Exhibit 10.33
ACQUISITION AGREEMENT AND
PLAN OF SHARE EXCHANGE
by and among
GRAPHIC ARTS CENTER, INC.,
a Delaware corporation,
as Purchaser
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ COMMUNICATIONS CORPORATION,
an Indiana corporation
and
CERTAIN SHAREHOLDERS OF ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
November 6, 1996
TABLE OF CONTENTS
ARTICLE 1 SHARE EXCHANGE AND RELATED MATTERS.....................................................1
1.1 The Plan of Exchange..............................................................1
1.2 Purchase Price....................................................................2
1.3 Calculation of Stockholders Equity. ..............................................2
1.4 The Closing.......................................................................2
1.5 Closing Consideration Adjustment..................................................4
1.6 Transfer Taxes....................................................................5
1.7 Contingency of Consideration......................................................5
1.8 Dissenting Shareholders...........................................................6
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF PRIMARY
SHAREHOLDERS AND ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.......................................................6
2.1 Organization, Standing, Corporate Authorization, and Enforceability...............6
2.2 Capitalization of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.................................................7
2.3 Articles of Incorporation and Bylaws; Certain Records.............................8
2.4 Compliance with Other Instruments and Laws........................................9
2.5 Governmental Authorizations; Consents.............................................9
2.6 Litigation........................................................................9
2.7 Financial Statements; No Undisclosed Liabilities..................................9
2.8 Absence of Certain Changes or Events.............................................10
2.9 Title to Property, Absence of Liens and Encumbrances.............................11
2.10 Full Authority; Compliance with Laws............................................12
2.11 Benefit Plans...................................................................12
2.12 Claims..........................................................................15
2.13 Taxes...........................................................................15
2.14 Contracts.......................................................................17
2.15 Environmental Quality...........................................................19
2.16 Intellectual Property...........................................................20
2.17 Prepaid Expenses................................................................20
2.18 Affiliate Transactions..........................................................20
2.19 Labor Matters...................................................................20
2.20 Customers and Vendors...........................................................21
2.21 Other Disclosures...............................................................21
2.22 Parachute Payments..............................................................22
2.23 Acquisition of Capital Stock....................................................22
2.24 Accuracy........................................................................22
2.25 Brokers and Finders.............................................................22
2.26 Primary Shareholder Knowledge...................................................22
2.27 Day Dream, Inc..................................................................22
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ARTICLE 3 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE
PRIMARY SHAREHOLDERS..............................................23
3.1 Ownership of Purchase Shares..................................23
3.2 Title to Purchase Shares......................................23
3.3 Authorization.................................................23
3.4 Enforceability................................................23
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER........................24
4.1 Organization and Standing of Purchaser........................24
4.2 Authorization.................................................24
4.3 Enforceability................................................24
4.4 Compliance with Other Instruments and Laws....................24
4.5 Governmental Authorizations, Consents.........................24
4.6 Litigation....................................................24
4.7 Securities Act of 1933........................................25
4.8 Employee Relations............................................25
4.9 Brokers and Finders...........................................25
4.10 Purchaser's Knowledge.........................................25
ARTICLE 5 COVENANTS OF ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ AND THE\
PRIMARY SHAREHOLDERS...............................................25
5.1 Directors; Shareholder Meeting................................25
5.2 Conduct of Business...........................................26
5.3 Access........................................................27
5.4 No Sale or Transfer of Purchase Shares........................27
5.5 No Solicitation or Negotiation................................27
5.6 Filings and Consents..........................................27
5.7 Assistance Regarding Financial Statements.....................28
5.8 Signing of Agency Agreement...................................28
5.9 Resale of SPG.................................................28
5.10 Day Dream Litigation..........................................28
5.11 Day Dream Note................................................29
ARTICLE 6 COVENANTS OF PURCHASER.............................................29
6.1 Confidentiality...............................................29
6.2 Officer and Director Indemnification..........................29
6.3 Filings and Consents..........................................30
6.4 Day Dream Litigation..........................................30
ARTICLE 7 COVENANTS OF ALL PARTIES...........................................31
7.1 Commercially Reasonable Efforts; Further Assurances...........31
7.2 Certain Filings, Etc..........................................31
7.3 Public Announcements..........................................31
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ARTICLE 8 CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE.....................31
8.1 Accuracy of Representations and Warranties....................31
8.2 Performance...................................................32
8.3 Certificate...................................................32
8.4 Payoff Letters................................................32
8.5 Debt..........................................................32
8.6 No Injunction.................................................32
8.7 No Material Adverse Effect....................................32
8.8 HSR Act.......................................................32
8.9 Consents......................................................32
8.10 Redemption of Preferred Stock and Redeemed Shares.............32
8.11 SPG Shares....................................................33
8.12 Real Estate Option............................................33
8.13 Legal Opinions................................................33
8.14 Resignations..................................................33
8.15 Certificate of Secretary......................................33
8.16 Corporate Approval............................................33
8.17 Escrow Agreement..............................................33
8.18 Employment Agreements.........................................33
8.19 Completion of Due Diligence...................................34
8.20 Contract With Day Dream, Inc..................................34
8.21 Repayment of Shareholder Debt.................................34
8.22 Lease with U.S. Bancorp.......................................34
8.23 Guaranty Agreement............................................34
8.24 No Discovery..................................................34
8.25 Documentation.................................................34
8.26 Articles of Exchange..........................................34
8.27 Accrual.......................................................34
ARTICLE 9 CONDITIONS TO OBLIGATION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
TO CLOSE...........................................................35
9.1 Accuracy of Representations and Warranties....................35
9.2 Repayment of Debt.............................................35
9.3 Performance...................................................35
9.4 Certificate...................................................35
9.5 Corporate Approval............................................35
9.6 No Injunction.................................................35
9.7 HSR Act.......................................................35
9.8 Legal Opinion.................................................35
9.9 Employment Agreements.........................................35
9.10 Escrow Agreement..............................................35
9.11 No Discovery..................................................36
9.12 Documentation.................................................36
9.13 Articles of Exchange..........................................36
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ARTICLE 10 TERMINATION OF AGREEMENT..........................................36
10.1 Right to Terminate Agreement................................36
10.2 Effect of Termination.......................................36
ARTICLE 11 CERTAIN REMEDIES AND LIMITATIONS..................................37
11.1 Survival of Representations, Warranties and Covenants.......37
11.2 Indemnification by Shareholders.............................37
11.3 Limitations on Representations, Warranties
and Liabilities of Primary Shareholders.....................39
11.4 Indemnification by Purchaser................................40
11.5 Limitations on Liability of Purchaser.......................40
11.6 Indemnification Claims......................................40
11.7 Defense of Third Party Actions..............................41
11.8 Subrogation.................................................42
11.9 Exclusivity.................................................43
11.10 Retention of Records........................................43
ARTICLE 12 MISCELLANEOUS.....................................................43
12.1 Materiality.................................................43
12.2 Expenses....................................................43
12.3 Notices; Etc................................................44
12.4 Assignment..................................................45
12.5 Entire Agreement; Amendment; Governing Law; Etc.............45
12.6 Counterparts................................................45
12.7 Third Party Rights..........................................45
12.8 Exhibits and Schedules......................................45
12.9 Pronouns....................................................46
12.10 Authority and Execution.....................................46
12.11 Severability................................................46
12.12 Time of Essense.............................................46
12.13 Interpretation..............................................46
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INDEX
Accountant.....................................................................4
Act............................................................................2
Affiliate.....................................................................38
Agreement......................................................................1
Associates....................................................................29
Audited Financial Statements...................................................9
Audited Statements.............................................................4
Benefit Plan..................................................................13
CERCLA........................................................................19
Claim..........................................................................7
Claim Notice..................................................................40
Claimants.....................................................................40
Closing........................................................................2
Closing Consideration..........................................................2
Closing Date...................................................................2
COBRA.........................................................................14
Code..........................................................................13
Confidential Information......................................................29
Contingent Consideration.......................................................5
Day Dream Litigation..........................................................28
Day Dream Note................................................................22
Debt..........................................................................32
Disclosure Schedule............................................................6
Disputed Matter................................................................4
Disqualified Individuals......................................................22
Dissenting Shares..............................................................6
Effective Time.................................................................2
Employment Agreements.........................................................33
Environmental Laws............................................................19
Equity Interests...............................................................8
ERISA.........................................................................12
Escrow Agreement...............................................................3
Escrow Amount..................................................................3
Estimated Stockholders Equity..................................................3
Exchange.......................................................................1
Final Closing Statement........................................................5
Financial Statements...........................................................9
Guaranty Agreement............................................................29
Hazardous Materials...........................................................19
HSR Act.......................................................................32
Indemnified Parties...........................................................41
Indemnifying Parties..........................................................41
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Intellectual Property.........................................................20
Leased Property...............................................................12
Legal Requirement..............................................................8
Losses........................................................................37
Material Adverse Effect.......................................................43
Material Contracts............................................................17
Multiemployer Plans...........................................................14
Neutral Accountants............................................................4
Notice of Disagreement.........................................................4
Payoff Letters.................................................................3
PBGC..........................................................................14
Pension Plan..................................................................14
Permits.......................................................................12
Permitted Liens...............................................................12
▇▇▇▇▇▇▇........................................................................1
Preferred Stock................................................................7
Primary Shareholders...........................................................1
Pro Rata Share.................................................................2
Property......................................................................19
Purchase Price.................................................................2
Purchase Shares................................................................1
Purchaser......................................................................1
Purchaser Indemnified Obligation..............................................37
Purchaser Indemnified Parties.................................................37
Purchaser Related Agreements..................................................24
RCRA..........................................................................19
Real Estate Purchase Price....................................................49
Redeemed Shares................................................................3
Redemption.....................................................................1
Redemption Agreement...........................................................1
Related Agreements.............................................................7
▇▇▇▇▇▇.........................................................................1
Secretary of State..........................................................2, 6
Securities Act................................................................25
Shareholder Indemnified Obligations...........................................40
Shareholder Indemnified Parties...............................................40
Shareholder Notes..............................................................3
Shareholder's Agent............................................................1
Shareholders...................................................................1
Shareholders' Closing Statement................................................4
Shareholders' Expenses........................................................43
▇▇▇▇▇▇▇........................................................................1
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇................................................................1
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock...................................................1
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SPG............................................................................3
SPG Common Stock...............................................................8
Stockholders Equity............................................................2
Tax...........................................................................15
Tax Returns...................................................................15
Taxes.........................................................................15
Tentative Closing Consideration................................................3
Title Notice..................................................................12
Unaudited Financial Statements.................................................9
Value Added....................................................................5
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ACQUISITION AGREEMENT AND PLAN OF SHARE EXCHANGE
THIS ACQUISITION AGREEMENT AND PLAN OF SHARE EXCHANGE ("Agreement") is made
and entered into as of November 6, 1996, by and among GRAPHIC ARTS CENTER, INC.,
a Delaware corporation ("Purchaser"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ COMMUNICATIONS
CORPORATION, an Indiana corporation ("▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. ("▇▇▇▇▇▇▇") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
("▇▇▇▇▇▇") (collectively, the "Primary Shareholders").
WITNESSETH:
WHEREAS, Purchaser desires to purchase all of the issued and outstanding
common stock of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock"), which
shall represent 100% of the issued capital stock of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (after
effect is given to that certain redemption agreement (the "Redemption
Agreement") between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and several holders of shares of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Common Stock providing for the redemption of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Common
Stock immediately prior to Closing (as defined herein) (the "Redemption")), from
the holders of such shares of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock (the "Shareholders")
upon and subject to the terms and conditions set forth herein (such shares of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock to be acquired by Purchaser hereunder hereinafter
being referred to as the "Purchase Shares"); and
WHEREAS, the respective Boards of Directors of Purchaser and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ have determined that it is in the best interest and welfare of said
corporations and their respective shareholders that Purchaser acquire 100% of
the capital stock of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ through an exchange of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Common Stock for such consideration and on such terms and conditions as
hereinafter set forth.
WHEREAS, ▇▇▇▇▇▇▇ has agreed to act as agent for the individual Shareholders
(the "Shareholder's Agent") for certain purposes relating to this Agreement,
pursuant to an Agency Agreement to be executed by all of the Shareholders in a
form and manner satisfactory to Purchaser.
WHEREAS, the estimated consolidated Stockholders Equity (as defined herein)
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ at Closing (as defined herein) will be not more than $7.9
million dollars.
NOW, THEREFORE, in consideration of the mutual covenants, representations
and warranties made herein and of the mutual benefits to be derived herefrom,
the Primary Shareholders, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and Purchaser agree as follows:
ARTICLE 1
SHARE EXCHANGE AND RELATED MATTERS
1.1 THE PLAN OF EXCHANGE. Subject to the terms and conditions of this
Agreement, including the receipt of all requisite Shareholder approvals, the
acquisition of the Purchase Shares by Purchaser (the "Exchange") will be carried
out in the following manner:
(a) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall call a meeting of the Shareholders to
approve the Exchange and shall solicit proxies in favor of the Exchange.
(b) Subject to the provisions of this Agreement, Articles of
Exchange consistent with this Agreement shall be duly executed and, on the
Closing Date (as defined in Section 1.4 hereof), or as soon thereafter as
reasonably practicable, filed with the Indiana Secretary of State (the
"Secretary of State") in accordance with the Indiana Business Corporation Law
(the "Act"). The Exchange shall become effective upon the filing of the Articles
of Exchange with the Secretary of State (the "Effective Time").
(c) At the Effective Time, Purchaser shall acquire all of the
issued and outstanding shares of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Stock in exchange for the
consideration set forth in Section 1.2. After the Effective Time, each Share
shall be deemed for all purposes to represent only the right of the holder to
receive such consideration (subject to any Dissenters' Rights as provided in
Section 1.8), and after such time there shall be no further transfer of such
Purchase Shares on the books of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
1.2 PURCHASE PRICE. The total cash consideration to be paid to the
Shareholders by Purchaser for the Purchase Shares, subject to adjustment under
Section 8.10, shall be an amount equal to (i) the Stockholders Equity of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ at Closing (as defined in Section 1.3) plus (x) an additional Nine
Hundred Thousand Dollars ($900,000) and (y) an amount, not to exceed $700,000,
equal to the tax accrued for on the books of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in connection with
the Redemption in addition to the $369,000 already accrued for such purpose (the
"Closing Consideration"), and (ii) the Contingent Consideration payable by the
Purchaser to the Shareholders pursuant to Section 1.7 (collectively, the
"Purchase Price"). The Closing Consideration shall be paid to all Shareholders
in proportion to their relative ownership of the Purchase Shares (their "Pro
Rata Share").
1.3 CALCULATION OF STOCKHOLDERS EQUITY. The consolidated
stockholders equity of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ at Closing shall be as determined in
accordance with generally accepted accounting principles less any Shareholders'
Expenses (as defined in Section 12.2), including any prepayment fees and
penalties paid in connection with the discharge of the Debt, payable by the
Shareholders at the Closing ("Stockholders Equity"). The parties agree that such
Stockholders Equity calculation shall not include the net income effect of the
forgiveness of the Shareholder Notes in connection with the Redemption.
1.4 THE CLOSING. The closing of the transactions contemplated by
this Article 1 (the "Closing") shall be held at the offices of Rothgerber,
Appel, Powers & ▇▇▇▇▇▇▇ LLP in Denver, Colorado, at 10:00 a.m. (local time) on
November 22, 1996, or at such other place, time and date as may be jointly
designated by Purchaser, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Primary Shareholders (the date
on which the Closing takes place, the "Closing Date"). At or before the Closing,
each of the following shall occur:
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(a) As soon as practicable but no later than four business
days before the scheduled Closing Date, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall deliver to
Purchaser (i) a certificate, executed by the Chairman and CEO of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, setting forth ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ reasonable, good faith estimate of
Stockholders Equity as of the Closing Date, (the "Estimated Stockholders
Equity"), (ii) a certificate in the form of a letter (the "Payoff Letters"),
executed by the Chairman and CEO of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Chairman and CEO of
its subsidiary, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Graphics, Inc. ("SPG") and an authorized
representative of each bank or other creditor of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG set
forth on Schedule 1.4 (the "Creditors") to whom long-term indebtedness is owed
------------
(the "Debt") setting forth the amount of such Debt, including the current
portion thereof, and the estimated amounts of principal, interest, prepayment
fees and penalties that will be due and payable by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG to
each of the Creditors as of the Closing Date; and (iii) a certificate executed
by the Chairman and CEO of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ setting forth the number of Redeemed
Shares acquired or to be acquired by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in the Redemption from each
transferring Shareholder and the total number of Redeemed Shares so acquired by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ from such Shareholders.
(b) Prior to Closing, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall enter into the
Redemption Agreement in such form as is mutually agreeable to the parties,
pursuant to which certain shares of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock (the "Redeemed
Shares") shall be redeemed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ from certain Shareholders in
exchange for notes previously given by such Shareholders in exchange for shares
in Day Dream, Inc. (the "Shareholder Notes"). The Redemption of each such
Redeemed Share shall be in exchange for that proportion of the face amount of
the Shareholder Notes represented by the amount of Closing Consideration as
would be payable to such Shareholders if the aggregate value of the Shareholder
Notes were added to the Closing Consideration and such Closing Consideration (as
adjusted) were distributed to all Shareholders pro rata.
(c) That portion of the Debt owed to each Creditor shall be paid
to such Creditor by wire transfer of immediately available funds to an account
or accounts designated and in the amounts specified in the Payoff Letter. The
"Tentative Closing Consideration" shall be calculated using the Estimated
Stockholders Equity.
(d) From the Tentative Closing Consideration, Purchaser shall
(i) pay any unpaid Shareholders' Expenses (as defined in Section 12.2), and (ii)
deposit Six-Hundred Fifty Thousand Dollars ($650,000) with the Escrow Agent
acting pursuant to the Escrow Agreement referred to below (such amount, together
with income thereon, additions thereto, and releases therefrom, as more
specifically set forth in such Escrow Agreement being referred to herein as the
"Escrow Amount"). The Escrow Amount shall be held and distributed by such Escrow
Agent in accordance with the terms of the Escrow Agreement, in a form mutually
acceptable to the parties (the "Escrow Agreement"), which shall be entered into
by the Escrow Agent named therein, Purchaser and the Shareholder's Agent prior
to or on the Closing Date.
(e) The remainder of the Tentative Closing Consideration shall
be distributed at Closing to the Shareholders according to their Pro Rata Shares
by certified or cashier's check or wire transfer, as Purchaser shall choose.
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1.5 CLOSING CONSIDERATION ADJUSTMENT. The Closing Consideration
shall be adjusted as follows:
(a) A complete physical inventory will be taken at the direction
of the Primary Shareholders and observed by Purchaser within two days following
Closing. Inventory will be valued at the lesser of cost or market using FIFO in
accordance with generally accepted accounting principles applied on a consistent
basis.
(b) As soon as practicable but no later than 30 days after the
Closing Date, the Shareholder's Agent at the Shareholders' expense shall prepare
and deliver to KPMG Peat Marwick LLP ("Accountant") a statement setting forth in
detail the Stockholders Equity as of the Closing Date (the "Shareholders'
Closing Statement").
(c) Accountant shall audit the Shareholders' Closing Statement
in accordance with instructions mutually agreed upon by Purchaser and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, and, within 45 days of receipt thereof, shall render a report thereon
including any adjustments thereto recommended by the Accountant. The
Shareholder's Agent shall, within 10 days after receipt of such report, prepare
a revised Shareholders' Closing Statement including all such adjustments (the
"Audited Statements") and shall deliver the Audited Statement to Purchaser.
Purchaser and its representatives shall be afforded the opportunity to review
and inspect all of the financial records, work papers, schedules and other
supporting papers relating to the preparation of the Shareholders' Closing
Statement and the Audited Statement and to consult with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
Accountant regarding the methods used in the preparation thereof.
(d) The Audited Statements shall become final and binding on
Shareholders and Purchaser unless Purchaser gives written notice to the
Shareholder's Agent of its disagreement with respect to any matter contained
therein ("Notice of Disagreement") within 45 days after the receipt thereof by
Purchaser. A Notice of Disagreement shall not be permitted unless the aggregate
amount in dispute exceeds Ten Thousand Dollars ($10,000). A Notice of
Disagreement shall specify in reasonable detail the nature of any disagreement
so asserted. For a period of 30 days after the delivery of the Notice of
Disagreement, the Shareholders' Agent and Purchaser shall attempt to resolve in
writing all of their differences with respect to each matter specified in the
Notice of Disagreement, in which case any such resolution shall be final and
binding on the parties. If, at the end of such 30-day period, the Shareholders'
Agent and Purchaser have not resolved in writing all of their differences with
respect to any such matter, then each unresolved matter ("Disputed Matter")
shall be submitted to and reviewed by a neutral "big six" accounting firm
mutually agreeable to the parties ("Neutral Accountants"). The Neutral
Accountants shall consider only the Disputed Matters and shall act promptly to
resolve in writing all Disputed Matters, and its decisions with respect to the
Disputed Matters shall be final and binding on each of the Shareholders and
Purchaser; provided that, no such resolution of the Disputed Matter shall
require payment of an amount greater than the highest amount or less than the
lowest amount suggested for such resolution by either the Shareholders' Agent or
the Purchaser. The Neutral Accountants shall notify the Shareholders' Agent and
the Purchaser of its resolution of the Disputed Matters, and upon receipt
thereof by the Accountant, the Accountant shall promptly prepare final Audited
Statements reflecting the resolution
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of all Disputed Matters promptly after such resolution (the "Final Closing
Statement") and shall deliver it to Purchaser and the Shareholders' Agent.
(e) Shareholders and Purchaser shall each be responsible for and
shall each pay one-half of the fees and expenses incurred in connection with the
Neutral Accountants.
(f) Within 10 days after receipt of the Final Closing Statement
(i) if the Estimated Stockholders Equity is greater than
the Stockholders Equity as set forth in the Final Closing Statement,
Shareholders shall pay to Purchaser the difference, plus interest as
provided below, first by giving instructions to the Escrow Agent to
distribute from any remaining Escrow Amount and then any additional
amounts shall be paid by Shareholders to Purchaser on demand in
immediately available funds.
(ii) if the Stockholders Equity as set forth in the Final
Closing Statement is greater than the Estimated Stockholders Equity,
Purchaser shall pay to each of the Shareholders his or her pro rata
share of the difference plus interest as provided below in immediately
available funds.
Any payment required to be made pursuant to this Section
1.5(f) shall be made together with simple interest thereon from the Closing Date
to the date of payment at the annual rate (calculated on the basis of a 365-day
year) equal to the prime rate published by The Wall Street Journal on the
Closing Date.
1.6 TRANSFER TAXES. Any transfer taxes, stamp duties, filing fees,
registration fees, recordation expenses, or other similar taxes, fees, charges
or expenses incurred by any Shareholder, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or any other party in
connection with the transfer of the Purchase Shares to Purchaser or in
connection with any of the other transactions contemplated by this Agreement
shall be borne and paid exclusively by Shareholders.
1.7 CONTINGENCY OF CONSIDERATION. In addition to the other
consideration provided for herein, the Shareholders of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (other
than those Shareholders who exercise their Dissenter's Rights, as provided in
Section 1.8 below) shall be entitled to the following additional consideration
(the "Contingent Consideration") in the aggregate amount of $1,000,000, which
shall be payable by the Purchaser and contingent upon the future performance of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as follows:
(a) The aggregate sum of $250,000 would be paid to the
Shareholders (according to the pro rata allocation described on Schedule 1.7) in
------------
each year that the Value Added (as defined herein) of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, excluding
SPG, grows by 5% over the previous year. "Value Added" shall be defined as net
sales minus all direct material costs and outside service costs, including all
costs categorized as such in the internal income statement prepared consistently
with the consolidating schedule statement in the audit report prepared in
connection with the regularly conducted audit of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ by its
independent auditors for the year ended February 29,
-5-
1996. The base year for the initial actual Value Added calculation of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ will be that amount reflected in the Financial Statements for the year
ended February 29, 1996, which is $29,447,355 calculated as provided on Schedule
--------
1.7(a) attached hereto. Thereafter, for the purpose of this calculation, the
------
calculation will be based upon Purchaser's fiscal years, i.e., Value Added for
fiscal year 1998 will be calculated based upon the results of the 1997 fiscal
year.
(b) If the growth in the Value Added of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
beginning on January 1, 1997, through December 31, 1997, excluding SPG, is more
than (5%) of the base year, the Shareholders will earn an additional aggregate
$50,000 for each percentage point of growth above (5%) for that year, i.e., if
the fiscal year ended December 31, 1997, growth in Value Added turns out to be
7% more than the base amount (in both cases excluding SPG), Purchaser will pay
the Shareholders an aggregate of $350,000.
(c) The period for this Contingent Consideration will be the
four (4) years ending December 31, 2000, unless the maximum aggregate Contingent
Consideration of $1,000,000 has been paid sooner as provided herein. The payment
of the Contingent Consideration shall be independent of the employment status of
any of the Shareholders.
1.8 DISSENTING SHAREHOLDERS. Any Purchase Shares held by
Shareholders who have satisfied the requirements of Chapter 44 of the Act
related to the rights of dissenting shareholders ("Dissenters' Rights"), and
have not effectively withdrawn or lost such Dissenters' Rights (such shares
being referred to as "Dissenting Shares"), shall not be converted pursuant to
this Agreement, but the holders thereof shall be entitled only to such
Dissenters' Rights. Each dissenting shareholder who is entitled to payment for
such Purchase Shares pursuant to such Dissenters' Rights shall receive payment
from Purchaser in an amount as determined pursuant to such Dissenters' Rights.
To the extent such payment for Dissenting Shares exceeds the amount of the
Closing Consideration otherwise payable by Purchaser for such Purchase Shares
under this Agreement, such amount shall be immediately payable in readily
available funds by the Primary Shareholders to the Purchaser.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PRIMARY SHAREHOLDERS
AND ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
The Disclosure Schedules delivered to Purchaser by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in
connection with its execution of this Agreement, is sometimes referred to herein
as the "Disclosure Schedule." The Disclosure Schedules will be delivered
within 5 business days of the date hereof and unless mutually agreed upon either
party may terminate this Agreement. Each of the Primary Shareholders and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ represents and warrants to Purchaser that the following
statements are true as of the date of this Agreement and as of the Closing Date
(subject to any update of the Disclosure Schedules in accordance with Section
8.1):
-6-
2.1 ORGANIZATION, STANDING, CORPORATE AUTHORIZATION, AND
ENFORCEABILITY.
(a) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG are corporations duly organized,
validly existing and operating under the laws of Indiana. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
SPG are in good standing under the laws of Indiana and have all requisite
corporate power and authority to carry on their respective businesses as
currently conducted and to own or lease and operate their properties. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and SPG are qualified to do business and are in good standing in each
jurisdiction in which the property owned, leased or operated by either, or the
nature of the business conducted by either makes such qualification necessary.
(b) This Agreement and all other agreements, documents and
instruments executed or to be executed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and/or SPG herewith
(the "Related Agreements") constitute or will upon due execution constitute the
valid and legally binding obligations of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and/or SPG, enforceable
in accordance with their terms, except as such enforceability may be limited by
equitable principles and by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or similar laws relating to or affecting the rights of
creditors generally. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG have the requisite corporate power
and authority to enter into this Agreement and the Related Agreements.
(c) Except for Board of Directors and Shareholder approval as
required under the Act, the execution and delivery of this Agreement, the
Related Agreements, and all other documents and instruments executed or to be
executed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to this Agreement, and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate and other action on the part of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG.
Upon receipt of such Shareholder approval, all such corporate authorization will
have been obtained. This Agreement and the Related Agreements have been, or
will have been, at the time of their respective executions and deliveries, duly
executed and delivered by a duly authorized officer of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and/or
SPG.
(d) Except for SPG, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ does not own, directly or
indirectly, the capital stock (or other similar equity interests) of any other
corporation, joint venture, partnership, limited liability company or other
similar entity. SPG does not own, directly or indirectly, the capital stock ( or
other similar equity interests) of any other corporation, joint venture,
partnership, limited liability company or similar entity. Except as listed on
Schedule 2.1(d) (which capital stock will be acquired prior to Closing and
---------------
subject to this representation and warranty), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ owns all of the
issued and outstanding capital stock of SPG free and clear of any lien, pledge,
charge, adverse claim, security interest, encumbrance (including any imposed by
law in any jurisdiction), title retention agreement, option or right to purchase
of any kind, proxy, voting agreement, voting trust, restriction on
transferability, preemptive right or other Claim of any kind.
As used in this Agreement, "Claim" means any and all claims,
liabilities, causes of action, arbitrations, audits, hearings, investigations,
litigation or suits, whether in contract, tort or otherwise, whether statutory
and common law, whether civil, criminal, administrative, investigative, formal
or informal, whether known or unknown, fixed or contingent.
-7-
2.2 CAPITALIZATION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇. As of the date of this
Agreement, the authorized capital stock of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ consists of 300,000
shares of Common Stock, no par value (the "▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock") of
which 178,095 shares are outstanding and 10,000 shares of Preferred Stock $100
par value (the "Preferred Stock") of which 1,700 shares are outstanding. As of
the date of this Agreement, the authorized capital stock of SPG consists of
100,000 shares of Common Stock, no par value ("SPG Common Stock") of which 8,628
is outstanding. Schedule 2.2 contains a list of all Shareholders of ▇▇▇▇▇▇▇
------------
▇▇▇▇▇▇▇ of record, and accurately sets forth the number of shares of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Common Stock held by each such Shareholder on the date hereof. All
prior issuance of securities by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG, and all prior
repurchases, redemptions or exchanges affecting the outstanding securities of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG, including the Redemption, have complied with all
applicable Legal Requirements (as defined below) (including federal and state
securities laws), preemptive rights and contractual restrictions and there are
no further liabilities of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, SPG or the Primary Shareholders due
to the former holders thereof. Each share of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock,
Preferred Stock and SPG Common Stock has been duly authorized and validly issued
and is fully paid and nonassessable. Except as described above, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and SPG do not have shares of its capital stock issued or outstanding. Except
for the Redemption Agreement, there are no outstanding convertible or
exchangeable securities, subscriptions, calls, options, warrants, rights,
contractual or arising by operation of law (including, without limitation,
rights of first refusal and preemptive rights), or other agreements or
commitments of any character to which ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG is a party or by
which either of them is bound, relating to the issuance, purchase, other
acquisition or voting of any shares of the capital stock of, or other equity or
ownership interest in (collectively, "Equity Interests") ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG.
No bonds, debentures, notes or other indebtedness having the right to vote under
any circumstances (or convertible into securities having such right to vote) of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG are issued and outstanding. There are no agreements,
arrangements or commitments of any character (contingent or otherwise) pursuant
to which any person or entity is or may be entitled to receive any payment based
on the revenues or earnings, or calculated in accordance therewith, of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ or SPG. Except as set forth on Schedule 2.2, there are no voting trusts,
------------
proxies or other agreements or understandings to which ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG is
a party or by which ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG is bound with respect to the voting
of any shares of capital stock or other Equity Interests of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or
SPG.
For purposes of this Agreement, the term "Legal Requirement"
shall mean any federal, state or local law, statute, legislation, ordinance,
code, rule, regulation, decree, award, order, permit, franchise, consent or
authorization of, any federal, state, local or other governmental body or
agency, department, commission, bureau, board, council, court, magistrate, panel
or instrumentality of the United States, any political subdivision thereof or
any state or local governmental authority.
2.3 ARTICLES OF INCORPORATION AND BYLAWS; CERTAIN RECORDS. Copies of
the articles of incorporation, bylaws, minute books and stock records of each of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG have been made available to Purchaser, and each such
copy is true, correct and complete. All material records of any type and
description in whatever form or medium that presently exist and that relate
-8-
to the business or properties of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG are in the possession
or control of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG (or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG has the right to
possess or control such records) and are located at the offices of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and SPG, or of their counsel, independent auditors or other advisors,
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG will have the right to possession of all such
records upon the consummation of the transactions contemplated by this
Agreement.
2.4 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS. The execution and
delivery of this Agreement and the Related Agreements and the consummation of
the transactions contemplated hereby and thereby will not conflict with or
result in any violation of or default under any provision of the articles of
incorporation or bylaws of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG, or, except as set forth on
Schedule 2.4, of any mortgage, indenture, trust, lease, partnership or other
------------
agreement or other instrument, permit, concession, grant, franchise, license,
judgment, order, decree, or Legal Requirement applicable to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
SPG or the Shareholders or any of the respective properties of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
or SPG, nor will it prevent or materially delay the consummation of the
transactions contemplated hereby.
2.5 GOVERNMENTAL AUTHORIZATIONS; CONSENTS. Except as set forth on
Schedule 2.5, no consents, licenses, approvals or authorizations of, or
------------
registrations or declarations with, any governmental authority, agency, bureau
or commission, or any third party, are required to be obtained or made by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, SPG or the Shareholders in connection with the execution,
delivery, performance, validity and enforceability of this Agreement or any
Related Agreement or the sale or transfer of the Purchase Shares.
2.6 LITIGATION. To the best of each Primary Shareholder's
knowledge, no action, suit, proceeding or governmental investigation is pending
or threatened, at law or in equity, which seeks to question, delay or prevent,
or could have the effect of delaying or preventing, the consummation of all or
any portion of the transactions contemplated hereby.
2.7 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES. Except as set
forth on Schedule 2.7:
------------
(a) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ has delivered to Purchaser (i) the
audited consolidated balance sheets of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as of February 28, 1996,
and 1995 and the related consolidated statements of operations, common
stockholders' equity and cash flows for the fiscal years ended February 28,
1996, 1995 and 1994, accompanied in each case by the opinion thereon of KPMG
Peat Marwick LLP, independent public accountants, (such audited financial
statements, including the notes thereto, hereinafter being referred to as the
"Audited Financial Statements"), and (ii) the unaudited consolidated balance
sheet of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as of August 31, 1996 and the related unaudited
consolidated statements of operations, common stockholders' equity and cash
flows for the six months ended August 31, 1996 set forth on Schedule 2.7(a) (the
---------------
"Unaudited Financial Statements"). (The Audited Financial Statements and the
Unaudited Financial Statements including the notes thereto together hereinafter
being referred to as the "Financial Statements"). All of the Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as indicated therein)
throughout the periods indicated
-9-
and present fairly in all material respects the consolidated financial position
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG as of the dates thereof and the consolidated results
of its operations for the periods then ended subject, in the case of the
Unaudited Financial Statements, to normal recurring year-end adjustments,
adjustments specifically required by this Agreement, and the absence of notes.
(b) Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG has any Claims, debts,
obligations, guaranties of the obligations of others or liabilities (whether
absolute or contingent, liquidated or unliquidated, due or to become due),
except for (i) Claims, debts, obligations, guaranties and liabilities to the
extent reflected or reserved against in the Financial Statements, (ii) debts,
obligations, guaranties and liabilities to the extent referred to in Schedule
--------
2.12, (iii) debts, obligations, guaranties and liabilities incurred or entered
----
into subsequent to August 31, 1996, in the ordinary course of business and
otherwise not in contravention of this Agreement, (iv) debts, obligations and
liabilities relating to this Agreement and the Related Agreements and
instruments being executed and delivered in connection herewith and the
transactions referred to herein and therein (including obligations to pay legal
fees, financial advisory fees, bank fees, accounting fees and other amounts in
connection therewith so long as such obligations are included in determining
Stockholders Equity in the Final Closing Statements).
2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for (i) matters
set forth on Schedule 2.8, (ii) matters disclosed in the Financial Statements
------------
and (iii) as contemplated by this Agreement, neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG
has, since February 28, 1996:
(a) undergone any change in its condition (financial or
otherwise), properties, assets, liabilities, business or operations, except for
changes in the ordinary course of business which have not either individually or
in the aggregate had a Material Adverse Effect, as defined in Section 12.1, on
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG;
(b) changed any of its methods of accounting or accounting
practices or classifications of assets or liabilities, or failed to maintain its
books of account in the usual, regular and ordinary manner in accordance with
generally accepted accounting principles and on a basis consistent with prior
periods unless required by regulation or generally accepted accounting
principles;
(c) modified the material terms of, or canceled or
terminated, any Material Contract (as defined below);
(d) terminated, discharged or received any written notice
regarding the resignation, discharge or termination of any officer;
(e) established or adopted any Benefit Plan, or increased the
amount of the wages, bonus, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees, except in any case in the ordinary course of business in accordance
with past practice and, in the case of senior management employees, in an amount
not exceeding 3% in any one case;
-10-
(f) declared, set aside, made or paid any dividend or other
distribution in respect of its capital stock or purchased or redeemed, directly
or indirectly, any shares of its capital stock, or split up, combined,
reclassified, redeemed, repurchased or otherwise reacquired any of their
respective capital stock, except in the case of Preferred Stock to be redeemed
in advance of the Closing Date or the shares of capital stock of SPG not owned
by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇;
(g) issued or sold any shares of its capital stock of any
class or any subscriptions, options, warrants, calls or other rights to purchase
directly or indirectly any such shares or any securities directly or indirectly
convertible into or exchangeable for such shares or made any other change in its
capital structure;
(h) incurred any direct or contingent liability for borrowed
money or guaranteed the monetary obligations of any other person or entity other
than indebtedness to be included in the Debt to be discharged at Closing, or
made any monetary investment in, advance to or loan to any person or entity
other than in the ordinary course of business;
(i) mortgaged, pledged or subjected to any material lien,
lease, security interest or other charge or encumbrance any of its properties or
assets, tangible or intangible, except those securing Debt to be discharged at
Closing;
(j) made any material change in its practices, operations or
policies with respect to the method for selling goods or services, or other
method for accounting for sales, the conduct of accounts receivable collection
or accounts payable payment activities;
(k) merged or consolidated with or into any other entity or
initiated or participated in negotiations with any person or entity with respect
to any of the foregoing;
(l) implemented or adopted any change in its tax methods,
principles or elections;
(m) acquired or disposed of any material assets or properties
or made any capital improvement other than in the ordinary course of business;
or
(n) suffered any damage, destruction or loss (not covered by
insurance) which has had or could reasonably be expected to have a Material
Adverse Effect on ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG.
2.9 TITLE TO PROPERTY, ABSENCE OF LIENS AND ENCUMBRANCES:
(a) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG have good title to their owned
material assets, including the tangible assets reflected on the balance sheet
included in ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ most recent Financial Statements, other than
assets disposed of or used after the date thereof in the ordinary course of
business for fair value. Except as disclosed in Schedule 2.9, the tangible
------------
assets owned by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG are owned free and clear of all liens,
mortgages, pledges, charges, security interests or encumbrances, except for
Permitted Liens (as defined below). Each
-11-
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG owns, leases or licenses, and has adequate rights to
use all material property and other material assets necessary to conduct their
respective businesses as going concerns on a basis consistent with past
practices. The assets of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG are in operating condition and
repair (subject to normal wear and tear). Neither the whole nor any part of any
real property occupied by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG have been condemned by any
public authority, nor to the best of the Primary Shareholders' knowledge, is any
such condemnation or taking threatened or contemplated. There exists free and
uninterrupted egress and ingress over a public roadway to all operating
facilities.
For the purposes of this Agreement, the term "Permitted Liens" shall
mean liens for current taxes not yet due and imperfections of title, liens and
encumbrances, if any, which do not materially and adversely affect the use,
value or marketability of the property affected thereby and the liens,
mortgages, pledges, charges, security interests and encumbrances securing the
Debt as set forth on Schedule 2.9.
------------
(b) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG validly hold the leasehold created by
the leases (true, complete and correct copies of which have been provided to
Purchaser) as described on Schedule 2.9(b) (the "Leased Property") and such
---------------
leases are enforceable by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG as the lessee thereunder.
(c) Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG is a party to any agreement
granting any third party the right or an option to purchase or lease all or any
portion of the real or personal property of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG.
(d) There is not pending nor have ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG received
any written notice of (i) any claim or proceeding asserting or seeking to
establish a title interest in the real property of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG, or
any claim of default under any of the leases under which leaseholds have been
created ("Title Notice"), or (ii) the existence of any facts or proceedings
which may result in the issuance of such a Title Notice; and, there are not any
such proceedings nor is there any Title Notice.
2.10 FULL AUTHORITY; COMPLIANCE WITH LAWS. Except as set forth on
Schedule 2.10, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG are in compliance with all applicable
-------------
Legal Requirements. Set forth on Schedule 2.10 is a list of any and all permits,
-------------
licenses, consents, orders, approvals, franchises, certificates or other
authorizations under any applicable Legal Requirement (collectively the
"Permits"), issued to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG in connection with the ownership,
operation and maintenance of their respective businesses or assets. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and SPG have obtained and maintained all Permits. Each of the Permits
is in full force and effect, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG are in compliance in
all respects with all the provisions of such Permits.
-12-
2.11 BENEFIT PLANS.
(a) Except as set forth in Schedule 2.11, neither ▇▇▇▇▇▇▇
-------------
▇▇▇▇▇▇▇ nor SPG maintains, sponsors, participates in or contributes to, or is
required to contribute to, directly or indirectly, or has any obligation under:
(i) Any employee benefit plan, employee pension benefit
plan, employee welfare benefit plan (including any medical, dental,
disability, accident or sickness, salary continuation or life insurance
plan or arrangement), or multiemployer plan, all as defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
regardless of whether or not a plan is exempt from some or all of the
otherwise applicable requirements of ERISA; or
(ii) Any material bonus, commission, deferred
compensation, incentive compensation, restricted stock, stock purchase,
stock option, stock appreciation right, debenture, supplemental pension,
profit sharing, royalty pool, vacation, sick leave, severance or
termination pay policies, supplemental unemployment benefits plan, loan
guarantee, relocation assistance, employee loan or other extensions of
credit, or other similar material plan, program, agreement, policy,
commitment, arrangement or benefit currently in effect under which
current or former employees or their dependents, beneficiaries,
representatives or estates are currently or will in the future be
entitled to benefits.
(b) With respect to each plan, program, agreement, policy,
commitment, arrangement or benefit described on Schedule 2.11 (a "Benefit
-------------
Plan"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ has furnished to the Purchaser true, correct and
complete copies of such Benefit Plan, including amendments, if applicable,
summary plan descriptions, if applicable, the Internal Revenue Service
determination letter, if applicable, and the two most recent Forms 5500, 5500-C
or 5500-R, as applicable, and has made available to the Purchaser the most
recent actuarial reports of or regarding such Benefit Plan. As to each Benefit
Plan not reduced to writing, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ has provided to the Purchaser a
description of all material elements of such Benefit Plan.
(c) Except as set forth in Schedule 2.11:
-------------
(i) Each Benefit Plan has been operated and administered in all
material respects in accordance with its terms and applicable laws,
including but not limited to ERISA and the Internal Revenue Code of 1986
as amended (the "Code") (as defined below). Each Benefit Plan that is
intended to be qualified under the Code either has received from the
Internal Revenue Service, or timely applied for, a determination letter
on such Benefit Plan's qualified status.
(ii) Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG, or, to the best of the
Primary Shareholders' knowledge, any other party in interest (within the
meaning of ERISA) has engaged in any non-exempt prohibited transaction
with respect to any Benefit Plan under
-13-
ERISA, the Code and, to the best of Shareholders' knowledge, there is
no pending assertion of the occurrence of any such transaction.
(iii) All contributions required under applicable law or
the terms of any Benefit Plan, collective bargaining agreement or
other agreement relating to a Benefit Plan to be paid by ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ or SPG for all periods prior to the date of this Agreement
have been completely and timely made to each Benefit Plan when due,
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG, as applicable, have established adequate
reserves on its books (which will be treated as a deduction from
current assets or as a current liability for purposes of the
determination of Actual Stockholders Equity) to meet liabilities for
contributions accrued but that have not been made because they are not
yet due and payable.
(iv) There is no current or pending investigation or
audit by the Internal Revenue Service, the Department of Labor or any
other governmental entity of any Benefit Plan, nor has ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
or SPG received notification from any such governmental entity of such
a pending audit or investigation, and there are no actions, suits or
Claims pending (other than routine claims for benefits) or threatened,
with respect to any Benefit Plan or against the assets of any such
Benefit Plan.
(v) Except as disclosed in Schedule 2.11(c)(v), no
-------------------
Benefit Plan is or ever has been a plan subject to Title IV of ERISA,
Part 3 of Subtitle B of Title I of ERISA or Section 412 of the Code
("Pension Plan"), or is or ever has been a multiemployer plan as
defined in Section 3(37) of ERISA or Section 414(f) of the Code
("Multiemployer Plans"). Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG has incurred
any liability to the Pension Benefit Guaranty Corporation ("PBGC")
with respect to any Pension Plan, except for required premium
payments, which payments have been made when due. No accumulated
funding deficiency (within the meaning of Section 312 of the Code or
Section 302 of ERISA) or reportable event (as defined in Section 4043
of ERISA) has occurred with respect to any Pension Plan. No event has
occurred in connection with any Pension Plan which could subject
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, SPG or any Pension Plan to liability under Section
4062, 4063 or 4064 of ERISA, and, to the best knowledge of the Primary
Shareholders, no event has occurred which might give rise to any
liability of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, SPG or any Pension Plan to the PBGC
under Title IV of ERISA or which could reasonably be anticipated to
result in any claims being made against ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, SPG or any
Pension Plan by the PBGC. Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG has incurred
or, as a result of the transactions contemplated by this Agreement,
will incur any withdrawal liability (including any contingent or
secondary withdrawal liability) within the meaning of Section 4201 and
4204 of ERISA to any Multiemployer Plan. Upon a complete withdrawal or
a partial withdrawal (as those terms are defined in Section 4203 and
4205, respectively, of ERISA) from a Multiemployer Plan occurring on
or before the close of the most recent fiscal year of each such
Multiemployer Plan ended prior to the Closing Date (April 30, 1995,
and June 23, 1995) neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG would have been
subject to withdrawal liability under Title IV, Subtitle E, Part 1 of
ERISA and, to the best of Shareholders' knowledge, there has been no
material change in the financial condition of any Multiemployer Plan
that would result in the
-14-
imposition of such liability due to such complete or partial withdrawal
on or before the Closing Date.
(vi) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG have complied in all material
respects with all notice and continuation coverage requirements
applicable to group health plans under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), with respect to all
medical and health benefits provided by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG that are
subject to COBRA.
(vii) No Benefit Plan amendments have been adopted nor will
any such amendments be adopted prior to the Closing Date except as may be
necessary for compliance purposes with the Code or ERISA and there is no
arrangement, commitment or understanding to create any additional plan
which would constitute a Benefit Plan or increase the rate of benefit
accrual or contribution requirement under any of the Benefit Plans or
modify, change or terminate any existing Benefit Plan.
(d) Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG is a member of a "controlled
group" of organizations (as defined in Sections 414(b), (c), (m) or (o) of the
Code) that includes any organization other than ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG which
sponsors or maintains any employee benefit plan within the meaning of Section
3(3) of ERISA which under Title IV of ERISA or any section of the Code or ERISA
would subject Purchaser, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG or any of their respective
employee benefit plans or the fiduciaries thereof or their respective assets to
any taxes, encumbrances, penalties or other liabilities.
2.12 CLAIMS. Except as set forth in Schedule 2.12, there are no
-------------
material Claims against or, to the knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or the Primary
Shareholders, threatened against ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG or their respective
properties, at law or in equity or before any court, governmental department,
commission, board, agency, authority, instrumentality, domestic or foreign, or
any Claims which have had or could be reasonably expected to have individually
or in the aggregate a Material Adverse Effect on ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG before,
on or after the Closing Date. Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG is subject to any
material judgment, stipulation, order or decree arising from any action, suit,
proceeding or investigation, or any such judgment, stipulation, order or decree
which individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect on ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG. To the best of the Primary
Shareholders' knowledge, no action, suit, proceeding or governmental
investigation is pending or threatened against ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG which
seeks to question, delay or prevent the consummation of the transactions
contemplated hereby.
2.13 TAXES.
(a) For purposes of this Agreement, "Taxes" in the plural and
"Tax" in the singular shall refer to any and all taxes, charges, fees, levies,
or other assessments of whatever kind or nature, including, but not limited to,
any federal, state, local or foreign net income, gross income, gross receipts,
unitary, license, payroll, unemployment, excise, severance, stamp, occupation,
-15-
premium, windfall profits, environmental (including, but not limited to, taxes
under section 59A of the Code), occupational, leasing, lease, fuel, customs,
duties, capital stock, franchise, profits, withholding, Social Security,
unemployment, disability, ad valorem, real property, personal property (tangible
and intangible), sales, use, transfer, registration, value added, alternative or
minimum, estimated, or any other kind of tax whatsoever, including the recapture
of any tax items, and including any interest, addition, penalty or other
associated charge thereto, whether disputed or not.
(b) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG have filed or will file or cause
to be filed, within the applicable period prescribed by law, (i) all federal,
state, local, foreign or other material Tax Returns, as that term is defined
below, required by such law to be filed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG, respectively,
for all taxable periods ending on or prior to the Closing Date or (ii) valid
extensions of the time for filing such Tax Returns. For purposes of this
Agreement, "Tax Returns" shall mean any returns, reports or statements with
respect to Taxes which are required to be filed with any taxing authority.
(c) Except as set forth in Schedule 2.13(c), neither ▇▇▇▇▇▇▇
----------------
▇▇▇▇▇▇▇ nor SPG has obtained or will obtain prior to the Closing Date any
extensions of time in which to file any Tax Returns which have not as of yet
been filed for any taxable period ending on or prior to the Closing Date.
(d) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG have paid or shall pay, within
the time and in the manner prescribed by law, all Taxes shown as due on all such
Tax Returns filed or to be filed prior to the Closing Date.
(e) Except as set forth in Schedule 2.13(e), no Claim or
----------------
assertion has been made against ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG by any Tax authority in
any jurisdiction in which no Tax Return has been filed by the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or
SPG that either ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG is or may be subject to taxation of any
sort in such jurisdiction or otherwise is required to file a Tax Return in such
jurisdiction.
(f) Except for Permitted Liens, there are no Tax liens or
other security interests or encumbrances of any type resulting from Tax
liabilities on any of the assets of either ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG.
(g) There is no dispute, Claim or any other controversy
concerning any material Tax liability of either ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG either
(i) raised or asserted by any Tax authority in writing; or (ii) whether or not
formally asserted or claimed, as to which the Shareholders or the Chief
Financial Officer or the Controller of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ with authority for Tax
matters has any knowledge.
(h) Except as set forth in Schedule 2.13(h), none of the
----------------
income Tax Returns for any open tax year that include ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG has
been audited by any taxing authority. Each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG has made
available to Purchaser a complete copy of each federal income Tax Return,
examination report, statement of deficiency, or any other administrative or
-16-
judicial assertion, assessment or determination of federal income Tax liability
with respect to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG.
(i) Since February 28, 1993, each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG
has employed a permissable method of Tax accounting, validly elected for each
taxable period ending on or prior to the Closing Date. Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
nor SPG have changed, or requested to be permitted to change, any material
method of Tax accounting.
(j) Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG has waived any statute of
limitations with respect to any Taxes or has agreed to any extension of time
with respect to a Tax assessment or deficiency, except for such waivers or
extensions which, by their terms, have elapsed as of the date of this Agreement,
nor are any requests for such waivers or extensions pending.
(k) Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG (i) has filed a consent
under Section 341(f) of the Code concerning collapsible corporations, (ii) has
made any payments, is obligated to make any payments, or is a party to any
agreement that will render it (or the payor of compensation under the agreement)
subject to the provision of section 280G of the Code regarding payments as a
result of a change in control, (iii) has been a United States real property
holding company within the meaning of section 897(c)(2) of the Code or (iv) is a
party to any Tax allocation or Tax sharing agreement.
(l) The unpaid Taxes of each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG,
including Taxes attributable to all periods ending on or prior to the Closing
Date which are not yet due and payable, do not materially exceed the reserve on
the Unaudited Interim Balance Sheet for tax liability.
2.14 CONTRACTS. Except as set forth in this Agreement or on Schedule
--------
2.14 (the agreements listed thereon being referred to as the "Material
----
Contracts"), neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG are a party to, bound by or
obligated under any:
(a) collective bargaining agreement;
(b) mortgage, indenture, note or installment obligation or
other instrument or contract for or relating to any borrowing of an amount in
excess of $5,000 by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG (other than intercompany borrowings
between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG);
(c) guaranty by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG of any obligation in
excess of $5,000 (excluding any endorsement made in the ordinary course of
business for collection);
(d) license agreement involving the payment or receipt by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG of $5,000 or more during any 12-month period during the
term thereof;
(e) lease of real or personal property under which ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ or SPG are lessors or lessees involving annual rentals in excess of
$5,000;
-17-
(f) agreement for the purchase by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG of
equipment involving outstanding commitments in excess of $5,000;
(g) agreement purporting to limit the right of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ or SPG to compete in any line of business, with any person or other
entity or in any geographic area;
(h) agreement for the purchase or sale of raw materials,
products or goods or the provision of services involving payments in excess of
$5,000 at prices that vary from the prices therefor generally prevailing in
customary, arms-length transactions or that may not be terminated by ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ or SPG on not more than thirty (30) days' notice without penalty;
(i) contract with any governmental or quasi-governmental
authority involving payments in excess of $5,000;
(j) bond, deposit, financial assurance requirement or
insurance coverage in excess of $5,000 individually required to be submitted to
customers of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG, as the case may be, under any sale, lease
or service arrangement or to any governmental authority under any Permit or
Legal Requirement;
(k) agreement or instrument relating to the acquisition by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG of any entity or all or substantially all of the assets
of any person or entity;
(l) other agreement, contract or obligation of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ or SPG calling for or involving the payment, potential payment or
accrued obligation by or to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG, as the case may be, from the
date hereof through the earliest date such agreement, contract or obligation can
be terminated unilaterally without material penalty by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG,
as the case may be, of an amount in excess of $5,000;
(m) agreement or commitment relating to the borrowing of
money or the guaranty or indemnity (direct or indirect) in respect of or the
granting of security for any obligation for the borrowing of money, by ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, SPG or any other person or entity, in excess of $5,000, including,
without limitation, guarantees, accommodation collateral, letters of credit,
mortgages, deeds of trust, indentures, loan agreements and credit agreements;
(n) agreement or commitment relating to clean-up or
remediation involving Hazardous Materials (as hereinafter defined);
(o) agreement that creates an encumbrance or any restriction
on the ability of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG to (i) pay dividends or make similar
distributions; (ii) make loans or advances to any person or entity, or (iii)
sell, lease or transfer any of their respective properties or assets, except (in
each case) for such restrictions or encumbrances existing under or by reason of
(1) applicable Legal Requirements, (2) customary non-assignment provisions in
leases and other contracts entered into in the ordinary course of business, or
(3) any instrument governing the Outstanding Debt;
-18-
(p) indemnification obligations in favor of any person or
entity, and any escrow agreements related to any indemnification or obligation;
or
(q) confidentiality, secrecy, screening, development or
settlement agreement pertaining to any Intellectual Property.
(r) any printing contract or other contract with any customer
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG.
Except as specifically set forth on Schedule 2.14 with respect thereto, all of
-------------
the Material Contracts are legal, valid, binding and in full force and effect,
no default exists thereunder on the part of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG, and the
consummation of the transactions contemplated by this Agreement will not cause
any default or condition in respect of any such Material Contracts, the effect
of which is to cause, permit, create or perfect the right in any party (a) to
repudiate or disavow its obligations to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG thereunder, (b)
to require or have the right to require ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG to perform their
respective obligations thereunder (including obligations to pay indebtedness)
prior to such time on which, or on terms and conditions otherwise different from
those that, are provided therein or (c) to recover from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG
any damages or fines. No party (including ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG) to any such
Material Contract is in default thereunder. True, correct and complete copies of
all the Material Contracts have been delivered to the Purchaser.
2.15 ENVIRONMENTAL QUALITY.
(a) Except as set forth on Schedule 2.15(a), neither ▇▇▇▇▇▇▇
----------------
▇▇▇▇▇▇▇ nor SPG nor, to the knowledge of the Primary Shareholders, any previous
owner, tenant, occupant, user or operator of any real property now or ever owned
or leased by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG (the "Property") released or disposed of any
"Hazardous Materials" (as defined below) on, under, in or about the site of the
Property, except in compliance in all material respects with applicable
Environmental Laws (as defined below). For the purposes of this Agreement, the
term "Hazardous Materials" shall mean any substance, material or waste which is
regulated by any local government authority, the State of Indiana, or other
state where applicable, or the United States Government, including, without
limitation, any material or substance which is (a) defined as a "hazardous
waste," "hazardous material," "hazardous substances, " "extremely hazardous
waste," "regulated substance" or "restricted hazardous waste" under any
provision of the laws of Indiana, or any other applicable law, including, but
not limited to, the Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901
et seq. ("RCRA"), and the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. (S) 9601 et seq. ("CERCLA") and (b) petroleum,
including crude oil and any fraction thereof and any refined petroleum products
and derivatives thereof.
(b) The Property complies in all respects with all applicable
Environmental Laws. For purposes of this Agreement, the term "Environmental
Laws" shall mean all federal, state and local laws, ordinances and regulations
pertaining to air and water quality, soils and subsurface strata,
-19-
natural resources, Hazardous Materials, waste generation, management,
transportation and disposal or other environmental matters, including the Clean
Water Act, the Clean Air Act, the Federal Water Pollution Control Act, the Solid
Waste Disposal Act, RCRA, CERCLA, and the rules, regulations and ordinances of
the city and county in which the Property is located, the Environmental
Protection Agency and all other applicable federal, state, regional and local
agencies. Without limiting the generality of the foregoing, neither ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ nor SPG is liable or potentially liable for any response costs or
natural resource damages under Sections 107(a) or 113(f) of CERCLA, or under any
other so-called "superfund" or "superlien" law or similar Legal Requirement, at
or with respect to the Property and no circumstances exist, which with notice or
lapse of time or both could result in such liability.
(c) The conduct of the businesses of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG
complies in all respects with all applicable Environmental Laws.
(d) Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG has sent any Hazardous
Material to a site that, pursuant to any applicable Environmental Laws, (i) has
been placed on the "National Priorities List" of hazardous waste sites or any
similar state list, (ii) is otherwise designated or identified as a potential
site for remediation, cleanup, closure or other environmental remedial activity,
or (iii) is subject to a claim, an administrative order or other request to take
"removal" or "remedial" action, as defined in any applicable Environmental Laws,
or to make payment for the costs of cleaning up the site.
(e) Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG (i) is involved in any
suit or proceeding with respect to a release or threatened release of any
Hazardous Material or a violation or alleged violation of any applicable
Environmental Laws, nor, have ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG received any notice of any
claims from any person or entity relating to property damage or to personal
injuries from exposure to any Hazardous Material, nor, have ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or
SPG received any notice or request for information from any governmental agency
or authority or other third party with respect to any of the foregoing, or (ii)
to the knowledge of the Primary Shareholders, has failed to timely file any
report required to be filed, failed to acquire all necessary certificates,
approvals and permits or failed to generate and maintain all required data,
documentation and records under all applicable Environmental Laws.
(f) Except as set forth in Schedule 2.15(f), there are
----------------
currently no underground storage tanks in or under the Property, and no
underground storage tank was removed from the Property during the period that
Shareholders maintained an ownership in such property.
2.6 INTELLECTUAL PROPERTY. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG either owns or
has the right to use by license, sublicense, or other written agreement, all of
the inventions, improvements, domestic and foreign patents and applications
therefor, customer lists, copyrights, copyright- registrations and applications
therefor, trademarks, trade names, service marks, trade dress, logos, rights in
computer software, and all rights granted or retained in licenses under any of
the foregoing which are used in connection with the conduct of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇
or SPG's business as presently conducted (collectively the "Intellectual
Property"). None of the Intellectual Property used in connection with
-20-
the conduct of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ or SPG's business is, or has been in the past
five years, involved in, or the subject of, any pending or threatened
infringement, interference, opposition or similar action, suit or proceeding.
The material license fees, royalties and other amounts payable by ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and SPG in connection with the use of the Intellectual Property,
together with the terms and conditions on which, and periods for which such
amounts are payable, are set forth in Schedule 2.16.
-------------
2.17 PREPAID EXPENSES. All prepaid expenses shown on the balance
sheet of the most recent Financial Statements or subsequently paid by ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and SPG and shown on Shareholders' Closing Statement have been incurred
solely in connection with the businesses and assets of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG
or this Agreement.
2.18 AFFILIATE TRANSACTIONS. Set forth on Schedule 2.18 is a list of
-------------
all transactions (including, without limitation, employment contracts, loans and
advances, accounts and notes payable or receivable and service agreements)
between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG and any current officer, director, shareholder or
affiliate of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or of SPG (a) which are effective as of the date
hereof and at Closing or (b) constitutes a present or future liability or
obligation of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG to any officer, director, shareholder or
affiliate of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or of SPG.
2.18 LABOR MATTERS. Except as set forth on Schedule 2.19, (a)
-------------
neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG has entered into or is a party to any collective
bargaining agreement, memorandum of understanding or other written document
binding on ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG respecting terms and conditions of employment
with respect to an identified group of employees with any labor union that would
cover any of their respective employees and (b) the employees of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and SPG are not subject to any collective bargaining agreement, memorandum of
understanding or other written document binding on ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG
respecting terms and conditions of employment with respect to an identified
group of employees nor are any such employees, in their capacities as employees,
represented by any labor union. As to the collective bargaining agreements
disclosed on Schedule 2.19, neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG is in default
-------------
thereunder. There are no Claims, controversies, labor disturbances,
investigations, proceedings or complaints pending, threatened, by any
governmental agency or any of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ or SPG's employees or any party
or parties representing any of such employees against ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG
before any court, arbitrator or other tribunal. To the best of the Primary
Shareholders' knowledge, there are no organizational efforts presently being
made or threatened by or on behalf of any labor union with respect to the
employees of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG, nor has there been in the last five (5)
years. Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG has experienced a work stoppage,
strike, lock-out or other labor disturbance within the past five (5) years, and
there is no work stoppage, strike, lock-out or other labor disturbance presently
occurring, or, to the Primary Shareholders' best knowledge, threatened. To the
best of the Primary Shareholders' knowledge, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG have
complied with all Legal Requirements relating to their respective employees, the
employment of labor, and the safety and health of employees, including, without
limitation, all Legal Requirements relating to occupational health and safety,
discrimination, unemployment, wages, hours, the Family and Medical Leave Act,
collective bargaining, and the collection and payment of withholding taxes and
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similar taxes in respect of the businesses of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG. Except
as set forth in Schedule 2.19, there are no unfair labor practice charges or
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complaints pending against ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG involving employees now or
previously employed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG.
2.20 CUSTOMERS AND VENDORS. Schedule 2.20 hereto is a correct and
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current list of the 20 largest customers and the 10 largest vendors of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and SPG, respectively, during the 7-month period ended September 30,
1996, taken together, with the amount of sales made to each such customer or by
each such vendor, as the case may be, during such period as reasonably
ascertained from readily available information, such amounts being estimated in
good faith as being within ten percent (10%) of the actual sales made to or by
such customer or vendor, as the case may be. Except as set forth on Schedule
--------
2.20, the Primary Shareholders do not have any information indicating that any
----
of these customers or vendors intends to cease doing business with ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ or SPG or materially alter the amount of the business that it is
presently doing with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG.
2.21 OTHER DISCLOSURES. In addition to the other disclosures
required hereby, the following documents and information pertaining to ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and SPG have been made available to the Purchaser:
(a) true, correct and complete copies of each policy of
insurance maintained by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG, together with information on
premiums, coverage, insurers, expiration dates and deductibles; and
(b) the location and name of each bank or other financial
institution in which ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG have an account or line of credit,
and the identity of each such account or line of credit, and each bank in which
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG have a safe deposit box, together with the names of all
persons authorized to draw upon or have access thereto.
2.22 PARACHUTE PAYMENTS. Any bonuses or other compensation or
amounts paid or payable by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG, including amounts payable as
a result of the transaction contemplated by the Agreement, has not resulted in
and will not result in payments to "Disqualified Individuals" (as defined in
Section 280G(c) of the Code) of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG which, individually or in
the aggregate, will constitute "excess parachute payments" (as defined in
Section 280G(b) of the Code) resulting in the imposition of the excise tax under
Section 4999 of the Code or the disallowance of deductions under Section 280G of
the Code.
2.23 ACQUISITION OF CAPITAL STOCK. The Preferred Stock, the Redeemed
Stock and the SPG Common Stock not owned at all times by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ that is
redeemed, reacquired or acquired by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ have been, or will be,
redeemed, reacquired or acquired from the former owners thereof in such a manner
as to not give rise to any Claims from such former owners including Claims under
federal or state securities laws.
2.24 ACCURACY. The representations and warranties made by ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and the Primary Shareholders to Purchaser set forth in this Agreement,
the Schedules to this Agreement, and
-22-
the written agreements, instruments and documents delivered and to be delivered
pursuant to or in connection with this Agreement and to which the Purchaser has
been afforded access, do not include an untrue statement of material fact or
omit to state any material fact necessary to make them, when taken together and
in light of the circumstances in which they were or are made, not misleading in
any material respect.
2.25 BROKERS AND FINDERS. Except for amounts due by the Shareholders
to Corporate Development Associates, Inc., which amount will be paid at Closing
by the Shareholders from the Closing Consideration, no person or entity is
entitled to any brokerage commission, finder's fee or like payment in connection
with the transactions contemplated in this Agreement.
2.26 PRIMARY SHAREHOLDER KNOWLEDGE. No Primary Shareholder and no
officer or director of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG has actual knowledge, as of the
date hereof, of any state of facts which will have a Material Adverse Effect on
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG or give rise to a Purchaser Indemnified Obligation (as
defined below), except for such matters as have been disclosed by Shareholders
to Purchaser or its representatives and are contained in the Disclosure
Schedule.
2.27 DAY DREAM, INC. Since February 28, 1996, there has been no
decrease in sales, margins or profits of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ or SPG's business
with Day Dream, Inc. Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor any Primary Shareholder has any
information indicating that Day Dream, Inc. intends to cease to do business with
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG or materially affect the amount of business that Day
Dream, Inc. is presently doing with either or both of them. The receivable from
Day Dream appearing on the Financial Statements (the "Day Dream Note") is, to
Primary Shareholder's knowledge, a valid obligation of Day Dream, and represents
no more than the ordinary risk of collectibility to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
ARTICLE 3
ADDITIONAL REPRESENTATIONS AND
WARRANTIES OF THE PRIMARY SHAREHOLDERS
Each Primary Shareholder represents and warrants to Purchaser as
follows:
3.1 OWNERSHIP OF PURCHASE SHARES. Such Primary Shareholder is now,
and (except as may be mutually agreed between such Primary Shareholder and
Purchaser) immediately prior to the Redemption such Primary Shareholder will be,
the owner of the number of shares of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Common Stock, set forth
opposite the name of such Primary Shareholders on Schedule 3.1. Each of the
------------
Purchase Shares to be sold by such Primary Shareholder to Purchaser is now, and
(except as may be mutually agreed in writing between such Primary Shareholder
and Purchaser) immediately prior to the Closing, will be owned by such Primary
Shareholder free and clear of any lien, pledge, charge, adverse claim, security
interest, encumbrance (including any imposed by law in any jurisdiction), title
retention agreement, option or right to purchase of any kind.
-23-
3.2 TITLE TO PURCHASE SHARES. Upon delivery of the Purchase Shares
being sold by such Primary Shareholder to Purchaser hereunder and payment and
delivery to such Primary Shareholder of the consideration specified herein,
Purchaser will acquire valid title thereto, free and clear of any lien, pledge,
charge, adverse claim, security interest, encumbrance (including any imposed by
law in any jurisdiction), title retention agreement, option or right to purchase
of any kind, other than (a) any restrictions imposed by applicable securities
laws, (b) any liens, pledges, charges, adverse claims, security interests,
encumbrances, title retention agreements, options, equities or rights to
purchase created by or through Purchaser or any of Purchaser's affiliates.
3.3 AUTHORIZATION. The execution and delivery of this Agreement and
all documents and instruments executed or to be executed by such Primary
Shareholder pursuant to this Agreement, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by any necessary
action on the part of such Primary Shareholder and such Primary Shareholder has
full right, power and legal capacity to execute and deliver this Agreement and
perform such Primary Shareholder's obligations hereunder. This Agreement and all
other documents and instruments executed or to be executed by such Primary
Shareholder pursuant to this Agreement have been, or will have been, at the time
of their respective executions and deliveries, duly executed and delivered by
such Primary Shareholder.
3.4 ENFORCEABILITY. This Agreement constitutes the valid and
legally binding obligation of such Primary Shareholder, enforceable in
accordance with its terms, except as such enforceability may be limited by
equitable principles and by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or similar laws relating to or affecting the rights of
creditors generally.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Primary Shareholders and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as follows:
4.1 ORGANIZATION AND STANDING OF PURCHASER. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
enter into this Agreement, to carry out the transactions contemplated hereby and
to perform its obligations hereunder.
4.2 AUTHORIZATION. The execution and delivery of this Agreement,
and all other agreements, documents and instruments executed or to be executed
by Purchaser pursuant to this Agreement (the "Purchaser Related Agreements"),
and the consummation of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary corporate and other action on the part of
Purchaser. This Agreement, and the Purchaser Related Agreements have been, or
will have been, at the time of their respective executions and deliveries, duly
executed and delivered by a duly authorized officer of Purchaser.
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4.3 ENFORCEABILITY. This Agreement constitutes, and each of the
Purchaser Related Agreements when duly executed and delivered will constitute,
the valid and legally binding obligations of Purchaser, enforceable in
accordance with its terms, except as such enforceability may be limited by
equitable principles and by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or similar laws relating to or affecting the rights of
creditors generally.
4.4 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS. The execution and
delivery of this Agreement, and the Purchaser Related Agreements, and the
consummation of the transactions contemplated hereby and thereby, will not
conflict with or result in any violation or default under any provision of the
Certificate of Incorporation or Bylaws of Purchaser, or of any material
mortgage, indenture, trust, lease, agreement or other instrument, permit,
concession, grant, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Purchaser or any of its properties,
the result of which (either individually or in the aggregate) will prevent or
materially delay the consummation of the transactions contemplated hereby.
4.5 GOVERNMENTAL AUTHORIZATIONS, CONSENTS. No consents, licenses,
approvals or authorizations of, and registrations or declarations with, any
governmental authority, bureau, agency or commission, or any third party, are
required to be obtained or made by Purchaser in connection with the execution,
delivery, performance, validity and enforceability of this Agreement or the
Purchaser Related Agreements or Purchaser's purchase of the Purchase Shares
pursuant hereto, other than a filing with the Federal Trade Commission and the
Department of Justice under the HSR Act.
4.6 LITIGATION. To the best of Purchaser's knowledge, no action,
suit, proceeding or governmental investigation is pending or threatened, at law
or in equity, which seeks to question, delay or prevent the consummation of all
or any portion of the transactions contemplated hereby.
4.7 SECURITIES ACT OF 1933. Purchaser is an "accredited investor"
as defined under Rule 501 of Regulation D under the Securities Act of 1933, as
amended (the "Securities Act"), and is acquiring the Purchase Shares solely for
the purpose of investment and not with a view to, or for sale in connection
with, any distribution thereof. Purchaser acknowledges that the Purchase Shares
are not registered under the Securities Act and that such Purchase Shares may
not be transferred or sold except pursuant to the registration provisions of the
Securities Act or pursuant to an applicable exemption therefrom and pursuant to
state securities laws and regulations, as applicable. Purchaser is also aware
that the certificate or certificates evidencing the Purchase Shares will bear a
legend or legends referring to the restrictions on the transferability thereof
and any other legends required by applicable law.
4.8 EMPLOYEE RELATIONS. Purchaser has no present intention to
layoff any significant number of the employees of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG or to
close any facility of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG.
4.9 BROKERS AND FINDERS. No person or entity is entitled to any
brokerage commission, finder's fee or like payment from Purchaser in connection
with the transactions contemplated in this Agreement.
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4.10 PURCHASER'S KNOWLEDGE. No officer or director of Purchaser has
actual knowledge, as of the date hereof, of any state of facts which, in the
judgment of Purchaser, will give rise to a Shareholder Indemnified Obligation
(as defined below), except for such matters as have been disclosed to Purchaser
by Shareholders, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or their representatives and are contained in
the Disclosure Schedules.
ARTICLE 5
COVENANTS OF ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
AND THE PRIMARY SHAREHOLDERS
5.1 DIRECTORS; SHAREHOLDER MEETING. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Primary
Shareholders shall take all actions necessary in accordance with applicable law
and the articles of incorporation and bylaws of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to present this
matter to the Board of Directors of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and upon approval of the
Board of Directors to convene a meeting of Shareholders to vote upon this
Agreement and the Exchange. At such meeting of the Board of Directors, the
Primary Shareholders who are Directors of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall vote in favor of
approval of this Agreement, the Redemption and the Exchange and shall recommend
such approval to the Board of Directors, and at such meeting of the Shareholders
the Primary Shareholders shall vote in favor of the approval of this Agreement,
the Redemption Agreement and the Exchange and will recommend that other
Shareholders do the same, and subject to applicable laws, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
the Primary Shareholders shall solicit from the Shareholders proxies in favor of
such adoption and approval and shall take all other action necessary or helpful
to secure a vote of the Shareholders in favor of this Agreement and the
Exchange.
5.2 CONDUCT OF BUSINESS. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Primary
Shareholders agree that, between the date of this Agreement and the Closing
Date, except as contemplated by this Agreement as set forth on Schedule 5.2,
------------
neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor SPG without Purchaser's written consent or except as
requested by Purchaser will:
(a) amend its articles of incorporation or bylaws;
(b) make any change in its practices, operations or policies
with respect to the selling goods or services, collecting accounts receivable
and/or paying accounts payable;
(c) conduct its business in a manner that departs from the
manner in which such business was being conducted prior to the date of this
Agreement;
(d) increase the rate or change the form of compensation
payable to any director, officer or employee of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG or
increase any employee benefits, except in the ordinary course of business in
accordance with past practice in an amount not to exceed 3% in any one case;
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(e) purchase or dispose of any properties or other assets,
except in the ordinary course of business;
(f) declare, set aside, pay or make any dividend or other
distribution in respect of any of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ or SPG's outstanding shares
of capital stock;
(g) issue or sell any shares of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ or SPG's
capital stock (whether or not from the treasury) or any other securities; grant
any options, convertibility rights, rights to subscribe for shares of capital
stock or securities convertible into or exchangeable for shares of capital
stock, warrants, calls or other agreements relating to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ or
SPG's capital stock; split up, combine, reclassify, redeem, repurchase or
otherwise reacquire any of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ or SPG's capital stock, except as
contemplated herein, or otherwise change its capitalization;
(h) except as required specifically by this Agreement or
generally by regulation or generally accepted accounting principles, maintain
its books of account other than in the usual, regular and ordinary manner in
accordance with generally accepted accounting principles and on a basis
consistent with prior periods, make any change in any of its books, accounting
methods or practices, or reclassify any assets or liabilities;
(i) cancel, terminate, renew or amend any Material Contract
or enter into any contract agreement, lease, license or commitment which would
be a Material Contract if such had existed on the date hereof;
(j) merge or consolidate with or into any other person or
entity or sell or dispose of all or substantially all of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ or
SPG's assets to any person or entity, or initiate or participate in negotiations
with any person or entity with respect to any of the foregoing;
(k) invest in certificates of deposit in any one bank if such
investment in the aggregate exceed $100,000 at any time;
(l) incur any direct or contingent liability for borrowed
money or guarantee the monetary obligations of any other person or entity, other
than indebtedness to be included in the Debt, or make any monetary investment
in, advance to or loan to any person or entity other than in the ordinary course
of business;
(m) fail to make maintenance expenditures in the amounts and
at the times required to operate its business in the ordinary course consistent
with past practice;
(n) implement or adopt any change in their tax methods,
principles or elections;
(o) enter into any transaction outside the ordinary course of
business; or
(p) agree or commit to do any of the foregoing.
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5.3 ACCESS. The Primary Shareholders and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ agree
that, between the date of this Agreement and the Closing Date, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and SPG shall, after receiving reasonable advance notice from Purchaser, give
Purchaser and its Associates (as defined in Section 6.1) reasonable access
(during normal business hours) to the books, records, contracts and officers of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG for the purpose of enabling such parties to further
investigate and inspect the business, operations and financial and legal affairs
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG.
5.4 NO SALE OR TRANSFER OF PURCHASE SHARES. Each Primary
Shareholder agrees that, between the date of this Agreement and the Closing
Date, such Primary Shareholder shall not, without Purchaser's prior written
consent, directly or indirectly, sell or otherwise transfer, or agree or commit
to transfer, any of the Purchase Shares or any interest in or right relating to
any of such Primary Shareholder's Purchase Shares.
5.5 NO SOLICITATION OR NEGOTIATION. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and the
Primary Shareholders agree that between the date of this Agreement and the
Closing Date they will not, nor will they permit SPG or any officer, director or
agent of any Shareholder, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG nor any of the affiliates of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, SPG, any Shareholder or any of their respective officers or
directors to (i) solicit any proposal or offer from any person or entity (other
than Purchaser) relating to the sale of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG or any material
portion of its assets, (ii) provide any non-public information to any person or
entity (other than Purchaser) for use in preparing any proposal or offer
relating to the sale of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG or any material portion of its
assets, or (iii) respond to or enter into any negotiations regarding any
proposal or offer from any person or entity (other than Purchaser).
5.6 FILINGS AND CONSENTS. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Primary
Shareholders shall use commercially reasonable efforts to do, and to cause SPG
to do, each of the following:
(a) as soon as possible after the date of this Agreement,
file with the appropriate governmental authority the notification form required
to be filed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ under the HSR Act with respect to this Agreement
and the transactions contemplated hereby, together with a request for early
termination of the applicable waiting period;
(b) after consultation with Purchaser, make any additional
filing required to be made by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ under the HSR Act and promptly
furnish to the appropriate governmental authority such additional information as
may be requested under the HSR Act;
(c) make or give each other filing or notice required to be
made or given pursuant to any applicable Legal Requirement, Material Contract or
Permit by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, SPG or any of the Shareholders in connection with the
execution and delivery of any of this Agreement or in connection with the
consummation or performance of any of the transactions contemplated hereby; and
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(d) obtain an agreement from each Creditor to terminate its
lien or liens and all lien filings upon payment of the amounts specified in such
Creditor's respective Payoff Letter and each consent required to be obtained
pursuant to any applicable Legal Requirement, Permit or Material Contract by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, SPG or any Shareholder in connection with the execution and
delivery of any of this Agreement or in connection with the consummation or
performance of the transactions contemplated hereby. Shareholders shall pay all
costs of obtaining such releases and consents.
5.7 ASSISTANCE REGARDING FINANCIAL STATEMENTS. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
the Primary Shareholders agree to, and to cause SPG to, render reasonable
assistance to Purchaser in order to permit Purchaser at its expense to prepare
such financial statements and consents, schedules, certificates and opinions as
may be required for inclusion by Purchaser or its ultimate parent corporation in
filings to be made under the HSR Act.
5.8 SIGNING OF AGENCY AGREEMENT. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Primary
Shareholders agree to use their best efforts to cause all Shareholders to
execute and deliver counterparts of the Agency Agreement.
5.9 RESALE OF SPG. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Primary Shareholders
agree to, and to cause SPG to, permit and use their best efforts to assist
Purchaser to sell SPG to its management or another interested party at an amount
approximately equal to that amount that Purchaser paid for SPG, which amount
shall include any payments of debt made by Purchaser on behalf of SPG at
Closing.
5.10 DAY DREAM LITIGATION. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ agrees to set aside a
reserve in the Financial Statements in the amount of $390,000 against possible
losses in connection with the pending litigation between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Day
Dream, Inc. (the "Day Dream Litigation"). ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Primary
Shareholders agree that such amount shall not constitute a limit on the amount
of liability that may result from the Day Dream Litigation, and no provision of
this Agreement shall be construed to prevent Purchaser from having
indemnification pursuant to Article 11 for such liability beyond such amount
reserved for on the Financial Statements.
5.11 DAY DREAM NOTE. The collectibility of the Day Dream Note shall
be further secured by the personal guarantee of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., in the
amount of $750,000, which shall be evidenced by a Guaranty Agreement mutually
acceptable to the Purchaser and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇., and which shall include
such standard provisions and negative covenants concerning fraudulent transfers
as is customary (the "Guaranty Agreement").
ARTICLE 6
COVENANTS OF PURCHASER
Purchaser agrees with the Primary Shareholders and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
that:
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6.1 CONFIDENTIALITY. Purchaser shall hold in strict confidence, and
cause its stockholders, affiliates, directors, officers, employees, agents,
attorneys, accountants, financing sources and representatives and those of its
affiliates ("Associates") to hold in strict confidence, all documents and
information obtained with respect to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, SPG and Shareholders
("Confidential Information"). Purchaser shall not permit any Confidential
Information to be improperly utilized or to be disclosed or conveyed to any
other person or entity other than its Associates in furtherance of this
Agreement. Without limiting the generality of the foregoing, and except as
required by law or as permitted by Section 7.3, (i) Purchaser shall not disclose
to any person or entity, and shall not permit any of its Associates to disclose
to any person or entity, the existence of this Agreement or any of the terms or
provisions hereof and (ii) Purchaser shall not contact any customers or
employees of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG, and Purchaser shall not permit any of its
Associates to contact any customers or employees of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG,
without the prior consent of an officer of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇. This Section 6.1
shall terminate if and when the Closing occurs in accordance with Article 1 of
this Agreement.
6.2 OFFICER AND DIRECTOR INDEMNIFICATION. Purchaser agrees to do,
or to cause ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to do, the following:
(a) Maintain and not amend or modify, except as required by
law, the provisions with respect to indemnification set forth in the respective
articles of incorporation and bylaws of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG on date of this
Agreement, for a period of two (2) years from the Closing Date in any manner
that would adversely affect the rights thereunder of individuals who at the
Closing Date were directors, officers, employees or agents of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or
SPG.
(b) The provisions of this Section 6.2 shall survive the
Closing and are intended to be for the benefit of, and shall be enforceable by,
each officer, director, employee and agent of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG described
in this Section 6.2 and his or her heirs, representatives and assigns.
(c) Nothing in this Section 6.2 shall prevent the merger of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG with or into another entity, the merger of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ into SPG or the consolidation of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG with another
entity, so long as the surviving or resulting entity is bound by the covenants
in this Section 6.2.
(d) Effective upon the Closing, each Primary Shareholder
releases ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG and their present and former officers,
directors, employees and agents from each and every Claim it may have in its
capacity as a security holder and/or employee of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG.
6.3 FILINGS AND CONSENTS. Purchaser shall use commercially
reasonable efforts to do each of the following:
(a) as soon as possible after the date of this Agreement,
file or cause its ultimate parent entity to file with the appropriate
governmental authority the notification form required to be
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filed by Purchaser or such ultimate parent entity under the HSR Act with respect
to this Agreement and the transactions contemplated hereby, together with a
request for early termination of the applicable waiting period;
(b) after consultation with the Primary Shareholders, make or
cause its ultimate parent entity to make any additional filing required to be
made by Purchaser or such ultimate parent entity under the HSR Act and promptly
furnishes to the appropriate governmental authority such additional information
as may be requested under the HSR Act;
(c) make or give each other filing or notice required to be
made or given pursuant to any applicable Legal Requirement by Purchaser in
connection with the execution and delivery of any of this Agreement or in
connection with the consummation or performance of any of the transactions
contemplated hereby; and
(d) obtain each consent required to be obtained by Purchaser
pursuant to any applicable Legal Requirement or material contract to which
Purchaser is a party or by which it is bound in connection with the execution
and delivery of any of this Agreement or in connection with the consummation or
performance of the transactions contemplated hereby.
6.4 DAY DREAM LITIGATION. In the event that the Day Dream
Litigation is resolved (either by final judgment or binding settlement between
the parties thereto) for an amount, including fees and expenses and net of any
recovery by Purchaser from third parties (including insurance proceeds), less
than the $390,000 reserved for on the Financial Statements in connection
therewith, then Purchaser promptly shall pay the amount of such difference up to
$390,000 to the Primary Shareholders, pro rata, in readily available funds.
ARTICLE 7
COVENANTS OF ALL PARTIES
The parties hereto agree that:
7.1 COMMERCIALLY REASONABLE EFFORTS; FURTHER ASSURANCES. Subject to
the terms and conditions of this Agreement, each party will use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under applicable Legal
Requirements to consummate the transactions contemplated by this Agreement. The
Primary Shareholders, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Purchaser each agree to (and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and the Primary Shareholders agree to cause SPG to) execute and deliver
such other documents, certificates, agreements and other writings and to take
such other actions as may be necessary or desirable in order to consummate or
implement expeditiously the transactions contemplated by this Agreement.
7.2 CERTAIN FILINGS, ETC. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the Primary
Shareholders and Purchaser shall cooperate with one another (a) in determining
whether any action by or in respect of, or filing
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with, any governmental body, agency, official or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (b) in taking such actions or
making any such filings, in furnishing such information as may be required in
connection therewith, including without limitation filings under the HSR Act,
and in seeking timely to obtain any such actions, consents, approvals or
waivers.
7.3 PUBLIC ANNOUNCEMENTS. The parties agree not to issue any press
release or make any public statement with respect to this Agreement or the
transactions contemplated hereby prior to the Closing without the prior consent
of Purchaser and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (which consent shall not be unreasonably
withheld or delayed), except to the extent that any party hereto is required by
law to make any such disclosure and such party notifies the other parties hereto
a reasonable time before making such disclosure of the nature and content of the
intended disclosure, and consults with such other parties regarding the nature
and content of such disclosure.
ARTICLE 8
CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE
The obligation of Purchaser to purchase the Purchase Shares, pay the
Purchase Price and discharge the Debt, and otherwise consummate the transactions
that are to be consummated at the Closing is subject to the satisfaction of, as
of the Closing Date, of the following conditions (any of which may be waived by
Purchaser in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Primary Shareholders set forth in
Articles 2 and 3 being true as of the date of this Agreement and being accurate
as of the Closing Date with the same effect as though made on and as of the
Closing Date, except to the extent that (a) any of such representations and
warranties refers specifically to a date other than the Closing Date, (b) the
accuracy of any of such representations and warranties is affected by any of the
transactions contemplated by this Agreement, and (c) as to the representations
and warranties in Article 2, a representation and warranty is modified in an
updated Disclosure Schedule as of the Closing Date (which updated Disclosure
Schedule shall be accurate as of the Closing Date) delivered to Purchaser at
least two business days prior to the Closing Date.
8.2 PERFORMANCE. The Primary Shareholders, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG
having performed, in all material respects, all obligations required by this
Agreement and the Redemption Agreement to be performed by the Primary
Shareholders, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG on or before the Closing Date including
without limitation the covenants set forth in Article 5.
8.3 CERTIFICATE. Purchaser having received from the Primary
Shareholders and officers of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG a certificate dated the
Closing Date confirming that the conditions in Sections 8.1, and 8.2 have been
met.
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8.4 PAYOFF LETTERS. Purchaser having received the Payoff Letters,
executed by the Chairman and CEO of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Chairman and CEO of
SPG and an authorized representative of each Creditor, setting forth the
estimated amounts as of the Closing Date of the principal, interest, prepayment
fees and penalties that will be due and payable by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG to
each of the Creditors holding Debt.
8.5 DEBT. The amount of Debt due to Creditors exclusive of
intercompany debt, including the current portion thereof, not being in excess of
$18,170,000 for ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and $1,645,000 for SPG (except in the event and
to the extent that such excess is attributable solely to accounts receivable due
from MacMillan Publishing, Inc. greater than that ordinarily experienced by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as evidenced by its current aging reports).
8.6 NO INJUNCTION. There not being in effect, at the Closing, any
injunction or other binding order of any court or other tribunal having
jurisdiction over Purchaser that prohibits the purchase of the Purchase Shares
by Purchaser.
8.7 NO MATERIAL ADVERSE EFFECT. There having been no Material
Adverse Effect on ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG since February 28, 1996.
8.8 HSR ACT. All applicable waiting periods under the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR Act"), relating
to the transactions contemplated hereby having expired or been terminated.
8.9 CONSENTS. All required consents, licenses, approvals, estoppel
certificates, releases of Encumbrances, acknowledgments of payment in full and
authorizations including those specified on Schedule 8.9 having been obtained
------------
and delivered to Purchaser.
8.10 REDEMPTION OF PREFERRED STOCK AND REDEEMED SHARES. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ having redeemed and reacquired all of its outstanding Preferred Stock
and the Redeemed Shares and there being no further obligations or liabilities of
Purchaser, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, SPG or the Primary Shareholders due the former
holders thereof.
8.11 SPG SHARES. All shares of capital stock of SPG not owned by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on the date hereof having been acquired by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
there being no further obligations or liabilities of Purchaser, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
SPG or the Primary Shareholders due the current or former holders thereof;
provided that, such condition will be waived by Purchaser upon ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
entering into an agreement to sell SPG acceptable to the Purchaser, in which
event the Closing Consideration shall be reduced by $239,316.
8.12 REAL ESTATE OPTION. Purchaser and the owner(s) of the parcels
of real property located in Indianapolis, Indiana at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ having entered into an option agreement pursuant to
which Purchaser shall have the option to purchase either of such parcels
(including the buildings and fixtures located thereon) at any time during the
current least terms or any renewals thereof on the terms and conditions set
forth in Exhibit C.
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8.13 LEGAL OPINIONS. Purchaser having received from counsel to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ an opinion in a form reasonably satisfactory to Purchaser.
8.14 RESIGNATIONS. Except as otherwise contemplated by Schedule 8.14
-------------
or provided by the express written consent of Purchaser, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG
having received the written resignation, effective as of the Closing Date, of
each director and officer of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG.
8.15 CERTIFICATE OF SECRETARY. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG having
delivered certificates, signed by the secretary of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG,
respectively, certifying (i) current copies, as amended, of the articles of
incorporation and bylaws of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG, and the resolutions of the
board of directors of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG authorizing this Agreement and the
transactions contemplated hereby.
8.16 CORPORATE APPROVAL. The Board of Directors of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
having approved this Agreement, the Redemption and the Exchange within ten days
of execution of this Agreement, and this Agreement and the Exchange having been
approved by the holders of not less than a majority of the shares of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Common Stock outstanding.
8.17 ESCROW AGREEMENT. Shareholders, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Purchaser and
the Escrow Agent (as defined in the Escrow Agreement) having executed and
delivered the Escrow Agreement.
8.18 EMPLOYMENT AGREEMENTS. Purchaser and the Primary Shareholders
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ having executed mutually agreeable employment agreements (the
"Employment Agreements") including, among other reasonable and customary terms,
an employment term of two years (with an option to extend by one year upon
satisfaction of certain conditions) and a covenant not to complete of one year.
8.19 COMPLETION OF DUE DILIGENCE. Purchaser having completed
customary due diligence review, including but not limited to review of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇'▇ and SPG's financial and operating records, assets and liabilities,
leases, permits, licenses, environmental reporting and status, contracts and
agreements, customer and supplier relationships, and continuity of key employees
after Closing and the results of such review shall be satisfactory to Purchaser
in its sole discretion.
8.20 CONTRACT WITH DAY DREAM, INC. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ contract with
Day Dream, Inc. having been amended to eliminate an obligation by ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ to pay rebates on amounts paid by Day Dream, Inc., to discount in any
way the amounts billed to Day Dream, Inc. or to otherwise give Day Dream, Inc.
any preferential treatment.
8.21 REPAYMENT OF SHAREHOLDER DEBT. Each Shareholder having paid or
otherwise satisfied the amount of any debt, account payable or other liability
owed by such Shareholder to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG.
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8.22 LEASE WITH U.S. BANCORP. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ equipment lease with
U.S. Bancorp, in the form of a Schedule to Master Lease Agreement No. 10699.002
dated December 13, 1995, to the extent pertaining to the Heidelberg 6-color
offset press, Serial No. 537635, shall be terminated or otherwise amended to the
satisfaction of Purchaser.
8.23 GUARANTY AGREEMENT. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. having executed and
delivered to the Purchaser the Guaranty Agreement in a form mutually acceptable
to the Purchaser and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as provided in Section 5.11.
8.24 NO DISCOVERY. Purchasers not being informed of or otherwise
discovered any matter or matters which would constitute a Purchaser Indemnified
Obligation or which would represent a Material Adverse Effect on ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and/or SPG.
8.25 DOCUMENTATION. All agreements, documents and instruments
incidental to the performance of the transactions contemplated by this Agreement
being in a form and substance reasonably satisfactory to Purchaser and its legal
counsel and Purchaser having received copies of all documents that it may have
reasonably requested in connection with such transactions.
8.26 ARTICLES OF EXCHANGE. The Articles of Exchange having been duly
executed and delivered by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in a form mutually acceptable to the
parties and filed with the Indiana Secretary of State.
8.27 ACCRUAL. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ having accrued an additional $700,000
on its books on account of the amount of Taxes of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG arising
out of or relating to the Redemption or otherwise to the discharge of the debt
owed to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ by the Shareholders.
ARTICLE 9
CONDITIONS TO OBLIGATION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ TO CLOSE
The obligation of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to effect the Exchange and otherwise
consummate the transactions that are to be consummated at the Closing is subject
to the satisfaction, as of the Closing Date, of the following conditions (any of
which may be waived on behalf of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ by the Primary Shareholders in
whole or in part):
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Purchaser set forth in Article 4 being accurate in all
material respects as of the date of this Agreement and as of the Closing, as
though made on and as of the Closing Date.
9.2 REPAYMENT OF DEBT. Purchaser having discharged the Debt of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG due to the Creditors, either by paying it or assuming
it, and having obtained releases of the Shareholders from any guaranties of any
such Debt assumed.
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9.3 PERFORMANCE. Purchaser having performed, in all material
respects, all obligations required by this Agreement to be performed by
Purchaser on or before the Closing Date.
9.4 CERTIFICATE. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ having received from a duly
authorized officer of Purchaser a certificate dated the Closing Date confirming,
to the best of such person's knowledge, that the conditions in Sections 9.1 and
9.2 have been met.
9.5 CORPORATE APPROVAL. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ having timely received the
approval of this Agreement and the Exchange by its Board of Directors and by the
holders of not less than a majority of the shares of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Common
Stock outstanding. No Shareholder holding an aggregate of greater than five
percent (5%) of the Purchase Shares having exercised or being entitled to
exercise Dissenter's Rights.
9.6 NO INJUNCTION. There not being in effect, at the Closing, any
injunction or other binding order of any court or other tribunal having
jurisdiction over any Shareholder, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG that prohibits the
sale of the Purchase Shares to Purchaser.
9.7 HSR ACT. All applicable waiting periods under the HSR Act
relating to the transactions contemplated hereby having expired or been
terminated.
9.8 LEGAL OPINION. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Primary Shareholders
having received from counsel to Purchaser an opinion in a form reasonably
satisfactory to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
9.9 EMPLOYMENT AGREEMENTS. The Employment Agreements having been
entered into by Purchaser and the Primary Shareholders.
9.10 ESCROW AGREEMENT. Purchaser and the Escrow Agent having executed
and delivered the Escrow Agreement.
9.11 NO DISCOVERY. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ not being informed of or otherwise
discovered any matter or matters which would constitute Shareholder Indemnified
Obligations which would represent a Material Adverse Effect on ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
9.12 DOCUMENTATION. All agreements, documents and instruments
incidental to the performance of the transactions contemplated by this
Agreement, being in a form and substance reasonably satisfactory to ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, the Primary Shareholders and their legal counsel and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and the Primary Shareholders having received copies of all documents that they
may have reasonably requested in connection with such transaction.
9.13 ARTICLES OF EXCHANGE. The Articles of Exchange having been duly
executed and delivered by Purchaser in a form mutually acceptable to the parties
and filed with the Indiana Secretary of State.
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ARTICLE 10
TERMINATION OF AGREEMENT
10.1 RIGHT TO TERMINATE AGREEMENT. This Agreement may be terminated
prior to the Closing:
(a) by the mutual agreement of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Purchaser;
(b) by Purchaser at any time after December 6, 1996, if any
condition set forth in Article 8 shall not have been satisfied or waived and
Purchaser is not in material breach of this Agreement; or
(c) by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ at any time after December 6, 1996, if any
condition set forth in Article 9 shall not have been satisfied or waived by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or the Primary Shareholders on behalf of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Primary Shareholders are not in material breach of this
Agreement.
(d) by Purchaser if the results of its due diligence review of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG are not satisfactory to it, in its sole discretion.
10.2 EFFECT OF TERMINATION. Upon the termination of this Agreement
pursuant to Section 10.1:
(a) Purchaser shall promptly cause to be returned to ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ or SPG (or destroy) all Confidential Information, including any copies
made by or supplied to Purchaser or any of Purchaser's Associates of any such
Confidential Information;
(b) In the event of termination under Section 10.1(c), Purchaser
shall pay reasonable and documented out-of-pocket costs and expenses of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ plus $50,000;
(c) In the event of termination under Section 10.1(a), 10.1(b) or
10.1(d), each party shall pay its own costs and expenses; and
(d) No party hereto shall have any obligation or liability to the
other parties hereto; provided, however that (i) the parties hereto shall remain
bound by the provisions of this Section 10.2 and Sections 6.1 and 7.3 and
Article 12 and (ii) no party shall be relieved of any obligation or other
liability arising from any material breach by such party of any provision of
this Agreement.
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ARTICLE 11
CERTAIN REMEDIES AND LIMITATIONS
11.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties made by Shareholders or Purchaser as to any fact
or condition existing on or before the Closing Date, in this Agreement, in any
Schedule or in any certificate delivered pursuant hereto, shall survive the
Closing for a period of three (3) years, except for those relating to Taxes
which shall survive for a period equal to the statute of limitations applicable
to any Claim arising in connection with such Taxes, provided that there shall
be no termination of any such representation or warranty as to which a Claim has
been asserted prior to the termination of any such survival period. All such
representations and warranties shall be unaffected by any investigation made by
or on behalf of Purchaser or Shareholders or by knowledge obtained as a result
thereof or otherwise. Except as otherwise expressly provided in this Agreement,
all covenants, agreements, undertakings and indemnities set forth in this
Agreement survive the Closing for a period of three (3) years, except for those
relating to Taxes which shall survive as provided above with respect to
representations and warranties; provided that there shall be no termination of
any such covenant, agreement, undertaking or indemnity as to which a Claim has
been asserted prior to the termination of any such survival period.
11.2 INDEMNIFICATION BY SHAREHOLDERS.
(a) Subject to the limitations and other provisions set forth herein
(including, without limitation, the provisions of Sections 11.3), each Primary
Shareholder will jointly and severally, or in the case of ▇▇▇▇▇▇, severally
defend, indemnify and hold harmless Purchaser, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, SPG, each of
their respective Affiliates (as defined below) and their respective lenders, and
all of their respective officers, directors, stockholders (other than Primary
Shareholders), agents, representatives, consultants and employees, and all of
their respective heirs, successors and permitted assigns (collectively, the
"Purchaser Indemnified Parties") from, against and in respect of the amount of
any and all liabilities, obligations, losses, damages, Claims, actions, liens
and deficiencies of any kind or nature ("Losses") which exist, or which are
imposed on, incurred by or asserted against any one or more of the Purchaser
Indemnified Parties based upon, resulting from or arising out of any of the
following (each, a "Purchaser Indemnified Obligation"):
(i) any breach or inaccuracy of any representation, warranty,
statement, certification, agreement or covenant made by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the
Primary Shareholders or any Shareholder in this Agreement, any Related
Documents, any Disclosure Schedule hereto or thereto, or in any other written
document,
(ii) any Claim, litigation or proceeding brought by any third-
party against ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG based upon, resulting from, arising out of
or concerning any event occurring, or fact or circumstance existing, prior to
the Closing,
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(iii) in an amount greater than $25,000, any Claim, litigation or
proceeding brought by The ▇▇▇▇▇▇▇ Company against Purchaser based upon,
resulting from, arising out of or concerning, either directly or
indirectly, the events of which the Primary Shareholders are aware
surrounding the letter of intent dated September 18, 1996, between ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, SPG and The ▇▇▇▇▇▇▇ Company.
(iv) the cost of remediating under Environmental Laws any of the
properties now or previously owned, leased, or contaminated by ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ or SPG if the materials requiring such remediation existed as of
the Closing,
(v) except as specifically provided otherwise in paragraphs (vii)
and (viii) below, the net after-tax amount of any Taxes for periods ending
on or before the Closing Date for which either ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG are
liable to the extent that (i) such Taxes are not reflected on the Financial
Statements and did not arise in the ordinary course of business after the
date thereof, (ii) such Taxes should have been but were not reflected in
any return filed by either ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG prior to the Closing,
(iii) such Taxes were required to be paid prior to the Closing and were not
so paid, or (iv) such Taxes result from the failure by either ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ or SPG prior to the Closing to comply with any legal requirements
relating to information reporting or withholding and payment over of taxes
with respect to payments made to third parties;
(vi) the amount by which any Accounts Receivable existing at the
Closing exceeds the reserve therefore on the 120 days after the Closing
provided that such uncollected Accounts Receivable are transferred to the
Primary Shareholders after payment by the Primary Shareholders to
Purchaser, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG of such uncollected amount;
(vii) the amount of any Taxes of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG arising out
of or relating to the Redemption or otherwise to the discharge of the debt
owed to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ by the Shareholders to the extent such amount of
Taxes exceeds $1,069,000, the amount reserved for such purpose and
reflected on the books of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ at Closing; or
(viii) the amount of any other Taxes of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG arising
out of the transactions contemplated by this Agreement including those
relating to the sale of SPG by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
For purposes of this provision, an "Affiliate" of a party is a company or entity
that controls, is controlled by, or is under common control with, that party.
In addition, and without limiting the generality of the foregoing, all of
the Shareholders (other than those Shareholders exercising their Dissenters'
Rights) will jointly and severally defend, indemnify and hold harmless the
Purchaser Indemnified Parties, to the extent of the Escrow Amount as provided in
the Escrow Agreement, for such Purchaser Indemnified Obligations.
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(b) The amount of all such Losses shall be determined after deduction
of the amount of any insurance proceeds recovered by Purchaser Indemnified
Parties, and shall include any cost or expenses (including, without limitation,
settlement costs and reasonable attorneys', accountants' and experts' fees and
court costs) incurred by Purchaser Indemnified Parties in connection with any of
the foregoing Purchaser Indemnified Obligations (including, without limitation,
any reasonable cost or expense incurred by Purchaser Indemnified Parties in
enforcing their rights pursuant to this Section 11.2).
(c) Claims for indemnification under any Purchaser Indemnified
Obligation may be made regardless of whether or not the matter giving rise to
such claim would constitute a breach of a representation and warranty made in
this Agreement, any Related Agreement, any Disclosure Schedule hereto and
thereto or any other written document. No Purchaser Indemnified Party shall be
required to make any claim or demand against any particular Primary Shareholder
or any other person prior to the making of any claim or demand for
indemnification or at any other time. The Primary Shareholders agree that,
notwithstanding any other provision of this Agreement, any Related Agreement or
applicable Legal Requirements, Purchaser Indemnified Parties may offset all
valid claims for indemnification under this Section 11.2 against any payment to
be made to or for the account of any Primary Shareholder pursuant to this
Agreement or any Related Document.
11.3 LIMITATIONS ON REPRESENTATIONS, WARRANTIES AND LIABILITIES OF PRIMARY
SHAREHOLDERS.
(a) Without limiting the effect of any other limitations set forth
herein, and notwithstanding any inaccuracy or inaccuracies in any representation
and warranty made herein, the Primary Shareholders shall not be liable to the
Purchaser Indemnified Parties, except under the Escrow Agreement as provided
therein, unless and until the aggregate amount of Purchaser Indemnified
Obligations exceeds $45,000. Notwithstanding the foregoing, the indemnification
remedies provided in this Agreement shall be non-exclusive, and no provision of
this Agreement shall be construed to limit the liability of the Primary
Shareholders to the Purchaser Indemnified Parties to the Escrow Amount or to
require Purchaser to resort to the Escrow Amount to satisfy any Losses in lieu
of pursuing its other remedies against ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or the Primary
Shareholders.
(b) No payment shall be required to be made for a Purchaser
Indemnified Obligation unless a Claim Notice (as defined below) with respect
thereto has been delivered to the Primary Shareholders on or prior to the third
anniversary of the Closing.
(c) The thresholds and limitations contained in this Section 11.3 and
on the indemnity obligations of Primary Shareholders shall not apply to any
adjustments in the Purchase Price pursuant to Article 1.
(d) The total amount of the payments that the Primary Shareholders
can be required to make hereunder shall be limited in the aggregate to a maximum
of $2,500,000, and the Primary Shareholders' cumulative liability shall in no
event exceed such amount.
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(e) The total amount of the payment that ▇▇▇▇▇▇ can be required to
make hereunder shall be limited to a maximum amount equal to his pro rata share
of the Purchase Price.
11.4 INDEMNIFICATION BY PURCHASER. Subject to the limitations and the
provisions set forth herein (including, without limitation, the provisions of
Section 11.5), Purchaser will indemnify and hold harmless the Primary
Shareholders and their respective affiliates, officers, directors, partners,
stockholders, agents, representatives, consultants and employees, and all of
their respective heirs, successors and permitted assigns (collectively, the
"Shareholder Indemnified Parties") from and against the net amount (determined
after deduction of the amount of any insurance proceeds recovered) any and all
Damages suffered or incurred by the Shareholder Indemnified Parties to the
extent resulting from: (a) the failure of any representation or warranty made by
Purchaser in Article 4 to have been true when made and at the Closing; (b) the
breach or nonfulfillment by Purchaser of any covenant or obligation of Purchaser
under this Agreement; (c) any Claim or any action arising out of or related to
the operation or ownership of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG arising out of the
operation of the business after the Closing (other than (i) the Purchaser
Indemnified Obligations and (ii) Damages for which a Purchaser Indemnified Party
is entitled to indemnification under this Article 11); and (e) the enforcement
of this Section 11.4 against Purchaser (the foregoing defined as "Shareholder
Indemnified Obligations").
11.5 LIMITATIONS ON LIABILITY OF PURCHASER.
(a) Without limiting the effect of any other limitations set forth
herein, Purchaser shall not be liable to the Shareholder Indemnified Parties
unless and until the amount of Shareholder Indemnified Obligations exceeds
$45,000.
(b) No payment shall be required to be made for Shareholder
Indemnified Obligations unless a Claim Notice with respect thereto has been
delivered to Purchaser on or prior to the third anniversary of the Closing.
(c) The total amount of the payments that Purchaser can be required
to make hereunder shall be limited in the aggregate to a maximum of $2,500,000,
and Purchaser's cumulative liability shall in no event exceed such amount.
11.6 INDEMNIFICATION CLAIMS.
(a) If either a Purchaser Indemnified Party, on the one hand, or a
Shareholder Indemnified Party, on the other hand, (the "Claimants") wishes to
assert an indemnification claim hereunder, the Claimant shall deliver to the
Primary Shareholders, if a Purchaser Indemnified Party, or to Purchaser, if the
Claimant is a Shareholder Indemnified Party, a written notice (a "Claim Notice")
setting forth:
(i) the matter giving rise to the claim for indemnification,
-41-
(ii) a detailed description of all of the facts and
circumstances known to Claimant giving rise to the claim, and
(iii) a detailed description of, and a reasonable estimate of
the total amount of, the monetary amounts actually incurred or expected to
be incurred for which indemnification is sought;
(b) Purchaser Indemnified Parties and Shareholder Indemnified Parties
are referred to herein as "Indemnified Parties," and the persons from whom
indemnification may be sought pursuant to this Section 11.6 are referred to as
the "Indemnifying Parties." Within twenty (20) days after receipt of any Claim
Notice, the Indemnifying Parties will (i) acknowledge in writing their
responsibility for all or part of such matter for which indemnification is
sought under this Article 11, and will either (x) pay or otherwise satisfy the
portion of such matter as to which responsibility is acknowledged, or (y) take
such other action as is reasonably satisfactory to the Indemnified Party to
provide reasonable security or other assurances for the performance of their
obligations hereunder, and/or (ii) give written notice to the Indemnified Party
of their intention to dispute or contest all or part of such responsibility.
Upon delivery of such notice of intention to contest, the parties will negotiate
in good faith to resolve as promptly as possible any dispute as to
responsibility for, or the amount of, any such matter.
11.7 DEFENSE OF THIRD PARTY ACTIONS. If either Purchaser, on the one
hand, or the Primary Shareholders, on the other hand (the "Indemnified Party")
receives notice or otherwise obtains knowledge of any Claim or any threatened
Claim that may give rise to an indemnification claim against any Primary
Shareholder, on the one hand, or Purchaser, on the other hand (the "Indemnifying
Party"), then the Indemnified Party shall promptly deliver to the Indemnifying
Party a written notice describing such Claim in reasonable detail. The untimely
delivery of such written notice by the Indemnified Party to the Indemnifying
Party shall relieve the Indemnifying Party of liability with respect to such
claim to the extent it has been prejudiced by lack of timely notice under this
Article 11 with respect to such Claim. The Indemnifying Party shall have the
right, at its option to assume the defense of any such Claim with its own
counsel, reasonably satisfactory to the Indemnified Party, but only if the
Indemnifying Party simultaneously agrees to indemnify persons and entities
claiming indemnity from the Indemnified Party fully and completely (whether or
not, in the case of any Primary Shareholder, there are sufficient funds in the
Escrow Amount available for such purpose) for such Claim. If the Indemnifying
Party elects to assume the defense of and indemnification for any such Claim,
then:
(a) notwithstanding anything to the contrary contained in this
Agreement, the Indemnifying Party shall not be required to pay or otherwise
indemnify the Indemnified Party against any attorneys' fees or other expenses
incurred on behalf of the Indemnified Party in connection with such matter
following the Indemnifying Party's election to assume the defense of such matter
so long as the Indemnifying Party continues to diligently conduct such defense;
(b) the Indemnified Party shall make available to the Indemnifying
Party all books, records and other documents and materials that are under the
direct or indirect control of the
-42-
Indemnified Party or any of the Indemnified Party's Associates and that the
Indemnifying Party considers necessary or desirable for the defense of such
matter at the expense of the Indemnifying Party;
(c) the Indemnified Party shall execute such documents and take such
other actions as the Indemnifying Party may reasonably request for the purpose
of facilitating the defense of, or any settlement, compromise or adjustment
relating to, such Claim (with the Indemnifying Party to reimburse Indemnified
Party for third-party, out-of-pocket expenses) and the Indemnified Party shall
not be required to take any such action or execute any document which imposes
any equitable or unindemnified liability remedy on any Indemnified Party or
would adversely affect the business or operations of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG;
(d) the Indemnified Party shall otherwise fully cooperate as
reasonably requested by the Indemnifying Party in the defense of such Claim
(with the Indemnifying Party to reimburse Indemnified Party for third-party,
out-of-pocket expenses); and
(e) the Indemnified Party shall not admit any liability with respect
to such Claim.
If the Indemnifying Party fails or refuses to assume the defense of and
indemnification for such Claim, then the Indemnified Party shall proceed
diligently to defend such Claim with the assistance of counsel; provided,
however, that the Indemnified Party shall not settle, adjust or compromise such
Claim, or admit any liability with respect to such Claim, without the prior
written consent of the Indemnifying Party, such consent not to be unreasonably
withheld or delayed; and provided further, that, in the event the Indemnifying
Party shall withhold consent, then the Indemnifying Party shall thereafter
reimburse Indemnified Party on a current basis as requested by Indemnified Party
for all costs and expenses of defense for which Indemnified Party are entitled
to indemnification; and provided however, that when indemnification by the
Indemnifying party is no longer required under this Section 11 by reason of any
of the limitations contained herein, the Indemnifying Party's consent to any
such settlement, adjustment or compromise shall no longer be required.
11.8 SUBROGATION. To the extent that the Indemnifying Party makes or is
required to make any indemnification payment to any Indemnified Party, the
Indemnifying Party shall be entitled to exercise, and shall be subrogated to,
any rights and remedies (including rights of indemnity, rights of contribution
and other rights of recovery) that the Indemnified Party or any of the
Indemnified Party affiliates may have against any other person (other than any
Purchaser Indemnified Party or Shareholder Indemnified Party) with respect to
any Damages, circumstances or matter to which such indemnification payment is
directly or indirectly related. The Indemnified Party shall permit the
Indemnifying Party to use the name of the Indemnified Party and the names of the
Indemnified Party's affiliates in any transaction or in any proceeding or other
matter involving any of such rights or remedies; and the Indemnified Party shall
take such actions as the Indemnifying Party may reasonably request for the
purpose of enabling the Indemnified Party to perfect or exercise the
Indemnifying Party's right of subrogation hereunder.
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11.9 EXCLUSIVITY. The right of each party hereto to assert
indemnification claims and receive indemnification payments pursuant to this
Article 11 shall be the sole and exclusive right and remedy exercisable by any
person or entity entitled to indemnification hereunder with respect to any
breach by the other party hereto of any representation or warranty.
11.10 RETENTION OF RECORDS. From and after the date of this Agreement,
Purchaser shall preserve, and shall cause ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG to preserve,
all books, records and other documents, materials and information relevant to
the representations, warranties and covenants set forth in this Agreement until
the later of three (3) years following the Closing Date or for such longer
period as the rights of the parties hereunder may exist. At all times after the
Closing Date, Purchaser, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and SPG shall give the Primary
Shareholders and their Associates reasonable access to such books, records and
other documents, materials and information of the Company relating to the
operation of the business of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG up to and including the
Closing Date.
ARTICLE 12
MISCELLANEOUS
12.1 MATERIALITY. For purposes of this Agreement, a contract, obligation,
liability, transaction, change, breach, encumbrance, proceeding or other matter
or event shall not be deemed "material" if the monetary amount involved is less
than $10,000. A "Material Adverse Effect" is any adverse effect on the
business, operations, assets or financial condition or results of a company
unless the effect either can reasonably be expected to result in less than a
$100,000 effect on the financial condition or results of operation of such
company or the effect is due to general changes in the economy or the high
impact color commercial printing business generally.
12.2 EXPENSES. The term "Shareholders' Expenses" shall mean: (i) all
costs and expenses of Corporate Development Associates, Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and SPG in connection with the negotiation of this Agreement and the
consummation of the transactions contemplated hereby that are allocated to the
Shareholders under the terms of this Agreement; (ii) all prepayment fees and
penalties to be paid by any of Purchaser, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or the Shareholders in
connection with the discharge of the Debt; (iii) all other costs and expenses
required to be borne by Shareholders under the terms of this Agreement including
the costs and expenses of Shareholders or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ incurred in acquiring
the SPG Common Stock not owned by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ at February 28, 1996; (iv) all
other fees and expenses of Shareholders incurred in connection with or on behalf
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or SPG and not previously paid or reimbursed by Shareholder;
in each case, only to the extent such costs, expenses, fees and/or penalties are
not accrued for or represented as a payable on the Financial Statements at
Closing. Shareholders and Purchaser shall pay their own respective fees and
expenses incidental to the preparation of this Agreement, the performance and
compliance with all agreements contained in this Agreement to be performed or
complied with by them and the consummation of the transactions contemplated
hereby, including the legal and accounting fees and expenses. Purchaser shall
be responsible for the fees and expenses associated with any Phase I
environmental assessment conducted in connection with this transaction.
-44-
12.3 NOTICES; ETC. All notices, instructions and other communications
given hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) via a reputable
nationwide overnight courier service, in each case to the address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered three business days after it is sent prepaid, or one business day
after it is sent via a reputable nationwide overnight courier service.
If to Purchaser, to:
Mail-Well, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Mail-Well, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Primary Shareholder, to:
the address of such Primary Shareholder set forth under the name of such
Primary Shareholder on Exhibit A to this Agreement,
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Johnson, Smith, Pence, Densborn, ▇▇▇▇▇▇ & Heath
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or, in each case, to such other address as may be specified in writing to the
other parties.
Any party may give any notice, instruction or communication in connection
with this Agreement using any other means (including personal delivery, telecopy
or ordinary mail), but no such notice, instruction or communication shall be
deemed to have been delivered unless and until
-45-
it is actually received by the party to whom it was sent. Any party may change
the address to which notices, instructions or communications are to be delivered
by giving the other parties to this Agreement notice thereof in the manner set
forth in this Section 12.3.
12.4 ASSIGNMENT. Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor any Primary Shareholder may
assign or otherwise transfer this Agreement or any of his rights hereunder to
any person or entity, without the prior written consent of Purchaser. Subject to
the foregoing, this Agreement shall inure to the benefit of and be binding upon
the Primary Shareholders and their successors and permitted assigns.
Notwithstanding the foregoing, this Agreement shall not be terminated by the
death or incapacity of any Primary Shareholder, and if, after the execution
hereof, any Primary Shareholder shall die or become incapacitated, this
Agreement shall be binding upon the successors and assigns of any Primary
Shareholder as if such death or incapacity had not occurred and regardless of
notice thereof. Except as expressly permitted by this Section 12.4, Purchaser
shall not voluntarily or by operation of law assign or otherwise transfer this
Agreement or any of its rights or obligations hereunder except to any of its
parents, subsidiaries or affiliates, without the prior written consent of the
Primary Shareholders and provided that any permitted assignment or transfer
shall not relieve Purchaser of any of its obligations hereunder. Purchaser may
assign its rights under this Agreement and under other closing documents without
the consent of the Primary Shareholders to any financial institution(s) or their
affiliates as required pursuant to any existing or future financing
arrangements. In addition, upon foreclosure or sale in lieu of foreclosure or
deed by or to any such financial institutions or their affiliates, the
warranties, representations, obligations, agreements and indemnities of the
Primary Shareholders in this Agreement and in other documents contemplated by
this Agreement will inure to the benefit of such financial institutions (or
their affiliates) or any such purchaser or grantee. Subject to the foregoing,
this Agreement shall inure to the benefit of Purchaser and its permitted
successors and assigns.
12.6 ENTIRE AGREEMENT; AMENDMENT; GOVERNING LAW; ETC. This Agreement
(together with the Exhibits and Schedules hereto) embody the entire agreement
and understanding among the parties hereto with respect to the subject matter
hereof. This Agreement may be amended, modified, waived, discharged or
terminated only by (and any consent hereunder shall be effective only if
contained in) an instrument in writing signed by the party against which
enforcement of such amendment, modification, waiver, discharge, termination or
consent is sought. This Agreement shall be construed in accordance with and
governed by the laws of the State of Colorado as it applies to contracts to be
performed entirely within the State of Colorado. No representation or warranty
(either express, implied or otherwise) is being made by any party with respect
to the subject matter hereof other than as expressly set forth herein.
12.6 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which is an original, but all of which shall constitute
one instrument.
12.7 THIRD PARTY RIGHTS. The parties do not intend to confer any benefit
hereunder on any person or entity other than the parties hereto, the Purchaser
Indemnified Parties and their respective successors in interest.
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12.8 EXHIBITS AND SCHEDULES. Each of the Exhibits and Schedules referred
to herein and attached hereto is an integral part of this Agreement and is
incorporated herein by this reference.
12.9 PRONOUNS. All pronouns and any variations thereof used in this
Agreement shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as appropriate.
12.10 AUTHORITY AND EXECUTION. Each person executing this Agreement on
behalf of a party hereto represents and warrants that he is duly and validly
authorized to do so on behalf of such party, with full right and authority to
execute this Agreement and to bind such party with respect to all of its
obligations hereunder.
12.11 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction, as to such jurisdiction, shall be
ineffective to the extent of such invalidity or unenforceability, without
rendering invalid or unenforceable the retraining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
12.12 TIME OF ESSENCE. Time is of the essence of this Agreement.
12.13 INTERPRETATION. Each party acknowledges that such party, either
directly or through such party's representatives, has participated in the
drafting of this Agreement, and any applicable rule of constructions that
ambiguities are to be resolved against the drafting party should not be applied
in connection with the construction or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to
be executed as of the date first above written.
PURCHASER
GRAPHIC ARTS CENTER, INC.
a Delaware corporation
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
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PRIMARY SHAREHOLDERS
-------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ COMMUNICATIONS
CORPORATION
BY: _______________________________________
NAME: _____________________________________
TITLE: ____________________________________
-48-
EXHIBIT A
Name of Stockholders Address # of Purchase Shares of Common Stock
-------------------- ------- ------------------------------------
-49-
EXHIBIT C
Real Estate Purchase Option. Purchaser shall have the option to purchase
either or both of the parcels of real estate (including the buildings and
fixtures thereon) currently owned by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Investment, Inc., located
at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ both in Indianapolis,
Indiana at any time during the current lease periods or any renewal period as
contained in said leases on the following terms and conditions:
(a) Notice of exercise of the purchase option shall be given by
Purchaser to the landlord at least three (3) months prior to any termination or
renewal option, subject to withdrawal as hereinafter provided.
(b) The real estate purchase price hereinafter called ("Real Estate
Purchase Price") to be paid by Purchaser for either or both parcels of real
estate shall be at the fair market value of the property, as agreed upon by the
parties, or in the event of their failure to agree, as determined by a neutral
appraisal conducted by a mutually agreeable professional appraiser of properties
of this type.
(c) Within thirty (30) days after receipt of the report of the neutral
appraiser who shall have furnished the parties with its determination of the
Fair Market Value, the Purchaser shall have the right to withdraw its notice of
exercise of option to purchase, in which event, said lease or leases shall
continue in full force and effect as though notice of exercise had never been
served; and this paragraph shall be of no further force or effect. If Tenant
elects to so withdraw, Tenant shall pay all appraisal fees connected with the
withdrawn exercise of option and reimburse landlord for all reasonable expenses.
(d) If the premises is destroyed by fire or other casualty, or
condemnation has occurred after Purchaser has exercised the option to purchase
the premises, but prior to the closing thereof, then Purchaser shall have the
right to rescind its notice of exercise, by notice to the landlord given within
thirty (30) days after such fire or other casualty or condemnation, and any
party shall bear its own expenses. The landlord shall pay the realty transfer
fee, if any, upon delivery of the deed to Purchaser. Landlord and Purchaser
shall apportion usual closing adjustments if any. Landlord and Purchaser's
obligation concerning Environmental Laws, shall be governed by the provisions of
this Agreement and shall survive Closing, as applicable.
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SCHEDULE 1
"Value Added"
February 29, 1996
YEAR TO
DATE ACTUAL
SALES $55,270,429.06
DISCOUNTS & ALLOWANCES (732,190.95)
--------------
NET SALES $54,536,238.11
PAPER PURCHASES 17,169,554.78
OTHER CHANGEABLE MATERIALS 3,970,014.82
SCRAPS SALES (808,075.34)
PURCHASE DISCOUNT'S EARNED (532,070.62)
PAPER USAGE VARIANCE (106,052.93)
INVENTORY CHANGE MATERIALS 207,629.31
--------------
DIRECT MATERIALS $19,901,000.02
JOB PRINTING 860,353.79
ART SERVICES 38,801.12
COMPOSITION SERVICES 59,290.52
BINDERY SERVICES 2,489,521.14
PREPRESS SERVICES 213,637.48
MAILING & LABELING 109,722.38
CHANGEABLE EXTERN DELIVERY 868,927.92
INTERCOMPANY PURCHASES 569,531.03
INVENTORY CHANGE - OS (19,902.53)
--------------
OUTSIDE SERVICES $ 5,189,882.85
==============
VALUE ADDED $29,447,355.24