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STOCK PURCHASE AGREEMENT
BETWEEN
NEW ENGLAND BUSINESS SERVICE, INC.
AND
CSS INDUSTRIES, INC.
December 5, 1997
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STOCK PURCHASE AGREEMENT
This Agreement is entered into on December 5, 1997, by and among NEW
ENGLAND BUSINESS SERVICE, INC., a Delaware corporation (the "Buyer"), and CSS
INDUSTRIES, INC., a Delaware corporation (the "Seller"). The Buyer and the
Seller are referred to collectively herein as the "Parties."
W I T N E S S E T H:
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WHEREAS, the Seller owns all of the outstanding Class A Common Stock of
Rapidforms, Inc., a New Jersey corporation ("Rapidforms"); and
WHEREAS, this Agreement contemplates a transaction in which the Buyer will
purchase from the Seller, and the Seller will sell to the Buyer, all of the
outstanding capital stock of Rapidforms in return for cash.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
ARTICLE I
DEFINITIONS
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For the purposes of this Agreement, the following words and phrases, when
used herein, shall have the meanings specified or referred to below:
"Adjusted Net Equity" has the meaning set forth in Section 2.05(c) below.
"Adverse Consequences" means all actions, suits, proceedings, charges,
complaints, claims, demands, injunctions, judgments, orders, decrees, rulings,
damages, dues, penalties, fines, costs, amounts paid in settlement,
Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including
court costs and reasonable attorneys' fees and expenses, determined after
taking into effect all proceeds of insurance; provided that Adverse
Consequences shall not include any damages which were not, at the time of the
breach, reasonably foreseeable as a probable result of such breach.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
Section 1504 or any similar group defined under a similar provision of state,
local or foreign law, of which Rapidforms or any of its Subsidiaries is a
member.
"Xxxxxxxx" has the meaning set forth in Section 2.05(a) below.
"Business Day" means any day on which banking institutions in Boston,
Massachusetts are open for the transaction of banking business.
"Buyer" has the meaning set forth in the preface above.
"Class A Common Stock" means the Class A common stock of Rapidforms, $.01
par value per share.
"Class B Common Stock" means the Class B common stock of Rapidforms, $.01
par value per share.
"Closing" has the meaning set forth in Section 2.03 below.
"Closing Balance Sheet" has the meaning set forth in Section 2.05(a)
below.
"Closing Date" has the meaning set forth in Section 2.03 below.
"Closing Financial Statements" has the meaning set forth in Section
2.05(a) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any confidential or proprietary
information concerning the businesses and affairs of Rapidforms and its
Subsidiaries that is not already generally available to the public.
"Controlled Group of Corporations" has the meaning set forth in Code
Section 1563.
"Disclosure Schedule" has the meaning set forth in Section 3.01 below.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan,
(b) qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Section
3(2).
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"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Section
3(1).
"Encumbrances" has the meaning set forth in Section 3.01(e) below.
"Environmental, Health, and Safety Laws" means all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees and rulings thereunder) of federal, state and local governments (and
all agencies thereof) concerning pollution or protection of the environment,
public health and safety, or employee health and safety.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Extremely Hazardous Substance" has the meaning set forth in Section 302
of the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Final Auditor" has the meaning set forth in Section 2.05(a) below.
"Final Determination" means Adjusted Net Equity as agreed to by the
parties, or as determined by the Final Auditor, in accordance with Section
2.05(a) below.
"Financial Statements" has the meaning set forth in Section 4.07 below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Indemnified Party" has the meaning set forth in Section 8.04 below.
"Indemnifying Party" has the meaning set forth in Section 8.04 below.
"Initial Purchase Price" has the meaning set forth in Section 2.02 below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all
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copyrights, and all applications, registrations, and renewals in connection
therewith, (d) all mask works and all applications, registrations, and renewals
in connection therewith, (e) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals), (f) all
computer software (including data and related documentation), (g) all other
proprietary rights, and (h) all copies and tangible embodiments thereof (in
whatever form or medium).
"July 31, 1997 Balance Sheet" has the meaning set forth in Section
2.05(a).
"July 31, 1997 Financial Statements" has the meaning set forth in Section
4.07 below.
"Knowledge" means actual knowledge of the person without any implied duty
of investigation.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Material Adverse Effect" means a material adverse effect on the business
or financial condition of Rapidforms and its Subsidiaries taken as a whole.
"Most Recent Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section
4.07 below.
"Most Recent Fiscal Month End" has the meaning set forth in Section 4.07
below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 4.07
below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
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"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA Section 406
and Code Section 4975, but excludes any transaction so described which is
exempt from the prohibitions of ERISA pursuant to ERISA Section 408 and the
excise taxes of Code Section 4975 pursuant to Code Section 4975.
"Purchase Price" means the amount as finally determined pursuant to
Section 2.05(b) below.
"Rapidforms" has the meaning set forth in the preface above.
"Rapidforms Share" means any share of the Class A Common Stock and the
Class B Common Stock.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Seller's Knowledge" means the Knowledge of any of the following
individuals: Xxxx Xxxxxx, Xxxxx X. Xxxxxx, Xxxxxxxx X. Xxxxxxxxxxx, Xxxxxxx X.
Xxxxx, Xxxxxx X. Xxxx, Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxx, E. Xxxxxxx Xxxxxx,
and Xxxxxx Xxxxxxx.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits,
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environmental (including taxes under Code Section 59A), customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 8.04 below.
"WARN" means the Worker Adjustment and Retraining Notification Act, 29
U.S.C. SectionSection 2101-2109, and related regulations.
ARTICLE II
PURCHASE AND SALE OF RAPIDFORMS SHARES
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2.01 Basic Transaction. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from the Seller, and the Seller
agrees to sell to the Buyer, all of the Rapidforms Shares then issued and
outstanding on the Closing Date, free and clear of any and all Encumbrances,
for the consideration specified below in this Article II.
2.02 Initial Purchase Price. The Buyer agrees to pay to the Seller
at the Closing Eighty Million Dollars ($80,000,000.00) (the "Initial Purchase
Price") by wire transfer of immediately available funds, as directed by the
Seller at least one Business Day prior to Closing.
2.03 The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Hill &
Xxxxxx, a Professional Corporation, in Boston, Massachusetts, commencing at
10:00 a.m. local time on December 23, 1997 or the Business Day following the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the Closing itself) (the
"Closing Date"). The Closing shall be effective as of 12:01 a.m. on the
Closing Date unless the Closing is December 31, 1997, in which case the Closing
shall be effective as of the close of business on the Closing Date.
2.04 Deliveries at the Closing. At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 7.01 below, (ii) the Buyer will deliver to the Seller
the various certificates, instruments, and documents referred to in Section
7.02 below, (iii) the Seller will deliver to the Buyer
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stock certificates representing all the Rapidforms Shares issued and
outstanding on the Closing Date, endorsed in blank or accompanied by duly
executed assignment documents, and (iv) the Buyer will deliver to the Seller
the consideration specified in Section 2.02 above.
2.05 Adjustments to Initial Purchase Price.
(a) Following the Closing Date, the Seller and the Buyer shall
jointly engage Xxxxxx Xxxxxxxx LLP ("Xxxxxxxx"), but at the Seller's
expense, to perform an audit of Rapidforms' consolidated financial
statements for the period ended on the Closing Date (the "Closing
Financial Statements"). In order to complete such audit, Buyer,
Rapidforms and its Subsidiaries shall provide full cooperation to Seller
and Xxxxxxxx, including, without limitation, making available and
providing reasonable access to the premises, books and records and
employees of Rapidforms and its Subsidiaries, and executing customary
accountant representation letters. Following the completion of such
audit, which Seller and Xxxxxxxx shall use their respective commercially
reasonable efforts to complete within 45 calendar days after the Closing
Date, the Seller shall deliver to the Buyer a true and complete copy of
such Closing Financial Statements, including a balance sheet (the "Closing
Balance Sheet") prepared in accordance with GAAP (excluding footnote
requirements) reflecting consistent methodology and practices regarding
the establishment of balance sheet reserves and liabilities and in a
manner consistent with the July 31, 1997 balance sheet of Rapidforms
(included on Exhibit A hereto) (the "July 31, 1997 Balance Sheet"),
together with a schedule computing Rapidforms' Adjusted Net Equity (as
defined below) based upon the Closing Balance Sheet. It is understood
that in the preparation of the Closing Balance Sheet, the Seller may
adjust reserves and accruals included in the July 31, 1997 Balance Sheet
in conformity with GAAP and Rapidforms' historic methodology. The Seller
shall permit the Buyer to review all work papers and computations used by
Xxxxxxxx in auditing such Closing Financial Statements. Within fifteen
(15) calendar days following the date of delivery of such Closing
Financial Statements to the Buyer, the Buyer shall either accept the
Closing Balance Sheet and Rapidforms' Adjusted Net Equity based thereon or
propose adjustments thereto. In the event the Buyer and the Seller fail
to agree on all of the Buyer's proposed adjustments within ten (10)
calendar days following the date of delivery by the Buyer of notice of
such proposed adjustments, the parties shall request Price Waterhouse LLP
or, in the event that such firm is unavailable to accept this assignment,
such other recognized firm of auditors as the parties mutually agree (the
"Final Auditor") to prepare and deliver to the Buyer and the Seller (i) a
final Closing Balance Sheet in accordance with the terms hereof, adjusting
only items in dispute between the Buyer and the Seller, and (ii) a final
determination of the Adjusted Net Equity of Rapidforms on the Closing Date
as reflected in such final Closing Balance Sheet (the "Final
Determination"), which Final Determination
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shall be binding upon the Buyer and the Seller. The services of the
Final Auditor shall be paid for equally by the Buyer and
the Seller.
(b) Upon a Final Determination, the Initial Purchase Price shall
thereupon be reduced or increased dollar for dollar to the extent that the
sum of the Adjusted Net Equity of Rapidforms on the Closing Date as so
finally determined plus $919,519 is less or more than Rapidforms' Adjusted
Net Equity on July 31, 1997. Within five (5) Business Days after the
Final Determination is made: (i) to the extent that Rapidforms' Adjusted
Net Equity on the Closing Date plus $919,519 is less than Rapidforms'
Adjusted Net Equity on July 31, 1997, the Seller shall remit to the Buyer
the amount of such deficiency; or (ii) to the extent that Rapidforms'
Adjusted Net Equity on the Closing Date plus $919,519 is more than
Rapidforms' Adjusted Net Equity on July 31, 1997, the Buyer shall remit to
the Seller the amount of such excess. Any such payment shall be made by
wire transfer in immediately available funds to a bank account designated
in writing by the Buyer or the Seller, as the case may be. If the Final
Determination has not been made on or before March 15, 1998, Buyer shall
pay Seller $919,519 for payment of income Taxes, and the amount of any
remittance under clauses (i) and (ii) of this Section 2.05(b) shall be the
amount by which Rapidforms' Adjusted Net Equity on the Closing Date is
more or less than its Adjusted Net Equity on July 31, 1997.
(c) For purposes of this Section 2.05, "Adjusted Net Equity"
shall mean the sum of (i) total shareholders' investment, (ii) payables to
Affiliates (including income taxes payable and deferred tax liabilities)
and (iii) minority interest , less the sum of (i) receivables from
Affiliates (including income tax assets and deferred tax assets) and (ii)
the original cost of goodwill and other intangibles, where all such terms
refer to amounts categorized and determined consistently with Rapidforms'
July 31, 1997 Balance Sheet (included as Exhibit A hereto).
2.06 Intercompany Obligations. Upon consummation of the Closing, all
payables to Affiliates and receivables from Affiliates, including without
limitation with respect to income tax obligations, of or to Rapidforms, to or
for the benefit of Seller and its Affiliates other than Rapidforms and its
Subsidiaries, shall be cancelled and of no further force and effect, except (i)
workers compensation liabilities to Seller, (ii) liabilities incurred by Seller
from third parties for services provided directly to and for the benefit of
Rapidforms and its Subsidiaries prior to the Closing in the Ordinary Course of
Business and (iii) as otherwise set forth in this Agreement. Rapidforms and
its Subsidiaries are not obligated to continue any such services referred to in
clause (ii) above, and shall not be liable for any fees or penalties assessed
in connection with the termination of such services.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION
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3.01 Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer that the statements contained in this
Section 3.01 are correct as of the date of this Agreement and will be correct
in all material respects as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3.01), except as set forth in the disclosure schedule
delivered by the Seller to the Buyer on the date hereof (the "Disclosure
Schedule"). The Disclosure Schedule shall be arranged in sections
corresponding to the lettered and numbered sections in this Agreement which
require the disclosure. Any matter disclosed in one section of the Disclosure
Schedule may be cross-referenced in other sections of the Disclosure Schedule,
and shall be deemed disclosed for all purposes of the Disclosure Schedule to
the extent this Agreement requires such disclosure and to the extent the
relevance and significance of such disclosure is evident from such disclosure
or cross-reference.
(a) Organization. The Seller is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(b) Authorization of Transaction. The Seller has full corporate
power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Seller, enforceable in accordance with
its terms and conditions. The Seller need not give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement, other than under the Xxxx-Xxxxx-Xxxxxx
Act.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which the Seller is
subject, or any provision of its charter or bylaws, or (ii) conflict with,
result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which the Seller is a
party or by which it is bound or to which any of its assets is subject.
(d) Brokers' Fees. The Seller has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement for which the Buyer
could become liable or obligated.
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(e) Rapidforms Shares. Each Person holds of record (and, to the
Seller's Knowledge, owns beneficially) the number of Rapidforms Shares set
forth next to its name in Section 4.02 of the Disclosure Schedule. The
Rapidforms Shares owned by the Seller are owned, and to the Seller's
Knowledge, the Rapidforms Shares owned by the other holders are owned,
free and clear of any restrictions on transfer (other than any
restrictions under the Securities Act and state securities laws), Taxes,
Security Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, demands or other encumbrances, other than
encumbrances with respect to Taxes not yet due and payable
("Encumbrances"). No such Person is a party to any voting trust, proxy,
or other agreement or understanding with respect to the voting of any
capital stock of Rapidforms.
3.02 Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Seller that the statements contained in
this Section 3.02 are correct as of the date of this Agreement and will be
correct in all material respects as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3.02).
(a) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions. The Buyer
need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement, other than under the Xxxx-Xxxxx-Xxxxxx Act.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which the Buyer is
subject or any provision of its charter or bylaws or (ii) conflict with,
result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which the Buyer is a
party or by which it is bound or to which any of its assets is subject.
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(d) Brokers' Fees. The Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement for which the Seller
could become liable or obligated.
(e) Investment. The Buyer is acquiring the Rapidforms Shares for
investment and is not acquiring the Rapidforms Shares with a view to or
for sale in connection with any distribution thereof within the meaning of
the Securities Act, unless in compliance with applicable securities law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
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CONCERNING RAPIDFORMS AND ITS SUBSIDIARIES
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The Seller represents and warrants to the Buyer that the statements
contained in this Article IV are correct as of the date of this Agreement
and will be correct in all material respects as of the Closing Date (as
though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Article IV), except as set forth in
the Disclosure Schedule (organized and cross-referenced as described in
Section 3.01 above).
4.01 Organization, Qualification, and Corporate Power. Each of
Rapidforms and its Subsidiaries is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each of Rapidforms and its Subsidiaries is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required (except where failure so to qualify would
not result in a Material Adverse Effect) and each such jurisdiction is
identified in Section 4.01 of the Disclosure Schedule. Each of Rapidforms and
its Subsidiaries has full corporate power and authority and all material
licenses, permits, and authorizations necessary to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it.
Section 4.01 of the Disclosure Schedule lists the directors and officers of
each of Rapidforms and its Subsidiaries. The Seller has delivered to the Buyer
correct and complete copies of the charter and bylaws of each of Rapidforms and
its Subsidiaries (as amended to date). The minute books (containing the
records of meetings of the stockholders, the board of directors, and any
committees of the board of directors), the stock certificate books, and the
stock record books of each of Rapidforms and its Subsidiaries are correct and
complete in all material respects. None of Rapidforms and its Subsidiaries is,
in any material respect, in default under or in violation of any provision of
its charter or bylaws.
4.02 Capitalization. The entire authorized capital stock of
Rapidforms consists of 4,000,000 Rapidforms shares, 1,000,000 of which are
preferred and 3,000,000 of which are common. On the date hereof, 818,500
shares of Class A Common Stock and 72,625 shares of Class B Common Stock are
issued and outstanding and 109,750
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Rapidforms Shares are held in treasury, and 818,500 shares of Class A Common
Stock and no shares of Class B Common Stock will be issued and outstanding and
182,375 shares will be held in treasury as of the Closing Date. All of the
issued and outstanding Rapidforms Shares have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held of record by the respective
stockholders as set forth in Section 4.02 of the Disclosure Schedule. As of
the Closing Date, there shall be no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require Rapidforms or any
of its Subsidiaries to issue, sell, or otherwise cause to become outstanding
any of its capital stock. As of the Closing Date, there shall be no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Rapidforms or its
Subsidiaries.
4.03 Noncontravention. Neither the execution and the delivery of this
Agreement, nor, upon and subject to compliance with the Xxxx-Xxxxx-Xxxxxx Act,
the consummation of the transactions contemplated hereby, will (a) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which any of Rapidforms and its Subsidiaries is subject or any
provision of the charter or bylaws of any of Rapidforms and its Subsidiaries or
(b) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any material agreement,
contract, lease, license, instrument, or other arrangement to which any of
Rapidforms and its Subsidiaries is a party or by which it is bound or to which
any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). None of Rapidforms and its Subsidiaries needs
to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement, other
than under the Xxxx-Xxxxx-Xxxxxx Act.
4.04 Brokers' Fees. None of Rapidforms and its Subsidiaries has any
Liability or obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this Agreement.
4.05 Title to Assets. Rapidforms and its Subsidiaries have good and
marketable title to, or a valid leasehold interest in, the properties and
assets reflected on the Most Recent Balance Sheet (including such items as have
been fully expensed) or acquired after the date thereof (other than real
property, which is covered in Section 4.12), free and clear of all Security
Interests, except for properties and assets disposed of in the Ordinary Course
of Business since the date of the Most Recent Balance Sheet.
4.06 Subsidiaries. Section 4.06 of the Disclosure Schedule sets forth
for each Subsidiary of Rapidforms (i) its name and jurisdiction of
incorporation, (ii) the number of shares of authorized capital stock of each
class of its capital stock, (iii) as of the date
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hereof, the number of issued and outstanding shares of each class of its
capital stock, the names of the holders thereof, and the number of shares held
by each such holder, and (iv) as of the date hereof, the number of shares of
its capital stock held in treasury. All of the issued and outstanding shares
of capital stock of each Subsidiary of Rapidforms have been duly authorized and
are validly issued, fully paid, and nonassessable. With respect to all shares
shown in Section 4.06 of the Disclosure Schedule as owned by Rapidforms or a
Subsidiary of Rapidforms, such shares are held of record and owned beneficially
by such entity, free and clear of any Encumbrances. As of the Closing Date,
there shall be no outstanding or authorized options, warrants, purchase rights,
conversion rights, exchange rights, or other contracts or commitments that
could require any of Rapidforms and its Subsidiaries to issue, sell, or
otherwise cause to become outstanding any of its own capital stock. As of the
Closing Date, there shall be no outstanding stock appreciation, phantom stock,
profit participation, or similar rights with respect to any Subsidiary of
Rapidforms. As of the Closing Date, there shall be no voting trusts, proxies,
or other agreements or understandings with respect to the voting of any capital
stock of any Subsidiary of Rapidforms. None of Rapidforms and its Subsidiaries
controls directly or indirectly or has any direct or indirect equity
participation in any corporation, partnership, trust, or other business
association which is not a Subsidiary of Rapidforms.
4.07 Financial Statements. The following financial statements have
been delivered to the Buyer (collectively the "Financial Statements"): (i)
audited consolidated balance sheets and statements of income, shareholders'
investment and cash flows as of and for the fiscal year ended December 31, 1996
(the "Most Recent Fiscal Year End") for Rapidforms and its Subsidiaries; (ii)
unaudited consolidated and consolidating balance sheets and statements of
income, shareholders' investment and cash flows (the "Most Recent Financial
Statements") as of and for the nine months ended September 30, 1997 (the "Most
Recent Fiscal Month End") for Rapidforms and its Subsidiaries; and (iii) the
unaudited consolidated and consolidating balance sheets for the seven months
ended July 31, 1997 for Rapidforms and its Subsidiaries (the "July 31, 1997
Financial Statements"). The Financial Statements (including the notes thereto
with respect to the Most Recent Fiscal Year End) present fairly, in all
material respects, the financial position of Rapidforms and its Subsidiaries as
of such dates and the results of operations of Rapidforms and its Subsidiaries
for such periods in conformity with GAAP; provided, however, that the Most
Recent Financial Statements and the July 31, 1997 Financial Statements are
subject to normal year-end adjustments (which will not, as they relate to
periods prior to September 30, 1997, be material individually or in the
aggregate) and lack footnotes and other presentation items.
4.08 Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any Material Adverse Effect. Since
that date:
(a) none of Rapidforms and its Subsidiaries has sold, leased,
transferred, or assigned any of its assets, tangible or intangible, other
than (i) in
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the Ordinary Course of Business, (ii) where any such transaction was with
an Affiliate of Rapidforms or its Subsidiaries, for a fair consideration,
and (iii) immaterial transactions;
(b) none of Rapidforms and its Subsidiaries has entered into any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) either involving more than $250,000 or
outside the Ordinary Course of Business;
(c) no party (including any of Rapidforms and its Subsidiaries)
has accelerated, terminated, modified, or cancelled any agreement,
contract, lease, or license (or series of related agreements, contracts,
leases, and licenses) involving more than $250,000 to which any of
Rapidforms and its Subsidiaries is a party or by which any of them is
bound;
(d) none of Rapidforms and its Subsidiaries has imposed any
Security Interest upon any of its assets, tangible or intangible;
(e) none of Rapidforms and its Subsidiaries has made any capital
expenditure (or series of related capital expenditures) either involving
more than $500,000 or outside the Ordinary Course of Business;
(f) none of Rapidforms and its Subsidiaries has made any capital
investment in, any loan to, or any acquisition of the securities or assets
of, any other Person (or series of related capital investments, loans, and
acquisitions) either involving more than $100,000 or outside the Ordinary
Course of Business;
(g) none of Rapidforms and its Subsidiaries has issued any note,
bond, or other debt security or created, incurred, assumed, or guaranteed
any indebtedness for borrowed money or capitalized lease obligation
involving more than $100,000 in the aggregate;
(h) none of Rapidforms and its Subsidiaries has delayed or
postponed the payment of accounts payable and other Liabilities outside
the Ordinary Course of Business;
(i) none of Rapidforms and its Subsidiaries has cancelled,
compromised, waived, or released any right or claim (or series of related
rights and claims) either involving more than $100,000 or outside the
Ordinary Course of Business;
(j) none of Rapidforms and its Subsidiaries has granted any
license or sublicense of any rights under or with respect to any
Intellectual Property, other than in the Ordinary Course of Business;
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(k) there has been no change made or authorized in the charter or
bylaws of any of Rapidforms and its Subsidiaries;
(l) none of Rapidforms and its Subsidiaries has issued, sold, or
otherwise disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock, other than
pursuant to options granted prior to the date hereof under the existing
stock option plans of Rapidforms or its Subsidiaries, as described in
Section 4.24 of the Disclosure Schedule;
(m) none of Rapidforms and its Subsidiaries has declared, set
aside, or paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock, except for the acquisition of
minority interests in Rapidforms and certain of its Subsidiaries;
(n) none of Rapidforms and its Subsidiaries has experienced any
material damage, destruction, or loss (whether or not covered by
insurance) to its property;
(o) none of Rapidforms and its Subsidiaries has made any loan to,
or entered into any other transaction with, any of its directors,
officers, and employees outside the Ordinary Course of Business;
(p) none of Rapidforms and its Subsidiaries has entered into any
employment contract written or oral, or collective bargaining agreement,
which is not terminable by Rapidforms and its Subsidiaries at will and
without additional payments by Rapidforms or its Subsidiaries, or modified
the terms of any existing such contract or agreement;
(q) none of Rapidforms and its Subsidiaries has granted any
increase in the base compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business;
(r) none of Rapidforms and its Subsidiaries has adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance,
or other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or taken any such action with respect
to any other Employee Benefit Plan);
(s) none of Rapidforms and its Subsidiaries has made any other
change in employment terms for any of its directors, officers, and
employees outside the Ordinary Course of Business;
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(t) none of Rapidforms and its Subsidiaries has made or pledged
to make any charitable or other capital contribution outside the Ordinary
Course of Business;
(u) to the Seller's Knowledge, except as expressly contemplated
by this Agreement or the Disclosure Schedule, there has not been any other
material occurrence, event, incident, action, failure to act or
transaction, outside the Ordinary Course of Business, involving any of
Rapidforms and its Subsidiaries; and
(v) none of Rapidforms and its Subsidiaries has committed to any
of the foregoing.
4.09 Undisclosed Liabilities. To Seller's Knowledge, none of
Rapidforms and its Subsidiaries has any material Liability except for (i)
Liabilities set forth on the face of the Most Recent Balance Sheet, (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business and (iii) Liabilities otherwise disclosed in this
Agreement or the Disclosure Schedule.
4.10 Legal Compliance. Each of Rapidforms and its Subsidiaries has
complied in all material respects with all applicable laws currently in effect
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and neither the Seller nor Rapidforms
or any of its Subsidiaries has received notice that any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any failure so to
comply.
4.11 Tax Matters.
(a) Each of Rapidforms and its Subsidiaries has filed all Tax
Returns that it was required to file. All such Tax Returns were correct
and complete in all material respects. All Taxes owed by any of
Rapidforms and its Subsidiaries (whether or not shown on any Tax Return)
have been paid or accrued. None of Rapidforms and its Subsidiaries
currently is the beneficiary of any extension of time within which to file
any Tax Return. No claim has ever been made by an authority in a
jurisdiction where any of Rapidforms and its Subsidiaries does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction.
There are no Security Interests on any of the assets of any of Rapidforms
and its Subsidiaries that arose in connection with any failure (or alleged
failure) to pay any Tax.
(b) Each of Rapidforms and its Subsidiaries has withheld and paid
all Taxes required to have been withheld and paid in connection with
amounts paid
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or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(c) There is no dispute or claim concerning any Tax liability of
any of Rapidforms or its Subsidiaries either (i) claimed or raised by any
authority in writing or (ii) otherwise to Seller's Knowledge. Section
4.11 of the Disclosure Schedule lists all federal, state, local, and
foreign income Tax Returns filed with respect to any of Rapidforms and its
Subsidiaries for taxable periods ended on or after December 31, 1992,
indicates those Tax Returns that have been audited, and indicates those
Tax Returns that currently are the subject of audit. The Seller has
delivered to the Buyer correct and complete copies of the relevant
portions of all federal income Tax Returns of the Seller for taxable
periods ended after December 31, 1992, examination reports, and statements
of deficiencies assessed against or agreed to by any of Rapidforms and its
Subsidiaries since December 31, 1992.
(d) None of Rapidforms or its Subsidiaries has waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency, nor has any Affiliated Group
waived any such statute of limitations or agreed to any such extension of
time in respect of income Taxes for any taxable period during which any of
Rapidforms or its Subsidiaries was a member of the Affiliated Group.
(e) None of Rapidforms and its Subsidiaries has filed a consent
under Code Section 341(f) concerning collapsible corporations. None of
Rapidforms and its Subsidiaries has made any payments, is obligated to
make any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. None of Rapidforms and its
Subsidiaries has been a United States real property holding corporation
within the meaning of Code Section 897(c)(2) during the applicable period
specified in Code Section 897(c)(1)(A)(ii).
(f) Each of Rapidforms and its Subsidiaries has disclosed on its
federal income Tax Returns all positions taken therein that are
reasonably likely to give rise to a substantial understatement of federal
income Tax within the meaning of Code Section 6662. None of Rapidforms
and its Subsidiaries is a party to any written Tax allocation or sharing
agreement which will not be terminated prior to the Closing. Neither
Rapidforms nor any of its Subsidiaries (A) has been a member of an
Affiliated Group filing a consolidated federal income Tax Return other
than a group the common parent of which is the Seller, or (B) has any
Liability for the Taxes of any Person (other than any of Rapidforms and
its Subsidiaries) under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor,
by contract, or otherwise.
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(g) The unpaid Taxes of Rapidforms and its Subsidiaries as a
whole (A) did not, as of the Most Recent Fiscal Month End, exceed the
reserves for Tax liabilities as a whole (including reserves for deferred
Taxes established to reflect timing differences between book and Tax
income) set forth on the Most Recent Balance Sheet and (B) do not exceed
that reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of Rapidforms and its
Subsidiaries in filing their Tax Returns.
4.12 Real Property.
(a) Section 4.12(a) of the Disclosure Schedule lists and
describes briefly all real property that any of Rapidforms and its
Subsidiaries owns. With respect to each such parcel of owned real
property:
(i) the identified owner has good and marketable title to the
parcel of real property, free and clear of any Security Interest,
easement, covenant, or other restriction, subject to installments of
special assessments not yet delinquent and recorded easements, covenants,
and other restrictions (recorded or unrecorded) which do not impair the
current use, occupancy, or value of the property subject thereto;
(ii) there are no pending or, to the Seller's Knowledge,
threatened condemnation proceedings, lawsuits, or administrative actions
relating to the property or other matters affecting materially and
adversely the current use, occupancy, or the value thereof;
(iii) the legal description for the parcel contained in the deed
thereof describes such parcel fully and adequately, the buildings and
improvements are located within the boundary lines of the described
parcels of land, are not in violation of applicable setback requirements,
zoning laws, and ordinances (and none of the properties or buildings or
improvements thereon are subject to "permitted non-conforming use" or
"permitted non-conforming structure" classifications), and do not encroach
on any easement which may burden the land, and the land does not serve any
adjoining property for any purpose inconsistent with the use of the land,
and the property is not located within any flood plain or subject to any
similar type restriction for which any permits or licenses necessary to
the use thereof have not been obtained;
(iv) all facilities have been operated and maintained in all
material respects in accordance with applicable laws, rules, and
regulations and, to the Seller's Knowledge, Rapidforms and its
Subsidiaries have received all approvals of governmental authorities
(including licenses and permits) required in connection with the ownership
or operation thereof;
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(v) to the Seller's Knowledge, there are no material leases,
subleases, licenses, or other agreements, written or oral, granting to any
party or parties (other than Rapidforms and its Subsidiaries) the right of
use or occupancy of any portion of the parcel of real property;
(vi) there are no outstanding options or rights of first refusal
to purchase the parcel of real property, or any portion thereof or
interest therein;
(vii) there are no parties (other than Rapidforms and its
Subsidiaries) in possession of any parcel of real property, other than
tenants under any leases disclosed in Section 4.12(a) of the Disclosure
Schedule who are in possession of space to which they are entitled; and
(viii) all facilities located on each parcel of real property are
supplied with utilities and other services necessary for the operation of
such facilities, including gas, electricity, water, telephone, sanitary
sewer, and storm sewer, all of which services are provided via public
roads or via permanent, irrevocable, appurtenant easements benefiting such
parcel of real property.
(b) Section 4.12(b) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to any of
Rapidforms and its Subsidiaries. The Seller has delivered to the Buyer
correct and complete copies of the leases and subleases listed in Section
4.12(b) of the Disclosure Schedule (as amended to date). With respect to
each lease and sublease listed in Section 4.12(b) of the Disclosure
Schedule:
(i) the lease or sublease is legal, valid and binding against
Rapidforms and its Subsidiaries, and, to Seller's Knowledge, against any
third parties thereto, and is in full force and effect;
(ii) the lease or sublease will continue to be legal, valid and
binding against Rapidforms and its Subsidiaries, and, to Seller's
Knowledge, against any third parties thereto, and will continue to be in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby;
(iii) neither any of Rapidforms or its Subsidiaries nor, to the
Seller's Knowledge, any other party to the lease or sublease is in breach
or default, and no event has occurred which, with notice or lapse of time,
would constitute a breach or default or permit termination, modification,
or acceleration thereunder;
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