EXHIBIT 10.48
STOCK PURCHASE AGREEMENT
By and Among
WORKFLOW MANAGEMENT ACQUISITION CORP.,
UNIVERSAL FOLDING BOX CO., INC.
and
The Stockholders Named Therein
Dated as of February 26, 1999
TABLE OF CONTENTS
Page No.
1. STOCK PURCHASE...........................................................................................1
1.1 Stock...........................................................................................1
1.2 Purchase Price..................................................................................1
1.3 Post-Closing Adjustment.........................................................................2
1.4 Pledged Assets..................................................................................3
1.5 Exchange of Certificates and Payment of Cash....................................................4
1.6 Accounting Terms................................................................................5
1.7 Post-Closing Earn-out...........................................................................5
1.8 Real Estate Distribution........................................................................8
1.9 Stockholders'Representative; Allocation of Purchase Price to Stockholders.......................8
2. CLOSING..................................................................................................9
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDER.......................................10
3.1 Due Organization...............................................................................10
3.2 Authorization; Validity........................................................................10
3.3 No Conflicts...................................................................................10
3.4 Capital Stock of the Company...................................................................11
3.5 Transactions in Capital Stock..................................................................12
3.6 Subsidiaries, Stock, and Notes.................................................................12
3.7 Complete Copies of Materials...................................................................12
3.8 Absence of Claims Against Company..............................................................12
3.9 Company Financial Conditions...................................................................12
3.10 Financial Statements...........................................................................13
3.11 Liabilities and Obligations....................................................................14
3.12 Books and Records..............................................................................14
3.13 Bank Accounts; Powers of Attorney..............................................................15
3.14 Accounts and Notes Receivable..................................................................15
3.15 Permits........................................................................................15
3.16 Real Property..................................................................................16
3.17 Personal Property..............................................................................19
3.18 Intellectual Property..........................................................................19
3.19 Significant Customers; Material Contracts and Commitments......................................21
3.20 Government Contracts...........................................................................23
3.21 Inventory......................................................................................23
3.22 Insurance......................................................................................24
3.23 Environmental Matters..........................................................................24
3.24 Labor and Employment Matters...................................................................26
3.25 Employee Benefit Plans.........................................................................27
3.26 Taxes..........................................................................................31
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3.27 Conformity with Law; Litigation................................................................33
3.28 Relations with Governments.....................................................................34
3.29 Absence of Changes.............................................................................34
3.30 Disclosure.....................................................................................36
3.31 Predecessor Status; Etc........................................................................36
3.32 Location of Chief Executive Offices............................................................36
3.33 Location of Equipment and Inventory............................................................37
3.34 Year 2000 Compliance...........................................................................37
3.35 Acquisitions and Divestitures..................................................................37
3.36 Product Lines..................................................................................38
4. REPRESENTATIONS AND WARRANTIES OF BUYER.................................................................39
4.1 Due Organization...............................................................................39
4.2 Authorization; Validity of Obligations.........................................................39
4.3 No Conflicts...................................................................................40
4.4 Financial Statements...........................................................................40
4.5 Disclosure.....................................................................................40
5. COVENANTS...............................................................................................41
5.1 Tax Matters....................................................................................41
5.2 Accounts Receivable............................................................................44
5.3 Title Insurance and Surveys....................................................................45
5.4 Employee Benefit Plans.........................................................................47
5.5 Related Party Agreements.......................................................................47
5.6 Cooperation....................................................................................47
5.7 Access to Information; Confidentiality; Public Disclosure......................................48
5.8 Conduct of Business Pending Closing............................................................49
5.9 Prohibited Activities..........................................................................50
5.10 Exclusivity....................................................................................51
5.11 Notification of Certain Matters................................................................52
5.12 Notice to Bargaining Agents....................................................................52
5.13 New Jersey ISRA Compliance.....................................................................52
5.14 Workflow Obligations...........................................................................55
5.15 Miscellaneous Assets...........................................................................56
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER............................................................57
6.1 Representations and Warranties; Performance of Obligations.....................................57
6.2 No Litigation..................................................................................57
6.3 No Material Adverse Change.....................................................................57
6.4 Consents and Approvals.........................................................................57
6.5 Opinion of Counsel.............................................................................57
6.6 Charter Documents..............................................................................58
6.7 Financial Statements...........................................................................58
6.8 Company Deliveries.............................................................................58
6.9 Delivery of Closing Financial Certificate......................................................58
6.10 FIRPTA Compliance..............................................................................59
6.11 Employment Agreements..........................................................................59
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6.12 Lease/Real Estate Matters......................................................................59
6.13 Consulting Agreement...........................................................................59
6.14 ISRA Clearance.................................................................................59
6.15 Other Closing Deliveries.......................................................................59
6.16 Environmental Studies..........................................................................59
6.17 Facility Engineering Studies...................................................................60
6.18 Release of Company Guarantees of Personal Debt.................................................60
6.19 Certified Resolutions..........................................................................60
6.20 Xxxxxxxxx Release..............................................................................61
6.21 Payoff Documentation...........................................................................61
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDER AND THE COMPANY..................................61
7.1 Representations and Warranties; Performance of Obligations.....................................61
7.2 No Litigation..................................................................................61
7.3 Consents and Approvals.........................................................................61
7.4 Consulting Agreement...........................................................................62
7.5 Lease/Real Estate Matters......................................................................62
7.6 Release of Personal Guarantees.................................................................62
7.7 Opinion of Counsel.............................................................................62
7.8 Other Closing Deliveries.......................................................................62
7.9 ISRA Clearance.................................................................................62
7.10 Certified Resolutions..........................................................................62
8. INDEMNIFICATION.........................................................................................62
8.1 General Indemnification by the Stockholder.....................................................62
8.2 Limitation and Expiration......................................................................63
8.3 Indemnification Procedures.....................................................................64
8.4 Survival of Representations Warranties and Covenants...........................................66
8.5 Remedies Cumulative............................................................................66
8.6 Right to Set Off...............................................................................66
8.7 General Indemnification of Buyer...............................................................67
9. NONCOMPETITION..........................................................................................67
9.1 Prohibited Activities..........................................................................67
9.2 Confidentiality................................................................................68
9.3 Damages........................................................................................69
9.4 Reasonable Restraint...........................................................................69
9.5 Severability; Reformation......................................................................69
9.6 Independent Covenant...........................................................................69
9.7 Materiality....................................................................................69
10. GENERAL.................................................................................................70
10.1 Termination....................................................................................70
10.2 Effect of Termination..........................................................................70
10.3 Successors and Assigns.........................................................................70
10.4 Entire Agreement; Amendment; Waiver............................................................71
10.5 Counterparts...................................................................................71
iv
10.6 Brokers and Agents.............................................................................71
10.7 Expenses.......................................................................................71
10.8 Specific Performance; Remedies.................................................................72
10.9 Notices........................................................................................72
10.10 Governing Law..................................................................................73
10.11 Severability...................................................................................73
10.12 Absence of Third Party Beneficiary Rights......................................................73
10.13 Mutual Drafting................................................................................73
10.14 Further Representations........................................................................74
v
vi
LIST OF EXHIBITS
EXHIBIT A - Form of Employment Agreement (Xxxxx Xxxxx)
EXHIBIT B - Form of Lease - Main Facility
EXHIBIT C - Form of Lease - Parking Lot Parcel
EXHIBIT D - Form of Consulting Agreement (Xxxxxxx X. Xxxxxx)
EXHIBIT E - Opinion of Counsel - Stockholder/Company
EXHIBIT F - Opinion of Counsel - Buyer/Workflow
EXHIBIT G - Form of Employment Agreement (Xxxxx Xxxxxxxxx)
EXHIBIT H - Form of Release Agreement (Xxxxx Xxxxxxxxx)
EXHIBIT I - Form of Escrow Agreement
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into this 26th day of February, 1999, by and among Workflow Management
Acquisition Corp., a New Jersey corporation ("Buyer"), Workflow Management,
Inc., a Delaware corporation ("Workflow"), Universal Folding Box Co., Inc., a
New York corporation (the "Company"), Xxxxxxx X. Xxxxxx, the principal
stockholder of the Company ("Principal Stockholder") and the Xxxxxxx X. Xxxxxx
Annuity Trust ("Additional Stockholder") (the Principal Stockholder and
Additional Stockholder constituting all of the stockholders of the Company and
referred to herein collectively as "Stockholder").
BACKGROUND
The Stockholder owns all of the issued and outstanding capital stock of
the Company. This Agreement contemplates a transaction in which the Buyer will
purchase from the Stockholder, and the Stockholder will sell to the Buyer, all
of the outstanding capital stock of the Company (the "Stock") for the cash
consideration set forth herein.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
1. STOCK PURCHASE
1.1 Stock. Subject to the terms and conditions of this Agreement,
at the Closing (as defined below), the Stockholder will sell to Buyer, and
Buyer will purchase from the Stockholder, the Stock for the Purchase Price (as
defined below).
1.2 Purchase Price.
(1) For purposes of this Agreement, the "Purchase Price" shall
be the amounts payable to the Stockholder by Buyer as set forth below in this
Section 1.2(a), which shall be payable in the following manner:
(1) $6,000,000 (Six Million Dollars) of the Purchase Price
shall be payable in cash ("Cash Purchase Price"), as adjusted pursuant to
this Section 1.2 and Section 1.3. The Cash Purchase Price, as so adjusted, shall
first be applied to satisfy the escrow obligations set forth in Section 1.4 and
the balance shall be paid to the Stockholder in cash at Closing, by wire
transfer to such account or accounts as the Stockholder may designate
(2) Certain payments shall be made to Stockholder based
upon the "Gross Profit" of the Company, as specifically set forth in Section 1.7
hereof. For purposes of the Code, 4.62% of such payments shall be treated
as interest for income tax purposes, which is equal to the Applicable
Federal Rate for Short-Term Annual obligations as published by the Internal
Revenue Service in Revenue Ruling 99-8.
(2) The Purchase Price has been calculated based upon several
factors including the assumption that the net worth of the Company, calculated
in accordance with generally accepted accounting principles ("GAAP")
consistently applied (with inventory determined in accordance with Section
5.6(d) hereto), is equal to or greater than $3,181,528, reduced by the Real
Estate Adjustment as defined in and determined pursuant to Section 1.8 hereof
(such amount, after giving effect to the reduction for the Real Estate
Adjustment, the "Net Worth Target") as of the Closing;
(3) If on the Closing Financial Certificate (as defined in Section
6.9), the Certified Closing Net Worth (as defined in Section 6.9) is less than
the Net Worth Target, the Cash Purchase Price to be delivered to the Stockholder
may, at Buyer's election, be reduced either (i) at the Closing, or (ii) within
five (5) days after completion of the Post-Closing Audit (as defined in Section
1.3), by the difference between the Net Worth Target and the Certified Closing
Net Worth set forth on the Closing Financial Certificate.
(4) If on the Closing Financial Certificate, the Certified Closing
Net Worth is greater than the Net Worth Target, the Cash Purchase Price to be
delivered to the Stockholder will be increased by the difference between the
Certified Closing Net Worth set forth on the Closing Financial Certificate and
the Net Worth Target. Such increase shall be subject to adjustment as a result
of, and shall be paid within five (5) days following completion of the final
determination of the Actual Company Net Worth pursuant to Section 1.3 hereof.
Notwithstanding the foregoing provisions of this Section 1.2(d), the maximum
increase in the Cash Purchase Price pursuant to this Section 1.2(d) shall be
$500,000 (Five Hundred Thousand Dollars). The increase in the Cash Purchase
Price pursuant to this Section 1.2(d), subject to the limitation of the $500,000
maximum increase, shall be referred to as the "Net Worth Increase."
1.3 Post-Closing Adjustment.
(1) The Cash Purchase Price shall be subject to adjustment after
the Closing Date as specified in this Section 1.3.
(2) Within one hundred twenty (120) days following the Closing
Date, Buyer shall cause PriceWaterhouseCoopers LLP ("Buyer's Accountant") to
audit the Company's books to determine the accuracy of the information set forth
on the Closing Financial Certificate (the "Post-Closing Audit"). The parties
acknowledge and agree that for purposes of determining the net worth of the
Company as of the Closing Date, the value of the assets of the Company shall,
except with the prior written consent of Buyer and Stockholder, be calculated as
provided in the last paragraph of Section 6.9. Within five (5) days after
completion of the Post-Closing Audit, Buyer shall deliver a written notice (the
"Financial Adjustment Notice") to the Stockholder, setting forth (i) the
determination made by Buyer's Accountant of the actual Company net worth (i.e.
total assets minus total liabilities) as of the Closing Date (the "Actual
Company Net Worth") and if the Actual Company Net Worth is in excess of the Net
Worth Target, the amount of the actual Net Worth Increase, provided that such
actual Net Worth Increase shall be limited to a maximum of $500,000(the "Actual
Net Worth Increase"), (ii) the amount of the Cash Purchase Price that would have
been payable at Closing pursuant to Section 1.2(c) or that would be payable
after the Closing pursuant to Section 1.2(d) to reflect the Actual Net Worth
Increase, if any, in each case had the Actual Company Net Worth been reflected
on the Closing Financial Certificate instead of the Certified Closing Net Worth,
(iii) if there is no Actual Net Worth Increase, the amount by which the Cash
Purchase Price would have been reduced at Closing had the Actual Company Net
Worth been used in the calculations pursuant to Section 1.2(c) (the "Purchase
Price Reduction") and (iv) if there is an Actual Net Worth Increase, the amount
thereof to be paid after the Closing. The Purchase Price Reduction shall take
account of the reduction, if any, to the Cash Purchase Price already taken
pursuant to Section 1.2(c)(i).
(3) The Stockholder shall have thirty(30) days from the receipt of
the Financial Adjustment Notice to notify Buyer if the Stockholder disputes such
Financial Adjustment Notice. If Buyer has not received notice of such a dispute
within such thirty(30) day period, (i) if there is no Actual Net Worth Increase,
Buyer shall be entitled to receive from the Stockholder (which may, at Buyer's
sole discretion, be from the Pledged Assets as defined in Section 1.4) the
Purchase Price Reduction, and (ii) if there is an Actual Net Worth Increase, the
Stockholder shall be entitled to receive from the Buyer, the amount of the
Actual Net Worth Increase, in each case within five (5) days after the earlier
to occur of (x) expiration of such thirty (30) day period, or (y) written notice
from Stockholder of the acceptability of the Financial Adjustment Notice. If,
however, the Stockholder has delivered notice of such a dispute to Buyer within
such thirty(30) day period, then Buyer and Stockholder shall use their good
faith efforts to resolve such dispute, but if they have been unable to do so
within twenty (20) days of receipt of Stockholder's notice of dispute, then KPMG
Peat Marwick, an independent accounting firm that has not represented any of the
parties hereto within the preceding two (2) years, shall be engaged to review
the Company's books, Closing Financial Certificate and Financial Adjustment
Notice(and related information) to determine the amount, if any, of the Purchase
Price Reduction, and the amount, if any, of the Actual Net Worth Increase. The
independent accounting firm shall make its determination of the Purchase Price
Reduction, if any, and the Actual Net Worth Increase, if any, within thirty(30)
days of its selection. The determination of the independent accounting firm
shall be final and binding on the parties hereto, and upon such determination
(i) if there is no Actual Net Worth Increase, the Buyer shall be entitled to
receive from the Stockholder (which may, at Buyer's sole discretion, be from the
Pledged Assets as defined in Section 1.4) the Purchase Price Reduction and (ii)
if there is an Actual Net Worth Increase, the Stockholder shall be entitled to
receive from Buyer the amount of the Actual Net Worth Increase, in each case
within five (5) days after the final determination is reported by such
independent accounting firm. The costs of the independent accounting firm shall
be borne proportionately by Buyer and the Stockholder based on the differential
amounts of their respective determinations of the Company's net worth at Closing
from the determination of the independent accounting firm, or equally by Buyer
and the Stockholder in the event that the determination by the independent
accounting firm is equidistant between the Certified Closing Net Worth and the
Actual Company Net Worth.
1.4 Pledged Assets.
(1) As collateral security for the payment of any Post-Closing
adjustment to the Purchase Price under Section 1.3, or any indemnification
obligations of the Stockholder pursuant to Article 8, the Stockholder shall, and
by execution hereof does hereby, transfer, pledge and assign to Buyer, for the
benefit of Buyer, a security interest in the following assets (the "Pledged
Assets"), which shall be held and distributed in accordance with the Escrow
Agreement to be entered into on the Closing (as defined in Section 2 below)
between Buyer, Stockholder and the Escrow Agent named therein in the form of
Exhibit I hereto (the "Escrow Agreement"):
(1) seven percent (7%) of the cash comprising the Cash
Purchase Price paid on the Closing Date; and
(2) all interest, earnings and other cash and non-cash
proceeds of all of the foregoing property and all rights, titles, interests,
privileges and preferences appertaining or incident to the foregoing property.
(2) The Pledged Assets shall be withheld by Buyer from
distribution to the Stockholder at the Closing and instead shall be deposited in
escrow with the Escrow Agent named in the Escrow Agreement to be held and
distributed pursuant to the Escrow Agreement.
(3) The Pledged Assets shall be available to satisfy any
post-Closing adjustment to the Cash Purchase Price pursuant to Section 1.3 and
any indemnification obligations of the Stockholder pursuant to Article 8 until
One-Hundred Twenty (120) days after the Closing Date (the "Release Date").
Promptly following the Release Date, Escrow Agent shall return or cause to be
returned to the Stockholder the Pledged Assets, less Pledged Assets having an
aggregate value equal to the amount of (i) any post-Closing adjustment to the
Cash Purchase Price payable to Buyer under Section 1.3 (including any
post-Closing adjustment to the Cash Purchase Price that is subject to dispute
under the terms and conditions of Section 1.3), (ii) any pending claim for
indemnification made by any Buyer Indemnified Party (as defined in Article 8),
and (iii) any indemnification obligations of the Stockholder pursuant to Article
8, which retained Pledged Assets shall continue to be held in accordance with
the terms and conditions of the Escrow Agreement.
1.5 Exchange of Certificates and Payment of Cash.
(1) Buyer to Provide Cash. In exchange for the Stock, Buyer shall
cause to be paid to the Stockholder by wire transfer the Cash Purchase Price, as
adjusted pursuant to Section 1.2 and Section 1.3.
(2) Certificate Delivery Requirements. At the Closing, the
Stockholder shall deliver to Buyer the certificates (the "Certificates")
representing the Stock, duly endorsed in blank by the Stockholder, or
accompanied by blank stock powers duly executed by the Stockholder and with all
necessary transfer tax and other revenue stamps, acquired at the Stockholder's
expense, affixed and canceled. The Stockholder shall promptly cure any
deficiencies with respect to the endorsement of the Certificates or other
documents of conveyance with respect to the stock powers accompanying such
Certificates.
(3) No Further Ownership Rights in Capital Stock of the Company.
All cash to be delivered (including cash that constitutes Pledged Assets or
other obligations under Section 1.2(a) above) upon the surrender for exchange of
shares of the Stock in accordance with the terms hereof shall be deemed to have
been delivered in full satisfaction of all rights pertaining to such shares of
Stock, and following the Closing the Stockholder shall have no further rights
to, or ownership in, shares of capital stock of the Company.
(4) Lost, Stolen or Destroyed Certificates. In the event any
certificates evidencing shares of the Stock shall have been lost, stolen or
destroyed, Buyer shall cause payment to be made in exchange for such lost,
stolen or destroyed certificates, upon the making of an affidavit of that fact
by the Stockholder, such cash as provided in Section 1.2.
1.6 Accounting Terms. Except as otherwise expressly provided herein or
in the Schedules, all accounting terms used in this Agreement shall be
interpreted, and all financial statements, Schedules, certificates and reports
as to financial matters required to be delivered hereunder shall be prepared, in
accordance with GAAP consistently applied (with inventory determined in
accordance with Section 5.6(d) hereto).
1.7 Post-Closing Earn-out.
(1) For (i) the period commencing the date after the Closing Date
and ending April 24, 1999 ("Initial Fiscal Period"), (ii) for each of Buyer's
next four (4) fiscal years following the Initial Fiscal Period, and (iii) the
period commencing April 27, 2003 and ending on the date that is five (5) years
after the Closing Date (such periods individually an "Annual Earn-out Period"),
Stockholder shall be entitled to receive from the Buyer ten percent (10%) of the
annual Gross Profit (as defined herein) of the Company for any Annual Earn-out
Period, on the specific terms and conditions set forth in this Section 1.7 (such
payments the "Earn-out"). Any Earn-out due shall be payable in cash within
thirty (30) days after the last day of the respective Annual Earn-out Period,
and shall be accompanied by a detailed computation of the Earn-out certified by
a financial officer of Workflow as being true, complete and correct and prepared
from the books and records of the Company. Subject to the confidentiality
requirements of Section 9.2 hereof, Stockholder or a certified public accountant
designated by him may by advance appointment during business hours inspect the
books and records of the Company relevant to computation of the Earn-out amount
to confirm the reported Earn-out amount. Such inspection shall be at
Stockholder's expense; provided, however, that if as a result of such inspection
it is finally determined that the amount of the Earn-out to be properly paid to
Stockholder is at least five (5%) percent greater than that originally reported
by the Company, then such inspection shall be at the expense of the Company.
(2) Gross Profit for any period shall mean the amount of the
Company's "Net Sales" less "Cost of Goods Sold," in each case on an
unconsolidated basis and without giving effect to the results of operations of
any direct or indirect parent or subsidiary of the Company. "Net Sales" for any
period means the invoiced amount of goods sold by the Company during such period
to the Earn-out Accounts (as defined below), less actual trade discounts,
returns, artwork to the extent not paid by customers, and freight to the extent
not paid by customers and a reserve for bad debts in the amount of one and
eight/tenths percent (1.8%, referred to herein, as the "Reserve Percentage") of
the foregoing amount. In each Annual Earn-out period after the first, the Net
Sales amount, as computed in accordance with the preceding sentence, shall be
(x) adjusted upward, on a dollar for dollar basis, to the extent the actual bad
debt experience for the prior Annual Earn-out period was more favorable to the
Company than the Reserve Percentage and (y) adjusted downward, on a dollar for
dollar basis, to the extent the actual bad debt experience for the prior Annual
Earn-out period was less favorable to the Company than the Reserve Percentage.
For the final Annual Earn-out Period, in addition to the adjustment to Net Sales
for such final Annual Earn-out Period specified in the preceding sentence with
respect to the actual bad debt experience for the Annual Earn-out Period just
prior to the final Annual Earn-out Period, there will be a similar adjustment
and payment, as specified in the preceding sentence, with respect to the actual
bad debt experience for the final Annual Earn-out Period, within nine(9) months
of completion of the final Annual Earn-out Period. By way of example, if in the
first Annual Earn-out Period, the actual bad debt experience reflected 1.5% of
Net Sales(rather than 1.8%), and Net Sales for the first Annual Earn-out Period
were $10,000,000, then the differential of 0.3% times $10,000,000 (computed to
$30,000) would be added to the calculation of Net Sales for the second Annual
Earn-out Period. By way of another example, if in the first Annual Earn-out
Period, the actual bad debt experience reflected 2.0% of Net Sales(rather than
1.8%), and Net Sales for the first Annual Earn-out Period were $10,000,000, then
the differential of 0.2% times $10,000,000 (computed to $20,000) would be
subtracted from the calculation of Net Sales for the second Annual Earn-out
Period. "Earn-out Accounts" means (i) those accounts of the Company existing on
the date hereof as identified on Schedule 1.7(b) ("Existing Accounts"), (ii)
those accounts of the Company generated from and after the date hereof by the
Company's own sales staff ("New Generated Accounts"), and (iii) those other
accounts actually and specifically assigned to or referred to the Company by
Workflow or its subsidiaries from and after the Closing Date ("New Assigned
Accounts"). The Earn-out Accounts shall exclude accounts of businesses or
companies acquired by Workflow, Buyer, the Company or any of their subsidiaries
and any accounts (other than Existing Accounts or New Generated Accounts) which
in the discretion of Workflow and its subsidiaries are not actually and
specifically assigned to the Company. "Cost of Goods Sold" for any period means
the cost of goods sold which are allocable to Net Sales as determined in a
manner consistent with the Company's historical method of determining Cost of
Goods Sold; provided, however, that Cost of Goods Sold shall not be reduced by
any purchase discounts, bulk purchase discounts, special discounts or other
similar incentives, other than normal payment term discounts and normal
discounts off list price.
(3) To the extent that the Company has a negative Gross Profit
during any Annual Earn-out Period (such amount a "Gross Profit Loss"), the Gross
Profit Loss shall be carried forward to the subsequent Annual Earn-out Period(s)
and aggregated with the Gross Profit (or Gross Profit Loss) for such subsequent
Annual Earn-out Period(s) for purposes of determining the Earn-out, if any, due
for such subsequent Annual Earn-out Period(s). All Gross Profit Losses shall
continue to be carried forward on an annual basis until such time as Gross
Profits are fully offset by the total amount of the Gross Profit Losses. Any
Gross Profit Losses will not effect prior payments of Earn-outs for Annual
Earn-out Periods in which the Company had a Gross Profit.
(4) In the event that, after the date of this Agreement, the
Company is merged (or otherwise consolidated) into Buyer, Workflow or any direct
or indirect subsidiary of Buyer or Workflow (any such entity a "Merger
Affiliate") such that the Company is not the surviving corporation under
applicable law, the Earn-out shall only be payable with respect to the business
and operations conducted by the Company and without reference to the business
and operations of the Merger Affiliate. For purposes of calculating the Earn-out
payable under this Section 1.7 after a merger or other consolidation by the
Company and a Merger Affiliate, the Buyer shall cause such Merger Affiliate to
(i) conduct the Company's former business and operations as a division of the
Merger Affiliate with substantially the same sales organization ("Company
Division") and (ii) maintain such financial reporting systems as are necessary
to accurately calculate the Gross Profit (or Gross Profit Losses) of the Company
Division.
(5) Except as otherwise expressly agreed to by Buyer and Company,
the Earn-out shall only be payable with respect to the business and operations
currently conducted by the Company (or by the Company Division) and any product
lines of the Company not referenced in Schedule 3.36 of current product lines of
the Company and developed solely by the Stockholder and approved by the Buyer
and without reference to any other entity hereafter merged into or otherwise
consolidated with the Company. The foregoing reference to the business and
operations currently conducted by the Company does not exclude the New Generated
Accounts and the New Assigned Accounts. In the event that the Buyer or Workflow
causes any entity to merge or otherwise consolidate into the Company or to be
acquired by the Company or any subsidiary thereof, such that the Company is the
surviving corporation under applicable law, the Company shall maintain such
financial reporting systems as are necessary to accurately calculate the Gross
Profit (or Gross Profit Losses) of the Company (or the Company Division) without
taking into account the results of any other operations or acquisitions of the
Company or any such other entity. Except as provided in the first sentence of
this Section 1.7(e), no Earn-out shall be payable with respect to any Gross
Profit attributable to product lines offered by Buyer, Workflow or their direct
or indirect subsidiaries that are not referenced in Schedule 3.36 of current
product lines of the Company. During the period from the Closing Date through
the date which is five (5) years after the Closing Date, neither Company,
Workflow, Buyer or any Merger Affiliate (in the case of a transaction referred
to in Section 1.7(d) above), shall dismantle, transfer or sell the business or
assets or sales organization of the Company (or Company Division, as applicable)
relevant to the generation of Net Sales for computation of the Earn-out;
provided, however, that (i) transactions meeting the requirements of Sections
1.7(d) and 1.7(e) may be implemented, (ii) Company (or the Company Division, as
applicable) may sell inventory and other assets, and replace, improve or dispose
of obsolete or non-useable assets, in the ordinary course of business, (iii) all
or substantially all of the assets, business or capital stock of the Company or
Company Division may be sold to a bona-fide third party purchaser which assumes
in writing, in favor of Stockholder, all obligations of the Buyer under this
Section 1.7 with respect to payment of the Earn-Out from and after the date of
such sale and (iv) the Company's business operations may be discontinued and its
assets liquidated if, on a sustained and continuing basis, the Company is unable
to operate profitability and it is not economically feasible to continue such
business, or if there is a catastrophic event such that the Company is unable to
utilize its main manufacturing facility on a sustained and continuing basis.
(6) Notwithstanding anything in this Section 1.7 to the contrary,
Buyer shall have the right to reduce any amounts otherwise payable as an
Earn-out by (i) the amount of any indemnification obligations of the Stockholder
under Article 8 and (ii) the amount of any Purchase Price Reduction which
Stockholder has failed to repay to Buyer.
(7) Notwithstanding anything in Sections 1.7(a) through 1.7(e) to
the contrary, but subject to reduction pursuant to Section 1.7(f), (i) the
Earn-out payment for each Annual Earn-out Period which is a full fiscal year
shall be not less than $300,000 and (ii) the Earn-out Payment for each Annual
Earn-out Period which is not a full fiscal year shall be not less than $300,000
multiplied by a fraction, the numerator of which is the number of calendar days
in the applicable Annual Earn-out Period and the denominator is 365. Any amount
payable under this Section 1.7(g) shall be payable within thirty (30) days after
the last day of the respective Annual Earn-out Period, and shall be payable by
the Buyer regardless of whether the Company is sold, merged or liquidated.
1.8 Real Estate Distribution.
(1) Prior to the Closing, the Company shall distribute and convey
to the Stockholder or an entity owned or controlled by Stockholder ("Fee Owner")
the Real Property (as hereinafter defined) located at Madison and Thirteenth
Streets, Hoboken, New Jersey, which serves as the Company's main facility, and
more particularly described on Schedule 1.8(a) hereto (the "Main Facility Real
Property"). Such transfer shall be "As Is" and without recourse to the Company
or the Buyer. All documentation utilized to effectuate such transaction shall be
provided to Buyer in advance of the Closing and shall be reasonably satisfactory
to Buyer.
(2) The dollar value assigned to such real estate distribution for
purposes of adjusting the net worth of the Company on the Closing Date shall be
determined as the historical cost basis of such property less accumulated
depreciation for financial accounting purposes (such amount as finally
determined referred to herein as the "Real Estate Adjustment"). The amount of
the Real Estate Adjustment shall be excluded from the computation of the
Certified Closing Net Worth and the Actual Company Net Worth. For illustrative
purposes only, the amount of the Real Estate Adjustment and method of
calculation thereof, if computed as of December 31, 1998, is set forth on
Schedule 1.8(b) hereto.
(3) All Taxes (as defined in Section 3.26) and other transaction
fees and expenses relating to the distribution and conveyance of such real
estate by the Company to the Fee Owner shall be borne exclusively by the
Stockholder (and not the Company).
1.9 Stockholders' Representative; Allocation of Purchase Price to
Stockholders.
(1) Each of the Principal Stockholder and the Additional
Stockholder, by signing this Agreement, designates the Principal Stockholder to
be the Stockholders' Representative for purposes of this Agreement. Both the
Principal Stockholder and the Additional Stockholder shall be bound by any and
all actions taken by the Stockholders' Representative on their behalf.
(2) Buyer and Workflow (and from and after the Closing Date, the
Company) shall be entitled to rely upon any communication or writings given or
executed by the Principal Stockholder. All communications or writings to be sent
to the Stockholder pursuant to this Agreement may be addressed to the
Stockholders' Representative and any communication or writing so sent shall be
deemed notice to both the Principal Stockholder and the Additional Stockholder.
The Principal Stockholder and the Additional Stockholder hereby consent and
agree that the Stockholder's Representative is authorized to accept deliveries,
including any notice, on behalf of the Principal Stockholder and the Additional
Stockholder.
(3) The Stockholders' Representative is hereby appointed and
constituted the true and lawful attorney in fact of each of the Principal
Stockholder and the Additional Stockholder, with full power in his name and on
his behalf to act according to the terms of this Agreement in the absolute
discretion of the Stockholders' Representative, and in general to do all things
and to perform all acts, including without limitation, executing and delivering
all agreements, certificates receipts, instructions and other instruments
contemplated by or deemed advisable in connection with Article 8 of this
Agreement. This power of attorney and all authority hereby conferred is granted
in consideration of the mutual covenants and agreements made herein, and shall
be irrevocable and coupled with an interest and shall not be terminated by any
act of the Principal Stockholder or the Additional Stockholder, by operation of
law, whether by death or any other event.
(4) All payments of the Cash Purchase Price and Earn-outs,
distributions of the Pledged Assets, and adjustments to such payments including
the Purchase Price Adjustment, shall be paid or allocated among the Principal
Stockholder and the Additional Stockholder pro-rata in accordance with their
respective percentage ownership interests in the common stock of the Company
sold to the Buyer under this Agreement, which interests are hereby agreed to be
as follows:
Principal Stockholder 84.972% (Eighty-Four and Nine
Hundred Seventy Two One thousandths
Percent)
Additional Stockholder 15.028% (Fifteen and Twenty-Eight
one thousandths Percent)
2. CLOSING
The consummation of the transactions contemplated by this Agreement
(the "Closing") shall take place through the delivery of executed originals or
facsimile counterparts of all documents required hereunder within five (5) days
after such date that all conditions to Closing (other than the delivery by the
parties of closing certificates and similar ministerial actions) shall have been
satisfied or waived (provided however, that such closing certificates and
similar ministerial actions shall be delivered and/or taken at the Closing), or
at such other time and date as Buyer, the Company and the Stockholder may
mutually agree, which date shall be referred to as the "Closing Date."
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDER
To induce Buyer to enter into this Agreement and consummate the
transactions contemplated hereby, each of the Company and the Stockholder
represents and warrants to Buyer as follows (for purposes of this Agreement, the
phrases "knowledge of the Company" or the "Company's knowledge," or words of
similar import, mean the actual knowledge of the Stockholder, Xxxxx Xxxxx,
President of the Company, and/or Xxxxx Xxxxx, Chief Financial Officer of the
Company.
3.1 Due Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and is duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities to
own, operate and lease its properties and to carry on its business in the places
and in the manner as now conducted, except where the failure to be so qualified
would not have a material adverse effect on the Company or its business or
assets (a "Material Adverse Effect"). Schedule 3.l hereto contains a list of all
jurisdictions in which the Company is authorized or qualified to do business.
The Company is in good standing as a foreign corporation in each jurisdiction in
which the character of the property owned, leased or operated by the Company, or
the nature of the business or activities conducted by the Company, makes such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect. The Company has delivered to Buyer true,
complete and correct copies of the Certificate of Incorporation and Bylaws of
the Company, as amended to date. Such Certificate of Incorporation and Bylaws
are collectively referred to as the "Charter Documents." The Company is not in
violation of any Charter Documents. The minute books of the Company have been
made available to Buyer (and have been delivered, along with the Company's
original stock ledger and corporate seal, to Buyer) and are correct and, except
as set forth in Schedule 3.1, complete in all material respects. Schedule 3.1
contains a complete and accurate list of the directors and officers of the
Company.
3.2 Authorization; Validity. The Company has the full legal right,
corporate power and authority to enter into this Agreement and the transactions
contemplated hereby and to perform its obligations pursuant to the terms of this
Agreement. The Stockholder has the full legal right and authority to enter into
this Agreement and the transactions contemplated hereby and to perform his
respective obligations pursuant to the terms of this Agreement. The execution
and delivery of this Agreement by the Company and the performance by the Company
of the transactions contemplated herein have been duly and validly authorized by
the Board of Directors of the Company and the Stockholder and this Agreement has
been duly and validly authorized by all necessary corporate action. This
Agreement is a legal, valid and binding obligation of the Company and the
Stockholder, enforceable in accordance with its terms, except where such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally.
3.3 No Conflicts. Provided that the consents referred to in
Schedule 3.3 are obtained prior to the Closing, the execution, delivery and
performance of this Agreement, the consummation of the transactions contemplated
hereby, and the fulfillment of the terms hereof will not:
(1) conflict with, or result in a breach or violation of, any of
the Charter Documents;
(2) conflict with, or result in a default (or would constitute a
default but for any requirement of notice or lapse of time or both) under, any
document, agreement or other instrument to which the Company or the Stockholder
is a party or by which the Company or the Stockholder is bound, or result in the
creation or imposition of any lien, charge or encumbrance on any of the
Company's properties pursuant to (i) any law or regulation to which the Company
or the Stockholder or any of their respective property is subject, or (ii) any
judgment, order or decree to which the Company or the Stockholder is bound or
any of their respective property is subject;
(3) result in termination or any impairment of any permit,
license, franchise, contractual right or other authorization of the Company; or
(4) violate any law, order, judgment, rule, regulation, decree or
ordinance to which the Company or the Stockholder is subject or by which the
Company or the Stockholder is bound including, without limitation, the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx"), together
with all rules and regulations promulgated thereunder.
3.4 Capital Stock of the Company. The authorized capital stock of
the Company consists of 1,000 shares of common stock, no par value, of which 885
shares are issued and outstanding and 65 shares are held as treasury stock. All
of the issued and outstanding shares of the capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and
are owned of record and beneficially by the Stockholder free and clear of all
Liens (defined below). The Principal Stockholder is the record and beneficial
owner of 752 shares of Common Stock of the Company and the Additional
Stockholder is the record and beneficial owner of 133 shares of Common Stock of
the Company. All of the issued and outstanding shares of the capital stock of
the Company were offered, issued, sold and delivered by the Company in
compliance with all applicable state and federal laws concerning the issuance of
securities. Further, none of such shares was issued in violation of any
preemptive rights. There are no voting agreements or voting trusts with respect
to any of the outstanding shares of the capital stock of the Company. For
purposes of this Agreement, "Lien" means any mortgage, security interest,
pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), charge, preference, priority or other security
agreement, option, warrant, attachment, right of first refusal, right of first
offer, preemptive, conversion, put, call or other claim or right, covenant,
encroachment, easement or similar restriction, any lease to which the relevant
asset is subject, restriction on transfer (other than restrictions imposed by
federal and state securities laws), or preferential arrangement of any kind or
nature whatsoever (including any restriction on the transfer of any assets, any
conditional sale or other title retention agreement, any financing lease
involving substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction), or any other matter affecting title to any
of the Owned Real Property.
3.5 Transactions in Capital Stock. Except as set forth in Schedule
3.5, no option, warrant, call, subscription right, conversion right or other
contract or commitment of any kind exists of any character, written or oral,
which may obligate the Company or the Stockholder to issue, transfer, or sell,
or for there to otherwise become outstanding, any shares of capital stock. The
Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof. As a result of the
transactions contemplated by this Agreement, Buyer will be the record and
beneficial owner of all outstanding capital stock of the Company and rights to
acquire capital stock of the Company. Except as set forth on Schedule 3.5,
neither the Company nor the Stockholder has entered into any agreement or
promise (oral or written) whereby any employee, consultant, director, officer,
customer, supplier, broker, finder, distributor or dealer of the Company or any
other person or entity (other than the Stockholder) has any right to the
proceeds of or to participate in or to receive any payment in connection with
any sale of the capital stock, assets or business of the Company, or upon any
merger, consolidation or change in control of the Company.
3.6 Subsidiaries, Stock, and Notes.
(1) Except as set forth on Schedule 3.6(a), the Company has no
subsidiaries. For purposes of this Agreement, "subsidiaries" means any
corporation, partnership, limited liability company, association or other
business entity of which a person (as defined in Section 10.13) owns, directly
or indirectly, more than 50% of the voting securities thereof.
(2) Except as set forth on Schedule 3.6(b), the Company does not
presently own, of record or beneficially, or control, directly or indirectly,
any capital stock, securities convertible into capital stock or any other equity
interest in any corporation, association or business entity, nor is the Company,
directly or indirectly, a participant in any joint venture, partnership, limited
liability company or other noncorporate entity.
(3) Except as set forth on Schedule 3.6(c), there are no
promissory notes that have been issued to, or are held by, the Company. The
aggregate amount of loans made by the Company to its employees outstanding as of
the date hereof does not exceed $25,000.
3.7 Complete Copies of Materials. The Company has delivered to
Buyer true and complete copies of each agreement, contract, commitment or other
document (or summaries thereof) that is referred to in the Schedules.
3.8 Absence of Claims Against Company. The Stockholder does not
have any claims against the Company, other than debt to the Principal
Stockholder set forth on Schedule 3.8 which will be paid or extinguished at or
before the Closing.
3.9 Company Financial Conditions.
(1) The Company's net worth (i) as of the end of its fiscal year
ending December 31, 1997 was not less than $3,181,528, and (ii) as of the
Closing will not be less than the Net Worth Target; provided however, if the
Company's net worth at Closing is less than the Net Worth Target, and the
Closing occurs, then the Buyer's sole remedy for violation of this clause (ii)
shall be to recover the Purchase Price Reduction pursuant to Section 1.3 hereof.
(2) The Company's sales for (i) its fiscal year ending December
31, 1997 were not less than $17,037,649, and (ii) the twelve (12) month period
ending December 31, 1998 were not less than $19,000,000;
(3) The Company's earnings before interest, taxes and depreciation
(after the addition of "add-backs" set forth on Schedule 3.9(c)) for (i) its
fiscal year ending December 31, 1997 were not less than $1,779,902 and (ii) the
twelve (12) month period ended December 31, 1998, were not less than $2,000,000
(in each case assuming an annual rental expense of $370,000).
(4) The sum of the Company's total outstanding long term and short
term indebtedness to (i) banks and (ii) all other financial institutions and
creditors (in each case including the current portions of such indebtedness, but
excluding trade payables and other accounts payable incurred in the ordinary
course of the Company's business consistent with past practice and excluding
debt to Stockholder and obligations or liabilities attributable to the Section
338(h)(10) Election (as defined below)) as of the Closing Date will not be more
than $2,496,337 (such maximum outstanding debt referred to herein as the
"Accepted Indebtedness"). The Company's indebtedness to Stockholder shall be
paid or extinguished at or prior to the Closing Date.
For purposes of Section 3.9(a) and (c), calculation of amounts as of the Closing
shall be made in accordance with the last paragraph of Section 6.9.
3.10 Financial Statements. The Company has delivered to the Buyer
(a) true, complete and correct copies of the Company's audited balance sheet as
of December 31, 1997 (the end of its most recent completed fiscal year), and
income statement for the year ended December 31, 1997 (collectively, the
"Audited Financials") and (b) true, complete and correct copies of the Company's
unaudited balance sheet (the "Interim Balance Sheet") as of December 31, 1998
(the "Balance Sheet Date") and income statement, for the twelve (12) month
period then ended (collectively, the "Interim Financials," and together with the
Audited Financials, the "Company Financial Statements"). Except as noted on the
auditors' report accompanying the Audited Financials, the Company Financial
Statements have been prepared in accordance with GAAP consistently applied,
subject, in the case of the Interim Financials, (i) to normal year-end audit
adjustments, which individually or in the aggregate will not be material, (ii)
the exceptions stated on Schedule 3.10, and (iii) to the omission of footnote
information. Each balance sheet included in the Company Financial Statements
presents fairly in all material respects the financial condition of the Company
as of the date indicated thereon, and each of the income statements included in
the Company Financial Statements presents fairly in all material respects the
results of its operations for the periods indicated thereon. Since the dates of
the Company Financial Statements, there have been no material changes in the
Company's accounting policies other than as requested by Buyer to conform the
Company's accounting policies to GAAP.
3.11 Liabilities and Obligations.
(1) The Company is not liable for or subject to any liabilities
except for:
(1) those liabilities reflected on the Interim Balance Sheet
and not previously paid or discharged;
(2) those liabilities arising in the ordinary course of its
business consistent with past practice under any contract, commitment or
agreement specifically disclosed on any Schedule to this Agreement or not
required to be disclosed thereon because of the term or amount involved is less
than the threshold set forth in any applicable provision of this Agreement
expressly permitting exemption from disclosure of the particular type of
liability;
(3) those liabilities incurred since the Balance Sheet Date in
the ordinary course of business consistent with past practice, which liabilities
are not, individually or in the aggregate, material; and
(4) liabilities relating to occasional customer product
replacements or adjustments requested after the Balance Sheet Date for products
shipped prior to or subsequent to the Balance Sheet Date, not in excess of
historical amounts over such time period.
(2) The Company has delivered to Buyer, in the case of those
liabilities disclosed in the Schedules hereto, which are either (i) not fixed or
(ii) are being contested, a reasonable estimate of the maximum amount which may
be payable.
(3) Schedule 3.11(c) includes a summary description of all plans
or projects involving the opening of new operations, expansion of any existing
operations, the expansion or acquisition of any real property or leased
facilities, the acquisition of any business or the purchase, lease or
development of significant equipment or systems, to which management of the
Company has made any material expenditure, contract or commitment in the
two-year period prior to the date of this Agreement, which if pursued by the
Company would require additional material expenditures of capital.
(4) For purposes of this Section 3.11, the term "liabilities"
shall include without limitation any direct or indirect liability, indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, either accrued, absolute, contingent, mature,
unmature or otherwise and whether known or unknown, fixed or unfixed, xxxxxx or
inchoate, liquidated or unliquidated, secured or unsecured. Schedule 3.11(d)
contains a complete list of all indebtedness for borrowed money of the Company.
3.12 Books and Records. The Company has made and kept books and
records and accounts, which, in reasonable detail, accurately and fairly reflect
the activities of the Company. The Company has not engaged in any transaction,
maintained any bank account, or used any corporate funds except for
transactions, bank accounts, and funds which have been and are reflected in its
normally maintained books and records.
3.13 Bank Accounts; Powers of Attorney. Schedule 3.13 sets forth a
complete and accurate list as of the date of this Agreement, of:
(1) the name of each financial institution in which the Company
has any account or safe deposit box;
(2) the names in which the accounts or boxes are held;
(3) the type of account;
(4) the name of each person authorized to draw thereon or have
access thereto; and
(5) the name of each person, corporation, firm or other entity
holding a general or special power of attorney from the Company and a
description of the terms of such power.
3.14 Accounts and Notes Receivable. The Company has delivered to
Buyer a complete and accurate list, as of a date not more than two (2) business
days prior to the date hereof, of the accounts and notes receivable of the
Company (including without limitation receivables from and advances to employees
and the Stockholder), which includes an aging of all accounts and notes
receivable showing amounts due in thirty (30) day aging categories
(collectively, the "Accounts Receivable"). All such Accounts Receivable
represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business. Such Accounts Receivable
are collectible net of any reserves for bad debts, returns and allowances shown
on the Company's books and records (which reserves are adequate and calculated
consistent with past practice). There is no contest, claim, or right of set-off,
other than rebates and returns in the ordinary course of business, under any
contract with any obligor of an Account Receivable relating to the amount or
validity of such Account Receivable.
3.15 Permits. The Company owns or holds all licenses, franchises,
permits and other governmental authorizations, including without limitation
permits, titles (including without limitation motor vehicle titles and current
registrations), fuel permits, licenses and franchises necessary for the
continued operation of its business as it is currently being conducted (the
"Permits"). The Permits are valid, and the Company has not received any notice
that any governmental authority intends to modify, cancel, terminate or fail to
renew any Permit. No present or former officer, manager, member or employee of
the Company or any affiliate thereof, or any other person, firm, corporation or
other entity, owns or has any proprietary, financial or other interest (direct
or indirect) in any Permits. The Company has conducted and is conducting its
business in compliance with the requirements, standards, criteria and conditions
set forth in the Permits and other applicable orders, approvals, variances,
rules and regulations and is not in violation of any of the foregoing, other
than Diminimus Violations (as defined below). The transactions contemplated by
this Agreement will not result in a default under, or a breach or violation of,
or adversely affect the rights and benefits afforded to the Company, by any
Permit.
3.16 Real Property.
(1) For purposes of this Agreement, "Real Property" means all of
the Company's right, title and interest in and to the following: all interests
in real property including, without limitation, fee estates, leaseholds and
subleaseholds, easements, licenses of real property, rights to access, and
rights of way, and all buildings and other improvements and fixtures (other than
removable trade fixtures) located thereon or affixed thereto (including without
limitation the Tangible Real Estate Assets relating thereto defined in Section
3.16(c)(iii) below) , owned or used by the Company, together with any additions
thereto or replacements thereof. "Real Property" and "Owned Real Property" shall
exclude the vacant land parcels owned by the Company in the Pine Barrens area of
New Jersey (the "Pine Barrens Real Property").
(2) Schedule 3.16(b) contains a complete and accurate description
of all Real Property (including street address, legal description (where known),
owner, and Company's use thereof) and, to the Company's knowledge, any Lien
affecting such Real Property ("Encumbrances"). Schedule 3.16(b) indicates
whether the Real Property is owned or leased. The Real Property listed on
Schedule 3.16 includes all interests in real property necessary to conduct the
business and operations of the Company as currently conducted.
(3) (1) The "Owned Real Property" shall be defined to include (x)
the Main Facility Real Property, and (y) the adjacent parking lot parcel owned
by the Article Third Trust under the will of Xxxx X. Xxxxxx more particularly
described on Schedule 3.16(b) hereto (the "Parking Lot Real Property"). With
respect to the Main Facility Real Property, the Fee Owner (and in the case of
the Parking Lot Real Property, the Article Third Trust under the will of Xxxx X.
Xxxxxx) at the Closing will be the sole owner of and have good fee simple and
insurable title to the Main Facility Real Property (in the case of the Fee
Owner) and the Parking Lot Real Property (in the case of said Trust), in each
case free and clear of any Encumbrances other than the following (collectively,
"Permitted Encumbrances"): (A) Liens for current taxes, assessments and water
and sewer charges not yet due and payable, and (B) Encumbrances and title
defects and other matters as set forth on Schedule 3.16(c)(i); provided,
however, notwithstanding the foregoing, any Encumbrance(s) (1) which does not
constitute a mortgage or other Lien, statutory, consensual or otherwise, where
enforcement could result in foreclosure on, or the sale or transfer of, the
Owned Real Property (other than the Liens described in the preceding clause (A)
of this Section 3.16(c)(i) or Liens created by or on behalf of Buyer), and (2)
which individually or in the aggregate do not, in any material respect,
interfere with or prohibit (x) the Company's exercise or enjoyment of any of its
rights under the leases of the Main Facility Real Property and Parking Lot Real
Property to be entered into on or prior to the Closing Date pursuant to
subsections 6.12(a) and 6.12(b) herein below (the "Closing Leases"), or (y) the
use of any such Owned Real Property for any purpose permitted by any of the
Closing Leases, shall be deemed to be Permitted Encumbrances.
(2) The Company has rights of ingress and egress to and from all
parcels of Owned Real Property from and to a publicly dedicated street.
(3) Except as set forth on Schedule 3.16(c)(iii), all structures,
improvements and additions and all structural, mechanical and other physical
systems thereof that constitute part of the Owned Real Property, including but
not limited to the walls, roofs and structural elements thereof and the heating,
ventilation, air conditioning, plumbing, electrical, mechanical, sewer, waste
water and storm water systems, and the cyclone "Vacuum System," including all
ducts, ductwork and other installations comprising said system, at the Owned
Real Property (collectively, the "Tangible Real Estate Assets"), are free of
defects (other than "Diminimus Violations" as defined herein) and in reasonably
good operating condition and repair, considering the age and use thereof and
ordinary wear and tear excepted. For purposes of this Section, a defect shall
mean a condition relating to the structures or any structural, mechanical or
physical system which requires an expenditure of more than $1,000 to correct. No
maintenance or repair to the Owned Real Property, Structures or any Tangible
Asset has been unreasonably deferred. There is no water seepage, diffusion or
other intrusion into said buildings, including any subterranean portions, that
would impair beneficial use of the Owned Real Property, Structures or any
Tangible Real Estate Asset as presently used and operated. A "Diminimus
Violation" shall be defined as a minor, insignificant defect, violation or
infraction the existence of which does not interfere with operation of the
Company's business and which can be cured or remedied at nominal expense and
without interference with the operation of the Company's business.
(4) All water, sewer, gas, electric and drainage facilities, and
all other utilities required by any applicable law or by the use and operation
of the Owned Real Property in the conduct of the Company's business are
installed to the property lines of the Owned Real Property, are connected
pursuant to valid Permits to municipal or public utility services or proper
drainage facilities, are operable and are adequate to service the Owned Real
Property in the operation of the Company's business as presently conducted and
to permit compliance with the requirements of all laws in the operation of such
business (except for Diminimus Violations of the foregoing). To the Company's
knowledge, no fact or condition exists which could result in the termination or
material reduction of the current access from the Real Property to existing
roads or to sewer or other utility services presently serving the Real Property.
(5) Except as set forth on Schedule 3.16(c)(v), and except for
Diminimus Violations and Permitted Encumbrances, the Owned Real Property and all
present uses and operations of the Owned Real Property comply with all
applicable statutes, rules, regulations, ordinances, orders, writs, injunctions,
judgments, decrees, awards or restrictions of any government entity having
jurisdiction over any portion of the Owned Real Property (including, without
limitation, applicable statutes, rules, regulations, orders and restrictions
relating to zoning, land use, safety, health, employment and employment
practices and access by the handicapped) (collectively, "Laws"), covenants,
conditions, restrictions, easements, disposition agreements and similar matters
affecting the Owned Real Property. The Company has obtained all approvals of
governmental authorities (including certificates of use and occupancy and
Permits) required in connection with the construction, ownership, use,
occupation and operation of the Owned Real Property as presently used and
operated.
(6) None of the Structures, the appurtenances thereto or the
equipment therein or the operation or maintenance thereof, or the current
conduct of the Company's business, violates any restrictive covenant or
encroaches on any property owned by others or any easement, right of way or
other Encumbrance or restriction affecting such Owned Real Property in any
respect, other than Diminimus Violations and Permitted Encumbrances. The Owned
Real Property and its current continued use, occupancy and operation does not
constitute a nonconforming use and is not the subject of a special use permit
under any applicable Law.
(7) There are no pending or, to the Company's knowledge,
threatened condemnation, fire, health, safety, building, zoning or other land
use regulatory proceedings, lawsuits or administrative actions relating to any
portion of the Owned Real Property which do or may adversely effect the current
use, occupancy or value thereof, nor has the Company or the Stockholder received
notice of any pending or threatened special assessment proceedings affecting any
portion of the Owned Real Property.
(8) Except as set forth on Schedule 3.16(c)(viii) hereto, no
portion of the Owned Real Property or the structures, facilities and
improvements to the Owned Real Property (the "Structures") has suffered any
damage by fire or other casualty which has not heretofore been completely
repaired and restored to its original condition.
(9) There are no parties other than the Company in possession of
any of the Real Property or any portion thereof, and there are no leases,
subleases, licenses, concessions or other agreements, written or oral, granting
to any party or parties other than the Company the right of use or occupancy of
any portion of the Real Property or any portion thereof, other than pursuant to
Permitted Encumbrances.
(10) There are no outstanding options or rights of first refusal
to purchase the Owned Real Property, or any portion thereof or interest therein.
The Company has not transferred any air rights or development rights relating to
the Owned Real Property.
(11) Except as set forth on Schedule 3.16(c)(xi) hereto, there are
no service contracts or other agreements relating to the use or operation of the
Real Property.
(12) Except as set forth on Schedule 3.16(c)(xii) hereto, no
portion of the Owned Real Property is located in a wetlands area, as defined by
Laws, or in a designated or recognized flood plain, flood plain district, flood
hazard area or area of similar characterization. No present commercial use of
any portion of the Owned Real Property will violate any requirement of the
United States Corps of Engineers or Laws relating to wetlands areas.
(13) All real property taxes and assessments that are due and
payable with respect to the Owned Real Property have been paid or will be paid
at or prior to Closing.
(14) All oral or written leases, subleases, licenses, concession
agreements or other use or occupancy agreements pursuant to which the Company
leases from any other party any Real Property, including all amendments,
renewals, extensions, modifications or supplements to any of the foregoing or
substitutions for any of the foregoing (collectively, the "Leases") are valid
and in full force and effect. The Company has provided Buyer with true and
complete copies of all of the Leases, all amendments, renewals, extensions,
modifications or supplements thereto, and all material correspondence related
thereto, including all correspondence pursuant to which any party to any of the
Leases declared a default thereunder or provided notice of the exercise of any
option granted to such party under such Lease. The Leases and the Company's
interests thereunder are free of all Liens, except for the Permitted
Encumbrances.
(15) Except as set forth on Schedule 3.16(c)(xv) hereto, none of
the Leases requires the consent or approval of any party thereto in connection
with the consummation of the transactions contemplated hereby.
3.17 Personal Property.
(1) Schedule 3.17(a) sets forth a complete and accurate list of
all tangible personal property ("Personal Property") included on the Interim
Balance Sheet and all other personal property owned or leased by the Company
with a current book value in excess of $5,000 both (i) as of the Balance Sheet
Date and (ii) acquired since the Balance Sheet Date, including in each case
true, complete and correct copies of leases for Personal Property and an
indication as to which Personal Property is currently owned, or was formerly
owned, by the Stockholder or business or personal affiliates of the Stockholder
or of the Company.
(2) The Company currently owns or leases all Personal Property
necessary to conduct the business and operations of the Company as they are
currently being conducted.
(3) All of the trucks and other Personal Property consisting of
material, machinery and equipment of the Company, including those listed on
Schedule 3.17(a), are in good working order and condition, ordinary wear and
tear excepted. All Personal Property leases set forth on Schedule 3.17(a) are in
full force and effect and constitute valid and binding agreements of the
Company, and the Company is not in breach of any of their terms, other than
Diminimus Violations. All Personal Property used by the Company that is material
to the operation of its business is either owned by the Company or leased under
an agreement listed on Schedule 3.17(a).
3.18 Intellectual Property.
(1) The Company is the true and lawful owner of, or is licensed or
otherwise possesses legally enforceable rights to use, the registered and
unregistered Marks (as defined below) listed on Schedule 3.18(a). Such schedule
lists (i) all of the Marks registered in the United States Patent and Trademark
Office ("PTO") or the equivalent thereof in any state of the United States or in
any foreign country, and (ii) all of the unregistered Marks, that the Company
now owns or uses in connection with its business. Except with respect to those
Marks shown as licensed on Schedule 3.18(a), the Company owns all of the
registered and unregistered trademarks, service marks, and trade names that it
uses. The Marks listed on Schedule 3.18(a) will not cease to be valid rights of
the Company by reason of the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby. For
purposes of this Section 3.18, the term "Xxxx" shall mean all right, title and
interest in and to any United States or foreign trademarks, service marks and
trade names now held by the Company, including any registration or application
for registration of any trademarks and services marks in the PTO or the
equivalent thereof in any state of the United States or in any foreign country,
as well as any unregistered marks used by the Company, and any trade dress
(including logos, designs, company names, business names, fictitious names and
other business identifiers) used by the Company in the United States or any
foreign country.
(2) The Company is the true and lawful owner of, or is licensed or
otherwise possesses legally enforceable rights to use, all rights in the Patents
listed (as defined below) on Schedule 3.18(b)(i) and in the Copyright (as
defined below) registrations listed on Schedule 3.18(b)(ii). Such Patents and
Copyrights constitute all of the Patents and Copyrights that the Company now
owns or is licensed to use. The Company owns or is licensed to practice under
all patents and copyright registrations that the Company now owns or uses in
connection with its business. For purposes of this Section 3.18, the term
"Patent" shall mean any United States or foreign patent to which the Company is
the owner of, or is licensed to use, as of the date of this Agreement, as well
as any application for a United States or foreign patent made by the Company;
the term "Copyright" shall mean any United States or foreign copyright owned or
licensed by the Company as of the date of this Agreement, including any
registration of copyrights, in the United States Copyright Office or the
equivalent thereof in any foreign county, as well as any application for a
United States or foreign copyright registration made by the Company.
(3) The Company is the true and lawful owner of, or is licensed or
otherwise possesses legally enforceable rights to use, all rights in the trade
secrets, franchises, or similar rights (collectively, "Other Rights") listed on
Schedule 3.18(c). Those Other Rights constitute all of the Other Rights that the
Company now owns or is licensed to use. The Company owns or is licensed to
practice under all trade secrets, franchises or similar rights that it owns,
uses or practices under.
(4) The Marks, Patents, Copyrights, and Other Rights listed on
Schedules 3.18(a), 3.18(b)(i), 3.18(b)(ii), and 3.18(c) are referred to
collectively herein as the "Intellectual Property." The Intellectual Property
owned by the Company is referred to herein collectively as the "Company
Intellectual Property." All other Intellectual Property is referred to herein
collectively as the "Third Party Intellectual Property." Except as indicated on
Schedule 3.18(d), the Company has no obligations to compensate any person for
the use of any Intellectual Property nor has the Company granted to any person
any license, option or other rights to use in any manner any Intellectual
Property, whether requiring the payment of royalties or not.
(5) The Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any Third Party Intellectual Property license,
sublicense or agreement described in Schedule 3.18(a), (b), or (c). No claims
with respect to the Company Intellectual Property or Third Party Intellectual
Property are currently pending or, to the knowledge of the Company, are
threatened by any person, nor, to the Company's knowledge, do any grounds for
any claims exist: (i) to the effect that the manufacture, sale, licensing or use
of any product as now used, sold or licensed or proposed for use, sale or
license by the Company infringes on any copyright, patent, trademark, service
xxxx or trade secret; (ii) against the use by the Company of any trademarks,
trade names, trade secrets, copyrights, patents, technology, know-how or
computer software programs and applications used in the Company's business as
currently conducted by the Company; (iii) challenging the ownership, validity or
effectiveness of any of the Company Intellectual Property or other trade secret
material to the Company; or (iv) challenging the Company's license or legally
enforceable right to use of the Third Party Intellectual Property. To the
Company's knowledge, there is no unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property by any third party.
Neither the Company nor any of its subsidiaries (x) has been sued or charged in
writing as a defendant in any claim, suit, action or proceeding which involves a
claim or infringement of trade secrets, any patents, trademarks, service marks,
or copyrights and which has not been finally terminated or been informed or
notified by any third party that the Company may be engaged in such infringement
or (y) has knowledge of any infringement liability with respect to, or
infringement by, the Company or any of its subsidiaries of any trade secret,
patent, trademark, service xxxx, or copyright of another.
3.19 Significant Customers; Material Contracts and Commitments.
(1) Schedule 3.19(a) sets forth a complete and accurate list of
all Significant Customers and Significant Suppliers. For purposes of this
Agreement, "Significant Customers" are the twenty (20) customers that have
effected the most purchases, in dollar terms, from the Company during the fiscal
year ended December 31, 1998 and "Significant Suppliers" are the twenty (20)
suppliers who supplied the largest amount by dollar volume of products or
services to the Company during the fiscal year ended December 31, 1998.
(2) Schedule 3.19(b) contains a complete and accurate list of all
contracts, commitments, leases, instruments, agreements, licenses or Permits,
written or oral, to which the Company is a party or by which it or its
properties are bound (including without limitation contracts with Significant
Customers, joint venture, limited liability company or partnership agreements,
contracts with any labor organizations, employment agreements, consulting
agreements, franchise, distribution and dealer agreements, loan agreements,
indemnity or guaranty agreements, bonds, mortgages, options to purchase land,
Liens, pledges or other security agreements) (i) to which the Company and any
affiliate of the Company or any officer, director or stockholder of the Company
are parties ("Related Party Agreements"); (ii) that may give rise to obligations
or liabilities exceeding, during the current term thereof, $10,000, or (iii)
that may generate revenues or income exceeding, during the current term thereof,
$10,000, excluding Ordinary Purchase Orders (as defined herein) (collectively
with the Related Party Agreements, the "Material Contracts"). The Company has
delivered to Buyer true, complete and correct copies of the Material Contracts.
"Ordinary Purchase Orders" shall be defined as purchase orders for inventory and
supplies and customer orders for products in the ordinary course of business
unless any such orders constitute "long-term", "blanket", "requirements",
"supply", "minimum volume" or similar contracts or commitments which shall not
be Ordinary Purchase Orders.
(3) Except to the extent set forth on Schedule 3.19(c), (i) none
of the Company's Significant Customers has canceled or substantially reduced or,
to the knowledge of the Company, is currently attempting or threatening to
cancel or substantially reduce, any purchases from the Company, (ii) none of the
Company's Significant Suppliers has canceled or substantially reduced or, to the
knowledge of the Company, is currently attempting to cancel or substantially
reduce, the supply of products or services to the Company, (iii) the Company has
complied with all of its commitments and obligations and is not in default under
any of the Material Contracts, and no notice of default has been received with
respect to any thereof, and (iv) there are no Material Contracts that were not
negotiated at arm's length. The Company has not received any material customer
complaints concerning its products and/or services, nor has it had any of its
products returned by a purchaser thereof except for normal returns consistent
with past history and those returns that would not result in a reversal of any
material revenue.
(4) Each Material Contract, except those terminated pursuant to
Section 5.6, is valid and binding on the Company and is in full force and effect
and is not subject to any default thereunder by any party obligated to the
Company pursuant thereto. All necessary consents, waivers and approvals of
parties to any Material Contracts that are required in connection with any of
the transactions contemplated hereby, or are required by any governmental agency
or other third party or are advisable in order that any such Material Contract
remain in effect without modification after the transactions contemplated by
this Agreement and without giving rise to any right to termination, cancellation
or acceleration or loss of any right or benefit ("Third Party Consents"), are
listed on Schedule 3.19(d).
(5) The Company is not a "women's business enterprise" ("WBE") or
"woman-owned business concern" as defined in 48 C.F.R. ss. 52.204-5, or a
"minority business enterprise" ("MBE") or "minority-owned business concern" as
defined in 48 C.F.R. ss. 52.219- 8, nor has it held itself out to be such to any
of its customers.
(6) The outstanding balance on all loans or credit agreements
either (i) between the Company and the Stockholder or any person in which the
Stockholder owns a material interest, or (ii) guaranteed by the Company for the
benefit of the Stockholder or any person in which the Stockholder owns a
material interest, are set forth in Schedule 3.19(f).
(7) The pledge, hypothecation or mortgage of all or substantially
all of the Company's assets (including, without limitation, a pledge of the
Company's contract rights under any Material Contract) will not, except as set
forth on Schedule 3.19(g), (i) result in the breach or violation of, (ii)
constitute a default under, (iii) create a right of termination under, or (iv)
result in the creation or imposition of (or the obligation to create or impose)
any lien upon any of the assets of the Company (other than a lien created
pursuant to the pledge, hypothecation or mortgage described at the start of this
Section 3.19(g)) pursuant to any of the terms and provisions of, any Material
Contract to which the Company is a party or by which the property of the Company
is bound.
3.20 Government Contracts.
(1) Except as set forth on Schedule 3.20, the Company is not a
party to any government contracts.
(2) The Company has not been suspended or debarred from bidding on
contracts or subcontracts for any agency or instrumentality of the United States
Government or any state or local government, nor, to the knowledge of the
Company, has any suspension or debarment action been threatened or commenced.
There is no valid basis for the Company's suspension or debarment from bidding
on contracts or subcontracts for any agency of the United States Government or
any state or local government.
(3) Except as set forth in Schedule 3.20, the Company has not
been, nor is it now being, audited or investigated by any government agency, or
the inspector general or auditor general or similar functionary of any agency or
instrumentality, nor, to the knowledge of the Company, has such audit or
investigation been threatened.
(4) The Company has no dispute pending before a contracting office
of, nor any current claim (other than the Accounts Receivable) pending against,
any agency or instrumentality of the United States Government or any state or
local government, relating to a contract.
(5) The Company has not, with respect to any government contract,
received a cure notice advising the Company that it is or was in default or
would, if it failed to take remedial action, be in default under such contract.
(6) The Company has not submitted any inaccurate, untruthful, or
misleading cost or pricing data, certification, bid, proposal, report, claim, or
any other information relating to a contract to any agency or instrumentality of
the United States Government or any state or local government.
(7) No employee, agent, consultant, representative, or affiliate
of the Company is in receipt or possession of any competitor or government
proprietary or procurement sensitive information related to the Company's
business under circumstances where there is reason to believe that such receipt
or possession is unlawful or unauthorized.
(8) Each of the Company's government contracts has been issued,
awarded or novated to the Company in the Company's name.
3.21 Inventory. The inventory of the Company consists of raw
materials and supplies, manufactured and purchased parts, goods in process and
finished goods, all of which is merchantable and fit for the purposes for which
it was procured or manufactured, and, except (i) as set forth on Schedule 3.21
hereto and (ii) for normal, insignificant waste quantities such as the outer
sheet of paper rolls being wrinkled or similarly damaged, consistent with
historical amounts thereof, none of which is slow-moving, obsolete, damaged, or
defective, subject to a GAAP reserve for inventory set forth on the face of the
Interim Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Company. The inventory set forth on the Interim Balance Sheet
excludes "billed not shipped" ("BNS") finished goods being held for customers;
such BNS amount of finished goods on the date of the Interim Balance Sheet is
set forth on Schedule 3.21.
3.22 Insurance. Schedule 3.22 sets forth a complete and accurate
list, as of the Balance Sheet Date, of all insurance policies carried by the
Company (identifying the type and amount of coverage, insurance carrier and
policy number) and all insurance loss runs or workmen's compensation claims
received for the past two (2) policy years. The Company has delivered to Buyer
true, complete and correct copies of all current insurance policies, all of
which are in full force and effect. All premiums payable under all such policies
have been paid and the Company is otherwise in compliance with the terms of such
policies (other than Diminimus Violations which have not and will not result in
cancellation of any insurance policy). To the knowledge of the Company, there
have been no threatened terminations of, or material premium increases with
respect to, any of such policies. Schedule 3.22 also sets forth a complete and
accurate description of all self-insurance programs maintained by the Company
and any reserves, stop-loss and administrative service arrangements relating
thereto.
3.23 Environmental Matters.
(1) The Company and any other person or entity for whose conduct
the Company is responsible, have no liability under, and are presently in
compliance with any and all environmental, health or safety-related laws,
regulations, ordinances or by-laws at the federal, state and local level whether
existing as of the date hereof, previously enforced or subsequently enacted (the
"Environmental Laws") applicable to the Real Property and any facilities and
operations thereon, except as listed in Schedule 3.23(a) and Diminimus
Violations.
(2) There exists no condition on, at, under or affecting the Owned
Real Property, which will cause a violation of any Environmental Law or result
in any damage, loss, cost, expense, claim, demand, order or liability to or
against the Company by any third party including, without limitation, any
condition resulting from the operation of the Company's business and/or the
operation of the business of any other property owner or operator in the
vicinity of the Owned Real Property and/or any activity or operation formerly
conducted by any person or entity on or off the Owned Real Property, except as
set forth in Schedule 3.23(b) and Diminimus Violations.
(3) The Company, and any other person or entity for whose conduct
the Company is or may be held responsible, have not generated, manufactured,
refined, transported, treated, stored, handled, disposed, transferred, produced,
or processed any pollutant, toxic substance, hazardous waste, solid waste,
hazardous material, hazardous substance, or oil as defined in or pursuant to any
Environmental Law including, without limitation, the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. ss. 6901 et seq., the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended, 42 U.S.C.
ss. 9601 et seq., the Federal Clean Water Act, as amended, 33 U.S.C. ss. 1251 et
seq. (collectively, "Hazardous Materials") at the Real Property, except in
compliance with all applicable Environmental Laws and except as listed in
Schedule 3.23(c) and for Diminimus Violations.
(4) The Company has no knowledge of the releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing, or dumping of Hazardous Materials into the soil, surface
waters, ground waters, land, stream sediments, surface or subsurface strata,
ambient air, sewer system, or any environmental medium at or from the Real
Property ("Environmental Condition") in violation of any Environmental Law
except as listed in Schedule 3.23(d).
(5) No Lien has been imposed on the Owned Real Property by any
governmental entity at the federal, state, or local level in connection with the
presence on or off the Owned Real Property of any Hazardous Material, except as
listed in Schedule 3.23(e).
(6) Except as set forth in Schedule 3.23(f), the Company has not,
and any other person or entity for whose conduct the Company is responsible has
not, (i) entered into or been subject to any consent decree, compliance order,
or administrative order with respect to the Real Property or any facilities or
operations thereon; (ii) received written notice under the citizen suit
provision of any of the Environmental Laws in connection with the Real Property
or any facilities or operations thereon which has not been dismissed, disposed
of or remediated; (iii) received any written request for information, notice,
demand letter, administrative inquiry, or formal or informal complaint or claim
with respect to any Environmental Condition relating to the Real Property or any
facilities or operations thereon; or (iv) been subject to or threatened with any
governmental or citizen enforcement action with respect to the Real Property or
any facilities or operations thereon, and the Company has no knowledge that any
of the above will be forthcoming.
(7) The Company has all Permits necessary pursuant to
Environmental Laws for its activities and operations at the Owned Real Property
and for any past or ongoing alterations or improvements at the Owned Real
Property, which permits as presently in effect are listed in Schedule 3.23(g).
(8) None of the following exists at the Owned Real Property: (1)
underground storage tanks, (2) asbestos-containing materials in any form or
condition, (3) materials or equipment containing polychlorinated biphenyls, (4)
lead paint, pipes or solder, or (5) landfills, surface impoundments or disposal
areas, except as listed in Schedule 3.23(h).
(9) The Company has provided to Buyer copies of all documents,
records and information in its possession or control concerning Environmental
Conditions affecting the Real Property or any facilities or operations thereon,
whether generated by Company or others, including, without limitation,
environmental audits, environmental risk assessments, or site assessments of the
Real Property and/or any adjacent property or other property in the vicinity of
the Real Property owned or operated by the Company or others, documentation
regarding off-site disposal of Hazardous Materials, spill control plans, and
environmental agency reports and correspondence. Furthermore, the Stockholder
shall have an ongoing obligation to immediately provide to Buyer copies of any
additional such documents that come into the possession or control of or become
available to the Stockholder subsequent to the date hereof and during the term
of the lease of the Owned Real Property to the Company.
(10) The Company has, at its sole cost and expense, taken or
caused to be taken all actions necessary to ensure that as of the Closing Date
the Real Property, all activities and operations thereon, and all alterations
and improvements thereto, comply with (1) any and all agreements with
governmental entities, court orders, and administrative orders regarding
Environmental Conditions and (2) to the Company's knowledge, all Environmental
Laws.
3.24 Labor and Employment Matters. With respect to employees of
and service providers to the Company:
(1) the Company is and has been in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including
without limitation any such laws respecting employment discrimination, workers'
compensation, family and medical leave, the Immigration Reform and Control Act,
and occupational safety and health requirements (except for Diminimus
Violations), and to the Company's knowledge, has not and is not engaged in any
unfair labor practice;
(2) there is not now any unfair labor practice complaint against
the Company pending or, to the Company's knowledge, threatened, before the
National Labor Relations Board or any other comparable authority and during the
past three years there has been no such complaint which has resulted in
liability to the Company;
(3) there is not now, nor within the past three (3) years has
there been, any labor strike, slowdown or stoppage actually pending or, to the
Company's knowledge, threatened, against the Company;
(4) Except for the collective bargaining agreement covering
certain of the Company's employees and referred to in Section 3.24(f) below, to
the Company's knowledge, no labor representation organization effort exists with
respect to the employees of the Company nor has there been any such activity
within the past three (3) years;
(5) Except as set forth on Schedule 3.24(e), no grievance or
arbitration proceeding arising out of or under collective bargaining agreements
is pending and, to the Company's knowledge, no claims therefor exist or have
been threatened;
(6) Certain employees of the Company are represented by the labor
union identified on Schedule 3.24(f) pursuant to the collective bargaining
agreement identified thereon, which agreement is in full force and effect and
has a scheduled expiration date identified on Schedule 3.24(f). Except as set
forth on Schedule 3.24(f), the employees of the Company are not and have never
been represented by any labor union, and no collective bargaining agreement is
binding and in force against the Company or currently being negotiated by the
Company; and
(7) all persons classified by the Company as independent
contractors do substantially satisfy and have substantially satisfied the
requirements of law to be so classified, and the Company has fully and
accurately reported their compensation on IRS Forms 1099 when required to do so.
3.25 Employee Benefit Plans.
(1) Definitions.
(1) "Benefit Arrangement" means any benefit arrangement,
obligation, custom, or practice, whether or not legally enforceable, to provide
benefits, other than salary or wages, as compensation for services rendered, to
present or former directors, employees, agents, or independent contractors,
other than any obligation, arrangement, custom or practice that is an Employee
Benefit Plan, including, without limitation, employment agreements, severance
agreements, executive compensation arrangements, incentive programs or
arrangements, sick leave, vacation pay, severance pay policies, plant closing
benefits, salary continuation for disability, consulting, or other compensation
arrangements, workers' compensation, retirement, deferred compensation, bonus,
stock option or purchase, stock incentive, "phantom stock", hospitalization,
medical insurance, life insurance, tuition reimbursement or scholarship
programs, any plans subject to Section 125 of the Code, and any plans providing
benefits or payments in the event of a change of control, change in ownership,
or sale of a substantial portion (including all or substantially all) of the
assets of any business or portion thereof, in each case with respect to any
present or former employees, directors, or agents.
(2) "Company Benefit Arrangement" means any Benefit
Arrangement sponsored or maintained by the Company or with respect to which the
Company has or may have any liability (whether actual, contingent, with respect
to any of its assets or otherwise) as of the Closing Date, in each case with
respect to any present or former directors, employees, or agents of the Company.
(3) "Company Plan" means, as of the Closing Date, any
Employee Benefit Plan for which the Company is the "plan sponsor" (as defined in
Section 3(16)(B) of ERISA) or any Employee Benefit Plan maintained by the
Company or to which the Company is obligated to make payments (including any
Multiemployer Plan to which the Company is obligated to make payments), in each
case with respect to any present or former employees of the Company.
(4) "Employee Benefit Plan" has the meaning given in
Section 3(3) of ERISA.
(5) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and all regulations and rules issued thereunder, or any
successor law.
(6) "ERISA Affiliate" means any person that, together with
the Company, would be or was at any time after January 1, 1991 and prior to the
Closing Date treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA and any general partnership of which the Company is or has
been after January 1, 1991 a general partner.
(7) "Multiemployer Plan" means any Employee Benefit Plan
described in Section 3(37) of ERISA.
(8) "Qualified Plan" means any Employee Benefit Plan
(other than any Multiemployer Plan) that meets, purports to meet, or is intended
to meet the requirements of Section 401(a) of the Code.
(ix) "Welfare Plan" means any Employee Benefit Plan
described in Section 3(1) of ERISA.
(2) Schedule 3.25(b) contains a complete and accurate list of all
Company Plans and Company Benefit Arrangements including without limitation,
Multiemployer Plans covering any employees of the Company on account of such
employees' employment by the Company. Schedule 3.25(b) specifically identifies
all Company Plans (if any) that are Qualified Plans.
(3) With respect, as applicable, to Employee Benefit Plans and
Benefit Arrangements:
(1) true, correct, and complete copies of all the
following documents with respect to each Company Plan and Company Benefit
Arrangement (other than Multiemployer Plans), to the extent in existence and
applicable, have been delivered to Buyer: (A) all documents constituting the
Company Plans and Company Benefit Arrangements, including but not limited to,
trust agreements, insurance policies, service agreements, and formal and
informal amendments thereto; (B) the most recent Forms 5500 or 5500C/R filed
with the IRS and any financial statements attached thereto and those for the
prior three (3) years; (C) the most recent Internal Revenue Service
determination letter and the most recent IRS determination letter that covered
the qualification of the entire plan (if different); (D) the most recent summary
plan description; (E) the most recent written descriptions of all non-written
agreements relating to any such plan or arrangement; (F) all reports submitted
to the Company with respect to any such plan or arrangement within the four (4)
years preceding the date of this Agreement by third-party administrators,
actuaries, investment managers, consultants, or other independent contractors;
(G) all notices that were given to the Company within the three (3) years
preceding the date of this Agreement by the IRS, Department of Labor, or any
other governmental agency or entity with respect to any such plan or
arrangement; and (H) employee manuals or handbooks containing personnel or
employee relations policies;
(2) the Universal Folding Box Co., Inc. 401(k) Thrift
Plan (the "Company 401(k) Plan") is the only Company Plan which is a Qualified
Plan. Except as disclosed on Schedule 3.25(c), the Company has never maintained
or contributed to another Qualified Plan. The Company 401(k) Plan qualifies
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and any trusts maintained pursuant thereto are exempt from federal
income taxation under Section 501 of the Code, and nothing has occurred with
respect to the design or operation of the Company 401(k) Plan that is likely to
cause the loss of such qualification or exemption or the imposition on the
Company of any liability, lien, penalty, or tax under ERISA or the Code;
(3) except as disclosed on Schedule 3.25(c), the Company
has never sponsored or maintained, had any obligation to sponsor or maintain, or
had any liability (whether actual or contingent, with respect to any of its
assets or otherwise) with respect to any Employee Benefit Plan subject to
Section 302 of ERISA or Section 412 of the Code or Title IV of ERISA (including
any Multiemployer Plan). With respect to each Multiemployer Plan which is a
Company Plan, the Company will have no withdrawal or other liability ("Closing
Date Withdrawal Liability") under Sections 4201, 4063 or 4064 of ERISA to any
Multiemployer Plan by reason of the consummation the transactions provided for
in this Agreement. With respect to any Company Plans previously maintained by
the Company subject to Title IV of ERISA other than Multiemployer Plans, the
plans were terminated properly, in accordance with their terms, and with all
necessary governmental approvals, and the Company has no actual, contingent, or
potential liability with respect to such plans. Within the six years ending as
of the date hereof, the Company has had no ERISA Affiliate. The Company has
never assumed, by contract, operation of law or otherwise, the assets,
investments, contribution or withdrawal liability, or contribution history of
any other business or entity, with respect to any Employee Benefit Plan,
including any Multiemployer Plan.
(4) each Company Plan and each Company Benefit
Arrangement (other than any Multiemployer Plan) has been maintained in
accordance with its constituent documents and with all applicable provisions of
the Code, ERISA and other laws, including federal and state securities laws
(other than Diminimus Violations);
(5) except as set forth on Schedule 3.25(c), there are
no pending, or to the knowledge of the Company, threatened claims or lawsuits
by, against, or relating to any Employee Benefit Plans or Benefit Arrangements
that are not Company Plans or Company Benefit Arrangements that would, if
successful, result in liability of the Company or the Stockholder, and other
than routine claims for benefits, no claims or lawsuits have been asserted,
instituted or, to the knowledge of the Company, threatened by, against, or
relating to any Company Plan or Company Benefit Arrangement (other than any
Multiemployer Plan), against the assets of any trust or other funding
arrangement under any such Company Plan (other than any Multiemployer Plan), by
or against the Company with respect to any Company Plan or Company Benefit
Arrangement, or by or against the plan administrator or any fiduciary of any
Company Plan or Company Benefit Arrangement (other than any Multiemployer Plan),
with respect to such Company Plan or Company Benefit Arrangement and the Company
does not have knowledge of any fact that could form the basis for any such claim
or lawsuit. The Company Plans and Company Benefit Arrangements (other than any
Multiemployer Plan) are not presently under audit or examination (nor has notice
been received of a potential audit or examination) by the IRS, the U.S.
Department of Labor, or any other governmental agency or entity, and no matters
are pending with respect to the Company 401(k) Plan under the IRS's Voluntary
Compliance Resolution program, its Closing Agreement Program, or other similar
programs;
(6) no Company Plan or Company Benefit Arrangement
contains any provision or is subject to any law that would prohibit the
transactions contemplated by this Agreement or that would give rise to any
vesting of benefits, severance, termination, or other payments or liabilities as
a result of the transactions contemplated by this Agreement;
(7) with respect to each Company Plan (other than any
Multiemployer Plan), there has occurred no non-exempt "prohibited transaction"
(within the meaning of Section 4975 of the Code) or transaction prohibited by
Section 406 of ERISA which is not exempt under Section 408 of ERISA or breach of
any fiduciary duty described in Section 404 of ERISA that would, if successful,
result in any liability for the Company, the Stockholder, or any officer,
director, or employee of the Company;
(8) all reporting, disclosure, and notice requirements
of ERISA and the Code have been fully and completely satisfied (other than
Diminimus Violations) with respect to each Company Plan and each Company Benefit
Arrangement (other than any Multiemployer Plan);
(9) all amendments and actions required to bring the
Company Benefit Plans into conformity with the applicable provisions of ERISA,
the Code, and other applicable laws have been made or taken (other than
Diminimus Violations), except to the extent such amendments or actions (A) are
not required by law to be made or taken until after the Closing Date or (B) are
disclosed on Schedule 3.25(c);
(10) all amounts that the Company is required to pay as
contributions to the Company Benefit Plans by the last day of the most recent
fiscal year of each of the plans ended before the date of this Agreement have
been paid; all benefits accrued under any unfunded Company Plan or Company
Benefit Arrangement will have been paid, accrued, or otherwise adequately
reserved in accordance with GAAP as of the Balance Sheet Date; and all monies
withheld from employee paychecks with respect to Company Plans have been
transferred to the appropriate plan, to the extent required under applicable
law, within 30 days of such withholding;
(11) except with respect to amounts held in the
Company's accounts and used to pay benefits under the Company's flexible
spending plan, the Company has not prepaid or prefunded any Welfare Plan through
a trust, reserve, premium stabilization, or similar account, nor does the
Company provide benefits through a voluntary employee beneficiary association as
defined in Section 501(c)(9);
(12) the Company has no liability (whether actual,
contingent, with respect to any of its assets or otherwise) with respect to any
Employee Benefit Plan that is not a Company Plan or Benefit Arrangement that is
not a Company Benefit Arrangement or with respect to any Employee Benefit Plan
sponsored or maintained (or which has been or was required under applicable law,
to be sponsored or maintained) by any ERISA Affiliate;
(13) all group health plans of the Company and its
ERISA Affiliates have been operated in material compliance with the requirements
of Sections 4980B and 5000 of the Code, and the Company has provided, or will
have provided before the Closing Date, to individuals entitled thereto all
required notices and coverage pursuant to Section 4980B with respect to any
"qualifying event" (as defined therein) that the Company knows occurred before
the Closing;
(14) except as set forth on Schedule 3.25(c), no
employee or former employee of the Company or beneficiary of any such employee
or former employee is, by reason of such employee's or former employee's
employment in the Company, entitled to receive any benefits, including, without
limitation, death or medical benefits (whether or not insured) for periods
following retirement or other termination of employment as described in
Statement of Financial Accounting Standards No. 106, other than (i) benefits
under a Qualified Plan, (ii) deferred compensation benefits accrued as
liabilities on the Interim Balance Sheet or (iii) continuation coverage mandated
under Section 4980B of the Code or other applicable law.
(4) Schedule 3.25(d) hereto contains the most recent quarterly
listing of workers' compensation claims of the Company and a schedule of
workers' compensation claims of the Company for the last three (3) fiscal years.
(5) Schedule 3.25(e) hereto sets forth an accurate list, as
of the date hereof, of all employees of the Company who earned more than $50,000
from the Company in 1998, all officers and all directors of the Company, and
lists all employment agreements with such employees, officers and directors and
the rate of compensation (and the portions thereof attributable to salary,
bonus, and other compensation respectively) of each such person, other than
compensation under any Company Plan or Company Benefits Arrangement, as of (a)
the Balance Sheet Date and (b) the date hereof.
(6) Except as set forth on Schedule 3.25(f), the Company has
not declared or paid any bonus compensation in contemplation of the transactions
contemplated by this Agreement.
3.26 Taxes.
(1) (1) The Company has timely filed all Tax Returns due on or
before the Closing Date, and all such Tax Returns are true, correct, and
complete in all material respects.
(2) The Company has paid in full all Taxes owed by it,
whether or not shown on any Tax Return.
(3) The amount of the Company's liability for unpaid
Taxes as of the Balance Sheet Date did not exceed the amount of the current
liability accruals for Taxes (excluding reserves for deferred Taxes) shown on
the Interim Balance Sheet, other than diminimus amounts.
(4) Except as set forth on Schedule 3.26, there are no
ongoing examinations or claims against the Company for Taxes, and no notice of
any audit, examination, or claim for Taxes, whether pending or threatened, has
been received.
(5) The Company has a taxable year ended on December 31,
in each year from and after the year commencing 1987.
(6) The Company currently utilizes the accrual method of
accounting for income Tax purposes and such method of accounting has not changed
in the past twenty-five (25) years. The Company has not agreed to, and is not
and will not be required to, make any adjustments under Code Section 481(a) as a
result of a change in accounting methods.
(7) The Company has withheld and paid over to the proper
governmental authorities all Taxes required to have been withheld and paid over,
and complied with all information reporting and backup withholding requirements,
including maintenance of required records with respect thereto, in connection
with amounts paid to any employee, independent contractor, creditor, or other
third party.
(8) Copies of (A) any notices, assessments, reports and
audits, Tax examinations which are pending, or which have not been fully
satisfied and settled, (B) extensions of statutory limitations for the
collection or assessment of unpaid Taxes and (C) the Tax Returns of the Company
for the last fiscal year have been delivered to Buyer.
(9) There are (and as of immediately following the
Closing there will be) no Liens on the assets of the Company relating to or
attributable to Taxes.
(10) To the Company's knowledge, there is no basis for
the assertion of any claim relating or attributable to Taxes which, if adversely
determined, would result in any Lien on the assets of the Company or otherwise
have an adverse effect on the Company or its business.
(11) None of the Company's assets are treated as "tax
exempt use property" within the meaning of Section 168(h) of the Code.
(12) There are no contracts, agreements, plans or
arrangements, including but not limited to the provisions of this Agreement,
covering any employee or former employee of the Company that, individually or
collectively, could give rise to the payment of any amount (or portion thereof)
by the Company that would not be deductible by the Company pursuant to Sections
280G, 404 or 162 of the Code.
(13) The Company has not filed any consent agreement
under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as defined in Section
341(f)(4) of the Code) owned by the Company.
(14) The Company is not, and has not been at any time, a
party to a tax sharing, tax indemnity or tax allocation agreement, and the
Company has not assumed the tax liability of any other person under contract.
(15) The Company is not, and has not been at any time, a
"United States real property holding corporation" within the meaning of Section
897(c)(2) of the Code.
(16) The Company's tax basis in its assets for purposes
of determining its future amortization, depreciation and other federal income
tax deductions is accurately reflected on the Company's tax books and records.
(17) The Company has not been a member of an affiliated
group filing a consolidated federal income Tax Return and does not have any
liability for the Taxes of another person under Treas. Reg. ss. 1.1502-6 (or any
similar provision of state, local or foreign law), as a transferee or successor,
by contract or otherwise.
(2) (1) The Company has, since January 1, 1987, been an S
Corporation within the meaning of Section 1361 of the Code and is currently an S
Corporation for the State of New Jersey corporate income tax purposes.
(2) The Company does not have a net recognizable
built-in gain within the meaning of Section 1374 of the Code.
(3) For purposes of this Agreement:
(1) the term "Tax" shall include any tax or similar
governmental charge, impost or levy (including without limitation income taxes,
franchise taxes, transfer taxes or fees, sales taxes, use taxes, gross receipts
taxes, value added taxes, employment taxes, excise taxes, ad valorem taxes, real
and personal property taxes, special assessments, water and sewer charges,
withholding taxes, payroll taxes, minimum taxes or windfall profit taxes)
together with any related penalties, fines, additions to tax or interest imposed
by the United States or any state, county, local or foreign government or
subdivision or agency thereof; and
(2) the term "Tax Return" shall mean any return
(including any information return), report, statement, schedule, notice, form,
estimate, or declaration of estimated tax relating to or required to be filed
with any governmental authority in connection with the determination,
assessment, collection or payment of any Tax.
3.27 Conformity with Law; Litigation.
(1) Except as set forth on Schedule 3.27(a) or any other
applicable disclosure schedule hereto and for Diminimus Violations, the Company
has not violated any law or regulation or any order of any court or federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over it.
(2) The Stockholder has not, at any time: (i) committed any
criminal act (except for minor traffic and similar violations); (ii) engaged in
acts of fraud, dishonesty, gross negligence or moral turpitude; (iii) filed for
personal bankruptcy; or (iv) been an officer, director, manager, trustee or
controlling shareholder of a company that filed for bankruptcy or Chapter 11
protection while Stockholder was in such position.
(3) Except as set forth on Schedule 3.27(c), there are no
claims, actions, suits or proceedings, pending or, to the knowledge of the
Company, threatened against or affecting the Company at law or in equity in any
court, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over it and no notice of any claim, action, suit or proceeding,
whether pending or threatened, has been received. There are no judgments,
orders, injunctions, decrees, stipulations or awards (whether rendered by a
court or administrative agency or by arbitration) against the Company or against
any of its properties or business.
3.28 Relations with Governments. The Company has not made, offered
or agreed to offer anything of value to any governmental official, political
party or candidate for government office, nor has it otherwise taken any action
that would cause the Company to be in violation of the Foreign Corrupt Practices
Act of 1977, as amended, or any law of similar effect.
3.29 Absence of Changes. Since the Balance Sheet Date, the Company
has conducted its business in the ordinary course and, except as contemplated
herein or as set forth on Schedule 3.29, there has not been:
(1) any change, by itself or together with other changes, that
has affected adversely, or is likely to affect adversely, the business,
operations, affairs, prospects, properties, assets, profits or condition
(financial or otherwise) of the Company;
(2) any damage, destruction or loss (whether or not covered by
insurance) adversely affecting the properties or business of the Company;
(3) any change in the authorized capital of the Company or in
its outstanding securities or any change in its ownership interests or any grant
of any options, warrants, calls, conversion rights or commitments;
(4) any declaration or payment of any dividend or distribution
in respect of the capital stock, or any direct or indirect redemption, purchase
or other acquisition of any of the capital stock of the Company;
(5) any increase in the compensation, bonus, schedule of sales
commissions or fee arrangements payable or to become payable by the Company to
any of its officers, directors, the Stockholder, employees, consultants or
agents, except for ordinary and customary bonuses and salary increases for
employees in accordance with past practice, nor has the Company entered into or
amended any Company Benefit Arrangement, Company Plan, employment, severance or
other agreement relating to compensation or fringe benefits;
(6) any work interruptions, labor grievances or claims filed,
or any similar event or condition of any character, materially adversely
affecting the business or future prospects of the Company;
(7) except as contemplated by this Agreement, any sale or
transfer, or any agreement to sell or transfer, any material assets, property or
rights of the Company to any person, including without limitation the
Stockholder and his affiliates;
(8) any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to the Company, including without limitation any
indebtedness or obligation of the Stockholder and his affiliates, provided that
the Company may negotiate and adjust bills in the course of good faith disputes
with customers in a manner consistent with past practice;
(9) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the assets,
property or rights of the Company or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(10) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside of
the ordinary course of business of the Company;
(11) any waiver of any material rights or claims of the
Company;
(12) any breach, amendment or termination of any material
contract, agreement, license, permit or other right to which the Company is a
party;
(13) any transaction by the Company outside the ordinary
course of business;
(14) any capital commitment by the Company, either
individually or in the aggregate, exceeding $10,000;
(15) any change in accounting methods or practices (including
any change in depreciation or amortization policies or rates) by the Company or
the revaluation by the Company of any of its assets;
(16) any creation or assumption by the Company of any Lien on
any asset (other than liens arising under existing lease financing arrangements
which are not material and liens for Taxes not yet due and payable and Permitted
Encumbrances);
(17) any entry into, amendment of, relinquishment, termination
or non- renewal by the Company of any contract, lease transaction, commitment or
other right or obligation requiring aggregate payments by the Company in excess
of $10,000, other than those in the ordinary course of business and, even if in
the ordinary course of business, except for Ordinary Purchase Orders, are
disclosed to Buyer prior to the closing if in excess of such $10,000 threshold;
(18) any loan by the Company to any person or entity,
incurring by the Company of any indebtedness, guaranteeing by the Company of any
indebtedness, issuance or sale of any debt securities of the Company or
guaranteeing of any debt securities of others;
(19) the commencement or notice or, to the knowledge of the
Company, threat of commencement, of any lawsuit or proceeding against, or
investigation of, the Company or any of its affairs; or
(20) negotiation or agreement by the Company or any officer or
employee thereof to do any of the things described in the preceding clauses (a)
through (s) (other than negotiations with Buyer and its representatives
regarding the transactions contemplated by this Agreement).
3.30 Disclosure. All lists, schedules, instruments, exhibits,
certificates and reports furnished to Buyer pursuant hereto are and will be
complete and accurate in all material respects. No representation, warranty or
confirmation by the Stockholder or the Company contained in this Agreement, in
the Schedules attached hereto (other than those provided by Buyer) or in any
certificate furnished or to be furnished by the Stockholder or the Company to
Buyer pursuant hereto contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact necessary in
order to make any statement contained herein or therein not misleading. There is
no fact known to the Stockholder that has specific application to the
Stockholder or the Company (other than general economic or industry conditions)
and that materially adversely affects or, as far as the Stockholder can
reasonably foresee, materially threatens, the assets, business, prospects,
financial condition, or results of operations of the Company that has not been
set forth in this Agreement or any Schedule hereto.
3.31 Predecessor Status; Etc. Schedule 3.31 sets forth a listing
of all legal names, trade names, fictitious names or other names (including,
without limitation, any names of divisions or operations) of the Company and all
of its predecessor companies during the five-year period immediately preceding
the Closing, including without limitation the names of any entities from whom
the Company has acquired material assets. During the five (5) year period
immediately preceding the Closing, (i) the Company has operated only under the
names set forth on Schedule 3.31 in the jurisdiction or jurisdictions set forth
on Schedule 3.31 and has not been a subsidiary or division of another
corporation or a part of an acquisition which was later rescinded and (ii) there
has not been any sale or spin-off of material assets of either the Company, any
other person or entity that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company.
3.32 Location of Chief Executive Offices. Schedule 3.32 sets forth
the location of the Company's chief executive offices.
3.33 Location of Equipment and Inventory. All inventory and
equipment held on the date hereof by the Company is located at one of the
locations shown on Schedule 3.33. For purposes of this Agreement, (a) the term
"inventory" shall mean any inventory of whatever nature owned by the Company as
of the date hereof, and, in any event, shall include, but shall not be limited
to, all merchandise, inventory and goods wherever located, together with all
goods, supplies, incidentals, packaging materials and any other items used or
usable in manufacturing, processing, packaging or shipping the same; in all
stages of production -- from raw materials through work-in-process to finished
goods; and (b) the term "equipment" shall mean any "equipment" of any nature
owned by the Company as of the date hereof, and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, fixtures and
vehicles owned by the Company as of the date hereof, wherever located, together
with all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto, but shall exclude Tangible Real Estate Assets.
3.34 Year 2000 Compliance. The Company has implemented plans and
procedures designed to enable the Company to be Year 2000 Compliant and ready by
June 30, 1999. To the extent the Company may not be Year 2000 Compliant and
Ready (as defined below) at any time prior to June 30, 1999, the Company has no
reason to believe that such status will result in a material adverse affect on
the Company's business, operations, affairs, prospects, properties, assets,
existing and potential liabilities, obligations, profits or condition (financial
or otherwise). In addition, the Company has no reason to believe that its
respective vendors, suppliers and customers are not Year 2000 Compliant and
Ready where the failure to be Year 2000 Compliant and Ready would have a
material adverse affect on the business, operations, affairs, prospects,
properties, assets, existing and potential liabilities, obligations, profits or
condition (financial or otherwise) of the Company. For purposes of this
Agreement, the term "Year 2000 Compliant and Ready," with respect to any person,
means that the hardware and software systems and components (including without
limitation imbedded microchips) owned, licensed or used by such person in
connection with its business operations will (without any additional material
cost or the need for material human intervention) (i) accurately process
information involving any and all dates before, during and/or after January 1,
2000, including without limitation recognizing and processing input, providing
output, storing information and performing date-related calculations, all
without creating any ambiguity as to the century and without any other error or
malfunction, (ii) operate accurately without material interruption or
malfunction on and in respect of any and all dates before, during and/or after
January 1, 2000 and (iii) where applicable, respond to and process two digit
year input without creating any ambiguity as to the century.
3.35 Acquisitions and Divestitures
(1) Schedule 3.35 lists and identifies all acquisitions or
investments in the business, assets, capital stock, partnership interests or
membership interests in any other entity or division thereof conducted at any
time during the past five (5) years by the Company, whether by purchase, merger,
consolidation, or any other form of transaction, as well as all divestitures or
sales of any business, subsidiary, or division of the Company or the assets,
capital stock, partnership interests or membership interests therein conducted
at any time by the Company, other than sales of inventory and dispositions of
Personal Property in the ordinary course of business (such transactions referred
to as "Acquisitions and Divestitures"); and for each Acquisition or Divestiture,
sets forth the date of the transaction, the interests acquired or sold, the
parties to the transaction and the consideration therefor, and identifies all
parties which have retained interests in any business acquired by the Company.
(2) Schedule 3.35 sets forth a listing of all asset purchase,
stock purchase, merger, consolidation, or other primary agreement relating to
each Acquisition and Divestiture as well as all promissory notes, guarantees,
security agreements, pledge agreements, preferred stock designations, and other
operative agreements relating to each Acquisition and Divestiture.
(3) Schedule 3.35 sets forth a listing of all agreements,
reports, audits, and documentation relating to purchase price adjustments,
post-closingaudits, post-closing amendments, revaluations or reappraisals
relating to all Acquisitions and Divestitures.
(4) Schedule 3.35 sets forth a listing of all earnout
agreements or other agreements relating to the payment of additional purchase
price or compensation, whether stock, cash or otherwise, based on post-closing
performance of businesses which are the subject of Acquisitions or Divestitures,
together with calculations, reports and statements of any amounts paid
thereunder.
(5) Except as specifically described in Schedule 3.35, there
are no claims for indemnification, adjustment, recission, disputes, arbitration,
accounting or breach or default, by the Company or any other party, under any
agreement relating to any Acquisition or Divestiture. All agreements relating to
Acquisitions or Divestitures are in full force and effect; there is no existing
default by the Company under any such agreement, and to the actual knowledge of
the Company, there is no existing default under any such agreement by any other
party thereto. The Company has made all payments required to be made to date
(whether in cash, stock or property) under all Acquisitions, and the Company has
received all payments required to be made to date (whether in cash, stock or
property) under all Divestitures.
(6) Schedule 3.35 identifies any Acquisition or Divestiture
involving a company or affiliate thereof which was the subject of any
bankruptcy, insolvency or reorganization proceedings; copies of the final court
orders approving the transaction (and the plan of reorganization if the
transaction was pursuant to such plan) have been delivered to the Buyer.
3.36 Product Lines
(1) Schedule 3.36 contains a complete and correct list of all
product types and product lines comprising the businesses of the Company and its
subsidiaries, identified by the specific subsidiary or division thereof. During
the past five (5) years, the Company never been the subject of any product
liability, safety, or false, deceptive or misleading advertising claims and has
never been the subject of any product safety investigation, proceeding, warning,
citation or other claim by any federal, state, foreign or local governmental
agency. The Company has not initiated any recall of any products or taken any
similar action (and none has been initiated by any government agency), and the
Company does not know of any basis for any such action which should have been
taken or may have to be taken in the future. The Company has not engaged in any
advertising practices which are deceptive, misleading, or otherwise in violation
of any legal requirements.
(2) Each item of merchandise included in the inventory of the
Company or which has been sold or shipped by the Company is safe for its
intended uses and conforms with all legal requirements and product safety and
testing codes and standards, and contains all required labels, disclosures and
warnings (other than labels placed on product at the customer's request), except
for Diminimus Violations.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
To induce the Company and the Stockholder to enter into this
Agreement and consummate the transactions contemplated hereby, Buyer represents
and warrants to the Company and the Stockholder as follows:
4.1 Due Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of New Jersey,
and is duly authorized and qualified to do business under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted, except where the
failure to be so qualified does not have a material adverse affect on the Buyer
or its business or assets. Workflow is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
4.2 Authorization; Validity of Obligations. (1) The representative
of Buyer executing this Agreement has all requisite corporate power and
authority to enter into and bind Buyer to the terms of this Agreement. Buyer has
the full legal right, power and corporate authority to enter into this Agreement
and the transactions contemplated hereby and to perform its obligations pursuant
to the terms of this Agreement. The execution and delivery of this Agreement by
Buyer and the performance by Buyer of the transactions contemplated herein has
been duly and validly authorized by the Board of Directors of Buyer and this
Agreement has been duly and validly authorized by all necessary corporate
action. This Agreement is a legal, valid and binding obligation of Buyer
enforceable in accordance with its terms, except where such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors rights generally.
(2) The representative of Workflow executing this Agreement
has all requisite corporate power and authority to enter into and bind Workflow
to the obligations set forth in Section 5.14 of this Agreement. Workflow has the
full legal right, power and corporate authority to enter into this Agreement and
the transactions contemplated hereby and to perform its obligations pursuant to
the terms of this Agreement. The execution and delivery of this Agreement by
Workflow and the performance by Workflow of its obligations contemplated herein
have been duly and validly authorized by the Board of Directors of Workflow and
this Agreement has been duly and validly authorized by all necessary corporate
action of Workflow. Workflow's obligations set forth in Section 5.14 hereof are
legal, valid and binding obligations of Workflow enforceable in accordance with
their terms, except where such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors rights generally.
4.3 No Conflicts. The execution, delivery and performance of this
Agreement, the consummation of the transactions herein contemplated hereby and
the fulfillment of the terms hereof will not:
(1) conflict with, or result in a breach or violation of the
Buyer's or Workflow's Certificate of Incorporation or By-Laws;
(2) conflict with, or result in a default (or would constitute
a default but for a requirement of notice or lapse of time or both) under any
document, agreement or other instrument to which Buyer or Workflow is a party,
or result in the creation or imposition of any lien, charge or encumbrance on
any of Buyer's or Workflow's properties pursuant to (i) any law or regulation to
which Buyer or Workflow or any of its property is subject, or (ii) any judgment,
order or decree to which Buyer or Workflow is bound or any of its property is
subject;
(3) result in termination or any impairment of any material
permit, license, franchise, contractual right or other authorization of Buyer or
Workflow; or
(4) violate any law, order, judgment, rule, regulation, decree
or ordinance to which Buyer or Workflow is subject, or by which Buyer or
Workflow is bound (including, without limitation, the HSR Act, together with all
rules and regulations promulgated thereunder).
4.4 Financial Statements. Workflow's financial statements,
contained in its report on Form 10-Q as filed with the Securities and Exchange
Commission for the quarter ended October 24, 1998 (the "Workflow Financial
Statements") are, except as noted in such interim financials, prepared in
accordance with GAAP consistently applied, subject to (i) normal year-end audit
adjustments, (ii) the exceptions stated on Schedule 4.4, and (iii) to the
omission of footnote information. The balance sheet included in the Workflow
Financial Statements presents fairly, in all material respects, the financial
condition of Workflow as of the date indicated thereon, and each of the income
statements included in such Workflow Financial Statements presents fairly, in
all material respects, the results of its operations for the periods indicated
thereon. A true and correct copy of such Workflow Form 10-Q has been delivered
to Stockholder.
4.5 Disclosure. All lists , schedules, instruments, exhibits,
certificates and reports furnished by Workflow or Buyer pursuant hereto are and
will be complete and accurate in all material respects. No representation,
warranty or confirmation by Buyer or Workflow, contained in this Agreement, in
Buyer's Schedules attached hereto or in any certificate furnished or to be
furnished by Buyer or Workflow to Stockholder pursuant hereto contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary in order to make any statement contained herein or
therein not misleading.
5. COVENANTS
5.1 Tax Matters.
(1) The following provisions shall govern the allocation of
responsibility as between the Company, on the one hand, and the Stockholder, on
the other, for certain tax matters following the Closing Date:
(1) The Stockholder shall prepare or cause to be
prepared and file or cause to be filed, within the time and in the manner
provided by law, all Tax Returns of the Company for all periods ending on or
before the Closing Date that are due after the Closing Date. Except as provided
in Section 5.1(d) (iii) hereto, the Stockholder shall pay to the Company on or
before the due date of such Tax Returns the amount of all Taxes shown as due on
such Tax Returns to the extent that such Taxes are not reflected in the current
liability accruals for Taxes (excluding reserves for deferred Taxes) shown on
the Company's books and records as of the Closing Date. Such Tax Returns shall
be prepared and filed in accordance with applicable law and in a manner
consistent with past practices and shall be subject to review and approval by
Buyer, which approval shall not be unreasonably withheld To the extent
reasonably requested by the Stockholder or required by law, Buyer and the
Company shall participate in the filing of any Tax Returns filed pursuant to
this paragraph.
(2) Except as set forth in Section 5.1(a)(v) with
respect to income Tax Returns for the Company for the 1999 calendar year, the
Company shall prepare or cause to be prepared and file or cause to be filed any
Tax Returns for Tax periods which begin before the Closing Date and end after
the Closing Date. The Stockholder shall pay to the Company within fifteen (15)
days after the date on which Taxes are paid with respect to such periods an
amount equal to the portion of such Taxes which relates to the portion of such
taxable period ending on the Closing Date to the extent such Taxes are not
reflected in the current liability accruals for Taxes (excluding reserves for
deferred Taxes) shown on the Company's books and records as of the Closing Date
or reflected in the Certified Closing Net Worth. For purposes of this Section
5.1, in the case of any Taxes that are imposed on a periodic basis and are
payable for a Taxable period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such Taxable
period ending on the Closing Date shall (x) in the case of any Taxes other than
Taxes based upon or related to income or receipts, be deemed to be the amount of
such Tax for the entire Taxable period multiplied by a fraction the numerator of
which is the number of days in the Taxable period ending on the Closing Date and
the denominator of which is the number of days in the entire Taxable period, and
(y) in the case of any Tax based upon or related to income or receipts be deemed
equal to the amount which would be payable if the relevant Taxable period ended
on the Closing Date. Any credits relating to a Taxable period that begins before
and ends after the Closing Date shall be taken into account as though the
relevant Taxable period ended on the Closing Date. All determinations necessary
to give effect to the foregoing allocations shall be made in a manner consistent
with prior practice of the Company.
(3) Buyer and the Company on one hand and Stockholder on
the other hand shall (A) cooperate fully, as reasonably requested, in connection
with the preparation and filing of Tax Returns pursuant to this Section 5.1 and
any audit, litigation or other proceeding with respect to Taxes; (B) make
available to the other, as reasonably requested, all information, records or
documents with respect to Tax matters pertinent to the Company for all periods
ending prior to or including the Closing Date; and (C) preserve information,
records or documents relating to Tax matters pertinent to the Company that are
in their possession or under their control until the expiration of any
applicable statute of limitations or extensions thereof.
(4) Except as provided in Section 5.1(d)(iii) hereto,
the Stockholder shall timely pay all transfer, documentary, sales, use, stamp,
registration and other Taxes and fees arising from or relating to the
transactions contemplated by this Agreement, and the Stockholder shall, at his
own expense, file all necessary Tax Returns and other documentation with respect
to all such transfer, documentary, sales, use, stamp, registration, and other
Taxes and fees. If required by applicable law, Buyer and the Company will join
in the execution of any such Tax Returns and other documentation.
(5) The Stockholder and Buyer agree that the Buyer's
purchase of the capital stock of the Company is controlled by Section
1362(e)(6)(D) of the Code and Treasury Regulation ss. 1362-3(b)(3) wherein the
1999 calendar tax year of the Company will be treated as two taxable years for
income Tax purposes and items of income, loss, deduction or credit shall be
assigned to the two short taxable years in accordance with the Company's normal
method of accounting under Treasury Regulation ss. 1.1362-3(b)(3) on a "per
books" method. The Stockholder and the Company shall file income Tax Returns for
the 1999 calendar tax year in a manner consistent with the foregoing.
(2) The Company shall, prior to the Closing, maintain its
status as an S Corporation for federal and state income tax purposes. The
Company and the Stockholder will not revoke the Company's election to be taxed
as an S corporation within the meaning of Sections 1361 and 1362 of the Code or
any corresponding provisions of state and local law. The Company and the
Stockholder will not take or allow any action to be taken (other than the sale
of the Stock pursuant to this Agreement) that would result in the termination
of the Company's status as a validly electing S corporation within the meaning
of Sections 1361 and 1362 of the Code.
(3) The parties agree as follows with respect to Section
338(h)(10) of the Code:
(1) At the Buyer's option, the Company and Stockholder
will join with Buyer in making a timely election under Section 338(h)(10) of the
Code (and any corresponding election under state, local, and foreign tax law)
with respect to the purchase and sale of the Stock hereunder (a "Section
338(h)(10) Election"). Stockholder will include any income, gain, loss,
deduction, or other tax item resulting from the Section 338(h)(10) Election on
their Tax Returns to the extent permitted by applicable law. Buyer and
Stockholder shall cooperate fully with each other in the making of such
election. In particular, Buyer shall be responsible for the preparation and
filing of all Tax Returns and forms (the "Section 338 Forms") required under
applicable tax law to be filed in connection with making the Section 338 (h)(10)
Election. Stockholder shall deliver to Buyer, within 45 days prior to the date
the Section 338 Forms are required to be filed, subject to Section 5.1(c)(iii)
hereto, such documents and other forms as reasonably requested by Buyer to
properly complete the Section 338 Forms.
(2) Buyer and Stockholder shall allocate the Purchase
Price in the manner required by Section 338 of the Code and the Treasury
Regulations promulgated thereunder. Such allocation shall be used for purposes
of determining the modified aggregate deemed sales price under Treasury
Regulations and in reporting the deemed sale of assets of the Company in
connection with the Section 338(h)(10) Election.
(3) Buyer shall initially prepare a completed set of IRS
Forms 8023 (and any comparable forms required to be filed under state, local or
foreign tax law) and any additional data or materials required to be attached to
Form 8023 pursuant to the Treasury Regulations promulgated under Section 338 of
the Code. Buyer shall deliver said forms to Stockholder for review no later than
45 days prior to the date the Section 338 Forms are required to be filed. In the
event the Stockholder objects to the manner in which the Section 338 Forms have
been prepared, the Stockholder shall notify Buyer within 10 days of receipt of
the Section 338 Forms of such objection, and the parties shall endeavor within
the next 15 days in good faith to resolve such dispute. If the parties are
unable to resolve such dispute within said 15 day period, Buyer and the
Stockholder shall submit such dispute to an independent accounting firm of
recognized national standing (the "Allocation Arbiter") selected by Buyer and
the Stockholder, which firm shall not be the regular accounting firm of Buyer or
the Stockholder. Promptly, but not later than 15 days after its acceptance of
appointment hereunder, the Allocation Arbiter will determine (based solely on
presentations of Buyer and the Stockholder and not by independent review) only
those matters in dispute and will render a written report as to the disputed
matters and the resulting preparation of the Section 338 Forms shall be
conclusive and binding upon the parties.
(4) No new elections with respect to Taxes, or any
changes in current elections with respect to Taxes, affecting the Company after
the Section 338(h)(10) Election shall be made after the date of this Agreement
without the prior written consent of the Buyer and the Stockholder.
(4) Buyer and Stockholder agree as follows with respect to the
allocation of Tax liabilities:
(1) In the event that the Section 338(h)(10) Election is
effectively implemented at the request of Buyer, the Cash Purchase Price, as
adjusted pursuant to Sections 1.2 and 1.3, shall be increased by an amount (the
"Purchase Price Increase"), equal to the additional tax liability of the
Stockholder by reason of the gain realized by the Company as a result of the
sale of its assets deemed to have taken place by reason of the Section
338(h)(10) Election determined in accordance with the hypothetical formula of
incremental taxes set forth on Schedule 5.1(d) attached hereto, but utilizing
actual numbers as at the Closing Date determined by the Post-Closing Audit as
finally determined pursuant to Section 1.3 and reflecting an appraisal of the
fixed assets of the Company to be obtained by Buyer, and Buyer shall pay such
Purchase Price Increase to Stockholder by wire transfer to such account or
accounts as Stockholder shall designate, when Stockholder has executed and
delivered the Form 8023 as finally determined pursuant to Section 5.3(c)(iii)
above and any other necessary forms to implement the Section 338(h)(10)
Election.
(2) Stockholder shall be responsible for all federal
income Taxes attributable to the Company for periods ending on or before the
Closing Date (including any Tax resulting from the Section 338(h)(10) Election).
Buyer shall be responsible for all federal income Taxes of the Company for
periods ending after the Closing Date.
(3) Stockholder shall be liable for any individual or
personal state, local, or foreign Tax imposed directly on Stockholder (as
distinguished from Taxes imposed upon the Company) attributable to an election
under state, local, or foreign law similar to the election available under
Section 338(h)(10) of the Code. Stockholder will be liable for nonfederal income
Taxes of the Company (other than those imposed on the Company and attributable
to an election similar to Section 338(h)(10) of the Code) for periods ending on
or before the Closing Date, and the Buyer and Company will be liable for
nonfederal income Taxes of the Company for periods ending after the Closing
Date.
(5) The Stockholder shall deliver at the Closing, a certification,
which shall constitute a representation and warranty of Stockholder, that the
amount of the Company's liability for unpaid Taxes for all periods or portions
thereof ending on or before the Closing Date will not exceed the amount of the
current liability accruals for Taxes(excluding reserves for deferred Taxes) as
such reserves are reflected on the books and records of the Company on the
Closing Date, other than diminimus amounts.
5.2 Accounts Receivable.
(1) On the Closing Date, the Company will deliver to Buyer a
complete and accurate list, as of a date not more than two (2) business days
prior to the Closing Date, of the Accounts Receivable as at such date, including
an aging of such Accounts Receivable, showing amounts due in thirty(30) day
aging categories, and Stockholder shall deliver a certification, which shall
constitute a representation and warranty of Stockholder, that all such Accounts
Receivable represent valid obligations arising from sales actually made or
services actually performed in the ordinary course of business, that such
Accounts Receivable are collectible net of any reserves for bad debts, returns
and allowances shown on the Company's books and records(which reserves are
adequate and calculated consistent with past practice), and that there is no
contest, claim or right of set-off, other than rebates and returns in the
ordinary course of business, under any contract with any obligor of an Account
Receivable relating to the amount or validity of such Account Receivable.
(2) In the event that all Accounts Receivable are not collected in
full (net of reserves specified in Section 3.14) within one hundred twenty (120)
days after the Closing then, at the request of the Company or Buyer, the
Stockholder shall (x) during the period from one hundred twenty (120) days after
the Closing to one hundred eighty (180) days after the Closing utilize his
reasonable efforts to assist the Company in the collection of such unpaid
Accounts Receivable, and (y) on the date which one hundred ninety (190) days
after the Closing, pay the Company an amount equal to the dollar amount of all
Accounts Receivable not collected in full (net of reserves, specified in Section
3.14) as at one hundred eighty (180) days after Closing, and upon receipt of
such payment the Company shall assign to the Stockholder making the payment all
rights with respect to the uncollected Accounts Receivable giving rise to the
payment and shall also thereafter promptly remit any excess collections received
by it with respect to such assigned Accounts Receivable. If and when the amount
subsequently collected by Stockholder with respect to the assigned Accounts
Receivable equals (i) the payment made therefor plus (ii) the costs and expenses
reasonably incurred by the Stockholder in the collection of such assigned
Accounts Receivable, the Stockholder shall reassign to the Company all of such
assigned Accounts Receivable as have not been collected in full by the
Stockholder and shall also thereafter promptly remit any excess collections
received by them. Upon the written request of the Company, the Stockholder shall
provide it with a status report concerning the collection of assigned Accounts
Receivable.
5.3 Title Insurance and Surveys.
(1) With respect to each of the Owned Real Property, the
Stockholder will obtain and deliver or cause to be delivered to Buyer (i) as
soon as practicable after the date of this Agreement, a current title commitment
by First American Title Insurance Company or other nationally recognized title
insurance company (the "Title Company"), either directly or through its agent,
disclosing the condition of title to the subject fee estate and copies of all
easements, rights of way, and restrictions of record described therein with
respect thereto (the "Title Commitment"), and (ii) at or prior to Closing, an
ALTA Owner's Policy of Title Insurance on a form customarily used in the state
in which such Owned Real Property is located, issued at ordinary premium rates
by the Title Company, insuring the leasehold interest of the Buyer or its
designee , in an amount equal to the fair market value of the leasehold estates
in the Owned Real Property as created under the Closing Leases (as reasonably
determined by Buyer), insuring title to such leasehold estates to be in the name
of the party designated by Buyer on Schedule 5.3(a), subject only to and
containing no exceptions other than the Permitted Encumbrances (each a "Title
Policy").
(2) Each Title Policy obtained for the benefit of Buyer or its
designee pursuant to this Agreement shall, except to the extent that the Title
Company in the state in which the applicable property is located are not
lawfully permitted to issue such policies and subject to Section 5.3(e) below,
(i) insure title to the leasehold estate in the subject Owned Real Property
described in such Policy (subject to Permitted Encumbrances) and all recorded
easements benefitting such property, (ii) contain an endorsement insuring that
the property described in the policy is the same real estate shown in the survey
delivered pursuant to Section 5.3(c) below with respect to such property, (iii)
contain a "contiguity" endorsement with respect to any property consisting of
more than one record parcel, as well as insuring the contiguity of the Parking
Lot Real Property with the Main Facility Real Property, except for
non-contiguous portions between the Parking Lot Real Property and the Main
Facility Real Property that in the aggregate (assuming that any non-contiguous
portion would constitute a bar or prohibition to the use of or access on or over
such portion) do not and would not interfere, in any material adverse respect,
with the existing use or operation (including parking and pedestrian and
vehicular access) of the Main Facility Real Property and/or the Parking Lot Real
Property, (iv) provide coverage against mechanics' and materialmen's Liens
arising out of the construction, repair or alteration of any of the subject
Owned Real Property prior to the date of Closing, (v) contain an endorsement
insuring that no covenant, restriction or agreement affecting title to the
subject Owned Real Property is violated by the existing use thereof or
improvements located thereon and that no future violation of any such covenant,
restriction or agreement will result in a forfeiture or loss of title of the
insured's interest, (vi) contain any other special endorsements reasonably
required by Buyer, including, without limitation, an endorsement, if available
in the State of New Jersey, insuring that the improvements included in such
Owned Real Property are a permitted use under the zoning designation applicable
to such Owned Real Property, and (vii) not be subject to any survey exception
containing matters other than the Permitted Encumbrances.
(3) With respect to each Owned Real Property interest as to which
a Title Policy is to be procured pursuant to this Agreement, the Stockholder
will obtain and deliver to Buyer as soon as practicable after the date of this
Agreement and before the Closing a current survey of the relevant parcel,
prepared and certified to Buyer, the Company and Stockholder and to the Title
Company by a licensed surveyor and conforming to current ALTA Minimum Detail
Requirements for Land Title Surveys, disclosing the location of all
improvements, easements, party walls, utility lines, and other Encumbrances
affecting such Owned Real Property and showing access affirmatively to a public
street or road.
(4) It shall be conditions of Buyer's obligation to consummate the
transactions contemplated hereby that with respect to each Owned Real Property
(i) all Structures are located within the boundary lines of such Owned Real
Property except for encroachments which do not materially and adversely
interfere with the existing use or operation of any of the Owned Real Property
and which encroachments the Title Company will insure Buyer or its designee,
without additional premium or charge, may remain as long as the so encroaching
Structure remains, (ii) no structures, facilities or other improvements on any
parcel adjacent to the Real Property encroach onto any portion of the Owned Real
Property except for such encroachment(s) as do not interfere, in any material
adverse respect, with the existing use or operation of any of the Owned Real
Property, (iii) the Structures do not encroach on any easement which burdens or
benefits any portion of the Owned Real Property except for such encroachments as
do not interfere, in any material adverse respect, with any existing use,
operation or benefits of such easement, (iv) all Owned Real Property
constituting more than one parcel is contiguous, and that the Parking Lot Real
Property is contiguous with the Main Facility Real Property, such contiguity to
be without gaps or gores except for such non-contiguity between the Parking Lot
Real Property and the Main Facility Real Property that in the aggregate
(assuming that any non-contiguous portion would constitute a bar or prohibition
to the use of or access upon or over such portion) does and would not interfere,
in any material adverse respect, with the existing use and operation (including
parking and pedestrian and vehicular access) of the Main Facility Real Property
and/or the Parking Lot Real Property, and (v) the survey to be delivered to
Buyer pursuant to Section 5.3(c) above shall show that the Main Facility Real
Property and the Parking Lot Real Property to be leased pursuant to the Closing
Leases constitute, in all material respects, the same property shown outlined in
the diagram attached hereto as Schedule 5.3(d) and made a part hereof.
(5) The Stockholder shall be responsible for all costs associated
with obtaining the title commitments and surveys described above, and if Buyer,
in its sole discretion, elects to purchase title insurance, Buyer shall be
responsible for the costs of purchasing the Title Policies described above and
endorsements thereto including all costs in connection with the endorsements
required under clause (vi) of Section 5.3(b) above; provided, however, that it
shall be a further condition of Buyer's obligation to consummate the
transactions contemplated hereby that all title policy endorsements referred to
in this Section 5.3 (other than the endorsements referred to in clause (vi) of
Section 5.3(b) above) be issued by the Title Company to Buyer or its designee
without additional premium or charge to Buyer or its designee.
5.4 Employee Benefit Plans. With respect to any Company Plan or
Company Benefit Arrangement that is not terminated or merged into an existing
Workflow Plan or benefit arrangement substantially contemporaneously with the
Closing, the Stockholder shall use reasonable efforts to cooperate with the
Company, Buyer and Workflow during the one (1) year period beginning on the
Closing Date to assist the Company, Buyer and Workflow in their administration
and maintenance of such Company Plan or Company Benefit Arrangement.
5.5 Related Party Agreements. Except for those leases or
arrangements set forth on Schedule 5.5, the Company and/or the Stockholder, as
the case may be, shall terminate any Related Party Agreements which Buyer
requests the Company or Stockholder to terminate. Without limiting the
generality of the foregoing, all indebtedness for borrowed money owed by the
Company to the Stockholder shall be extinguished prior to the Closing Date by
payment of such amounts to the Stockholder, provided however, that any funds
borrowed by the Company to enable such payment, together with those used to
provide distributions to Stockholder, do not cause the maximum Accepted
Indebtedness to be exceeded.
5.6 Cooperation.
(1) The Company, Stockholder, and Buyer shall each deliver or
cause to be delivered to the other on the Closing Date, and at such other times
and places as shall be reasonably agreed to, such instruments as the other may
reasonably request for the purpose of carrying out this Agreement. In connection
therewith, if required, the president or chief financial officer of the Company
shall execute any management representation letters and similar documentation
reasonably required by Buyer's independent public accountants (in connection
with such accountant's audit of the Company) or the Nasdaq National Market.
(2) The Stockholder and the Company shall cooperate and use their
reasonable efforts to have the present officers, directors and employees of the
Company cooperate with Buyer on and after the Closing Date in furnishing
information, evidence, testimony and other assistance in connection with any
filing obligations, actions, proceedings, arrangements or disputes of any nature
with respect to matters pertaining to all periods prior to the Closing Date.
(3) Each party hereto shall cooperate in obtaining all consents
and approvals required under this Agreement to effect the transactions
contemplated hereby
(4) In order to calculate the Certified Closing Net Worth and the
Actual Company Net Worth, (i) the physical inventory taken of the Company's
inventory in December, 1998 shall be utilized as a baseline and brought forward
to the Closing Date for use in the computing the Certified Closing Net Worth and
(ii) an additional physical inventory shall be taken shortly after the Closing
Date and rolled back to the Closing Date for purposes of the Post-Closing Audit
and computation of the Actual Company Net Worth. The value of the inventory will
be calculated in accordance with GAAP (lower of cost or market on a first-in,
first-out (FIFO) basis), and will include, in all material respects, all
inventory owned by the Company, but will exclude BNS goods.
5.7 Access to Information; Confidentiality; Public Disclosure.
(1) Between the date of this Agreement and the Closing Date, the
Company will afford to the officers and authorized representatives of Buyer
access to (i) all of the sites, properties, books and records of the Company and
(ii) such additional financial and operating data and other information as to
the business and properties of the Company as Buyer may from time to time
reasonably request, including without limitation, access upon reasonable request
to the Company's employees, customers, vendors, suppliers and creditors for due
diligence inquiry. No information or knowledge obtained in any investigation
pursuant to this Section 5.7 shall affect or be deemed to modify any
representation or warranty contained in this Agreement or the conditions to the
obligations of the parties to consummate the transactions contemplated herein.
(2) Buyer recognizes and acknowledges that it had in the past,
currently has, and in the future may possibly have, access to certain
confidential information of the Company, such as lists of customers, operational
policies, and pricing and cost policies that are valuable, special and unique
assets of the Company's business. Buyer agrees that, unless there is a Closing,
it will not use any of such information or disclose confidential information
with respect to the Company to any person, firm, corporation, association or
other entity for any purpose or reason whatsoever, except to authorized
representatives of the Company and to counsel and other advisers, provided that
such advisers agree to the confidentiality provisions of this Section 5.7(b),
unless (i) such information becomes known to the public generally through no
fault of Buyer, (ii) disclosure is required by law or the order of any
governmental authority under color of law, or (iii) the disclosing party
reasonably believes that such disclosure is required in connection with the
defense of a lawsuit against the disclosing party, provided, that prior to
disclosing any information pursuant to clause (i), (ii) or (iii) above, Buyer
shall give prior written notice thereof to the Company and provide the Company
with the opportunity to contest such disclosure and shall cooperate with efforts
to prevent such disclosure.
(3) Buyer will give Stockholder an opportunity to review in
advance and give comments on any press releases or public announcements made by
Buyer regarding the transactions contemplated by this Agreement. From and after
such time as Buyer makes such press release or public announcement, Stockholder
and the Company may also make public disclosures consistent with those made by
Buyer.
(4) Except as provided in Section 5.7(c) above, prior to the
Closing Date, neither the Company nor the Stockholder shall make any disclosure
(whether or not in response to an inquiry) of the subject matter of this
Agreement unless previously approved by Buyer in writing which approval shall
not be unreasonably withheld; provided, however, that the Company may make such
disclosure to its professional advisors, lenders, executive officers and parties
from whom the Company must obtain consents or approvals in connection with the
transactions contemplated hereby. Buyer agrees to keep the Company and the
Stockholder apprised in advance of any disclosure of the subject matter of this
Agreement by Buyer prior to the Closing Date.
5.8 Conduct of Business Pending Closing. Between the date hereof
and the Closing Date, the Company will (except as otherwise expressly set forth
herein or as requested or agreed by Buyer):
(1) carry on its business in substantially the same manner as it
has heretofore and not introduce any material new method of management,
operation or accounting;
(2) maintain its properties and facilities, including those held
under leases, in as good working order and condition as at present, ordinary
wear and tear excepted;
(3) perform all of its obligations under agreements relating to or
affecting its respective assets, properties or rights (other than Diminimus
Violations);
(4) keep in full force and effect present insurance policies or
other comparable insurance coverage;
(5) use commercially reasonable efforts to maintain and preserve
its business organization intact, retain its present officers and key employees
and maintain its relationships with suppliers, vendors, customers, creditors and
others having business relations with it;
(6) maintain compliance with all Permits, Laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar governmental authorities (other than Diminimus
Violations);
(7) except as expressly contemplated hereby, maintain present debt
and lease instruments and not enter into new or amended debt or lease
instruments; and
(8) maintain present salaries and commission levels for all
officers, directors, employees, agents, representatives and independent
contractors, except for ordinary and customary bonuses and salary increases for
employees (other than the Stockholder) in accordance with past practice.
(9) provide Buyer with a copy of any Tax Returns (other than any
estimated tax returns, payroll tax returns or sales tax returns) or amendments
to a Tax Return filed on behalf of the Company on or after the date hereof.
5.9 Prohibited Activities. Between the date hereof and the Closing
Date, except as expressly contemplated hereby, the Company will not, without the
prior written consent of Buyer:
(1) make any change in its Articles of Incorporation or Bylaws, or
authorize or propose the same;
(2) issue, deliver or sell, authorize or propose the issuance,
delivery or sale of any securities, options, warrants, calls, conversion rights
or commitments relating to its securities of any kind, or authorize or propose
any change in its equity capitalization, or issue or authorize the issuance of
any debt securities;
(3) declare or pay any dividend, or make any distribution (whether
in cash, stock or property) in respect of its stock whether now or hereafter
outstanding, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or purchase, redeem or
otherwise acquire or retire for value any shares of its stock; provided however,
that Stockholder shall be permitted to cause the Company to make cash
distributions to Stockholder from funds drawn down on the Company's existing
banking lines or from cash on hand, limited to an aggregate amount of
distributions and funds used in repayment of the Company's debt to Stockholder
which would not cause the maximum Accepted Indebtedness to be exceeded;
(4) except as expressly contemplated hereby, enter into any
contract or commitment or incur or agree to incur any liability or make any
capital expenditures, or guarantee any indebtedness, except (i) in the ordinary
course of business and consistent with past practice in an amount not in excess
of $10,000 and (ii) purchase orders with customers and suppliers in the ordinary
course of business.
(5) except to the extent permitted by Section 5.8(h) above,
increase the compensation payable or to become payable to the Stockholder or any
officer, director, employee, agent, representative or independent contractor;
make any bonus or management fee payment to any such person; make any loans or
advances; adopt or amend any Company Plan or Company Benefit Arrangement; or
grant any severance or termination pay;
(6) create or assume any mortgage, pledge or other lien or
encumbrance upon any assets or properties whether now owned or hereafter
acquired;
(7) sell, assign, lease, pledge or otherwise transfer or dispose
of any property or equipment except in the ordinary course of business
consistent with past practice;
(8) acquire or negotiate for the acquisition of (by merger,
consolidation, purchase of a substantial portion of assets or otherwise) any
business or the start-up of any new business, or otherwise acquire or agree to
acquire any assets that are material, individually or in the aggregate, to the
Company;
(9) merge or consolidate or agree to merge or consolidate with or
into any other corporation;
(10) waive any material rights or claims of the Company, provided
that the Company may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice;
(11) commit a breach of or amend or terminate any material
agreement, permit, license or other right;
(12) enter into any other transaction (i) with a party affiliated
with the Stockholder or the Company or any officer or director of the Company
that is not negotiated at arm's length or (ii) outside the ordinary course of
business consistent with past practice or (iii) prohibited hereunder;
(13) commence a lawsuit other than for routine collection of bills
(provided however, that Buyer will not unreasonably withhold its consent to such
commencement);
(14) revalue any of its assets, including without limitation,
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business consistent with past practice;
(15) make any tax election other than in the ordinary course of
business and consistent with past practice, change any tax election, adopt any
tax accounting method other than in the ordinary course of business and
consistent with past practice, change any tax accounting method or enter into
any closing agreement or settle any tax claim or assessment;
(16) take, or agree (in writing or otherwise) to take, any of the
actions described in Sections 5.9(a) through (o) above, or any action which
would make any of the representations and warranties of the Company and the
Stockholder contained in this Agreement untrue or result in any of the
conditions set forth in Articles 6 and 7 not being satisfied; or
(17) lend any funds to employees of the Company such that the
aggregate amount outstanding at any one time exceeds $25,000.
5.10 Exclusivity. None of the Stockholder, the Company, or any
agent, officer, director or any representative of the Company or the Stockholder
will, during the period commencing on the date of this Agreement and ending with
the earlier to occur of the Closing or the termination of this Agreement in
accordance with its terms, directly or indirectly: (a) solicit, encourage or
initiate the submission of proposals or offers from any person for, (b) engage
in any discussions pertaining to, or (c) furnish any information to any person
other than Buyer relating to, any acquisition or purchase of all or a material
amount of the assets of, or any equity interest in, the Company or a merger,
consolidation or business combination of the Company. In addition to the
foregoing, if the Company or the Stockholder receives any unsolicited offer or
proposal, or has actual knowledge of any unsolicited offer or proposal, relating
to any of the above, the Company or the Stockholder shall immediately notify
Buyer thereof, including the identity of the party making such offer or proposal
and the specific terms of such offer or proposal.
5.11 Notification of Certain Matters. Each party hereto shall give
prompt notice to the other parties hereto of (a) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of it contained herein to be
untrue or inaccurate in any material respect at or prior to the Closing and (b)
any material failure of such party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by such party hereunder.
The delivery of any notice pursuant to this Section 5.11 shall not, without the
express written consent of the other parties be deemed to (x) modify the
representations or warranties hereunder of the party delivering such notice, (y)
modify the conditions set forth in Articles 6 and 7, or (z) limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
5.12 Notice to Bargaining Agents. Prior to the Closing Date, the
Company shall satisfy any requirement for notice of the transactions
contemplated by this Agreement under applicable collective bargaining
agreements, if requested by Buyer, and shall provide Buyer with proof that any
required notice has been sent.
5.13 New Jersey ISRA Compliance.
(1) Stockholder, Fee Owner and the Company shall comply with the
provisions of the New Jersey Industrial Site Recovery Act ("ISRA"), N.J.S.A.
Section 13:1k-6 et seq., including, without limitation, submitting all required
filings and undertaking all required investigations and remedial actions, with
respect to the transactions provided for in this Agreement, including the sale
of the stock of the Company to Buyer and the distribution by the Company of the
Owned Real Property to the Fee Owner. All costs and expenses relating to ISRA
compliance shall be borne by the Stockholder (and not the Company), provided
however, that if for convenience any of such costs and expenses are paid by,
charged to, or advanced by the Company, such amounts will reduce the calculation
of the Certified Closing Net Worth and the Actual Company Net Worth. Buyer will
cooperate with Stockholder and the Company in seeking ISRA compliance with
respect to the purchase of shares of the Company, but all of Buyer's out of
pocket expenses relating thereto, shall be reimbursed by Stockholder at the
Closing; such reimbursement of Buyer's pre-Closing expenses shall be subject to
a maximum amount of $5,000.
(2) From and after the execution and delivery of this Agreement,
Stockholder and the Company shall file (if not already filed prior to the date
hereof) and shall continue to diligently prosecute, a General Information Notice
and Preliminary Assessment Report with the New Jersey Department of
Environmental Protection ("NJDEP") and provide any additional filings, studies,
information and documentation requested by NJDEP under applicable legal
requirements. Unless it appears that an NFA(as defined below) will be readily
issued by NJDEP prior to the Outside Date(as defined in Section 10.1(b) hereof),
then Stockholder and the Company shall file and diligently prosecute an
application for a Remediation Agreement (as defined below) and prosecute the
same with the objective of having such Remediation Agreement approved by the
NJDEP prior to the Outside Date. Stockholder and the Company shall file with or
obtain from the NJDEP the items set forth on Schedule 5.13 (b) by no later than
the dates set forth on such schedule.
(3) On or prior to the Closing Date, as a condition precedent to
the obligations of Buyer to consummate the transactions under this Agreement,
either:
(1) the Stockholder and the Company shall have obtained
from the NJDEP either (i) a negative declaration, (ii) a no further action
letter ("NFA"), or (iii) a letter of non-applicability ("LNA"), with respect to
the Owned Real Property; or
(2) the Stockholder and NJDEP, shall have entered into a
Remediation Agreement meeting the requirements set forth in Section 5.13(e)
below and otherwise reasonably acceptable to Stockholder and Buyer, with respect
to the Owned Real Property("Remediation Agreement"), and the Stockholder shall
have provided all financial security required under such Remediation Agreement
to NJDEP.
Furthermore, on the Closing Date, the LNA previously obtained by the Company
from the NJDEP with respect to the warehouse leased by the Company at
1310-1322-1324 Jefferson Street, Hoboken, New Jersey, shall remain in effect and
shall not have been revoked or amended.
(4) In the event that upon the expiration of Outside Date (as
defined in Section 10.1(b) hereof) the NJDEP has failed to issue a negative
declaration, NFA or LNA with respect to the Owned Real Property and the
Stockholder and NJDEP have failed to enter into the Remediation Agreement, then,
unless the parties shall otherwise agree in writing, this Agreement may be
terminated in accordance with the terms of Section 10.1(b) hereof.
(5) The Remediation Agreement shall be substantially in the form
set forth in the regulations of the NJDEP and shall obligate the Stockholder
after the Closing to satisfy the requirements under ISRA and under such
Remediation Agreement to investigate and remediate the Owned Real Property.
Stockholder shall be responsible for all costs incurred by Stockholder, the
Company, Buyer or Workflow in complying with the Remediation Agreement.
Stockholder alone shall execute the Remediation Agreement as the only party
responsible for ISRA compliance if permitted by NJDEP. If NJDEP will not permit
Stockholder to be the only party executing the Remediation Agreement, then in
addition to Stockholder, the Company shall execute the Remediation Agreement;
provided however, that as between the Stockholder, the Company, Buyer and
Workflow, Stockholder shall remain responsible for all costs incurred by
Stockholder, the Company, Buyer or Workflow in complying with ISRA and the
Remediation Agreement. Stockholder shall be exclusively responsible for
establishing and maintaining any "remediation funding source" required by NJDEP
pursuant to ISRA, without recourse against any other party hereto, whether or
not such parties sign the Remediation Agreement. Notwithstanding the terms and
conditions of any Remediation Agreement, Stockholder shall continue to indemnify
the Buyer Indemnified Parties(as defined in Section 8.1 hereof) pursuant to
Section 8 of this Agreement for all compliance with ISRA and the Remediation
Agreement.
(6) Buyer and its attorneys and environmental consultants shall be
entitled to participate with Stockholder in the review and negotiation with the
NJDEP of the Remediation Agreement and any remediation plans and programs
established pursuant to the Remediation Agreement; to review and monitor the
filing with the NJDEP of all documents, studies, plans and programs pursuant to
the Remediation Agreement; and to review and monitor the carrying out of all
remediation activities with respect to the Owned Real Property pursuant to the
Remediation Agreement or to otherwise comply with ISRA. Stockholder and the
Company shall cooperate in the exchange of necessary information to carry out
these activities. Remediation plans and programs entered into pursuant to the
Remediation Agreement with respect to the Owned Real Property, and filing of
documents, studies, plans and programs with the NJDEP pursuant to the
Remediation Agreement, shall be subject to the reasonable approval of the Buyer
on a case by case basis, in the event that any such plan, program or filing (1)
would materially interfere with the business operations of the Company, Buyer or
Workflow or (2) would impose any liability or obligation on the Company, Buyer
or Workflow (other than (A) diminimus amounts and (B) non-monetary liabilities
and obligations which do not materially interfere with the business operations
of the Company, Buyer or Workflow). Stockholder shall, and shall cause its
consultants and contractors, to provide the Buyer will copies of all
investigative reports and studies and all filings and documentation relating to
the Remediation Agreement, as well as all correspondence with the NJDEP or other
governmental agencies relating to the Remediation Agreement.
(7) Stockholder shall undertake responsibility for carrying out
all investigative and remediation activities required by the NJDEP pursuant to
the Remediation Agreement and any remediation plans and programs required by the
Remediation Agreement through and including obtaining a final NFA clearance from
NJDEP with respect to the Remediation Agreement, and Stockholder shall retain at
its own expense all necessary consultants and contractors, which shall be
subject to the reasonable approval of Buyer. The Company shall grant access to
the Owned Real Property to Stockholder and his approved consultants and
contractors in order to carry out such investigative and remediation activities
approved by Buyer pursuant to Section 5.13(f) above, upon their execution and
delivery of customary access agreements with the Company and the delivery of
customary insurance certificates naming the Company, Buyer and Workflow as
additional named insureds. In the event that Stockholder shall fail to carry out
the requirements of the Remediation Agreement or any remediation plan or program
pursuant to the Remediation Agreement to NJDEP's satisfaction, then the Company,
Buyer or Workflow may, but shall not be obligated to, cause such requirements to
be completed, at Stockholder's exclusive cost and expense. The indemnification
by Stockholder to the Buyer Indemnified Parties set forth in Section 8 of this
Agreement shall include, without limitation, all activities of Stockholder and
its consultants and contractors undertaken pursuant to the Remediation Agreement
and any remediation plan or program thereunder. All activities of Stockholder
and its consultants and contractors undertaken pursuant to the Remediation
Agreement and any remediation plan or program thereunder shall be carried out in
accordance with schedules mutually agreed between Stockholder and the Company,
with a minimum of disruption to the Company's normal business operations, and in
compliance with applicable law.
(8) In the event that prior to the expiration of the Outside Date,
the NJDEP shall require that remediation be undertaken as a condition of issuing
a negative declaration or NFA, and cost of such remediation is estimated to be
less than $50,000 and such remediation can be completed on or prior to the
Outside Date such that an NFA can be obtained by the Outside Date and without
any material disruption of the Company's business operations, then Stockholder
shall cause such remediation to be performed and completed by the Outside Date.
The costs and expenses of such remediation shall be considered an ISRA
compliance expense payable in the manner set forth in Section 5.13(a). In the
event that the NFA is not obtained by the Outside Date and the estimated cost of
remediation to be undertaken pursuant to a proposed Remediation Agreement with
the NJDEP is less than $50,000, then Stockholder shall be required to enter into
a Remediation Agreement on or before the Outside Date and Stockholder shall
cause such remediation to be performed and completed in accordance with the
Remediation Agreement. Stockholder and the Company shall be permitted to
negotiate with the NJDEP and seek a less costly remediation, provided this does
not delay completing ISRA compliance activities and obtaining the NFA or
Remediation Agreement by the Outside Date.
(9) In the event that prior to the expiration of the Outside Date,
the NJDEP shall require that remediation be undertaken as a condition of issuing
a negative declaration or NFA, or of entering into a Remediation Agreement, and
the estimated cost of such remediation is in excess of $50,000, then Stockholder
shall not be required to cause such remediation to be performed or to enter into
a Remediation Agreement, and unless the parties shall otherwise agree in
writing, this Agreement may be terminated in accordance with the terms of
Section 10.1(b) hereof. Notwithstanding the foregoing, Stockholder may elect to
expend more than $50,000 to effectuate remediation if (A) such remediation and
issuance of the NFA can be completed prior to the Outside Date and will not
cause material disruption to the Company's business operations or (B) a
Remediation Agreement is entered into on or prior to the Outside Date, and in
the event Stockholder so elects, this Agreement shall not be terminated pursuant
to this Section 5.13(i), provided that in the case of an NFA, so long as such
remediation is completed and the NFA is obtained by the Outside Date; all costs
and expenses of such remediation shall be considered an ISRA compliance expense
payable in the manner set forth in Section 5.13(a).
(10) Stockholder shall cause the Fee Owner to cooperate and comply
with the requirements of this Section 5.13, including without limitation, the
granting of access, consent and permission under the lease to the Company of the
Owned Real Property.
(11) The provisions of this Section 5.13 shall survive the
execution and delivery of this Agreement and the occurrence of the Closing.
(12) The term "remediation" as used in this Section 5.13 shall
have the definition set forth in NJAC 7:26E-1.8. A termination by Stockholder or
Buyer or failure to enter into a Remediation Agreement under Section 5.13(h) or
5.13(i) due to costs of remediation being in excess of $50,000 shall not in and
of itself be considered a failure to fulfill any obligation under this Agreement
for purposes of Section 10.1(b).
5.14 Workflow Obligations.
(1) Workflow, by its execution and delivery of this Agreement,
confirms and agrees for the benefit of Stockholder that (i) all of the
representations and warranties of Buyer made in Section 4 of this Agreement with
respect to Workflow are true and correct; (ii) subject to the satisfaction of
all conditions precedent set forth in Section 6 of this Agreement, Workflow
shall cause Buyer to carry out its obligations to consummate the closing of the
transactions set forth in this Agreement; and (iii) if the Closing occurs,
Workflow shall cause Buyer to carry out its obligations to pay the Purchase
Price as determined under this Agreement, and to the extent it fails to do so,
Workflow hereby guarantees and agrees to make such payment of the Purchase Price
(inclusive of the Earn-Out as determined pursuant to Section 1.7 hereto) as
determined pursuant to this Agreement.
(2) The obligations of Workflow under this Agreement shall be
subject to all set-offs, offsets, adjustments and defenses that the Buyer would
have, or is entitled to have, under this Agreement, and Workflow may enforce all
rights and remedies of Buyer under this Agreement.
(3) The obligations of Workflow under this Agreement are solely
for the benefit of the Stockholder and no provision of this Agreement is
intended, nor will any provision be interpreted, to create any obligations of
Workflow to any creditor, claimant, client, customer, or employee of Buyer or
the Company.
5.15 Miscellaneous Assets
(1) On or prior to the expiration of the term of the Consulting
Agreement between the Principal Stockholder and the Company, the Principal
Stockholder may, at his own expense, remove from the Company's premises the
artwork set forth on Schedule 5.15(a) hereto, and the Company shall have no
claim or interest in such artwork. Stockholder shall indemnify the Buyer
Indemnified Parties (as defined in Section 8 hereof) pursuant to Section 8
hereof for any claim of any third party to such artwork.
(2) Prior to the Closing, the Company shall distribute and convey
to the Fee Owner or its designee the Pine Barrens Real Property identified on
Schedule 5.15(b) hereto. Such transfer shall be "AS IS" and without recourse to
the Company or the Buyer. All documentation utilized to effectuate such
transaction shall be provided to Buyer in advance of the Closing, and shall be
reasonably satisfactory to Buyer. There shall be no reduction to the Net Worth
Target with respect to such distribution. All Taxes and other transaction fees
and expenses relating to the distribution and conveyance of such real estate by
the Company to the Fee Owner shall be borne exclusively to the Stockholder (and
not the Company). Stockholder shall indemnify the Buyer Indemnified Parties
pursuant to Section 8 hereof for any claim of any third party to such Pine
Barrens Real Property.
(3) Prior to the Closing, the Company shall assign to the
Principal Stockholder all right, title and interest the Company may have in a
term life insurance policy on the life of the Principal Stockholder, and the
beneficiary of such policy shall be changed to a beneficiary designated by the
Principal Stockholder. All Taxes and other transaction fees and expenses
relating to such transfer shall be borne exclusively by the Stockholder (and not
the Company).
(4) In the event that the Company recovers actual payments in its
currently pending tax certiorari proceeding against the City of Hoboken which
are attributable to periods prior to the Closing Date, such payments shall be
transferred to Stockholder, less any expenses incurred by the Company after the
Closing in connection with such proceeding.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligation of Buyer to effect the transactions contemplated by
this Agreement is subject to the satisfaction or waiver, at or before the
Closing Date, of the following conditions and deliveries:
6.1 Representations and Warranties; Performance of Obligations.
All of the representations and warranties of the Stockholder and the Company
contained in this Agreement shall be true, correct and complete in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date; all of the
terms, covenants, agreements and conditions of this Agreement to be complied
with, performed or satisfied by the Company and the Stockholder on or before the
Closing Date shall have been duly complied with, performed or satisfied in all
material respects; and a certificate to the foregoing effects dated the Closing
Date and signed on behalf of the Company and by the Stockholder shall have been
delivered to Buyer.
6.2 No Litigation. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision challenging
Buyer's proposed acquisition of the Company, or limiting or restricting Buyer's
conduct or operation of the business of the Company (or its own business)
following the transactions contemplated by this Agreement shall be in effect,
nor shall any proceeding brought by an administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, seeking
any of the foregoing be pending. There shall be no action, suit, claim or
proceeding of any nature pending or threatened against Buyer or the Company,
their respective properties or any of their officers or directors, that could
materially and adversely affect the business, assets, liabilities, financial
condition, results of operations or prospects of the Company. A certificate to
the foregoing effects (other than those relating to Buyer) dated the Closing
Date and signed on behalf of the Company and the Stockholder shall have been
delivered to Buyer.
6.3 No Material Adverse Change. There shall have been no material
adverse changes in the business, operations, affairs, prospects, properties,
assets, existing and potential liabilities, obligations, profits or condition
(financial or otherwise) of the Company, taken as a whole, since the Balance
Sheet Date other than as disclosed in the Schedules hereto; and Buyer shall have
received a certificate signed by the Stockholder dated the Closing Date to such
effect.
6.4 Consents and Approvals. All necessary consents of, and filings
with, any governmental authority or agency or third party, relating to the
consummation by the Buyer, Company and the Stockholder of the transactions
contemplated hereby, including without limitation, those set forth on Schedule
3.3 and Schedule 3.19(d), shall have been obtained and made.
6.5 Opinion of Counsel. Buyer shall have received an opinion from
counsel to the Company and the Stockholder, dated the Closing Date,
substantially in the form of Exhibit E attached hereto.
6.6 Charter Documents. Buyer shall have received (a) a copy of the
Articles of Incorporation of the Company certified by an appropriate authority
in the state of its incorporation and (b) a copy of the Bylaws of the Company
certified by the Secretary of the Company.
6.7 Financial Statements. Buyer shall have received from the
Company completed financial statements for the calender quarters ended March 31,
June 30 and September 30, 1998, and for the quarter and fiscal year ended
December 31, 1998, in a form reasonably satisfactory to Buyer.
6.8 Company Deliveries. The Company shall have made such
deliveries as are called for by this Agreement.
6.9 Delivery of Closing Financial Certificate. Buyer shall have
received a certificate (the "Closing Financial Certificate"), dated as of the
Closing Date, signed on behalf of the Company and by the Stockholder, setting
forth:
(1) the net worth of the Company as of the last day of its fiscal
year ending December 31, 1997 (the "Certified 1997 Net Worth");
(2) the net worth of the Company as of the Closing Date (the
"Certified Closing Net Worth");
(3) the sales of the Company for the fiscal year ending December
31, 1997 (the "Certified 1997 Sales");
(4) the sales of the Company for the fiscal year ending December
31, 1998 (the "Certified 1998 Sales");
(5) the earnings of the Company before interest, tax and
depreciation (after the addition of "add-backs" set forth on Schedule 3.9(c) and
assuming an annual rental expense of $370,000) for the fiscal year ending
December 31, 1997 (the "Certified 1997 Profits");
(6) the earnings of the Company before interest and taxes (after
the addition of "add-backs" set forth on Schedule 3.9(c) and assuming an annual
rental expense of $370,000) for the fiscal year ending on December 31, 1998 (the
"Certified 1998 Profits"); and
(7) the sum of the Company's total outstanding long term and short
term indebtedness to (i) banks and (ii) all other financial institutions and
creditors (in each case including the current portion of such indebtedness, but
excluding trade payables and other accounts payable incurred in the ordinary
course of the Company's business consistent with past practice and excluding
debt to the Stockholder) as of the Closing Date (the "Certified Closing
Long-Term Debt").
The parties acknowledge and agree that for purposes of determining the Certified
Closing Net Worth, the Actual Company Net Worth and the Certified 1998 Profits
(1) the Company shall not take account of any increase in intangible assets
other than accounts receivable (including without limitation goodwill,
franchises and intellectual property) accounted for after December 31, 1997, (2)
the determination shall be calculated after giving effect to any expenses
incurred by the Company (or incurred by the Stockholder but paid by, charged to
or advanced by the Company) in connection with the transactions contemplated by
this Agreement, including, without limitation, costs of ISRA compliance pursuant
to Section 5.13 hereof and (3) inventory will be valued in accordance with GAAP
(lower of cost or market) on a First-In, First-Out (FIFO) Basis, and will
include, in all material respects, all inventory owned by the Company, but will
exclude BNS goods.
6.10 FIRPTA Compliance. The Stockholder shall have delivered to
Buyer a properly executed statement in a form reasonably acceptable to Buyer for
purposes of satisfying Buyer's obligations under Treas. Reg. ss. 1.1445-2(b).
6.11 Employment Agreements. (a) Xxxxx Xxxxx shall have entered
into an employment agreement with the Company substantially in the form of
Exhibit A hereto and (b) Xxxxx Xxxxxxxxx shall have entered into an employment
agreement with the Company substantially in the form of Exhibit G hereto.
6.12 Lease/Real Estate Matters. (1) The Company shall have
distributed and conveyed the Company's Main Facility Real Property to the Fee
Owner in accordance with Section 1.8 hereof, and the Fee Owner and the Company
shall have entered into a lease of such Real Property in the form of Exhibit B
hereto.
(2) The Article Third Trust under the Will of Xxxx X. Xxxxxx and
the Company shall have entered into a lease of the Parking Lot Real Property, in
the form of Exhibit C hereto.
(3) With respect to any new mortgages placed on the Main Facility
Real Property or the Parking Lot Real Property, the Company shall have obtained
a non-disturbance agreement executed by the mortgagee thereof in form and
substance satisfactory to Buyer.
6.13 Consulting Agreement. The Stockholder shall have entered into
a consulting agreement with the Company in the form of Exhibit D hereto.
6.14 ISRA Clearance. The Company and the Stockholder shall have
satisfied the requirements of Section 5.13 and Buyer shall have received
satisfactory documentation proof.
6.15 Other Closing Deliveries. Buyer shall have received all other
documents and instruments, duly executed and delivered by Stockholder, the
Company and/or third parties, as required by this Agreement or otherwise
necessary to effectuate the purposes of this Agreement.
6.16 Environmental Studies. (1) Buyer shall have obtained
completed PHASE I and PHASE II environmental studies performed by an
environmental consultant retained by Buyer with respect to the Company's Owned
Real Property, which studies, subject to Sections 6.16(b) and (c) below, shall
be satisfactory to Buyer. The cost of environmental studies performed by Buyer's
Consultant shall be borne by Buyer; provided however, that if the NJDEP requires
the use of information generated by such Phase II study in connection with the
ISRA clearance referred to in Section 5.13, then Buyer and Stockholder shall
share equally the cost of such Phase II study by Buyer's consultant; provided
however, that Stockholder's maximum obligation for the cost of such study shall
be $8,000.
(2) In the event that the Phase I or Phase II environmental
studies by Buyer's consultant reveal conditions that in Buyer's reasonable
opinion require that remediation be undertaken, and the cost of such remediation
is less than $50,000, such remediation can be completed within sixty (60) days
and without any material disruption of the Company's business operations, and
such conditions do not involve a material violation of Environmental Law, then
(1) such conditions shall not, in and of themselves, preclude the consummation
of the transactions contemplated hereby; (2) Stockholder shall be required to
bear the entire cost of such remediation and the securing of any necessary
Permits or approvals under applicable Environmental Laws (3) Stockholder and any
transferee of the Owned Real Property shall cooperate with Buyer, both before
and after the Closing, in carrying out such remediation and securing such
permits and approvals, and (4) Stockholder shall remain obligated to indemnify
the Buyer Indemnified Parties pursuant to Section 8 for such conditions.
(3) In the event that the Phase I or Phase II environmental
studies by Buyer's consultant reveal conditions that in Buyer's reasonable
opinion require that remediation be undertaken, and the cost of such remediation
is either in excess of $50,000, or would cause material disruption of the
Company's business operations, or would require more than sixty (60) days to
perform or such conditions involve a material violation of any Environmental
Law, then unless the parties shall otherwise agree, this Agreement may be
terminated in accordance with Section 10.1(b) hereof. Notwithstanding the
foregoing, Stockholder may elect to expend more than $50,000 (and bear such
expense) to effectuate remediation if such remediation can be completed prior to
the Outside Date and will not cause material disruption of the Company's
business and the conditions do not involve a material violation of Environmental
Law, and in the event Stockholder so elects, this Agreement shall not be
terminated pursuant to this Section 6.16(c) so long as such remediation is
completed prior to the Outside Date.
6.17 Facility Engineering Studies. Buyer shall have obtained, at
its own expense, a completed study performed by a facilities engineering
consultant retained by Buyer with respect to the Company's facility at the Owned
Real Property, which shall be reasonably satisfactory to Buyer.
6.18 Release of Company Guarantees of Personal Debt.
Simultaneously with the Closing, the Company shall have been released from any
guarantees and/or obligations it may have of personal indebtedness of
Stockholder, including without limitation, mortgage indebtedness relating to the
Owned Real Property and other debt set forth on Schedule 6.18 hereto.
6.19 Certified Resolutions. Buyer shall have received resolutions
of the Board of Directors and Shareholders of the Company authorizing the
transactions contemplated by this Agreement certified by the Principal
Stockholder.
6.20 Xxxxxxxxx Release. The Buyer shall have received a release,
in favor of the Company, Buyer and Workflow, executed and delivered by Xxxxx
Xxxxxxxxx, in the form of Exhibit H hereto.
6.21 Payoff Documentation. The Buyer shall have received, with
respect to the Accepted Indebtedness and any other debt set forth on Schedule
6.18 hereto (a) payoff letters from the holders of such debt confirming the
total indebtedness to be paid to such holders as of the Closing Date in order to
extinguish such debt and (b) UCC-3 termination statements, mortgage
satisfactions and other similar documentation executed by the holders of such
debt in form for filing, such documentation to be held in escrow by counsel to
Buyer pending the Closing and receipt by such holders of Buyer's payoff of the
Accepted Indebtedness and Stockholder's payoff of the debt set forth on Schedule
6.18 hereto.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDER AND THE COMPANY
The obligation of the Stockholder and the Company to effect the
transactions contemplated by this Agreement are subject to the satisfaction or
waiver, at or before the Closing Date, of the following conditions and
deliveries:
7.1 Representations and Warranties; Performance of Obligations.
All of the representations and warranties of Buyer contained in this Agreement
shall be true, correct and complete in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made as of such date; all of the terms, covenants, agreements and
conditions of this Agreement to be complied with, performed or satisfied by
Buyer on or before the Closing Date shall have been duly complied with,
performed or satisfied in all material respects; and a certificate to the
foregoing effects dated the Closing Date and signed by the President or any Vice
President of Buyer shall have been delivered to the Company and the Stockholder.
7.2 No Litigation. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision challenging
Buyer's proposed acquisition of the Company, or limiting or restricting Buyer's
conduct or operation of the business of the Company (or its own business)
following the transactions contemplated by this Agreement shall be in effect,
nor shall any proceeding brought by an administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, seeking
any of the foregoing be pending; and a certificate to the foregoing effects
(other than those relating to Stockholder or the Company) dated the Closing Date
and signed by the President or any Vice President of Buyer shall have been
delivered to the Company and the Stockholder.
7.3 Consents and Approvals. All necessary consents of, and filings
with, any governmental authority or agency or third party relating to the
consummation by Stockholder, Company or Buyer of the transactions contemplated
herein, shall have been obtained and made.
7.4 Consulting Agreement. The Company shall have afforded
Stockholder an opportunity to enter into a consulting agreement with the Company
in substantially the form of Exhibit D hereto.
7.5 Lease/Real Estate Matters. After distribution and conveyance
of the Company's Main Facility Real Property to the Fee Owner, the Company and
the Fee Owner shall have entered into a lease of such property substantially in
the form of Exhibit B hereto.
7.6 Release of Personal Guarantees. Simultaneous with the Closing,
the Buyer shall either (a) at its own expense, pay off and extinguish the
Accepted Indebtedness and use reasonable commercial efforts to obtain a release
of Stockholder from all personal guarantees he may have given of such Accepted
Indebtedness or (b) obtain a release of Stockholder from all personal guarantees
he may have given of such Accepted Indebtedness.
7.7 Opinion of Counsel. Stockholder shall have received an opinion
from counsel to the Buyer, dated the Closing Date, substantially in the form of
Exhibit F hereto.
7.8 Other Closing Deliveries. Stockholder shall have received all
other documents and instruments, duly executed and delivered by Buyer, Workflow
and/or third parties, as required by this Agreement or otherwise reasonably
necessary to effectuate the purposes of this Agreement.
7.9 ISRA Clearance. The Company shall have received ISRA clearance
required by Section 5.13(c) of the transactions contemplated by this Agreement.
7.10 Certified Resolutions. Stockholder shall have received
resolutions of the Board of Directors and sole shareholder of Buyer and the
Board of Directors of Workflow authorizing the transactions contemplated hereby,
certified by an officer of Workflow and Buyer.
8. INDEMNIFICATION
8.1 General Indemnification by the Stockholder. The Stockholder
covenants and agrees to indemnify, defend, protect and hold harmless Buyer,
Workflow and, from and after the Closing, the Company and their respective
officers, directors, employees, stockholders, assigns, successors and affiliates
(individually, a "Buyer Indemnified Party" and collectively, "Buyer Indemnified
Parties") from, against and in respect of:
(1) all liabilities, losses, claims, damages, punitive damages,
causes of action, lawsuits, administrative proceedings (including informal
proceedings), investigations, audits, demands, assessments, adjustments,
judgments, settlement payments effectuated in accordance with Section 8.3
hereof, deficiencies, penalties, fines, interest (including interest from the
date of such damages) and costs and expenses (including without limitation
reasonable attorneys' fees and disbursements of every kind, nature and
description) (collectively, "Damages") suffered, sustained, incurred or paid by
the Buyer Indemnified Parties in connection with, resulting from or arising out
of, directly or indirectly:
(1) any breach of any representation or warranty of the
Stockholder or the Company set forth in this Agreement or any Schedule or
certificate, delivered by or on behalf of the Stockholder or the Company
pursuant hereto; or
(2) any nonfulfillment of any covenant or agreement by
the Stockholder or, prior to the Closing Date, the Company, under this
Agreement; or
(3) the business, operations or assets of the Company
prior to the Closing Date or the actions or omissions of the Company's
directors, officers, stockholders, employees or agents prior to the Closing
Date, other than Damages arising from matters expressly disclosed in the Company
Financial Statements, this Agreement or the Schedules to this Agreement or
expressly exempted from disclosure under the terms and conditions of this
Agreement;
(4) the matters disclosed on Schedules 3.23
(environmental matters), 3.25 (employee benefit plans), 3.26 (taxes), and 3.27
(conformity with law; litigation);
(5) the distribution and conveyance of the Company's
Main Facility Real Property to the Stockholder pursuant to Section 1.8 hereof;
(6) the applicability of ISRA to the transactions
contemplated by this Agreement and the compliance with the requirements of ISRA
and any remediation or remediation agreement pursuant to ISRA; or
(7) any Closing Date Withdrawal Liability.
(2) any and all Damages incident to any of the foregoing or to the
enforcement of this Section 8.1.
8.2 Limitation and Expiration. Notwithstanding the above:
(1) there shall be no liability for indemnification under Section
8.1 unless, and solely to the extent that, the aggregate amount of Damages
exceeds $50,000 (the "Indemnification Threshold"); provided, however, that the
Indemnification Threshold shall not apply to (i) adjustments to the Cash
Purchase Price as set forth in Sections 1.2 and 1.3; (ii) Damages arising out of
any breaches of the covenants of the Stockholder set forth in this Agreement or
representations and warranties made in Sections 3.4 (capital stock of the
Company), 3.5 (transactions in capital stock), and 3.26 (taxes); (iii) Damages
described in Sections 8.1(a)(v), (vi) or (vii); and (iv) existing litigation and
other matters disclosed on Schedule 3.27.
(2) the aggregate amount of the Stockholder's liability under this
Article 8 shall not exceed the Purchase Price; provided, however, that the
Stockholder's liability for Damages arising out of any breaches of the
representations made in Section 3.26 (taxes) or Damages described in Sections
8.1(a)(v), (vi) and (vii) and existing litigation and other matters disclosed on
Schedule 3.27 shall not be subject to such limitation and shall not count toward
the limitation described in the first clause of this Section 8.2(b);
(3) the indemnification obligations of Stockholder under this
Article 8, or under any certificate or writing furnished in connection herewith,
shall terminate at the date that is the later of clause (i) or (ii) of this
Section 8.2(c):
(1) (1) except as to representations, warranties, and
covenants specified in clause (i)(2) of this Section 8.2(c), thirty-six (36)
months after the Closing Date, or
(2) with respect to representations and warranties
contained in Sections 3.23 (environmental matters), 3.25 (employee benefit
plans), 3.26 (taxes), and the indemnification set forth in Sections 8.1(a)(ii),
(v), (vi), or (vii) and existing litigation and other matters disclosed on
Schedule 3.27 on (A) the date that is six (6) months after the expiration of the
longest applicable federal or state statute of limitation (including extensions
thereof), or (B) if there is no applicable statute of limitation, (x) ten (10)
years after the Closing Date if the Claim is related to the cost of
investigating, containing, removing, or remediating a release of Hazardous
Material into the environment, or (y) five (5) years after the Closing Date for
any other Claim covered by clause (i)(2)(B) of this Section 8.2(c); or
(2) the final resolution of claims or demands asserted
and pending as of the relevant dates described in clause (i) of this Section
8.2(c) (such claims referred to as "Pending Claims").
(4) Notwithstanding any other provision of this Agreement, it is
not intended that there be more than one recovery of indemnification for the
same claim from Stockholder by reason of the fact that the Company, as well as
the Stockholder, has made representations, warranties and covenants to the Buyer
under this Agreement.
8.3 Indemnification Procedures. All claims or demands for
indemnification under this Article 8 ("Claims") shall be asserted and resolved
as follows:
(1) In the event that any Buyer Indemnified Party or Stockholder
Indemnified Party (as defined in Section 8.7 below) (each an "Indemnified
Party") has a Claim against any party obligated to provide indemnification
pursuant to Section 8.1 hereof (with respect to a claim by the Buyer Indemnified
Parties) or Section 8.7 hereof (with respect to a claim by the Stockholder
Indemnified Parties) (the "Indemnifying Party") which does not involve a Claim
being asserted against or sought to be collected by a third party, the
Indemnified Party shall with reasonable promptness notify the Indemnifying Party
of such Claim, specifying the nature of such Claim and the amount or the
estimated amount thereof to the extent then feasible (the "Claim Notice"). If
the Indemnifying Party does not notify the Indemnified Party within thirty (30)
days after the date of delivery of the Claim Notice that the Indemnifying Party
disputes such Claim, with a detailed statement of the basis of such position,
the amount of such Claim shall be conclusively deemed a liability of the
Indemnifying Party hereunder. In case an objection is made in writing in
accordance with this Section 8.3(a), the Indemnified Party shall respond in a
written statement to the objection within thirty (30) days and, for sixty (60)
days thereafter, the Indemnified Party and the Indemnifying Party shall attempt
in good faith to agree upon the rights of the respective parties with respect to
each of such Claims (and, if the parties should so agree, a memorandum setting
forth such agreement shall be prepared and signed by both parties). In the event
that after such time period, the parties cannot resolve an objection to such
Claim by the Indemnified Party, then the Indemnified Party and the Indemnifying
Party shall be free to pursue their legal and contractual remedies with respect
to such Claim.
(2) (1) In the event that any Claim for which the Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted against an
Indemnified Party by a third party (a "Third Party Claim"), the Indemnified
Party shall promptly after learning of the claim deliver a Claim Notice to the
Indemnifying Party . The Indemnifying Party shall have thirty (30) days from the
date of delivery of the Claim Notice to notify the Indemnified Party (A) whether
the Indemnifying Party disputes liability to the Indemnified Party hereunder
with respect to the Third Party Claim, and, if so, the basis for such a dispute,
and (B) if such party does not dispute liability, whether or not the
Indemnifying Party desires, at the sole cost and expense of the Indemnifying
Party, to defend against the Third Party Claim, provided that the Indemnified
Party is hereby authorized (but not obligated) to file any motion, answer or
other pleading and to take any other action which the Indemnified Party shall
deem necessary or appropriate to protect the Indemnified Party's interests.
(2) In the event that Indemnifying Party timely notifies the
Indemnified Party that the Indemnifying Party does not dispute the Indemnifying
Party's obligation to indemnify with respect to the Third Party Claim, the
Indemnifying Party shall defend the Indemnified Party against such Third Party
Claim by appropriate proceedings, provided that, unless the Indemnified Party
otherwise agrees in writing, the Indemnifying Party may not settle any Third
Party Claim (in whole or in part) if such settlement does not include a complete
and unconditional release of the Indemnified Party. If the Indemnified Party
desires to participate in, but not control, any such defense or settlement the
Indemnified Party may do so at its sole cost and expense. If the Indemnifying
Party elects not to defend the Indemnified Party against a Third Party Claim,
whether by failure of such party to give the Indemnified Party timely notice as
provided herein or otherwise, then the Indemnified Party, without waiving any
rights against such party, may settle or defend against such Third Party Claim
in the Indemnified Party's sole discretion and to the extent the claim is
subject to indemnification pursuant to Section 8 hereof the Indemnified Party
shall be entitled to recover from the Indemnifying Party the amount of any
settlement or judgment and, on an ongoing basis, all indemnifiable costs and
expenses of the Indemnified Party with respect thereto, including interest from
the date such costs and expenses were incurred.
(3) If at any time, in the reasonable opinion of a Buyer
Indemnified Party, notice of which shall be given in writing to the Stockholder,
any Third Party Claim seeks material prospective relief which could have an
adverse effect on any Buyer Indemnified Party or the Company or any subsidiary,
the Buyer Indemnified Party shall have the right to control or assume (as the
case may be) the defense of any such Third Party Claim and the amount of any
judgment or settlement and the reasonable costs and expenses of defense shall be
included as part of the indemnification obligations of the Indemnifying Party
hereunder. If the Buyer Indemnified Party elects to exercise such right, the
Indemnifying Party shall have the right to participate in, but not control, the
defense of such Third Party Claim at the sole cost and expense of the
Indemnifying Party.
(3) Nothing herein shall be deemed to prevent the Indemnified
Party from making a Claim, and an Indemnified Party may make a Claim hereunder,
for potential or contingent Damages provided the Claim Notice sets forth the
specific basis for any such potential or contingent claim or demand to the
extent then feasible and the Indemnified Party has reasonable grounds to believe
that such Claim may be made.
(4) Subject to the provisions of Section 8.2, the Indemnified
Party's failure to give reasonably prompt notice as required by this Section 8.3
of any actual, threatened or possible claim or demand which may give rise to a
right of indemnification hereunder shall not relieve the Indemnifying Party of
any liability which the Indemnifying Party may have to the Indemnified Party
unless the failure to give such notice materially and adversely prejudiced the
Indemnifying Party.
(5) The parties will make appropriate adjustments for any Tax
benefits, Tax detriments or insurance proceeds in determining the amount of any
indemnification obligation under this Article 8, provided that no Indemnified
Party shall be obligated to continue pursuing any payment pursuant to the terms
of any insurance policy, if, after making commercially reasonable efforts, the
Indemnified Parties' claim or portion thereof has not been paid by the insurer.
In the event that an Indemnifying Party has actually paid an amount in respect
of a Claim and the Indemnified Party, subsequent thereto, actually receives
payment of insurance proceeds with respect to such Claim, the Indemnified Party
shall remit such proceeds to the Indemnifying Party, but not in excess of
amounts actually paid by the Indemnifying Party to the Indemnified Party in
respect of such Claim.
8.4 Survival of Representations Warranties and Covenants. All
representations, warranties and covenants made by the Company, the Stockholder,
and Buyer in or pursuant to this Agreement or in any document delivered pursuant
hereto shall be deemed to have been made on the date of this Agreement (except
as otherwise provided herein) and, if a Closing occurs, as of the Closing Date.
The representations of the Company and the Stockholder will survive the Closing
for the periods referred to in Section 8.2(c). The representations of Buyer will
survive the Closing and will remain in effect until, and will expire, thirty-six
(36) months after the Closing Date.
8.5 Remedies Cumulative. The remedies set forth in this Article 8
are cumulative and shall not be construed to restrict or otherwise affect any
other remedies that may be available to the Indemnified Parties under any other
agreement or pursuant to statutory or common law.
8.6 Right to Set Off. Buyer shall have the right, but not the
obligation, to set off, in whole or in part, against the Pledged Assets or any
Earn-out, amounts finally determined under Section 8.3 to be owed to Buyer by
the Stockholder under Section 8.1 hereof.
8.7 General Indemnification of Buyer.
(1) Buyer covenants and agrees to indemnify, defend, protect and
hold harmless the Stockholder and his heirs and personal representatives (each a
"Stockholder Indemnified Party" and collectively, "Stockholder Indemnified
Parties") from and against:
(1) all Damages suffered, sustained, incurred or paid by
the Stockholder Indemnified Parties in connection with, resulting from or
arising out of, directly or indirectly;
(1) any breach of any representation or warranty of
Buyer or Workflow set forth in this Agreement or any certificate delivered by or
on behalf of Buyer or Workflow in connection herewith; or
(2) any nonfulfillment of any covenant or agreement
on the part of Buyer or Workflow in this Agreement;
(2) any and all Damages incident to any of the foregoing or
to the enforcement of this Section 8.7.
(2) There shall be no liability for indemnification under this
Section 8.7 unless, and solely to the extent that, the aggregate amount of
Damages under this Section 8.7 exceeds the Indemnification Threshold, as defined
in Section 8.2(a), provided, however, that the indemnification threshold shall
not apply to (i) payments of the Purchase Price, or (ii) Damages arising out of
any breaches of the covenants of Buyer or Workflow set forth in this Agreement.
(3) The aggregate amount of Buyer's liability under this Section
8.7 shall not exceed an amount equal to the Purchase Price.
(4) The indemnification obligations under this Section 8.7 or in
any certificate or writing furnished by Buyer or Workflow in connection herewith
shall terminate thirty-six (36) months after the Closing Date.
9. NONCOMPETITION
9.1 Prohibited Activities. The Stockholder acknowledges that
during the course of his ownership of the Stock, he developed relationships on
behalf of and acquired proprietary and confidential information about the
Company, including, but not limited to, its customers, vendors, prices, sales
strategies and other information, some of which may be regarded and treated by
the Company and Buyer as trade secrets. In order to protect the Company's and/or
Buyer's critical interest in these relationships and information, Stockholder
covenants that he will not, for a period of five (5) years following the Closing
Date, for any reason whatsoever, directly or indirectly, for himself or on
behalf of or in conjunction with any other person, persons, partnership,
corporation, or business of whatever nature:
(1) engage, as an officer, director, shareholder, owner, partner,
member, joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or adviser, or as a sales representative, in
any business selling any products or services in direct competition with the
Company, within 50 miles of any locations where the Company both has an office
and conducts business ("Territory"). As used in this subsection, "competition"
shall mean engaging, directly or indirectly, for himself or any other person or
entity, in (i) any facet of the business of the Company in which Stockholder was
engaged in prior to the Closing Date or (ii) any facet of the business of the
Company about which Stockholder acquired proprietary or confidential information
during the course of his or her ownership of the Stock. As used in this Section
9.1, "Company" shall include any Merger Affiliate or Company Division which
carries on the business of the Company;
(2) hire or join with in a competitive business capacity, any
employee of the Company within the Territory;
(3) solicit or accept business which competes with the business of
the Company from any person who is, on the Closing Date, or that has been,
within one (1) year prior to the Closing Date, a customer of the Company; or
(4) acquire or enter into any agreement to acquire any prospective
acquisition candidate that was, to the knowledge of the Stockholder, either
called upon by Workflow or its Subsidiaries as a prospective acquisition
candidate or was the subject of an acquisition analysis by Workflow or its
Subsidiaries within 3 years prior to the Closing Date. The Stockholder, to the
extent lacking the knowledge described in the preceding sentence, shall
immediately cease all contact with such prospective acquisition candidate upon
being informed that Workflow or its Subsidiaries had called upon such candidate
or made an acquisition analysis thereof.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit the Stockholder from acquiring as an investment not more than one
percent (1%) of the capital stock of a competing business whose stock is traded
on a national securities exchange or over- the-counter.
9.2 Confidentiality. The Stockholder recognizes that by reason of
his ownership of the Stock and his employment by the Company, he has acquired
confidential information and trade secrets concerning the operation of the
Company, the use or disclosure of which could cause the Company or its
affiliates or subsidiaries substantial loss and damages that could not be
readily calculated and for which no remedy at law would be adequate.
Accordingly, the Stockholder covenants and agrees with the Company and Buyer
that from and after the Closing he will not at any time, except in performance
of Stockholders' obligations to the Company or with the prior written consent of
the Company directly or indirectly, disclose any secret or confidential
information that he or she may learn or has learned by reason of his ownership
of the Company or his or her employment by the Company, or any of its
subsidiaries and affiliates, or use any such information in a manner detrimental
to the interests of the Company or Buyer, unless (i) such information becomes
known to the public generally through no fault of the Stockholder, (ii)
disclosure is required by law or the order of any governmental authority under
color of law, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, provided, that prior to disclosing any information pursuant to
clause (i), (ii) or (iii) above, the Stockholder shall give prior written notice
thereof to Buyer and provide Buyer with the opportunity to contest such
disclosure and shall cooperate with efforts to prevent such disclosure. The term
"confidential information" includes, without limitation, information not
previously disclosed to the public or to the trade by the Company's or Buyer's
management with respect to the Company's or Buyer's, or any of their affiliates'
or subsidiaries', products, facilities, and methods, trade secrets and other
intellectual property, software, source code, systems, procedures, manuals,
confidential reports, product price lists, customer lists, financial information
(including the revenues, costs, or profits associated with any of the Company's
products), business plans, prospects, or opportunities but shall exclude any
information already in the public domain.
9.3 Damages. Because of the difficulty of measuring economic
losses to Buyer as a result of a breach of the foregoing covenant, and because
of the immediate and irreparable damage that could be caused to Buyer for which
it would have no other adequate remedy, the Stockholder agrees that the
foregoing covenant may be enforced by Buyer in the event of breach by the
Stockholder, by injunctions and restraining orders.
9.4 Reasonable Restraint. The parties agree that the foregoing
covenants in this Article 9 impose a reasonable restraint on the Stockholder in
light of the activities and business of Buyer on the date of the execution of
this Agreement, assuming the completion of the transactions contemplated hereby.
9.5 Severability; Reformation. The covenants in this Article 9 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
9.6 Independent Covenant. The parties expressly acknowledge that
the terms and conditions of this Article 9 are independent of the terms and
conditions of any other agreements including, but not limited to, any consulting
and employment agreements entered into in connection with this Agreement. It is
specifically agreed that the period of five (5) years stated at the beginning of
this Article 9 during which the agreements and covenants of the Stockholder made
in this Article 9 shall be effective, shall be computed by excluding from such
computation any time during which the Stockholder is found by a court of
competent jurisdiction to have been in violation of any provision of this
Article 9. The covenants contained in Article 9 shall have no effect if the
transactions contemplated by this Agreement are not consummated.
9.7 Materiality. The Company and the Stockholder hereby agree that
the covenants set forth in this Article 9 are a material and substantial part of
the transactions contemplated by this Agreement, supported by adequate
consideration.
10. GENERAL
10.1 Termination. This Agreement may be terminated at any time
prior to the Closing Date solely:
(1) by mutual consent of the Board of Directors of Buyer and the
Stockholder; or
(2) by the Stockholder, on the one hand, or by Buyer, on the other
hand, if the Closing shall not have occurred on or before April 24, 1999 (the
"Outside Date"), provided that the right to terminate this Agreement under this
Section 10.1(b) shall not be available to either party (with the Stockholder and
the Company deemed to be a single party for this purpose) whose material
misrepresentation, breach of warranty or failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of the Closing
to occur on or before such date; or
(3) by the Stockholder, on the one hand, or by Buyer, on the other
hand, if there is or has been a material breach, failure to fulfill or default
on the part of the other party (with the Stockholder and the Company deemed to
be a single party for this purpose) of any of the representations and warranties
contained herein or in the due and timely performance and satisfaction of any of
the covenants, agreements or conditions contained herein, and the curing of such
default shall not have been made or shall not reasonably be expected to occur
before the Closing Date; or
(4) by the Stockholder, on the one hand, or by Buyer, on the other
hand, if there shall be a final nonappealable order of a federal or state court
in effect preventing consummation of the transactions contemplated by this
Agreement; or there shall be any action taken, or any statute, rule, regulation
or order enacted, promulgated or issued or deemed applicable to the transactions
contemplated by this Agreement by any governmental entity which would make the
consummation of the transactions contemplated by this Agreement illegal.
10.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 10.1, this Agreement shall forthwith become
ineffective, and there shall be no liability or obligation on the part of any
party hereto or its officers, directors or stockholders. Notwithstanding the
foregoing sentence, (i) the provisions of Articles 10 and 8, and Sections 5.7(b)
and 9.2, shall remain in full force and effect and survive any termination of
this Agreement; (ii) each party shall remain liable for any breach of this
Agreement prior to its termination; and (iii) in the event of termination of
this Agreement pursuant to Section 10.1(c) above, then notwithstanding the
provisions of Section 10.7 below, the breaching party (with the Stockholder and
the Company deemed to be a single party for purposes of this Article 10), shall
be liable to the other party to the extent of the expenses incurred by such
other party in connection with this Agreement and the transactions contemplated
hereby, as well as any damages in accordance with applicable law.
10.3 Successors and Assigns. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law, including
without limitation, to the estate of Stockholder) and shall be binding upon and
shall inure to the benefit of the parties hereto, the successors of Buyer, and
the heirs and legal representatives of the Stockholder. Notwithstanding anything
in the foregoing to the contrary, Buyer may assign any of its rights or
obligations under this Agreement to Workflow or any direct or indirect
subsidiary of Workflow in its sole and absolute discretion and without the
consent of the Company or the Stockholder; provided, however that in the event
of such assignment Buyer shall continue to be liable to the Stockholder for the
payment of the Purchase Price and the assignee shall assume by written
instrument all obligations of Buyer under this Agreement.
10.4 Entire Agreement; Amendment; Waiver. This Agreement sets
forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby. Each of the Schedules to this Agreement is
incorporated herein by this reference and expressly made a part hereof. Any and
all previous agreements and understandings between or among the parties
regarding the subject matter hereof, whether written or oral, are superseded by
this Agreement. This Agreement shall not be amended or modified except by a
written instrument duly executed by each of the parties hereto, or in accordance
with Section 10.5. Any extension or waiver by any party of any provision hereto
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. Disclosure of matters in any one schedule hereto shall be deemed
disclosure on the other schedules hereto if the applicable cross-reference is
logical and readily apparent.
10.5 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original, and all of
which counterparts taken together shall constitute but one and the same
instrument.
10.6 Brokers and Agents. Except for the employment by Stockholder
of DAK Corporate Investors, Inc., Buyer and the Company and Stockholder (as a
group) each represents and warrants to the other that it has not employed any
broker or agent in connection with the transactions contemplated by this
Agreement and agrees to indemnify the other against all losses, damages or
expenses relating to or arising out of claims for fees, commissions or expenses
of any broker or agent employed or alleged to have been employed by such party.
Stockholder (and not the Company) shall be solely and exclusively responsible
for, and shall indemnify the Buyer, Workflow and the Company, for all losses,
damages or expenses relating to or arising out of claims for fees, commissions
and expenses of DAK Corporate Investors, Inc.
10.7 Expenses. Buyer has and will pay the fees, expenses and
disbursements of Buyer and its agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement. Any fees,
expenses and disbursements of the Stockholder, the Company, and their agents,
representatives, financial advisers, accountants and counsel incurred in
connection with the subject matter of this Agreement which are paid by, charged
to, or advanced by the Company will reduce the calculation of the Certified
Closing Net Worth and the Actual Company Net Worth.
10.8 Specific Performance; Remedies. Each party hereto
acknowledges that the other parties will be irreparably harmed and that there
will be no adequate remedy at law for any violation by any of them of any of the
covenants or agreements contained in this Agreement, including without
limitation, the confidentiality obligations set forth in Section 5.7(b) and the
noncompetition provisions set forth in Article 9. It is accordingly agreed that,
in addition to any other remedies which may be available upon the breach of any
such covenants or agreements, each party hereto shall have the right to obtain
injunctive relief to restrain a breach or threatened breach of, or otherwise to
obtain specific performance of, the other parties, covenants and agreements
contained in this Agreement.
10.9 Notices. Any notice, request, claim, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given when received if delivered personally or
sent by telefax (with confirmation of receipt), by registered or certified mail,
postage prepaid, or by recognized courier service, as follows:
If to Buyer or, after the Closing, to the Company to:
Workflow Management Acquisition Corp.
c/o Workflow Management, Inc.
000 Xxxxx Xxxx Xxx
Xxxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Vice President and General Counsel
(Telefax: (000) 000-0000)
with a required copy to:
Xxxxxxx, Xxxxxxxxx LLP
0 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxxx, Esq.
(Telefax: (000) 000-0000)
If to the Stockholder to:
Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
(Telefax: (000) 000-0000)
with a required copy to:
Xxxx, Marks & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxx, Esq.
(Telefax: (000) 000-0000)
or to such other address as the person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given when actually received by the addressees. Attorneys
for either party may, but shall not be required, to give any notice on behalf of
their respective clients.
10.10 Governing Law. This Agreement shall be governed by and
construed, interpreted and enforced in accordance with the laws of New Jersey.
Any disputes arising out of, in connection with or with respect to this
Agreement, the subject matter hereof, the performance or non-performance of any
obligation hereunder, or any of the transactions contemplated hereby shall be
adjudicated in a court of competent civil jurisdiction sitting in the State of
New Jersey and nowhere else. Each of the parties hereto hereby irrevocably
submits to the jurisdiction of such court for the purposes of any suit, civil
action or other proceeding arising out of, in connection with or with respect to
this Agreement, the subject matter hereof, the performance or non-performance of
any obligation hereunder, or any of the transactions contemplated hereby
(collectively, "Suit"). Each of the parties hereto hereby waives and agrees not
to assert by way of motion, as a defense or otherwise in any such Suit, any
claim that it is not subject to the jurisdiction of the above courts, that such
Suit is brought in an inconvenient forum, or that the venue of such Suit is
improper.
10.11 Severability. If any provision of this Agreement or the
application thereof to any person or circumstances is held invalid or
unenforceable in any jurisdiction, the remainder hereof, and the application of
such provision to such person or circumstances in any other jurisdiction, shall
not be affected thereby, and to this end the provisions of this Agreement shall
be severable. The preceding sentence is in addition to and not in place of the
severability provisions in Section 9.5.
10.12 Absence of Third Party Beneficiary Rights. No provision of
this Agreement is intended, nor will any provision be interpreted, to provide or
to create any third party beneficiary rights or any other rights of any kind in
any creditor, claimant, client, customer, affiliate, shareholder, employee or
partner of any party hereto or any other person or entity.
10.13 Mutual Drafting. This Agreement is the mutual product of the
parties hereto, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of each of the parties, and shall not be
construed for or against any party hereto. As used in this Agreement, the term
"person" shall mean an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
10.14 Further Representations. Each party to this Agreement
acknowledges and represents that it has been represented by its own legal
counsel in connection with the transactions contemplated by this Agreement, with
the opportunity to seek advice as to its legal rights from such counsel. Each
party further represents that it is being independently advised as to the tax
consequences of the transactions contemplated by this Agreement and is not
relying on any representation or statements made by the other party as to such
tax consequences.
[Execution Page Following]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
BUYER
WORKFLOW MANAGEMENT ACQUISITION CORP.
By: /s/ Workflow Management Acquisition Corp.
-----------------------------------------
Name:
-----------------------------------------
Title:
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UNIVERSAL FOLDING BOX CO., INC.
By:/s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman
PRINCIPAL STOCKHOLDER:
/s/ Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx
ADDITIONAL STOCKHOLDER:
THE XXXXXXX X. XXXXXX ANNUITY TRUST
By:/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx, Trustee
WORKFLOW MANAGEMENT, INC. (for the purpose
of confirming its obligations under
Section 5.14 hereof and approving Buyer's
obligations under Section 1.7 hereof)
By: /s/ Workflow Management, Inc.
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Name:
-------------------------------
Title:
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