Exhibit 2.1
STOCK PURCHASE AGREEMENT
DATE: March 31, 1997
PARTIES: Zomax Optical Media, Inc. ("Zomax")
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile Number (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇")
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile Number (▇▇▇) ▇▇▇-▇▇▇▇
RECITALS:
▇. ▇▇▇▇▇▇ is the holder of all of the issued and outstanding capital stock
of Benchmark Media Services, Inc. ("Benchmark").
B. The parties mutually desire that ▇▇▇▇▇▇ sell to Zomax all of the issued
and outstanding shares of capital stock of Benchmark upon the terms and subject
to the conditions set forth in this Agreement
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
The following words and phrases shall have the meanings set forth below:
"▇▇▇▇▇▇" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"Benchmark" shall mean Benchmark Media Services, Inc.
"Benchmark Shares" shall have the meaning ascribed to it in Section
2.1 below.
"Closing" shall have the meaning ascribed to it in Section 8.1 below.
"Closing Date" shall mean the date of the Closing.
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"Employee Plans" shall have the meaning ascribed to it in Section
3.18(b) below.
"ERISA" shall have the meaning ascribed to it in Section 3.18(b) below.
"Inventory" shall have the meaning ascribed to it in Section 3.14
below.
"Licenses and Permits" shall have the meaning ascribed to it in
Section 3.15 below.
"Patents" shall have the meaning ascribed to it in Section 3.12 below.
"Personal Property Leases" shall have the meaning ascribed to it in
Section 3.17 below.
"Product Liability Claims" shall have the meaning ascribed to it in
Section 3.22 below.
"Revenues" shall have the meaning ascribed to it in Section 2.2(b).
Technology" shall have the meaning ascribed to it in Section 3.12
below.
"Territory" shall have the meaning ascribed to it in Section 6.1(a)
below
"Trademarks" shall have the meaning ascribed to it in Section 3.11
below.
"Zomax" shall mean Zomax Optical Media, Inc.
ARTICLE 2.
PURCHASE OF THE SHARES
2.1) Shares Purchased from ▇▇▇▇▇▇. Subject to the terms and conditions
hereof, ▇▇▇▇▇▇ hereby assigns, sells, transfers, conveys and delivers to Zomax
all of the shares of capital stock of Benchmark, as listed on Exhibit 3.4 hereto
(the " Benchmark Shares"), and Zomax hereby purchases the Benchmark Shares from
▇▇▇▇▇▇.
2.2) Purchase Price. The Purchase Price shall be the sum of the following
amounts:
(a) The sum of one dollar in cash in full payment for all the
Benchmark Shares payable at Closing.
(b) (i) Zomax will pay ▇▇▇▇▇▇ the following additional consideration
based upon Benchmark's Revenues generated during calendar year
1997 from sales to the Benchmark customers as listed on Exhibit
2.2(b) hereto. For purposes
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herein, Revenues shall mean the total invoice amount for products
and services based upon services performed and shipments made
prior to year end.
Revenue Generated Additional Consideration
less than $7.5 million $ 0
$7.5 - $8.5 million $ 250,000
$8.5 - $9.5 million $ 500,000
$9.5 - $11.0 million $ 750,000
$11.0 - $13.0 million $1,000,000
more than $13.0 million $1,250,000
(ii) During January, 1998, the Additional Consideration shall be
computed as of December 31, 1997 in accordance with generally
accepted accounting principles. The Additional Consideration will
be paid in cash by Zomax to ▇▇▇▇▇▇ on February 1, 1998.
2.3) Sales and Use Tax. ▇▇▇▇▇▇ shall be responsible for payment of any
sales or use tax assessable with respect to the transactions herein.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
OF ▇▇▇▇▇▇
▇▇▇▇▇▇ makes the following representations and warranties to Zomax with the
intention that Zomax may rely upon the same. ▇▇▇▇▇▇ shall represent at the time
of Closing that the following are true and correct in all respects.
3.1) Organization. Benchmark is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado, has all
requisite power and authority, corporate and otherwise, to own its properties
and assets and conduct its business as currently conducted.
3.2) Qualification. Benchmark is qualified to do business and in good
standing as a foreign corporation in the States of Minnesota, Indiana and
Florida and in all other states in which qualification is required by the nature
of its business and in which the failure to so qualify would have a material
adverse effect on Benchmark.
3.3) Capitalization of Benchmark. The authorized capital of Benchmark
consists of 8,000,000 shares of common stock, 720,000 shares of Series A
Preferred Stock, 1,700,000 shares of Series B Preferred Stock and 1,580,000
shares of preferred stock for which no series has been designated. There are
issued and outstanding 7,148,528 shares of Benchmark common stock, no shares of
Series A Preferred Stock, no shares of Series B Preferred Stock and no other
shares of capital stock. There are no outstanding rights, plans, options,
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warrants, conversion rights or agreements for the purchase or acquisition from
Benchmark of any shares of its capital stock, except as set forth on Exhibit 3.3
hereto.
3.4) Title to Shares of Stock of Benchmark. Exhibit 3.4 hereto is a
complete and correct list of the number of shares of all classes of stock of
Benchmark owned by all shareholders of Benchmark. As of the closing, ▇▇▇▇▇▇
shall own one hundred percent of all classes of stock of Benchmark which is
issued and outstanding, free and clear from all liens, claims and third party
interests whatsoever. ▇▇▇▇▇▇ has all requisite power and authority (without
consent or approval of any other person) to enter into and carry out his
obligations under this Agreement.
3.5) Subsidiaries, Joint Ventures or Partnerships. Except as disclosed in
Exhibit 3.5 hereto, Benchmark does not have any subsidiary, and Benchmark is not
a shareholder, partner or joint venturer with any other person or legal entity.
Any subsidiary disclosed in Exhibit 3.5 hereto is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation as set forth in Exhibit 3.5 hereto.
3.6) Financial Statements.
(a) Financial Statements. ▇▇▇▇▇▇ has furnished Zomax a true and
complete copy of Benchmark's balance sheets and statements of
income for its fiscal year ended March of 1996 and have furnished
updates thereof as of and for the period ending February 23, 1997
(collectively the "Financial Statements"). The Financial
Statements have been, and any financial statements delivered to
Zomax for subsequent periods will be, prepared in conformance
with generally accepted accounting principles and procedures
applied on a basis consistent with prior periods, and fairly
present and will fairly present in all material respects the
financial condition of Benchmark as of the represented dates
thereof and the results of Benchmark's operations for the periods
covered thereby. For purposes of this Agreement, the Financial
Statements shall be deemed to include any notes thereto.
(b) Benchmark's Books and Records. Benchmark's books of account and
records (including customer order files, employment records and
production and manufacturing records) are complete, true and
correct in all material respects.
(c) Absence of Undisclosed Liabilities. As of the date of the most
recent Financial Statements there are not and as of March 28,
1997 there will not be any liabilities or obligations of any
nature (whether accrued, absolute, contingent, or otherwise)
which in the aggregate exceed the sum of $25,000 or which
individually exceed $5,000, that are not disclosed or fully
reflected or reserved against on the Financial Statements or
otherwise disclosed to Zomax on any Exhibit hereto.
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(d) No Adverse Changes. Since February 23, 1997, there has not
occurred or arisen (whether or not in the ordinary course of
business): (i) any material adverse change in the financial
condition, prospects, or operations of Benchmark, (ii) any change
in Benchmark's accounting methods or practices, (iii) any sale or
transfer of any asset or any amendment of any agreement of
Benchmark except in the ordinary course of business, (iv) any
loss of or damage to the assets of Benchmark due to abuse,
misuse, fire or other casualty, (v) any labor trouble with any
Benchmark employee, (vi) any reasonably foreseeable increase in
operating costs of Benchmark not commensurate with increased
production, (vii) any warranty or product liability claims or
losses against Benchmark, or (viii) any other event or condition
known or suspected by ▇▇▇▇▇▇ to have occurred or to exist which,
singly or in the aggregate, materially and adversely affect or
may affect Benchmark.
3.7) Tax Reports, Returns and Payment.
(a) Tax Reports and Returns. Except as disclosed in Exhibit 3.7(a)
hereto, Benchmark has timely filed all federal and applicable
state, local and foreign tax or assessment reports and returns of
every kind required to be filed by Benchmark, without limitation,
income tax, sales and use tax, real estate tax, personal property
tax and unemployment tax, and has duly paid all taxes and other
charges (including interest and penalties) due to or claimed to
be due by any taxing authorities. True and correct copies of the
reports and returns filed by Benchmark during the last three tax
years have been made available to Zomax. Where required, timely
estimated payments or installment payments of tax liabilities
have been made to all governmental agencies in amounts sufficient
to avoid underpayment penalties or late payment penalties
applicable thereto. During the three (3) years preceding the
Closing Date, such income tax returns have not been subjected to
any examination or audit by governmental authorities except as
disclosed on Exhibit 3.7(a) hereto.
(b) FIFO Inventory. Benchmark has prepared and duly filed its
election to utilize FIFO basis inventory accounting under the
Internal Revenue Code, and such election is in effect for its
current fiscal year.
(c) Tax Payments. Except as disclosed in Exhibit 3.7(c) hereto, the
provisions for taxes shown in the Financial Statements are
adequate to cover the aggregate liability of Benchmark as of the
Closing Date for all taxes, duties and charges based on the
income, purchases, sales, business, real estate ownership,
capital stock or surplus, or assets of Benchmark; and Benchmark
has incurred no liability for any income taxes for the period
from February 28, 1997 through the Closing Date except those
which arise in the ordinary course of business. No unexpired
waivers executed by or with respect to the liability of
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Benchmark of the statute of limitations with respect to any
taxes, duties or charges are in effect, nor has Benchmark
otherwise agreed to any extension of time with respect to an
assessment of deficiency with respect to such taxes, duties or
charges. Benchmark is not a party to any pending action or
proceeding by any governmental agency for assessment or
collection of taxes, and no claim, proposed assessment or
assessment for collection of taxes have been asserted or
threatened against Benchmark; and ▇▇▇▇▇▇ and Benchmark are not
aware of any reasonable grounds, any facts or any circumstances
which would give rise thereto.
3.8) Title to Assets. The assets of Benchmark reflected on the Financial
Statements or listed on any Exhibit hereto constitute all property necessary for
the conduct of the business of Benchmark as now conducted. Benchmark holds title
to all such assets free and clear of all liens, charges, encumbrances or third
party claims or interests of any kind whatsoever, except as disclosed in Exhibit
3.8 hereto.
3.9) Location of Assets. Except as set forth on Exhibit 3.9, all assets of
Benchmark are located on the premises of Benchmark listed on Exhibit 3.16
hereto.
3.10) Tangible Personal Property. Exhibit 3.10 hereto contains a list of
all tangible property used by Benchmark in the conduct of its business as it is
currently conducted. All tangible assets of Benchmark are in good repair and
operating condition, except as stated in Exhibit 3.10 hereto.
3.11) Trademarks. Exhibit 3.11 hereto contains a complete list of all
tradenames, trademarks or service ▇▇▇▇ registrations and applications, common
law trademarks, copyrights and copyright registrations and applications used by
Benchmark in its business as currently conducted (the "Trademarks"). Benchmark
has good title to, and the full and unrestricted right to use, the Trademarks,
and the Trademarks are free and clear of all liens, charges, encumbrances, or
third party claims or interests of any kind whatsoever. Except as disclosed in
Exhibit 3.11 hereto, the use of the Trademarks does not infringe on any rights
of any other person or entity; the Trademarks are not licensed to or licensed
from any other person or entity; and there have been no claims of any
infringement regarding the Trademarks or Benchmark's use thereof.
3.12) Patents and Technology. Exhibit 3.12 hereto contains a true and
complete description of all of the domestic and foreign letters patent, patent
applications and patent and know-how licenses used by Benchmark in its business
as currently conducted ("Patents") and all technology, know-how, trade secrets,
manufacturing processes, formulae, drawings, designs and computer programs
related to or used or useful in the conduct of Benchmark's business as currently
conducted and all documentary evidence thereof ("Technology"). Benchmark has
good title to the Patents and Technology, and the full and unrestricted right to
use the same. Such rights are free and clear of all liens, charges, encumbrances
or third party claims or interests of any kind whatsoever. The nature of the
inventions claimed in the
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Patents and the practice of the Technology do not infringe on any rights of any
other person or entity, and there have been no claims by any person of such
infringement. None of such rights is licensed to or licensed from any other
person or entity except as disclosed in Exhibit 3.12 hereto.
3.13) Accounts Receivables. Except to the extent reserved against in the
Financial Statements, or disclosed in Exhibit 3.13 hereto, all accounts
receivable of Benchmark have been collected or are substantially current and
will be collected within one hundred twenty (120) days after the Closing Date at
the aggregate face amounts of such receivables recorded on Benchmark's books to
the extent the total face amount thereof exceeds the allowance for doubtful
accounts set forth in the Financial Statements. All such accounts, notes or
other receivables are valid, legal, and binding obligations owing to Benchmark,
enforceable against the parties to be charged, and, in the case of any note, in
accordance with its terms, not subject to any defenses or set-offs.
3.14) Inventory. The inventory, including raw materials, supplies, work in
process and finished inventory as of February 23, 1997 ("Inventory") is
described in Exhibit 3.14 hereto and represents the normal supplies and stock in
trade of Benchmark. The Inventory is and will be, except and to the extent of
the obsolescence reserve shown on Exhibit 3.14, good, merchantable and saleable
in the ordinary course of business and is and will be of a quality, quantity and
mix consistent with Benchmark's past business practices and the demands of its
customers.
3.15) Licenses and Permits. Benchmark possesses all necessary permits,
licenses and approvals, governmental or otherwise, without which it could not
conduct its business in its present form and at its present locations all of
which are listed on Exhibit 3.15 hereto (the "Licenses and Permits"). All of the
Licenses and Permits are valid and in good standing and Benchmark has not
received any notice that the Licenses and Permits will lapse or be terminated by
action of any governmental authority or otherwise. Except as disclosed in
Exhibit 3.15 hereto, all of the Licenses and Permits are freely assignable and
transferable to Zomax and will continue to be in full force and effect after the
Closing.
3.16) Real Property. Exhibit 3.16 hereto is an accurate and complete list
of all real property owned, leased or subject to option, or beneficially owned
by Benchmark, or otherwise used by Benchmark in conducting its business, which
list states the ownership status and a brief description of all buildings and
structures located on such real property. Neither Benchmark nor ▇▇▇▇▇▇ has
received any formal or informal notice of the initiation of any condemnation
proceeding with respect to such real property, or offer of sale in lieu thereof.
3.17) Leases. Exhibit 3.17 hereto contains an accurate and complete list of
all leases of personal property related to or used in the operation of
Benchmark's business (the "Personal Property Leases"). Benchmark has not
breached, nor has it received in writing any claim or threat that it has
breached, any of the terms or conditions of any of the Personal
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Property Leases or any lease of real property. Except as set forth as Exhibit
3.16 hereto, each real property lease is in full force and effect and is not
subject to any material default thereunder by any party obligated to Benchmark
pursuant thereto. Benchmark has not received any notice of default under any of
such leases and there is no event existing which, with notice or lapse of time,
or both, would constitute a default under any such lease. There are no
provisions of, or developments materially affecting, any of such leases which
might prevent Benchmark from realizing the benefits thereof or which might
prevent Zomax from realizing such benefits following completion of this
transaction.
3.18) Agreements, Contracts and Commitments.
(a) Material Contracts. Exhibit 3.18(a) hereto contains an accurate
and complete list as of March 28, 1997 of all agreements,
contracts, leases and commitments to which Benchmark is a party
and which involve more than $5,000 singly or $25,000 in the
aggregate or which otherwise are material to the financial
condition or operations of Benchmark and are not disclosed in the
most recent Financial Statements or in any other Exhibit.
(b) Employee Plans. Benchmark does not maintain any "Employee Plans"
except as set forth in the employee policy manual attached to
Exhibit 3.18(b) or as set forth on Exhibit 3.18(b) hereto.
"Employee Plans" mean any pension, retirement, disability,
medical, dental, or other health insurance plan, life insurance
or other death benefit plan, profit sharing deferred
compensation, stock option, bonus or other incentive plan,
vacation benefit plan, severance plan, or other employee benefit
plan or arrangement including, without limitation, any "pension
plan" as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and any
"welfare plan" as defined in Section 3(l) of ERISA, whether or
not any of the foregoing is funded, (i) to which Benchmark is a
party or by which it is bound, or (ii) with respect to which
Benchmark has made any payments or contributions may otherwise
have any liability (including any such plan or other arrangement
formerly maintained by Benchmark).
(c) Union and Employment Contracts and Other Employment Matters.
(i) Except as set forth on Exhibit 3.18(c), Benchmark is not a
party to any collective bargaining agreement or any other
written employment agreement, nor is Benchmark a party to
any other contract or understanding (oral or written) that
contains any severance pay liabilities or obligations,
except for accrued, unused vacation pay or accrued and
unused sick leave pay. Except as set forth on Exhibit
3.18(b), all of Benchmark's employee benefits are outlined
in the employee manual attached as Exhibit 3.18(b).
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(ii) Except as disclosed in Exhibit 3.18(c) hereto, during the
last three (3) years Benchmark has experienced no work
stoppages, walkouts or strikes or attempts by its employees
to organize a union.
(iii)Except as disclosed in Exhibit 3.18(c) hereto, there have
been no employee or ex-employee lawsuits or claims, or any
claims of unfair labor practices or the like, in the past
three (3) years.
(d) Breach. Except as disclosed in Exhibit 3.18(d) hereto, Benchmark
has performed all obligations required to be performed by
Benchmark to date under any material contract, commitment or
arrangement of any kind to which Benchmark is a party or by which
Benchmark is bound; and neither Benchmark nor any other party is
in default under any material contract, commitment, or
arrangement of any kind to which Benchmark is a party or by which
Benchmark is bound. Except as disclosed in Exhibit 3.18(d)
hereto, no event has occurred which after the giving of notice or
the lapse of time or otherwise would constitute a default under,
or result in a breach of by Benchmark or any other party, any
contract, commitment, or arrangement to which Benchmark is a
party or by which Benchmark is bound.
(e) Copies of Contracts; Terms and Binding Effect. True, complete and
correct copies of all written contracts, commitments,
understandings, and other documents referred to in the Exhibits
hereto have been delivered or made available to Zomax; there are
no amendments to or modifications of, or agreements of the
parties relating to, any such contracts, commitments, and
understandings which have not been delivered to Zomax; and each
such contract, commitment, or understanding, as amended, is
considered valid and binding on the parties to it in accordance
with its respective terms, and the transaction contemplated by
this Agreement will not result in the violation or breach of any
such material contract, commitment, or understanding.
3.19) Contracts with Related Parties. Except as disclosed in Exhibit 3.19
hereto, there are no agreements or contracts between Benchmark and any of its
employees, agents, officers, directors or shareholders.
3.20) Predominant Customers. Except as disclosed in Exhibit 3.20 hereto, no
single customer of Benchmark accounted for over five percent (5%) of Benchmark's
revenues during the fiscal year ending prior to the date of this Agreement.
3.21) Change In Customers. Except as disclosed in Exhibit 3.21 hereto,
neither Benchmark nor ▇▇▇▇▇▇ have any information indicating that any
significant customers intend to cease doing business with Benchmark or
materially alter the amount of business they do with Benchmark.
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3.22) Product Liability Claims. All products which Benchmark has sold have
been merchantable, free from material defects in material or workmanship, and
suitable for the purpose for which they were sold. Since its inception,
Benchmark has never received a claim based upon alleged breach of product
warranty, strict liability in tort, negligent manufacture of product, or any
other allegation of liability arising from Benchmark's manufacture or sale of
its products (hereafter collectively referred to as "Product Liability Claims"),
any of which Product Liability Claims exceeds $5,000. All liability from any
actual and potential Product Liability Claims, whether or not asserted on or
before the Closing Date, are fully covered including all costs of defense and
investigation, by Benchmark's product liability insurance policies. During the
two (2) years prior to the Closing Date there have been no Product Liability
Claims whatsoever received by Benchmark except as set forth in Exhibit 3.22
hereto, which Exhibit describes such claims and the disposition thereof. Neither
Benchmark nor ▇▇▇▇▇▇ has any reasonable grounds to believe that future Product
Liability Claims with respect to products of Benchmark sold prior to the Closing
Date will be different from Benchmark's past experience with respect thereto as
set forth herein.
3.23) Insurance. Exhibit 3.23 hereto contains a complete list of all
insurance policies maintained by Benchmark during the last three (3) years.
Benchmark has not been refused any insurance coverage applied for or sought by
Benchmark other than in the ordinary course of business.
3.24) Litigation and Related Matters. Except as disclosed on Exhibit 3.24
hereto, there is no pending or threatened litigation, proceeding, or
investigation (including any environmental, building or safety investigation)
against Benchmark or ▇▇▇▇▇▇, nor is Benchmark or ▇▇▇▇▇▇ subject to any existing
judgment, order, decree, or other action affecting the operation of Benchmark's
business or which would prevent, impede, or make illegal the consummation of the
transactions contemplated in this Agreement, or which would have a material
adverse effect on Benchmark.
3.25) Laws and Regulations. Benchmark has complied, and is in compliance,
with applicable laws, statutes, orders, rules, regulations and requirements
promulgated by governmental or other authorities relating to it, including,
without limitation, any relating to wages, hours, hiring, promotion, retirement,
working conditions, air, water, solid or liquid waste pollution,
nondiscrimination, health, safety, pensions, benefits, the production,
processing, advertising or sale of products, trade regulation, antikickback,
export licensing, antitrust, antiboycott, warranties, or control of foreign
exchange; and Benchmark has not received any notice of any sort of alleged
violation of any such statute, order, rule, regulation or requirement. Benchmark
and the business it conducts conform in all material respects to all applicable
zoning and building laws.
3.26) Breaches of Contracts; Required Consents. Neither the execution and
delivery of this Agreement by ▇▇▇▇▇▇, nor compliance by ▇▇▇▇▇▇ with the terms
and provisions of
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this Agreement, nor the consummation of the transactions contemplated by this
Agreement will:
(a) Conflict with or result in a breach of (i) any of the terms,
conditions or provisions of the Articles of Incorporation, Bylaws
or other governing instruments of Benchmark, (ii) any judgment,
order, decree or ruling to which Benchmark or ▇▇▇▇▇▇ is a party,
(iii) any injunction of any court or governmental authority to
which Benchmark or any of the ▇▇▇▇▇▇ is subject, or (iv) any
agreement, contract or commitment which is material to the
business of Benchmark or to Benchmark's financial condition; or
(b) Except as disclosed in Exhibit 3.26(b) hereto, require the
affirmative consent or approval of any third party.
3.27) Binding Obligation. This Agreement constitutes the legal, valid and
binding obligation of ▇▇▇▇▇▇ in accordance with the terms hereof. ▇▇▇▇▇▇ is not
subject to any charter, mortgage, lien, lease, agreement, contract, instrument,
law, rule, regulation, order, judgment or decree, or any other restriction of
any kind or character, which would prevent the consummation of the transactions
contemplated in this Agreement.
3.28) Minute Books. The copies of the Articles of Incorporation of
Benchmark and all amendments thereto, certified as of a recent date by the
Secretary of State of Colorado, and of the Bylaws of Benchmark, certified by the
Secretary or an Assistant Secretary of Benchmark, which have been delivered to
Zomax are complete and correct. The minute books of Benchmark are complete and
correctly reflect, in all material respects, all corporate actions of Benchmark
taken at all meetings or through written action.
3.29) Completeness of Disclosures. None of the representations or
warranties made by ▇▇▇▇▇▇ in this Agreement or the Exhibits hereto, and no
written statement, certificate or Exhibit furnished or to be furnished by or on
behalf of ▇▇▇▇▇▇ to Zomax or its agents pursuant hereto, or in connection with
the transaction contemplated by this Agreement, contains any untrue statement of
a material fact or omits any material fact the omission of which would be
misleading. The Exhibits to this Agreement, where provided by or on behalf of
Seller, completely and correctly present the information required by this
Agreement to be set forth in them.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF ZOMAX
Zomax makes the following representations and warranties to ▇▇▇▇▇▇ with the
intention that ▇▇▇▇▇▇ may rely upon the same, and acknowledges that the same
shall be true as of the Closing Date and shall survive the Closing of this
transaction.
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4.1) Organization. Zomax is a corporation, duly organized, validly existing
in good standing under the laws of the State of Minnesota and has all requisite
power and authority, corporate and otherwise, to own its properties and conduct
the business in which it is presently engaged.
4.2) Corporate Authority. Zomax has all requisite power and authority to
execute, perform and carry out the provisions of this Agreement. Zomax has taken
all requisite corporate action authorizing and empowering Zomax to enter into
this Agreement and to consummate the transactions contemplated herein.
4.3) Breaches of Contracts; Required Consents. Neither the execution and
delivery of this Agreement by Zomax, nor compliance by Zomax with the terms and
provisions of this Agreement, will:
(a) Conflict with or result in a breach of: (i) any of the terms,
conditions or provisions of the Articles of Incorporation, Bylaws
or other governing instruments of Zomax, (ii) any judgment,
order, decree or ruling to which Zomax is a party, (iii) any
injunction of any court or governmental authority to which it is
subject, or (iv) any agreement, contract or commitment listed on
any Exhibit hereto and which is material to the financial
condition of Zomax; or
(b) Require the affirmative consent or approval of any third party
which has not been obtained.
4.4) Binding Obligation. This Agreement constitutes the legal, valid and
binding obligation of Zomax in accordance with the terms hereof. Zomax is not
subject to any charter, mortgage, lien, lease, agreement, contract, instrument,
law, rule, regulation, order, judgment or decree, or any other restriction of
any kind or character, which would prevent the consummation of the transactions
contemplated in this Agreement.
4.5) Financial Statements. The balance sheet of Zomax as of December 27,
1996, with the related statement of income, stockholders' equity, and changes in
financial position for the period then ended and the notes to them which, among
other things, are part of Zomax's Annual Report on Form 10-K for the year ended
December 27, 1996 (collectively the "Financial Statements"), (i) are in
accordance with the books and records of Zomax and (ii) (A) have been prepared
in accordance with generally accepted accounting principles and procedures
applied on a consistent basis (except as set forth in the notes to the Financial
Statements and (B) present fairly the financial position of Seller as of the
dates of the respective Financial Statements and the results of their operations
for the periods covered by the Financial Statements.
- 12 -
ARTICLE 5.
CONDUCT OF BUSINESS PRIOR TO CLOSING
5.1) Access to Information. During the period prior to the Closing, ▇▇▇▇▇▇
shall give to Zomax and its attorneys, accountants or other authorized
representatives, full access to all of the property, books, contracts,
commitments and records of ▇▇▇▇▇▇ and shall furnish to Zomax during such period
all such information concerning the Business as Zomax reasonably may request.
5.2) Restrictions. Except as disclosed in Exhibit 5.2, ▇▇▇▇▇▇ represents
and warrants that since the date of the most recent Financial Statements and
during the period from the date of this Agreement to the Closing Date, Benchmark
has not and will not have (except as Zomax otherwise has consented in writing):
(a) created or incurred any liability (absolute or contingent) except
unsecured current liabilities incurred for other than money
borrowed, renewals of existing borrowings, and liabilities under
insurance and other contracts entered into in the ordinary course
of business (and in compliance with this Agreement);
(b) granted any new mortgage, pledge, or lien upon, or otherwise
encumbered, any of the assets of the Business, tangible or
intangible, except pursuant to Benchmark's existing working
capital line of credit in the ordinary course of business;
(c) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent) other than
current liabilities shown on the Financial Statements (including
current installments of long-term debt shown on them), taxes, and
current liabilities incurred since the date of this Agreement in
the ordinary course of business;
(d) made any capital expenditures or capital additions or
betterments, which individually exceeded $5,000 in value;
(e) sold or otherwise disposed of any of the assets of the Business,
tangible or intangible, except inventory in the ordinary course
of business at regular prices;
(f) declared or paid any dividends or made any other distribution or
payment on or in respect of, or directly or indirectly purchased,
retired, redeemed, or otherwise acquired, any shares of
Benchmark's capital stock;
(g) made or become a party to any contract, commitment, or other
arrangement or renewed, extended, amended, or modified any
contract, commitment, or other
- 13 -
arrangement which in any one case involved an amount in excess of
$5,000, except in the ordinary course of business (and in
compliance with this Agreement);
(h) paid or agreed to pay, conditionally or otherwise, any bonus,
additional compensation, pension, or severance pay to any of
Benchmark's present or former directors or officers or to
employees whose annual base compensation (including bonuses and
commissions) exceeded $35,000, whether under any existing profit
sharing, pension, or other plan or otherwise;
(i) increased the rate of compensation (including salaries, fees,
commission rates, bonuses, profit sharing, incentive, pension,
retirement, or other similar payments) being paid at the date of
this Agreement to any of Benchmark's present or former directors
or officers or to employees whose annual base compensation
(including bonuses and commissions) exceeded $35,000;
(j) made or suffered any material change in the assets of the
Business;
(k) sold or otherwise disposed of any leases pertaining to the
Business, or entered into any renewals or extensions of existing
leases or entered into any new leases;
(l) permitted any amendment or termination of any material contract,
license, franchise or other agreement;
(m) altered or revised its accounting principles, procedures, methods
or practices;
(n) removed, or permitted to be removed, from any building, facility
or real property, any machinery, equipment, fixture, vehicle, or
other personal property or parts thereof, except in the ordinary
course of business (and in compliance with this Agreement);
(o) changed its credit policy as to sales of inventories or
collection of receivables;
(p) granted or committed to grant any options, warrants or other
rights to subscribe for or purchase or otherwise acquire any
shares of Benchmark's capital stock or other securities or other
ownership interests in Benchmark;
(q) issued or sold or committed to issue or sell any shares of
Benchmark's capital stock or other securities or other ownership
interests in Benchmark; or
(r) received a written communication from any customer which
accounted for more than two percent (2%) of Benchmark's revenues
for the Business during
- 14 -
the last full fiscal year to the effect that such customer does
not intend to continue to purchase merchandise from Benchmark.
5.3) Risk of Loss. Prior to completion of the Closing, the risk of loss or
destruction to any of Benchmark's assets shall be that of ▇▇▇▇▇▇. In the event
of damage or destruction of any of Benchmark's assets, ▇▇▇▇▇▇ shall replace such
damaged or destroyed assets with similar assets of equal value and shall use any
insurance proceeds received for such damage to make such replacements.
5.4) Preserve Accuracy of Representations and Warranties. ▇▇▇▇▇▇ shall
refrain from taking any action, except with the prior written consent of Zomax,
which would render any representation, warranty or agreement of ▇▇▇▇▇▇ in this
Agreement inaccurate or breached as of the Closing. At all times prior to the
Closing, ▇▇▇▇▇▇ will promptly inform Zomax in writing with respect to any
matters that arise after the date of this Agreement which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in the Exhibits. ▇▇▇▇▇▇ promptly will notify Zomax in writing
of all lawsuits, claims, proceedings and investigations that may be threatened,
brought, asserted or commenced against Benchmark or Benchmark's officers or
directors involving the transaction contemplated by this Agreement or which
might have a material adverse impact on the Business.
5.5) No Solicitation of Other Offers. ▇▇▇▇▇▇ agrees that, prior to Closing
Date or the termination of this Agreement pursuant to Section 7.4 below neither
▇▇▇▇▇▇ nor any of ▇▇▇▇▇▇'▇ representatives will solicit from any other person
any offer, inquiry or proposal with respect to the sale, merger or other
acquisition of Benchmark or of all or any portion of Benchmark's assets. ▇▇▇▇▇▇
will promptly notify Zomax of any such offer, inquiry or proposal received by
▇▇▇▇▇▇ or ▇▇▇▇▇▇'▇ representatives.
ARTICLE 6.
POST CLOSING OBLIGATIONS
6.1) Restrictive Covenants. ▇▇▇▇▇▇ covenants and agrees as follows:
(a) Covenant Not to Compete. ▇▇▇▇▇▇ agrees not to engage in
competition with the currently existing businesses of Zomax or
Benchmark anywhere in the United States of America, Canada or
Mexico (the "Territory") for a period of five (5) years
subsequent to the Closing Date. This covenant of noncompetition
shall be interpreted to prohibit, without limiting the generality
of the foregoing, ▇▇▇▇▇▇ from serving as a more than five percent
(5%) shareholder, partner, director, officer, employee, agent of
or independent contractor to, any person or entity which directly
competes in the Territory with Zomax or Benchmark in their
currently existing business.
- 15 -
(b) Solicitation of Benchmark or Zomax Employees. ▇▇▇▇▇▇ agrees not
to solicit any Benchmark or Zomax employees, either directly or
indirectly, to leave the employment of Benchmark or Zomax for a
period of five (5) years subsequent to the Closing Date.
(c) Injunctive Relief and Reasonableness. Zomax and ▇▇▇▇▇▇ stipulate
and agree that the remedy at law for breach of the restrictive
covenants would be inadequate and that Zomax shall be entitled to
injunctive relief to enforce the covenant not to compete and the
non-solicitation covenant. Zomax and ▇▇▇▇▇▇ further stipulate and
agree that the prohibitions contained herein are reasonable as to
time and area, and they specifically waive any objection to the
reasonableness of said prohibitions.
(d) Payment of Severance. ▇▇▇▇▇▇ agrees to assume all obligations of
Benchmark relating to the Severance Agreement dated February 13,
1997 between the Benchmark and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, to hold Benchmark
and Zomax harmless, and to pay any and all amounts hereafter
owing to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to such Severance Agreement.
6.2) Covenants. Zomax covenants and agrees that it will cause Benchmark to
send quarterly statements of accrued Revenues (determined in accordance with
Section 2.2(b) above) to ▇▇▇▇▇▇.
ARTICLE 7.
CONDITIONS OF CLOSING; ABANDONMENT OF TRANSACTION
7.1) Conditions to Obligations of Zomax to Proceed on the Closing Date. The
obligations of Zomax to proceed on the Closing Date shall be subject at its
discretion to the satisfaction, on or prior to the Closing, of all of the
following conditions:
(a) Truth of Representations and Warranties and Compliance with
Obligations. The representations and warranties of ▇▇▇▇▇▇ herein
shall be true in all material respects on the Closing Date with
the same effect as though made at such time. ▇▇▇▇▇▇ shall have
performed all material obligations and complied with all material
covenants and conditions prior to or as of the Closing Date.
▇▇▇▇▇▇ shall have delivered to Zomax a certificate in form and
substance satisfactory to Zomax dated as of the Closing Date and
executed by ▇▇▇▇▇▇ to all such effects.
- 16 -
(b) Opinion of Counsel. Zomax shall have received a duly executed
opinion letter from ▇▇▇▇▇▇'▇ legal counsel dated as of the
Closing Date, in form and substance reasonably satisfactory to
Zomax and its counsel, to the effect that:
(i) Benchmark is a corporation duly organized and validly
existing and in good standing in the State of Colorado has
all necessary corporate power to own the property it now
owns and to operate its business as it is now operated; and
is qualified to do business and is in good standing in the
States of Minnesota, Indiana and Florida and in all other
states in which qualification is required by the nature of
the Business.
(ii) To the best of such counsel's knowledge, after reasonable
inquiry, this Agreement and all collateral documents have
been duly and validly authorized, executed and delivered by
▇▇▇▇▇▇ constitute the valid and binding obligations of
▇▇▇▇▇▇, and are enforceable in accordance with their terms,
except as limited by bankruptcy and insolvency laws and by
other laws affecting the rights of creditors generally, and
are sufficient to convey and vest in Zomax all right, title
and interest in the Benchmark shares;
(iii)To the best of such counsel's knowledge, after reasonable
inquiry, ▇▇▇▇▇▇ owns one hundred percent (100%) of the
shares of all classes of capital stock of Benchmark which
are issued and outstanding; there are no existing rights,
plans, options, warrants, conversion rights or agreements
for the purchase or acquisition from Benchmark of any shares
of its capital stock except as set forth in the Stock
Purchase Agreement; and ▇▇▇▇▇▇'▇ has all requisite power and
authority (without consent or approval of any other party)
to execute and to carry out his obligations under this
Agreement;
(iv) To the best of such counsel's knowledge, after reasonable
inquiry, no suit, action, arbitration, legal or
administrative proceeding, or any governmental
investigation, is pending or threatened against Benchmark,
or any of their businesses or properties;
(v) Neither the execution nor delivery of this Agreement, nor
the consummation of the transactions contemplated in this
Agreement, will constitute:
(1) To the best of such counsel's knowledge,
after reasonable inquiry, a violation of
Benchmark's Articles of Incorporation or
Bylaws, or, to the best of such counsel's
knowledge, after reasonable inquiry, a
default (or an event which with notice or
lapse of time or both will constitute a
default) under, or
- 17 -
violation or breach of, any material
indenture, license, lease, mortgage,
instrument, or other agreement to which
Benchmark is a party, or by which its
properties may be bound;
(2) To the best of such counsel's knowledge,
after reasonable inquiry, require the
affirmative consent or approval of any third
party except as disclosed in Exhibit
3.26(b); or
(3) To the best of such counsel's knowledge,
after reasonable inquiry, an event which
would result in the creation or imposition
of any lien, charge, or encumbrance on any
of the Benchmark Shares; and
(vi) To the best of such counsel's knowledge, after reasonable
inquiry, ▇▇▇▇▇▇ has good and marketable title to the
Benchmark Shares free and clear of all liens, encumbrances,
charges, and third-party claims or interests whatsoever;
(c) Required Consents. Benchmark shall have obtained the consent or
approval of each person whose consent or approval Zomax
reasonably believes is required in connection with this
Agreement; including, without limitation, consent of all
licensing and governmental authorities required to assign the
Licenses and Permits.
(d) Delivery of Documents. ▇▇▇▇▇▇ shall have delivered all documents
required to be delivered at Closing pursuant to Section 8.2
hereof.
(e) Litigation Affecting Closing. No suit, action or other proceeding
shall be pending or threatened by or before any court or
governmental agency in which it is sought to restrain or prohibit
or to obtain damages or other relief in connection with this
Agreement or the consummation of the transaction contemplated by
this Agreement, and no investigation that may result in any such
suit, action or other proceeding shall be pending or threatened.
(f) Intentionally Omitted.
(g) Verification of Accounts Receivable. Zomax shall have obtained,
to its satisfaction, confirmation of the accounts receivable owed
to Benchmark by its customers.
(h) Review of Tax Returns. Zomax shall have had the opportunity prior
to the Closing Date to review all of Benchmark's state and
federal income tax returns. Zomax shall be satisfied that there
are no undisclosed liabilities for
- 18 -
taxes, penalties or interest on those returns not yet audited by
the respective taxing authorities or on those returns which may
yet be audited.
(i) Cancellation of Severance Agreements. ▇▇▇▇▇▇ shall have cancelled
all severance agreements of Benchmark for Benchmark employees
other than the Severance Agreement for ▇▇▇ ▇▇▇▇▇▇▇.
(j) Cancellation of Options and Warrants. ▇▇▇▇▇▇ shall have cancelled
all outstanding options and warrants to purchase shares of
capital stock of Benchmark.
7.2) Conditions to Obligation of ▇▇▇▇▇▇ to Proceed on the Closing Date. The
obligation of ▇▇▇▇▇▇ to proceed on the Closing Date shall be subject to the
satisfaction, on or before the Closing, of the following conditions:
(a) Truth of Representations and Warranties and Compliance with
Obligations. The representations and warranties of Zomax herein
contained shall be true in all material respects on the Closing
Date with the same effect as though made at such time. Zomax
shall have performed all material obligations and complied with
all material covenants and conditions prior to or as of the
Closing Date. Zomax shall have delivered to ▇▇▇▇▇▇ a certificate
of Zomax in form and substance reasonably satisfactory to ▇▇▇▇▇▇
dated as of the Closing Date and executed by the President of
Zomax to all such effects.
(b) Opinion of Counsel. ▇▇▇▇▇▇ shall have received a duly executed
opinion letter from Zomax's legal counsel dated as of the Closing
Date, in form and substance reasonably satisfactory to ▇▇▇▇▇▇ and
its counsel, to the effect that:
(i) Zomax is a corporation duly organized and validly existing
and in good standing in the State of Minnesota and has all
necessary corporate power to own the property it now owns
and to operate its business as it is now operated;
(ii) This Agreement and all collateral documents have been duly
and validly authorized, executed and delivered by Zomax,
constitute the valid and binding obligations of Zomax, and
are enforceable in accordance with their terms, except as
limited by bankruptcy and insolvency laws and by other laws
affecting the rights of creditors generally;
(iii)Neither the execution nor delivery of this Agreement, nor
the consummation of the transactions contemplated in this
Agreement, will, constitute a violation of Zomax's Articles
of Incorporation or Bylaws, or, to the best of such
counsel's knowledge, after reasonable inquiry, a default (or
an event which with notice or lapse of time or both will
- 19 -
constitute a default) under, or violation or breach of, any
indenture, license, lease, mortgage, instrument, or other
agreement to which Zomax is a party, or by which its
properties may be bound; or require the affirmative consent
or approval of any third party except as disclosed in
Exhibit 3.26(b).
(c) Delivery of Documents. Zomax shall have delivered all documents
required to be delivered at Closing pursuant to Section 8.3 hereof.
7.3) THIS SECTION INTENTIONALLY LEFT BLANK.
7.4 Termination of Agreement. This Agreement and the transactions
contemplated herein may be terminated at or prior to the Closing Date as
follows:
(a) By mutual written consent of all parties.
(b) By Zomax pursuant to written notice delivered at or prior to the
Closing if ▇▇▇▇▇▇ has failed in any material respect to satisfy
all of the conditions to Closing set forth in Section 7.1.
(c) By ▇▇▇▇▇▇ pursuant to written notice delivered at or prior to the
Closing if Zomax has failed in any material respect to satisfy
the conditions set forth in Section 7.2.
(d) By either party pursuant to written notice delivered at or prior
to the Closing if the Closing shall have not occurred by April
11, 1997, for any reason other than the refusal or failure of the
terminating party to meet its obligations under this Agreement.
7.5) Consequences of Termination. In the event of termination of this
Agreement, ▇▇▇▇▇▇ and Zomax each will return to the other all documents and
materials obtained from the other in connection with the transaction
contemplated by this Agreement and will use all reasonable efforts to keep
confidential any nonpublic information about the other party obtained pursuant
to this Agreement. Zomax and ▇▇▇▇▇▇ shall each be entitled to exercise any
rights and remedies available to them by law.
- 20 -
ARTICLE 8.
CLOSING
8.1) Closing. The closing of the transaction contemplated by this Agreement
("Closing") shall be held at the offices of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A., on March
31, 1997, at 10:00 a.m. local time.
8.2) Documents Delivered by ▇▇▇▇▇▇. At the Closing, ▇▇▇▇▇▇ shall deliver
the following documents, duly executed as appropriate, to Zomax:
(a) All certificates, schedules, exhibits, and attachments in
completed form and specifying the information required by the
provisions of this Agreement.
(b) Articles of Incorporation of Benchmark certified by the Colorado
Secretary of State.
(c) Bylaws of Benchmark certified by Benchmark's Secretary.
(d) Certificates of Good Standing for Benchmark dated no earlier than
ten (10) days prior to the Closing Date, certified by the
Minnesota, Indiana, Florida and Colorado Secretaries of State;
provided, the Certificate from the Secretary of State of Colorado
must be dated no earlier than thirty (30) days prior to the
Closing Date.
(e) Stock certificates representing the Benchmark Shares duly
endorsed for transfer to Zomax.
(f) An opinion letter referred in Section 7.1(b).
(g) The certificate referred to in Section 7.1(a).
(h) Copies of all agreements terminating severance agreements
pursuant to Section 7.1(i) above.
(i) Copies of all agreements or documentation regarding the
termination of options and warrants pursuant to Section 7.1(j)
above.
(j) Resignation of the members of Benchmark's Board of Directors.
8.3) Documents Delivered by Zomax. At the Closing, Zomax delivered the
following documents, duly executed as appropriate, to ▇▇▇▇▇▇:
(a) The certificate referred to in Section 7.2(a).
- 21 -
(b) Certified copies of corporate resolutions of Zomax authorizing it
to enter into the transactions contemplated herein.
(c) An opinion letter referred to in Section 7.2(b).
(d) Check or funds from Zomax made payable to ▇▇▇▇▇▇ in the amount of
$1.00.
(e) Wire transfer of funds from Zomax to ▇▇▇▇▇▇ in the amount of
$1,000,000 plus accrued interest thereon in the amount of
$9,369.86.
ARTICLE 9.
INDEMNIFICATION
9.1) Indemnification by ▇▇▇▇▇▇. Subject to the limitations set forth in
Section 9.2 below, ▇▇▇▇▇▇ shall indemnify and hold Zomax harmless at all times
from and after the date of this Agreement, against and in respect of all
damages, losses, costs and expenses (including reasonable attorney fees) which
Zomax may suffer or incur in connection with any of the following matters:
(a) Any claim demand, action or proceeding asserted by a creditor of
Benchmark or ▇▇▇▇▇▇ or any other person respecting liabilities of
▇▇▇▇▇▇ or liabilities of Benchmark not specifically disclosed
herein.
(b) The breach by ▇▇▇▇▇▇ of any of his representations, warranties or
covenants contained in this Agreement.
(c) Any claim, demand, action or proceeding asserted by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Vice President and Chief Financial Officer of Benchmark,
pursuant to a Severance Agreement dated February 3, 1997, a copy
of which is attached hereto as Exhibit 9.1(c).
9.2) Limitation of Liability.
(a) Zomax shall not assert any claim under Sections 9.1(a) and (b)
and 9.5 unless and until all such claims under Section 9.1 above
exceed an aggregate of $25,000.
(b) Zomax shall assert any claim under Section 9.1(b) above within
two years from the Closing Date or be forever barred from
asserting such claim.
(c) The rights of Zomax with respect to any claims arising under
Section 9.1 above shall be limited to recovery of actual losses,
costs and expenses
- 22 -
(including reasonable attorney fees) and no recovery shall exceed
the aggregate amount of $1,000,000, plus the Additional
Consideration.
9.3) Indemnification by Zomax. Subject to the limitations set forth in
Section 9.4 below, Zomax shall indemnify and hold ▇▇▇▇▇▇ harmless at all times
from and after the date of this Agreement, against and in respect of all
damages, losses, costs and expenses (including reasonable attorney fees) which
▇▇▇▇▇▇ may suffer or incur in connection with any of the following matters:
(a) Any claim, demand, action or proceeding asserted by a creditor of
Benchmark or Zomax respecting liabilities of Benchmark
specifically assumed by Zomax pursuant to this Agreement.
(b) The breach by Zomax of any of its representations, warranties or
covenants contained in this Agreement.
9.4) Limitation of Liability.
(a) ▇▇▇▇▇▇ shall not assert any claim under Sections 9.3 and 9.5
unless and until all such claims under Section 9.3 above exceed
an aggregate of $25,000.
(b) ▇▇▇▇▇▇ shall assert any claim under Section 9.3(b) above within
two years from the Closing Date or be forever barred from
asserting such claim.
(c) The rights of ▇▇▇▇▇▇ with respect to any claims arising under
Section 9.3 above shall be limited to recovery of actual losses,
costs and expenses (including reasonable attorney fees) and no
recovery shall exceed the aggregate amount of $1,000,000, plus
the Additional Consideration.
9.5) Third Party Claims. If a claim by a third party is made against any of
the indemnified parties, and if any of the indemnified parties intends to seek
indemnity with respect to such claim under this Article, such indemnified party
shall promptly notify the indemnifying party of such claim. The indemnifying
party shall have thirty (30) days after receipt of the above-mentioned notice to
undertake, conduct and control, through counsel of such party's own choosing
(subject to the consent of the indemnified party, such consent not to be
unreasonably withheld) and at such party's expense, the settlement or defense of
it, and the indemnified party shall cooperate with the indemnifying party in
connection with such efforts; provided that: (i) the indemnifying party shall
not by this Agreement permit to exist any lien, encumbrance or other adverse
charge upon any asset of any indemnified party, (ii) the indemnifying party
shall permit the indemnified party to participate in such settlement or defense
through counsel chosen by the indemnified party, provided that the fees and
expenses of such counsel shall be borne by the indemnified party, and (iii) the
indemnifying party shall agree promptly to reimburse the indemnified party for
the full amount of any loss resulting from such claim and all related expense
incurred by the indemnified party pursuant to this
- 23 -
Article; provided, however, that in no event shall the indemnification of claims
pursuant to this Section 9.5 exceed the aggregate amount of $1,000,000 plus the
Additional Consideration. So long as the indemnifying party is reasonably
contesting any such claim in good faith, the indemnified party shall not pay or
settle any such claim. If the indemnifying party does not notify the indemnified
party within thirty (30) days after receipt of the indemnified party's notice of
a claim of indemnity under this Article that such party elects to undertake the
defense of such claim, the indemnified party shall have the right to contest,
settle or compromise the claim in the exercise of the indemnified party's
exclusive discretion at the expense of the indemnifying party.
9.6) Set Off. In the event ▇▇▇▇▇▇ fails to pay when due any claim Zomax may
have for indemnification pursuant to this Article or otherwise, Zomax may, in
addition to any other remedies to which Zomax may be entitled, set-off an amount
equal to Zomax's claim against the amounts owed by Zomax to ▇▇▇▇▇▇ as Additional
Consideration pursuant to Section 2.2(b) above.
ARTICLE 10.
GENERAL
10.1) Further Documents and Assurances. At any time and from time to time
after the Closing Date, each party shall, upon request of another party,
execute, acknowledge and deliver all such further and other assurances and
documents, and will take such action consistent with the terms of this
Agreement, as may be reasonably requested to carry out the transactions
contemplated herein and to permit each party to enjoy its rights and benefits
hereunder.
10.2) Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given, when
received, if personally delivered; when deposited, if placed in the U.S. mails
for delivery by registered or certified mail, return receipt requested, postage
prepaid, addressed as set forth at the beginning of this Agreement; or when sent
by facsimile, if sent to the facsimile number set forth at the beginning of this
Agreement. Addresses and facsimile numbers may be changed by written notice
given pursuant to this Section, however any such notice shall not be effective,
if mailed, until three (3) working days after depositing in the U.S. mails or
when actually received, whichever occurs first.
10.3) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their successors or
assigns.
10.4) Headings. The descriptive headings of the several Articles and
Sections of this Agreement and of the several Exhibits to this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
- 24 -
10.5) Expenses. Each party hereto shall each bear and pay for its own costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereby, including, without limitation, all fees and disbursements
of lawyers, accountants and financial consultants incurred through the Closing
Date; provided however, Benchmark shall pay up to $10,000 of the expenses of
▇▇▇▇▇▇ in connection with this Agreement.
10.6) Brokers' Commissions. ▇▇▇▇▇▇ and Zomax each represent and warrant to
the other that they/it have/has not engaged any broker or finder in connection
with the transaction described herein. Each party agrees to indemnify and hold
the other party harmless for any breach of this representation and warranty.
10.7) Entire Agreement; Modification and Waiver. This Agreement, together
with the Exhibits and the related written agreements specifically referred to
herein, represents the only agreement among the parties concerning the subject
matter hereof and supersedes all prior agreements (including the letter of
intent dated as of February 27, 1997) whether written or oral, relating thereto.
No purported amendment, modification or waiver of any provision hereof shall be
binding unless set forth in a written document signed by all parties (in the
case of amendments or modifications) or by the party to be charged thereby (in
the case of waivers). Any waiver shall be limited to the provision hereof and
the circumstance or event specifically made subject thereto and shall not be
deemed a waiver of any other term hereof or of the same circumstance or event
upon any recurrence thereof.
10.8) Public Announcement. In the event either party to this Agreement
proposes to issue any press release or public announcement concerning, or
otherwise divulge, any provisions of this Agreement or the transaction
contemplated by this Agreement, such party shall so advise the other party, and
the parties shall after such advice use their best efforts to cause a mutually
agreeable release or announcement to be issued.
10.9) Arbitration. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota without regard to the
conflicts of laws and rules thereof. All disputes, controversies or differences
arising out of or in connection with this Agreement or the making thereof,
including claims of fraud in the inducement, which cannot be settled by mutual
agreement shall be finally settled by binding arbitration pursuant to the Rules
of Commercial Arbitration of the American Arbitration Association then in
effect, except as specified herein and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. Any
arbitration hereunder shall be held in Minneapolis, Minnesota. The arbitration
shall be conducted by a single arbitrator selected by the parties. The
arbitrator shall be a retired state or federal judge or an attorney who has
practiced business litigation for at least 10 years. In the event that the
parties are unable to agree on an arbitrator, the arbitrator shall be selected
by the American Arbitration Association. The hearings shall be conducted on an
expedited schedule. They shall commence no later than 20 days after initiation
of proceedings and shall be completed within 20 days, and the arbitrator shall
make the award within 10 days of the close of the hearings. The arbitrator shall
have the authority to award any remedy or relief that a court
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of the State of Minnesota could order or grant, including, without limitation,
equitable remedies, specific performance of any obligation created under this
Agreement, the awarding of punitive damages, the issuance of an injunction or
the imposition of sanctions for abuse or frustration of the arbitration process.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in the manner appropriate to each, all as of the day and year first
above written.
ZOMAX OPTICAL MEDIA, INC.
By /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its Chief Executive Officer
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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EXHIBITS
Number Title
2.2(b) Benchmark Customers
3.3 Capitalization
3.4 ▇▇▇▇▇▇'▇ Shares
3.5 Subsidiaries
3.7(a) Tax Returns
3.7(c) Tax Payments
3.8 Title to Assets
3.9 Location of Assets
3.10 Tangible Personal Property
3.11 Trademarks
3.12 Patents and Technology
3.13 Accounts Receivable
3.14 Inventory
3.15 Licenses and Permits
3.16 Real Estate
3.17 Leases
3.18(a) Material Contracts
3.18(b) Employee Plans
3.18(c) Employee Matters
3.18(d) Breaches
3.19 Related Party Transactions
3.20 Predominant Customers
3.21 Changes in Customers
3.22 Product Liability Claims
3.23 Insurance
3.24 Litigation
3.26(b) Consents
5.2 Prohibited Transactions
9.1(c) Severance Agreement
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