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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
Agreement made as of the 4th day of April, 1997 by and among Unidigital
Inc., a Delaware corporation with its principal office at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Unidigital"), its wholly-owned subsidiary,
Unidigital/▇▇▇▇▇ Corporation, a Massachusetts corporation with its principal
office at c/o Unidigital Inc., ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(the "Buyer"), ▇▇▇▇▇ Image Group, Inc., a Massachusetts corporation with its
principal office at ▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Seller") and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ ("▇▇▇▇▇▇") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), the holders
of all of the issued and outstanding shares of common stock of the Seller
(▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ are sometimes collectively referred to herein as the
"Shareholders"). The Seller and ▇▇▇▇▇▇ are sometimes collectively referred to
herein as the "Selling Parties".
Preliminary Statement
The Seller is engaged principally in the business of digital imaging and
photographic processing (the "Business"). The Buyer desires to purchase, and the
Seller desires to sell, certain of the assets and the Business of the Seller,
for the consideration set forth below and the assumption of certain of the
Seller's liabilities 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
1.1 Delivery of the Assets.
(a) Subject to and upon the terms and conditions of this Agreement,
except as specifically provided in Section l.l(b) hereof, at the closing of the
transactions contemplated by this Agreement (the "Closing"), the Seller shall
sell, transfer, convey, assign and deliver to the Buyer, and the Buyer shall
purchase from the Seller, free and clear of all liens, liabilities, security
interests, leasehold interests and encumbrances of any nature whatsoever (except
as otherwise expressly provided herein), all of the properties, assets and other
claims, rights and interests of the Seller or which are used in the Business of
whatever kind, character or description, whether real, personal or mixed,
tangible or intangible, wherever situated, including without limitation:
(i) all inventories of raw materials, work in process, goods
in transit (i.e., inventories purchased by, but not delivered to, the Seller),
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 Seller for the payment thereof) (collectively, the
"Accounts Receivable");
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(iii) those prepaid expenses set forth in Schedule 1.1(iii);
(iv) all rights under the contracts, agreements, leases,
licenses, purchase orders, customer sales agreements and other instruments set
forth on Schedule 2.9(b) and Schedule 2.13(a) attached hereto (collectively, the
"Contract Rights");
(v) all books; payment records; accounts; customer lists;
environmental reports or studies; correspondence; production records; technical,
accounting, manufacturing and procedural manuals; engineering data; development
and design data; plans, blueprints, specifications and drawings; employment and
personnel records; and other useful business records, including electronic
media, and any confidential or other information which has been reduced to
writing, utilized in the conduct of or relating to the Business or the Assets
(as hereinafter defined), subject to the Seller's right to retain copies thereof
which the Seller reasonably requires for its ongoing operation, winding-up or
dissolution;
(vi) all rights of the Seller 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
Seller hereunder);
(vii) the motor vehicles and other rolling stock listed on
Schedule 1.1(vii);
(viii) 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 hereof whether
or not reflected as capital assets in the accounting records of the Seller which
are owned by the Seller and used or useful in the Business including but not
limited to all of the foregoing located at the locations set forth on Schedule
1.l(viii) (collectively, the "Fixed Assets");
(ix) all right, title and interest of Seller in and to all
intangible property rights relating to the Business, including but not limited
to inventions, discoveries, trade secrets, processes, formulas, know-how, United
States and foreign patents, patent applications, trade names, including but not
limited to the name "▇▇▇▇▇ Image Group, Inc.", or any derivation thereof and
those names listed on Schedule 2.20 attached hereto, trademarks, trademark
registrations, applications for trademark registrations, copyrights, copyright
registrations, certification marks, industrial designs, technical expertise,
research data and other similar property and the registrations and applications
for registration thereof owned by the Seller or, where not owned, used by the
Seller in the Business and all goodwill associated thereto and all licenses and
other agreements to which the Seller is a party (as licensor or licensee) or by
which the Seller is bound relating to any of the foregoing kinds of property or
rights to any "know-how" or disclosure or use of ideas (collectively, the
"Intangible Property");
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(x) 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 Seller in connection
with the Assets;
(xi) all of the Seller's goodwill and the exclusive right
to use the names of the Seller as all or part of a corporate name;
(xii) except as specifically provided in Section 1.1(b)
hereof, all other assets, properties, claims, rights and interests of the Seller
which relate to the Business and exist on the date hereof, of every kind and
nature and description, whether tangible or intangible, real, personal or mixed;
and
(xiii) cash or cash equivalents ("Cash").
(b) Notwithstanding the provisions of Section 1.1(a) above, the
assets to be transferred to the Buyer under this Agreement shall not include (i)
any of Seller's rights or consideration under this Agreement, or (ii) any
refunds of federal, state, foreign or local income or other tax paid by the
Seller, or (iii) any insurance policies currently held by the Seller and related
premium agreements for general liability, product liability and workers
compensation insurance for periods prior to the date hereof, or (iv) except as
otherwise set forth on Schedule 1.1(b)(i) attached hereto, any of the assets of
Color Space Corporation, a Massachusetts corporation controlled by ▇▇▇▇▇▇
("Color Space"), or (v) those assets listed on Schedule 1.1(b)(ii) attached
hereto (collectively, the "Excluded Assets").
(c) The Inventory, Accounts Receivable, Contract Rights, Fixed
Assets, Intangible Property, Cash and other properties, assets and business of
the Seller described in Section 1.1(a) above, other than the Excluded Assets,
shall be referred to collectively as the "Assets".
1.2 Further Assurances.
(a) At the Closing, the Seller shall execute and deliver a ▇▇▇▇ of
Sale (the "▇▇▇▇ of Sale") substantially in the form attached hereto as Exhibit
A, and the assignments described in Sections 7.13(b) and (c) hereof. At any time
and from time to time after the Closing, at the Buyer's request and without
further consideration, the Selling Parties (or their successors) promptly 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 and
the Business, 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.
(b) The Selling Parties and the Buyer each will use its best efforts
to obtain as promptly as possible written consents to the transfer, assignment
or sublicense to the Buyer of all
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agreements, commitments, purchase orders, contracts, licenses, leases, rights
and other contract documents being transferred pursuant to Section 1.1(a) hereof
where the approval or other consent of any other person is required. If any such
approval or consent cannot be obtained, or if the parties hereafter agree in
writing that it is not in their respective best interests to obtain any such
approval or other consent, the Selling Parties will cooperate with the Buyer in
any reasonable arrangement designed to provide the Buyer with substantially the
same economic benefits as if such approval or other consent had been obtained
and the transfer effected on or before the date hereof.
1.3 Assumption of Liabilities.
(a) At the Closing, the Buyer shall execute and deliver an
Instrument of Assumption of Liabilities (the "Instrument of Assumption")
substantially in the form attached hereto as Exhibit B, pursuant to which it
shall assume and agree to (i) perform, pay and discharge, in accordance with
their respective terms, all those liabilities and obligations set forth on
Schedule 1.3(a) attached hereto which were incurred in the ordinary course of
business of the Business and are outstanding on the date hereof (the obligations
set forth in (i) are collectively, the "Assumed Current Liabilities"); (ii)
perform in accordance with their terms those obligations outstanding on the date
hereof under the Contract Rights; and (iii) perform in accordance with their
terms those liabilities arising after the date hereof 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 Seller 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) Except as otherwise provided herein, the Buyer shall not assume
any of the liabilities of the Seller and the Shareholders and shall purchase the
Assets free and clear of all liens, mortgages, security interests, encumbrances
and claims and the Selling Parties each 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 of any kind whatsoever
arising out of or relating to the conduct of the Business by Seller or the
Assets or Assumed Liabilities prior to the date hereof. Without limiting the
foregoing, the Buyer shall not at the Closing assume or agree to perform, pay or
discharge, and the Seller and the Shareholders shall remain unconditionally
liable for, all obligations, liabilities and commitments, fixed or contingent,
of the Seller and the Shareholders other than the Assumed Liabilities, including
but not limited to:
(i) except as set forth on Schedule 1.3(a) attached hereto,
severance, termination or other payments or benefits (including but not limited
to post-retirement benefits) including but not limited to those owing under
Seller's severance policy or any employment agreement to any employees (union or
non-union), sales agents or independent contractors employed by the Seller prior
to the Closing (collectively, "Seller's Employees"), liabilities arising under
any federal, state, local or foreign "plant closing law", liabilities accruing
under the Seller's employee benefit plans, retirement plans, and liabilities for
any Employee Plan (as defined in
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Section 2.21 except those liabilities to Seller's Employees who become employees
of Buyer after the Closing relating solely to and arising solely out of their
term of employment with the Buyer);
(ii) worker's compensation claims arising from events
prior to Closing;
(iii) stock option or other stock-based awards made to
Seller's Employees,
(iv) liabilities for any federal, state, local or foreign
income taxes (including interest, penalties and additions to such taxes) or any
deferred income taxes of the Seller or the Shareholders;
(v) liabilities for any payroll taxes (including interest,
penalties and additions to such taxes), except those liabilities to Seller's
Employees who become employees of the Buyer after the Closing relating solely to
and arising solely out of their term of employment with the Buyer;
(vi) liabilities incurred for violations of occupational
safety, wage, health, welfare, employee benefit or environmental laws or
regulations prior to the date hereof;
(vii) liabilities to the extent related solely to the
Excluded Assets;
(viii) except as provided in Section 11 hereof, any tax
(including but not limited to any federal, state, local or foreign income,
franchise, single business, value added, excise, customs, intangible, sales,
transfer, recording, documentary or other tax) imposed upon, or incurred by, the
Seller or the Shareholders, if any, in connection with or related to this
Agreement or the transactions contemplated hereby (including interest, penalties
and additions to such taxes);
(ix) liabilities for any commercial rent taxes to the
extent accrued but not paid prior to the date hereof;
(x) other than the Assumed Liabilities, any liabilities of
Seller to third parties arising out of the failure of Seller to obtain any
necessary consents to the assignment to Buyer of contracts or leases to which
Seller is a party (including damages asserted by third parties for breach of
such contracts or leases due to the failure to obtain such consents);
(xi) except as set forth in Section 9.6 hereof,
liabilities, contingent or otherwise, which are not disclosed on Schedule
1.3(a);
(xii) liabilities in connection with the litigation
entitled ▇▇▇▇ et al. ▇. ▇▇▇▇▇▇▇ et al. in Suffolk Superior Court (Civil
Action No. 89-6129D) and ▇▇▇▇▇▇▇ et al. v. Kayafus et al. in Middlesex
Superior Court (Civil Action No. (96-2200), each in the Commonwealth of
Massachusetts (collectively, the "Prior Litigation");
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(xiii) liabilities of Seller for any state franchise taxes or
annual license or other fees relating to qualification as a foreign corporation
or authorization to do business in such states (including interest, penalties
and additions to such taxes and fees); and
(xiv) any other liabilities of any kind or nature whether now
in existence or arising hereafter not expressly assumed by Buyer under Section
1.3(a) hereof.
1.4 Purchase Price. In consideration of the transfer of the Business and
Assets of the Seller to the Buyer hereunder, the Buyer will assume the Assumed
Liabilities and will pay an aggregate purchase price (the "Purchase Price"),
subject to the provisions of Section 1.5, equal to (i) $1,725,000 in cash
payable to the Seller (such aggregate amount of consideration to be paid in cash
in accordance with the provisions of this Section 1.4(i) hereof being referred
to herein as "Cash Consideration"), (ii) $150,000 payable to the Seller, such
amount to be paid by the issuance of an 8% promissory note (the "Note") in the
form attached hereto as Exhibit C, (iii) $225,000 payable to ▇▇▇▇▇▇ (or his
nominee), such amount to be paid by the issuance of such number of shares of
restricted Unidigital common stock (the "Unidigital Stock"), which when
multiplied by the average daily bid and asked prices of Unidigital's stock for
the 10 trading days immediately prior to the three trading days immediately
prior to the Closing, shall have a market value of $225,000, (iv) $25,000
payable to ▇▇▇▇▇▇▇▇ (or his nominee), such amount to be paid in Unidigital
Stock, which when multiplied by the average daily bid and asked prices of
Unidigital's stock for the 10 trading days immediately prior to the three
trading days immediately prior to the Closing, shall have a market value of
$25,000 (such aggregate amount of consideration paid in stock in accordance with
the provisions of this Sections 1.4 (iii) and (iv) hereof being referred to
herein as the "Stock Consideration"), (v) an aggregate of $150,000 in a
guaranteed cash bonus pool for the management team and key staff of the Seller
(excluding ▇▇▇▇▇▇) (the "Management Team") payable in two distributions of
$75,000 on the first and second anniversaries of the date hereof to be
distributed among the Management Team in accordance with the determination of
the Board of Directors of Buyer, (vi) 50,000 options to purchase the common
stock of Unidigital granted to the Management Team on the date hereof to be
distributed among the Management Team in accordance with the determination of
the Board of Directors of Buyer, and (vii) 50% of the pre-tax income of the
Business (excluding any interest charges related to the acquisition of the
Assets contemplated hereby) to the extent such pre-tax income exceeds $400,000
(but no payment shall be due on any pre-tax income of the Business in excess of
$1,400,000) for the year ending on the end of the first fiscal quarter of
Unidigital subsequent to the first anniversary of the date hereof (unless the
date hereof coincides with the end of a fiscal quarter of Unidigital in which
case the measurement period shall be on the first anniversary of the date
hereof). Such amount shall be payable within ninety (90) days of such
measurement date.
1.5 The Closing.
(a) The Closing shall take place at the offices of the Seller on the
date hereof. The transfer of the Assets by the Seller to the Buyer shall be
deemed to occur on the date hereof.
(b) At the Closing the Buyer shall pay the Purchase Price in
the following manner:
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(i) by the assumption of the Assumed Liabilities;
(ii) payment of the Cash Consideration;
(iii) delivery of the Note; and
(iv) delivery of the Stock Consideration. Buyer shall deliver
that portion of the Stock Consideration due to ▇▇▇▇▇▇ to a third-party escrow
agent, reasonably acceptable to the Seller and the Buyer, as "Escrow Agent"
pursuant to the Escrow Agreement (the "Escrow Agreement") in the form attached
hereto as Exhibit D. The disbursement of amounts held by the Escrow Agent shall
be done in accordance with the terms of the Escrow Agreement.
1.6 Allocation of Purchase Price. The aggregate amount of the Purchase
Price shall, for tax purposes only, be allocated among the Assets and Assumed
Liabilities substantially in accordance with the amounts set forth on Schedule
1.6. The Seller and the Buyer agree that they will not take any position which
is materially inconsistent with the allocations provided for in this Agreement
in preparing income, capital or franchise tax returns.
2. Representations of the Selling Parties
The representations and warranties made by the Selling Parties
herein or in any instrument or document furnished in connection herewith shall
survive the Closing until (and including) the fifth anniversary of the date
hereof. The representations and warranties in this Section 2 or in any document
delivered to the Buyer pursuant to this Agreement are deemed to be material and
the Buyer is entering into this Agreement relying on such representations and
warranties. The Selling Parties, jointly and severally, represent and warrant to
the Buyer as follows (it being understood that all references in this Section 2
to the Seller shall be deemed to include any of Seller's subsidiaries, unless
the context otherwise requires):
2.1 Organization. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and has all requisite power and authority (corporate and other) to own its
properties, to carry on its business as now being conducted, to execute and
deliver this Agreement and the agreements contemplated herein, and to consummate
the transactions contemplated hereby. Schedule 2.1 sets forth the authorized and
outstanding capital stock of the Seller as well as the record and beneficial
owners thereof. Except as set forth on Schedule 2.1, the Seller does not own or
control, directly or indirectly, any corporation, partnership, association or
business entity. The Seller 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 and failure to be
qualified would have a material adverse affect on the Business. Schedule 2.1
contains a true, correct and complete list of all of the jurisdictions in which
the ownership of the property used in the Business or the nature of the Business
requires qualification.
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2.2 Authorization. The execution and delivery of this Agreement (and all
other agreements provided for herein) by the Seller, and the consummation by the
Seller of all transactions contemplated hereby, has been duly authorized by all
requisite corporate and shareholder action. This Agreement and all such other
agreements and obligations entered into and undertaken in connection with the
transactions contemplated hereby to which the Seller is a party constitutes the
valid and legally binding obligations of the Seller, 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. The execution, delivery and performance by the
Seller of this Agreement and the agreements provided for herein, and the
consummation by the Buyer of the transactions contemplated hereby and thereby,
do not, (a) violate the provisions of any law, rule or regulation applicable to
the Seller; (b) violate the provisions of the Articles of Organization or Bylaws
of the Seller; (c) violate any judgment, decree, order or award of any court,
governmental body or arbitrator; or (d) except as otherwise set forth herein
(including any schedules or exhibits attached hereto), 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 Seller pursuant
to, any indenture, mortgage, deed of trust or other instrument or agreement to
which any of them is a party or by which any of them or any of their properties
is or may be bound, other than with respect to obligations of Seller which will
be discharged at or prior to Closing. Schedule 2.2 attached hereto sets forth a
true, correct and complete list of all consents, approvals, permissions,
licenses, authorizations and other requirements prescribed by law, rule,
regulation or by contract in connection with the consummation by the Seller of
the transactions contemplated by this Agreement. Except as indicated on Schedule
2.2, all such items have been or will be, prior to the date hereof, obtained and
satisfied.
2.3 Ownership of the Assets. Schedule 2.3 attached hereto sets forth a
true, correct and complete list of all claims, liabilities, liens, pledges,
charges, encumbrances and equities of any kind affecting their respective Assets
(collectively, the "Encumbrances"). The Seller is, and at the Closing will be,
the true and lawful owner of the Assets, and will have the right to sell and
transfer to the Buyer good and marketable title to all Assets, which at the
Closing will be free and clear of all Encumbrances. The delivery to the Buyer of
the instruments of transfer of ownership contemplated by this Agreement will
vest good and marketable title to all Assets in the Buyer, free and clear of all
liens, mortgages, pledges, security interests, restrictions, prior assignments,
encumbrances and claims of any kind or nature whatsoever. The Assets to be
conveyed to the Buyer hereunder constitute all properties, assets, rights and
claims which are necessary in all material respects to the conduct of the
Business as currently conducted by the Seller.
2.4 Financial Statements.
(a) The Seller has previously delivered to the Buyer its audited
balance sheet as of June 30, 1996 (the "June 1996 Balance Sheet") and the
related statements of operations, shareholders' equity and changes in financial
position of the Seller for the fiscal year then ended (collectively, the "June
1996 Financial Statements") and its unaudited balance sheet as of
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February 28, 1997 (the "February 1997 Balance Sheet") the related unaudited
statements of operations, shareholders' equity and changes in financial position
of the Seller for the year then ended (in each case as prepared by management of
Seller) (the "Unaudited Financial Statements"). The June 1996 Financial
Statements and the Unaudited Financial Statements (collectively, the "Financial
Statements"), have been prepared in accordance with generally accepted
accounting principles applied consistently with past practice and the Unaudited
Financial Statements have been certified by the Seller's Chief Executive Officer
and Chief Financial Officer.
(b) The Financial Statements are accurate and complete, and fairly
present, as of their respective dates, the financial condition, retained
earnings (deficit), assets and liabilities of the Seller and the results of
operations of the Seller's business for the periods indicated. Nothing has come
to the attention of the Seller since the date of the Financial Statements which
would lead it to believe that the reserves and accruals shown thereon are
inadequate for all reasonably anticipated losses, costs and expenses and the
Seller reasonably believes that such reserves and accruals are adequate for all
of such losses, costs and expenses.
2.5 Litigation. Except as set forth on Schedule 2.5, the Seller is not a
party to, or to the Selling Parties' best knowledge threatened with, and none of
the Assets are subject to, any litigation, suit, action, investigation (to the
best of the Selling Parties' knowledge), 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) or prospects of the Business. The
Seller is not 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) or prospects of the Business or the consummation of the
transactions contemplated hereby. The Seller has not 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 or the
business, condition (financial or otherwise), properties or prospects of the
Business.
2.6 Insurance. Schedule 2.6 sets forth a true, correct and complete list
of all fire, theft, casualty, general liability, workers compensation, business
interruption, environmental impairment, product liability, automobile and other
insurance policies insuring the Assets or business of the Business and of all
life insurance policies maintained for any employees of the Business, specifying
the type of coverage, the amount of coverage, the premium, the insurer and the
expiration date of each such policy (collectively, the "Insurance Policies") and
all claims made under such Insurance Policies since January 1, 1993. True,
correct and complete copies of all of the Insurance Policies have been
previously delivered by the Seller to the Buyer. The Insurance Policies are in
full force and effect and are in amounts and of a nature which are adequate and
customary for the business of the Business. All premiums due on the Insurance
Policies or renewals thereof have been paid and there is no default under any of
the Insurance Policies. Except as set forth on Schedule 2.6, the Seller has not
received any notice or other
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communication from any issuer of the Insurance Policies canceling or materially
amending any of the Insurance Policies, materially increasing any deductibles or
retained amounts thereunder, or materially increasing the annual or other
premiums payable thereunder, and, to the best knowledge of the Selling Parties,
no such cancellation, amendment or increase of deductibles, retainers or
premiums is threatened.
2.7 Inventory. Schedule 2.7 sets forth a true, correct and complete list
of the Inventory as of date hereof, including a description and reasonable
estimate of the valuation thereof. At the date hereof, the Inventory will
consist of items of a quality and quantity which are usable or saleable, without
discount and at values at least equal to the values indicated on the latest
balance sheet included in the Financial Statements, in the ordinary course of
business, except as otherwise reserved or provided for in accordance with the
procedures set forth on Schedule 2.7, conducted by and within the normal
operating cycle of the Business. At the date hereof, the value of all items of
obsolete materials, excess quantities of materials and of materials of below
standard quantity will be reserved for in accordance with the procedures set
forth in Schedule 2.7, and to the extent not inconsistent, with generally
accepted accounting principles.
2.8 Fixed Assets. Schedule 2.8 sets forth a true, correct and complete
list of all Fixed Assets as of the date hereof, including a description and the
cost and accumulated depreciation on an aggregate basis with respect to all
Fixed Assets. Except as set forth in Schedule 2.8, as of the date hereof, the
Fixed Assets are in good condition and repair and are sufficiently operational
(apart from ordinary wear and tear) to enable the Buyer to conduct the business
in essentially the same manner in which it has heretofore been conducted by the
Seller.
2.9 Leases. Schedule 2.9(a) attached hereto sets forth a true, correct and
complete list as of the date hereof of all leases of real estate, identifying
separately each ground lease, to which the Seller is a party as lessee or tenant
or which the Seller uses in the operations of the Business. Schedule 2.9(b)
attached hereto sets forth a list of all leases of real estate which the Buyer
will assume pursuant to this Agreement (the "Leases"). True, correct and
complete copies of the Leases, and all amendments, modifications and
supplemental agreements thereto, have previously been delivered by the Seller to
the Buyer. The Leases are in full force and effect, are binding and enforceable
against each of the parties thereto in accordance with their respective terms
and, except as set forth on Schedule 2.9(b) attached hereto, have not been
modified or amended since the date of delivery to the Buyer. No party to any
Lease has sent written notice to the other claiming that such party is in
default thereunder, which default remains uncured. Except as set forth on
Schedule 2.9(b) attached hereto, there has not occurred any event which would
constitute a breach of or default in the performance of any material covenant,
agreement or condition contained in any Lease by either party thereto, nor has
there occurred any event which with the passage of time or the giving of notice
or both would constitute such a breach or material default. The Seller is not
obligated to pay any leasing or brokerage commission relating to any Lease and
will not have any enforceable obligation to pay any leasing or brokerage
commission upon the renewal or extension of any Lease. No material construction,
alteration or other leasehold improvement work with respect to any of the Leases
remains to be paid for or to be performed by any party under any Lease. Seller
has fulfilled all material obligations required pursuant to the Leases to have
been performed by Seller and has no reason to believe that it will
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be unable to perform, when due, all of its remaining obligations under said
Leases after the date hereof to the Closing. None of the Leases imposes any
restrictions that would materially interfere with the continued operation of the
business as currently conducted on any of the properties that are the subject of
the Leases. There is no pending or, to the best of the Selling Parties'
knowledge, threatened eminent domain taking or condemnation that will or may
affect any of the properties that are the subject of the Leases.
2.10 Change in Financial Condition and Assets. Since June 30, 1996, there
has been no change which materially and adversely affects the Assets or the
business, properties, condition (financial or otherwise) or prospects of the
Business and which has not been disclosed on the Financial Statements. The
Selling Parties have no knowledge of any existing or threatened occurrence,
event or development related to the Assets or the business, properties,
condition (financial or otherwise) or prospects of the Business which could have
a material adverse effect on the Assets or the business, properties, condition
(financial or otherwise) or prospects of the Business.
2.11 Accounts Receivable. Schedule 2.11 sets forth a true, correct and
complete list of all Accounts Receivable within two days of the Closing,
including an aging thereof as of the date hereof. All Accounts Receivable arose
out of the sales of inventory or services in the ordinary course of business and
are collectible in the values as shall be determined in accordance with Schedule
2.7.
2.12 Books and Records. The general ledgers and books of account of the
Seller with respect to the Business, all federal, state, local and foreign
income, franchise, property and other tax returns filed by the Seller, with
respect to the Assets, and all other books and records of the Seller with
respect to the Business are in all material respects complete and correct and
have been maintained in accordance with good business practice and in accordance
with all applicable procedures required by laws and regulations other than any
digression from such practice and procedures which has no material and adverse
effect on the Assets or the Business, or the valuations thereof for the purposes
of this Agreement, as conducted as of and prior to the date hereof.
2.13 Contracts and Commitments.
(a) Schedule 2.13(a) attached hereto contains a true, complete and
correct list and description of the following contracts and agreements, whether
written or oral, which relate to the Business and which are to be assigned from
the Seller to the Buyer at Closing (collectively, the "Contracts"):
(i) all material loan agreements, indentures, mortgages
and guaranties to which the Seller is a party or by which the Seller or its
property is bound;
(ii) all pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, personal property leases
and lease purchase agreements
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relating to any of the Assets to which the Seller is a party or by which the
Seller or any of its property is bound;
(iii) all contracts, agreements, commitments, purchase
orders (other than merchandise deliveries to customers in the normal course of
business upon standard terms) or other understandings or arrangements to which
the Seller is a party or by which any of their respective property is bound
which (A) involve payments or receipts by any of them of more than $10,000 in
the case of any single contract, agreement, commitment, understanding or
arrangement under which full performance (including payment) has not been
rendered by all parties thereto or (B) may materially adversely affect the
condition (financial or otherwise) or the properties, Assets, business or
prospects of the Business;
(iv) all collective bargaining agreements, employment
and consulting agreements, non-competition agreements, trust agreements,
executive compensation plans, bonus, 401(k), or profit-sharing plans, deferred
compensation agreements, pension plans, retirement plans, employee stock option
or stock purchase plans and group life, health and accident insurance and other
employee benefit plans, agreements, memoranda of understanding, arrangements or
commitments to which the Seller is a party or by which the Seller or any of its
property is bound;
(v) all agency, distributor, sales representative and
similar agreements to which the Seller is a party;
(vi) all material contracts, agreements or other
understandings or arrangements, whether written or oral, between the Seller and
any shareholder, employee, officer or director of the Seller which may affect
the Business as conducted as of and prior to the date hereof or the Assets;
(vii) all leases, whether operating, capital or
otherwise, under which the Seller is lessor or lessee;
(viii) all contracts, agreements and other documents
or information relating to past disposal of waste (whether or not hazardous)
which are available;
(ix) all return policies and product warranties
relating to products or goods manufactured or distributed by the Business as the
same are currently in effect or may have been in effect from time to time since
June 30, 1995, as well as any exception to such policies, all cooperative
advertising arrangements and all rebate, discount or allowance arrangements;
(x) all contracts related to operation, maintenance or
management of the leased facilities under any Leases (the "Leased Premises")
other than immaterial contracts which do not constitute a part of Assumed
Liabilities; and
(xi) any licensing agreements, franchise agreements
and other material agreement or contract entered into by the Seller.
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(b) Except as set forth on Schedule 2.13(b) attached hereto:
(i) each Contract is a valid and binding agreement of the
Seller, enforceable against the Seller in accordance with its terms, and the
Selling Parties have no knowledge that any Contract is not a valid and binding
agreement of the other parties thereto:
(ii) the Seller has fulfilled all material obligations
required pursuant to the Contracts to have been performed by it prior to the
date hereof, and the Seller has no reason to believe that it will not be able to
fulfill, when due, all of its obligations under the Contracts which remain to be
performed after the date hereof to the Closing;
(iii) the Seller is not in breach of or 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 Selling Parties, there is
no existing breach or default by any other party to any Contract, and no
Inchoate Default.
(c) Except as set forth on Schedule 2.13(b), the continuation,
validity and effectiveness of each Contract would not be affected by the
transfer thereof to Buyer under this Agreement and all such Contracts are
assignable to Buyer without a consent.
(d) True, correct and complete copies of all of the foregoing
contracts and agreements (other than all unfilled purchase orders and all
unfilled customer orders), including but not limited to the Contracts, and a
list of all unfilled purchase orders and all unfilled customer orders, shall be
delivered by the Seller to the Buyer within five business days of the date
hereof other than Contracts which will be terminated as of the Closing.
2.14 Compliance with Laws. Except as set forth in Schedule 2.14, the
Seller has all requisite licenses, permits and certificates, including health
and safety permits, from federal, state, local and foreign authorities necessary
to conduct the Business and own and operate the Assets (collectively, the
"Permits"). Schedule 2.14 sets forth a true, correct and complete list of all
such Permits, copies of which previously have been (or within five business days
hereof will be) delivered by the Seller to the Buyer. The Seller has not engaged
in any activity which would cause or, to the knowledge of the Seller, 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 defaults or Inchoate Defaults by the Seller
under any Permit. The Selling Parties have no knowledge of any default or
claimed or purported or alleged default or Inchoate Defaults on the part of any
party in the performance of any obligation to be performed or paid by any party
under any Permit. Except as set forth in Schedule 2.14, the consummation of the
transactions contemplated by this Agreement will in no way affect the
continuation, validity or effectiveness of the Permits or require the consent of
any third party under any such Permit. The Seller is not in violation of any
law, regulation or
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ordinance (including but not limited to laws, regulations or ordinances relating
to building, zoning, land use or similar matters) relating to its properties,
the violation of which could have a material adverse effect on the Assets or the
business, properties, condition (financial or otherwise) or prospects of the
Seller. The business of the Seller does not violate, in any material respect,
and the Seller is not in violation of, any federal, state, local or foreign
laws, regulations or orders, the violation or enforcement of which would have a
material and adverse effect on the Assets, business, properties, condition
(financial or otherwise) or prospects of the Seller. Except as set forth on
Schedule 2.14, the Seller has not 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.
2.15 Employee Relations.
(a) The Seller is in compliance with all material federal, state,
local and foreign laws respecting employment and employment practices, terms and
conditions of employment, and wages and hours, and is not engaged in any unfair
labor practice, and there are no arrears in the payment of wages or taxes or
workers compensation assessments or penalties.
(b) Except as set forth on Schedule 2.15:
(i) none of Seller's Employees are represented by any
labor union;
(ii) there is no unfair labor practice complaint against the
Seller pending before the National Labor Relations Board or any state, foreign,
or local agency affecting the Seller;
(iii) there is no pending labor strike or other material labor
trouble affecting the Seller (including but not limited to any organizational
campaign);
(iv) there is no material labor grievance pending against
or affecting the Seller;
(v) there is no pending organizing activities respecting
the Seller's Employees;
(vi) there are no pending arbitration proceedings arising out
of or under any collective bargaining agreement to which the Seller is a party,
or to the best knowledge of the Seller, any basis for which a claim may be made
under any collective bargaining agreement to which the Seller is a party
affecting the Seller's Employees; and
(vii) there is no pending litigation, or other proceeding or
basis for an unasserted claim against the Seller by any employee or group of
employees or independent contractor or group of independent contractors which is
based on claims arising out of any employee's or group of employees' employment
relationship with the Seller or any independent contractor's or group of
independent
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contractors' independent consulting relationship with the Seller (insofar as
such relationship pertains to the Business of the Seller), including but not
limited to claims for contract, tort, discrimination, employee benefits,
commissions, wrongful termination, age discrimination, sexual harassment, sexual
discrimination and any and all common law or statutory claims.
2.16 Absence of Certain Changes or Events. Except as set forth on Schedule
2.16, since June 30, 1996, the Seller has not entered into any transaction which
is not in the usual and ordinary course of business, and, without limiting the
generality of the foregoing, the Seller has not:
(a) Mortgaged, pledged or subjected to lien, charge or other
encumbrance any of the Assets;
(b) Sold or purchased, assigned or transferred any of its
Assets (except for Inventory sold in the ordinary course of business);
(c) Made any material amendment to or termination of any
Contract or done any act or omitted to do any act which would cause the
breach of any Contract;
(d) Suffered any casualty losses, whether insured or uninsured,
and whether or not in the control of the Seller, in excess of $25,000 in the
aggregate, or waived any rights of any value unless such loss or waiver is
reflected in the Financial Statements;
(e) Authorized or issued recall notices for any of its products
relating to the Business or initiated any safety investigations relating to
the Business;
(f) Merged or consolidated with or into any corporation or
other entity;
(g) Made, accrued or become liable for any bonus, profit sharing
or incentive payment, except for accruals under existing plans, if any, or
increase the rate of compensation payable or to become payable by it to any of
its officers, or, except in accordance with past practice and the ordinary
course of business, its employees;
(h) Waived, forgiven, released or compromised any rights of
material (individually or in the aggregate) value to the Business, including
without limitation any indebtedness owed to the Seller;
(i) Failed to use best efforts to (i) preserve the possession,
control and good condition of the Assets and Business, (ii) keep in faithful
service its present officers and key employees, and (iii) preserve the goodwill
of its customers, suppliers, agents, brokers and others having business
relations with it;
(j) Failed to operate the Business and maintain its books,
accounts and records in the customary manner and in accordance with past
practice;
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(k) Materially altered the terms, status or funding condition
of any Employee Plan except as contemplated by this Agreement;
(l) Entered into any collective bargaining contract, or any
joint venture, partnership or other arrangement for the conduct of the
Business;
(m) Declared or paid any dividend or other distribution in respect
of shares of capital stock other than normal distributions for the payment of
income taxes occasioned by Subchapter S tax election;
(n) Made any purchase, redemption or other acquisition,
directly or indirectly, of any outstanding shares of its capital stock;
(o) Forgiven, released or compromised any indebtedness owed to the
Seller by any employee or other person except upon full payment or, in the case
of any customer, returns and allowances made in the ordinary course of business
consistent with past practices;
(p) Purchased any assets or securities of any person, other
than in the ordinary course of business;
(q) Commenced any legal proceeding in bankruptcy or any other
action seeking reorganization, liquidation, dissolution, winding-up arrangement,
composition or readjustment of its debts or any other relief under any
bankruptcy, insolvency, reorganization or other similar act or law of any
jurisdiction now or hereafter in effect or make any other assignment for the
benefit of its creditors; or
(r) Received notice of any litigation, warranty claim or products
liability claims relating to the Business.
2.17 Customers. The Seller has heretofore provided to the Buyer a true,
correct and complete list of the names and addresses of all customers of the
Seller. None of the 15 customers which accounted for the largest dollar volume
of purchases from the Seller for the twelve-month period ended the date hereof,
has notified the Seller that it intends to discontinue its relationship with the
Seller nor, to the best of the Selling Parties' knowledge, does there exist any
actual or threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship of the Seller with any such
customer nor does there exist a present condition or state of facts or
circumstances known to the Seller involving such customers which would
materially adversely affect the Business or prevent the Buyer from conducting
the Business after the consummation of the transactions contemplated by this
Agreement in essentially the same manner in which it has heretofore been
conducted by the Seller. The Seller has no consignment sales in effect as of the
date hereof and no customer has any return rights except as set forth on
Schedule 2.13(a).
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2.18 Suppliers. Schedule 2.18 sets forth a true, correct and complete list
of the names and addresses of the ten suppliers of the Seller which accounted
for the largest dollar volume of purchases by the Seller for the twelve-month
period ended the date hereof. The Seller is not a party to any requirements
contract relating to the purchase of inventory, finished goods or other property
used in the conduct of the Business. None of the Seller's suppliers has notified
the Seller that it intends to discontinue its relationship with the Seller, nor
raise its prices so as to materially adversely affect the Business nor, to the
best of the Selling Parties' knowledge, does there exist any actual or
threatened termination, cancellation or limitation of, or any modification or
change in, the business relationship of the Seller with any such supplier, nor
does there exist a present condition or state of facts or circumstances known to
the Selling Parties involving such suppliers which would materially adversely
affect the Business or prevent the Buyer from conducting the Business after the
consummation of the transactions contemplated by this Agreement in essentially
the same manner in which it has heretofore been conducted by the Seller.
2.19 Prepayments and Deposits. Except as set forth on Schedule 2.11, the
Seller has no prepayments or deposits from customers for products to be shipped,
or services to be performed, by the Seller after the date hereof.
2.20 Trade Names and Other Intangible Property.
(a) Schedule 2.20 attached hereto sets forth a true, correct and
complete list and a description of all Intangible Property. True, correct and
complete copies of all licenses and other agreements relating to the Intangible
Property have been previously delivered by the Seller to the Buyer. The Selling
Parties have no knowledge of any default or claimed or purported or alleged
default or state of facts which with notice or lapse of time or both would
constitute a default on the part of any party in the performance of any
obligation to be performed or paid by any party under any such license or
agreement. During the past two years the only name by which the Seller has been
known or which the Seller has used is its corporate name set forth in the
preamble of this Agreement.
(b) Except as otherwise disclosed in Schedule 2.20 attached hereto,
the Seller is the sole and exclusive owner, free and clear of all liens, claims
and restrictions, of all Intangible Property and all designs, permits, labels
and packages used on or in connection therewith. The Intangible Property owned
by the Seller is sufficient to conduct the Business, as presently conducted. The
Seller has received no notice of, and has no knowledge of any basis for, a claim
against it that any of its operations, activities, products or publications
infringes on any patent, trademark, trade name, copyright or other property
right of a third party, or that it is illegally or otherwise using the trade
secrets, formulae or any property rights of others. Except as otherwise
disclosed in Schedule 2.20, the Seller (i) has no disputes with or claims
against any third party for infringement by such third party of any trade name
or other Intangible Property of the Seller, and (ii) is not obligated or under
any liability whatsoever to make any payments by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any patent,
trademark, trade name, copyright or other property right, with respect to the
use thereof or in connection with the conduct of the Business or otherwise. The
Seller has taken all steps
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reasonably necessary to protect its right, title and interest in and to the
Intangible Property. Except as set forth in Schedule 2.20, the consummation of
the transactions contemplated by this Agreement (including any required
financing) will in no way affect the continuation, validity or effectiveness of
the Intangible Property or require the consent of any third party in respect of
the Intangible Property.
2.21 Employee Benefit Plans.
(a) ERISA. Except as set forth on Schedule 2.21, neither the Seller
nor any person, firm, corporation or entity which is (or within the past five
years has been) a member with the Seller of a "controlled or affiliated group",
within the meaning of Section 414(b), (c), (m), (n) or (o) of the Internal
Revenue Code of 1986, as amended (the "Code"), has maintained, sponsored or
contributed to any "pension plan" within the meaning of Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any
"welfare plan" within the meaning of Section 3(1) of ERISA, or any other
employee benefit plan, program, practice or arrangement, whether or not subject
to ERISA (a "non-ERISA plan") (such pension plans, welfare plans and non-
ERISA plans of the Seller being herein referred to as the "Employee Plans").
Except as set forth on Schedule 2.21, the Seller has provided the Buyer with a
true, correct and complete copy of each pension plan, each welfare plan and each
non-ERISA plan listed on such Schedule, together with a copy of the most recent
summary plan description and annual report (if applicable) with respect to each
such plan. Except as set forth on Schedule 2.21, each pension plan listed on
such Schedule is a "qualified plan" within the meaning of Section 401 of the
Code. Except as set forth on Schedule 2.21, each pension plan, each welfare plan
and each non-ERISA plan listed on such Schedule has been administered in
accordance with its terms, and each pension plan and welfare plan has been
operated and administered in accordance with all applicable requirements of
ERISA and the Code. Without limiting the generality of the foregoing, no
trustee, administrator, sponsor, or other party-in-interest or disqualified
person, has engaged or participated in any "prohibited transaction", as that
term is defined in Section 4975(c)(1) of the Code, with respect to any pension
plan or welfare plan listed on Schedule 2.21. Without limiting the generality of
the foregoing, in connection with all welfare or non-ERISA plans which are
subject to continuation coverage under Section 4980B of the Code, all notices
and elections with respect to such coverage have been made in compliance with
the requirements of Section 4980B. With respect to each "defined benefit pension
plan", as defined in Section 3(35) of ERISA, identified on Schedule 2.21: (i)
the fair market value of the assets thereof as of the date hereof is as set
forth on such Schedule; (ii) the present value of all accrued benefits
thereunder, determined as if such pension plan terminated on the date hereof, is
as set forth on Schedule 2.21; (iii) if any such plan is a "multiemployer plan",
as defined in Section 3(37) of ERISA, the present value of the contingent
liability of the Seller both in the event of the termination of such plan and in
the event that the Seller withdraws therefrom is as set forth on Schedule 2.21;
(iv) no such plan has incurred an "accumulated funding deficiency", as such term
is defined in Section 302 of ERISA, and (v) no such pension plan has terminated,
nor has any "reportable event", within the meaning of Section 4043 of ERISA,
occurred with respect to such plan. All contributions for all periods ending
prior to the date hereof (including periods from the first day of the current
plan year to the date hereof) will be made prior to the date hereof by the
Seller in accordance with past practice with respect to pension plans, welfare
plans and non-
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ERISA plans. All insurance premiums (including premiums to the Pension Benefit
Guaranty Corporation) have been paid in full, subject only to normal
retrospective adjustments in the ordinary course of business, with regard to
applicable plans for policy years or other applicable policy periods ending on
or before the date hereof.
(b) Claims and Litigation. Except as set forth on Schedule 2.21, to
the best of the Selling Parties' knowledge, there are no threatened or pending
claims, suits or other proceedings by present or former employees of Seller,
plan participants, beneficiaries or spouses of any of the above, the Internal
Revenue Service, the Pension Benefit Guaranty Corporation, or any other pension
or entity involving any Employee Plan, including claims against the assets of
any trust, involving any Employee Plan, or any rights or benefits thereunder,
other than ordinary and usual claims for benefits to participants or
beneficiaries, including claims pursuant to domestic relations orders and there
is no basis for any legal action, proceeding or investigation with respect to
such plans.
2.22 Leased Premises.
(a) Schedule 2.22 contains a true, correct and complete list of the
address of all Leased Premises.
(b) Except as set forth on Schedule 2.22, no work has been performed
on or materials supplied to the Leased Premises within any applicable statutory
period which could give rise to mechanics or materialmen's liens; all bills and
claims for labor performed and materials furnished to or for the benefit of the
Leased Premises for all periods prior to the Closing shall be paid in full, and
the Selling Parties have no knowledge of any mechanic's or materialmen's liens,
whether or not perfected, on or affecting any portion of the Leased Premises.
(c) There is no pending or, to Seller's knowledge, threatened
condemnation or eminent domain proceeding with respect to the Leased Premises.
(d) Except as set forth on Schedule 2.22, and to the best of
Seller's knowledge, there are no taxes or betterment or special assessments
other than ordinary real estate taxes pending or payable against the Leased
Premises and there are no contingencies existing under which any assessment for
real estate taxes may be retroactively filed against the Leased Premises; the
Selling Parties have no knowledge of any proposed special assessment that may
affect the Leased Premises or any part thereof; there are no penalties due with
respect to real estate taxes and/or impositions, and all real estate taxes
and/or impositions (excepting those for the current year that are not yet due
and payable) with respect to the Leased Premises have been paid in full; there
are no taxes or levies, permit fees or connection fees which must be paid
respecting existing curb cuts, sewer hookups, water-main hookups or services of
a like nature.
(e) The Leased Premises comply with the requirements of all
building, zoning, subdivision, health, safety, environmental, pollution control,
waste products, sewage control and all other applicable statutes, laws, codes,
ordinances, rules, orders, regulations and decrees (collectively, the
"Government Regulations") of any and all government agencies, the
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violation of which would have a material adverse effect on the Assets or the
business, property condition (financial or otherwise) or prospects of the
Seller. To the extent set forth in Schedule 2.14, the Seller has obtained and
provided to the Buyer all consents, permits, licenses and approvals required by
such Government Regulations, such consents, permits, licenses and approvals are
in full force and effect, have been properly and validly issued, and on or prior
to the date hereof will be assigned to the Buyer by the Seller to the extent the
same are assignable. Except as set forth in Schedule 2.14, there is no uncured
breach of any condition or requirement imposed by, or pursuant to, any permit or
license issued with respect to the Leased Premises. There is no action pending
or, to the best of the Selling Parties' knowledge, threatened by any government
agencies claiming that the Leased Premises violates such Government Regulations
or threatening to shut down the Business or the use of the Assets or to prevent
the Assets from being used as presently used.
(f) Except as set forth on Schedule 2.22, there are no actions,
suits, petitions, notices or proceedings pending, given or, to the best of the
Seller's knowledge, threatened by any persons or government agencies before any
court, government agencies or instrumentalities, administrative or otherwise,
which if given, commenced or concluded would have a material adverse effect on
the value, occupancy, use or operation of the Leased Premises.
(g) To Seller's knowledge the structural components of all of the
buildings located on the Leased Premises are in good condition and repair,
normal wear and tear excepted.
(h) The Selling Parties (i) have not received notice and (ii) have
no knowledge of the existence of any outstanding notice:
(A) from any federal, state, county, municipal or foreign
authority alleging any health, safety, pollution, environmental, zoning or other
violation of law with respect to the Leased Premises or any part thereof that
has not been entirely corrected; or
(B) from any insurance company or bonding company with respect
to any defects or inadequacies in the Leased Premises or any part thereof that
would adversely affect the insurability of same or cause the imposition of
extraordinary premiums or charges therefor or any termination or threatened
termination of any policy of insurance or bond relating thereto.
If the Selling Parties obtain knowledge of any such notice prior to the date
hereof, the respective Selling Parties shall promptly notify Buyer thereof.
2.23 Bank Accounts; Securities. Set forth in Schedule 2.23 is a list of
all bank accounts, safe deposit boxes, money market funds, certificates of
deposit, stocks, bonds, notes and other securities in the names of or owned or
controlled by the Seller, all of which are included in the Assets.
2.24 Disclosure. No representation or warranty by the Selling Parties in
this Agreement or in any Exhibit hereto, or in any list, statement, document or
information set forth in or attached to any Schedule delivered or to be
delivered pursuant to this Agreement, contains
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or will contain any untrue statement of a material fact or omits or will omit
any material fact necessary in order to make the statements contained therein
not misleading. The Selling Parties have disclosed to the Buyer all material
facts pertaining to the transactions contemplated by this Agreement. For
purposes of this Agreement, any disclosure made on any Schedule or Exhibit
hereto shall be deemed to have been made on any other Schedule or Exhibit to
which it may be applicable.
2.25 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by the Seller 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.
2.26 Preservation of Assets. The Seller has not sold, assigned or
transferred any of the Assets, other than in the ordinary course of business, or
declared or paid any dividend or other distribution in respect of shares of
capital stock or made any purchase, redemption or other acquisition, directly or
indirectly, of any outstanding shares of its capital stock, since June 30, 1996.
2.27 Environmental Compliance.
(a) The Seller has obtained all permits, licenses and other
authorizations required under Federal, state and local laws, relating to
protection of the Environment (as defined below), including laws relating to any
Release (as defined below) of or presence of pollutants, contaminants, or
hazardous or toxic materials or wastes into or in soil, surface waters,
groundwaters, land, stream sediments, surface or subsurface strata, ambient air,
and/or any environmental medium (the "Environment") or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous or toxic
materials or waste. Schedule 2.27 hereto sets forth a complete and accurate list
of all such permits, licenses and other authorizations obtained by the Seller,
copies of which have been delivered to the Buyer. The Seller is in full
compliance with all terms and conditions of such permits, licenses and other
authorizations. To the best of the Selling Parties' knowledge, except as set
forth on Schedule 2.27, there are no proposed or pending changes in the federal,
state, county or local laws, regulations, standards, or in the Seller's permits,
licenses or authorizations relating to pollution or protection of the
Environment that would increase the present costs of compliance with such laws
or change any methods of operation.
(b) Except as indicated on Schedule 2.27 the Seller has not, and, to
the best of the Selling Parties' knowledge, after due inquiry, none of the
Seller's employees, agents, contractors or subcontractors have, used, generated,
processed, stored, transported, recycled, Released or otherwise handled any
Hazardous Materials (as defined below) except as permitted by law on or about
any real property related to the Seller's business or the Seller's contractual
relations with any such agents, contractors or subcontractors, including, but
not limited to, real property formerly owned by the Seller (collectively, the
"Seller Real Property") and the facilities now or formerly leased or operated by
the Seller (collectively, the "Seller Facilities"). As used herein, each of the
Seller's Real Property and the Seller Facilities does not include the property
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owned by the Seller located at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in Boston, Massachusetts (the
"Piedmont Street Property"). It is understood and agreed that the Seller's
representation in this Section 2.27 is not made with respect to the Piedmont
Street Property. Additionally, except as indicated on Schedule 2.27, neither the
Seller Facilities nor the Seller Real Property is being used or has ever
previously been used for the generation, use, processing, storage,
transportation, recycling, Release or handling of any Hazardous Materials,
except as such use may have been permitted by law. In addition, except as
indicated on Schedule 2.27, neither the Seller Facilities nor the Seller Real
Property has ever been affected by any Hazardous Materials Contamination or
Environmental Condition. The Seller, in the conduct of its business, is and has
been in compliance with all Environmental Laws. Notwithstanding any statement or
representation to the contrary in any affidavit or other document, the Seller
affirmatively represents that as of the date hereof, the Seller has made all
filings required by RCRA and that there have been no failures by the Seller to
timely report under CERCLA Section 103 or RCRA Section 304. The Seller has not
received any written notice from any governmental authority or any other person
respecting or related to any actual, threatened or potential Release or presence
of any Hazardous Materials or any non-compliance with any Environmental Laws as
to which any such claimed noncompliance presently exists. Notwithstanding the
preceding sentence, the Seller has not received any notice from any governmental
authority respecting noncompliance with RCRA. No investigation, administrative
proceeding, consent order or agreement, limitation or settlement with respect to
Hazardous Materials, Hazardous Materials Contamination or Environmental
Condition is, to the best of the Selling Parties' knowledge, proposed,
threatened, anticipated or in force with respect to its business, nor has such
property ever been on any Federal or state "Superfund" or "Super Lien" list.
As used in this Section 2.27, "due inquiry" shall mean that Selling
Parties have made inquiry of all of Seller's executives, corporate officers and
directors and any employee or agent of Seller with responsibility for
environmental matters.
As used herein "Hazardous Materials" include any (i) "Hazardous Waste" as
defined by The Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section
6901 et seq.), as amended from time to time ("RCRA"), and regulations
promulgated thereunder; and "Hazardous Substance" as defined by The
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. Section 9601 et seq.), as amended from time to time ("CERCLA"), and
regulations promulgated thereunder; (ii) asbestos; (iii) polychlorinated
biphenyls; (iv) any substance, the presence of which on the premises of the
Seller's business, is prohibited by applicable law; (v) oil, petroleum or any
petroleum products or by-products; (vi) any other substance which, according to
applicable law, requires special handling or notification of any Federal, state
or local governmental entity in its collection, processing, handling, storage,
transport, treatment or disposal or exposure thereto; (vii) any substance, which
if not properly disposed of, may pollute, contaminate, harm or have any
detrimental effect on the Environment; (viii) underground storage tanks, whether
empty, filled or partially filled with any substance; and (ix) any other
pollutant, toxic substance, hazardous substance, hazardous waste, hazardous
material or hazardous substance as regulated by or defined in or pursuant to any
Environmental law or any other Federal, state, or local environmental law,
regulation, ordinance, rule, or by-law, whether existing on or prior to the date
hereof.
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As used herein, "Hazardous Materials Contamination" shall mean, with
respect to any premises, building or facilities or, the Environment,
contamination by a Release or the presence of Hazardous Materials.
As used herein, "Environmental Condition" shall mean any condition with
respect to the Environment on or off the Seller Real Property and Seller
Facilities, whether or not yet discovered, which could or does result in any
damage, loss, cost, expense, claim, demand, order, or liability to or against
the parties hereto by any third party (including, without limitation, any
government entity), including, without limitation, any condition resulting from
the operation of Seller's business and/or the operation of the business of any
other property owner or operator in the vicinity of the Seller Real Property and
Seller Facilities and/or any activity or operation formerly conducted by any
person or entity on or off the Seller Real Property and Seller Facilities.
As used herein, "Release" shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing.
As used herein, "Environmental Laws" shall mean any environmental or
health and/or safety-related law, regulation, rule, ordinance, or by-law at the
Federal, state, or local level, whether existing as of the date hereof,
previously enforced, or subsequently enacted, including but not limited to: (i)
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USCA
9601 et seq.; (ii) Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid
Waste Amendments of 1984, 42 USCA 6901 et seq.; (iii) Federal Water Pollution
Control Act of 1972 as amended by the Clean Water Act of 1977, as amended, 33
USCA 1251 et seq.; (iv) Toxic Substances Control Act of 1976, as amended, 15
USCA 2601 et seq.; (v) Emergency Planning and Community Right-to-Know Act of
1986, 42 ▇▇▇▇ ▇▇▇▇▇ et seq.; (vi) Clean Air Act of 1966, as amended by the Clean
Air Act of 1986, as amended by the Clean Air Act Amendments of l990, 42 USCA
7401 et seq.; (vii) National Environmental Policy Act of 1970, as amended, 42
USCA 4321 et seq.; (viii) Rivers and Harbors Act of 1970, as amended, 33 USCA
401 et seq.; (ix) Endangered Species Act of 1973, as amended, 16 USCA 1531, et
seq; (x) Occupational Safety and Health Act of 1970, as amended, 29 USCA 651 et
seq.; (xi) Safe Drinking Water Act of 1974, as amended, 42 USCA 300 et seq., and
any other federal, state, or local law, regulation, rule, ordinance or order
currently in existence which governs:
(i) the existence, cleanup and/or remediation of toxic or
hazardous materials;
(ii) the Release, emission, discharge or presence of
Hazardous Materials into or in the Environment;
(iii) the control of Hazardous Materials; or
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(iv) the use, generation, transport, treatment, storage,
disposal, removal or recovery of Hazardous Materials.
2.28 Purchase for Investment. ▇▇▇▇▇▇ represents that he is an "accredited
investor", within the meaning of Regulation D under the Securities Act of 1933,
as amended (the "1933 Act"). ▇▇▇▇▇▇▇▇ represents that he has acquired sufficient
information about Unidigital's business affairs and financial condition to reach
an informed and knowledgeable decision to acquire the Unidigital Stock. Each of
the Shareholders is acquiring the Unidigital Stock for his own account, for
investment purposes only, and not with a view to the resale or distribution of
all or any part thereof. The Shareholders have not offered or sold any portion
of the Unidigital Stock and, except as otherwise provided herein, have no
present plan or intention of dividing such Unidigital Stock with others or
reselling or otherwise disposing of any portion of the Unidigital Stock, either
currently or after the passage of a fixed or determinable period of time, or
upon the occurrence or nonoccurrence of any predetermined event or circumstance.
The Shareholders agree not to distribute or to transfer any of the Unidigital
Stock in the United States except in compliance with all applicable United
States federal and state securities laws. The Shareholders further recognize
that the Unidigital Stock will not be registered under the 1933 Act or the
securities laws of any state, and the transfer of the same will be restricted
under such laws, and the Unidigital Stock cannot be sold except pursuant to an
effective registration statement under such laws or an available exemption from
such registration, and the certificates representing the Unidigital Stock will
bear a legend to such effect. The Shareholders agree not to distribute or to
transfer any of the Unidigital Stock within two years after the date hereof.
2.29 Number of Employees. The number of employees employed by the
Seller as of the date hereof does not exceed 100.
3. Representations of the Buyer and Unidigital
Representations and warranties made by the Buyer and Unidigital
herein or in any instrument or document furnished in connection herewith shall
survive the Closing until (and including) the fifth anniversary of the date
hereof. The Buyer and Unidigital represent and warrant to the Seller as follows:
3.1 Organization and Authority. Each of the Buyer and Unidigital is duly
organized and validly existing and in good standing under the laws of the state
of its incorporation, and has requisite power and authority to own its
properties and to carry on its business as now being conducted. Each of the
Buyer and Unidigital has full power to execute and deliver this Agreement, and
the Instrument of Assumption and to consummate the transactions contemplated
hereby and thereby. The Buyer is an affiliate of, and controlled by, Unidigital.
3.2 Authorization. The execution and delivery of this Agreement by the
Buyer and Unidigital and the agreements provided for herein to which it is a
party, and the consummation by the Buyer and Unidigital of all transactions
contemplated hereby, have been duly authorized by all requisite corporate
action. This Agreement, the Note and all such other agreements and written
obligations entered into and undertaken in connection with the transactions
contemplated
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hereby constitute the respective valid and legally binding obligations of the
Buyer and Unidigital, enforceable against them in accordance with their
respective terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors rights generally.
Except as otherwise set forth on Schedule 3.2, the execution, delivery and
performance of this Agreement, the Note and the agreements provided for herein,
and the consummation by the Buyer and Unidigital 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 or Unidigital; (b) violate the provisions of
the organizational documents of the Buyer or Unidigital; (c) violate any
judgment, decree, order or award of any court, governmental body or arbitrator
applicable to the Buyer or Unidigital; 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 or Unidigital
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 or
Unidigital is or may be bound. Schedule 3.2 attached hereto sets forth a true,
correct and complete list of all consents and approvals of third parties that
are required of the Buyer and Unidigital in connection with the consummation by
the Buyer and Unidigital of the transactions contemplated by this Agreement.
3.3 Regulatory Approvals. All consents, approvals, authorizations and
other requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by the Buyer and Unidigital and which are necessary for
its consummation by the Buyer and Unidigital of the transactions contemplated by
this Agreement have been, or will be prior to the date hereof, obtained and
satisfied.
3.4 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by the Buyer and
Unidigital 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. Confidentiality; Public Announcements
4.1 Confidentiality. All information not previously disclosed to the
public or not generally known to persons engaged in the business of the Seller
or the Buyer which shall have been furnished by the Buyer or the Seller to the
other party in connection with the transactions contemplated hereby shall not be
disclosed by such receiving party to any person other than their respective
employees, directors, attorneys, accountants or financial advisors or other than
as contemplated herein. In the event that the transactions contemplated by this
Agreement shall not be consummated, all such information which shall be in
writing shall be returned to the party furnishing the same, including, to the
extent reasonably practicable, all copies or reproductions thereof which may
have been prepared, and neither party shall at any time thereafter disclose to
third parties, or use, directly or indirectly, for its own benefit, any such
information, written or oral, about the business of the other party hereto.
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4.2 Public Announcements. The parties will cooperate in the issuance of
any press releases or otherwise in the making of any public statements with
respect to the transactions contemplated hereby. All public announcements or
other public communications concerning this Agreement and the purchase of the
Assets by the Buyer shall be subject to the approval of all parties hereto,
which approval shall not be unreasonably withheld.
5. Employee Matters
5.1 Seller's Employees. Seller has furnished to Buyer a list containing
the names of the Seller's Employees, including each such employee's status,
social security number and current compensation. If any such employee's
employment is terminated or status changed prior to the date hereof, Seller
shall promptly notify Buyer of such termination or status change and, in the
case of termination, if such employee is replaced, the name, date of hire and
compensation of the individual replacing such employee. The Buyer acknowledges
that the Assumed Liabilities include (i) sales commissions payable after the
date hereof and due to any of the Seller's Employees, and (ii) obligations to
any employee of the Buyer with respect to accrued vacation prior to the date
hereof.
5.2 Future Changes. Nothing in this Section 5 shall require Buyer to
retain any of Seller's Employees for any period of time after the date hereof.
Subject to requirements of applicable law, Buyer reserves the right at any time
after the date hereof 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 Plant Closing. None of the Selling Parties has, directly or
indirectly, taken or omitted to take any action which may result in the Seller's
or the Buyer's liability to any person or entity under the Worker Adjustment and
Retraining Notification Act of ▇▇▇▇ (▇▇▇ "▇▇▇▇ ▇▇▇"). The term "any action" does
not include the sale and acquisition contemplated by this Agreement and the
liability under the WARN Act, if any, which results from the Seller's
termination of employees in connection with such sale and acquisition is the
sole responsibility of the Seller.
5.4 Reporting of Data. Buyer and Seller shall compile 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.
5.5 Pending Litigation. With respect to any litigation pending, or to the
knowledge of the Selling Parties threatened, as set forth in Schedule 2.21
hereto, which claim alleges violation of any nondiscrimination laws, collective
bargaining agreements, employment contract and termination thereof or wage and
hour laws, Seller shall fully defend such claim. Seller shall be responsible for
any monetary damages awarded in connection therewith. It is understood by the
parties that if Seller chooses to settle any matter relating to any of the
foregoing, including the terms and conditions thereof of any back pay claims,
such settlement shall be at the sole discretion of Seller and Seller shall be
solely responsible for the payment or performance of any such settlement terms.
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6. Best Efforts to Obtain Satisfaction of Conditions
The Selling Parties and the Buyer covenant and agree to use their
best efforts to obtain the satisfaction of the conditions specified in this
Agreement.
7. Conditions to Obligations of the Buyer
The obligations of the Buyer under this Agreement are subject to the
fulfillment, at the date hereof, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Buyer:
7.1 Continued Truth of Representations and Warranties of the Selling
Parties: Compliance with Covenants and Obligations. The representations and
warranties of the Selling Parties shall be true on and as of the date hereof.
The Seller 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 hereof.
7.2 Corporate Proceedings. All corporate and other proceedings required to
be taken on the part of the Seller to authorize or carry out this Agreement and
to convey, assign, transfer and deliver the Assets shall have been taken.
7.3 Other Governmental Approvals. All courts of law, governmental
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 Seller of the transactions
contemplated by this Agreement and the operation of the Seller's business by the
Buyer, shall have consented to, authorized, permitted or approved such
transactions including but not limited to, all clearance certificates required
pursuant to any applicable retail sales tax legislation required in connection
with the completion of the transactions contemplated herein.
7.4 Consents of Lenders, Lessors and Other Third Parties. The Seller 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 Seller to
consummate the transactions contemplated by this Agreement, including without
limitation, the landlord at the premises at ▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
and USTrust, the Seller's senior secured creditor.
7.5 Adverse Proceedings. No action or proceeding by or before any court or
other governmental body shall have been instituted by any governmental body or
person whatsoever which shall seek to restrain, prohibit or invalidate the
transactions contemplated by this Agreement or which might affect the right of
the Buyer to own or use the Assets after the date hereof.
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7.6 Opinion of Counsel. The Buyer shall have received an opinion of
▇▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇, counsel to the Seller, dated as of the date hereof,
substantially in the form attached hereto as Exhibit E (the "Opinion of Seller's
Counsel").
7.7 Board of Directors and Shareholder Approval. The directors and
shareholders of the Seller shall have duly authorized the transactions
contemplated by this Agreement.
7.8 Title to Assets. At the Closing, the Buyer shall receive good and
marketable title to all Assets, free and clear of all liens, mortgages, pledges,
security interests, restrictions, prior assignments, encumbrances and claims of
any kind or nature whatsoever.
7.9 Environmental Reports; Compliance with Laws. The Buyer shall not
have received unsatisfactory environmental reports from its environmental
consultants and at any time prior to the Closing shall not have discovered that
any Leased Premises fails to comply in any material respect with all applicable
federal, foreign, state or local environmental, zoning, land use, and wetlands
laws, rules and regulations.
7.10 Fire, Casualty or Eminent Domain. If any of the Assets are, prior to
the date hereof, either damaged by fire or other casualty insured against or
taken, in whole or in part, by eminent domain proceedings, then the Buyer shall
have the right to accept said Assets in their damaged or diminished condition
together with an assignment to Buyer of all insurance and/or condemnation
proceeds payable with respect to such fire, casualty or loss or terminate this
Agreement.
7.11 Due Diligence Review. The Buyer shall have completed a due
diligence review of the Business, the results of which review are
satisfactory to the Buyer.
7.12 Employment Agreements. ▇▇▇▇▇▇ shall have entered into an Employment
Agreement with the Buyer in the form attached hereto as Exhibit F, and ▇▇▇▇▇▇▇▇
shall have entered into an Employment Agreement with the Buyer in the form
attached hereto as Exhibit G (collectively, the "Employment Agreements").
7.13 Closing Deliveries. The Buyer shall have received at or prior to
the Closing each of the following documents:
(a) a ▇▇▇▇ of sale substantially in the form attached hereto as
Exhibit A, executed by the Seller;
(b) such instruments of conveyance, assignment and transfer, and
motor vehicle transfers and safety inspection certificates, if any, in form and
substance 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 other than the Intangible Property;
(c) such instruments of conveyance, assignment and transfer in form
and substance satisfactory to the Buyer and in a form appropriate to file, if
required, with the United
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States Office of Patents and Trademarks, sufficient to convey, transfer and
assign to, and to vest in, the Buyer, good and marketable title to the
Intangible Property;
(d) all technical data, formulations, product literature and other
documentation relating to the Seller's business, all in form and substance
reasonably satisfactory to the Buyer;
(e) such contracts, files and other data and documents pertaining to
the Assets or the Business as the Buyer may reasonably request;
(f) copies of the general ledgers and books of account of the Seller
related to the Business, and all federal, state, local and foreign income,
franchise, capital, property and other tax returns filed by the Seller with
respect to the Assets since June 30, 1995.
(g) such certificates of the Seller's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 7
as the Buyer shall reasonably request;
(h) certificate of the Secretary of the Seller attesting to the
incumbency of the Seller's officers, respectively, and the authenticity of the
resolutions authorizing the transactions contemplated by the Agreement;
(i) estoppel certificates from each lessor under the Leases set
forth in Schedule 2.9(b) attached hereto unless waived as set forth in such
schedule (i) consenting to the assignment of such Lease to the Buyer; (ii)
representing that there are no outstanding claims against the Seller under any
such Lease, and no outstanding defaults or events which, with the passage of
time, may become defaults; (iii) specifying the commencement and termination
dates under the Lease; and (iv) providing that any purchase right, purchase
option, right of first refusal, renewal right or other similar provision is
enforceable by the Buyer and specifying the rental rates under the Lease and any
other matters that Buyer may reasonably require;
(j) a cross receipt executed by the Buyer and the Seller;
(k) the originals, if in Seller's possession, of all building
permits, certificates of occupancy, and other governmental licenses, permits and
approvals, and all plans and specifications relating to the Leased Premises not
previously delivered to the Buyer;
(l) the Employment Agreements executed by each of the
Shareholders;
(m) the Opinion of Seller's Counsel;
(n) the Amendment of the Articles of Organization of the Seller
to discontinue the use of the name "▇▇▇▇▇ Image Group, Inc. " and to file any
instruments as may be necessary with any governmental authority to change
their corporate names and foreign qualifications; and
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(o) such other documents, instruments or certificates as the Buyer may
reasonably request in order to evidence the accuracy of the Selling Parties'
representations or compliance by Seller with its covenants hereunder.
8. Conditions to Obligations of the Seller
The obligations of the Seller under this Agreement are subject to
the fulfillment, at the date hereof, of the following conditions precedent, each
of which may be waived in writing at the sole discretion of the Seller:
8.1 Continued Truth of Representations and Warranties of the Buyer and
Unidigital; Compliance with Covenants and Obligations. The representations and
warranties of the Buyer and Unidigital in this Agreement shall be true on and as
of the date hereof. The Buyer and Unidigital shall have performed and complied
with all covenants required by this Agreement to be performed or complied with
by each of them prior to or at the date hereof.
8.2 Corporate Proceedings. All corporate, legal and other proceedings
required to be taken on the part of the Buyer and Unidigital to authorize or
carry out this Agreement shall have been taken.
8.3 Approvals. All other governmental 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 Buyer and Unidigital of the transactions contemplated by
this Agreement shall have consented to, authorized, permitted or approved such
transactions.
8.4 Consents of Lenders, Lessors and Other Third Parties. The Buyer and
Unidigital shall 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 and Unidigital to consummate the transactions
contemplated by this Agreement, including but not limited to those set forth on
Schedule 3.2 attached hereto.
8.5 Adverse Proceedings. No action or proceeding by or before any court or
other governmental body shall have been instituted by any governmental body or
person whatsoever which shall seek to restrain, prohibit or invalidate the
transactions contemplated by this Agreement or which might affect the right of
the Seller to transfer the Assets or would affect the right of the Buyer to
acquire the Assets.
8.6 The Buyer and/or Unidigital shall have assumed all of the Seller's
obligations to USTrust as set forth on Schedule 1.3(a) or discharged same, and
in any event secured a release of ▇▇▇▇▇▇'▇ guaranty or guaranties thereunder.
8.7 Unidigital shall have guaranteed all of the Buyer's obligations
hereunder (including the Note) and under the Employment Agreements.
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8.8 Closing Deliveries. The Seller shall have received at or prior
to the Closing each of the following documents:
(a) such certificates of the Buyer's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 8
as the Seller shall reasonably request;
(b) a certificate of the Secretary of the Buyer attesting to the
incumbency of the Buyer's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement;
(c) such certificates of Unidigital's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 8
as the Seller may reasonably request;
(d) a certificate of the Secretary of Unidigital attesting to the
incumbency of Unidigital's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement;
(e) Instrument of Assumption executed by the Buyer and accepted
by the Seller;
(f) payment of the portion of Purchase Price due on the date
hereof, including the Cash Consideration, the Note and the Stock
Consideration;
(g) the Employment Agreements, executed by the Buyer;
(h) a Guaranty substantially in the form attached hereto as
Exhibit H executed by Unidigital;
(i) the Opinion of Buyer's Counsel; and
(j) such other documents, instruments or certificates as the
Seller may reasonably request.
9. Post-Closing Agreements
9.1 Proprietary Information.
(a) The Seller 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 a secret or confidential nature with respect to the
Business, and shall not disclose, publish or make use of the same without the
consent of the Buyer, except to the extent that such information shall have
become public knowledge other than by breach of this Agreement by the Seller or
by any other persons who have agreed not to disclose, publish or make use of
such information.
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(b) The Seller agrees that the remedy at law for any breach of this
Section 9.1 would be inadequate and that the Buyer and/or Unidigital shall be
entitled to injunctive relief in addition to any other remedy it may have upon
breach of any provision of this Section 9.1.
9.2 No Solicitation or Hiring of Former Employees. Except as provided by
law or with the written consent of Buyer, for a period of two years after the
date hereof, the Seller 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, the Seller (the
"Corporate Affiliates"), shall not solicit any person who was a Seller's
Employee on the date hereof, and has been employed, and not terminated without
cause, by the Buyer, to terminate his employment with the Buyer or to become an
employee of the Seller or its Corporate Affiliates or hire any person who was
such an employee on the date hereof or on the date hereof.
9.3 Non-Competition Agreement.
(a) For a period of five (5) years after the date hereof, neither
the Seller nor any Corporate Affiliate thereof shall directly or indirectly (i)
manufacture, market or sell any product which has the same or substantially the
same function and primary application as any existing product manufactured by
the Seller on or prior to the date hereof or (ii) engage in, manage, operate, be
connected with or acquire any interest in, as an employee, consultant, advisor,
agent, owner, partner, co-venturer, principal, director, shareholder, lender or
otherwise, any business competitive with the business of the Seller as conducted
on the date hereof or on the date hereof (a "Competitive Business"), within 100
miles of the then-existing location of any Buyer or Unidigital facility in the
United States or any other country in which the Seller conducted business during
the two years prior to the date hereof, except that the Seller and its Corporate
Affiliates may own, in the aggregate, not more than 1% of the outstanding shares
of any publicly held corporation which is a Competitive Business which has
shares listed for trading on a securities exchange registered with the
Securities and Exchange Commission or through the automatic quotation system of
a registered securities association.
(b) The parties hereto agree that the duration and geographic scope
of the non-competition provision set forth in this Section 9.3 are reasonable.
In the event that any court determines that the duration or the geographic
scope, or both, are unreasonable and that such provision is to that extent
unenforceable, the parties hereto agree that the provision shall remain in full
force and effect for the greatest time period and in the greatest area that
would not render it unenforceable. The parties intend that this non-competition
provision shall be deemed to be a series of separate covenants, one for each and
every county of each and every state of the United States of America and each
and every political subdivision of each and every country outside the United
States of America where this provision is intended to be effective. The Seller
agrees that damages are an inadequate remedy for any breach of this provision
and that the Buyer shall, whether or not it is pursuing any potential remedies
at law, be entitled to equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or threatened breach
of this non-competition provision. If the Seller or any Corporate Affiliate
shall violate this Section 9.3, the duration of this Section 9.3 automatically
shall be extended as
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against such violating party for a period equal to the period during which such
party shall have been in violation of this Section 9.3. The covenants contained
in this Section 9.3 are deemed to be material and the Buyer is entering into
this Agreement relying on such covenants.
9.4 Sharing of Data. The Seller shall have the right for a period of seven
years following the date hereof 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 concluding its involvement in the business of the Seller prior to
the date hereof and for complying with its obligations under applicable
securities, tax, environmental, employment or other laws and regulations. The
Buyer and/or Unidigital shall have the right for a period of seven years
following the date hereof 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 Seller
pursuant to the terms of this Agreement to the extent that any of the foregoing
relates to the Business transferred to the Buyer hereunder or is otherwise
needed by the Buyer and/or Unidigital in order to comply with its obligations
under applicable securities, tax, environmental, employment or other laws and
regulations.
9.5 Cooperation in Litigation. Each party hereto will fully 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 hereof (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.
9.6 Legal Fees. The Buyer and Unidigital shall pay up to $50,000 in legal
fees and expenses incurred by the Selling Parties in connection with the Prior
Litigation, provided that such fees and expenses relate to legal services
rendered after the date hereof. The Buyer and Unidigital shall pay the Selling
Parties within 30 days after submission of reasonably detailed invoices related
to such services.
9.7 Accounting Fees. The Seller agrees to pay up to $8,000 in accounting
fees and expenses incurred after the date hereof for accounting services related
to the transactions contemplated hereby and the delivery to Unidigital of
financial statements sufficient to comply with application regulations of the
Securities and Exchange Commission.
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9.8 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Securities and Exchange Commission (the
"Commission") which may permit the sale of the Unidigital Stock to the public
without registration, Unidigital agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the 1933 Act, at all times after the
date hereof; and
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of Unidigital under the 1933 Act
and the Securities Exchange Act of 1934, as amended.
10. Indemnification and Reimbursement
10.1 Indemnification. The Selling 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 each 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 any of the following (but in any event excluding
the Assumed Liabilities) at such time as the Damages, whether actual or alleged,
exceed $15,000 in the aggregate:
(a) liability and obligation of the Selling Parties;
(b) misrepresentation or breach of warranty or covenant or agreement
by the Selling Parties made or contained in this Agreement or in any certificate
or other instrument furnished or to be furnished to the Buyer under this
Agreement;
(c) failure to comply with any bulk sales or similar laws
applicable to the transactions contemplated hereby; and
(d) litigation or other claim arising from acts, failures to act or
events which occurred prior to the date hereof including, without limitation,
the remediation of environmental conditions attributable to the conduct of the
Business at the manufacturing facility in Boston, Massachusetts prior to the
date hereof and claims for product failure or defect (including but not limited
to claims for personal injury, property damages and breach of warranty) which
relate to any product manufactured or sold prior to the date hereof.
It is understood and agreed that any claim for Damages hereunder must be
made by a member of the Buyer Group by the second anniversary of the date
hereof. It is further understood and agreed that the Selling Parties shall not
be liable for Damages on all matters taken in the aggregate asserted under
Section 10.1 hereof in excess of the Purchase Price, nor shall any Selling Party
be liable for more than his or its portion thereof.
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10.2 Accounts Receivable. In addition to the provisions of Section 10.1,
the Seller shall also indemnify the Buyer for the face value of all Accounts
Receivable which existed as of the Closing, but are not collected within one
hundred eighty (180) days after Closing, upon the Buyer's request therefor,
provided that the Buyer has used commercially reasonable efforts to collect such
receivables and such receivables exceed $25,000 in the aggregate. If the Buyer
shall thereafter collect any Account Receivable for which it has received an
indemnification payment from the Seller pursuant to the immediately preceding
sentence, the Buyer shall promptly remit the amount so collected to the Seller.
10.3 CERCLA. Nothing contained in this Agreement shall be deemed a waiver
of the right of the Buyer to maintain a private party cost recovery action under
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et seq.
10.4 Notice and Defense of Claims. The Seller's obligations and
liabilities hereunder with respect to claims resulting from the assertion of
liability by the Buyer or third parties shall be subject to the following terms
and conditions:
(a) Notice. The Buyer shall give prompt written notice to the Seller
of any claim or event known to it which does or may give rise to a claim by the
Buyer against the Seller for which the Buyer believes it is entitled to
indemnification pursuant to this Section 10 of this Agreement, stating the
nature and basis of said claims or events and the amounts thereof, to the extent
known, and in the case of any claim, action, suit or proceeding brought by any
third party, a copy of any claim, process or legal pleadings with respect
thereto promptly after any such documents are received by the indemnified party.
Such notice shall be given in accordance with Section 12 hereof.
(b) Third Party Claims or Actions.
(i) In the event any claim, action, suit or proceeding is made
or brought by any third party against the Buyer, with respect to which the
Seller may have liability for Damages under this Section 10 of this Agreement,
the Seller shall, at its own expense, be entitled to participate in and, to the
extent that it shall wish, jointly and with any other indemnifying party, to
assume the defense, with independent counsel reasonably satisfactory to the
Buyer, provided that in assuming the defense of any such third party claim,
action, suit or proceeding, the Seller acknowledges in writing to the Buyer that
the Seller shall thereafter be liable for any Damage with respect to such claim,
action, suit or proceeding.
(ii) If the Seller elects to assume control of such defense or
settlement, it shall conduct such defense or settlement in a manner reasonably
satisfactory and effective to protect the Buyer fully; such company and its
counsel will keep the Buyer fully advised as to its conduct of such defense or
settlement, and no compromise or settlement shall be agreed or made without the
written consent of the Buyer, not to be unreasonably withheld. In any case, the
Buyer shall have the right to employ its own counsel and such counsel may
participate in such action, but the reasonable fees and expenses of such counsel
shall be at the expense of the Buyer,
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when and as incurred, unless (A) the employment of counsel by the Buyer has been
authorized in writing by the Seller, (B) the Buyer shall have reasonably
concluded that there may be a conflict of interest between the Seller and the
Buyer in the conduct of the defense of such action, (C) the Seller shall not in
fact have employed independent counsel reasonably satisfactory to the Buyer to
assume the defense of such action and shall have been so notified by the Buyer,
(D) the Buyer shall have reasonably concluded and specifically notified the
Seller either that there may be specific defenses available to it which are
different from or additional to those available to it or that such claim,
action, suit or proceeding involves or could have a material adverse effect upon
it beyond the financial resources of the Seller or the scope of this Agreement,
or (E) the Seller fails to conduct such defense or settlement in a manner
reasonably satisfactory to protect the Buyer fully. If clause (B), (C), (D) or
(E) of the preceding sentence shall be applicable, then counsel for the Buyer
shall have the right to direct the defense of such claim, action, suit or
proceeding on behalf of the Buyer and the reasonable fees and disbursements of
such counsel shall constitute Damages hereunder.
(iii) If the Seller does not elect to assume the defense of
any such claim, or if it fails to conduct said defense or settlement in a manner
reasonably satisfactory to protect the Buyer fully, the Buyer may engage
independent counsel selected by the Buyer to assume the defense and may contest,
pay, settle or compromise any such claim on such terms and conditions as the
indemnified party may determine. The reasonable fees and disbursements of such
counsel shall constitute Damages hereunder.
(iv) The Buyer and the Seller, as the case may be, shall be
kept fully informed of such claim, action, suit or proceeding at all stages
thereof whether or not such party is represented by its own counsel.
10.5 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 ensure the proper and adequate defense of any
claim, action, suit or proceeding brought by any third party. Where counsel has
been selected by the Seller or by the Buyer pursuant to Section 10.4, the Seller
or the Buyer, as the case may be, shall be entitled to rely upon the advice of
such counsel in the conduct of the defense.
10.6 Confidentiality. The parties agree to cooperate in such a 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 best 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.
10.7 Offsets. The Buyer and Unidigital may offset against the amounts
payable under (i) the Note or (ii) Section 9.6 of this Agreement any and all
Damages owed by the Selling Parties to the Buyer Group pursuant to Section 10.1
hereof.
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11. Transfer and Sales Tax
The Seller 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. The Selling Parties shall indemnify,
defend and hold harmless the Buyer Group for any such taxes and fees, including
interest and penalties, if any, incurred in connection with the transactions
contemplated hereby. It is understood and agreed that the indemnification
provision set forth in this Section 11 shall not be subject to the two-year
limitation set forth in Section 10 hereof.
12. 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 Seller: ▇▇▇▇▇ Image Group, Inc.
▇▇▇ ▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇, President
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
To the Buyer: Unidigital Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇, President
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to: ▇▇▇▇▇▇▇▇ Ingersoll
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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.
13. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Neither the Seller
nor the Buyer may assign all or a portion of its rights and obligations
hereunder without the prior written consent of the other party, except that the
Buyer may assign all or a portion of its rights and obligations hereunder to an
Affiliate of Buyer, provided that Buyer shall remain liable for the performance
of the Buyer's obligations under this Agreement. Any assignment in contravention
of this provision shall be void.
14. 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 Buyer and the
Seller, by the consent of their respective Boards of Directors, or officers
authorized by such Boards, may amend or modify this Agreement, in such manner as
may be agreed upon, by a written instrument executed by the Buyer and the
Seller.
(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.
15. Expenses
Except as otherwise expressly provided herein, the Buyer and the
Seller shall each pay their own expenses in connection with this Agreement and
the transactions contemplated hereby.
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16. Legal Fees
In the event that legal proceedings are commenced by the Buyer
against the Seller, or by the Seller against the Buyer, in connection with this
Agreement or the transactions contemplated hereby, the party or parties which do
not prevail in such proceedings shall pay the reasonable attorneys' fees and
other costs and expenses, including investigation costs, incurred by the
prevailing party in such proceedings.
17. 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.
18. 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.
19. 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.
20. 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.
21. Currency
Unless otherwise indicated, all dollar amounts referred to in this
Agreement are in United States funds.
22. 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.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of and on the date first above written.
(Corporate Seal) SELLER:
ATTEST: ▇▇▇▇▇ IMAGE GROUP, INC.
_________________________ By:_____________________________
Secretary Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
Title: President
SHAREHOLDERS:
________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(Corporate Seal) BUYER:
ATTEST: UNIDIGITAL/▇▇▇▇▇ CORPORATION
_________________________ By:_____________________________
Clerk Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Chairman of the Board
ATTEST: UNIDIGITAL INC.
_________________________ By:_____________________________
Secretary Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: President
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