SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) FEBRUARY 5, 1997
UNIFLEX, INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-6339 11-2008652
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
383 WEST JOHN STREET, HICKSVILLE, NEW YORK 11802
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (516) 932-2000
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to an Asset Purchase Agreement dated as of February 1, 1997
(the "Agreement"), by and among Uniflex, Inc., a Delaware corporation (the
"Registrant"), Merrick Packaging Specialists, Inc., a New York corporation (the
"Seller"), and Jeffrey Gold, Lawrence Gold and Steven Braverman, the
stockholders of the Seller, on February 5, 1997, the Registrant acquired
substantially all of the assets of the Seller (the "Assets") and assumed certain
of its liabilities as of February 1, 1997. The purchase price for the Assets was
approximately $2,370,000, payable in a combination of cash and promissory notes.
The consideration paid to the Seller was determined by negotiations among the
parties and was based on the value of the business of the Seller on an ongoing
basis.
The Seller is a distributor of high quality paper, paper laminate and
plastic shopping bags and boxes for the retail industry. The Registrant intends
to continue the business of the Seller. The Seller's revenues for the fiscal
year ended December 31, 1996 were approximately $3,600,000.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits.
2 Asset Purchase Agreement dated as of February 1, 1997, by and among
Uniflex, Inc., Merrick Packaging Specialists, Inc., Jeffrey Gold,
Lawrence Gold and Steven Braverman.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNIFLEX, INC.
Dated: February 12, 1997 By: /S/ ROBERT K. SEMEL
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Name: Robert K. Semel
Title: President
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EXHIBIT INDEX
Exhibit
NO.
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2 Asset Purchase Agreement dated as of February 1, 1997, by and among
Uniflex, Inc., Merrick Packaging Specialists, Inc., Jeffrey Gold,
Lawrence Gold and Steven Braverman.
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EXHIBIT 2
ASSET PURCHASE AGREEMENT
THIS AGREEMENT dated as of February 1, 1997, is by and among Uniflex,
Inc., a Delaware corporation ("Buyer"), Merrick Packaging Specialists, Inc. a
New York corporation ("Seller"), Jeffrey Gold, Lawrence Gold, and Steven
Braverman, the shareholders of Seller (the "Shareholders").
WITNESSETH:
WHEREAS, Seller is in the business of, among other things,
manufacturing and selling packaging materials; and
WHEREAS, Buyer desires to purchase, and Seller desires to sell,
substantially all of the assets of Seller on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, Buyer and Seller hereby agree as follows:
ARTICLE I. ASSETS TO BE PURCHASED
Section 1.1. DESCRIPTION OF ASSETS. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (as hereinafter defined),
Seller shall convey, sell, transfer, assign and deliver to Buyer, and Buyer
shall purchase from Seller, all right, title and interest of Seller at the
Closing in and to all of the assets, properties, rights (contractual or
otherwise) and business of Seller which are used in connection with the business
and operations of the Seller including, without limitation, those set forth
below:
(a) All machinery, equipment, tooling, parts, furniture, supplies, and
other tangible personal property used in conducting the business and operations
of the Seller (the "Personal Property") and including, without limitation, the
Personal Property listed on SCHEDULE 1.1(A)[1];
(b) All raw materials, component parts, work-in-process, finished
goods inventory and other inventory (the "Inventory");
(c) All franchises, licenses, permits, consents, authorizations,
approvals and certificates of any regulatory,
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1 Each reference in this Agreement to an Exhibit or Schedule shall mean
an Exhibit or Schedule attached to this Agreement and incorporated into this
Agreement by such reference.
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administrative or other governmental agency or body used in conducting the
business and operations of Seller (to the extent the same are transferable) (the
"Permits") including, without limitation, the Permits listed on SCHEDULE 1.1(C);
(d) All patents, inventions, trade secrets, processes, proprietary
rights, proprietary knowledge, know-how, computer software, trademarks, names,
service marks, trade names, copyrights, symbols, logos, franchises and permits
used in conducting the business and operations of the Seller, and all
applications therefor, registrations thereof and licenses, sublicenses or
agreements in respect thereof, which Seller owns or has the right to use or to
which Seller is a party and all filings, registrations or issuances of any of
the foregoing with or by any federal, state, local or foreign regulatory,
administrative or governmental office including, without limitation, the items
listed on SCHEDULE 1.1(D) (collectively, the "Proprietary Rights");
(e) All leases of equipment, vehicles or other tangible personal
property used in conducting the business and operations of Seller (the "Personal
Property Leases") including, without limitation, the Personal Property Leases
listed on SCHEDULE 1.1(E);
(f) All leases of real property used in conducting the business and
operations of Seller (the "Real Property Leases"), including, without
limitation, the Real Property Leases listed on SCHEDULE 1.1(F);
(g) All contracts, agreements, contract rights, license agreements,
franchise rights and agreements, policies, purchase and sales orders, quotations
and executory commitments, instruments, third party guaranties,
indemnifications, arrangements, and understandings, whether oral or written, to
which Seller is a party (whether or not legally bound thereby), and used in
conducting the business and operations of Seller (the "Contracts") including,
without limitation, the Contracts listed on SCHEDULE 1.1(G);
(h) All accounts and notes receivable, negotiable instruments, cash,
deposits, prepaid expenses and other miscellaneous assets of Seller including,
without limitation, the items listed on SCHEDULE 1.1(H);
(i) All causes of action, judgments, claims or demands of whatever
kind or description which Seller has or may have against any other person or
entity;
(j) All books of account, customer lists, credit and sales records,
files, papers and records used in conducting the business and operations of
Seller, provided, however, that Buyer shall provide Seller with reasonable
access to, and allow Seller to copy, such books and records;
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(k) All insurance policies pertaining to Seller's operations and all
rights and claims of Seller of every nature and description under or arising out
of such insurance policies which pertain to the business operations of Seller
and all prepayments with respect thereto; and
(l) All goodwill.
Notwithstanding the foregoing, there shall be excluded from the
assets, properties, rights, (contractual and otherwise) and business of Seller
to be conveyed, sold, transferred, assigned and delivered to Buyer under this
Agreement (i) all losses, carryovers and rights to receive refunds and credits
with respect to any and all taxes of Seller and other governmental charges
assessed against Seller of every nature and description incurred or accrued
prior to the Closing, including interest payable with respect thereto and (ii)
all corporate minute books, stock records, tax returns and supporting schedules
(all of which shall be subject to Buyer's right to inspect and copy). All of the
assets, properties, rights (contractual and otherwise) and business to be
conveyed, sold, transferred, assigned and delivered to Buyer pursuant to this
Section 1.1 are hereinafter collectively referred to as the "Property."
SECTION 1.2. NON-ASSIGNMENT OF CERTAIN PROPERTY. To the extent that
the assignment hereunder of any of the Contracts, the Real Property Leases and
Personal Property Leases shall require the consent of any other party (or in the
event that any of the same shall be non-assignable), neither this Agreement nor
any action taken pursuant to its provisions shall constitute an assignment or an
agreement to assign if such assignment or attempted assignment would constitute
a breach thereof or result in the loss or diminution thereof; provided, however,
that in each such case, Seller shall use its best efforts to obtain the consent
of such other party to an assignment to Buyer. If any such consent is not
obtained, Seller shall cooperate with Buyer in any reasonable arrangement
designed to provide for Buyer the benefits of any such Contract, Real Property
Lease or Personal Property Lease including, without limitation, enforcement, for
the account and benefit of Buyer, of any and all rights of Seller against any
other person with respect to any such Contract, Real Property Lease or Personal
Property Lease; provided, however, that Buyer shall use its best efforts to
obtain all requisite consents to the assignment of the Contracts set forth in
SCHEDULE 1.2 (the "Material Contracts") for the benefit of Buyer, and same shall
be a condition to the Closing, and that all expenses related consents or
notations of Material Contracts shall be borne by Seller.
ARTICLE II. NO ASSUMPTION OF OBLIGATIONS
SECTION 2.1. LIABILITIES NOT ASSUMED. Except with respect to the
liabilities of Seller set forth on SCHEDULE 2.1
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which Seller shall assume from and after the Closing, with the exception of
liabilities and obligations arising under the Contracts, the Real Property
Leases and the Personal Property Leases to the extent such liabilities and
obligations are first required to be performed after the Closing (the "Assumed
Liabilities"), Buyer shall not by execution and performance of this Agreement,
or otherwise, assume or otherwise be responsible for any liabilities or
obligation of any nature of Seller, or its operations, businesses or activities,
or claims of such liability or obligation, matured or unmatured, liquidated or
unliquidated, fixed or contingent, or known or unknown, whether arising out of
occurrences prior to, at or after the date hereof, other than accrued vacation
for employees of Seller, other than the Shareholders, subsequently hired by
Buyer in connection with the transactions contemplated by this Agreement. Except
as provided herein, Buyer specifically shall not assume any liabilities or
obligations of Seller to Seller's employees; provided, however, that Buyer shall
have the right to make such employment arrangements with those of Seller's
employees as Buyer determines is in its best interests in effectuating the
intent of this transaction.
ARTICLE III. PURCHASE PRICE
SECTION 3.1. CONSIDERATION. Upon the terms and subject to the
conditions set forth in this Agreement, in consideration for the Property and
the covenant not to compete set forth in Section 5.1 and in full payment
therefor, Buyer shall pay to Seller the following:
(a) Seven Hundred Eighty Thousand Dollars ($780,000) payable at the
Closing in immediately available funds by wire transfer, or by certified or bank
check.
(b) Six Hundred Thousand Dollars ($600,000) payable August 1, 1997
with interest at the rate of 6% per annum from the Closing. Such obligation
shall be evidenced by a promissory note in the form attached hereto as EXHIBIT
3.1(B).
(c) Six Hundred Thousand Dollars ($600,000) payable August 1, 1998
with interest at the rate of 7 1/2% per annum from tHE Closing. Such obligation
shall be evidenced by a promissory note in the form attached hereto as EXHIBIT
3.1(C).
(d) Three Hundred Ninety Thousand Dollars ($390,000) payable March 1,
1999 with interest at the rate of 7 1/2% per annUM from the Closing. Such
obligation shall be evidenced by a promissory note in the form attached hereto
as EXHIBIT 3.1(D).
SECTION 3.2. PURCHASE PRICE ALLOCATION. Seller and Buyer hereby agree
that the aggregate purchase price for the Property shall be allocated for
purposes of this Agreement and for
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federal, state and local tax purposes as set forth on EXHIBIT 3.2 (the
"Allocation Certificate"). Buyer and Seller shall file all federal, state, local
and foreign tax returns, including Internal Revenue Form 8594, in accordance
with the allocation set forth in such Allocation Certificate.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Buyer represents and warrants to Seller and the
Shareholders that:
(a) CORPORATE EXISTENCE. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
(b) AUTHORIZATION; VALIDITY. Buyer has all requisite corporate power
and authority to enter into this Agreement, perform its obligations hereunder
and to consummate the transactions contemplated hereby. All necessary corporate
action has been taken by Buyer with respect to the execution, delivery and
performance by Buyer of this Agreement and the consummation of the transaction
contemplated hereby. Assuming the due execution and delivery of this Agreement
by Seller, this Agreement is a legal, valid and binding obligation of Buyer,
enforceable in accordance with its terms.
(c) LITIGATION. There is no claim, litigation, action, suit,
proceeding, investigation or inquiry, administrative or judicial, pending or, to
the best knowledge of Buyer, threatened against Buyer, at law or in equity,
before any federal, state or local court or regulatory agency, or other
governmental authority, which might have an adverse effect on Buyer's ability to
perform any of its obligations under this Agreement or upon the consummation of
the transactions contemplated by this Agreement.
(d) NO BREACH OF STATUTE OR CONTRACT. Neither the execution and
delivery of this Agreement nor the consummation by Buyer of the transactions
contemplated hereby nor compliance by Buyer with any of the provisions hereof
will violate or cause a default under any statute (domestic or foreign),
judgment, order, writ, decree, rule or regulation of any court or governmental
authority applicable to Buyer or any of its material properties; breach or
conflict with any of the terms, provisions or conditions of the Articles of
Incorporation, as amended, or By-laws of Buyer; or violate, conflict with or
breach any agreement, contract, mortgage, instrument, indenture or license to
which Buyer is party or by which Buyer is or may be bound, or constitute a
default (in and of itself or with the giving of notice, passage of time or both)
thereunder, or result in the creation or imposition of any encumbrance upon, or
give to any other party or parties, any claim, interest or right, including
rights of termination or cancellation in, or with respect to any of Buyer's
properties.
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SECTION 4.2. Seller and the Shareholders, jointly and severally,
represent and warrant to Buyer that:
(a) CORPORATE EXISTENCE. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York
and has the corporate power to own, operate or lease the Property and to carry
on its business as now being conducted. As a result of the business conducted by
the Seller or the character or location of the Property, Seller is duly
qualified to do business and in good standing in those jurisdictions listed on
SCHEDULE 4.2(A), which are the only jurisdictions where the nature of the
business conducted by the Seller or the character or location of the Property
requires such qualification, except where the failure to be so qualified would
not in the aggregate have a material adverse effect on the business of the
Seller or on the Property.
(b) AUTHORIZATION; VALIDITY. Seller has all requisite corporate power
and authority to enter into this Agreement, perform its obligations hereunder
and to consummate the transactions contemplated hereby without the approval of
any third party except as set forth on SCHEDULE 4.2(B). All necessary corporate
action has been taken by Seller with respect to the execution, delivery and
performance by Seller of this Agreement and the consummation of the transactions
contemplated hereby. Assuming the due execution and delivery of this Agreement
by Buyer, this Agreement is a legal, valid and binding obligation of Seller,
enforceable in accordance with its terms.
(c) NO BREACH OF STATUTE OR CONTRACT. Neither the execution and
delivery of this Agreement nor the consummation by Seller of the transactions
contemplated hereby nor compliance by Seller with any of the provisions hereof
will violate or cause a default under any statute (domestic or foreign),
judgment, order, writ, decree, rule or regulation of any court or governmental
authority applicable to Seller or any of its properties; breach or conflict with
any of the terms, provisions or conditions of the Certificate of Incorporation,
as amended, or By-Laws, as amended, of Seller; or violate, conflict with or
breach any material agreement, contract, mortgage, instrument, indenture or
license to which Seller is a party or by which Seller is or may be bound with
respect to the Property or its business, or constitute a default (in and of
itself or with the giving of notice, passage of time or both) thereunder, or
result in the creation or imposition of any encumbrance upon, or give to any
other party or parties any claim, interest or right, including rights of
termination or cancellation in, or with respect to the Property.
(d) SUBSIDIARIES. Seller has no subsidiaries, or equity investments in
any other corporation, association, partnership, joint venture or other entity,
including any which conducts or carries on the business of the Seller.
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(e) FINANCIAL STATEMENTS. (i) The following financial statements of
Seller, which have been furnished previously to Buyer by Seller and initialed
for identification by officers of Seller and Buyer and are attached hereto as
EXHIBIT A are true, correct and complete, have been prepared from and are in
accordance with the books and records of Seller applied on a consistent basis
throughout the periods involved and fairly present the financial condition of
the Seller, as at the dates stated and the results of operations of the Seller
for the periods then ended: the balance sheet and income statement of Seller as
at and for the year ended December 31, 1996 (the "Financial Statements").
(ii) The aggregate of the loans of the Shareholders to Seller
shall be reduced by an amount (the "Reduction") so that as of January
31, 1997 Seller shall have a net worth of at least One Dollar ($1.00)
and the Reduction shall have been contributed to Seller as an
additional capital.
(iii) Attached hereto as EXHIBIT B is the trial balance sheet of
Seller as of January 31, 1997 (the "Trial Balance Sheet") which is
true, correct and complete, has been prepared from and is in
accordance with the books and records of Seller applied on a
consistent basis and fairly presents the financial condition of the
Seller, as at January 31, 1997 in all material respects subject to the
Reduction. In determining whether any change in the Trial Balance
Sheet requires an adjustment in the purchase price, the provision of
paragraph (e)(ii) above shall apply, i.e., the aggregate of the loans
of the Shareholders shall be reduced by the amount (if any) needed to
produce a net worth of at least One Dollar ($1.00).
(f) ABSENCE OF CERTAIN CHANGES IN EVENTS. Except as set forth on
SCHEDULE 4.2(F), there has not been since December 31, 1996 with respect to the
Seller:
(i) Any material adverse change in its business operations (as
now conducted or as presently proposed to be conducted), assets,
properties or rights, prospects or condition (financial or otherwise),
or combination thereof which reasonably could be expected to result in
any such material adverse change (a "Material Adverse Effect");
(ii) Any increase in amounts payable by Seller to or for the
benefit of, or committed to be paid by Seller to or for the benefit
of, any officer, consultant, agent or employee of the Seller, in any
capacity, or in any benefits granted under any bonus, stock, option,
profit sharing, pension, retirement, deferred compensation,
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insurance, or other direct or indirect benefit plan with respect to
any such person;
(iii) Any transaction entered into or carried out other than in
the ordinary and usual course of its business;
(iv) Any material change made in the methods of doing business or
in the accounting principles or practices or the method of application
of such principles or practices;
(v) Any mortgage, pledge, lien, security interest, hypothecation,
charge or other encumbrance imposed or agreed to be imposed on or with
respect to the Property which will not be discharged prior to the
Closing except for financing statements filed by personal property
lessors as a matter of notification only;
(vi) Any sale, lease or other disposition of, or any agreement to
sell, lease or otherwise dispose of any of its properties or assets in
excess of $5,000;
(vii) Any purchase of or any agreement to purchase capital assets
or any lease or any agreement to lease, as lessee, any capital assets
in excess of $5,000; or (viii) Any modification, waiver, change,
amendment, release, rescission or termination of, or accord and
satisfaction with respect to any material term, condition or provision
of any contract, agreement, license or other instrument to which
Seller is a party, other than any satisfaction by performance in
accordance with the terms thereof in the usual and ordinary course of
its business.
(g) LIABILITIES. Except as set forth on SCHEDULE 4.2(G), Seller has no
liability or obligation of any nature (whether liquidated, unliquidated,
accrued, absolute, contingent or otherwise and whether due or to become due) in
respect of the Seller except:
(i) those set forth or reflected in the December 31, 1996 balance
sheet which have not been paid or discharged since the date thereof;
(ii) those arising under agreements or other commitments
expressly identified in any schedule hereto including, but not limited
to, the Personal Property Leases, the Real Property Leases and the
Contracts; and
(iii) current liabilities arising in the ordinary and usual
course of the Seller's business subsequent to
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December 31, 1996, which are accurately reflected on its books and
records in a manner consistent with past practice.
(h) TAXES.
(i) For purposes of this Agreement, (i) the term "Taxes" shall
mean all taxes, charges, fees, levies or other assessments, including,
without limitation, income, gross receipts, excise, property, sales,
license, payroll and franchise taxes, imposed by the United States, or
any state, local or foreign government or subdivision or agency
thereof whether computed on a unitary, combined or any other basis;
and such term shall include any interest and penalties or additions to
tax; and (ii) the term "Tax Return" shall mean any report, return or
other information required to be filed with, supplied to or otherwise
made available to a taxing authority in connection with Taxes.
(ii) Seller has (i) duly filed with the appropriate taxing
authorities all Tax Returns required to be filed by or with respect to
Seller or properly on extension and all such duly filed Tax Returns
are true, correct and complete in all material respects, and (ii) paid
in full or made adequate provisions for on its Financial Statements
all Taxes shown to be due on such Tax Returns. There are no liens for
Taxes upon the assets of Seller except for statutory liens for current
Taxes not yet due and payable or which may thereafter be paid without
penalty or are being contested in good faith. Except as set forth on
SCHEDULE 4.2(H), Seller has not received any notice of audit, is, to
its knowledge, undergoing any audit of its Tax Returns, or has
received any notice of deficiency or assessment from any taxing
authority with respect to liability for Taxes of Seller which has not
been fully paid or finally settled. There have been no waivers of
statutes of limitations by Seller with respect to any Tax Returns
which relate to Seller. Seller has not filed a request with the
Internal Revenue Service for changes in accounting methods within the
last two years which change would effect the accounting for tax
purposes, directly or indirectly, of Seller. Seller has delivered to
Buyer complete and accurate copies of the federal, state and local tax
returns of Seller with all schedules for the years ended December 31,
1994 and December 31, 1995;
(iii) Without limiting the foregoing, (A) the books and records
of Seller include adequate provision (in accordance with generally
accepted accounting principles) for all taxes, assessments, fees,
penalties and governmental charges which have been or may, in the
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future, be assessed against Seller for all periods ending on or prior
to the Closing, and (B) Seller is not on the date hereof, and will not
be at the date of the Closing, liable for taxes, assessments, fees or
governmental charges for which Seller has not made adequate provision
on its books and records.
(i) PROPRIETARY RIGHTS. SCHEDULE 1.1(D) sets forth all patents,
inventions, trade secrets, processes, proprietary rights, proprietary knowledge,
know-how, computer software, trademarks, names, service marks, trade names,
copyrights, symbols, logos, franchises and permits used in conducting the
business and operations of the Seller and all applications therefor,
registrations thereof and licenses, sublicenses or agreements in respect thereof
which Seller owns or has the right to use or to which Seller is a party and all
filings, registrations or issuances of any of the foregoing with or by any
federal, state, local or foreign regulatory, administrative or governmental
office or offices. Except as set forth on SCHEDULE 4.2(I), Seller is the sole
and exclusive owner of all right, title and interest in and to all Proprietary
Rights free and clear of all liens, claims, charges, equities, rights of use,
encumbrances and restrictions whatsoever. To the best knowledge of Seller, the
business of the Seller as conducted by it prior to the Closing, and the sale by
Seller and ownership by Buyer of any of the Property was not, is not and will
not be in contravention of any patent, trademark, copyright or other proprietary
right of any third party.
(j) INSURANCE. SCHEDULE 4.2(J) lists all policies of life, casualty,
liability and other forms of insurance owned or held by Seller. To the best
knowledge of Seller, all such policies are currently in full force and effect.
Seller has not received any notice from any such insurer with respect to the
cancellation of any such insurance. All premiums due and payable on such
policies have been paid. Seller is not a co-insurer under any term of any
insurance policy. Seller will keep such policies duly in force through the
Closing and shall assign same to the Buyer at Closing.
(k) LITIGATION. Except as set forth on SCHEDULE 4.2(K), there are no
claims, actions, suits or proceedings pending or, to the best knowledge of
Seller, threatened against or affecting Seller (or any officer or director of
Seller in connection with the Seller's business or affairs), before any federal,
state, local or foreign court or other governmental body. Seller is not subject
to or in default with respect to any judgment, order, writ, injunction or decree
or any governmental restriction applicable to the Seller, which is reasonably
likely to have a Material Adverse Effect.
(l) COMPLIANCE WITH LAWS. Seller is in compliance in all material
respects with all laws, ordinances, regulations and orders applicable to the
business and operations of the Seller and the
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Property and has no notice or knowledge of any material violations, whether
actual, claimed or alleged, thereof. In connection with conducting the business,
Seller has complied in all material respects with, all federal, state and local
laws, ordinances, rules and regulations pertaining to environmental matters
including, without limitation, solid waste disposal, toxic substances, hazardous
substances, hazardous materials, hazardous waste, toxic chemical, pollutants,
contaminants and air or water pollution and to the storage, use, handling,
transportation, discharge, and disposal (including spills and leaks) of gaseous,
liquid, semi-solid or solid materials. Except as set forth in SCHEDULE 4.2(1)
there has been no on-site disposal or discharge of chemicals, oil or solid
wastes on any property owned, leased or used by Seller and Seller has no
knowledge or reason to know of any such disposal or discharge during the period
prior to its ownership of the Property. SCHEDULE 1.1(C) lists all material
franchises, licenses, permits, consents, authorizations, approvals and
certificates of any regulatory, administrative or other governmental agency or
body used in conducting the business and operations of the Seller. Each of the
Permits is currently valid and in full force and effect and the Permits
constitute all franchises, licenses, permits, consents, authorization,
approvals, and certificates of any regulatory, administrative or other
governmental agency or body necessary to the conduct of the business of the
Seller. Seller is not in materials violation of any the Permits. To the best
knowledge of Seller, there is no pending or threatened proceeding which could
result in the relocation or cancellation of, or inability of Seller to renew,
any Permit. Set forth in SCHEDULE 4.2(L) is a list of all third party,
governmental and administrative consents required to be obtained as a result of
the transactions contemplated by the Agreement in order for the Buyer to operate
the business of the Seller immediately after the Closing on substantially the
same basis as the Seller operated its business prior to the Closing.
(m) BROKERS. No banker, broker or finder is entitled to any brokerage
or finder's fee or other commission in respect thereof based in any way on
agreements, arrangements or understandings made by or on behalf of Seller or of
any affiliate of Seller relating to the transactions contemplated hereby.
(n) EMPLOYEE BENEFIT PLANS.
(i) Set forth in SCHEDULE 4.2(N) is a true, accurate and complete
list of all pension, retirement, profit-sharing, deferred compensation, bonus,
stock option or other incentive plan, or other employee benefit program,
arrangement, agreement or understanding, or medical, vision, dental or other
health plan, or life insurance or disability plan, or any other employee benefit
plan, including as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (whether or not any such employee
benefit plans are otherwise
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exempt from the provisions of ERISA, whether or not formal or informal, written
or oral, and whether or not legally binding), adopted, established, maintained
or contributed to by Seller or under which it would otherwise be a party or have
liability and under which employees or former employees (whether or not retired
employees) of the Seller (or their beneficiaries) are eligible to participate or
derive a benefit (collectively, the "Employee Benefit Plans"). There shall be
included within the meaning of Seller, for this purpose and for the purpose of
the representations in this Section 4.2(n), all "affiliates," whether or not
incorporated, within the meaning of Section 407(d)(7) of ERISA.
(ii) Full payment has been made of all amounts which Seller is
required, under applicable law or under any Employee Benefit Plan or any
agreement relating to any Employee Benefit Plan to which it is a party, to have
paid as contributions to or benefits under any Employee Benefit Plan as of the
last day of the most recent fiscal year of such Employee Benefit Plan ended
prior to the date hereof. Seller has made adequate provision in accordance with
generally accepted accounting principles for liabilities to meet current
contributions or benefit payment.
(iii) With respect to any of Seller's employee welfare plans,
whether or not such welfare plans as defined in Section 3(1) are ERISA plans,
there has been timely compliance in all material respects with all requirements
imposed thereunder, as and when applicable to such plans, so that Seller has no
(or will not incur any) loss, assessment, penalty, loss of federal income tax
deduction or other sanction, arising on account of or in respect of any failure
to comply with any COBRA benefit continuation requirement, which is capable of
being assessed or asserted directly or indirectly against Seller or against
Buyer or any other member of Buyer's corporate control group, with respect to
any such plan.
(o) LABOR MATTERS. (i) No collective bargaining agreement is
applicable to any employees of Seller. There are not any disputes between Seller
and any such employees that could reasonably be expected to materially adversely
affect the conduct of its business or any unresolved labor union grievances or
unfair labor practice or labor arbitration proceedings pending, or to the
knowledge of Seller, threatened, relating to the business of Seller. To the
knowledge of Seller, there are not any organizational efforts presently being
made or threatened involving any of such employees. Except as set forth in
SCHEDULE 4.2(O) hereto, Seller has not received notice of any claim that Seller
has failed to comply with any laws relating to employment, including any
provisions thereof relating to wages, hours, collective bargaining, the payment
of social security and other payroll or similar taxes, equal employment
opportunity, employment discrimi- nation or harassment and employment safety, or
that Seller is liable for any arrears of wages or any taxes or penalties for
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failure to comply with any of the foregoing. Seller has complied in all material
respects with all applicable laws affecting employment and employment practices,
terms and conditions of employment and wages and hours with respect to its
operation of the Seller. Except as set forth on SCHEDULE 4.2(O), there has not
been since January 1, 1996 and there is no labor strike, material dispute,
slowdown or stoppage pending or, to the best knowledge of Seller, threatened
against or affecting Seller.
(ii) There are no proceedings pending or, to the knowl- edge of the
Seller, threatened before the National Labor Relations Board with respect to any
employees of Seller. Except as set forth in SCHEDULE 4.2(O) hereto, there are no
discrimination or harassment charges (relating to sex, age, religion, race,
national origin, ethnicity, handicap or veteran status) pending before any
federal or state agency or authority against Seller. There are no threats of
strikes, work stoppages or demands for collective bargaining by any union or
labor organization against or including Seller, no grievances, disputes or
controversies with any union or any other organization of the employees of
Seller, and no pending or threatened arbitration proceedings involving an
employment grievance, dispute or controversy.
(p) TITLE TO PROPERTIES. Except as set forth in SCHEDULE 4.2(P), and
except with respect to personal property leased pursuant to the Personal
Property Leases, Seller has marketable title to the Property. Except as set
forth on SCHEDULE 4.2(P), all such properties are held free and clear of all
mortgages, pledges, liens, security interests, encumbrances and restrictions of
any nature whatsoever. To the best of Seller's knowledge, Seller has furnished
or made available to Buyer, copies of all engineering, geologic and
environmental reports prepared by or for Seller with respect to the real
property owned, leased or used by the Seller
Except as set forth on SCHEDULE 4.2(P), no financing statement under
the Uniform Commercial Code or similar law naming the seller as debtor has been
filed in any jurisdiction in respect of the Property, and Seller is not a party
to or bound under any agreement or legal obligation authorizing any party to
file any such financing statement.
All plants, machinery and equipment owned or used by Seller in the
operation of its business are being purchased by Buyer in "as is" and "where is"
condition and Seller makes no warranties, express or implied, of merchantability
or fitness for particular purpose except that Seller represents that all plants,
machinery and equipment which are material to the business, operations or
condition (financial or otherwise) of Seller are in good operating condition and
repair (ordinary wear and tear excepted) and are adequate and suitable for the
purpose for which they are used.
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To the best of Seller's knowledge, SCHEDULE 1.1(A) contains a complete
and accurate list of all machinery, equipment, tooling, parts, furniture,
supplies and other tangible personal property owned or used by Seller including,
without limitation, the equipment capitalized for financial statement reporting
purposes on the December 31, 1996 balance sheet.
(q) CONTRACTS AND COMMITMENTS. SCHEDULES 1.1(E) and 1.1(F) list all
personal property leases, contracts, agreements, contract rights, license
agreements, franchise rights and agreements, policies, purchase and sales
orders, quotations and executory commitments, instruments, third party
guaranties, indemnifications, arrangements, obligations and understandings,
whether oral or written, to which Seller is a party (whether or not legally
bound thereby) and used in conducting its business, other than purchase and sale
orders, quotations and executory commitments incurred in the ordinary course of
its business which are currently in effect and where the payments or obligations
thereunder do not exceed $25,000 in the aggregate. All of the Personal Property
Leases and the Contracts are valid and binding, in full force and effect and
enforceable in accordance with their respective provisions. Seller has not
assigned, mortgaged, pledged, encumbered, or otherwise hypothecated any of its
right, title or interest under the Personal Property Leases or the Contracts.
Neither Seller nor, to the best knowledge of Seller, any other party thereto is
in material violation of, in default in respect or nor has there occurred an
event or condition which, with the passage of time or giving of notice (or
both), would constitute a material violation or a default of any Personal
Property Lease or Contract. No notice has been received by Seller claiming any
such default by Seller or indicating the desire or intention of any other party
thereto to amend, modify, rescind or terminate the same.
(r) ACCOUNTS RECEIVABLE. SCHEDULE 1.1(G) lists all of the accounts and
notes receivable, investments and prepaid expenses of Seller set forth on the
December 31, 1996 balance sheet. All such accounts and notes receivable and any
accounts and notes receivable arising between the date hereof and the Closing
are or will be, to the extent not collected between the date hereof and Closing,
subsisting; arose or will arise in the ordinary and usual course of its
business; and except for the reserves set forth in the December 31, 1996 balance
sheet and reserves established thereafter in accordance with Seller's prior
practice, credit experience and generally accepted accounting principles
consistently applied, are not and will not be subject to any counterclaim,
set-off or defense and are not and will not be subject to any lien, charge or
encumbrance of any nature. There has not been any material adverse change in the
collectability of the accounts or notes receivable of the Seller since December
31, 1996.
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(s) INVENTORIES. Except as set forth on SCHEDULE 4.2(S), the Inventory
reflected on the December 31, 1996 balance sheet has been determined in
accordance with generally accepted accounting principles applied on a basis
consistent with past practice, has been valued for purposes of the December 31,
1996 balance sheet in accordance with the Seller's normal inventory valuation
policy of stating inventory at the lower of cost (on a first-in, first-out
(FIFO) or market. Since the date of the December 31, 1996 balance sheet, there
have been no changes in the Inventory except changes in the ordinary course of
business of the Seller. Except as set forth on SCHEDULE 4.2(S), the Inventory is
free and clear of all pledges, liens, security interests, encumbrances, charges,
equities and other restrictions whatsoever.
(t) BACKLOG. SCHEDULE 4.2(T) sets forth a complete and correct
description of the "backlog" of the Seller as of December 31, 1996.
(u) OFFICERS, EMPLOYEES AND COMPENSATION. SCHEDULE 4.2(U) lists and
describes as of December 31, 1996, the base salary, fringe benefits and
perquisites of any employee of the Seller whose total current base salary
exceeds $35,000 annually. Except as disclosed on SCHEDULE 4.2(U), there are no
other forms of compensation paid by Seller to any such officer or employee.
Except as disclosed in SCHEDULE 4.2(U), the provisions for wages and salaries
accrued on the December 31, 1996 balance sheet are and will be adequate to
reflect all obligations for wages and salaries and other compensation to the
Seller's employees through December 31, 1996, including vacation pay, sick pay,
and all commissions and other fees due and payable to agents, salesmen and other
employees. Except as set forth in SCHEDULE 4.2(U), the Seller is not obligated,
directly or indirectly, to any director or officer of Seller or Parent or any
person related to such person by blood or marriage, except for current liability
for compensation. No director or officer of Seller or Parent or any person
related to such person by blood or marriage holds any position or office with or
has any material financial interest, direct or indirect, in any supplier,
customer or account of, or other outside business which has material
transactions with the Seller. SCHEDULE 4.2(U) sets forth the Seller's present
severance policy and the names, amounts and payment schedules relating to
persons currently receiving severance payments or retiree medical benefits.
(v) BOOKS OF ACCOUNT; RECORDS. The general ledgers, books of account
and other records of Seller are in all material respects complete and correct,
have been maintained in accordance with good business practices and the matters
contained therein are appropriately and accurately reflected in the Financial
Statements.
(w) CERTAIN BUSINESS MATTERS. Except as is set forth in SCHEDULE
4.2(W), (i) the product warranties given by Seller or by which it is bound
entail no greater obligations than are customary
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in the businesses engaged in by Seller, and, (ii) except for the actions
described on SCHEDULE 4.2(W), there are no outstanding claims from customers
based upon the quality or performance of products purchased by them from Seller,
and (iii) Seller is not a party to or bound by any agreement which limits its
freedom to compete in any line of business or with any person, or which is
otherwise materially burdensome to it. SCHEDULE 4.2(W) also contains a summary
description of (i) to the best of the knowledge of the Seller, all rebate and
volume discount practices and obligations of Seller, (ii) to the best of the
knowledge of the Seller, all sales allowance and customer return practices and
refund obligations of Seller, (iii) to the best of the knowledge of the Seller,
all warranty practices and obligations of Seller, and (iv) as of January 1,
1997, all outstanding quotations or proposals to customers or proposed customers
of Seller with a sales value in excess of $3,000.
(x) APPROVAL OF BOARD OF DIRECTORS AND SHAREHOLDERS. The Board of
Directors and the shareholders of Seller have duly approved this Agreement and
the consummation of the transactions contemplated herein.
(y) COMPLETE DISCLOSURE. No representation or warranty made by Seller
in this Agreement, and no exhibit, schedule, statement, certificate or other
writing furnished to Buyer by or on behalf of Seller pursuant to this Agreement,
contains or will contain, any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein and therein not misleading.
ARTICLE V. COVENANTS
SECTION 5.1. COVENANT NOT TO COMPETE. Seller and each of the
Shareholders agrees that it or he will not, and it or he will not cause any of
its or his affiliates not to, for a period of one (1) year with respect to all
retail products and two (2) years with respect to ASI products following the
date of this Agreement, and within a two hundred fifty (250) mile radius of New
York City, without the prior written consent of Buyer directly or indirectly:
(a) solicit any business for or from, or become associated with, as
principal, agent, employee, consultant, or in any other capacity, any person
who, or entity which, at the time of, or during the twelve (12) months
immediately preceding the date of this Agreement was in direct competition with
Buyer.
(b) become a principal, agent, employee, consultant, or otherwise
become associated with any person who, or entity which, has taken affirmative
action which would permit such entity or person to actually engage in direct
competition with Buyer during the period described in this Section 5.1 following
the date of this Agreement. For the purposes of this Section 5.1, ASI products
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shall mean any and all products of companies listed in the ASI listings of
suppliers and distributors as published annually in the Advertising Specialty
Register and the Advertising Specialty Market & Credit Report.
SECTION 5.2. COVENANT AGAINST DISCLOSURE. Buyer agrees not to (a)
disclose to any person, association, firm, corporation or other entity (other
than its employees, attorneys and other representatives who need to know such
information) in any manner, directly or indirectly, any confidential information
or data relevant to the business of the Seller, whether of a technical or
commercial nature, or (b) use, or permit or assist, by acquiescence or
otherwise, any person, association, firm, corporation or other entity (other
than its employees, attorneys and other representatives who need to know such
information) to use, in any manner, directly or indirectly, any such information
or data, excepting only use of such data or information as is at the time
generally known to the public and which did not become generally known through
any breach of any provision hereof by Buyer.
SECTION 5.3. COVENANT AGAINST HIRING. Seller understands that in
Buyer's view it is essential to the successful operation of the business to be
acquired from Seller that Buyer retain substantially unimpaired (to an extent
determined by Buyer in its sole discretion) the Seller's operating organization.
Seller shall not take any action which would induce any employee or
representative of the Seller not to become or continue as an employee or
representative of Buyer.
SECTION 5.4. ACCESS TO RECORDS. Except as provided in the next
sentence, between the date hereof and the Closing, Seller shall provide Buyer
and its agents with full access to the properties and records of Seller during
normal business hours and shall allow Buyer and its agents, at Buyer's expense,
to make copies of such documents, records and other information pertaining to
the Seller as Buyer may request.
If this Agreement is terminated pursuant to Article IX, any documents
supplied by Seller to Buyer or its agents shall be delivered by Buyer to Seller.
SECTION 5.5. CONDUCT OF BUSINESS PRIOR TO CLOSING. Seller agrees that
prior to the Closing, Seller shall not without the consent of Buyer:
(i) incur or become subject to, or agree to incur or become
subject to, any obligation or liability, absolute or contingent,
except current liabilities incurred, and obligations under contracts
entered into, in the ordinary course of business;
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(ii) discharge or satisfy any lien or encumbrance or pay any
obligation or liability, absolute or contingent, other than
liabilities payable in the ordinary course of business;
(iii) mortgage, pledge or subject of lien, charge or any other
encumbrance, any of the Property or agree so to do;
(iv) sell or transfer or agree to sell or transfer any of its
assets, or cancel or agree to cancel any debt or claim, except in each
case in the ordinary course of business;
(v) consent or agree to a waiver of any right of substantial
value;
(vi) enter into any transaction other than in the ordinary course
of its business;
(vii) increase the rate of compensation payable or to become
payable by it to any officers, employees or agents by more than the
rate being paid to them at December 31, 1996;
(viii) terminate any material contract, agreement, license or
other instrument to which it is a party;
(ix) through negotiation or otherwise, make any commitment or
incur any liability or obligation to any labor organization;
(x) make or agree to make any accrual or arrangement for or
payment of bonuses or special compensation of any kind to any officer,
employee or agent;
(xi) terminate any employee earning in excess of $35,000 per
annum or directly or indirectly pay or make a commitment to pay any
severance or termination pay to any officer, employee or agent except
in the ordinary course of business consistent with past practice (or
except for termination for cause);
(xii) introduce any new method of management, operation or
accounting with respect to its business or any of the assets,
properties or rights applicable thereto; (xiii) offer or extend more
favorable prices, discounts or allowances than were offered or
extended regularly on and prior to December 31, 1996, other than
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in the ordinary course of business or as reasonably required by
competitive conditions; or
(xiv) make capital expenditures or commitments therefor in excess
of $2,000 except for repairs and maintenance in the ordinary course of
business consistent with past practice.
SECTION 5.6. FURTHER ASSURANCES. On and after the Closing, Seller
shall prepare, execute and deliver, at Seller's expense, such further
instruments of conveyance, sale, assignment or transfer, and shall take or cause
to be taken such other or further action as Buyer's counsel shall reasonably
request at any time or from time to time in order to perfect, confirm or
evidence in Buyer title to all or any part of the Property or to consummate, in
any other manner, the terms and conditions of this Agreement. On and after the
Closing, Buyer shall prepare, execute and deliver, at Buyer's expense, such
further instruments, and shall take or cause to be taken such other or further
action as Seller's counsel shall reasonably request at any time or from time to
time in order to consummate, in any other manner, the terms and conditions of
this Agreement.
SECTION 5.7. ANNOUNCEMENTs. Neither party to this Agreement shall make
any public announcements prior to the Closing with respect to this Agreement or
the transactions contemplated hereby without the consent of the other party
hereto, except as required by law.
SECTION 5.8. CONSENTS. The parties hereto agree to use all reasonable
efforts to obtain all permits, approvals, authorizations and consents of all
third parties necessary for the consummation of the transactions contemplated
hereby.
SECTION 5.9. Effective within five (5) business days following the
Closing, Seller shall change its name to "Gold Family Corporation" and shall not
thereafter use the name "Merrick Packaging Specialists, Inc." or any derivation
thereof. In connection therewith, Buyer shall at its own cost prepare and file
an amendment to Seller's articles of incorporation.
SECTION 5.10. EMPLOYEES.
SCHEDULE 5.10(A) sets forth the names and years of service with Seller
of all employees. Buyer shall employ each employee whom Buyer in its sole
discretion, desires to employ effective on the Closing. In respect of such
employment, Buyer shall provide each employee with:
(a) a job or position having powers, responsibilities and job site
substantially similar to the job or position held by such employee immediately
prior to the Closing; and
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(b) an amount of compensation (both base or standard hourly rate and
bonus) on such terms and conditions as Buyer may establish after the Closing,
including but not limited to the amount of compensation (both base or standard
hourly rate and hours) and working conditions. In all respects after the
Closing, such employees shall remain at will employees and Buyer shall have the
right to dismiss in its sole discretion any employee of the Seller at any time
for any reason in which case severance obligations, if any, with respect to any
such dismissed employee shall be borne by Buyer, in accordance with such program
or programs as Buyer may establish or may deem applicable.
SECTION 5.11. BULK SALES NOTICE. Buyer shall comply with Section
1141(c), Article 28, of the New York State Sales and Use Tax Law and shall
submit all required information to State of New York Department of Taxation and
Finance in connection with the transactions contemplated hereby. Seller shall
cooperate with Buyer in such regard.
ARTICLE VI. CLOSING
SECTION 6.1. CLOSING. This transaction shall close on the 10th day
after Buyer has complied with Section 5.11 hereof and all deliveries to be made
at the time of closing shall be deemed to have taken place at 12:01 a.m., New
York time, as of February 1, 1997 at the offices of Olshan Grundman Frome &
Rosenzweig LLP, 505 Park Avenue, New York, New York 10022, or at such other
place as may be agreed upon from time to time in writing by Seller and Buyer
(the "Closing").
SECTION 6.2 DELIVERIES BY SELLER. At or prior to the Closing, Seller
shall deliver or cause to be delivered to Buyer, duly and properly executed, the
following:
(a) Good and sufficient General Conveyance, Assignment and Bill of
Sale, which shall be in the form attached hereto as EXHIBIT C, conveying,
selling, transferring and assigning to Buyer title to all of the Property, free
and clear of all security interests, liens, charges, encumbrances or equities
whatsoever, except for those assumed by Buyer pursuant to this Agreement or
approved in writing by Buyer prior to the Closing.
(b) Assignments and Assumptions of the Assumed Liabilities, which
shall be in form and substance satisfactory to Buyer and shall include, to the
extent obtained, the written consents of all parties necessary in order to duly
transfer all of Seller's rights thereunder to Buyer (the "Assignment and
Assumption Agreements") together with the consents (or notations) required
pursuant to SECTION 7.1(H).
(c) A certificate of the President and Secretary of Seller in
accordance with Section 7.1(d).
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(d) Resolutions of the directors and stockholders of Seller
authorizing the execution and delivery of this Agreement by Seller and the
performance of its obligations hereunder, certified by the Secretary of Seller.
(e) The Articles of Incorporation of Seller, certified as of a recent
date by the Secretary of State of New York.
(f) A certificate of the Secretary of State of New York dated as of a
recent date as to the good standing of Seller in such state, along with
telephonic confirmation of such good standing on the date of the Closing.
(g) A certificate of the Secretary of State of each state listed on
SCHEDULE 4.2(A), dated as of a recent date as to the good standing of Seller in
each such state, along with telephonic confirmation of such good standing on the
date of the Closing.
(h) The legal opinion referred to in Section 7.1(e).
(i) The employment agreement between Buyer and Lawrence Gold in the
form attached hereto as EXHIBIT D.
(j) The employment agreement between Buyer and Jeffrey Gold in the
form attached hereto as EXHIBIT E.
(k) The employment agreement between Buyer and Steven Braverman in the
form attached hereto as EXHIBIT F.
(l) The consulting agreement between Buyer and William Gold in the
form attached hereto as EXHIBIT G.
(m) The Assignment of the real estate lease for the premises (the
"Premises") located at 70 Austin Boulevard, Commack, New York 11725 in the form
attached hereto as EXHIBIT 7.1(I) (the "Lease").
(n) Except as provided herein, Seller shall pay any federal, state or
local sales or transfer taxes related to the transactions contemplated by this
Agreement.
(o) Such other separate instruments of sale, assignment or transfer
that Buyer may reasonably deem necessary or appropriate in order to perfect,
confirm or evidence title to all or any part of the Property.
SECTION 6.3. DELIVERIES BY BUYER. On or prior to the Closing, Buyer
shall deliver to Seller the portion of the purchase price due at Closing in
accordance with Section 3.1, and shall deliver to Seller, all duly and properly
executed, the following:
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(a) Resolutions of the board of directors of Buyer authorizing the
execution and delivery of this Agreement by Buyer and the performance of its
obligations hereunder, certified by the Secretary of Buyer.
(b) A certificate of the President and Secretary of Buyer in
accordance with Section 7.2(d).
(c) The legal opinion referred to in Section 7.2(e).
(d) The Assignment and Assumption Agreements.
(e) The Articles of Incorporation of Buyer, certified as of a recent
date by the Secretary of State of Delaware.
(f) A certificate of the Secretary of State of Delaware dated as of a
recent date as to the good standing of Buyer in such state, along with
telephonic confirmation of such good standing on the date of the Closing.
(g) The employment agreement between Buyer and Lawrence Gold in the
form attached hereto as EXHIBIT D.
(h) The employment agreement between Buyer and Jeffrey Gold in the
form attached hereto as EXHIBIT E.
(i) The employment agreement between Buyer and Steven Braverman in the
form attached hereto as EXHIBIT F.
(j) The consulting agreement between Buyer and William Gold in the
form attached hereto as EXHIBIT G.
(k) Such other separate instruments of assumption that Seller may
reasonably deem necessary or appropriate in order to confirm or evidence Buyer's
assumption of the Assumed Liabilities.
ARTICLE VII. CONDITIONS PRECEDENT TO OBLIGATIONS
SECTION 7.1. CONDITIONS TO OBLIGATIONS OF BUYER. Each and every
obligation of Buyer to be performed at the Closing shall be subject to the
satisfaction as of or before the Closing of the following conditions (unless
waived in writing by Buyer):
(a) REPRESENTATIONS AND WARRANTIES. Seller's representations and
warranties set forth in Section 4.2 of this Agreement shall have been true and
correct in all material respects when made and shall be true and correct in all
material respects at and as of the Closing as if such representations and
warranties were made as of the Closing.
(b) PERFORMANCE OF AGREEMENT. All covenants, conditions and other
obligations under this Agreement which are to be
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performed or complied with by Seller, shall have been fully performed and
complied with in all material respects on or prior to the Closing including,
without limitation, the deliver of the fully executed instruments and documents
in accordance with Section 6.2.
(c) NO ADVERSE PROCEEDING. There shall be no pending or threatened
claim, action, litigation or proceeding, judicial or administrative, or
governmental investigation against Buyer, Seller or the Property for the purpose
of enjoining or preventing the consummation of this Agreement, or otherwise
claiming that this Agreement or the consummation hereof is illegal.
(d) CERTIFICATE. Seller shall have delivered to Buyer a certificate
executed by Seller's President and Secretary, dated the date of the Closing, to
the effect that the conditions set forth in subsections (a) through (c) have
been satisfied.
(e) OPINION OF COUNSEL. Seller shall have delivered or caused to be
delivered to Buyer an opinion of counsel for Seller, addressed to Buyer and
dated the date of the Closing, in the form attached hereto as Exhibit 7.1(e).
(f) CONSENTS. All consents, waivers, orders, approvals, licenses and
authorizations by third parties, governmental and administrative authorities (or
any amendments or modifications to existing agreements with third parties),
which are required as a precondition to the performance by Seller or Buyer of
its obligations hereunder or under any agreement or instrument delivered
pursuant hereto, or which in the judgment of Buyer are necessary to continue
unimpaired any rights of Seller which could be impaired by the transactions
contemplated hereby or are necessary to enable Buyer to continue to conduct the
business of Seller on substantially the same basis following the Closing Date,
shall have been duly obtained and shall be in full force and effect and consents
(or notations) to the assignment of all Material Contracts to Buyer, in form
satisfactory to Buyer in its sole discretion shall be obtained.
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF SELLER. Each and every
obligation of Seller to be performed at the Closing shall be subject to the
satisfaction as of or before such time of the following conditions (unless
waived in writing by Seller):
(a) REPRESENTATIONS AND WARRANTIES. Buyer's representations and
warranties set forth in Section 4.1 of this Agreement shall have been true and
correct when made and shall be true and correct at and as of the Closing as if
such representations and warranties were made as of such time and date.
(b) PERFORMANCE OF AGREEMENT. All covenants, conditions and other
obligations under this Agreement which are to be performed or complied with by
Buyer shall have been fully performed
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and complied with in all material respects on or prior to the Closing, including
the delivery of the funds and the fully executed instruments and documents in
accordance with Section 6.3.
(c) NO ADVERSE PROCEEDING. At the Closing there shall be no pending or
threatened claim, action, litigation or proceeding, judicial or administrative,
or governmental investigation against Buyer, Seller or the Property for the
purpose of enjoining or preventing the consummation of this Agreement, or
otherwise claiming that this Agreement of the consummation hereof is illegal.
(d) CERTIFICATE. Buyer shall have delivered to Seller at the closing a
certificate, dated the date of the Closing, executed by Buyer's President and
Secretary to the effect that the conditions set forth in subsections (a) and (b)
and, to the best knowledge of such officers, (c), of this Section 7.2 have been
satisfied.
(e) OPINION OF COUNSEL. Buyer shall have delivered or caused to be
delivered to Seller an opinion of counsel for Buyer, addressed to Seller and
dated the date of the Closing, with regard to Sections 4.1(a), (b) and (d).
(f) APPROVAL OF BOARD OF DIRECTORS. The Board of Directors of Buyer
and The Chase Manhattan Bank, N.A. shall have duly approved this Agreement and
the consummation of the transactions contemplated herein.
ARTICLE VIII. INDEMNIFICATION
SECTION 8.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Subject to the limitations set forth in this Article VIII and notwithstanding
any investigation conducted at any time with regard thereto by or on behalf of
Buyer, Seller or the Shareholders, all representations, warranties, covenants
and agreements of Buyer, Seller and the Shareholders in this Agreement and in
the Additional Documents (as set forth hereinbelow) shall survive the execution,
delivery and performance of this Agreement and shall be deemed to have been made
again by Buyer, Seller and the Shareholders at and as of the Closing. All
statements contained in any Additional Document or Schedule or Exhibit hereto
shall be deemed representations and warranties of Buyer and Seller set forth in
this Agreement within the meaning of this Article.
SECTION 8.2. INDEMNIFICATION.
(a) Subject to the limitations set forth in this Article VIII, Seller
and the Shareholders, shall, jointly and severally, indemnify and hold harmless
Buyer from and against any and all losses, liabilities, damages, demands,
claims, suits, actions, judgments or causes of action, assessments, costs and
expenses including, without limitation, interest, penalties, reasonable
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attorneys' fees, any and all reasonable expenses incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation excluding, however, recoveries in respect of lost profits or
consequential damages (collectively, "Damages"), asserted against, resulting to,
imposed upon, or incurred or suffered by Buyer, directly or indirectly, as a
result of or arising from the following (individually an "Indemnifiable Claim"
and collectively "Indemnifiable Claims" when used in the context of Buyer as the
Indemnified Party (as defined below)):
(i) Any inaccuracy in or breach of any of the representations,
warranties or agreements made by Seller or the Shareholders in this
Agreement or the non-performance of any covenant or obligation to be
performed by Seller or the Shareholders;
(ii) Any liability imposed upon Buyer as transferee of the
business or operations of the Seller or the Property, or otherwise
relating to the conduct of the business and operations of the Seller
prior to the Closing, including all liabilities relating to the
condition of the premises whether arising under Federal, state or
local environmental laws or regulations or otherwise;
(iii) Any liability imposed upon Buyer and arising out of or
relating to any of Seller's other assets, operations, businesses or
activities which are not a part of the Property or any liability of
Seller of any kind not specifically assumed by Buyer pursuant to this
Agreement;
(iv) Any misrepresentation in or any omission from any
certificate or schedule or other material document (collectively, the
"Additional Documents") furnished or to be furnished by or on behalf
of Seller under this Agreement;
(v) Except with respect to the Assumed Liabilities, the filing by
Buyer of Form AU-196.10 with the New York State Department of Taxation
and Finance and the allocation of the sales price on Form AU-196.10,
Seller's failure to comply with the bulk transfer laws of any state or
its misapplication of the proceeds of the purchase price of the
Property in fraud of its creditors; or
(vi) (A) any generation, transportation, storage, treatment or
disposal of industrial, toxic or hazardous substances or solid or
hazardous wastes as a result of or
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related to the business or operations of the Seller occurring on or
prior to the Closing;
(B) any spills, discharges, leaks, emissions, injections,
escapes, dumping or any releases or threatened releases as defined
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, P.L. 96-510, as amended or reauthorized from
time to time, or any other similar Federal, state or local laws,
statutes, rules or regulations (collectively, "Superfund Laws";
individually, a "Superfund Law") as a result of or related to the
business or operations of the Seller occurring on or prior to the
Closing;
(C) any obligation under any Superfund Law after the Closing
as a result of or related to the business or operation of the Company
by the Seller on or prior to the Closing;
(D) the exposure of and resulting consequences to any
persons, including, but not limited to, employees of the Seller, to
any mineral, chemical or industrial product, a raw material,
intermediate, by-product or waste, or substance created, generated,
processed, handled or originating at Seller's principal manufacturing
facility as a result of the business or operations of the Seller on or
prior to the Closing;
(E) any discharges to surface waters or ground waters or any
air emissions which result from or are caused by the business or
operation of the Seller occurring on or prior to the Closing;
(F) any failure of the Seller to register with, report to or
otherwise notify governmental agencies or third parties on or prior to
the Closing, or any inadequacy with respect to such registration,
report or notification; and
(G) any violations or alleged violations which would result
from or are caused by the business or operation of the Seller
occurring on or prior to the Closing of federal, state, local or
foreign environmental laws.
(b) Subject to the limitations set forth in this Article VIII, Buyer
shall indemnity and hold harmless Seller from and against any and all Damages
asserted against, resulting to, imposed upon, or incurred or suffered by Seller,
directly or indirectly, as a result of, or arising from, the following
(individually an "Indemnifiable Claim" and collectively "Indemnifiable Claims"
when used in the context of Seller as the Indemnified Party):
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(i) Any inaccuracy in or breach of any of the representations,
warranties or agreements made by Buyer in this Agreement or the
non-performance of any covenant or obligation to be performed by
Buyer;
(ii) Any liability imposed upon Seller as a result of Buyer's
conduct of the business and operations of the Seller after the
Closing; or
(iii) The nonperformance or nonpayment by Buyer of any of the
Assumed Liabilities.
(c) Without duplication of Damages, Buyer or Seller, as the case may
be, shall be deemed to have suffered Damages arising out of or resulting from
the matters referred to in subsection (a) and (b) above if the same shall be
suffered by any parent, subsidiary or affiliate of Buyer or Seller,
respectively.
SECTION 8.3. LIMITATIONS ON INDEMNIFICATION. Rights to indemnification
hereunder are subject to the following limitations:
(a) Neither Buyer nor Seller shall be entitled to indemnification
hereunder with respect to an Indemnifiable Claim (or, if more than one
Indemnifiable Claim is asserted, with respect to all Indemnifiable Claims)
unless the aggregate amount of Damages with respect to such Indemnifiable Claim
or Claims exceeds $25,000 in which even the indemnity provided for in Section
8.2 hereof shall be effective with respect to only so much of such Damages as
exceeds $25,000.
(b) the obligation of indemnify provided herein with respect to the
representations and warranties set forth in Section 4.2(h) of this Agreement
shall terminate on:
(i) the expiration for the periods of limitations and any
extensions thereof applicable to assessment and collection of federal
taxes under the Code, with respect to the representations as to the
absence of unpaid or undisclosed federal taxes (including any
interests, penalties or expenses) of Seller; and
(ii) the expiration of the periods of limitations and any
extensions thereof applicable to assessment and collection of state,
local or foreign taxes with respect to the representations as to the
absence of unpaid or undisclosed state, local or foreign taxes
(including any interest, penalties or expenses) of Seller.
(c) The obligation of indemnity provided herein with respect to the
representations and warranties set forth in Section 4.2(1) shall terminate
twenty-five months after the Closing.
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(d) The obligation of indemnity provided herein with respect to the
representations and warranties set forth in Section 4.2(p) as they relate to
title shall not terminate.
(e) The obligation of indemnity provided herein with respect to the
representations and warranties set forth in Section 4.2(n) of this Agreement
shall terminate upon expiration for the statutes of limitations applicable to
the items contained therein.
(f) The obligation of indemnity provided herein resulting from the
assertion of liability with respect to the representations and warranties set
forth in Section 4.1 and Section 4.2 (except Section 4.2(h), Section 4.2(l),
Section 4.2(p) as they relate to title and Section 4.2(n) of this Agreement)
shall terminate two years after the Closing.
(g) If, prior to the termination of any obligation to indemnify as
provided for herein, written notice of a claimed breach is given by the party
seeking indemnification including in detail the basis therefore (the
"Indemnified Party") to the party from who indemnification is sought (the
"Indemnifying Party") or a suit or action based upon a claimed breach is
commenced against the Indemnifying Party, the Indemnified Party shall not be
precluded from pursuing such claimed breach or suit or action, or from
recovering from the Indemnifying Party (whether through the courts or otherwise)
on the claim, suit or action, by reason of the termination otherwise provided
for above.
SECTION 8.4. PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO THIRD-PARTY
CLAIMS.
(a) If the Indemnified Party determines to seek indemnification under
this Article with respect to Indemnifiable Claims resulting from the assertion
of liability by third parties, it shall give notice to the Indemnifying Party
within 20 days of the Indemnified Party's becoming aware of any such
Indemnifiable Claim or of facts upon which any such Indemnifiable Claim will be
based; the notice shall set forth such information with respect thereto as is
then reasonably available to the Indemnified Party. If any such liability is
asserted against the Indemnified Party, and the Indemnified Party notifies the
indemnifying Party thereof, the Indemnifying Party will be entitled, if it so
elects by written notice delivered to the Indemnified party within 20 days after
receiving the Indemnified Party's notice, to assume the defense thereof with
counsel satisfactory to the Indemnified Party. Notwithstanding the foregoing (i)
the Indemnified Party shall also have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Indemnified Party; (ii) the Indemnified Party shall not have any obligation
to give any notice of any assertion of liability by a third party unless such
assertion is in writing; and (iii) the rights of the Indemnified Party to be
indemnified hereunder in
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respect of Indemnifiable Claims resulting from the assertion of liability by
third parties shall not be adversely affected by its failure to give notice
pursuant to the foregoing unless, and, if so, only to the extent that, the
Indemnifying Party is materially prejudiced thereby. With respect to any
assertion of liability by a third party that results in an Indemnifiable Claim,
the parties hereto shall make available to each other all relevant information
in their possession material to any such assertion.
(b) In the event that the Indemnifying Party, within 20 days after
receipt of the aforesaid notice of an Indemnifiable Claim, fails to assume the
defense of the Indemnified Party against such Indemnifiable Claim, the
Indemnified Party shall have the right to undertake the defense, compromise or
settlement of such action on behalf of and for the account and risk of the
Indemnifying Party.
(c) Notwithstanding anything in this Section to the contrary, (i) if
there is a reasonable probability that an Indemnifiable Claim may materially and
adversely affect the Indemnified Party, other than as a result of money damages
or other money payments, the Indemnified Party shall have the right, at its own
cost and expense, to defend, compromise or settle such Indemnifiable Claim; and
(ii) the Indemnifying Party shall not, without the Indemnified Party's written
consent, settle or compromise any Indemnifiable Claim or consent to entry of any
judgment in respect thereof unless such settlement, compromise or consent
includes as an unconditional term thereof providing for the giving by the
claimant or the plaintiff to the Indemnified Party and all affiliates of the
Indemnified Party a release from all liability in respect of such Indemnifiable
Claim. If the Indemnifying Party can settle such Indemnifiable Claim with a
complete release of the Indemnified Party and all affiliates of the Indemnified
Party for monetary damages only, but the Indemnified Party refuses such
settlement, the Indemnifying Party shall not be liable for Damages in excess of
the monetary damages of such proposed settlement.
SECTION 8.5. PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO
NON-THIRD-PARTY CLAIMS. In the event that the Indemnified Party asserts the
existence of an Indemnifiable Claim (but excluding claims resulting from the
assertion of liability by third parties), it shall give written notice to the
Indemnifying Party specifying the nature and amount of the claim asserted. If
the Indemnifying Party, within 30 days or such greater time as may be necessary
for the Indemnifying Party to investigate such Indemnifiable Claim not to exceed
90 days, after receiving the notice from the Indemnified Party, shall not give
written notice to the Indemnified Party announcing their intent to contest such
assertion of the Indemnified Party, such assertion shall be deemed accepted and
the amount of claim shall be deemed a valid Indemnifiable Claim. During the time
period set forth in the preceding sentence, the
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Indemnified Party shall cooperate fully with the Indemnifying Party in respect
of such Indemnifiable Claim. In the event, however, that the Indemnifying Party
contests the assertion of a claim by giving such written notice to the
Indemnified Party within said period, then if the parties hereto, acting in good
faith, cannot reach agreement with respect to such claim within ten days after
such notice, either party may bring legal action to resolve such issue.
ARTICLE IX. TERMINATION
SECTION 9.1. TERMINATION BY EITHER PARTY. This Agreement may be
terminated and cancelled at any time prior to the Closing by Buyer or Seller
upon written notice to the other if: (i) any of the representations or
warranties of the other party, as the case may be, contained herein or in any
schedule attached hereto shall prove to be inaccurate or untrue in any material
respect; or (ii) any obligation, term or condition to be performed, kept or
observed by such other party, as the case may be, hereunder has not been
performed, kept or observed in any material respect at or prior to the time
specified in this Agreement.
SECTION 9.2. TERMINATION BY BUYER. This Agreement may be terminated
and cancelled by Buyer without penalty, damages, payments or liabilities
whatsoever to either party: (i) at any time prior to the Closing in the event of
a material adverse loss or damage to the Property in excess of $25,000, it being
understood by the parties that none of the risk of any such loss or damage prior
to the Closing shall be borne by Buyer. In the event of a loss or damage to the
Property prior to the Closing and the Closing shall have occurred, Buyer shall
be entitled to receive any insurance proceeds received by Seller in respect of
such loss or damages.
ARTICLE X. MISCELLANEOUS PROVISIONS
SECTION 10.1. NOTICE. All notices and other communications required or
permitted under this Agreement shall be deemed to have been duly given and made
if in writing and if served either by personal delivery to the party for whom
intended (which shall include delivery by Federal Express or similar service) or
three (3) business days after being deposited, postage prepaid, certified or
registered mail, return receipt requested, in the United States mail bearing the
address shown in this Agreement for, or such other address as may be designated
in writing hereafter by, such party:
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If to Seller: Merrick Packaging Specialists, Inc.
c/o Jeffrey Gold
8 Philson Court
Commack, New York 11725
with a copy to: Richard Reichler, Esq.
c/o Lilco
175 E. Old Country Road
Hicksville, New York 11801
If to Buyer: Uniflex, Inc.
474 Grand Blvd.
Westbury, New York 11590
Attention: Mr. Robert K. Semel,
President
with copies to: Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
Attention: Steven Wolosky, Esq.
SECTION 10.2. ENTIRE AGREEMENT. This Agreement, the Additional
Documents, the exhibits and schedules hereto, and the documents referred to
herein embody the entire agreement and understanding of the parties hereto with
respect to the subject matter hereof, and supersede all prior and
contemporaneous agreements and understandings, oral or written, relative to said
subject matter.
SECTION 10.3. BINDING EFFECT; ASSIGNMENT. This Agreement and the
various rights and obligations arising hereunder shall inure to the benefit of
and be binding upon Seller, its successors and assigns, and Buyer, its
successors and assigns however no such assignment shall relieve any party of its
obligations hereunder.
SECTION 10.4. CAPTIONS. The Article and Section headings of this
Agreement are inserted for convenience only and shall not constitute a part of
this Agreement in construing or interpreting any provision hereof.
SECTION 10.5. EXPENSES OF TRANSACTION. The liability for sales taxes
in connection with the sale and delivery of the Property shall be one-half the
responsibility of Seller and one- half of the responsibility of Buyer, provided,
however, that Seller shall not be responsible for more than $12,500 of such
sales taxes. The liability for real estate transfer and or documentary taxes in
connection with the sale and delivery of the Property shall be the
responsibility of Seller. Seller shall pay all costs and expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby, and
will make all necessary arrangements so that the Property will not be charged
with or
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diminished by any such cost or expense. Buyer shall pay all costs and expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby.
SECTION 10.6. WAIVER; CONSENT. This Agreement may not be changed,
amended, terminated, augmented, rescinded or discharged (other than by
performance), in whole or in part, except by a writing executed by the parties
hereto, and no waiver of any of the provisions or conditions of this Agreement
or any of the rights of a party hereto shall be effective or binding unless such
waiver shall be in writing and signed by the party claimed to have given or
consented thereto. Except to the extent that a party hereto may have otherwise
agreed in writing, no waiver by that party of any condition of this Agreement or
breach by the other party of any of its obligations or representations hereunder
or thereunder shall be deemed to be a waiver of any other condition or
subsequent or prior breach of the same or any other obligation or representation
by the other party, nor shall any forbearance by the first party to seek a
remedy for any noncompliance or breach by the other party be deemed to be a
waiver by the first party of its rights and remedies with respect to such
noncompliance or breach.
SECTION 10.7. NO THIRD PARTY BENEFICIARIES. Subject to Section 10.3
hereof, nothing herein, expressed or implied, is intended or shall be construed
to confer upon or give to any person, firm, corporation or legal entity, other
than the parties hereto, any rights, remedies or other benefits under or by
reason of this Agreement.
SECTION 10.8. COUNTERPARTS. This Agreement may be executed
simultaneously in multiple counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
SECTION 10.9. GENDER. Whenever the context requires, words used in the
singular shall be construed to mean or include the plural and vice versa, and
pronouns of any gender shall be deemed to include and designate the masculine,
feminine or neuter gender.
SECTION 10.10. GOVERNING LAW. This Agreement shall in all respects be
construed in accordance with and governed by the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
BUYER:
UNIFLEX, INC.
By: /S/ HERBERT BARRY
-----------------
Title CHAIRMAN
SELLER:
MERRICK PACKAGING SPECIALISTS, INC.
By: /S/ JEFFREY GOLD
----------------------
Title PRESIDENT
/S/ JEFFREY GOLD
----------------------
JEFFREY GOLD
/S/ LAWRENCE GOLD
LAWRENCE GOLD
/S/ STEVEN BRAVERMAN
----------------------
STEVEN BRAVERMAN
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Schedule 1.1(a) - Personal Property
Schedule 1.1(c) - Permits
Schedule 1.1(d) - Proprietary Rights
Schedule 1.1(e) - Personal Property Leases
Schedule 1.1(f) - Real Property Leases
Schedule 1.1(g) - Contracts
Schedule 1.1(h) - Accounts Receivable, Etc.
Schedule 1.2 - Material Contracts
Schedule 2.1 - Assumed Liabilities
Schedule 4.2(a) - Foreign Qualifications
Schedule 4.2(b) - Consents
Schedule 4.2(f) - Absence of Changes; Exceptions
Schedule 4.2(g) - Liabilities; Exceptions
Schedule 4.2(h) - Taxes; Exceptions
Schedule 4.2(i) - Proprietary Rights; Exceptions
Schedule 4.2(j) - Insurance
Schedule 4.2(k) - Litigation
Schedule 4.2(1) - Compliance with Laws
Schedule 4.2(n) - Employee Benefit Plans
Schedule 4.2(o) - Labor Matters
Schedule 4.2(p) - Title to Properties
Schedule 4.2(s) - Inventories
Schedule 4.2(t) - Backlog
Schedule 4.2(u) - Officers, Etc.
Schedule 4.2(w) - Certain Business Matters
Schedule 5.3 - Covenant Against Hiring
Schedule 5.10(a) - Employees
Exhibit 3.1(b) - Promissory Note
Exhibit 3.1(c) - Promissory Note
Exhibit 3.1(d) - Promissory Note
Exhibit A - Financial Statements
Exhibit B - Financial Statements
Exhibit C - Bill of Sale
Exhibit D - Lawrence Gold Employment Agreement
Exhibit E - Jeffrey Gold Employment Agreement
Exhibit F - Steven Braverman Employment Agreement
Exhibit G - William Gold Consulting Agreement
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