ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT dated as of June 15, 1999 (this "Agreement"),
among I.A.T., LLC, a New York limited liability company (the "Buyer"),
Unidigital Elements (NY), Inc., a New York corporation ("Elements"), Unison
(NY), Inc., a Delaware corporation ("Unison"), and Unidigital Inc., a Delaware
corporation and parent of each of Elements and Unison (the "Parent"). Elements,
Unison and the Parent are sometimes collectively referred to herein as the
"Unidigital Parties" and Elements and Unison are sometimes collectively referred
to as the "Selling Parties".
Preliminary Statement
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Parent is engaged, principally through Elements and Unison, in the
business, among other businesses, of providing digital prepress and printing
products and services, including service bureau, printing brokerage and related
marketing and marketing support primarily to graphic artists and marketing
professionals, currently based out of the facilities located at ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ (the "Business"). The Buyer desires to purchase, and the
Unidigital Parties desire to sell, certain of the assets of the Unidigital
Parties for the consideration set forth below, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. Sale and Delivery of the Assets
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1.1 Delivery of the Assets.
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(a) Subject to and upon the terms and conditions of this Agreement,
at the closing of the transactions contemplated by this Agreement (the
"Closing"), the Unidigital Parties shall sell, transfer, convey, assign and
deliver to the Buyer, and the Buyer shall purchase from the Unidigital Parties,
free and clear of all liens, liabilities, security interests, leasehold
interests and encumbrances of any nature whatsoever (except as otherwise
expressly provided herein), the properties, assets and other claims, rights and
interests of the Unidigital Parties relating to the Business set forth below
(but excluding in all events the Excluded Assets (as defined below))
(collectively, the "Assets"):
With respect to the Selling Parties:
(i) all inventories of raw materials, work in process, goods
in transit (i.e., inventories purchased by, but not delivered to, the Selling
Parties), finished goods, office supplies, maintenance supplies, packaging
materials, spare parts and similar items (collectively, the "Inventory");
(ii) all accounts receivable and notes receivable (including
any security held by the Selling Parties for the payment thereof) (collectively,
the "Accounts Receivable");
(iii) those prepaid expenses set forth in Schedule 1.1(a)(iii);
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(iv) all rights under the contracts, agreements, leases,
licenses, purchase orders, customer sales agreements and other instruments set
forth on Schedule 1.1(a)(iv) attached hereto (collectively, the "Contract
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Rights");
(v) all customer lists; production records; technical,
manufacturing and procedural manuals; engineering data; development and design
data; plans, blueprints, specifications and drawings; and other useful business
records, including electronic media, and any confidential or other information
which has been reduced to writing, relating to the Assets;
(vi) all rights of the Selling Parties under express or
implied warranties from the suppliers of the Assets to the extent transferable
(but excluding such rights insofar as the same pertain to liabilities retained
by the Selling Parties hereunder);
(vii) all of the machinery, equipment, tools, dies, tooling,
production fixtures, maintenance machinery and equipment, computers,
telecommunication systems, fittings and other office equipment, furniture,
leasehold improvements and construction in progress on the date of Closing which
are owned by the Selling Parties and are set forth on Schedule 1.1(a)(vii)
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(collectively, the "Fixed Assets");
(viii) subject to Section 8.6 hereof, for a period of five years
following the Closing, all right, title and interest of the Selling Parties in
and to all intangible property rights relating to the Business, including all of
the Selling Parties' rights to use the name "Elements," "Elements (NY)," or any
derivation thereof in the United States of America, and all goodwill associated
thereto (collectively, the "Intangible Property");
(ix) all transferable approvals, authorizations,
certifications, consents, variances, permissions, licenses and permits to or
from, or filings, notices or recordings to or with, federal, state, foreign, and
local governmental authorities as held or effected by the Selling Parties in
connection with the Assets;
(x) all office supplies, production supplies, spare parts,
other miscellaneous supplies, and other tangible property of any kind wherever
located;
(xi) all prepayments and prepaid expenses of the Selling
Parties;
(xii) all claims, causes of action, rights of recovery and
rights of set-off of any kind of the Selling Parties;
(xiii) the right to receive and retain mail, accounts receivable
payments and other communications relating to the Business;
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(xiv) the right to ▇▇▇▇ and receive payment for products
shipped or delivered by either of the Selling Parties and services performed by
either of the Selling Parties but unbilled or unpaid as of the Closing;
(xv) all telephone numbers (e.g., "800" numbers) used by
either of the Selling Parties;
(xvi) (A) the right to use the four floors at ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ City, currently used by the Selling Parties and further
described on Schedule 1.1(a)(xvi) attached hereto (the "Premises") for the
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period of time and at the rental rates described on Schedule 1.1(a)(xvi), as
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though Buyer were the lessee thereof under a lease having terms no less
favorable to the lessee than those contained in the real property lease attached
hereto as Exhibit 1.1(a)(xvi) (the "Existing Premises Lease"), as such terms
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would apply to a lessee who is not in default under the Existing Premises Lease
and (B) the right to apply the proceeds of the security deposit of the Selling
Parties held by the landlord of the Premises to the lease to be entered into
between such landlord and the Buyer as of the Closing; and
(xvii) the right to use the machinery and equipment described
on Schedule 1.1(a)(xvii) attached hereto (the "Special Leased Equipment") for
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the period of time and at the rental rates described on Schedule 1.1(a)(xvii)
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(the "Special Equipment Lease Terms"), as though Buyer were the lessee of the
Special Leased Equipment covered thereby on terms no less favorable to Buyer
than those contained in the equipment leases covering such Special Leased
Equipment attached hereto as Exhibit 1.1(a)(xvii) (the "Existing Special Leased
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Equipment Leases"), as such terms would apply to a lessee who is not in default
under the Existing Special Leased Equipment Leases, including all rights, if
any, contained in the Existing Special Leased Equipment Leases to purchase
Equipment from the lessor.
With respect to the Parent, all assets of the Parent or any of its
subsidiaries other than the Selling Parties which are used solely or primarily
in the Business and which would be included in items (i) through (xvii) above if
the Parent and such subsidiaries were included in the definition of "Selling
Parties" (the "Other Included Assets").
(b) The assets to be transferred to the Buyer under this Agreement shall
be limited solely to those Assets set forth in Section 1.1(a) and shall not
include any other assets of the Unidigital Parties, including without
limitation, (i) any of the Unidigital Parties' rights or consideration under
this Agreement, or (ii) any refunds of federal, state, foreign or local income
or other tax paid by the Unidigital Parties, or (iii) any insurance policies
currently held by the Unidigital Parties and related premium agreements for
general liability, product liability and workers compensation insurance, or (iv)
the financial books and records of the Unidigital Parties (it being understood
that the Unidigital Parties shall make such financial books and records related
to the Assets available at the reasonable request of the Buyer), or (v) cash or
cash equivalents of the Unidigital Parties, or (vi) those assets listed on
Schedule 1.1(b) attached hereto (collectively, the "Excluded Assets").
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1.2 Further Assurances. At the Closing, the Unidigital Parties shall
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execute and deliver General Assignments and Bills of Sale (the "▇▇▇▇ of Sale"),
substantially in the form
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attached hereto as Exhibit A, and the assignments described in Section 6.6(b)
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hereof. At any time and from time to time after the Closing, at the Buyer's
request and without further consideration, the Unidigital Parties shall execute
and deliver such assignments of leases and other instruments of sale, transfer,
conveyance, assignment and confirmation, and take such other action, as the
Buyer may reasonably request to more effectively transfer, convey and assign to
the Buyer, and to confirm the Buyer's title to, all of the Assets, to put the
Buyer in actual possession and operating control thereof, to assist Buyer in
exercising all rights with respect thereto and to carry out the purpose and
intent of this Agreement.
1.3 Assumption of Liabilities.
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(a) At the Closing, the Buyer shall execute and deliver an assumption
agreement (the "Assumption Agreement"), substantially in the form attached
hereto as Exhibit B, pursuant to which it shall assume and agree to (i) perform,
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pay and discharge, in accordance with their respective terms, all those
liabilities and obligations set forth on Schedule 1.3(a) attached hereto which
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were incurred in the ordinary course of business of the Business and are
outstanding on the date of Closing; (ii) perform in accordance with their terms
those obligations outstanding on the date of Closing under the Contract Rights;
and (iii) perform in accordance with their terms those liabilities arising after
the date of Closing from any agreement, contract, commitment or other contract
documents which the Buyer has requested be transferred to it pursuant to Section
1.1(a) but which has not been so transferred due to the failure of the
Unidigital Parties to obtain the consent or approval required for such transfer,
provided that the Buyer has received substantially the same economic benefit of
such contract as if such consent or approval had been obtained (the obligations
set forth in (i), (ii) and (iii) are, collectively, the "Assumed Liabilities").
(b) The Buyer shall not assume any of the liabilities of the
Unidigital Parties, including, without limitation, any environmental or tax
liabilities arising out of the conduct of the Business prior to the Closing,
and, except as otherwise provided herein, shall purchase the Assets free and
clear of all liens, mortgages, security interests, encumbrances and claims and
the Unidigital Parties represent, warrant and agree that the Buyer shall not be
or become liable for any claims, demands, liabilities or obligations not
expressly assumed in this Agreement.
1.4 Purchase Price.
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(a) In consideration of the transfer of the Assets to the Buyer
hereunder, the Buyer will assume the Assumed Liabilities and will pay an
aggregate purchase price (the "Purchase Price") equal to (i) $500,000 in cash
payable to the Selling Parties (the "Cash Consideration"), (ii) $1,500,000
payable to the Selling Parties, such amount to be paid by the issuance of a 5%
promissory note (the "Note"), substantially in the form attached hereto as
Exhibit C, and (iii) $250,000 payable to the Selling Parties or their designees
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in digital print and prepress services valued at retail prices customarily
charged by the Business (the "Print Services"). In addition, Unidigital hereby
agrees to amend the Stock Option Agreements for each of the persons set forth on
Schedule 1.4(a) attached hereto such that each such person shall have two years
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from the date of Closing to exercise all vested options to purchase shares of
Common Stock of Unidigital previously granted to each such person.
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(b) In the event the value of the Accounts Receivable (aged 120 days
or less) ("Qualified Accounts Receivable") acquired by the Buyer hereunder do
not exceed the accounts payable assumed by the Buyer hereunder ("Accounts
Payable") by at least $1,000,000 (all as determined in a manner consistent with
past practice), the Cash Consideration shall be reduced, on a dollar-for-dollar
basis, by the amount determined as follows: $1,000,000 minus (Qualified Accounts
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Receivable minus Accounts Payable).
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(c) The right of the Selling Parties to utilize the Print Services
shall terminate on the third anniversary of the date of the Closing. In
addition, the Print Services may be redeemed by the Selling Parties at a rate
not to exceed $85,000 per year, commencing on the day immediately following each
of the date of the Closing, the first anniversary of the date of the Closing and
the second anniversary of the date of the Closing, as the case may be.
1.5 The Closing. The Closing will take place at the offices of Unidigital
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Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ concurrent with the
execution hereof. The transfer of the Assets by the Unidigital Parties to the
Buyer shall be deemed to occur concurrent with the execution hereof. At the
Closing, the Buyer is paying the Cash Consideration by wire transfer to an
account or accounts specified by the Selling Parties in immediately available
funds.
1.6 Allocation of Purchase Price. Within 20 days of the Closing, the
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parties shall determine, in good faith, the allocation of the aggregate amount
of the Purchase Price, for tax purposes only, among the Assets. The parties
agree that they will not take any position which is materially inconsistent with
the allocations determined in accordance with this Agreement in preparing
income, capital or franchise tax returns.
2. Representations of the Unidigital Parties
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The representations and warranties made by the Unidigital Parties
herein or in any instrument or document furnished in connection herewith shall
survive the Closing until the first anniversary of the Closing. The Unidigital
Parties, jointly and severally, represent and warrant to the Buyer as follows:
2.1 Organization. Each of the Unidigital Parties is a corporation duly
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organized, validly existing and in good standing under the laws of the state of
its incorporation, and has all requisite corporate power and authority to own
their respective properties, to carry on their respective businesses as now
being conducted, to execute and deliver this Agreement and the agreements
contemplated herein, and to consummate the transactions contemplated hereby.
Each of the Unidigital Parties is duly qualified to do business and in good
standing in all jurisdictions in which its ownership of property or the
character of its business requires such qualification, except where the failure
to qualify will not have a material adverse effect upon such Unidigital Party.
2.2 Authorization. The execution and delivery of this Agreement (and all
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other agreements provided for herein) by the Unidigital Parties, and the
consummation by the Unidigital Parties of all transactions contemplated hereby,
have been duly authorized by all requisite corporate action. This Agreement and
all such other agreements and obligations entered
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into and undertaken in connection with the transactions contemplated hereby to
which each Unidigital Party is a party constitutes the valid and legally binding
obligations of such Unidigital Party, enforceable against it, in accordance with
their respective terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally and by general principles of equity. The execution, delivery
and performance by each of the Unidigital Parties of this Agreement and the
agreements provided for herein, and the consummation of the transactions
contemplated hereby and thereby, will not, with or without the giving of notice
or the passage of time or both, (a) violate the provisions of any law, rule or
regulation applicable to such Unidigital Party; (b) violate the provisions of
the Certificate of Incorporation of such Unidigital Party; (c) violate any
judgment, decree, order or award of any court, governmental body or arbitrator;
or (d) conflict with or result in the breach or termination of any term or
provision of, or constitute a default under, or cause any acceleration under, or
cause the creation of any lien, charge or encumbrance upon the Assets pursuant
to, any indenture, mortgage, deed of trust or other instrument or agreement to
which any of the Unidigital Parties is a party or by which any of the Unidigital
Parties or any of their respective properties is or may be bound.
2.3 Ownership of the Assets. Except as set forth on Schedule 2.3 attached
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hereto, the Unidigital Parties are the true and lawful owners of the Assets, and
have the right to sell and transfer to the Buyer good and marketable title to
all Assets, which are free and clear of all claims, liabilities, liens, pledges,
charges, encumbrances and equities of any kind affecting the Assets
(collectively, the "Encumbrances").
2.4 Litigation. None of the Unidigital Parties is a party to, nor to the
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best knowledge of each of the Unidigital Parties, threatened with, and none of
the Assets are subject to, any material litigation, suit, action, investigation
(to the best knowledge of each of the Unidigital Parties), grievance,
arbitration, proceeding, or controversy or claim before any court,
administrative agency or other governmental authority relating to or affecting
the Assets or the business, properties, condition (financial or otherwise) of
the Business. None of the Unidigital Parties is in violation of or in default
with respect to any judgment, order, award, writ, injunction, decree or rule of
any court, governmental department, commission, agency, instrumentality,
arbitrator, administrative agency or governmental authority or any regulation of
any administrative agency or governmental authority, where such violation or
default would have a material adverse effect upon the Assets, the business,
properties, condition (financial or otherwise) of the Business or the
consummation of the transactions contemplated hereby. None of the Unidigital
Parties has received notice of any product liability claim, warranty claim or
other claim whatsoever which, if decided adversely, would have a material
adverse effect on the Assets.
2.5 Compliance with Laws. The Unidigital Parties have all requisite
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licenses, permits and certificates from federal, state, local and foreign
authorities necessary to conduct the Business and own and operate the Assets
(collectively, the "Permits"). None of the Unidigital Parties has engaged in any
activity which would cause or, to the knowledge of each of the Unidigital
Parties, permit revocation or suspension of any such Permit and no action or
proceeding looking to or contemplating the revocation or suspension of any such
Permit is pending or threatened. There are no existing material defaults by the
Unidigital Parties under any
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Permit. None of the Unidigital Parties is in violation of any federal, state,
local or foreign law, regulation or ordinance relating to its properties, the
violation of which could have a material adverse effect on the Assets. None of
the Unidigital Parties has received any notice or communication from any
federal, state, foreign, or local governmental or regulatory authority or
otherwise of any such violation or noncompliance and has not received any notice
prior to such time of any violation that has not been cured.
2.6 Contracts and Commitments.
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(a) Schedule 2.6(a) attached hereto sets forth a true, correct and
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complete list of the contracts and agreements which are to be assigned from the
Unidigital Parties to the Buyer at the Closing (collectively, the "Contracts").
(b) Except as set forth on Schedule 2.6(b), the continuation,
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validity and effectiveness of each Contract would not be affected by the
transfer thereof to the Buyer under this Agreement and all such Contracts are
assignable to the Buyer without a consent and:
(i) each Contract is a valid and binding agreement of the
Unidigital Party party to each such Contract, enforceable against such
Unidigital Party in accordance with its terms, and the Unidigital Parties have
no knowledge that any Contract is not a valid and binding agreement of the other
parties thereto:
(ii) each of the Unidigital Parties has fulfilled all
material obligations required pursuant to the Contracts to have been performed
by it prior to the date of Closing;
(iii) none of the Unidigital Parties is in material breach
of or material default under any Contract, and no event has occurred which with
the passage of time or giving of notice or both would constitute such a default,
result in a loss of rights or result in the creation of any lien, charge or
encumbrance, thereunder or pursuant thereto (an "Inchoate Default"); and
(iv) to the best knowledge of the Unidigital Parties, there is
no existing breach or default by any other party to any Contract, and no
Inchoate Default.
(c) True, correct and complete copies of all of the Contracts have
been delivered by the Unidigital Parties to the Buyer prior to the date of
Closing.
2.7 Brokers. All negotiations relative to this Agreement and the
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transactions contemplated hereby have been carried on by the Unidigital Parties
without the intervention of any other person in such manner as to give rise to
any valid claim against the Buyer for a finder's fee, brokerage commission or
other like payment.
3. Representations of the Buyer
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The representations and warranties made by the Buyer herein or in any
instrument or document furnished in connection herewith shall survive the
Closing until the first anniversary of the date of Closing. The Buyer represents
and warrants to the Unidigital Parties as follows:
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3.1 Organization and Authority. The Buyer is duly organized and validly
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existing and in good standing under the laws of the state of its organization,
and has requisite power and authority to own its properties and to carry on its
business as now being conducted. The Buyer has full power to execute and deliver
this Agreement and to consummate the transactions contemplated hereby.
3.2 Authorization. The execution and delivery of this Agreement by the
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Buyer and the agreements provided for herein to which it is a party, and the
consummation by the Buyer of all transactions contemplated hereby, have been
duly authorized by all requisite action. This Agreement and all such other
agreements and written obligations entered into and undertaken in connection
with the transactions contemplated hereby constitute the valid and legally
binding obligations of the Buyer, enforceable against it in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors
rights generally and general principles of equity. The execution, delivery and
performance of this Agreement and the agreements provided for herein, and the
consummation by the Buyer of the transactions contemplated hereby and thereby,
will not, with or without the giving of notice or the passage of time or both,
(a) violate the provisions of any law, rule or regulation applicable to the
Buyer; (b) violate the provisions of the organizational documents of the Buyer;
(c) violate any judgment, decree, order or award of any court, governmental body
or arbitrator applicable to the Buyer; or (d) conflict with or result in the
breach or termination of any term or provision of, or constitute a default
under, or cause any acceleration under, or cause the creation of any lien,
charge or encumbrance upon the properties or assets of the Buyer pursuant to,
any indenture, mortgage, deed of trust or other agreement or instrument to which
it or its properties is a party or by which the Buyer is or may be bound.
3.3 Regulatory Approvals. All consents, approvals, authorizations and
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other requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by the Buyer and which are necessary for its consummation
by the Buyer of the transactions contemplated by this Agreement have been
obtained and satisfied.
3.4 Brokers. All negotiations relative to this Agreement and the
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transactions contemplated hereby have been carried on by the Buyer without the
intervention of any other person in such manner as to give rise to any valid
claim for a finder's fee, brokerage commission or other like payment.
4. Public Announcements
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Except as otherwise required by law or government regulation or
otherwise reasonably necessary for either of the parties to conduct any
litigation, arbitration or other proceeding, any public announcement, press
release or release of information with respect to this Agreement or the
transactions contemplated hereby shall be issued, if at all, at such time and in
such manner as the Buyer and the Selling Parties mutually determine. The Selling
Parties and the Buyer shall consult with each other concerning the means by
which the employees, customers, suppliers and others having a business
relationship with the Selling Parties will be informed of the transactions
contemplated hereby.
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5. Employee Matters
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5.1 Employees. The Buyer is making offers of employment to each of the
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employees listed on Schedule 5.1 at salaries and bonuses no less favorable to
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the applicable employee than such employee currently receives from the Selling
Parties, as applicable.
5.2 Future Changes. Except as set forth in Section 5.1, nothing in
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this Agreement shall require the Buyer to hire or retain any of employees of the
Selling Parties for any period of time after the date of Closing. Subject to
requirements of applicable law, the Buyer reserves the right at any time after
the date of Closing to terminate such employment and amend, modify or terminate
any term or condition of employment, including without limitation, any employee
benefit plan, program, policy, practice or arrangement.
5.3 Reporting of Data. The Buyer and the Unidigital Parties shall compile
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and furnish to each other such actuarial and employee data as shall be required
from time to time for each party to perform and fulfill its obligations under
this Section 5.
6. Conditions to Obligations of the Buyer
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The obligations of the Buyer under this Agreement are subject to the
fulfillment, on or prior to the Closing, of the following conditions precedent,
each of which may be waived in writing in the sole discretion of the Buyer:
6.1 Continued Truth of Representations and Warranties of the Unidigital
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Parties; Compliance with Covenants and Obligations. The representations and
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warranties of the Unidigital Parties shall be true on and as of the date of
Closing. The Unidigital Parties shall have performed and complied in all
material respects with all covenants required by this Agreement to be performed
or complied with by it prior to or at the date of Closing. The Unidigital
Parties shall have delivered to the Buyer each of the Schedules to this
Agreement and such Schedules shall be reasonably satisfactory to the Buyer and
its lender.
6.2 Corporate Proceedings. All corporate and other proceedings required
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to be taken on the part of the Unidigital Parties to authorize or carry out this
Agreement and to convey, assign, transfer and deliver the Assets shall have been
taken.
6.3 Other Governmental Approvals. All courts of law, governmental
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agencies, departments, bureaus, commissions and similar bodies, the consent,
authorization or approval of which is necessary under any applicable law, rule,
order or regulation for the consummation by the Unidigital Parties of the
transactions contemplated by this Agreement and the operation of the Business by
the Buyer, shall have consented to, authorized, permitted or approved such
transactions.
6.4 Consents of Lenders, Lessors and Other Third Parties. The Unidigital
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Parties shall have received the consents and approvals of all lenders, lessors
and other third parties whose consent or approval is required in order for the
Unidigital Parties to consummate the
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transactions contemplated by this Agreement, including, without limitation, the
landlord at the Premises.
6.5 Board of Directors and Shareholder Approval. The Board of Directors of
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each of the Unidigital Parties and the sole shareholder of each of the Selling
Parties shall have duly authorized the transactions contemplated by this
Agreement.
6.6 Closing Deliveries of the Unidigital Parties.
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The Buyer will receive at the Closing each of the following documents
or items:
(a) the ▇▇▇▇ of Sale, executed by the Unidigital Parties;
(b) such instruments of conveyance, assignment and transfer, in form
and substance reasonably satisfactory to the Buyer, as shall be appropriate to
convey, transfer and assign to, and to vest in, the Buyer, good and marketable
title to the Assets;
(c) all technical data, formulations, product literature and other
documentation relating to the Assets;
(d) such files and other data and documents pertaining to the Assets
as the Buyer may reasonably request related to the Assets;
(e) such certificates of each Unidigital Parties' officers and such
other documents evidencing satisfaction of the conditions specified in this
Section 6 as the Buyer shall reasonably request;
(f) certificate of the Secretary or Assistant Secretary of each of
the Unidigital Parties attesting to the incumbency of such Unidigital Parties'
officers, and the authenticity of the resolutions authorizing the transactions
contemplated by the Agreement and the organizational documents of such Selling
Party; and
(g) such other documents, instruments or certificates as the Buyer
may reasonably request.
6.7 Lease Obligations. The Unidigital Parties shall be current on all
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lease obligations owing to its lessors through the date of Closing.
6.8 Lock Box Arrangements. The Unidigital Parties shall have terminated
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all lock box arrangements relating to the Business on or prior to the date of
Closing.
7. Conditions to Obligations of the Unidigital Parties
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The obligations of the Unidigital Parties under this Agreement are
subject to the fulfillment, on or prior to the Closing, of the following
conditions precedent, each of which may be waived in writing at the sole
discretion of the Unidigital Parties:
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7.1 Continued Truth of Representations and Warranties of the Buyer
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Compliance with Covenants and Obligations. The representations and warranties of
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the Buyer in this Agreement shall be true on and as of the date of Closing. The
Buyer shall have performed and complied in all material respects with all
covenants required by this Agreement to be performed or complied with by it
prior to or at the date of Closing.
7.2 Corporate Proceedings. All legal and other proceedings required to be
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taken on the part of the Buyer to authorize or carry out this Agreement shall
have been taken.
7.3 Approvals. All other governmental agencies, departments, bureaus,
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commissions and similar bodies, the consent, authorization or approval of which
is necessary under any applicable law, rule, order or regulation for the
consummation by the Buyer of the transactions contemplated by this Agreement
shall have consented to, authorized, permitted or approved such transactions.
7.4 Consents of Lenders, Lessors and Other Third Parties. The Buyer shall
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have received all requisite and material consents and approvals of all lenders,
lessors and other third parties whose consent or approval is required in order
for the Buyer to consummate the transactions contemplated by this Agreement.
7.5 Closing Deliveries of the Buyer.
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The Unidigital Parties will receive at the Closing each of the
following documents or items:
(a) the Cash Consideration due at the Closing;
(b) the Note;
(c) the Assumption Agreement;
(d) such certificates of the Buyer's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 7
as the Unidigital Parties shall reasonably request;
(e) a certificate of the Secretary or Assistant Secretary of the
Buyer attesting to the incumbency of the Buyer's officers, and the authenticity
of the resolutions authorizing the transactions contemplated by this Agreement
and the organizational documents of the Buyer; and
(f) such other documents, instruments or certificates as the
Unidigital Parties may reasonably request.
11
8. Post-Closing Agreements
-----------------------
8.1 Proprietary Information.
-----------------------
(a) Each party hereto shall hold in confidence, and use its best
efforts to have all officers, shareholders, directors and personnel hold in
confidence, all knowledge and information of any other party hereto of a secret
or confidential nature, and shall not disclose, publish or make use of the same
without the consent of such other party, except to the extent that such
information shall have become public knowledge other than by breach of this
Agreement by the disclosing party or by any other persons who have agreed with
the parties hereto not to disclose, publish or make use of such information.
(b) The parties hereto agree that the remedy at law for any breach
of this Section 8.1 would be inadequate and that each of the parties hereto
shall be entitled to injunctive relief in addition to any other remedy it may
have upon breach of any provision of this Section 8.1.
(c) The foregoing to the contrary notwithstanding, no information,
written or oral, shall be construed or considered confidential information and
thereby subject to the restrictions of this Section 8.1 if such information was
(i) generally available to the public other than as a result of a disclosure by
any party hereto or anyone to whom the parties hereto transmit the information
in violation hereof, (ii) in the possession of the disclosing party or known to
the such party on a non-confidential basis prior to its disclosure to such
party, or (iii) available to the disclosing party on a non-confidential basis
from a source other than any other party hereto who is not bound by a
confidentiality agreement with the parties hereto.
8.2 Solicitation or Hiring of Former Employees.
------------------------------------------
(a) Except as required by law or with the written consent of the
Buyer, for a period of one year after the date of Closing, the Unidigital
Parties and any persons or entities that are not natural persons, that directly
or indirectly, through one or more intermediaries, control, are controlled by,
or are under common control with, any of the Unidigital Parties (the "Corporate
Affiliates"), shall not solicit any person who is an employee listed on Schedule
--------
5.1, and has been employed, and not terminated without cause, by the Buyer, to
---
terminate his or her employment with the Buyer or to become an employee of the
Unidigital Parties or their respective Corporate Affiliates or hire any person
who was such an employee on the date of Closing.
(b) Except as required by law or with the written consent of Elements,
Unison, or the Parent, as the case may be, for a period of one year after the
date of Closing, the Buyer shall not and shall cause all of its Corporate
Affiliates not to solicit any person who is an employee of Elements, Unison, the
Parent or their respective Corporate Affiliates, as the case may be (except for
those employees listed on Schedule 5.1), and has been employed, and not
-------------
terminated without cause, by Elements, Unison, the Parent or their respective
Corporate Affiliates, as the case may be, to terminate his or her employment
with Elements, Unison, the Parent or their respective Corporate Affiliates, as
the case may be, or to become an employee of
12
the Buyer or its Corporate Affiliates or hire any person who was such an
employee on the date of the Closing.
8.3 Sharing of Data. The Unidigital Parties shall have the right for a
-----------------
period of seven years following the date of Closing to have reasonable access to
such books, records and accounts, including financial and tax information,
correspondence, production records, employment records and other similar
information as are transferred to the Buyer pursuant to the terms of this
Agreement for the limited purposes of complying with its obligations under
applicable securities, tax, environmental, employment or other laws and
regulations. The Buyer and shall have the right for a period of seven years
following the date of Closing to have reasonable access to those books, records
and accounts, including financial and tax information, correspondence,
production records, employment records and other records which are retained by
the Unidigital Parties pursuant to the terms of this Agreement to the extent
that any of the foregoing relates to the Assets transferred to the Buyer
hereunder or is otherwise needed by the Buyer and in order to comply with its
obligations under applicable securities, tax, environmental, employment or other
laws and regulations. In addition to the foregoing, the Unidigital Parties
hereby agree to make available to the Buyer, without charge, the accounting
services of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ for a period not to exceed six (6) months
following the Closing; provided, however, that in no event shall ▇▇▇▇▇▇▇▇
-------- -------
Gerstenbluth be required to provide such services if it unreasonably interferes
with the performance of his duties for the Unidigital Parties or any of their
respective affiliates.
8.4 Cooperation in Litigation. Each party hereto will reasonably cooperate
-------------------------
with the other in the defense or prosecution of any litigation or proceeding
already instituted or which may be instituted hereafter against or by such party
relating to or arising out of the conduct of the Business prior to or after the
date of Closing (other than litigation arising out of the transactions
contemplated by this Agreement and except as otherwise expressly provided
herein). The party requesting such cooperation shall pay the out-of-pocket
expenses (including legal fees and disbursements) of the party providing such
cooperation and of its officers, directors, employees and agents reasonably
incurred in connection with providing such cooperation, but shall not be
responsible to reimburse the party providing such cooperation for such party's
time spent in such cooperation or the salaries or costs of fringe benefits or
similar expenses paid by the party providing such cooperation to its officers,
directors, employees and agents while assisting in the defense or prosecution of
any such litigation or proceeding.
8.5 Additional Payments; Right of Setoff. Pursuant to this Agreement,
---------------------------------------
Buyer shall acquire the right to use the Special Leased Equipment on the Special
Equipment Lease Terms. Buyer shall make its payments directly to the equipment
lessor. The Unidigital Parties jointly and severally agree to make additional
payments to the equipment lessor, if any ("Additional Equipment Payments"), as
needed to secure Buyer's right to use the Special Leased Equipment without
additional costs to Buyer. If the Unidigital Parties do not make the Additional
Equipment Payments, if any, on a timely basis, Buyer may (but shall not be
required to) make any or all such payments itself and, at Buyer's option, either
demand repayment of such amounts from the Unidigital Parties or, upon reasonable
notice to the Unidigital Parties, setoff the amount of such payments against
amounts which would otherwise be or become due from Buyer pursuant to the Note.
13
8.6 Termination of Use of Elements Name. Until the fifth anniversary of
------------------------------------
the date of the Closing, the Unidigital Parties shall, and shall cause their
Corporate Affiliates to, cease all use of the name "Elements" or any variation
thereof in connection with its business operation in the United States,
effective immediately, provided that the Unidigital Parties and their Corporate
Affiliates shall have a period of three months from the date of Closing to cease
using the name "Elements" in connection with their San Francisco-based
operations. The Buyer shall be entitled to renew its use of the name "Elements"
or any variation thereof in connection with its business operation in the United
States beyond such five-year period for three (3) additional one-year terms,
provided that the Buyer pays to the Unidigital Parties a royalty fee equal to
$20,000 per year (the "Royalty Fee") payable in a lump sum on the date upon
which such renewal is to be effected. In the event the Buyer pays the Royalty
Fee to the Unidigital Parties for three (3) consecutive years, the Buyer shall
acquire all right, title and interest in the Selling Parties' rights to use the
name "Elements" or any variation thereof in connection with its business
operation in the United States at no further additional cost.
9. Indemnification and Reimbursement
---------------------------------
9.1 Indemnification by the Unidigital Parties. The Unidigital Parties
-------------------------------------------
shall indemnify, defend and hold harmless the Buyer and any parent, subsidiary
or affiliate thereof and all directors, officers, employees, agents and
consultants of the foregoing (collectively, the "Buyer Group") from and against
all demands, claims, actions or causes of action, assessments, losses, damages,
liabilities (whether absolute, accrued, contingent or otherwise), costs and
expenses, including but not limited to, interest, penalties and reasonable
attorneys' fees and expenses (collectively, "Damages"), asserted against,
imposed upon or incurred by the Buyer Group or any member thereof, directly or
indirectly, by reason of or resulting from or relating to the breach of any
representation, warranty or covenant set forth herein (but in any event
excluding the Assumed Liabilities) at such time as the Damages, whether actual
or alleged, exceed $50,000, in which case all amounts (including amounts used to
calculate this minimum), but limited to $2,225,000, except in the case of
Damages arising out of environmental or tax liabilities in which case the
limitation on indemnification set forth in this Section 9.1 shall not apply.
Notwithstanding anything herein to the contrary, the limitation on
indemnification set forth above in this Section 9.1 shall not apply if and to
the extent that any member of the Seller Group (as defined below) shall have
been determined (whether by a court of competent jurisdiction, arbitration,
mediation, or settlement) to have committed fraud against the Buyer Group with
respect to any of the transactions contemplated herein.
9.2 Indemnification by the Buyer. The Buyer shall indemnify, defend and
-----------------------------
hold harmless the Unidigital Parties and any parent, subsidiary or affiliate
thereof and all directors, officers, employees, agents and consultants of the
foregoing (collectively, the "Seller Group") from and against all Damages
asserted against, imposed upon or incurred by the Seller Group or any member
thereof, directly or indirectly, by reason of or resulting from or relating to
the breach of any representation, warranty or covenant set forth herein, or the
operation of the Business post-closing, or the Assumed Liabilities, at such time
as the Damages, whether actual or alleged, exceed $50,000, in which case all
amounts (including amounts used to calculate this minimum), but limited to
$2,225,000, except in the case of Damages arising out of environmental or tax
14
liabilities in which case the limitation on indemnification set forth in this
Section 9.2 shall not apply.
Notwithstanding anything herein to the contrary, the limitation on
indemnification set forth above in this Section 9.2 shall not apply if and to
the extent that any member of the Buyer Group shall have been determined
(whether by a court of competent jurisdiction, arbitration, mediation, or
settlement) to have committed fraud against the Seller Group with respect to any
of the transactions contemplated herein.
9.3 Cooperation. The parties hereto agree to render to each other
-----------
such assistance as they may reasonably require of each other and to cooperate in
good faith with each other in order to provide for the proper and adequate
defense of any claim, action, suit or proceeding brought by any third party;
provided, however, that this Section 9.3 shall not require the Unidigital
-------- -------
Parties to retain any personnel or resources solely to comply with this Section
9.3 and the Unidigital Parties disclaim any warranty that it will have resources
available to comply with this Section 9.3.
9.4 Confidentiality. The parties agree to cooperate in such a reasonable
---------------
manner as to preserve in full the confidentiality of all confidential business
records and the attorney-client and work-product privileges. In connection
therewith, each party agrees that (a) it will use its reasonable efforts, in any
action, suit or proceeding in which it has assumed or participated in the
defense, to avoid production of confidential business records and (b) all
communications between any party hereto and counsel responsible for or
participating in the defense of any action, suit or proceeding shall, to the
extent possible, be made so as to preserve any applicable attorney-client or
work-product privilege.
10. Transfer and Sales Tax. The Buyer shall be responsible for and pay all
----------------------
filing and recording taxes and fees, and all sales, use and transfer taxes and
fees, if any, upon the sale and transfer of the Assets hereunder.
11. Notices. Any notices or other communications required or permitted
-------
hereunder shall be sufficiently given if in writing (including
telecommunications) and delivered personally or sent by telex, telecopy or other
wire transmission (with request for assurance in a manner typical with respect
to communications of that type), federal express or other overnight air courier
(postage prepaid), registered or certified mail (postage prepaid with return
receipt requested), addressed as follows or to such other address of which the
parties may have given notice:
To the Unidigital Parties: c/o Unidigital Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇, Chief Executive Officer
Tel. No: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
15
With a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Professional Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
To the Buyer: I.A.T., LLC
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇▇▇▇▇, President
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Pitney ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If by hand to: Pitney ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Unless otherwise specified herein, such notices or other communications
shall be deemed received (a) on the date delivered, if delivered personally or
by wire transmission; (b) on the next business day after mailing or deposit with
an overnight air courier; or (c) five business days after being sent, if sent by
registered or certified mail.
12. Successors and Assigns. This Agreement shall be binding upon and
------------------------
inure to the benefit of the parties hereto and their respective successors and
assigns. No party may assign all or a portion of its rights and obligations
hereunder without the prior written consent of the other party. Any assignment
in contravention of this provision shall be void.
13. Entire Agreement; Amendments; Attachments.
-----------------------------------------
(a) This Agreement, all Schedules and Exhibits hereto, and all
agreements and instruments to be delivered by the parties pursuant hereto
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior oral and written
and all contemporaneous oral negotiations, commitments and understandings
between such parties except as expressly provided herein. The parties, by the
consent of their respective Board of Directors, or officers authorized by such
Boards, may amend
16
or modify this Agreement, in such manner as may be agreed upon, by a written
instrument executed by the parties.
(b) If the provisions of any Schedule or Exhibit to this Agreement are
inconsistent with the provisions of this Agreement, the provisions of the
Agreement shall prevail. The Exhibits and Schedules attached hereto or to be
attached hereafter are hereby incorporated as integral parts of this Agreement.
14. Expenses. Except as otherwise expressly provided herein, the Buyer and
--------
the Unidigital Parties shall each pay their own expenses in connection with this
Agreement and the transactions contemplated hereby.
15. Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of New York, without reference to
conflicts of laws rules or principles.
16. Section Headings. The section headings are for the convenience of
-----------------
the parties and in no way alter, modify, amend, limit, or restrict the
contractual obligations of the parties.
17. Severability. The invalidity or unenforceability of any provision of
------------
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document.
19. Waiver. The rights and remedies of the parties to this Agreement
------
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party, (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given, and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
20. Ambiguity in Drafting. Each party shall have been deemed to have
---------------------
participated equally in the drafting of this Agreement and the agreements
contemplated hereby and any ambiguity in any such contracts shall not be
construed against any purported author thereof.
[SIGNATURE PAGE FOLLOWS]
17
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of and on the date first above written.
SELLING PARTIES:
UNIDIGITAL ELEMENTS (NY), INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Chief Executive Officer
UNISON (NY), INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Chief Executive Officer
BUYER:
I.A.T., LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
PARENT:
UNIDIGITAL INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Chief Executive Officer
18
