EXHIBIT 10(ZZZ)
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (the "Agreement"), made and entered into
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this 23rd day of October, 1996 by and among Graphic Industries, Inc., a Georgia
corporation ("Graphic"), Presstar Acquisition Corp., a Maryland corporation and
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a wholly owned subsidiary of Graphic ("Purchaser") and Ex-Speed-ite Service,
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Inc., a corporation formed under the laws of the District of Columbia (the
"Corporation"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and the 12201 Industrial
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Parkway Joint Venture (the "Joint Venture"), a Maryland partnership existing
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under that certain joint venture agreement dated January 30, 1981 among ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇▇▇ (collectively, the "Venturers").
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WITNESSETH:
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WHEREAS, the Venturers desires to sell and Purchaser desires to
purchase substantially all of the assets of the Joint Venture; and
WHEREAS, the Corporation desires to sell and the Purchaser desires to
purchase substantially all of the assets of the Corporation (collectively, the
"Transaction").
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NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth below and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and intending to be legally
bound, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
The following terms used in this Agreement shall have the meaning
set forth below:
Section 1.1 The "AAA" shall have the meaning set forth in
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Section 8.5.
Section 1.2 The "Act" shall mean the Securities Act of 1933, as
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amended.
Section 1.3 "Acquired Assets" shall mean all of the assets of the
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Business and all of the assets of the Corporation and the Joint Venture,
including, without limitation:
(a) all Real Property and the fixtures, improvements, licenses or
easements appertaining thereto;
(b) all tangible personal property of the Business, including without
limitation, all machinery, equipment, furniture, and leasehold improvements
(the "Personal Property");
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(c) all written or oral contracts, leases, warranties, commitments,
agreements, licenses, purchase and sales orders, rights to any telephone
numbers, registrations, permits,
approvals or other executory commitments of the Business, including but not
limited to all Contracts, all Real Property Leases and all Personal
Property Leases;
(d) all books and records of the Business (other than minute books),
including without limitation, data, data bases, business plans and
projections, records of sales, files, advertising materials and other
similar documents;
(e) all supplies and inventories;
(f) all Intellectual Property;
(g) all prepaid items, unbilled costs and fees, accounts, notes and
other receivables; and
(h) all assets and properties reflected on the Audited Schedule of Net
Assets;
provided, however, that the Acquired Assets shall not include the Excluded
Assets.
Section 1.4 "Acquisition Proposal" shall have the meaning set forth in
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Section 5.2.
Section 1.5 "Agreement" shall have the meaning set forth in the preamble.
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Section 1.6 "Area" shall mean the District of Columbia, Maryland and
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Virginia.
Section 1.7 "Assumed Liabilities" shall mean only those liabilities of the
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Business identified as such on the Audited Schedule of Net Assets which shall
include $40,365.01 as of November 1, 1996 to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. under the
Company's deferred compensation plan and certain expenses pursuant to Section
11.7 hereof; provided, however, that Assumed Liabilities shall not include any
Excluded Liabilities.
Section 1.8 "Audited Net Asset Value" shall mean the net book value of the
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Net Assets as of the Closing Date, as determined pursuant to Section 2.5 hereto.
Section 1.9 "Audited Schedule of Net Assets" shall have the meaning set
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forth in Section 2.5(b).
Section 1.10 "Business" shall mean desktop publishing and prepress
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services, multicolor conventional sheet fed offset printing, multicolor half web
heat set offset printing, bindery services including cutting, folding, and
saddle stitching, addressing and mailing services, internet web page design and
maintenance, acting as an internet site provider and all other forms of graphic
communications currently operated by the Corporation using the Acquired Assets
under the tradename "Presstar Printing Corporation."
Section 1.11 "Claim" shall have the meaning set forth in Section 8.3(a).
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Section 1.12 "Claim Notice" shall have the meaning set forth in Section
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8.3(a).
Section 1.13 "Closing" shall have the meaning set forth in Section 2.7.
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Section 1.14 "Closing Date" shall mean the date upon which the Closing (as
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defined herein) shall occur.
Section 1.15 "Closing Net Asset Value" shall mean the net book value of
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the Net Assets as of the Closing Date, as determined by Sellers pursuant to
Section 2.5(a) hereto.
Section 1.16 "Closing Schedule of Net Assets" shall have the meaning set
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forth in Section 2.5(a) hereto.
Section 1.17 "Code" shall mean the Internal Revenue Code of 1986, as
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amended.
Section 1.18 "Commission" shall mean the Securities and Exchange
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Commission, or any other federal agency at the time administering the Act.
Section 1.19 "Competing Business" shall mean desktop publishing and
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prepress services, multicolor conventional sheet fed offset printing, multicolor
half web heat set offset printing, bindery services including cutting, folding
and saddle stitching, addressing and mailing services, internet web page design
and maintenance, acting as an internet site provider and all other forms of
graphic communications currently operated by the Corporation.
Section 1.20 "Consulting Agreement" shall mean that certain consulting and
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non-competition agreement between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Purchaser, substantially
in the form of Exhibit A hereto.
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Section 1.21 "Contracts" shall have the meaning set forth in Section 3.20.
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Section 1.22 "Corporation" shall have the meaning set forth in the
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preamble.
Section 1.23 "Damages" means claims, damages, losses, judgments,
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settlement, and expenses, including, without limitation, all reasonable fees and
disbursements of counsel incident to the investigation or defense of any claim
or proceeding or threatened claim or proceeding, less the amount of any actual
tax or insurance benefits then available to or received by the Indemnified Party
with respect thereto.
Section 1.24 "Effective Period" shall have the meaning set forth in
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Section 7.4(a).
Section 1.25 "Employment Agreement" shall mean that certain employment and
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non-competition agreement between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Purchaser substantially in
the form of Exhibit B hereto.
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Section 1.26 "Environmental Laws" shall have the meaning set forth in
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Section 3.14(a).
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Section 1.27 "Environmental Permits" shall have the meaning set forth in
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Section 3.14(c).
Section 1.28 "ERISA" shall mean the Employee Retirement Income Security
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Act of 1974, as amended.
Section 1.29 "Escrow Agent" shall mean the party identified as the escrow
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agent in the Escrow Agreement, including its successors and assigns.
Section 1.30 "Escrow Agreement" shall mean that certain Escrow Agreement
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to be entered into by and among Graphic, Purchaser, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and the
Escrow Agent, substantially in the form of Exhibit C hereto, pursuant to which
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall deliver the Escrow Stock Consideration, which shall be
comprised of Graphic Common Stock having a value of no less than $350,000, which
shall be issued to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ pursuant to Section 5.9 hereof as payment
of his loan to the Corporation, to be held in escrow for the Escrow Period.
Section 1.31 "Escrow Period" shall mean the period beginning on the
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Closing Date, and ending one year thereafter.
Section 1.32 "Escrow Stock Consideration" shall mean that number of shares
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of Graphic Common Stock equal to the greater of: ((a) $350,000 or (b) twenty
percent (20%) of the Purchase Price) divided by the Stock Price, and rounded to
the nearest whole number.
Section 1.33 "Excluded Assets" shall mean
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(a) any accounts receivable listed on Schedule 1.33(a), which shall
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include that of Science Weekly;
(b) all uncollected service or late fees on any accounts receivable;
(c) any accounts receivable of the Corporation or the Joint Venture
due from either Shareholders or Venturers, or any of their affiliates;
(d) any claims the Sellers may have against the law firm Sanders,
Schnabel, ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇;
(e) all cash or cash equivalents in transit, in hand or in bank
accounts;
(f) capitalized loan costs;
(g) any life insurance policies on ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and any amounts
relating thereto;
(h) all Plans;
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(i) American Automobile Association 1929 lithostone, pictures, desk
appointments, water pitcher, refrigerator and file cabinet currently in
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇'▇ office;
(j) all gold coins which are identified as precious metals on the
Financial Statements; and
(k) all real estate and other tax refunds for periods ending prior to
the Closing Date.
Section 1.34 "Excluded Liabilities" shall mean:
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(a) any Tax and Payroll Liabilities; and
(b) any liability or obligation to the law firm Sanders, Schnabel,
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
Section 1.35 "Financial Statements" shall mean the financial statements of
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the Corporation and the Joint Venture for the years ended December 31, 1993,
December 31, 1994, December 31, 1995, and the period ended July 31, 1996, all of
which are attached hereto as Schedule 3.6.
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Section 1.36 "Graphic" shall have the meaning set forth in the preamble.
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Section 1.37 "Graphic Common Stock" shall mean shares of Common Stock,
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$0.10 par value, of Graphic.
Section 1.38 "Indemnified Party" shall mean the party seeking
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indemnification under Article 8 hereof.
Section 1.39 "Indemnifying Party" shall mean the party against whom
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indemnification is being sought pursuant to Article 8 hereof.
Section 1.40 "Intellectual Property" shall mean all trade names
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(including, without limitation, the trade name "Presstar Printing Corporation"),
trademarks, trade styles, service marks, patents, patent applications,
copyrights, copyright applications, trademark registrations and trademark
applications owned by, licensed by or registered in the name of any Seller for
use by the Business.
Section 1.41 "Interim Net Asset Value" shall mean a deficit of $458,947,
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which is the net book value of the Net Assets as of July 31, 1996 as reflected
on the Interim Schedule of Net Assets attached hereto as Schedule 1.41.
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Section 1.42 "Joint Venture" shall have the meaning set forth in the
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preamble.
Section 1.43 "Joint Venture Agreement" shall mean the 12201 Industrial
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Parkway Joint Venture Agreement dated January 30, 1981, by and among the
Venturers.
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Section 1.44 "Knowledge" shall mean all information, data, materials or
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knowledge actually known by a person or which should have been known by such
person after reasonable inquiry or investigation.
Section 1.45 "Net Assets" shall mean all of the Acquired Assets less the
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Assumed Liabilities. In determining Net Assets, Excluded Assets and Excluded
Liabilities shall be excluded.
Section 1.46 "Non Third Party Claim" shall have the meaning set forth in
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Section 8.3(a).
Section 1.47 "Personal Property" shall have the meaning set forth in
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Section 1.3(b).
Section 1.48 "Personal Property Leases" shall have the meaning set forth
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in Section 3.8(b).
Section 1.49 "Plans" shall have the meaning set forth in Section 3.18.
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Section 1.50 "Proprietary Information" shall mean information related to
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the Business (i) which derives economic value, actual or potential, from not
being generally known to, or readily ascertainable by, other persons who can
obtain economic value from its disclosure or use and, (ii) which is the subject
of efforts that are reasonable under the circumstances to maintain its secrecy.
Assuming the foregoing criteria are met, Proprietary Information includes, but
is not limited to, information concerning the financial affairs, processes,
services, employees, employees' compensation, research, development, existing
and future products and services, product and service plans and designs,
purchasing, accounting, distribution systems, marketing, formulae, compilations,
programs, methods, techniques, drawings, and suppliers of the Business.
Proprietary Information will not include any information or data which before
being divulged by any Seller, Shareholder or Venturer (i) has become generally
known to the public through no wrongful act of such party; (ii) has been
rightfully received by such party from another party without restriction on
disclosure and without breach of an obligation of confidentiality running either
directly or indirectly to Purchaser or Graphic; (iii) has been approved for
release and released to the general public by written authorization of Purchaser
or Graphic; (iv) has been disclosed pursuant to a requirement of a governmental
agency or of law without similar restrictions or other protections against
public disclosure, or has been required to be disclosed by operation of law;
provided, however, that such party must first have given written notice of such
required disclosure to Purchaser, and taken reasonable steps to allow Purchaser
to seek to protect the confidentiality of the information required to be
disclosed including, without limitation, to allow Purchaser to obtain a
protective order requiring that the Proprietary Information so disclosed be used
only for the purposes for which disclosure is required; or (v) is independently
developed by such party without use, directly or indirectly, of Proprietary
Information and does not relate to the Business.
Section 1.51 "Purchase Price" shall have the meaning set forth in Section
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2.3.
Section 1.52 "Purchaser" shall have the meaning set forth in the preamble.
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Section 1.53 "Qualified Plans" shall have the meaning set forth in Section
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5.15(d).
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Section 1.54 "Real Property" shall have the meaning set forth in Section
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3.9(a).
Section 1.55 "Real Property Leases" shall have the meaning set forth in
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Section 3.9(b).
Section 1.56 "Recipient" shall mean any party receiving Transaction Stock
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pursuant to the terms of this Agreement.
Section 1.57 "Release" shall mean that certain Release to be entered into
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by the Corporation, the Shareholders and the Venturers, substantially in the
form of Exhibit D hereto.
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Section 1.58 "Response Notice Period" shall have the meaning set forth in
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Section 8.3(a).
Section 1.59 "Restricted Period" shall mean the period commencing with the
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Closing Date and ending on the third anniversary thereof.
Section 1.60 "Sellers" shall mean, collectively, the Corporation and the
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Joint Venture provided, however, that the term "Sellers" shall not include the
Venturers in their individual capacities.
Section 1.61 "Shareholders" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇.
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▇▇▇▇▇▇▇.
Section 1.62 "Stock Consideration" shall mean that number of shares of
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Graphic Common Stock determined by dividing the Purchase Price by the Stock
Price, rounded up to the nearest whole number.
Section 1.63 "Stock Price" shall mean the average closing price per share
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of Graphic Common Stock as reported in The Wall Street Journal for the twenty
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(20) trading day period ending with the close of the fourth (4th) trading day
prior to the Closing.
Section 1.64 "Tax" shall mean all Federal, state and local sales, use,
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income, payroll, social security, occupation, gross receipts, ad valorem,
transfer, franchise, withholding, employment, excise, property, or other tax,
charge, duty or other assessment, together with any interest, fines or penalties
in connection therewith.
Section 1.65 "Tax and Payroll Liabilities" shall mean all Tax and payroll
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related liabilities of the Business, Corporation or Joint Venture existing on or
before the Closing Date.
Section 1.66 "Third Party Claim" shall have the meaning set forth in
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Section 8.3(a).
Section 1.67 "Transaction" shall have the meaning set forth in the
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preamble.
Section 1.68 "Transaction Stock" shall mean the Stock Consideration and
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all Graphic Common Stock delivered pursuant to Section 5.9 hereof.
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Section 1.69 "Venturers" shall have the meaning set forth in the preamble.
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Section 1.70 "WARN" shall mean the Worker Adjustment and Retraining
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Notification Act.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
Section 2.1 Purchase and Sale of Assets. At the Closing, subject to the
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terms and conditions set forth herein, Sellers shall sell to Purchaser and
Purchaser shall purchase from Sellers the Business as a going concern and the
Acquired Assets.
Section 2.2 Assumption of Liabilities. At the Closing, subject to the
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terms and conditions set forth herein, Purchaser shall assume and agree to pay,
discharge or perform, as appropriate, the Assumed Liabilities to the extent
reflected on the Audited Schedule of Net Assets.
Section 2.3 Purchase Price. The purchase price (the "Purchase Price") for
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the Business as a going concern and the Acquired Assets shall be an amount equal
to $733,125 plus or minus the Interim Net Asset Value, subject to adjustment as
provided in Section 2.5 hereof, to be paid as set forth in Section 2.4 hereof.
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Section 2.4 Payment of Purchase Price. At the Closing Purchaser shall
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deliver, for and in consideration of the Business as a going concern and the
Acquired Assets, the Stock Consideration, which shall be allocated among and
delivered to the Sellers or their designees as set forth in Section 2.6 hereof.
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Section 2.5 Purchase Price Adjustment.
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(a) Within 30 days following the Closing Date, Sellers shall cause to
be prepared and delivered to Purchaser a schedule (the "Closing Schedule of
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Net Assets"), substantially in the form of the Interim Schedule of Net
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Assets which is attached hereto as Schedule 1.41, reflecting the Closing
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Net Asset Value, and setting forth any proposed adjustment to the Purchase
Price based upon the difference between the Closing Net Asset Value and the
Interim Net Asset Value. Such Closing Schedule of Net Assets shall be
prepared in accordance with Generally Accepted Accounting Principles
consistently applied, except that it shall omit the statements of income,
cash flows, retained earnings and all footnotes. Purchaser shall provide
Sellers, and any representative of Sellers, full access to the books and
records of the Business for purposes of preparing the Closing Schedule of
Net Assets. All outside services utilized to create the Closing Schedule
of Net Assets shall be at the sole cost and expense of Sellers.
(b) Upon receipt of the Closing Schedule of Net Assets, Graphic shall,
at its expense, cause its Certified Public Accountants, Kanes Benator &
Company, L.L.C., to conduct a balance sheet audit of the Closing Schedule
of Net Assets (the "Audited Schedule of Net Assets") reflecting the Audited
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Net Asset Value as of the Closing Date and setting forth any proposed
adjustment to the Purchase Price based on the difference between the
Interim Net Asset Value and the Audited Net Asset Value. The audit of the
Closing
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Schedule of Net Assets shall be completed and the Audited Schedule of Net
Assets shall be delivered to Sellers within sixty (60) days following
receipt of the Closing Schedule of Net Assets and the audit shall be
conducted in accordance with Generally Accepted Auditing Standards as
promulgated by the American Institute of Certified Public Accountants and
the Audited Schedule of Net Assets shall be prepared in Accordance with
Generally Accepted Accounting Principles consistently applied, except that
it shall omit the statements of income, cash flows, retained earnings and
all footnotes.
(c) Sellers shall have fifteen (15) days following receipt of the
Audited Schedule of Net Assets to agree or disagree with the calculation of
the Audited Net Asset Value as set forth therein. If Sellers agree within
such fifteen (15) day period, payment of any difference between the Interim
Net Asset Value and the Audited Net Asset Value shall be made as provided
in Section 2.5(e) hereof. Failure of Sellers to notify Purchaser of a
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disagreement, together with a reason or reasons therefor, shall be deemed
agreement with the calculation of Purchase Price in the Audited Schedule of
Net Assets. If the parties do not agree, notice of the same shall be
delivered to Purchaser within such fifteen (15) day period, which notice
shall specify the item or items of disagreement and the reasons therefor.
Such dispute shall be resolved by arbitration, as set forth in Section 8.5
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hereof.
(d) The Purchase Price to be paid to the Sellers shall be adjusted,
dollar for dollar, in the aggregate, as follows: (i) upward or downward,
by the amount by which the Audited Net Asset Value as shown on the final
Audited Schedule of Net Assets, as agreed upon by the parties as set forth
in Section 2.5(c) hereof, is more or less than (whichever is the case) the
Interim Net Asset Value; (ii) downward, by the face value of any accounts
or notes receivable in favor of the Joint Venture or the Corporation which
are (A) included in the Audited Schedule of Net Assets, (B) in excess of
any bad debt reserve provided for on the Audited Schedule of Net Assets,
and (C) remain uncollected one hundred twenty (120) days after the date of
the Audited Schedule of Net Assets; (iii) downward, by an amount equal to
any loss, damage, cost or expense (including, but not limited to,
reasonable attorney's fees and court costs) incurred by Graphic or
Purchaser as a result of the breach of any representation, warranty or
covenant of the Sellers contained herein or in the schedules attached
hereto; and (iv) upward by the amount of accounts or notes receivable in
favor of the Joint Venture or the Corporation which are actually collected
within one hundred twenty (120) days after the date of the Audited Schedule
of Net Assets which exceed the face value of such accounts or notes
receivable included in the Audited Schedule of Net Assets net of any bad
debt reserve reflected therein.
(e) If the adjustment set forth in Section 2.5(d) hereof results in an
upward adjustment in the Purchase Price, Purchaser shall pay the amount of
such adjustment to Sellers in Graphic Common Stock valued at the Stock
Price and allocated among the Sellers as provided in Section 2.6 hereof.
If the adjustment set forth in Section 2.5(d) hereof results in a downward
adjustment in the Purchase Price, Sellers jointly and severally shall pay
Purchaser the amount of such adjustment in Graphic Common Stock valued at
the Stock Price. In the event there is a reduction in the Purchase Price
pursuant to this Section 2.5, the amount of such reduction shall first be
sought by Purchaser from the Escrow Stock
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Consideration in accordance with the Escrow Agreement, and if the available
Escrow Stock Consideration is not sufficient to pay such deficiency, the
Sellers shall remain jointly and severally liable therefor; provided,
however, that payment from the Escrow Stock Consideration shall not be
Purchaser's exclusive source for payment of such reduction. Any payment in
Graphic Common Stock under this Section 2.5(e) shall be made by rounding
the number of shares to the nearest whole number and no fractional shares
shall be paid or payable. Any payments due under this Section 2.5(e) shall
be made within ten (10) business days following the final determination and
agreement by the parties of the Purchase Price adjustment under Section
2.5(d) hereof. If there is a disagreement regarding the total amount of
the adjustment, any undisputed amounts shall be paid within ten (10) days
of the notice of dispute.
(f) Any accounts receivable which remain uncollected one hundred
twenty (120) days after the date of the Audited Schedule of Net Assets and
which result in a downward adjustment in the Purchase Price pursuant to
Section 2.5(d)(ii) hereof shall be transferred back to the Sellers upon
final settlement of the Purchase Price.
Section 2.6 Allocation of Purchase Price and Assumed Liabilities. In
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addition to Purchaser's assumption of the Assumed Liabilities from the
Corporation and the Joint Venture, respectively, in the amounts reflected on the
Audited Schedule of Net Assets, the Purchase Price shall be allocated between
the Sellers in accordance with the following: shares of Graphic Common Stock
representing $25,000 of the Purchase Price shall be allocated to the Joint
Venture and the Joint Venture hereby instructs that such shares be issued and
delivered directly to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇▇▇▇▇▇▇, and the
Corporation shall receive the remainder of the Purchase Price.
Section 2.7 Closing. The closing of the Transaction (the "Closing") will
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be held on November 1, 1996 at the offices of Galland, Kharasch, ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, P.C., Canal Square, ▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇-▇▇▇▇, or such other time and place as the parties may agree; provided,
however, that in no event shall the Closing be held later than December 31,
1996.
Section 2.8 Tax Consequences. It is intended that with respect to the
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Corporation, the Transaction shall constitute a reorganization within the
meaning of Code Section 368(a)(1)(C) and that this Agreement shall constitute a
"plan of reorganization" for purposes of Code Section 368.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS AND VENTURERS
Sellers and Venturers represent and warrant to Purchaser and Graphic as
follows:
Section 3.1 Organization; Power; Qualification:
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(a) The Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the District of Columbia.
The Corporation has no
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subsidiaries and is not a party to any joint venture nor a partner of any
partnership. The Corporation has the corporate power and authority to own
or lease and operate its properties and to carry on its business as now
being conducted, and is duly qualified and in good standing and authorized
to do business as a foreign corporation in Virginia and Maryland, which
constitutes each jurisdiction in which the character of its properties or
the nature of its business requires such qualification or authorization,
except where the failure to be so qualified, in good standing or authorized
will not have a material adverse effect. As of the Closing Date, all of
the issued and outstanding capital stock of the Corporation will be owned
by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(b) The Joint Venture is a partnership duly organized and validly
existing under the laws of the State of Maryland. The Joint Venture has
all requisite power and authority to own or lease and operate its
properties and to carry on its business as now being conducted and is duly
qualified and in good standing and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except where the
failure to be so qualified, in good standing or authorized will not have a
material adverse effect. The Venturers constitute all of the partners of
the Joint Venture.
Section 3.2 Authority. The execution and delivery of this Agreement, the
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Escrow Agreement and the Release by the Corporation and the performance of its
obligations hereunder and thereunder, have been duly authorized by the
Corporation's board of directors and shareholders, in accordance with applicable
law. Each Venturer has the requisite power and authority to enter into this
Agreement, the Escrow Agreement and the Release on behalf of the Joint Venture
and to perform its obligations hereunder and thereunder. The execution and
delivery of this Agreement, the Escrow Agreement and the Release by Sellers
constitute valid and legally binding obligations of each Seller, enforceable
against them in accordance with their respective terms.
Section 3.3 Title to Assets. Except as set forth on Schedule 3.3, Sellers
--------------- ------------
have good, valid and marketable title to all of the Acquired Assets, free and
clear of all mortgages, liens, pledges, security interests, charges, claims,
restrictions and other encumbrances and defects of title of any nature
whatsoever, and Sellers have complete and unrestricted power and the unqualified
right to sell, convey, assign, transfer and deliver the Acquired Assets to
Purchaser and to vest in Purchaser good title to the Acquired Assets.
Section 3.4 No Third Party Options. There are no existing agreements,
----------------------
options, commitments or rights with, of or to any person to acquire any of the
Business' assets, properties, or rights included in the Acquired Assets or any
interest therein, except for those contracts entered into in the normal course
of business consistent with past practice for the sale of inventory of the
Business.
Section 3.5 Compliance with Laws and Validity of Contemplated
-------------------------------------------------
Transactions. The execution, delivery and performance of this Agreement by
Sellers in accordance with its terms and the consummation of the transactions
contemplated hereby do not and will not (a) violate any law applicable to the
Sellers or the Business; (b) conflict with, result in a breach of, or constitute
a
-11-
default under the current Articles of Incorporation or By-Laws of the
Corporation, the Joint Venture Agreement or under any indenture, agreement, or
other instrument to which Sellers or the Business are a party or by which they
or any portion of their respective properties may be bound; or (c) result in or
require the creation or imposition of any lien upon or with respect to any
property now owned or hereafter acquired by Sellers or the Business.
Section 3.6 Financial Statements.
--------------------
(a) The Financial Statements, the Interim Schedule of Net Assets and
the Closing Schedule of Net Assets (i) are in accordance with the books and
records of the Business; (ii) are complete and correct and present fairly
the financial condition of the Business as of the respective dates
indicated and the results of operations for the respective periods
indicated; (iii) reflect adequate reserves for all known liabilities and
reasonably anticipated losses; and (iv) reflect proper accruals for run-off
in connection with any potential termination of the Corporation's self-
insured group plan.
(b) The Financial Statements, the Interim Schedule of Net Assets and
the Closing Schedule of Net Assets have been prepared in accordance with
Generally Accepted Accounting Principles, consistently applied, except that
(i) with respect to the July 31, 1996 Financial Statements the statements
of cash flows, retained earnings and accompanying footnotes have been
omitted; and (ii) with respect to the Interim Schedule of Net Assets and
the Closing Schedule of Net Assets, the statements of income, cash flows,
retained earnings and accompanying footnotes have been omitted.
(c) The accounts receivable shown on Financial Statements or acquired
by the Business after the date thereof but prior to the Closing Date
(excluding those constituting Excluded Assets) have been and will be
acquired or created only in the ordinary course of business and represent
or will represent bona fide transactions completed in accordance with the
terms and provisions contained in any documents related thereto. Except as
set forth on Schedule 3.3, all accounts receivable shown on the Financial
------------
Statements or acquired after the date thereof and prior to the Closing Date
are free and clear of any and all liens, claims, charges, encumbrances,
security interests or other rights against such accounts receivable in
favor of others. To Sellers' Knowledge, there are no setoffs,
counterclaims or disputes asserted or conditions precedent to payment
therefor with respect to any such account receivable, no discount or
allowance from any such account receivable has been made or agreed to,
except discounts for prompt payment granted in the ordinary course of
business and reflected in documents evidencing such account and none
represents ▇▇▇▇▇▇▇▇ prior to actual shipment of goods, including "▇▇▇▇ and
hold" accounts. The Business has established a bad debt reserve, as shown
on the Financial Statements, and there is no fact or circumstance which
would impair the validity or collectibility of the Business' accounts
receivable in an amount in excess of such bad debt reserve.
(d) All inventories reflected on the Financial Statements or acquired
or to be acquired by the Business thereafter and prior to the Closing Date,
(i) are and will on the Closing Date be in good condition, consist and will
consist of materials and supplies, of a
-12-
quality and quantity which are usable or salable in the ordinary course of
its business, and meet and will meet all applicable government standards,
(ii) are now and will on the Closing Date be located on the regular
business premises of the Business, (iii) are now and will on the Closing
Date be owned by Sellers free of any liens, claims, charges, encumbrances,
security interests or other rights to or against such in favor of others,
except as set forth on Schedule 3.3 hereto, (iv) have been or will be
------------
acquired by Sellers only in bona fide transactions entered into in the
ordinary course of business, and (v) are valued at the lesser of cost or
market value. None of such inventory is now, or on the Closing Date will
be, held by Sellers on consignment. All work in process is being prepared
for sale in the ordinary course of business, and, all amounts due to the
Business with respect to such work in process will be paid in full within
120 days of delivery of such completed work.
(e) The books and records of the Business have been maintained in all
material respects in accordance with sound business practices.
Section 3.7 Taxes. All federal, state and other Tax returns of the
-----
Business required by law to be filed have been duly filed, such returns are and
will be true, correct and complete in all material respects, and all federal,
state, and other taxes, assessments, and other governmental charges or levies
upon Sellers and any of their properties, income, profits, and assets that are
due and payable have been paid.
Section 3.8 Personal Property.
-----------------
(a) Schedule 3.8(a) contains an accurate and complete list of all
---------------
Personal Property, and Sellers have good title to all of the Personal
Property. All items of Personal Property are in good operating condition
and in a state of reasonable maintenance and repair, and, to the best of
Sellers' Knowledge, conform to all applicable laws, ordinances, codes,
rules and regulations relating to their use or operation. No items of
personal property other than the Personal Property are used or are
necessary for the operation of the Business, other than leased items set
forth on Schedule 3.8(b).
---------------
(b) Schedule 3.8(b) contains an accurate and complete list of all
---------------
leases for machinery, vehicles, equipment or other items of personal
property leased with respect to the Business (the "Personal Property
-----------------
Leases"). Each of the Personal Property Leases is in full force and effect
and there are no existing defaults or events of default, real or claimed,
or events which with notice or lapse of time or both would constitute a
default. All items of personal property subject to Personal Property
Leases are in good operating condition and in a state of reasonable
maintenance and repair. The Personal Property Leases shall be transferred
to Purchaser as of the Closing Date, and the continuation, validity and
effectiveness of the Personal Property Leases will in no way be affected by
such transfer or the transactions contemplated by this Agreement, except as
set forth on Schedule 3.8(b) hereto.
---------------
-13-
Section 3.9 Real Property.
-------------
(a) Schedule 3.9(a) contains an accurate and complete description of
---------------
all real property owned by the Sellers, including the location and size of
such real property (the "Real Property"). Except as set forth on Schedule
------------- --------
3.9(a), Sellers have good and marketable title to the Real Property.
------
(b) Schedule 3.9(b) contains an accurate and complete list of all real
---------------
property leases with respect to the Business (the "Real Property Leases").
--------------------
The Real Property Leases are, and on the Closing Date will be, in full
force and effect and there are no existing defaults or events of default,
real or claimed, or events which with notice or lapse of time or both would
constitute a default. The Real Property Leases are free and clear of any
mortgages or liens, and not subject to any deeds of trust, assignments,
subleases, or rights of any third parties other than the lessor thereof.
The Real Property Leases shall be terminated as of the Closing Date.
Section 3.10 Intellectual Property. Schedule 3.10 contains an accurate
--------------------- -------------
and complete list of all trade names, trademarks, trade styles and service
marks, patents, patent applications, copyrights, copyright applications,
trademark registrations and trademark applications included within the
Intellectual Property which are used or useful in the Businesses and that are
owned by or registered in the name of Sellers or to which Sellers have any
rights as licensees or otherwise, giving in each case a brief description of the
terms of such license or other arrangement. Sellers have not received notice of
any claimed infringement or unlawful use of any such Intellectual Property and,
to the best of Sellers' Knowledge, Sellers have not infringed or made any
unlawful use of the Intellectual Property. Sellers have not received notice
that the manufacture, use or sale by the Business of its products, or any
component or part thereof, nor any manufacturing operation or machinery employed
by the Business, violates or infringes upon any claims of any United States or
foreign patent or patent application owned or held by any third party. Sellers
own (or possess adequate and enforceable rights to use without payment of
royalties) all Intellectual Property necessary for the conduct of, or use in,
the Business as the same is presently being conducted.
Section 3.11 Insurance. Schedule 3.11 contains a list and brief
--------- -------------
description of the policies of fire, liability and other forms of insurance
owned or held by Sellers for the Business, or in which either the Corporation or
the Joint Venture is a named insured. The properties and Business of Sellers of
an insurable nature are insured to the extent and against such risks customarily
insured against by corporations or partnerships of similar size and in similar
businesses. All policies listed on Schedule 3.11 will be outstanding and duly
-------------
in force on the Closing Date. All premiums due under such policies have been
paid and there are no outstanding claims under any such policies.
Section 3.12 Litigation. Except as set forth on Schedule 3.12, there is
---------- --------------
no litigation, arbitration or other similar proceeding pending or, to the
Knowledge of Sellers, threatened against or affecting the Business or the
Acquired Assets. There are no judgments, decrees, injunctions, rules or orders
of any governmental entity or arbitrator outstanding against Sellers, the
Business or the Acquired Assets which involve the likelihood of any adverse
judgment or liability which can
-14-
reasonably be expected to result in any liability of Purchaser with respect to
its business or assets or any adverse change in the operations or conditions of
the Business.
Section 3.13 Compliance with Laws. Neither Sellers nor the Business are
--------------------
subject to, or in default under, any order of any court, governmental authority
or arbitration board or tribunal. Neither Sellers nor the Business are in
violation of any laws, ordinances, governmental rules or regulations to which it
or they are subject. Sellers have obtained all licenses, permits, franchises or
other governmental authorizations necessary to the ownership of its properties
or the conduct of its business, and no consent, authorization or approval of or
filing with any governmental agency is required in connection with the execution
and delivery by Sellers of this Agreement or the consummation by Sellers of the
Transactions contemplated hereby.
Section 3.14 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 3.14(a), operations of the
----------------
Business have been in the past and are now in compliance with all federal,
state and local laws, statutes, rules, regulations, ordinances, codes,
orders, decrees, judgments and all other governmental requirements and
restrictions, now in existence or hereafter amended or promulgated,
relating to pollution, contamination or protection of the environment or
public or employee health or safety (collectively, the "Environmental
-------------
Laws") including, without limitation, those relating to the Comprehensive
----
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
(S) 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42
U.S.C. (S) 6901 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. (S) 6901 et seq., the Federal Water Pollution Control Act, 33 U.S.C.
(S) 1251 et seq., the Safe Water Drinking Act, 42 U.S.C. (S) 300f-300j, the
Clean Air Act, 42 U.S.C. (S) 7401 et seq., the Occupational Safety and
Health Act, and all other statutory and all common law (including, without
limitation, nuisance, trespass, negligence and toxic torts).
(b) Sellers have not been notified and are not aware of any violation
of any Environmental Laws; no Seller is otherwise aware that the Business
may be potentially responsible or otherwise liable under the Environmental
Laws; and no Seller has received any requests for information, notices,
pleadings or other documents (including, without limitation, consent
orders, consent decrees, judgments, orders, complaints or injunctions)
relating to (i) the Environmental Laws, (ii) environmental protection or
health or safety matters, or (iii) any statutory or common law theory of
liability involving environmental or health or safety matters.
(c) The Business has had in the past and presently has all
governmental permits, licenses, consents, approvals and authorizations
relating to environmental protection or health or safety matters
(collectively, "Environmental Permits") necessary to conduct its operations
---------------------
and has been in the past and is presently in compliance with all the
Environmental Permits (including, without limitation, any information
provided on the applications therefor and all restrictions or limitations
therein) and has made all appropriate filings for issuance or renewal of
all the Environmental Permits.
-15-
(d) Except in the ordinary course of business in material compliance
with all Environmental Laws and Environmental Permits, no use, storage,
treatment, generation, recycling, disposal, releases, threatened releases,
handling, burial or placement of any materials regulated under or defined
by any Environmental Laws has occurred in the past or is presently
occurring on, in, at, under, over or about any property, building or other
structure currently or formerly owned, leased, operated or otherwise used
by the Business; and no materials regulated under or defined by
Environmental Laws have been in the past or are presently on, in, at,
under, over or about any property, building or other structure currently or
formerly owned, leased, operated or otherwise used by the Sellers.
(e) No under or above ground tanks have been in the past or are
presently on, in, at, under, over or about any property, building or other
structure currently or formerly owned, leased, operated or otherwise used
by the Business.
(f) No Seller has used any waste disposal site or otherwise disposed
of, transported, or arranged for the transportation of any material
regulated under or defined by any Environmental Laws to any place or
location that is listed or nominated for listing on the National Priorities
List, Comprehensive Environmental Response, Compensation and Liability
Information System or State equivalents of either or to any place or
location that may give rise to a material liability of Sellers.
(g) To the best of Sellers' Knowledge, there are no past or present
conditions, events, circumstances, facts, activities, incidents, actions,
omissions or plans: (i) that may interfere with or prevent continued
compliance with Environmental Laws and Environmental Permits; or (ii) that
give or may give rise to any liability or other obligation under any
Environmental Laws; or (iii) that form or may form the basis of any claim,
action, suit, proceeding, hearing, investigation or inquiry against or
involving the Business based on or related to any Environmental Laws or
Environmental Permits.
(h) No lien exists, and to the best of Sellers' Knowledge, no
condition exists which could result in filing a lien, under any
Environmental Laws against any property owned, leased, operated or
otherwise used by the Business.
Section 3.15 Absence of Changes. Except as set forth on Schedule 3.15,
------------------ -------------
since December 31, 1995 there has not been any transaction or occurrence in
which either the Corporation or the Joint Venture has: (a) adopted or amended
any collective bargaining agreement or any joint venture interest; (b) borrowed
any amount or incurred any liabilities (absolute or contingent), except in the
ordinary course of business; (c) mortgaged, pledged or subjected to lien any of
its assets, tangible or intangible, other than liens for current real property
taxes not yet due and payable; (d) sold, assigned or transferred any of its
assets, except for sale of inventory in the ordinary course of business, or
entered into any discussions or negotiations for the sale, assignment or
transfer of any such assets, or cancelled any debts or claims; (e) sold,
assigned or transferred any patents, trademarks, trade names, copyrights, or
other Intellectual Property; (f) suffered any material adverse change in its
business or financial position; (g) made any change in its accounting policies
or practices; (h) made any change in employee compensation or declared any
bonuses, except as
-16-
described on Schedule 3.15; (i) made or declared any dividend or distribution to
-------------
the Shareholders or Venturers; (j) experience a change in customer relations,
including, without limitation, any termination or notice of termination of
services by any customer; or (k) entered into any transaction other than in the
ordinary course of business or as otherwise contemplated hereby.
Section 3.16 Absence of Undisclosed Liabilities. The Business has no
----------------------------------
liabilities or obligations, either direct or indirect, matured or unmatured or
absolute, contingent or otherwise, except:
(a) those liabilities or obligations set forth on the Financial
Statements or the Closing Schedule of Net Assets and not heretofore paid or
discharged;
(b) those liabilities arising in the regular and ordinary course of
business under any Contract; and
(c) those liabilities or obligations incurred, consistently with past
business practice, in or as a result of the regular and ordinary course of
business since December 31, 1995.
Section 3.17 Employees. Schedule 3.17 contains a true and complete list
--------- -------------
of all employees of the Business; their salaries or wage rates and their
location of employment as of September 12, 1996, and a description of all group
insurance programs in effect for employees of the Business. Sellers are not in
default with respect to any of its obligations relating to salaries, wages or
group insurance programs in respect of employees of the Business.
Section 3.18 Employee Benefit Plans.
----------------------
(a) Sellers have complied, and currently are in compliance, in all
material respects with the applicable provisions of ERISA and the Code with
respect to each employee benefit plan (as defined under Section 3(3) of
ERISA) and all other pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive, bonus, vacation,
severance, disability, hospitalization, medical, life insurance or other
employee benefit plan, program, or arrangement, whether written or
unwritten, now or previously within the last four years maintained or
contributed to by the Corporation or the Joint Venture with respect to the
Business (the "Plans") and a brief description of each such Plan now
-----
maintained or contributed to is set forth on Schedule 3.18 hereto;
-------------
(b) Sellers have not maintained, adopted or established, contributed
to or been required to contribute to, or otherwise participated in or been
required to participate in, any employee benefit plan or other program or
arrangement subject to Title IV of ERISA;
(c) Sellers have not incurred any material liability with respect to
the Plans which has not been satisfied in full or been accrued on the
Financial Statements pending full satisfaction, and no event has occurred,
and there exists no condition or set of circumstances, which could result
in the imposition of any material liability with respect to such Plans.
-17-
Section 3.19 Labor Matters. Schedule 3.19 contains a complete and
------------- -------------
accurate list of all claims brought by employees against the Business in the
past three (3) years, including, without limitation, (i) workers compensation
claims; (ii) claims brought by employees of the Corporation before the Equal
Employment Opportunity Commission; (iii) claims brought by employees under the
Americans with Disabilities Act, 49 U.S.C. (S) 1201.01 et seq.; (iv) claims
brought by employees under the Age Discrimination in Employment Act, 29 U.S.C.
(S) 621 et seq.; (v) charges brought by employees before the National Labor
Relations Board under the National Labor Relations Act, 29 U.S.C. (S) 151 et
seq.; (vi) charges brought against the Business by the Occupational Safety and
Health Administration or complaints filed against the Business by employees with
such administration; (vii) claims brought by employees under the Occupational
Safety and Health Act, 29 U.S.C. (S) 651 et seq.; (viii) claims brought by
employees under the Fair Labor Standards Act before the Department of Labor, 29
U.S.C. (S) 201 et seq.; or (ix) claims brought by employees asserting violations
of state law or state common law.
Section 3.20 Contracts and Commitments.
-------------------------
(a) Schedule 3.20 sets forth an accurate and complete list of each
-------------
contract which is a:
(i) Contract for employment, or a non-competition agreement with
any present or former employee of the Business;
(ii) Contract with any labor union or other representative of
employees;
(iii) Contract for the lease of equipment;
(iv) Contract for the purchase, sale, production or supply of
goods or services (other than sales and purchase orders in amounts not
exceeding $10,000);
(v) Distributor, sales agency or vendor contract or any franchise
or license agreement;
(vi) Note, debenture, bond, equipment trust agreement, letter of
credit agreement, loan agreement, or other contract for borrowing or
lending of money, or agreement or arrangement for a line of credit or
guaranty, pledge, or undertaking of the indebtedness of any other
person;
(vii) Contract under the terms of which the Sellers are or the
Business is, directly or indirectly, liable upon or with respect
thereto, or is obligated in any other way to provide funds with
respect of, or to guaranty or assume, any debt or obligation of any
other person or entity, except endorsements made in the ordinary
course of business in connection with the deposit of items for
collection;
-18-
(viii) Contract for the provision of services by any individual
or entity in excess of $10,000 (including, but not limited to, any
Contracts with attorneys, accountants, consultants or contractors); or
(ix) Any other contract upon which the Business or Acquired
Assets depend or is materially affected.
The contracts listed on Schedule 3.20 are referred to herein as the
-------------
"Contracts"
----------
(b) Each of the Contracts listed in Schedule 3.20 is in full force and
-------------
effect and, except as disclosed on Schedule 3.20, there are no existing
-------------
defaults or events of default, real or claimed, or events which with notice
or lapse of time or both would constitute a default. None of the
Contracts, in the reasonable opinion of Sellers, contains any provision
with which there is a reasonable likelihood the Sellers, the Business, or
any party thereto will be unable to comply. The Contracts shall be
transferred to Purchaser as of the Closing Date and, except as reflected on
such Schedule 3.20, the continuation, validity and effectiveness of such
-------------
Contracts, and all other material terms thereof, will in no way be affected
by such transfer or the transactions contemplated by this Agreement.
(c) Except as set forth on Schedule 3.20(c) hereto, there exists no
----------------
actual or threatened termination, cancellation or limitation of, or any
modification or change in, (i) the business relationship of the Business
with any customer or group of customers of the Business whose purchases
individually or in the aggregate are material to the operations and
financial condition of the Business, (ii) the business relationship of the
Business with any material supplier to the Business, or (iii) the
relationship of the Business with any of its employees including the
resignation of any of its employees.
Section 3.21 Transactions with Affiliates. Except as set forth on
----------------------------
Schedule 3.21, neither Sellers nor any officer, director or employee of any
-------------
Seller, owns or has a 5% or more ownership interest in any corporation or other
entity that is or was during the past 3 years a party to, or in any property
which is or was during the past 3 years the subject of, any Contract, agreement,
business arrangement or relationship with the Business.
Section 3.22 Broker's or Finder's Fees. No Seller, Shareholder, or
-------------------------
directors or employees of the Corporation or Joint Venture has employed any
broker, agent or finder or incurred any liability for brokerage fees, agents'
commissions or finder's fees in connection with the transactions contemplated by
this Agreement.
Section 3.23 Securities Representations.
--------------------------
(a) Each Recipient either alone or with his or its purchaser
representative has such knowledge and experience in financial and business
matters that he or it is capable of evaluating the merits and risks of
obtaining the Transaction Stock and making an investment in Graphic. No
assurances have been made as to the future income or success of Graphic.
Each Recipient has had an opportunity to ask questions and receive
satisfactory answers from
-19-
the officers and directors of Graphic concerning Graphic and the terms and
conditions of his or its investment in capital stock of Graphic.
(b) No Recipient has received any representations or warranties, other
than those set forth in this Agreement, from the officers, directors,
affiliates, agents or representatives of Graphic in making his or its
decision to enter into this Transaction, and each Recipient is relying
solely on the information contained in this Agreement, in any prospectus
delivered to him or it, and personal investigation.
(c) Each Recipient has made other investments of this type and, by
reason of his or its business and financial experience and of the business
and financial experience of those persons he or it has retained to advise
him or it with respect to his or its disposition of the Business, he or it
has obtained the capacity to protect his or its own interest in investments
of this nature. In reaching the conclusion that he or it desires to
acquire the Transaction Stock, each Recipient has carefully evaluated his
or its financial resources and investment position and the risks associated
with his or its investment in Graphic and acknowledges that he or it is
familiar with and able to bear any economic risk of such investment.
(d) Each Recipient understands and agrees that the Transaction Stock
is to be issued to him or it without registration under any state or
federal law relating to the registration of securities and will be issued
to him or it in reliance on exemptions from registration under appropriate
state and federal laws and that reliance by Graphic on such exemptions is
predicated in part on the representations set forth in this Section 3.23.
------------
Each Recipient is acquiring the Transaction Stock for his or its own
account, to hold for investment, and with no present intention of dividing
his or its participation with others or reselling or otherwise
participating, directly or indirectly, in the distribution of the
Transaction Stock and shall not make any transfer, sale, or other
disposition of the Transaction Stock: (i) other than pursuant to an
effective registration under applicable state securities laws or in a
transaction which is otherwise in compliance with those laws; (ii) other
than pursuant to an effective registration under the Act or a transaction
otherwise in compliance with the Act; and (iii) with respect to the
Corporation, in a manner so that the disposition of such Transaction Stock
does not cause the transactions contemplated by this Agreement to fail to
qualify as a reorganization under Section 368 of the Code.
(e) No Recipient has received any public solicitation or advertisement
concerning an offer to sell the Transaction Stock. Each Recipient has
received and reviewed copies of Graphic's Annual Report on Form 10-K
(including the Annual Report to Shareholders) for the fiscal year ended
January 31, 1996, all Quarterly Reports on Form 10-Q currently filed for
fiscal year ending January 31, 1997, and Graphic's Proxy Statement for the
1996 Annual Meeting of Shareholders.
Section 3.24 Correctness of Representations. No representation or
------------------------------
warranty of any Seller or Venturer in this Agreement or in any statement,
certificate or Schedule furnished by Sellers or Venturers pursuant hereto, or in
connection with the transactions contemplated hereby, contains or, on the
Closing Date will contain, any untrue statement of a material fact or omits or,
on the Closing
-20-
Date will omit, to state any material fact necessary in order to make the
statements contained therein not misleading, and all such statements,
representations, warranties, certificates and Schedules will be true and
complete on and as of the Closing Date as though made on that date. True copies
of all deeds, title insurance policies, mortgages, indentures, notes, plans,
Contracts and other instruments listed on or referred to, or otherwise related
to any item referred to, in the Schedules delivered or furnished to Purchaser
pursuant to this Agreement have been delivered to or have been made available to
or will be made available for inspection by Purchaser and Purchaser's attorneys
and accountants.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND GRAPHIC
Purchaser and Graphic represent and warrant to the Sellers, the Venturers
and the Shareholders as follows:
Section 4.1 Organization; Power; Qualification. Each of Purchaser and
----------------------------------
Graphic is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation. Each of Purchaser and Graphic has
the corporate power and authority to own or lease and operate its properties to
carry on its business as now being conducted, and is duly qualified and in good
standing and authorized to do business as a foreign corporation in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification and authorization.
Section 4.2 Authority.
---------
(a) Purchaser has the corporate power and has taken all necessary
corporate action to authorize it to execute, deliver and perform this
Agreement, the Escrow Agreement, the Employment Agreement and the
Consulting Agreement, and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement, the
Escrow Agreement, the Employment Agreement and the Consulting Agreement by
Purchaser constitute valid and legally binding obligations of Purchaser,
enforceable against Purchaser in accordance with their respective terms.
(b) Graphic has the corporate power and has taken all necessary
corporate action to authorize it to execute, deliver and perform this
Agreement and the Escrow Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the Escrow Agreement by Graphic constitute valid and legally
binding obligations of Graphic, enforceable against Graphic in accordance
with their respective terms.
Section 4.3 Compliance with Laws and Validity of Contemplated
-------------------------------------------------
Transactions. The execution, delivery and performance of this Agreement by
Purchaser and Graphic in accordance with its terms and the consummation of the
transactions contemplated hereby do not and will not (a) violate any applicable
law, (b) conflict with, result in a breach of, or constitute a default under the
-21-
Articles of Incorporation or By-Laws of Purchaser or Graphic or under any
indenture, agreement or other instrument to which Purchaser or Graphic is a
party or by which they or any of their properties may be bound; or (c) result in
or require the creation or imposition of any lien upon or with respect to any
material property now owned or hereinafter acquired by Purchaser or Graphic.
Section 4.4 Transaction Stock. Each share of Transaction Stock, when
-----------------
issued and delivered as contemplated by this Agreement and the Escrow Agreement,
will be duly authorized, validly issued, fully paid and non-assessable. None of
the Transaction Stock is subject to any liens or other rights, and there are no
options, warrants, purchase agreements, put agreements, call agreements or other
agreements to which Graphic is a party which relate to or affect the transfer of
the Transaction Stock.
Section 4.5 Broker's or Finder's Fees. Except for the services of Garland
-------------------------
▇▇▇▇▇▇▇▇▇ & Associates, Inc., for which Graphic is responsible to pay all fees
with respect to the Transaction, neither Graphic nor Purchaser nor any director
or employee of Graphic or Purchaser has employed any broker, agent or finder or
incurred any liability for brokerage fees, agents' commissions or finder's fees
in connection with the transactions contemplated by this Agreement.
Section 4.6 Graphic Reports. Graphic has delivered to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------
for distribution to each of the Recipients copies of Graphic's Annual Report on
Form 10-K (including the Annual Report to Shareholders) for the fiscal year
ended January 31, 1996, all Quarterly Reports currently filed on Form 10-Q for
fiscal year ending January 31, 1997, and Graphic's Proxy Statement for the 1996
Annual Meeting of Shareholders. As of their respective dates, none of the
above-mentioned reports contained any untrue statement of material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which they
were made, not misleading.
Section 4.7 Eligibility to File Form S-3. Graphic meets all eligibility
----------------------------
requirements under the Act for filing a Registration Statement on Form S-3 with
respect to the Transaction Stock.
Section 4.8 Correctness of Representations. No representation or warranty
------------------------------
of Purchaser or Graphic in this Agreement or in any statement, certificate or
Schedule furnished by Purchaser or Graphic pursuant hereto, or in connection
with the transactions contemplated hereby, contains or, on the Closing Date will
contain, any untrue statement of a material fact or omits or, on the Closing
Date will omit, to state any material fact necessary in order to make the
statements contained therein not misleading, and all such statements,
representations, warranties, certificates and schedules will be true and
complete on and as of the Closing Date as though made on that date.
ARTICLE 5
OBLIGATIONS AND COVENANTS
Section 5.1 Conduct of the Business Prior to Closing. From the date hereof
----------------------------------------
to the Closing Date, and except to the extent that Purchaser shall otherwise
consent in writing, the Sellers shall:
-22-
(a) operate the Business as presently operated and only in the
ordinary course, and use its commercially reasonable efforts to preserve
intact its good will, reputation and present business organization and to
preserve its relationships with persons having business dealings with it;
(b) maintain all of the properties of the Business in good order and
condition, reasonable wear and use excepted;
(c) take all steps reasonably necessary to maintain the Intellectual
Property including any pending applications therefor;
(d) pay accounts payable, other obligations and liabilities and
collect accounts receivable of the Business in accordance with the Sellers'
past business practices;
(e) comply and cause the Business to comply with all laws applicable
to the conduct of the Business;
(f) not enter into any settlement regarding any claim, dispute or
other cause of action brought against Sellers or the Business by any third
party except for settlements of customer disputes in the ordinary course of
business;
(g) not sell, or otherwise dispose of, any of the Acquired Assets,
other than in the ordinary course of business;
(h) submit all contracts to which Sellers or the Business is to become
a party between the date hereof and the Closing Date for approval by
Purchaser, other than contracts entered into in the ordinary course of
business; and
(i) not take any action that would constitute a breach of Section 3.15
------------
hereof.
Section 5.2 No Solicitation. Sellers shall not, nor shall they permit any
---------------
of their officers, directors, employees, agents, or representatives, directly or
indirectly, to (a) initiate, solicit or encourage any inquiries or proposals by,
or (b) enter into any discussions or negotiations with, or disclose directly or
indirectly any information concerning the Business or its properties or assets
to, or afford any access to its properties, books and records to, any person
other than Purchaser in connection with any possible proposal (an "Acquisition
-----------
Proposal") regarding the sale, merger, consolidation, or similar transaction
--------
with respect to the Business. Sellers shall notify Purchaser immediately if any
discussions or negotiations are sought to be initiated or such information is
requested with respect to an Acquisition Proposal.
Section 5.3 Access and Information. From the date hereof to the Closing
----------------------
Date, Sellers shall afford to Purchaser, its counsel, accountants and other
representatives, free and full access to all the offices, properties, books,
contracts, commitments and records of the Business and to furnish such persons
with all information (including financial and operating data) concerning its
affairs as they reasonably may request, including copies and extracts of
pertinent records, documents and
-23-
contracts. The Business and its employees shall assist Purchaser, its counsel,
accountants and representatives, in their examination of the Business' books and
records. To the extent that the Sellers shall have control over same, the
accountants of the Business shall furnish to Purchaser during such period any
and all of their statements, working papers and underlying records and data as
Purchaser reasonably may request.
Section 5.4 Notification of Changes. Between the date hereof and the
-----------------------
Closing Date, Sellers shall promptly notify Purchaser in writing of any material
change in the financial condition of the Business and the method of conducting
its operations, any material damage to or loss of any property used in the
Business, or the institution of or the threat of institution of legal
proceedings against the Business.
Section 5.5 No Default. Sellers shall not after the date hereof and
----------
through the Closing Date do any act or omit to do any act, or knowingly permit
any act or omission to act, that would cause a material breach of any Contract.
Section 5.6 Taxes. All Tax returns of the Business required to be filed
-----
by the Closing Date, taking into account any extensions of the filing deadlines
granted to the Business, that have not yet been filed prior to the date hereof
(including those relating to periods after the Closing Date) shall be prepared
and filed by Sellers. Sellers shall use their best efforts to obtain all
extensions of time from governmental authorities necessary to effect this
provision. All Tax and Payroll Liabilities shall be retained by Sellers and
paid by Sellers when due.
Section 5.7 Compliance with Laws. At all times after the date hereof and
--------------------
through the Closing Date, Sellers shall comply with all applicable laws and
regulations including without limitation, those as may be required for the
consummation of the transactions contemplated by this Agreement.
Section 5.8 Consent of Others. To the extent that the consummation of the
-----------------
transactions provided for herein requires the consent or approval of a third
party, whether to avoid the occurrence of an event of default under any
Contract, license, lease or agreement to which any Seller is a party or by which
the Acquired Assets are bound or otherwise, or under any governmental law or
regulation, Sellers shall use their commercially reasonable efforts to obtain
any such consent or approval prior to the Closing Date.
Section 5.9 Payment of Assumed Liabilities and Deferred Compensation. Any
--------------------------------------------------------
Assumed Liabilities for loans advanced by any Shareholder or Venturer or any of
their affiliates, or any interest accrued thereon, including, without
limitation, the Corporation's payment obligations under that certain Stock
Redemption and Employment Agreement dated May 12, 1988 between the Corporation
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. and all deferred compensation owed to ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇. by the Corporation to the extent reflected on the Audited Schedule
of Net Assets shall be paid at Closing by delivery to such individual of an
appropriate number of shares of Graphic Common Stock, valued at the Stock Price;
provided, however, that the Corporation's payment obligation for interest of
$35,545 as accrued on the Interim Schedule of Net Assets and the Audited
Schedule of
-24-
Net Assets as being due to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall be paid by Purchaser by
delivery of such amount in cash at the Closing.
Section 5.10 Accounts Receivable.
-------------------
(a) Sellers jointly and severally hereby guaranty the collectibility
of all accounts receivable, net of any reserves, reflected on the Audited
Schedule of Net Assets, satisfaction of such guaranty shall first be sought
by the Purchaser from the Escrow Stock Consideration and if the available
Escrow Stock Consideration is not sufficient to cover the guaranteed
amount, the Sellers shall remain jointly and severally liable therefor;
provided, however, that payment from the Escrow Stock Consideration shall
not be Purchaser's exclusive source of payment under the guaranty.
(b) Purchaser shall use commercially reasonable efforts, following the
Closing Date, to collect in the ordinary course of business all of the
accounts receivable of the Business reflected on the Audited Schedule of
Net Assets.
Section 5.11 Mercantile Debt. Purchaser shall pay-off or assume at
---------------
Closing all amounts owed by the Business to Mercantile Safe Deposit and Trust
Company and, in the event of an assumption, Purchaser shall secure all necessary
third party consents to such assumption.
Section 5.12 Release of Personal Guaranties. Purchaser shall cause any
------------------------------
personal guaranties of any Seller, Shareholder or Venturer with respect to any
Assumed Liability of the Business to be released on or prior to the Closing. If
such release cannot be obtained, Graphic shall unconditionally guaranty the
performance of Purchaser with respect to such guaranteed liability.
Section 5.13 Post-Closing Sale of Real Estate. In the event that the real
--------------------------------
property located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, and the
building located thereon is sold by Purchaser or any of its affiliates
(including, but not limited to, Graphic) within the five (5) year period
beginning on the Closing Date, the net proceeds of the sale to Purchaser in
excess of $3.3 million before income tax shall be divided 50% to the Purchaser
and 50% to the Venturers in accordance with their respective ownership interest
in the Joint Venture set forth on Schedule 5.13.
-------------
Section 5.14 Confidentiality. Each of Graphic, Purchaser, the Sellers,
---------------
the Shareholders and the Venturers shall agree to keep confidential and not use
for its or their own benefit or the benefit of any other persons, or divulge to
any other person, any confidential or Proprietary Information which such party
learns during the course of the Transaction and which relates to the other
parties hereto or their affiliates. Each of the parties hereto shall use its
best efforts not to disclose, or to allow any of its officers, directors,
stockholders, agents or employees to disclose, the existence of this Agreement
or the Transaction contemplated hereby, except as required by applicable law or
legal process, without the prior written consent of the other parties hereto.
The parties agree that if the Transaction is not consummated for any reason,
each shall return or destroy all confidential materials received from any other
party hereto.
-25-
Section 5.15 Employee Benefits Plans.
-----------------------
(a) Purchaser shall not adopt, maintain, or assume sponsorship of any
of the Plans.
(b) Sellers shall retain liability for and shall pay when due all
benefits under any of the Plans providing medical or dental benefits
attributable to covered services rendered and expenses incurred on or prior
to the Closing Date and all medical and dental benefits attributable to
covered services rendered and expenses incurred after the Closing Date with
respect to employees of the Business and their eligible dependents who are
confined to hospitals or nursing institutions on the Closing Date, or
receiving home health care following a hospital confinement if the illness
or injury for which such confinement is necessary commenced on or prior to
the Closing Date.
(c) Sellers shall retain all liability for the continuation coverage
requirements of Sellers under Section 4980B of the Code and Section 601 and
608 of ERISA, with respect to each Sellers' employee who terminates or
terminated employment on or before the Closing Date and Purchaser shall
have no liability with respect thereto.
(d) After the Closing Date, as to all of Sellers' benefit plans that
are exempt from federal income taxation under Section 501(a) of the Code
(the "Qualified Plans"), Sellers shall (i) terminate all Qualified Plans,
(ii) submit a completed Form 5310 to the Internal Revenue Service regarding
the continued qualification of each qualified Plan to be terminated and
(iii) following the receipt of a favorable determination letter from the
Internal Revenue Service, make final distributions to participants of their
account balances in any Qualified Plans.
Section 5.16 Treatment of Transaction as Reorganization. Graphic and
------------------------------------------
Purchaser shall use commercially reasonable efforts to assist Sellers in filing
all tax returns related to the Transaction in a manner consistent with
characterizing the Transaction as a tax-free reorganization within the meaning
of Code Section 368(a)(1)(C). After the Closing Date, Graphic and Purchaser
shall make commercially reasonable efforts to cooperate with Sellers and to make
available to Sellers, as reasonably requested, all information, records and
documents relating to liabilities or potential liabilities for taxes of, or
related to, the Sellers, for periods ending on or before the Closing Date.
Section 5.17 WARN Act Liability. After the Closing Date, Purchaser shall
------------------
assume responsibility and liability for any mass layoffs or plant closings that
trigger the notice requirement of WARN.
-26-
ARTICLE 6
CONDITIONS TO CONSUMMATION OF TRANSACTION
Section 6.1 Conditions to Obligations of Purchaser. The obligation
--------------------------------------
of Purchaser to consummate the Transaction is subject to the satisfaction at or
prior to the Closing of each of the following conditions:
(a) Purchaser shall have satisfactorily completed its due diligence
inquiry into the business affairs and financial condition of the Business,
and shall have received satisfactory assurances that it will enjoy
continued customer and employee relationships with existing customers and
employees of the Business.
(b) Each of the representations and warranties of Sellers and
Venturers shall be true and correct in all material respects as of, and
shall not have been violated in any material respect at, the Closing as
though made on and as of the Closing; Sellers and Venturers shall, on or
before the Closing, have performed in all material respects all of their
obligations under this Agreement which by the terms hereof are to be
performed on or before the Closing, and Sellers and Venturers shall have
delivered to Purchaser a certificate dated as of the date of the Closing to
the foregoing effect.
(c) No action or proceeding by or before any court or other
governmental body shall have been instituted by any governmental body or
other person or entity or threatened in writing which seeks to restrain,
prohibit or invalidate the Transaction or which would have a material
adverse effect on Purchaser's ability to conduct the Business as presently
conducted or which claims material damages from Purchaser, Sellers,
Venturers or the Business with respect to the Transaction.
(d) The Corporation shall have delivered to Purchaser a certificate of
its Secretary certifying as to the requisite corporate or other action
authorizing the Transaction and incumbency of its officers.
(e) Sellers shall have obtained all necessary third party consents to
the Transaction from the parties set forth on Schedule 6.1(e) hereto.
---------------
(f) Purchaser shall have received any regulatory approvals required by
applicable laws.
(g) Purchaser shall have received a fully executed copy of the Release
substantially in the form of Exhibit D hereto.
---------
(h) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall have entered into the Consulting Agreement
substantially in the form of Exhibit A hereto.
---------
(i) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall have entered into the Employment Agreement
substantially in the form of Exhibit B hereto.
---------
-27-
(j) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall have executed and delivered to Purchaser
the Escrow Agreement substantially in the form of Exhibit C hereto.
---------
(k) Purchaser shall have entered into satisfactory employment
arrangements with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇.
(l) Purchaser and Graphic shall be satisfied, in their sole
discretion, that there exists no actual or threatened claims, disputes or
allegations against them, the Business or the Acquired Assets arising out
of the Transaction by any Seller, Shareholder, Venturer or third party,
other than those arising out of this Agreement or transactions contemplated
hereby; including without limitation settlement of all disputes with former
employees of the Corporation.
(m) Purchaser shall have received the opinion of Galland, Kharasch,
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C., counsel to Sellers, in form and substance
satisfactory to Purchaser.
(n) Since the date hereof, there shall have been no material adverse
change in the Business or event or circumstance which would reasonably be
expected to result in a material adverse change in the Business, except in
each case matters related to the economic conditions of the Business'
industry as a whole.
Section 6.2 Conditions to Obligations of Sellers. The obligation of
------------------------------------
Sellers to consummate the Transaction is subject to the satisfaction at or prior
to the Closing of each of the following conditions:
(a) Each of the representations and warranties of Purchaser and
Graphic shall be true and correct in all material respects as of, and shall
not have been violated in any material respect at, the Closing as though
made on and as of the Closing; Purchaser and Graphic shall, on or before
the Closing, have performed in all material respects all of its obligations
under this Agreement which by the terms hereof are to be performed on or
before the Closing; and Purchaser and Graphic shall have delivered to
Sellers a certificate of one of its officers dated as of the date of the
Closing to the foregoing effect.
(b) No action or proceeding by or before any court or other
governmental body shall have been instituted by any governmental body or
other person or entity or threatened in writing which seeks to restrain,
prohibit or invalidate the Transaction or which would have a material
adverse effect on the right of Sellers to consummate the Transaction or
which claims material damages from Sellers with respect to the Transaction.
(c) Purchaser shall have delivered to Sellers a certificate of its
Secretary certifying as to the requisite corporate and other action
authorizing the Transaction, and the incumbency of its officers.
(d) Purchaser shall have entered into the Employment Agreement,
substantially in the form of Exhibit B hereto.
---------
-28-
(e) Purchaser shall have entered into the Consulting Agreement,
substantially in the form of Exhibit A hereto.
---------
(f) Purchaser and Graphic shall have executed and delivered to Sellers
the Escrow Agreement, substantially in the form of Exhibit C hereto.
---------
(g) Sellers shall have received the opinion of Powell, Goldstein,
▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to Purchaser and Graphic, in form and substance
satisfactory to Sellers.
(h) Purchaser shall have satisfied or assumed all amounts owed by the
Sellers to Mercantile Safe Deposit and Trust Company and, in the event of
an assumption, Purchaser shall have secured all necessary third party
consents to such assumption.
ARTICLE 7
REGISTRATION OF TRANSACTION STOCK
Section 7.1 Registration of Transaction Stock. Graphic shall use its best
---------------------------------
efforts to prepare and file with the Commission as soon as practicable after the
Closing, but in no event later than 90 days, a Registration Statement on Form S-
3, pursuant to which Graphic shall request that the Transaction Stock be
registered for resale by the Recipients, and shall use its best efforts to have
such registration become effective. Recipients shall receive a copy of the
Registration Statement prior to filing for review, and Recipients shall
represent and warrant that the information contained in the Registration
Statement concerning them and the intended method of distribution of such
securities is true, complete, and correct. If at any time during the Effective
Period Graphic is unable to maintain such Registration Statement on Form S-3,
Graphic shall use a Form S-1 or such other registration form as Graphic deems
appropriate in order to fulfill its obligations under this Article 7.
Section 7.2 Furnishing Information. Recipients shall furnish to Graphic
----------------------
such information regarding themselves or the Transaction Stock, and the intended
method of disposition of such securities, as shall be reasonably requested by
Graphic in order to effect the registration of such shares.
Section 7.3 Prospectus Requirements. Recipients hereby covenant with
-----------------------
Graphic that they will promptly advise Graphic of any changes in the information
concerning Recipients contained in the Registration Statement and that
Recipients will not make any sale of the Transaction Stock pursuant to the
Registration Statement without complying with the prospectus delivery
requirements of the Act. Recipients acknowledge that occasionally there may be
times when Graphic must temporarily suspend the use of the prospectus forming a
part of the Registration Statement until such time as an amendment to the
Registration Statement has been filed by Graphic and declared effective by the
Commission, the relevant prospectus has been supplemented by Graphic or until
such time as Graphic has filed an appropriate report with the Commission
pursuant to the Securities Exchange Act of 1934, as amended. During any such
period in which sales are suspended and upon reasonable prior notice of such
suspension from Graphic, Recipients agree not to sell any shares of Transaction
-29-
Stock pursuant to any such prospectus. Recipients covenant that they will not
sell any shares pursuant to any such prospectus during the period commencing at
the time at which Graphic gives Recipients notice of the suspension of the use
of said prospectus and ending at the time Graphic gives notice that such
Recipients may thereafter effect sales pursuant to said prospectus.
Section 7.4 Registration Rights, Etc.
-------------------------
(a) Graphic agrees to (i) use its best efforts to keep the
Registration Statement continuously effective (including by filing
amendments and supplements thereto) in order to permit the disposition of
the Transaction Stock until the third anniversary of the Closing Date or
the sale by Recipients of all of such stock, whichever is earlier
(collectively, the "Effective Period"), and (ii) prepare and file with the
----------------
Commission, as soon as reasonably practicable, such amendments and
supplements to the Registration Statement as may be necessary to keep the
Registration Statement effective continuously during the Effective Period.
(b) Graphic agrees to cause the Registration Statement and the related
prospectus, and any amendment or supplement thereto, as of the effective
date of the Registration Statement, amendment, or supplement during the
Effective Period, (i) to comply in all material respects with the
applicable requirements of the Act and the rules and regulations
promulgated by the Commission thereunder, and (ii) not to contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, other than information confirmed by Recipients pursuant to
Section 7.2 or statements or omissions made in reliance upon and in
-----------
conformity with information furnished to Graphic in writing by or on behalf
of Recipients expressly for use in the Registration Statement and the
related prospectus, or any amendment or supplement thereto.
(c) In connection with the Registration Statement, Graphic agrees to,
as soon as reasonably practicable:
(i) furnish to Recipients such number of copies of the
Registration Statement, each amendment and supplement thereto, and
prospectus included in the Registration Statement and such other
related documents as Recipients may reasonably request;
(ii) notify Recipients promptly of any request by the Commission
for the amending or supplementing of the Registration Statement or
prospectus forming a part thereof;
(iii) advise Recipients after Graphic receives notice or
otherwise obtains knowledge of the issuance of any order by the
Commission suspending the effectiveness of the Registration Statement
or amendment or supplement thereto or of the initiation or threatening
of any proceeding for that purpose, and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal
promptly if such stop order should be issued;
-30-
(iv) use its best efforts to register or qualify the Transaction
Stock under such other securities or blue sky laws of such
jurisdictions within the United States and Puerto Rico as Recipients
shall reasonably request (provided that Graphic shall not be obligated
to qualify as a foreign corporation to do business under the laws of
any jurisdiction in which it is not then qualified or to file any
general consent to service of process), and do such other reasonable
acts and things as may be required of it to enable Recipients to
consummate the disposition in such jurisdiction of such securities;
and
(v) notify Recipients, at any time when a prospectus relating to
the Registration Statement is required to be delivered under the Act,
of the happening of any event as a result of which the Registration
Statement contains an untrue statement of material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and prepare a supplement
or amendment to the Registration Statement so that the Registration
Statement will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
Section 7.5 Indemnification.
---------------
(a) Graphic agrees to indemnify, defend and hold harmless Recipients
from and against all loss, damages, liabilities, expenses, costs, fees and
disbursements of counsel (including the reasonable fees and expenses of
legal counsel to Recipients), and actions to which they may become subject,
under the Act or otherwise, insofar as such loss, damage, liability,
expense or claim (or action in respect thereof) arises out of or is based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or prospectus contained therein (or
any amendment or supplement thereto) or arises out of or is based upon any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements in any thereof not
misleading, and will reimburse Recipients and such other persons for any
legal or any other expenses incurred in connection with investigating or
defending any such action or claim, except insofar as the same may have
been caused by any untrue statement or omission contained in this
information confirmed by Recipients pursuant to Section 7.2 or based upon
-----------
information furnished to Graphic in writing by or on behalf of such
Recipient expressly for use therein.
(b) Recipients agree to indemnify, defend and hold harmless Graphic
and its officers, directors, affiliates, agents, employees and controlling
persons (within the meaning of Section 15 of the Act) from and against all
loss, damages, liabilities, expenses, costs, fees and disbursements of
counsel (including the reasonable fees and expenses of legal counsel to
Graphic), and actions to which they may become subject, under the Act or
otherwise, insofar as such loss, damage, liability, expense or claim (or
action in respect thereof) arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
final prospectus contained in the Registration Statement (or any amendment
-31-
or supplement thereto) or arises out of or is based upon any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statement in any thereof not misleading,
to the extent that such untrue statement or omission is contained in the
information confirmed by Recipients pursuant to Section 7.2 or is made in
-----------
reliance upon or in conformity with information furnished in writing by or
on behalf of Recipient expressly for inclusion in the Registration
Statement or prospectus contained therein (or any amendment or supplement
thereto), and (ii) the failure by Recipient to comply with the covenants
contained in Section 7.3 above, and will reimburse Graphic and such other
-----------
persons for any legal or any other expenses incurred in connection with
investigating or defending any such action or claim.
Section 7.6 Fees and Expenses of Registration. Graphic will pay all
---------------------------------
expenses and fees incident to the performance of its obligations in Sections
--------
7.1, 7.3 and 7.4 other than selling commissions and fees and expenses of counsel
--- ---
or other advisors to Recipients; provided, however, that Graphic shall pay the
fees and expenses of one counsel for Recipients in connection with its
registration obligations hereunder, not to exceed $2,500.
ARTICLE 8
INDEMNIFICATION
Section 8.1 Indemnification of Purchaser and Graphic by Sellers.
---------------------------------------------------
(a) On the terms set forth in this Agreement, Sellers shall, from and
after the Closing Date, jointly and severally indemnify, defend, and hold
Purchaser and Graphic and their respective subsidiaries and affiliates
harmless from, against and in respect of any and all Damages incurred by
any of them arising from or in connection with any breach of any
representation, warranty or covenant made by Sellers in this Agreement and
for any and all liability (including undisclosed and contingent
liabilities) incurred or suffered by Purchaser or Graphic as a result of
the Transaction other than Assumed Liabilities; including, without
limitation, any Damages incurred by any of them arising from or in
connection with any Excluded Assets or Excluded Liabilities.
(b) The Sellers' representations, warranties and covenants set forth
in this Agreement shall, for purposes of this Section 8.1, be deemed to
have survived for a two (2) year period following the Closing Date except
with respect to the representations, warranties and covenants set forth in
Sections 3.1, 3.2, 3.3, 3.7 and 3.14 or which relate to any liability other
------------ --- --- --- ----
than the Assumed Liabilities, which shall survive for a period of seven (7)
years following the Closing Date.
(c) Notwithstanding anything to the contrary contained in this Section
8.1, no Damages shall be recoverable hereunder unless the aggregate amount
of all Damages shall exceed $25,000, and the full amount of Damages shall
be recovered once this threshold is
-32-
met without regard to such threshold; provided, however that this threshold
shall not apply to any adjustment in Purchase Price pursuant to Article 2
hereof.
(d) Notwithstanding anything to the contrary contained in this
Agreement, including but not limited to this Section 8.1, the aggregate
liability of the Sellers, Shareholders and Venturers to Graphic and
Purchaser under this Agreement shall be limited to the total value of all
of the Transaction Stock delivered under this Agreement, including the
Escrow Stock Consideration delivered from escrow to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
valued at the Stock Price.
Section 8.2 Indemnification of Sellers by Purchaser and Graphic.
---------------------------------------------------
(a) On the terms set forth in this Agreement, Graphic and Purchaser
shall, from and after the Closing Date, jointly and severally indemnify,
defend and hold Sellers harmless from, against and in respect of any and
all Damages incurred by any of them arising from or in connection with any
breach of any representation, warranty or covenant made by Graphic or
Purchaser in this Agreement and for any liability incurred or suffered by
any Seller as a result of the Assumed Liabilities or any liability which
arises after the Closing Date and which liability relates solely to the
actions or inactions of Purchaser with respect to such Acquired Assets
following the Closing Date.
(b) The representations, warranties and covenants of Graphic and
Purchaser set forth in this Agreement, for purposes of this Section 8.2,
shall be deemed to have survived for a period of two (2) years.
Section 8.3 Method of Asserting Claims, Etc.
--------------------------------
(a) In the event that any claim or demand for which an Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted against
or sought to be collected from an Indemnified Party by a third party (a
"Third Party Claim") or an Indemnified Party seeks indemnification from an
------------------
Indemnifying Party in connection with any other type of claim for which
indemnity may be sought hereunder (referred to herein as a "Non Third Party
---------------
Claim") (Third Party Claim and Non Third Party Claim shall be referred to
-----
collectively as a "Claim"), the Indemnified Party shall use reasonable
-----
efforts to notify the Indemnifying Party in writing of such Claim,
specifying the nature of such Claim arising hereunder and the amount or the
estimated amount thereof to the extent then feasible (which estimate shall
not be conclusive of the final amount of such Claim) (the "Claim Notice").
------------
The Indemnifying Party shall have twenty calendar days (or such earlier
period of time as may be required for the filing of responsive pleadings to
any legal action instituted with respect to the Claim or required due to
contractual deadlines imposed upon the Indemnified Party by the contract in
dispute but in any event, not less than 10 days) from the receipt of the
Claim Notice (the "Response Notice Period") to notify the Indemnified
----------------------
Party, (i) whether or not it disputes its liability to the Indemnified
Party hereunder with respect to such Claim and (ii) notwithstanding any
such dispute, whether or not it will defend, at its sole cost and expense,
the Indemnified Party against such Third Party Claim. No failure by an
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Indemnified Party to notify the Indemnifying Party of the existence or
assertion of a claim for which indemnification may be sought shall
constitute a defense to or waiver of such claim for indemnification except
to the extent the Indemnifying Party may be able to prove that it has been
materially prejudiced by such failure or delay.
(b) If the Indemnifying Party disputes its liability with respect to
such Claim or the amount thereof (whether or not the Indemnifying Party
desires to defend the Indemnified Party against such Third Party Claim as
provided in paragraphs (c) and (d) below), such dispute shall be resolved
in accordance with Section 8.5 hereof. Pending the resolution of any
dispute by the Indemnifying Party of its liability with respect to any
Third Party Claim, such Third Party Claim shall not be settled without the
prior written consent of the Indemnified Party and the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed.
(c) In the event that the Indemnifying Party notifies the Indemnified
Party within the Response Notice Period that it will defend the Indemnified
Party against a Third Party Claim, then the Indemnifying Party shall assume
the defense thereof with counsel reasonably acceptable to the Indemnified
Party, and the Indemnified Party shall cooperate in all reasonable respects
in such defense, including without limitation in making any appropriate
counterclaim against the person asserting the Third Party Claim or any
appropriate cross-complaint against any person (unless such counterclaim or
cross-complaint would be against any other entity with which the
Indemnified Party has ongoing business relations and would have a
significant likelihood in the good faith judgment of the Indemnified Party
of damaging such business relationships); provided, however, the
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party which consent shall not be unreasonably withheld, consent
to the entry of any judgment against the Indemnified Party or enter into
any settlement or compromise which does not include, as an unconditional
term thereof, the giving by the claimant or plaintiff to the Indemnified
Party of a release, in form and substance reasonably satisfactory to the
Indemnified Party, from all liability in respect of such Third Party Claim.
If any Indemnified Party desires to participate in, but not control, any
such defense or settlement, it may do so at its sole cost and expense. If,
in the reasonable opinion of the Indemnified Party, any such Third Party
Claim or the litigation or resolution of any such Third Party Claim
involves an issue or matter which could reasonably be expected to have a
material adverse effect on the Indemnified Party, then the Indemnified
Party shall have the right to control the defense or settlement of any such
Third Party Claim at its cost and expense, and such reasonable legal fees
and expenses shall be included as part of the indemnification obligation of
the Indemnifying Party hereunder. If the Indemnified Party should elect to
exercise such right, the Indemnifying Party shall have the right to
participate in, but not control, the defense or settlement of such Third
Party Claim at its sole cost and expense.
(d) If the Indemnifying Party elects not to defend the Indemnified
Party against such Third Party Claim, whether by not giving the Indemnified
Party timely notice within the Response Notice Period as provided above or
otherwise, then the Indemnified Party shall, at the expense of the
Indemnifying Party (if the Indemnified Party is entitled to
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indemnification hereunder), have the right to defend, settle or compromise
any such Third Party Claim with counsel of its own choosing. In the event
the Indemnified Party proposes to settle a Third Party Claim, the
Indemnified Party shall deliver to the Indemnifying Party written notice of
the proposed settlement of the Third Party Claim, which the Indemnifying
Party may reject in its reasonable judgment within thirty days of receipt
of such notice. In the event the Indemnified Party settles such Third
Party Claim over the objection of Indemnifying Party, dispute over such
settlement shall be resolved as provided in Section 8.5 hereof.
-----------
(e) In the event an Indemnified Party has a claim for indemnification
against the Indemnifying Party hereunder with respect to a Non Third Party
Claim, the Indemnified Party shall send a Claim Notice with respect to such
claim to the Indemnifying Party. If the Indemnifying Party disputes its
liability with respect to such claim or demand, such dispute shall be
resolved in accordance with Section 8.5 hereof; if the Indemnifying Party
-----------
accepts or agrees with such claim or does not notify the Indemnified Party
within the Response Notice Period that it disputes such claim, the amount
of such claim shall be conclusively deemed a liability of the Indemnifying
Party hereunder.
Section 8.4 Payment. The Indemnifying Party shall pay the Indemnified
-------
Party, within ten days after the final determination of liability under this
Article 8, the amount of any indemnification to which the Indemnified Party is
---------
entitled. The Indemnifying Party shall not have the right to set-off any amount
owed to the Indemnified Party under this Article 8 against any amounts owed by
the Indemnified Party to the Indemnifying Party. Upon the payment in full of
any claim, the Indemnifying Party shall be subrogated to the rights of the
Indemnified Party against any person, firm or corporation with respect to the
subject matter of such claim.
Section 8.5 Arbitration. All disputes under this Article 8, Section 2.4
----------- --------- -----------
or Section 2.5 shall be settled by arbitration in New York, New York, before a
-----------
single arbitrator pursuant to the rules of the American Arbitration Association
(the "AAA"). Arbitration may be commenced at any time by any party hereto
---
giving written notice to each other party to a dispute that such dispute has
been referred to arbitration under this Section 8.5. The arbitrator shall be
-----------
selected by the joint agreement of the parties, but if they do not so agree
within 20 days after the date of the notice referred to in the preceding
sentence, the selection shall be made pursuant to the rules from the panels of
arbitrators maintained by the AAA. Any award rendered by the arbitrator shall
be conclusive and binding upon the parties hereto; provided, however, that any
such award shall be accompanied by a written opinion of the arbitrator giving
the reasons for the award. This provision for arbitration shall be specifically
enforceable by the parties, and the decision of the arbitrator in accordance
herewith shall be final and binding and there shall be no right of appeal
therefrom. Unless otherwise designated by the arbitrator as a result of fault,
each party shall pay its own expenses of arbitration and the expenses of the
arbitrator shall be equally shared.
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ARTICLE 9
COVENANT NOT TO COMPETE
Section 9.1 Agreement Not to Compete. Unless otherwise consented to
------------------------
in writing by Purchaser, the Sellers agree that during the Restricted Period
they will not, within the Area, either directly or indirectly, on their own
behalf or in the service or on behalf of others, engage in any Competing
Business or provide managerial, supervisory, administrative, financial or
consulting services or assistance to, or own a beneficial interest in, any
Competing Business except for the ownership of less than five percent (5%) of a
publicly traded company. The Shareholders acknowledge that the agreements not
to compete contained in the Consulting Agreement and the Employment Agreement
are being entered into in connection with the sale of the Business, as well as
in connection with the consulting and employment relationships between the
Shareholders and Purchaser.
Section 9.2 Agreement Not to Solicit Employees. The Sellers agree
----------------------------------
that during the Restricted Period, they will not, without the prior written
consent of Purchaser, either directly or indirectly, on their own behalf or in
the service or on behalf of others, solicit, divert, or hire away, or attempt to
solicit, divert, or hire away, from the employment of Purchaser or Graphic, any
person employed by Purchaser or Graphic. The Shareholders acknowledge that the
agreements not to solicit employees contained in the Consulting Agreement and
Employment Agreement are being entered into in connection with the sale of the
Business, as well as in connection with the consulting and employment
relationships between the Shareholders and Purchaser.
Section 9.3 Agreement Not to Solicit Customers. The Sellers agree
----------------------------------
that during the Restricted Period, they will not, either directly or indirectly,
on their own behalf or in the service or on behalf of others, solicit or attempt
to solicit any person, firm or corporation who was a customer of the Business
during the immediately preceding one-year period (as shown on the books and
records of the Business). The Shareholders acknowledge that the agreements not
to solicit customers contained in the Consulting Agreement and Employment
Agreement are being entered into in connection with the sale of the Business, as
well as in connection with the consulting and employment relationships between
the Shareholders and Purchaser.
Section 9.4 Confidentiality.
---------------
(a) After the Closing, Sellers, Shareholders and Venturers (i) will
hold the Proprietary Information in confidence, and (ii) will not use,
duplicate, reproduce, distribute, disclose or otherwise disseminate the
Proprietary Information. In the event that any Seller, Shareholder or
Venturer determines that he or it is required by law to disclose any
Proprietary Information, he or it will not make such disclosure unless (and
then only to the extent that) he or it has been advised by independent
legal counsel that such disclosure is required by law and then only after
prior written notice is given to Purchaser (if reasonably practical) that
such disclosure has been requested and is required by law.
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(b) Any and all reproductions of the Proprietary Information in the
custody or control of the Sellers, Shareholders or Venturers will
prominently display a confidentiality legend.
(c) Sellers, Shareholders and Venturers covenant and agree that on or
before the Closing Date, they will destroy or will deliver to Purchaser all
tangible copies and embodiments of the Proprietary Information in their
possession or control.
Section 9.5 Remedies. The parties hereto specifically acknowledge and
--------
agree that the remedy at law for breach of this Article 9 will be inadequate and
---------
that any party, in addition to any other relief available to it, shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving actual damages.
ARTICLE 10
TERMINATION; AMENDMENTS; WAIVER
Section 10.1 Termination. This Agreement may be terminated, and the
-----------
Transaction contemplated hereby may be abandoned, at any time prior to the
Closing Date:
(a) by the written consent of Purchaser and Sellers;
(b) by Purchaser or Sellers if, without a material breach of the
terminating party, the Closing shall not have occurred on or before
December 31, 1996, which date may be extended by mutual consent of the
parties;
(c) by Purchaser if there has been a misrepresentation, breach of
warranty or breach of covenant or agreement by the Sellers or Venturers in
their representations, warranties, covenants or agreements set forth
herein; or
(d) by Sellers if there has been a misrepresentation, breach of
warranty or breach of covenant or agreement by Purchaser or Graphic in its
representations, warranties, covenants or agreements set forth herein.
Section 10.2 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 10.1 hereof, this Agreement
------------
shall forthwith become void and have no effect, other than the provisions of
Section 11.7 which shall survive. Nothing contained in this Section 10.2 shall
------------ ------------
relieve any party from liability for any breach of this Agreement occurring
before such termination.
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ARTICLE 11
MISCELLANEOUS
Section 11.1 Entire Agreement; Assignment. This Agreement, together
----------------------------
with any confidentiality agreements between the parties hereto, (a) constitutes,
with the Schedules and the Exhibits hereto, the entire agreement among the
parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof and thereof; provided,
however, that Purchaser and Sellers acknowledge that this Agreement is being
executed in part under that certain power of attorney contained in Section 18 of
the Letter of Intent by and among the parties hereto dated July 24, 1996 and
nothing contained in this Agreement supersedes such Section 18 of the Letter of
Intent (notwithstanding the foregoing), and Sellers represent and warrant that
such Letter of Intent was duly executed by all parties thereto other than
Graphic and that such power of attorney is in full force and effect and has not
been rescinded, revoked, modified or amended, in whole or in part, and (b) shall
not be assigned by operation of law or otherwise, provided that Purchaser may
assign its respective rights and obligations to any direct or indirect
subsidiary of Purchaser, but no such assignment shall relieve Purchaser of its
obligations hereunder.
Section 11.2 Validity. The invalidity or unenforceability of any
--------
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, each of which shall remain in full force
and effect.
Section 11.3 Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be deemed to have
been duly given, effective and received when delivered in person or by
electronic facsimile transmission, cable, telegram, telex, or a courier, or five
(5) days following the date such notice is mailed by registered or certified
mail (postage prepaid, return receipt requested), to the respective parties as
follows:
If to Purchaser or Graphic, to it at:
Graphic Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, III
with a copy to:
Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
Sixteenth Floor
191 Peachtree Street, N.E.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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If to the Sellers, to them at:
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
Galland, Kharasch, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
Canal Square
▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
actual receipt thereof).
Section 11.4 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of Maryland,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
Section 11.5 Descriptive Headings. Except as contained in Article 1
--------------------
hereto, descriptive headings herein are inserted for convenience of reference
only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
Section 11.6 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
Section 11.7 Expenses. All costs and expenses incurred in connection with
--------
the Transaction shall be paid by the party incurring such expenses; provided,
however, any legal or accounting expenses incurred by the Sellers in connection
with the Transaction contemplated herein shall be accrued in full on the Closing
Schedule of Net Assets of Sellers as an Assumed Liability as of the Closing Date
and any balance due as of the Closing Date shall be included in the Audited
Schedule of Net Assets, and shall be paid in full by Purchaser within 30 days
after the Audited Schedule of Net Assets is agreed upon pursuant to Section
2.5(c) hereof.
Section 11.8 Parties in Interest. This Agreement shall be binding upon
-------------------
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed as of the day and year first above written.
PRESSTAR ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇, III
---------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇, III
--------------------
Title: President
------------------
GRAPHIC INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇, III
---------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇, III
--------------------
Title: Chairman
----------------
EX-SPEED-ITE SERVICE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Shareholder
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Shareholder
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ JOINT VENTURE
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Managing Venturer
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, Venturer
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Venturer
by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ under Power of Attorney
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, Venturer
by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ under Power of Attorney
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Venturer
by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ under Power of Attorney
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------
▇▇▇▇ ▇▇▇▇▇▇▇▇, Venturer
by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ under Power of Attorney
-41-
