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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
May 6, 1994
Date of Report (Date of earliest event reported)
ANACOMP, INC.
(Exact name of registrant as specified in its charter)
Indiana 0-7641 35-1144230
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
11550 North Meridian Street,
P.O. Box 40888, Indianapolis, Indiana 46240
(Address of principal executive offices) (Zip Code)
(317) 844-9666
Registrant's telephone number, including area code
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Item 5. Other Events
On May 4, 1994 (the "Closing Date"), Anacomp, Inc., an
Indiana corporation ("Anacomp"), acquired 100% of the issued and
outstanding shares of capital stock (the "Graham Shares") of
Graham Acquisition Corporation, a Delaware corporation ("Graham")
pursuant to a Stock Purchase Agreement dated April 8, 1994 (the
"Purchase Agreement") between Anacomp and the holders of all of
the issued and outstanding shares of capital stock of Graham (the
"Sellers"). Graham is the parent of Graham Magnetics, Inc.,
("Graham Magnetics") whose primary business is the manufacture
and distribution of 1/2" open reel computer tape and 3480 tape
cartridges. Graham Magnetics operates one manufacturing facility
in the United States and has small foreign subsidiaries located
in the United Kingdom, France and Germany.
The purchase price for the Graham Shares was $7,600,000
payable through the issuance of 2,128,833 shares of Anacomp
common stock (the "Anacomp Shares") directly to the Sellers. The
Purchase Agreement also contains provisions under which up to an
additional $7,600,000 (payable in Anacomp Shares) will be paid by
Anacomp to the Sellers if, following the closing, certain net
income levels (up to $22.8 million over the next 3 1/2 years) are
met by the combined magnetics business of Anacomp and Graham.
On the Closing Date, Anacomp repaid approximately $5.5
million of indebtedness previously incurred by Graham and
purchased an unsecured 10% term note previously issued by Graham
to the previous owner of the Graham business (the "Graham Note").
The purchase price for the Graham Note was $5,525,270 (the
principal amount of the Graham Note). The purchase of the Graham
Note was effected through the issuance by Anacomp of a promissory
note (the "Anacomp Note") on substantially the same terms as the
Graham Note. The Anacomp Note also contains provisions which
allow the holder of the Anacomp Note to require prepayment in
full or in part by Anacomp at any time; such prepayment to be
effected through the issuance of Anacomp Shares to the holder of
the Anacomp Note. Anacomp is required to prepay the Anacomp Note
in cash should Anacomp refinance its 15% Senior Subordinated
Notes due 2000 and should there be, at the time of such
refinancing, an outstanding principal balance on the Anacomp
Note.
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(c) Exhibits
The exhibits furnished in accordance with Item 601
of Regulation S-K are:
2. Stock Purchase Agreement dated April 8, 1994, by and
among Anacomp, Inc. and the holders of all of the
issued and outstanding shares of capital stock of
Graham Acquisition Corporation.
4. Note Purchase and Loan Agreement, dated May 4, 1994, by
and among Anacomp, Inc., Carlisle Companies
Incorporated, Carlisle Memory Products Group
Incorporated and IMG Manufacturing.
99. Press release issued by Anacomp, Inc. on May 6, 1994.
<PAGE>
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 thereunto duly
authorized.
ANACOMP, INC.
(Registrant)
By:/s/Jack R. O'Donnell
Executive Vice President and
Chief Financial Officer
Date: May 6, 1994
<PAGE>
EXHIBIT INDEX
EXHIBITS
2 Stock Purchase Agreement dated April 8, 1994,
by and among Anacomp, Inc. and the holders of
all of the issued and outstanding shares of
capital stock of Graham Acquisition
Corporation.
4 Note Purchase and Loan Agreement, dated May
4, 1994, by and among Anacomp, Inc., Carlisle
Companies Incorporated, Carlisle Memory
Products Group Incorporated and IMG
Manufacturing.
99 Press release issued by Anacomp, Inc. on May
6, 1994.
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EXHIBIT 2
<PAGE>
STOCK PURCHASE AGREEMENT
AGREEMENT, dated April 8, 1994, by and among Anacomp,
Inc., an Indiana corporation (the "Buyer"), and the holders,
listed on Exhibit A (each a "Seller" and collectively the
"Sellers"), of all of the issued and outstanding shares of
capital stock of Graham Acquisition Corporation, a Delaware
corporation (the "Company").
The Sellers are the beneficial and record owners of all
of the issued and outstanding shares of common stock, $0.01 par
value (the "Shares"), of the Company. Each Seller wishes to sell
all of the Shares owned by such Seller and the Buyer wishes to
purchase all of the Shares upon the terms and subject to the
conditions of this Agreement.
Accordingly, the parties agree as follows:
1. Certain Definitions. (a) As used in this
Agreement, the following terms have the following meanings:
(i) "Affiliate" means, with respect to any
person, any other person controlling, controlled by or under
common control with, or the parents, spouse, siblings, children
or grandchildren of, such person.
(ii) "Anacomp Disclosure Documents" means Buyer's
1993 Annual Report to Shareholders, including its Annual Report
on Form 10-K for the year ended September 30, 1993, and any and
all documents made publicly available since that date.
(iii) "BASF Contract" means the Contract entered
into between BASF Corporation, Information Systems and Graham
Magnetics dated June 15, 1992 (Purchase Agreement No. 61592).
(iv) "CERCLA" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended, including but not limited to the Superfund Amendments
and Reauthorization Act of 1986.
(v) "Change in Control" means any sale or
transfer of more than 50 percent of the assets or stock (by sale,
merger, consolidation or otherwise) of the Graham Entity (or a
series of sales or transfers with such effect) to any person
other than Buyer or an affiliate of Buyer.
(vi) "Code" means the Internal Revenue Code of
1986, as amended.
(vii) "Environmental Laws" means RCRA, CERCLA, the
Superfund Amendments and Reauthorization Act of 1986, the Federal
Water Pollution Control Act, the Federal Clean Air Act, and all
other applicable Federal, state and local statutes and common
law, rules, regulations, judgments, decrees, agreements, permits,
ordinances, codes and other governmental restrictions or
requirements relating to pollution or protection of the
environment, including, without limitation, laws relating to
emissions, discharges, releases or threatened releases of
Hazardous Substances into the environment, including, without
limitation, ambient air, surface water, groundwater or land
surface, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances.
(viii) "Graham Magnetics" means Graham Magnetics,
Inc., a wholly owned subsidiary of the Company.
(ix) "Hazardous Substances" means any substance
which is a "hazardous substance" (as defined in CERCLA), or any
other substance or material defined, designated, classified,
regulated or considered as a hazardous or toxic waste, hazardous
or toxic material, or a hazardous, toxic, radioactive or
dangerous substance under any Environmental Law.
(x) "knowledge" with respect to any Seller, means
the knowledge of such Seller, and, with respect to the Company or
any of the Subsidiaries, means the knowledge of any of John C.
Belsly, Michael B. Bryan, Milton D. Smith or Scott D.
Whittenburg; and "knows" has a correlative meaning.
(xi) "Magnetic Media Business" means,
collectively, 1/2" tape cartridge media, 1/2" open reel tape, 4mm
and 8mm data tape cartridges, 1/4" tape cartridges, TK 50/52 tape
cartridges, 1/4" pancake media, 5-1/4" and 3-1/2" floppy
diskettes, cookies and pancakes for 5-1/4" and 3-1/2" floppy
diskettes, optical disk media and De Gausser and media certifying
equipment sales and service.
(xii) "person" means any individual, corporation,
partnership, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, Governmental Body or
other entity.
(xiii) "Pre-Closing Period" shall mean any Taxable
Year that ends on or before the Closing Date, and, with respect
to any Taxable Year beginning on or before and ending after the
Closing Date, shall mean the portion of such Taxable Year ending
on the Closing Date.
(xiv) "property" or "properties" means real,
personal or mixed property, tangible or intangible.
(xv) "RCRA" means the Federal Resource
Conservation and Recovery Act.
(xvi) "Tax" or "Taxes" means any and all taxes,
however denominated, imposed by any Federal, state, local, or
foreign government, or any agency or political subdivision of any
such government, which taxes shall include, without limiting the
generality of the foregoing, net income, gross income, gross
receipts, license, payroll, employment-related, excise,
severance, stamp, occupancy, premium, windfall profits,
environmental (including taxes under Section 59A of the Code),
customs or import duties, capital, franchise, profits,
withholding, social security (or similar), unemployment,
disability, workers' compensation taxes, real property, personal
property, sales, use, transfer, registration, value added, ad
valorem, alternative or add-on minimum, estimated, or other tax
of any kind whatsoever, including any interest, penalty, or
additions to tax, whether disputed or not.
(xvii) "Tax Return" means any return, declaration,
report, estimate, claim for refund, or information return or
statement relating to, or required to be filed in connection
with, any Taxes, including any schedule or attachment thereto,
and including any amendment thereof.
(xviii) "Taxable Year" shall mean any taxable year or
any other period which is treated as a taxable year with respect
to which any Tax may be imposed under any applicable statute,
rule or regulation.
(xix) "3M Contract" means the Contract entered into
between 3M and Graham Magnetics dated April 26, 1993 pursuant to
which Graham Magnetics manufactures for 3M certain computer tape
products which do not have a non-magnetic backcoating.
(xx) "Vistatech" means Vistatech Corporation, a
wholly-owned subsidiary of Carlisle Companies Incorporated.
(b) The following capitalized terms are defined in the
following Sections of this Agreement:
Term Section
Acquiror 2.4
Acquiror Shares 2.4
Acquisition Exhibit B
Act 5.3
Anacomp Shares 2.1
Agent 13.1
Asserted Liability 11.3.1
Audited Financials 4.7
Auditors 2.4
Balance Sheet 4.7
Balance Sheet Date 4.7
Basket Amount 11.4
Basket Exclusions 11.4
Benefit Plan 4.25
Broker 4.35
Buyer Preamble
Buyer's Calculation 2.4
Buyer SEC Documents 6.5
Change in Control Amount 2.4
Claims 4.14
Claims Notice 11.3.1
Closing 2.1
Closing Date 3
Common Stock 4.4
Company Preamble
Company Products 4.14
Condition of the Companies 4.3
Confidential Information 7.2
Contemplated Transactions 4.13
Contracts 4.13
Controlled Group Member 4.25
Core Business 9A.1
Documents 10
Effective Date 2.6
Environmental Claim 10
Environmental Report 4.16
ERISA 4.25
Exchange 2.2
General Claim 10
Governmental Bodies 4.10
Graham Entity 2.4
HSR Act 4.33
Indemnifying Party 11.3.1
Indemnitee 11.3.1
Insurance Policies 4.16
IRS 4.25
Laws 4.10
Liens 4.4
Losses 11.1
Net Income Amount Exhibit B
New Employment Agreements 7.7
Old Employment Agreements 7.7
Orders 4.10
Ownership Percentage 2.1
Payment Date 2.4
PBGC 4.25
Pension Plan 4.25
Permits 4.11
Permitted Exceptions 4.16
Post-Change Period 2.4
Post-Closing Payment 2.4
Preferred Stock 4.4
Premises 4.16
Proposed Contracts 4.15
Purchase Price 2.1
Post-Closing Payment 2.4
Qualified Plans 4.25
Required Consents 4.13
Restricted Area 9A.1.1
Restricted Period 9A.1.1
Restricted Seller 9A.1
Restrictive Covenants 9A.2
Safety and Environmental Laws 4.10
SEC 2.6
Seller Preamble
Sellers' Representative 2.5
Shares Preamble
Significant Customers 4.24
Significant Suppliers 4.24
Subsidiaries 4.2
Tangible Property 4.19
Tax Claim 10
Trade Secrets 4.20
Undisclosed Liabilities 4.23
Vistatech Lease 4.16
2. Sale and Purchase of Shares.
2.1 Sale and Purchase of Shares. At the closing
provided for in Section 3 (the "Closing") and upon the terms and
subject to the conditions of this Agreement, each Seller shall
sell, transfer and assign to Buyer, and Buyer shall purchase from
each Seller, the number of Shares set forth opposite each
Seller's name in Exhibit A hereto, free and clear of all Liens.
The aggregate purchase price (the "Purchase Price") for all of
the Shares shall consist of shares of Buyer's common stock (the
"Anacomp Shares") with a value of $7,600,000 to be delivered in
accordance with Section 2.2 and subject to adjustment in
accordance with Sections 2.4 and 2.7. The portion of the
aggregate Purchase Price to be paid to each Seller for the Shares
purchased from such Seller shall be based upon his or its
percentage ownership of the Shares and shall be the amount set
forth opposite such Seller's name in Exhibit A hereto. Buyer
will retain that portion of the Purchase Price with respect to
any Seller who elects not to sell his Shares to Buyer at the
Closing. The "Ownership Percentage" for each Seller shall be the
percentage set forth opposite such Seller's name in Exhibit A.
2.2 Payment of Purchase Price. The Purchase Price
shall be paid by Buyer as follows:
On the Closing Date, Buyer will issue to Sellers
2,128,852 Anacomp Shares (the number of Anacomp Shares equal to
(A) $7,600,000 divided by (B) $3.57 (the agreed-upon price per
share of Anacomp Shares), rounded to the nearest share). Buyer
shall issue such Anacomp Shares to each Seller by delivering to
Sellers' Representative a stock certificate (issued in the name
of such Seller) for that number of Anacomp Shares as equals the
total Anacomp Shares multiplied by such Seller's Ownership
Percentage (rounded to the nearest 1/1000th of a share). If the
Anacomp Shares to be delivered pursuant to this Section 2.2 would
include a fractional share, then Buyer shall, in lieu of such
fractional share, pay to Sellers' Representative an amount in
cash equal to the value of such fractional share.
2.3 Delivery of Shares. At the Closing, each Seller
shall deliver or cause to be delivered to the Buyer the stock
certificate or certificates representing the number of Shares set
forth opposite such Seller's name on Exhibit A, duly endorsed in
blank or accompanied by stock powers duly executed in blank, with
signatures guaranteed by a bank, trust company or member firm of
the New York Stock Exchange, Inc. (the "Exchange"), together with
any such other documents as may be necessary to effect the
transfer of such stock certificate or certificates, and with all
appropriate stock transfer tax stamps affixed.
2.4 Additional Payments of Anacomp Shares. As
additional consideration for the Shares, Buyer will pay to the
Sellers up to an additional $7,600,000 (the "Post-Closing
Payment"), which will be paid in Anacomp Shares, in increments on
each of the following dates (each a "Payment Date"):
Payment Date Payment Period
January 20, 1995 Period from Closing Date
through September 30, 1994
January 19, 1996 October 1, 1994 through
September 30, 1995
January 20, 1997 October 1, 1995 through
September 30, 1996
January 20, 1998 October 1, 1996 through
September 30, 1997;
provided, however, that the amount of such additional
consideration may be reduced in accordance with the provisions of
Section 11.5 hereof and provided further that Buyer will retain
that portion of the Post-Closing Payment with respect to any
Seller who elects not to sell his Shares to Buyer at the Closing.
The amount of the Post-Closing Payment to which the Sellers are
entitled on each such Payment Date will be determined by
reference to the Net Income Amount (as defined in Exhibit B
attached hereto) earned by the Graham Entity (as defined below)
during the periods set forth above. The Sellers shall be
entitled to receive Anacomp Shares in an amount equal to one-
third of the Net Income Amount earned by the Graham Entity in
each of the first three such periods, with the total payment over
the three periods not to exceed the Post-Closing Payment. If,
following the payment to the Sellers on the third Payment Date,
the Sellers have not received the Post-Closing Payment in its
entirety, then the Sellers shall be entitled to receive Anacomp
Shares in an amount equal to one-third of the Net Income Amount
earned by the Graham Entity in the fourth such period, with the
payment in such fourth period not to exceed the remaining amount
necessary to equal (when combined with payments on prior payment
dates) the Post-Closing Payment. If, following the payment to
the Sellers on the fourth Payment Date, the Sellers have not
received the Post-Closing Payment in its entirety, then the
Sellers shall not be entitled to receive the remaining amount
necessary to equal the Post-Closing Payment. The number of
Anacomp Shares issuable to the Sellers on each such Payment Date
shall be determined by taking the portion of the Post-Closing
Payment to which the Sellers are entitled and dividing it by the
average of the closing sales prices for the Anacomp Shares on the
Exchange, as reported in The Wall Street Journal, on each of the
30 consecutive trading days ending on the second trading day
preceding the relevant Payment Date; provided, however, that if
the average sales price as so calculated is less than $2.00 per
Anacomp Share, then Buyer shall only be obligated to issue to the
Sellers on the Payment Date that number of Anacomp Shares equal
to the portion of the Post-Closing Payment divided by $2.00. In
lieu of issuing fractional Anacomp Shares, Buyer shall pay to
each of the Sellers who would otherwise be entitled to a
fractional Anacomp Share cash in an amount calculated in the same
manner described in Section 2.2 above, as modified by the proviso
in the previous sentence.
For purposes of this Agreement, the "Graham Entity"
shall mean the Magnetic Media Business of Buyer to be comprised
of the Company and Buyer's magnetics group following the Closing.
All Magnetic Media Business of Buyer shall be deemed to be
included in the Graham Entity regardless of whether such business
was effected by the Company, Buyer or Buyer's magnetics group.
Buyer hereby agrees that during the period from the Closing Date
through September 30, 1994, Buyer will not effect a Change in
Control of the Graham Entity unless the Buyer has paid in full
the Post-Closing Payment. Upon a Change in Control of the Graham
Entity at any time during the period from September 30, 1994
through September 30, 1997 and prior to the payment in full of
the Post-Closing Payment, Buyer shall pay to Sellers an amount
equal to one-third of Buyer's net profits from the transaction
effecting the Change in Control less the amount of the Post-
Closing Payment previously paid to Sellers (the "Change in
Control Amount"). Notwithstanding the preceding sentence (i) the
Change in Control Amount shall be payable in cash or, at Buyer's
option, in whatever form of consideration Buyer receives in
connection with the Change in Control and (ii) the sum of the
amount of the Post-Closing Payment paid by Buyer and the Change
in Control Amount to be paid by Buyer shall in no event exceed
$7,600,000.
If the sum of the Change in Control Amount plus the
amount of the Post-Closing Payment previously paid to Sellers is
less than $7,600,000, then it shall be a condition to the Change
in Control that Buyer will cause the purchaser or transferee of
such business (the "Acquiror") to (i) assume the obligation to
account for the Net Income Amount attributable to such business
of the Graham Entity so transferred or sold during the period
from the consummation of the transaction pursuant to which the
Change in Control is effected through September 30, 1997 (the
"Post-Change Period") and (ii) agree to pay Sellers one-third of
the Net Income Amount during the Post-Change Period in cash, or,
if elected by Acquiror, in the event that the common stock of
Acquiror is listed on the American Stock Exchange or the Exchange
or is quoted on NASDAQ, in common stock (the "Acquiror Shares"),
provided that the Acquiror Shares shall be registered for resale
in an effective registration statement. Buyer will cause
Acquiror to, and Sellers will, engage in good faith negotiations
with each other with respect to any provisions of this Section
2.4 relating to the calculation of the Post-Closing Payment which
need to be modified for the Post-Change Period. Notwithstanding
anything herein to the contrary, the sum of (i) the amount of the
Post-Closing Payment paid to Sellers prior to the Change in
Control, (ii) the Change in Control Amount paid by Buyer and
(iii) all payments made by the Acquiror to the Sellers during the
Post-Change Period shall in no event exceed $7,600,000.
Each payment to be made towards the Post-Closing
Payment shall be calculated by Buyer and reviewed by Arthur
Andersen & Co., independent certified public accountants (the
"Auditors"), at Buyer's expense, in connection with the Auditors'
annual audit of Buyer, and shall be subject to review by Sellers'
outside auditors, at Sellers' expense. Buyer shall deliver the
calculation of each payment to be made towards the Post-Closing
Payment by the December 15th preceding each Payment Date (the
"Buyer's Calculation").
In the event that Sellers shall object to Buyer's
Calculation, Sellers' Representative shall give written notice to
Buyer of the dispute, stating the amount in dispute and
describing with reasonable specificity the basis therefor, by the
January 15th preceding each Payment Date.
The parties shall in good faith endeavor to resolve
such dispute as promptly as practicable. In the event that the
parties are unable to resolve such dispute within ten business
days following Sellers' Representative's delivery of a notice of
dispute, the item(s) in dispute shall be promptly submitted to
Price Waterhouse or such other firm of independent certified
public accountants of recognized national standing as shall be
mutually acceptable to Buyer and Sellers for resolution within 30
days after its engagement. The determination of such accounting
firm shall be final and binding on all parties hereto and
judgment may be entered thereon by a court of competent
jurisdiction. The fees and expenses of such accounting firm
shall be borne by the party against whom such determination is
made (or, if applicable, by Buyer, on the one hand, and Sellers,
on the other hand, in the proportions that such determination is
made against each of them).
In the event that the amount of a Post-Closing Payment
is in dispute, the amount of the Post-Closing Payment paid on the
relevant Payment Date shall be based upon the Buyer's Calculation
but shall be subject to adjustment in accordance with the
preceding paragraphs.
2.5 Sellers' Representative. Each Seller hereby
irrevocably appoints each of Barton P. Ferris, Jr., James P.
Maguire and Scott D. Whittenburg in writing to act as such
Seller's attorney-in-fact and representative (the "Sellers'
Representative"), in accordance with the Sellers' Representatives
Agreement referenced in Section 9.8 to do any and all things and
to execute any and all documents in such Seller's name, place and
stead, in any way which such Seller could do if personally
present, in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, to accept on
such Seller's behalf any Anacomp Shares to be delivered to such
Seller under this Agreement, or to amend, cancel or extend, or
waive the terms of, this Agreement. The Buyer shall be entitled
to rely, as being binding upon such Seller, upon any document or
other paper believed by the Buyer to be genuine and correct and
to have been signed by the Sellers' Representative, and the Buyer
shall not be liable to any Seller for any action taken or omitted
to be taken by the Buyer in such reliance. The Sellers'
Representative shall have the sole and exclusive right on behalf
of the Sellers to take any action pursuant to Section 7.3 or
Article 12.
2.6 Registration of Anacomp Shares. Prior to the
Closing, Buyer shall prepare and file with the Securities and
Exchange Commission (the "SEC") a registration statement for the
resale of all shares of Buyer's common stock issued (or to be
issued) to Sellers hereunder (including without limitation the
maximum number of shares of Buyer's common stock that could be
issued to Sellers as a Post-Closing Payment under Section 2.4).
Buyer shall use its reasonable best efforts to cause such
registration statement to become effective on or as soon as
possible after the Closing Date (the "Effective Date") and to
remain effective for a period of five (5) years following the
Effective Date, or one (1) year following the last possible
issuance of Anacomp Shares pursuant to Section 2.4, whichever
shall occur first. Buyer shall also use its reasonable best
efforts to list the Anacomp Shares for trading on the Exchange as
soon as possible. All of the Anacomp Shares which may be issued
in connection with the Post-Closing Payment shall likewise be
included in the registration statement and in the Exchange
listing application. Buyer shall pay all costs (including
without limitation all legal, accounting and printing fees)
arising from such registration. It is understood and agreed that
Sellers shall have no right to require registration of the shares
of Buyer's common stock except as provided in this Section 2.6.
2.7 Adjustments to the Purchase Price. In the event
the closing sales price of the Anacomp Shares on the Exchange on
the Effective Date is less than $3.57, Buyer shall issue as soon
as possible (but in no event later than five business days after
the Effective Date) to each of the Sellers (and include in
Buyer's registration statement) a number of additional Anacomp
Shares, in proportion to each Seller's holdings, equal to the
result of the following: (i) $7,600,000 divided by the greater
of (A) the closing sales price of the Anacomp Shares on the
Effective Date or (B) in the event that the Effective Date occurs
(1) on or within thirty days following the Closing Date, $3.07,
(2) more than thirty days but less than sixty days following the
Closing Date, $2.82 or (3) occurs more than sixty days following
the Closing Date, $2.57, minus (ii) the 2,128,852 Anacomp Shares
issued to the Sellers at the Closing.
3. Closing; Closing Date. The Closing of the sale
and purchase of the Shares contemplated hereby shall take place
at the offices of Cadwalader, Wickersham & Taft in New York, New
York at 10:00 a.m. local time, on April 28, 1994, or such other
time or date as the Buyer and the Sellers' Representative agree
in writing, but not later than April 30, 1994. The time and date
upon which the Closing occurs is herein called the "Closing
Date." The Closing shall be effective as of 11:59 p.m. on the
Closing Date.
4. Representations and Warranties of Each Seller.
The Sellers, severally and not jointly, represent and warrant to
the Buyer as follows:
4.1 Due Incorporation and Authority. Each of the
Company and Graham Magnetics 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 own, lease and operate its properties and to carry on its
business as now being and heretofore conducted.
4.2 Subsidiaries and Other Affiliates. Schedule 4.2
sets forth the name and jurisdiction of organization of each
corporation or other entity (collectively, "Subsidiaries") in
which the Company directly or indirectly owns or has the power to
vote shares of any capital stock or other ownership interests
having ordinary voting power to elect a majority of the directors
of such corporation, or other persons performing similar
functions for such entity, as the case may be. Except for the
Subsidiaries, the Company does not directly or indirectly own any
stock, securities or other equity or proprietary interest in any
other person. Each of the Subsidiaries is a corporation duly
organized, validly existing and in good standing (or the
equivalent concept in the relevant jurisdiction) under the laws
of its jurisdiction of organization and has all requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as now being and
heretofore conducted.
4.3 Qualification. Each of the Company and each of
the Subsidiaries is duly qualified or otherwise authorized as a
foreign corporation to transact business and is in good standing
in each jurisdiction set forth on Schedule 4.3, which are the
only jurisdictions in which such qualification or authorization
is required by law and in which the failure so to qualify or be
authorized could have a material adverse effect on the
properties, business, results of operations and financial
condition of the Company and the Subsidiaries, taken as a whole
(collectively, the "Condition of the Companies"). No other
jurisdiction has claimed, in writing or, to the Seller's
knowledge, otherwise, that the Company or any of the Subsidiaries
is required to qualify or otherwise be authorized as a foreign
corporation therein and, except as set forth on Schedule 4.3,
neither the Company nor any of the Subsidiaries files franchise,
income or other tax returns in any other jurisdiction based upon
the ownership or use of property therein or the derivation of
income therefrom. Neither the Company nor any of the
Subsidiaries owns or leases property in any jurisdiction other
than its respective jurisdiction of organization and the
jurisdictions set forth on Schedule 4.3.
4.4 Outstanding Capital Stock. The Company is
authorized to issue (a) 1,000,000 shares of common stock, par
value $0.01 per share (the "Common Stock") and (b) 250,000 shares
of preferred stock, par value $0.01 per share (the "Preferred
Stock"). There are no shares of Preferred Stock and 970,000
shares of Common Stock issued and outstanding. It is anticipated
that Chemical Bank will, prior to the Closing Date, exercise its
warrant to purchase 30,000 shares of Common Stock and that as of
the Closing Date, there will be 1,000,000 shares of Common Stock
issued and outstanding. The Company does not have any treasury
stock. All of the outstanding shares of Common Stock are owned
by the Sellers in the respective amounts set forth on Exhibit A.
The authorized and issued shares of capital stock or other
ownership interests of each Subsidiary are set forth on Schedule
4.4. Except as set forth on Schedule 4.4, all issued and
outstanding capital stock or other ownership interests of each
Subsidiary is owned directly or indirectly by the Company, free
and clear of any lien, pledge, mortgage, security interest,
claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction under any shareholder or similar
agreement, encumbrance or any other restriction or limitation
whatsoever (collectively, "Liens"). All of the outstanding
shares of capital stock of the Company (including the shares to
be issued to Chemical Bank upon exercise of its warrant) and the
Subsidiaries are duly authorized and validly issued, fully paid
and nonassessable. No other class of capital stock or other
ownership interests of the Company or any of the Subsidiaries is
authorized or outstanding.
4.5 Options or Other Rights. Except as set forth on
Schedule 4.5, there is no outstanding right, subscription,
warrant, call, unsatisfied preemptive right, option or other
agreement of any kind to purchase or otherwise to receive from
the Company, any of the Subsidiaries or any Seller any of the
outstanding, authorized but unissued, unauthorized or treasury
shares of the capital stock or any other security of the Company
or any of the Subsidiaries, and there is no outstanding security
of any kind convertible into any such capital stock.
4.6 Charter Documents and Corporate Records. The
Sellers have heretofore delivered to the Buyer true and complete
copies of the Certificates of Incorporation (certified by the
Secretaries of State or other appropriate official of their
respective jurisdictions of incorporation) and By-laws (certified
by the respective corporation's secretary or an assistant
secretary), or comparable instruments, of the Company and each of
the Subsidiaries as in effect on the date hereof. The minute
books or comparable records of the Company and of each of the
Subsidiaries, all of which have been made available to the Buyer
for its inspection contain true and complete records in all
material respects of all meetings and consents in lieu of meeting
of the Board of Directors or comparable persons (and any
committee thereof) of the Company and of each of the
Subsidiaries, and their respective shareholders or comparable
persons, since the time of its organization and accurately
reflect all transactions referred to in such minutes and consents
in lieu of meeting. The stock books or comparable records of the
Company and each of the Subsidiaries are true and complete in all
material respects.
4.7 Financial Statements. The consolidated balance
sheet of the Company and the Subsidiaries as of December 31, 1993
and December 31, 1992 and the related consolidated statement of
income, shareholders' equity and changes in financial position
for the year then ended, including the footnotes thereto,
certified by Deloitte & Touche, independent certified public
accountants, which have been delivered to the Buyer, are true,
correct and complete in all material respects, fairly present the
consolidated financial position of the Company and the
Subsidiaries as at such dates and the consolidated results of
operations of the Company and the Subsidiaries for such
respective periods, in each case in accordance with generally
accepted accounting principles consistently applied for the
periods covered thereby. (The foregoing consolidated financial
statements of the Company and the Subsidiaries as of December 31,
1993 and December 31, 1992 and for the years then ended are
sometimes herein called the "Audited Financials".) The
consolidated balance sheet included in the 1993 Audited
Financials is sometimes herein called the "Balance Sheet" and
December 31, 1993 is sometimes herein called the "Balance Sheet
Date". The unaudited consolidated balance sheet of the Company
as of February 28, 1994, and the related consolidated statement
of income, which have been delivered by the Buyer, are true,
correct and complete in all material respects, fairly present the
consolidated financial position of the Company and the
Subsidiaries as at such date and the consolidated results of
operations of the Company and the Subsidiaries for the two months
then ended, in each case in accordance with generally accepted
accounting principles applied on a basis consistent with that of
the Audited Financials (subject to normal year-end adjustments
not having any material adverse effect on revenues).
4.8 No Material Adverse Change. Since the Balance
Sheet Date, there has been no material adverse change in the
Condition of the Companies, and neither the Company, any of the
Subsidiaries nor any of the Sellers knows of any such change
which is threatened, nor has there been any damage, destruction
or loss which, to the best of the Sellers' knowledge, would have
or has had a material adverse effect on the Condition of the
Companies, whether or not covered by insurance.
4.9 Tax Matters. (a) Except as set forth in Schedule
4.9, the Company and each of its Subsidiaries have duly filed on
a timely basis (taking into account any extensions of time for
filing), all Tax Returns, relating to all Taxes for which the
Company or any of its Subsidiaries are liable, required to be
filed by or on behalf of the Company or any of its Subsidiaries
for any taxable period ending on or before the Closing Date.
Each such Tax Return is true and correct in all material
respects. The Company and its Subsidiaries have duly paid, or
have made adequate provisions (by a tax accrual or tax reserve)
for all Taxes for which the Company or any of its Subsidiaries
are liable for any Pre-Closing Period that ends on or before the
Closing Date.
(b) There are no liens for any Taxes, assessments or
government charges or levies upon any property or assets of the
Company or any of its Subsidiaries (except for liens for taxes
not yet due), nor are there any outstanding deficiencies or
assessments or written proposals for assessment of any Taxes
proposed, asserted or assessed against the Company or any of its
Subsidiaries that have not been paid in full or otherwise
settled. Except as set forth on Schedule 4.9, no actions,
proceedings, or examinations are pending or, to Sellers'
knowledge after due inquiry, threatened to be brought by any
taxing authority for the determination, assessment or collection
of any Taxes for which the Company or any of its Subsidiaries may
be liable. Except as set forth on Schedule 4.9, neither the
Company nor any Subsidiary thereof has requested any extension of
time within which to file any Tax Return which Tax Return has not
since been filed, and neither the Company nor any Subsidiary
thereof is bound by any election, consent, or agreement that
extends or waives any applicable statute of limitations with
respect to any taxable periods of the Company or any of its
Subsidiaries. The information set forth in Schedule 4.9
indicates the date through which the Taxable Years relating to
particular Tax Returns of the Company or any of its Subsidiaries
are closed by applicable statutes of limitations or otherwise.
Copies of all foreign, state and Federal income tax returns (as
amended) filed by or on behalf of the Company or any of its
Subsidiaries for all Taxable Years not closed by the applicable
statutes of limitation have been made available to the Buyer.
(c) Except as set forth in Schedule 4.9, all
liabilities for Taxes of the Company or any of its Subsidiaries
for the current year through the Closing Date, whether or not
they have become due and payable (including any Taxes
attributable to the Pre-Closing Period reportable in Tax Returns
covering a Taxable Year which includes the Closing Date), have
been duly paid in full or adequate provisions therefor have been
made by a tax accrual or tax reserve.
(d) Neither the Company nor any Subsidiary thereof is
a party to any outstanding tax sharing or other allocation
agreement with respect to any Taxes.
(e) Schedule 4.9 sets forth the following information
which is true, complete and correct to the best of the knowledge
of the Sellers and the officers of the Company and its
Subsidiaries responsible for such matters: (1) the amount of
foreign income taxes (or taxes in lieu thereof) which are
creditable for Federal income tax purposes or for foreign income
tax purposes and which are associated with the earnings and
profits of each foreign Subsidiary, and (2) the amount of any net
operating or capital losses (or tax credits) which are available
for carryover to subsequent years for Federal income tax purposes
and the extent to which the utilization of such losses and
credits is currently limited under the Code.
(f) Neither the Company nor any Subsidiary thereof has
ever made an election pursuant to Section 1362 of the Code to be
treated as an S Corporation for Federal income tax purposes. No
election under Section 341(f) of the Code has been made by the
Company or any of its Subsidiaries. Neither the Company nor any
Subsidiary thereof has agreed to, or been required to, make any
Section 481(a) adjustment because of a change of accounting or
otherwise. There are no closing agreements, irrevocable
elections, or similar agreements or decisions which will restrict
the choices of the Company or any of its Subsidiaries regarding
the treatment of any item of income, deduction, credit, or
allowance in taxable periods subsequent to the Closing Date. The
Company and its Subsidiaries have withheld and paid all Taxes
required to be withheld and paid in connection with amounts paid
or owing to any employee, creditor, independent contractor,
creditor, stockholder or other third party. Except as disclosed
in Schedule 4.9, neither the Company nor any Subsidiary thereof
has made any payments, is obligated to make any payments, or is a
party to any agreement that under certain circumstances could
obligate it to make any payments, that will not be deductible
under Section 280G of the Code. The Company and each of its
Subsidiaries have disclosed on their Federal income Tax Returns
all positions taken therein that could give rise to a substantial
understatement of Federal income tax within the meaning of
Section 6662 of the Code.
(g) Neither the Company nor any Subsidiary thereof has
ever been a member of an Affiliated Group (as defined in Section
1504(a) of the Code) for which consolidated or combined Tax
Returns were filed or were required to be filed other than the
Affiliated Group of which the Company is the common parent
thereof and consequently has no liability for unpaid Taxes under
Treas. Reg. Section 1.1502-6 (or any similar provision of state,
local, or foreign law). Neither the Company nor any of its
Subsidiaries has any liability for Taxes as a transferee or
successor arising out of an acquisition of assets that will not
be indemnified by the seller of such assets.
4.10 Compliance with Laws. Except as set forth on
Schedule 4.10, neither the Company nor any of the Subsidiaries is
in violation of any applicable order, judgment, injunction,
award, decree or writ (collectively, "Orders"), or any applicable
law, statute, code, ordinance, regulation or other requirement
(collectively, "Laws"), of any government or political
subdivision thereof, whether Federal, state, local or foreign, or
any agency or instrumentality of any such government or political
subdivision, or any court, administrative tribunal, or arbitrator
(collectively, "Governmental Bodies") including, without
limitation, (i) regulations and requirements of the Occupational
Safety and Health Administration or (ii) Environmental Laws (the
legal requirements referred to in clauses (i) and (ii) above
being sometimes herein called the "Safety and Environmental
Laws"), which violation could have an adverse effect on the
Condition of the Companies, and neither the Company nor any of
the Subsidiaries has received written, or, to Sellers' knowledge,
other notice that any such violation is being or may be alleged.
Neither the Company nor any of the Subsidiaries has made any
illegal payment to officers or employees of any Governmental
Body, or made any payment to customers for the sharing of fees or
to customers or suppliers for rebating of charges, or engaged in
any other reciprocal practice, or given any other illegal
consideration to purchasing agents or other representatives of
customers in respect of sales made or to be made by the Company
or any of the Subsidiaries.
4.11 Permits. Except as set forth on Schedule 4.11,
the Company and the Subsidiaries have all licenses, permits,
orders or approvals of, and have made all required filings and
registrations with, any Governmental Body that are required to
conduct the business of the Company or any of the Subsidiaries
(collectively, "Permits"), including, without limitation, all
Permits relating to compliance with Safety and Environmental
Laws. All Permits are listed on Schedule 4.11 and are in full
force and effect; no material violations are or have been
recorded in respect of any Permit; and no proceeding is pending
or, to the knowledge of the Company, any of the Subsidiaries or
any of the Sellers, threatened, nor has the Company or any of the
Subsidiaries received notice that any Governmental Body intends
to deny, cancel, terminate, revoke, limit or not renew any
Permit.
4.12 Environmental Matters.
(a) Except as set forth on Schedule 4.12, since June
30, 1992, the Company and the Subsidiaries have not conducted,
and do not conduct, any activity requiring a permit under 40 CFR
Part 270, or under any equivalent state law or regulation.
Neither the Company or any Subsidiary, nor any Seller, has
received written, or to the knowledge of Sellers, other notice
from any third party of any violation of any Safety and
Environmental Laws or allegation or claim of any such violation
that has not been addressed and corrected by the Company to the
satisfaction of governmental authorities having jurisdiction
thereof or otherwise disclosed by the Company and Sellers to
Buyer.
(b) Except as set forth on Schedule 4.12, since June
30, 1992, there has been no spill, discharge, leak, emission,
injection, escape, dumping or release of Hazardous Substances at,
on, above or beneath any real property, improvements, equipment,
vessels or other facilities owned, occupied or operated by the
Company or any of the Subsidiaries or at, on, above or beneath
the environment surrounding such property, improvements,
equipment, vessels or other facilities, other than those releases
which are allowable under, and in accordance with, the
performance standards set forth in the Company's or any of the
Subsidiaries' applicable operating Permits. Except as set forth
on Schedule 4.12, since June 30, 1992, neither the Company nor
any of the Subsidiaries has disposed, released or caused the
disposal or release of any Hazardous Substance at any site or
facility other than those sites or facilities owned, occupied or
operated by the Company or any of the Subsidiaries.
(c) Except as set forth on Schedule 4.12, all
activities to be performed under the "Letter Agreement Regarding
Environmental Matters" dated June 30, 1992 from Graham Asset
Corp. to Mr. Scott C. Selbach of Carlisle Companies Incorporated
have been completely and successfully performed.
4.13 No Breach. The execution, delivery and perform-
ance of this Agreement by the Sellers and the consummation of the
transactions contemplated hereby (the "Contemplated
Transactions") will not (i) violate any provision of the
Certificates of Incorporation or By-laws (or comparable
instruments) of the Company or any of the Subsidiaries; (ii)
require the Sellers, the Company or any of the Subsidiaries to
obtain any consent, approval or action of, or make any filing
with or give any notice to, any Governmental Body or any other
person, except as set forth on Schedule 4.13 (the "Required
Consents"); (iii) violate, conflict with or result in the breach
of any of the terms of, result in a material modification of the
effect of, otherwise cause the termination of or give any other
contracting party the right to terminate, or constitute (or with
notice or lapse of time, or both, constitute) a default (by way
of substitution, novation or otherwise) under, any contract,
agreement, indenture, note, bond, loan, instrument, lease,
conditional sale contract, mortgage, license, franchise,
commitment or other binding arrangement (collectively, the
"Contracts") to which the Company or any of the Subsidiaries is a
party or by or to which any of them or any of their properties
may be bound or subject, or result in the creation of any Lien
upon the properties of the Company or any of the Subsidiaries
pursuant to the terms of any such Contract; (iv) violate any
Order of any Governmental Body against, or binding upon, the
Company or any of the Subsidiaries or upon their respective
securities, properties or business; (v) violate any Law of any
Governmental Body, which violation could have a material adverse
effect on the Condition of the Companies; or (vi) violate or
result in any change or modification in any Permit, or cause the
revocation or suspension of any Permit except as set forth on
Schedule 4.11.
4.14 Claims and Proceedings. Except as set forth on
Schedule 4.14, (i) there are no outstanding Orders of any
Governmental Body against or involving the Company or any of the
Subsidiaries, (ii) there are no actions, suits, claims or legal,
administrative or arbitral proceedings or investigations
(collectively, "Claims") (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance) pending,
or to the knowledge of the Company, any of the Subsidiaries or
any of the Sellers, threatened, against or involving the Company
or any of the Subsidiaries or any of their properties or assets
and all notices required to have been given to any insurance
company listed as insuring against any Claim set forth on
Schedule 4.14 have been timely and duly given and, except as set
forth on Schedule 4.14, no insurance company has asserted in
writing that such Claim is not covered by the applicable policy
relating to such Claim; (iii) there are no product liability
Claims against or involving the Company or any of the
Subsidiaries or any product manufactured, marketed or distributed
at any time by the Company or any of the Subsidiaries ("Company
Products") and no such Claims have been settled, adjudicated or
otherwise disposed of since June 30, 1992, and (iv) there are no
Claims pending or, to the knowledge of the Company, any of the
Subsidiaries or any of the Sellers, threatened that would give
rise to any right of indemnification on the part of any director
or officer of the Company or any of the Subsidiaries or the
heirs, executors or administrators of such director or officer,
against the Company or any of the Subsidiaries or any successor
to the business of the Company or any of the Subsidiaries.
4.15 Contracts. (a) Schedule 4.15 sets forth all of
the following Contracts to which the Company or any of the
Subsidiaries is a party or by or to which any of them or any of
their properties may be bound or subject (other than those
specifically set forth on any other Schedule): (i) Contracts
with any current or former officer, director, shareholder,
employee, consultant, agent or other representative or with an
entity in which any of the foregoing is a controlling person;
(ii) Contracts with any labor union or association representing
any employee; (iii) material Contracts with any person to sell,
distribute or otherwise market any of the Company Products; (iv)
material Contracts with any person for the manufacture of any
product of the Company or any Subsidiary; (v) material Contracts
for the sale of any properties other than in the ordinary course
of business or for the grant to any person of any option or
preferential rights to purchase any properties; (vi) partnership
or joint venture agreements; (vii) real property leases; (viii)
Contracts under which the Company or any of the Subsidiaries
agrees to indemnify any party or to share tax liability of any
party; (ix) material Contracts with customers, distributors or
suppliers for the sharing of fees, the rebating of charges or
other similar arrangements; (x) Contracts containing covenants of
the Company or any of the Subsidiaries not to compete in any line
of business or with any person in any geographical area or
covenants of any other person not to compete with the Company or
any of the Subsidiaries in any line of business or in any
geographical area; (xi) Contracts relating to the acquisition by
the Company or any of the Subsidiaries of any operating business
or the capital stock of any other person; (xii) Contracts
requiring the payment to any person of an override or similar
commission or fee; (xiii) Contracts relating to the borrowing of
money; (xiv) Contracts containing obligations or liabilities of
any kind to holders of the capital stock of the Company as such
(including, without limitation, an obligation to register any of
such securities under any Federal or state securities laws);
(xv) Contracts for the payment of fees or other consideration to
any officer or director of the Company or any of the Subsidiaries
or to any other entity in which any of the foregoing has an
interest; (xvi) options for the purchase of any property for an
aggregate purchase price in excess of $2,000 per annum (other
than purchase orders for inventory entered into in the ordinary
course of business); (xvii) management Contracts and other
similar agreements with any person; (xviii) material Contracts
requiring the payment of any licensing fees, royalties, or
operating fees; and (xix) material Contracts which cannot be
cancelled without liability, premium or penalty on less than 90
days' notice. Schedule 4.15 also lists and briefly describes the
status of all Contracts currently in negotiation or proposed by
the Company or any of the Subsidiaries of a type which if entered
into by the Company or any of the Subsidiaries would be required
to be listed on Schedule 4.15 or on any other Schedule ("Proposed
Contracts"). For purposes of this Section 4.15, a contract will
be "material" if, pursuant to the terms of such contract, there
is either a current or future obligation or right of the Company
or any of the Subsidiaries to make payments in excess of $10,000
per annum or receive payments in excess of $10,000 per annum and
provided that purchase orders for inventory entered into in the
ordinary course of business will not be deemed to be material.
(b) There have been delivered to the Buyer true and
complete copies of (i) all of the Contracts set forth on Schedule
4.15, (ii) the most recent draft, letter of intent or term sheet
(or if none exist, a reasonably detailed written summary)
embodying the terms of all of the Proposed Contracts set forth on
Schedule 4.15 and (iii) a list of current capital improvement
projects and tangible property which have been ordered since the
Balance Sheet Date. All of the material Contracts referred to in
the preceding clause (i) are valid and binding upon the Company
or one of the Subsidiaries, as the case may be, in accordance
with their terms. Neither the Company nor any of the
Subsidiaries is in default in any material respect under any of
such Contracts (including without limitation, the 3M Contract and
the BASF Contract), nor does any condition exist that with notice
or lapse of time or both would constitute such a material default
thereunder. To the knowledge of the Company, any of the
Subsidiaries or any of the Sellers, no other party to any such
Contracts (including without limitation, 3M and BASF) is in
default thereunder in any material respect nor does any condition
exist that with notice or lapse of time or both would constitute
such a material default thereunder.
4.16 Real Estate.
(i) Graham Magnetics is the owner in fee simple
of that certain parcel of real estate together with
easements and licenses appurtenant thereto (if any),
and the buildings, fixtures and improvements thereon,
situated in Graham, Texas, which real estate is
described more particularly on Schedule 4.16 attached
hereto (collectively, hereinafter referred to as the
"Premises"), subject only to the permitted exceptions
shown on Schedule 4.16 (the "Permitted Exceptions").
Since June 30, 1992, neither the Company nor any of the
Subsidiaries has owned any fee interest in real
property other than the Premises or entered into any
new leases (other than lease renewals).
(ii) There are no leases, subleases, licenses or
occupancy agreements for the Premises or any portion
thereof except for the lease described on Schedule 4.16
hereto (the "Vistatech Lease"). A true copy of the
Vistatech Lease has been previously delivered to Buyer.
The Vistatech Lease has not been modified, amended or
extended, and is in full force and effect.
(iii) All initial work and alterations required of
Graham Magnetics under the Vistatech Lease have been
completed. Graham Magnetics has no further
construction obligations under the Vistatech Lease or
any subsequent "punch-list" or other agreement relating
to the Premises.
(iv) Neither the Company nor any of the
Subsidiaries has received any notice, from any of the
insurance companies which issue the insurance policies
insuring the Premises, of a non-insurable condition or
defect with respect to the Premises.
(v) Graham Magnetics has obtained fire and
extended coverage risks, business interruption, rent
loss and liability insurance policies (collectively,
the "Insurance Policies") with respect to the Premises
in an amount sufficient to avoid co-insurance. Such
policies are in full force and effect.
(vi) No labor or materials have been furnished to
the Premises which could be the basis for a mechanic's
or materialman's lien.
(vii) To the knowledge of the Company, any of the
Subsidiaries, or any of the Sellers, there are no
material defects in the construction of the
improvements on the Premises. Since completion of the
improvements, no repairs of a material nature or
replacements have been required to be made by Graham
Magnetics under the Vistatech Lease.
(viii) All electric service, water service and other
utilities necessary to the continued operation of the
Premises are available to the Premises and connected to
the improvements thereon.
(ix) The Premises are not situated in an area that
has been identified by the Secretary of Housing and
Urban Development as an area having special flood
hazards.
(x) Except as disclosed on Schedule 4.16, to the
knowledge of the Company, the Subsidiaries and the
Sellers, there is no friable asbestos (as defined by 40
C.F.R. Section 61.141) in or used in the construction
of the Premises.
(xi) Neither the Company nor any of the
Subsidiaries has received notice of any governmental
special assessment or similar charge (other than
scheduled real estate taxes) affecting the Premises.
(xii) The Premises are substantially in good
operating condition and repair subject only to ordinary
wear and tear. To the knowledge of the Company, any of
the Subsidiaries or any of the Sellers, the heating,
ventilation, air conditioning, electrical, plumbing,
water, storm drainage and sanitary sewer systems at or
serving the Premises and all facilities and equipment
relating thereto are in good working order and neither
the Company, any of the Subsidiaries, nor any of the
Sellers has knowledge of any defects or deficiencies
therein.
(xiii) No person or entity has any right or option
to purchase or otherwise acquire the Premises.
(xiv) To the knowledge of the Company, any of the
Subsidiaries, or any of the Sellers, the Premises have
been at all times during the Company's ownership
thereof, and presently are, except as may be disclosed
in that certain environmental report, dated June 17,
1992, prepared by Blasland & Bouck Engineers, R.C. (the
"Environmental Report"), a copy of which has been
delivered to the Buyer, or in Schedule 4.12, free of
contamination arising out of or resulting from
Hazardous Substances.
(xv) Except as forth on Schedule 4.12, neither the
Company nor any of the Subsidiaries has caused or, to
the knowledge of the Company, any of the Subsidiaries,
or any Sellers, suffered to occur, a disposal or
release of any Hazardous Substance in violation of any
Environmental Law at, upon, under or within the
Premises or any contiguous or adjacent real estate.
(xvi) Neither the Company nor any Subsidiary has,
to the best of the knowledge of the Company, any of the
Subsidiaries, or any of the Sellers, permitted, and
will not knowingly permit, the Company's tenant,
Vistatech, to engage in any operation or activity
(other than activities expressly permitted under the
Vistatech lease) that could result in, give rise to, or
lead to the imposition of liability on Vistatech, or on
Graham Magnetics or the Buyer, or the creation of a
lien on the Premises, under the Law.
4.17 Inventory. The inventory of the Company and the
Subsidiaries (including that reflected on the Balance Sheet) is
or was, prior to the sale thereof, in good and merchantable
condition, and suitable and usable or salable in the ordinary
course of business for the purposes for which intended. The
values at which such inventory is carried on the Balance Sheet
reflect the normal inventory valuation policy of the Company
(including the writing down of the value of obsolete inventory),
stating inventories at the lower of cost or market (on a first-
in, first-out method). The inventories of the Company as of the
date hereof are adequate and any change in such inventories
subsequent to the Balance Sheet Date was reasonable and warranted
in the ordinary course of business of the Company and the
Subsidiaries. Neither the Company, any of the Subsidiaries nor
any of the Sellers knows of any adverse condition affecting the
supply of materials available to the Company or any of the
Subsidiaries.
4.18 Receivables. All accounts and notes receivable
reflected on the Balance Sheet, and all accounts and notes
receivable arising subsequent to the Balance Sheet Date, (i) have
arisen in the ordinary course of business of the Company or the
Subsidiaries and (ii) subject only to a reserve for bad debts
computed in accordance with generally accepted accounting
principles consistently applied and reasonably estimated to
reflect the probable results of collection, have been collected
or are collectible in the ordinary course of business of the
Company and the Subsidiaries in the aggregate recorded amounts
thereof in accordance with their terms. Schedule 4.18 lists (i)
any obligor which together with all of its affiliates owed
accounts and notes receivable reflected on the Balance Sheet,
(ii) all accounts or notes receivable more than 60 days old, and
(iii) the reserve for all bad accounts and notes receivable.
4.19 Tangible Property. Schedule 4.19 sets forth all
of the facilities, machinery, equipment, furniture, leasehold
improvements, fixtures, vehicles, structures, any related
capitalized items and other tangible property material to the
business of the Company or any of the Subsidiaries (collectively,
the "Tangible Property"). The Tangible Properties are in good
operating condition and repair, subject to continued repair and
replacement in accordance with past practice, and are suitable
for their intended use. Since June 30, 1992 there has not been
any significant interruption of the operations of the Company or
any of the Subsidiaries due to inadequate maintenance of the
Tangible Property.
4.20 Intangible Property. Schedule 4.20 sets forth all
patents, registered trademarks, registered copyrights, registered
service marks and trade names, all applications for any of the
foregoing, and all permits, grants and licenses or other rights
running to or from the Company or any of the Subsidiaries
relating to any of the foregoing. There are no other patents,
registered trademarks, registered copyrights, registered service
marks or trade names which are material to the business of the
Company or any of the Subsidiaries as presently conducted or as
being developed. The Company and the Subsidiaries have the right
to use, free and clear of any claims or rights of others, all
trade secrets, know-how, processes, technology, blue prints and
designs utilized in or incident to their businesses as presently
conducted or as being developed ("Trade Secrets") and such use
does not infringe on any patent, trademark, copyright, service
mark or trade name owned by any third party. Except as set forth
on Schedule 4.20, neither the Company nor any of the Subsidiaries
has any notice of any adversely held patent, invention,
trademark, copyright, service mark or trade name of any other
person or notice of any claim of any other person relating to any
of the property set forth on Schedule 4.20 or any Trade Secret of
the Company or any of the Subsidiaries, and neither the Company,
any of the Subsidiaries nor any of the Sellers knows of any
reasonable basis for any such charge or claim. All Trade Secrets
are protected against the use of such Trade Secrets by other
persons to an extent and in a manner customary in the industries
in which the Company and the Subsidiaries operate. There is no
present or, to the knowledge of the Company, any of the
Subsidiaries or any of the Sellers, threatened use or
encroachment of any Trade Secret which could have a material
adverse effect on the Condition of the Companies. Schedule 4.20
sets forth any unregistered trademarks, service marks and trade
names of the Company or any of its Subsidiaries.
4.21 Title to Properties. The Company and the
Subsidiaries own outright and have good title to, or have valid
leasehold interests in, all of their properties, including,
without limitation, all of the assets reflected on the Balance
Sheet, in each case free and clear of any Lien, except for (i)
Liens specifically described in the notes to the Audited
Financials; (ii) properties disposed of, or subject to purchase
or sales orders, in the ordinary course of business since the
Balance Sheet Date; (iii) Liens securing taxes, assessments,
governmental charges or levies, or the claims of materialmen,
carriers, landlords and like persons, all of which are not yet
due and payable or are being contested in good faith, so long as
such contest does not involve any substantial danger of the sale,
forfeiture or loss of any assets material to the Condition of the
Companies; (iv) assets held or used pursuant to any lease listed
on Schedule 4.15; (v) the Permitted Real Property Exceptions as
defined on Schedule 4.16.
4.22 Accounts Payable. Schedule 4.22 sets forth a true
and correct aged list of all accounts payable of the Company and
each of the Subsidiaries as of February 28, 1994.
4.23 Undisclosed Liabilities. As at the Balance Sheet
Date, the Company and the Subsidiaries did not have any direct or
indirect indebtedness, liability, claim, loss, damage,
deficiency, obligation or responsibility, known or unknown, fixed
or unfixed, choate or inchoate, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise,
of a kind required by generally accepted accounting principles to
be set forth on a financial statement or in the notes thereto
that were not fully and adequately reflected or reserved against
on the Balance Sheet or described on any Schedule or in the notes
to the Audited Financials ("Undisclosed Liabilities"). Except as
set forth on any Schedule to this Agreement, the Company and the
Subsidiaries have not, except in the ordinary course of business,
incurred any Undisclosed Liabilities since the Balance Sheet
Date. Neither the Company, any of the Subsidiaries nor any of
the Sellers has any knowledge of any circumstance, condition,
event or arrangement that may hereafter give rise to any
Undisclosed Liabilities of the Company or any of the Subsidiaries
or any successor to their businesses except in the ordinary
course of business or as otherwise set forth on Schedule 4.23.
4.24 Suppliers and Customers. Schedule 4.24 lists, by
dollar volume paid for the twelve months ended on the Balance
Sheet Date, the 20 largest suppliers (the "Significant
Suppliers") and the 20 largest customers (the "Significant
Customers") of the Company and the Subsidiaries. Except as set
forth on Schedule 4.24, (i) no material customer or supplier of
the Company or the Subsidiaries (including without limitation any
Significant Customer or Significant Supplier) within the last
twelve months has threatened in writing to cancel or otherwise
terminate, or to the knowledge of the Company, any of the
Subsidiaries or any of the Sellers intends to cancel or otherwise
terminate, the relationship of such person with the Company or
any of the Subsidiaries, (ii) no material customer or supplier of
the Company or the Subsidiaries (including without limitation any
Significant Customer or Significant Supplier) has since the
Balance Sheet Date decreased materially or threatened in writing
to decrease or limit materially, or to the knowledge of the
Company, any of the Subsidiaries or any of the Sellers, intends
to modify materially its relationship with the Company or any of
the Subsidiaries or currently intends to decrease or limit
materially, its services or supplies to the Company or any of the
Subsidiaries or its usage or purchase of the services or products
of the Company or any of the Subsidiaries, (iii) to the knowledge
of the Company, any of the Subsidiaries or any of the Sellers,
the acquisition of the Shares by the Buyer and the consummation
of the Contemplated Transactions will not affect the relationship
of the Company or any of the Subsidiaries with any of their
suppliers or customers to an extent that would have a material
adverse effect on the Condition of the Companies and (iv) since
November 1, 1993, there have been no material changes to any
agreement with any Significant Supplier or Significant Customer.
4.25 Employee Benefit Plans. (a) Schedule 4.25
contains a complete list of (i) any pension, profit sharing,
deferred compensation, bonus, stock option, stock purchase,
severance, consulting, health, welfare or incentive plan or
agreement, including any post-employment benefits, and including,
but not limited to, any "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or (ii) any program
or policy providing for "fringe benefits" to its employees,
including but not limited to any "specified fringe benefit plan",
within the meaning of Section 6039(D) of the Code, to which, in
the case of (i) or (ii), the Company or any Subsidiary is a
party, or with respect to which, in the case of (i) or (ii), the
Company or any Subsidiary has or could reasonably have any
obligation in respect of their current or former employees
(individually a "Benefit Plan", and collectively the "Benefit
Plans").
(b) The Company has delivered or made available to
Buyer correct and complete copies of (A) each Benefit Plan,
including any trust agreement or insurance contract relating
thereto, (B) the most recent Internal Revenue Service ("IRS")
determination letter relating to each of the Benefit Plans which
is intended to qualify under Section 401(a) of the Code (the
"Qualified Plans"), (C) the most recent Annual Reports (Form 5500
Series) and accompanying schedules for each Benefit Plan, (D) any
summary plan description (including summaries of material
modifications) relating to any Benefit Plan, (E) the most recent
audited financial statement of each Benefit Plan (if applicable),
and (F) the most recent actuarial valuation report for each
Benefit Plan for which such reports were prepared.
(c) Except as disclosed on Schedule 4.25, the Company
and each Subsidiary has received, with respect to each of the
Qualified Plans, a favorable determination letter issued by the
IRS, and no events, actions or failures to act have occurred
since the issuance of such letter which would adversely affect
the qualification of any such Qualified Plan. Except as
disclosed on Schedule 4.25, neither the Company, any Subsidiary
nor any entity which is part of a group which includes the
Company or any Subsidiary and which is treated as a single
employer under Section 414(b) or (c) of the Code (a "Controlled
Group Member") contributes to, or is or has (since September 26,
1980) been obligated to contribute to, a "multiemployer plan", as
defined in Section 3(37) of ERISA.
(d) Each of the Benefit Plans has been administered in
all material respects in accordance with its terms, and in
accordance with the requirements of any applicable law. Except
as disclosed on Schedule 4.25, all reports, returns and
information required to be filed with the IRS, the United States
Department of Labor, or the Pension Benefit Guaranty Corporation
("PBGC"), or furnished or distributed to plan participants and
their beneficiaries, which if not timely filed, furnished or
distributed would result in any liability on the part of the
Company or any Subsidiary with respect to any Benefit Plan, have
been timely filed, furnished or distributed.
(e) No Benefit Plan (or pension plan maintained by a
Controlled Group Member) which is subject to Title IV of ERISA
("Pension Plan") has (i) completely or partially terminated or
(ii) been the subject of a "reportable event" (as defined in
Section 4043 of ERISA), which termination or event has resulted
or could reasonably result in any liability on the part of the
Company or any Subsidiary. All premiums required by Section 4007
of ERISA to be paid by the Company or any subsidiary have been
timely paid. No proceedings have been instituted or threatened
by the PBGC to terminate any Pension Plan, or to appoint a
trustee to administer such a plan, pursuant to Subtitle C of
Title IV of ERISA, and no circumstances exist that constitute
grounds entitling the PBGC to institute such an action. No
liability under Subtitle C or D of Title IV of ERISA has been
incurred by the Company or any Subsidiary with respect to any
Pension Plan. No Pension Plan has had an "accumulated funding
deficiency" (whether or not waived), as that term is defined in
Section 412 of the Code, and the fair market value of the assets
of each such plan equals or exceeds the actuarial present value
(based on the assumptions used for purposes of the most recent
actuarial valuation for such plan) of the "benefit liabilities"
(as defined in Section 4001(a)(16) of ERISA) of such plan.
Neither the Company nor any Subsidiary is, or has been, required
to furnish security to any Pension Plan pursuant to Section
401(a)(29) of the Code.
(f) There have been no "prohibited transactions" (as
defined in Section 4975 of the Code or Section 406 of ERISA) with
respect to any Benefit Plan as to which the Company or any
Subsidiary may have any liability. Except as disclosed on
Schedule 4.25, no events have occurred with respect to which the
Company or any Subsidiary may be liable for (i) a penalty under
Section 502(c) or 502(i) of ERISA, (ii) an addition to tax under
Section 6652(d), (e), (h), or (i) of the Code, or (iii) an excise
tax under Chapter 43 of Subtitle D of the Code.
(g) There are no pending, or to the knowledge of the
Company, any of the Subsidiaries or any of the Sellers,
threatened claims involving any Benefit Plan by any employee or
beneficiary covered under any such Benefit Plan (other than
routine claims for benefits) which may result in liability on the
part of the Company or any Subsidiary, nor, to the knowledge of
the Sellers, is there any basis for any such claim. The Company
will notify Buyer in writing of any such threatened or pending
claims arising after the date hereof but before the Closing Date.
(h) Except as disclosed on Schedule 4.25, neither the
Company nor any Subsidiary has any obligation to provide, or
liability with respect to, any post-retirement health or life
benefits for any current or former employee under any Benefit
Plan, contract or arrangement which cannot be amended or
terminated without liability.
4.26 Employee Relations. As of December 31, 1993, the
Company and the Subsidiaries have approximately 450 full-time
employees in the aggregate. Except as described on Schedule
4.26, no union organizing efforts have been conducted since June
30, 1992 or are now being conducted. Except as set forth on
Schedule 4.26, neither the Company nor any of the Subsidiaries
has at any time since June 30, 1992 had, nor, to the knowledge of
the Company, any of the Subsidiaries or any of the Sellers, is
there now threatened, a strike, picket, work stoppage, work
slowdown or other labor trouble that had or may have a material
adverse effect on the Condition of the Companies.
4.27 Insurance. Schedule 4.27 sets forth a list
(specifying the insurer, describing each pending claim thereunder
(other than reimbursement claims made by employees under group
medical insurance policies) as of February 28, 1994 and setting
forth the aggregate amounts paid out under each such policy
through the date hereof and the aggregate limit, if any, of the
insurer's liability thereunder) of all policies or binders of
fire, liability, product liability, workmen's compensation,
vehicular and other insurance held by or on behalf of the Company
or any of the Subsidiaries. Such policies and binders are valid
and binding in accordance with their terms and are in full force
and effect. Neither the Company nor any of the Subsidiaries is
in default with respect to any provision contained in any such
policy or binder or has failed to give any notice or present any
claim under any such policy or binder in due and timely fashion.
Except for claims set forth on Schedule 4.27, there are no
outstanding unpaid claims under any such policy or binder, and
neither the Company nor any of the Subsidiaries has received any
notice of cancellation or non-renewal of any such policy or
binder. To Sellers' knowledge, there is no inaccuracy in any
application for such policies or binders, any failure to pay
premiums when due or any similar state of facts that might form
the basis for termination of any such insurance. Except as set
forth on Schedule 4.27, neither the Company nor any of the
Subsidiaries has received any written or, to Sellers' knowledge,
other notice from any of its insurance carriers that any
insurance premiums will be materially increased in the future or
that any insurance coverage listed on Schedule 4.27 will not be
available in the future on substantially the same terms as now in
effect. There have been delivered or made available to the Buyer
true and complete copies of all insurance policies or binders set
forth on Schedule 4.27.
4.28 Company Products. Schedule 4.28 contains a
correct and complete breakdown of the 1994 standard manufacturing
cost for all Company Products manufactured or assembled by the
Company or any of the Subsidiaries. Except as set forth on
Schedule 4.28, there are no statements, citations or decisions by
any Governmental Body specifically stating that any Company
Product is defective or unsafe or fails to meet any standards
promulgated by any such Governmental Body. Except as set forth
on Schedule 4.28, there have been no recalls ordered by any such
Governmental Body with respect to any Company Product. Except as
set forth on Schedule 4.28, to the knowledge of the Company, any
of the Subsidiaries or any of the Sellers, there is no (i) fact
relating to any Company Product that would impose upon the
Company or any of the Subsidiaries a duty to recall any Company
Product or a duty to warn customers of a defect in any Company
Product, (ii) latent or overt design, manufacturing or other
defect in any Company Product or (iii) material liability for
warranty claims or returns with respect to any Company Product
not fully reflected on the Audited Financials. All liabilities
of the Company and the Subsidiaries for product liability and
product warranty claims have been fully and adequately reserved
against on the Balance Sheet in accordance with generally
accepted accounting principles and the historical practices of
the Company and the Subsidiaries.
4.29 Employees. Schedule 4.29 sets forth (i) the
Company's ADP report for the period ending December 31, 1993 (and
equivalent information for non-United States employees) (ii) any
payments or commitments to pay any severance or termination pay
to any such persons, and (iii) any accrual for, or any commitment
or agreement by the Company or any of the Subsidiaries to pay,
such increases, bonuses or pay. Except as set forth on Schedule
4.29, none of the officers or managers has indicated that he or
she will cancel or otherwise terminate such person's relationship
with the Company or any of the Subsidiaries. Included on
Schedule 4.29 are true, accurate and complete copies of each
severance plan, compensation plan or incentive plan of the
Company or any of its Subsidiaries currently in effect.
4.30 Operations of the Company. Except as set forth on
Schedule 4.30 or on any other Schedule, since December 31, 1992
neither the Company nor any of the Subsidiaries has:
(i) declared or paid any dividends or made any
other distributions of any kind to its shareholders, or made any
direct or indirect redemption, retirement, purchase or other
acquisition of any shares of its capital stock;
(ii) except for short-term bank borrowings in the
ordinary course of business, incurred any indebtedness for
borrowed money;
(iii) reduced its cash or short-term investments or
their equivalent, other than to meet cash needs arising in the
ordinary course of business, consistent with past practices;
(iv) waived any material right under any contract
or other agreement of the type required to be set forth on any
Schedule;
(v) made any change in its accounting methods or
practices or made any change in depreciation or amortization
policies or rates adopted by it;
(vi) materially changed any of its business
policies, including, without limitation, advertising, investment,
marketing, pricing, purchasing, production, personnel, sales,
returns, budget or product acquisition policies;
(vii) made any loan or advance to any of its
shareholders, officers, directors, employees, consultants, agents
or other representatives (other than travel advances made in the
ordinary course of business), or made any other loan or advance
otherwise than in the ordinary course of business;
(viii) except for inventory or equipment in the
ordinary course of business, sold, abandoned or made any other
disposition of any of its properties or made any acquisition of
all or any part of the properties, capital stock or business of
any other person;
(ix) paid, directly or indirectly, any of its
material Liabilities before the same became due in accordance
with its terms or otherwise than in the ordinary course of
business;
(x) terminated or failed to renew, or received
any written threat (that was not subsequently withdrawn) to
terminate or fail to renew, any contract or other agreement that
is or was material to the Condition of the Companies;
(xi) amended its Articles of Incorporation or
By-laws (or comparable instruments) or merged with or into or
consolidated with any other person, subdivided or in any way
reclassified any shares of its capital stock or changed or agreed
to change in any manner the rights of its outstanding capital
stock or the character of its business; or
(xii) engaged in any other material transaction
other than in the ordinary course of business.
4.31 Potential Conflicts of Interest. Except as set
forth on Schedule 4.31, no Seller or officer, director,
shareholder or affiliate of the Company, any of the Subsidiaries
or a Seller:
(i) owns, directly or indirectly, any interest in
(excepting less than 5% stock holdings for investment purposes in
securities of publicly held and traded companies), or is an
officer, director, employee or consultant of, any person which is
or is engaged in business as, a competitor, lessor, lessee,
supplier, distributor, sales agent or customer of the Company or
any of the Subsidiaries;
(ii) owns, directly or indirectly, in whole or in
part, any property that the Company or any of the Subsidiaries
uses in the conduct of its business; or
(iii) has any cause of action or other claim
whatsoever against, or owes any amount to, the Company or any of
the Subsidiaries, except for claims in the ordinary course of
business such as for accrued vacation pay, accrued benefits under
employee benefit plans, and similar matters and agreements
existing on the date hereof.
4.32 Banks, Brokers and Proxies. Schedule 4.32 sets
forth (i) the name of each bank, trust company, securities or
other broker or other financial institution with which the
Company or any of the Subsidiaries has an account, credit line or
safe deposit box or vault, or otherwise maintains relations; (ii)
the name of each person authorized by the Company or any of the
Subsidiaries to draw thereon or to have access to any safe
deposit box or vault; (iii) the purpose of each such account,
safe deposit box or vault; and (iv) the names of all persons
authorized by proxies, powers of attorney or other instruments to
act on behalf of the Company or any of the Subsidiaries in
matters concerning its business or affairs.
4.33 Premerger Notification. The Company (or its
ultimate parent entity) has filed notification and report forms
with respect to the Contemplated Transactions in compliance with
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and the
rules and regulations promulgated thereunder (the "HSR Act").
4.34 Full Disclosure. Seller has delivered or made
available to Buyer true, complete and authentic copies of all
documents and Contracts set forth on a Schedule hereto. No
representation or warranty of the Sellers contained in this
Agreement contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements made, in the context in which
made, not materially false or misleading.
4.35 Brokers. Other than as described in this Section
4.35, no broker, finder, agent or similar intermediary (a
"Broker") has acted on behalf of the Company, any of the
Subsidiaries or any of the Sellers in connection with this
Agreement or the Contemplated Transactions, and there are no
brokerage commissions, finder's fees or similar fees or
commissions payable in connection therewith based on any
agreement, arrangement or understanding with the Company, any of
the Subsidiaries or any of the Sellers, or any action taken by
the Company, any of the Subsidiaries or any of the Sellers. The
Company currently owes a finder's fee of $30,000 in connection
with the 1992 acquisition of the assets and the business of the
Company. Such finder's fee has been fully reserved on the
Balance Sheet. There are currently no disputes between the
Company and the finder with respect to such finder's fee. Other
than the remaining $30,000 fee, there are no liabilities or
obligations of the Company or its Subsidiaries to such finder,
including, without limitation, no obligation to issue any
securities of the Company or any of the Subsidiaries.
5. Further Representations and Warranties of Each
Seller;. Each Seller, severally and not jointly, represents and
warrants to the Buyer as follows:
5.1 Title to the Shares. As of the Closing Date, such
Seller shall own beneficially and of record, free and clear of
any Lien, or shall own of record and have full power and
authority to convey free and clear of any Lien, the Shares set
forth opposite such Seller's name on Exhibit A, and, upon
delivery of and payment for such Shares as herein provided, such
Seller will convey to the Buyer good and valid title thereto,
free and clear of any Lien.
5.2 Authority to Execute and Perform Agreement. Such
Seller has the full legal right and power and all authority and
approvals required to execute and deliver this Agreement and to
perform fully such Seller's obligations hereunder. This
Agreement has been duly executed and delivered by such Seller and
(assuming the due authorization, execution and delivery hereof by
the Buyer) is a valid and binding obligation of such Seller
enforceable in accordance with its terms (subject to applicable
bankruptcy, reorganization, insolvency, moratorium, or similar
laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in
equity or at law)). Except as set forth on Schedule 5.2, the
execution and delivery by such Seller of this Agreement, the
consummation of the Contemplated Transactions and the performance
by such Seller of this Agreement in accordance with its
respective terms will not (i) require the approval or consent of
any Governmental Body or the approval or consent of any other
person; (ii) conflict with or result in any breach or violation
of any of the terms and conditions of, or constitute (or with
notice or lapse of time or both constitute) a default under any
Law or Order of any Governmental Body applicable to such Seller
or to the Shares held by such Seller, or any Contract to which
such Seller is a party or by or to which such Seller is or the
Shares held by such Seller are bound or subject; or (iii) result
in the creation of any Lien on the Shares held by such Seller.
5.3 Anacomp Shares; No Solicitation or Distribution.
Seller acknowledges and understands that the shares of Buyer's
common stock issued to such Seller pursuant to this Agreement
have not been registered under the Securities Act of 1933, as
amended (the "Act"), and may not be sold except pursuant to an
effective registration statement, or pursuant to a duly available
exemption from the registration requirements of the Act. Seller
acknowledges that the shares of Buyer's common stock were not
offered or sold to it by any form of general solicitation or
general advertising, and that in making any subsequent offering
or sale of the shares of Buyer's common stock, Seller will be
acting only for itself and not as part of a sale or planned
distribution that would be in violation of the Act. Seller
hereby represents that it is its intention not to transfer, sell
or otherwise dispose of any shares of Buyer's common stock prior
to the registration of such shares pursuant to Section 2.6 other
than through a transaction that would not require registration of
such shares under the Act.
5.4 Knowledge and Experience. Seller has such
knowledge and experience in financial and business matters that
Seller is capable of evaluation of the merits and risks of the
acquisition of the shares of Buyer's common stock, and having had
access to such information with respect to the shares of Buyer's
common stock as it considered necessary, has concluded that
Seller is able to bear those risks. Seller hereby acknowledges
receipt of the Anacomp Disclosure Documents and that such Seller
has had the opportunity to discuss any questions regarding the
shares of Buyer's common stock or Buyer with appropriate officers
of Buyer.
5.5 Legended Certificates. Seller acknowledges that,
until the shares of Buyer's common stock are registered under the
Act, a legend similar to the following will appear on the shares
of Buyer's common stock: "THIS SECURITY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY BE REOFFERED AND SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM REGISTRATION IS
AVAILABLE."
6. Representations and Warranties of the Buyer. The
Buyer represents and warrants to the Sellers as follows:
6.1 Due Incorporation and Authority. The Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Indiana, and has all requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as now being and as
heretofore conducted.
6.2 Authority to Execute and Perform Agreement. The
Buyer has the full legal right and power and all authority and
approvals required to execute and deliver this Agreement and to
perform fully its obligations hereunder. This Agreement has been
duly executed and delivered by the Buyer and (assuming the due
authorization, execution and delivery hereof by the Sellers) is a
legal, valid and binding obligation of the Buyer enforceable in
accordance with its terms (subject to applicable bankruptcy,
reorganization, insolvency, moratorium, or similar laws affecting
creditors' rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of
whether enforcement is sought in a proceeding in equity or at
law)). Except as set forth on Schedule 6.2, the execution and
delivery by the Buyer of this Agreement, the consummation of the
Contemplated Transactions and the performance by the Buyer of
this Agreement in accordance with its terms will not (i) require
the Buyer to obtain any consent, approval or action of, or make
any filing with or give any notice to, any Governmental Body or
any other person; (ii) conflict with or result in any breach or
violation of any of the terms and conditions of, or constitute
(or with notice or lapse of time or both constitute) a default
under, the Certificate of Incorporation or By-laws of the Buyer,
any Law or Order of any Governmental Body applicable to the
Buyer, or any Contract to which the Buyer is a party or by or to
which the Buyer or any of its properties is bound or subject; or
(iii) result in the creation of any Lien on any of the properties
of the Buyer.
6.3 Purchase for Investment. The Buyer is purchasing
the Shares for its own account for investment and not for resale
or distribution.
6.4 Anacomp Shares. The Anacomp Shares, when issued
in accordance with this Agreement, will be duly authorized,
validly issued, fully paid and non-assessable and free and clear
of any Liens.
6.5 SEC Reports, Financial Statements and Anacomp
Disclosure Documents. Buyer has filed with the SEC all reports,
schedules, statements and other documents required to be filed by
it since September 30, 1993 under the Exchange Act and the Act
(as such documents have been amended since the time of their
filing, collectively, the "Buyer SEC Documents"). The Buyer SEC
Documents, including, without limitation, any financial
statements or schedules included therein, at the time filed (a)
complied in all material respects with the applicable
requirements of the Exchange Act and the Act, as the case may be,
and the applicable rules and regulations of the SEC thereunder
and (b) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
6.6 Absence of Undisclosed Liabilities and
Obligations. As at September 30, 1993, Buyer did not have any
direct or indirect material indebtedness, liability, claim, loss,
damage, deficiency, obligation or responsibility, known or
unknown, fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute,
contingent, or otherwise, of a kind required by generally
accepted accounting principles to be set forth on a financial
statement or in the notes thereto that were not fully and
adequately reflected or reserved against on the audited
consolidated balance sheet of the Buyer and its subsidiaries as
of September 30, 1993 ("Buyer Undisclosed Liabilities"). Except
as set forth on Schedule 6.6, Buyer has not, except in the
ordinary course of business, incurred any Buyer Undisclosed
Liabilities since September 30, 1993. Buyer has no knowledge of
any circumstance, condition, event or arrangement that may
hereafter give rise to any material Buyer Undisclosed Liabilities
of Buyer or any successor to its business except in the ordinary
course of business or as otherwise set forth on Schedule 6.6.
6.7 Premerger Notification. The Buyer has filed
notification and report forms with respect to the Contemplated
Transactions in compliance with the HSR Act.
6.8 Qualification. Buyer is duly qualified or
otherwise authorized as a foreign corporation to transact
business and is in good standing in each jurisdiction in which
such qualification or authorization is required by law and in
which the failure so to qualify or be authorized could have a
material adverse effect on the properties, business, prospects,
results of operations and financial condition of Buyer and its
subsidiaries taken as a whole. No other jurisdiction has
claimed, in writing or otherwise, that Buyer or any of its
subsidiaries is required to qualify or otherwise be authorized
therein.
6.9 Charter Documents and Corporate Records. Buyer
has heretofore delivered to Sellers' Representative true and
complete copies of Buyer's Articles of Incorporation (certified
by the Secretary of State) and By-laws (certified by Buyer's
secretary or assistant secretary) as in effect on the date
hereof.
6.10 Financial Statements. The consolidated balance
sheets of Buyer as of September 30, 1993, September 30, 1992 and
September 30, 1991 and the related consolidated statements of
income, shareholders' equity and changes in financial position
for the years then ended, including the footnotes thereto,
certified by Arthur Andersen & Co., independent certified public
accountants, which have been delivered to Sellers'
Representative, are true, correct and complete in all material
respects, fairly present the consolidated financial position of
Buyer as at such dates and the consolidated results of operations
of Buyer for such respective periods, in each case in accordance
with generally accepted accounting principles consistently
applied for the periods covered thereby.
6.11 No Material Adverse Change. Since September 30,
1993, there has been no material adverse change in the
properties, business, prospects, results of operations and
financial condition of Buyer, and Buyer does not know of any such
change which is threatened, nor has there been any damage,
destruction or loss which to the best of Buyer's knowledge, would
have or has had a material adverse effect on the financial
condition of the Buyer.
6.12 Brokers. No Broker has acted on behalf of the
Buyer in connection with this Agreement or the Contemplated
Transactions, and that there are no brokerage commissions,
finders' fees or similar fees or commissions payable in
connection therewith based on any agreement, arrangement or
understanding with the Buyer, or any action taken by the Buyer.
7. Covenants and Agreements.
7.1 Conduct of Business. From the date hereof through
the Closing Date, each Seller, severally and not jointly, agrees
that the Sellers (i) shall cause the Company and the Subsidiaries
to conduct their businesses in the ordinary course and, without
the prior written consent of the Buyer, not undertake any of the
actions specified in Section 4.30; and (ii) shall use their best
efforts to cause the Company and the Subsidiaries to conduct
their businesses in such a manner that the representations and
warranties contained in Article 4 shall continue to be true and
correct on and as of the Closing Date as if made on and as of the
Closing Date. From the date hereof through the Closing Date,
each Seller, severally and not jointly, agrees to conduct such
Seller's affairs in such a manner so that the representations and
warranties of such Seller contained in Article 5 shall continue
to be true and correct on and as of the Closing Date as if made
on and as of the Closing Date. Each Seller shall give the Buyer
prompt notice of any event, condition or circumstance known to
such Seller occurring from the date hereof through the Closing
Date that would constitute a violation or breach of any
representation or warranty, whether made as of the date hereof or
as of the Closing Date, or that would constitute a violation or
breach of any covenant of any Seller contained in this Agreement.
7.2 Corporate Examinations and Investigations. Prior
to the Closing Date, the Sellers agree that the Buyer shall be
entitled, through its employees and representatives designated in
writing to the Company, including, without limitation,
Cadwalader, Wickersham & Taft and Arthur Andersen & Co., to make
such investigation of the properties, businesses and operations
of the Company and the Subsidiaries, and such examination of the
books, records and financial condition of the Company and the
Subsidiaries, as may be reasonably necessary. Any such
investigation and examination shall be conducted at reasonable
times and under reasonable circumstances upon reasonable prior
notice to the Company, and the Sellers shall, and shall cause the
Company and the Subsidiaries to, cooperate fully therein. No
investigation by the Buyer shall diminish or obviate any of the
representations, warranties, covenants or agreements of the
Sellers contained in this Agreement. In order that the Buyer may
have full opportunity to make such physical, business, accounting
and legal review, examination or investigation, as may be
reasonably necessary, of the affairs of the Company and the
Subsidiaries, the Sellers shall make available and shall cause
the Company and the Subsidiaries to make available to the
representatives of the Buyer during such period all such
information and copies of such documents concerning the affairs
of the Company and the Subsidiaries as such representatives may
reasonably request, shall permit the representatives of the Buyer
access to the properties of the Company and the Subsidiaries and
all parts thereof and shall cause their officers, employees,
consultants, agents, accountants and attorneys to cooperate fully
with such representatives in connection with such review and
examination. If this Agreement terminates, (i) the Buyer shall
keep confidential and shall not use in any manner any information
or documents obtained from the Company or the Subsidiaries
concerning their properties, businesses and operations
("Confidential Information"), unless such information was in the
public domain or subsequently developed by the Buyer
independently of any investigation of the Company or the
Subsidiaries, and (ii) any Confidential Information in writing
and all copies thereof shall be promptly returned. From the date
hereof through the Closing Date, neither party shall use any
Confidential Information to the disadvantage of the other party.
7.3 Publicity. The parties agree that no publicity
release or announcement concerning this Agreement or the
Contemplated Transactions shall be made without advance approval
thereof by the Sellers' Representative and the Buyer; provided,
however, that if in the written opinion of counsel for either of
the parties public disclosure of the pendency of the Contemplated
Transactions is required under Federal securities laws, then the
consent or approval of the other party to the disclosure of such
information and the content thereof shall not be unreasonably
withheld.
7.4 Expenses. In the event that this Agreement is
terminated without the Contemplated Transactions having been
consummated through no fault of the Company or the Sellers, then
Buyer shall be liable for all costs and expenses (including
reasonable attorneys' fees) incurred by the Sellers in connection
with the Contemplated Transactions. In the event that this
Agreement is terminated without the Contemplated Transactions
having been consummated through no fault of Buyer, then the
Company shall be liable for all costs and expenses (including
reasonable attorneys' fees) incurred by Buyer in connection with
the Contemplated Transactions. In the event that this Agreement
is terminated without the Contemplated Transactions having been
consummated through no fault of any party hereto, then the
parties to this Agreement shall, except as otherwise specifically
provided herein, bear their respective expenses incurred in
connection with the preparation, execution and performance of
this Agreement and the Contemplated Transactions, including,
without limitation, all fees and expenses of agents,
representatives, counsel and accountants. Notwithstanding the
foregoing, to the extent that the expenses of the Company's
counsel and accountants in connection with the preparation of
this Agreement and the Contemplated Transactions exceeds $200,000
in the aggregate, the Purchase Price will be reduced by $1.00 for
each $1.00 of such expense in excess of $200,000.
7.5 Related Parties. Except as set forth on Schedule
7.5, the Sellers shall, prior to the Closing, pay or cause to be
paid to the Company or one of the Subsidiaries, as the case may
be, all amounts owed to the Company or such Subsidiary and
reflected on the Balance Sheet or borrowed from or owed to the
Company or such Subsidiary since the Balance Sheet Date by any of
the Sellers or any affiliate of any of the Sellers. At and as of
the Closing, any debts of the Company or any of the Subsidiaries
owed to any of the Sellers or to any affiliate of any of the
Sellers shall be cancelled, except those debts owed to any Seller
in respect of his or her employment with the Company or any of
the Subsidiaries and incurred in the ordinary course of business.
7.6 Transfer Taxes. The Company shall be responsible
for any sales, recording or real property transfer taxes (other
than stock transfer taxes which shall be borne by the Sellers)
arising from the transactions contemplated by this Agreement.
7.7 Employment Agreements; Sellers' Consent Under
Section 280G of the Code. John C. Belsly, Michael B. Bryan,
Milton D. Smith and Scott D. Whittenburg (the "Management
Employees") shall at or prior to the Closing each terminate his
June 30, 1992 Employment and Compensation Agreement with Graham
Asset Corp. (collectively, the "Old Employment Agreements") and
enter into an employment and non-compete agreement (collectively,
the "New Employment Agreements") with the Buyer substantially in
the form of Exhibit D to this Agreement. Each Seller hereby
confirms that he is aware of and by completion of the Shareholder
Approval Form attached as Exhibit E hereto approves all the terms
for payments to the Management Employees pursuant to Section 5 of
such New Employment Agreements and it is the intention of the
Sellers that such approval be sufficient to exempt any payment
made pursuant to Section 5 of the New Employment Agreements from
the operation of Section 280G(a) of the Code. In addition, the
Sellers by completion of the Shareholder Approval Form attached
as Exhibit E hereto (i) reconfirm their original approval of the
immediate vesting on the Closing Date of the remaining unvested
restricted Shares granted to each Management Employee pursuant to
Section 5B of the Old Employment Agreements and Paragraph 4.e. of
the Restricted Stock Agreements entered into as of June 30, 1992
between the Company and each Management Employee, such original
approval being granted by the Sellers in Section 9 of the
Stockholder's and Registration Rights Agreement among the Company
and the Sellers dated June 30, 1992; (ii) approve the bonuses in
the aggregate amount of $480,000 payable in accordance with
Exhibit F hereto and granted to the Management Employees pursuant
to resolution of the Company's Board of Directors dated November
9, 1993; (iii) approve the cancellation by the Company of
promissory notes in the aggregate amount of $285,720, plus
accrued interest, given by the Management Employees in payment
for the 100,000 Group 2 restricted shares sold to the Management
Employees and (iv) intend that their approvals exempt the vesting
of the Shares and payment of the bonuses described in clauses (i)
and (ii) and the cancellation of indebtedness of promissory notes
described in clause (iii) from the application of Section 280G(a)
of the Code.
7.8 Conversion of Subordinated Debt; Prepayment of
Bank Debt. On or before the Closing Date, the Buyer shall use
its reasonable best efforts to negotiate an agreement with the
Company's subordinated debtholder which provides for the
conversion of such subordinated debt on the Closing Date in
accordance with the terms and conditions set forth in Exhibit H
to this Agreement. The appropriate Sellers will also cooperate
with Buyer in obtaining the agreement of Chemical Bank to the
prepayment by Buyer of the Company's indebtedness owed to
Chemical Bank in a manner consistent with the requirements of the
indenture governing the Buyer's Senior Subordinated Notes.
7.9 Further Assurances. Each of the parties shall
execute such Documents and take such further actions as may be
reasonably required or desirable to carry out the provisions
hereof and the Contemplated Transactions. Each such party shall
use its best commercially reasonable efforts to fulfill or obtain
the fulfillment of the conditions to the Closing set forth in
Articles 8 and 9.
7.10 Quarterly Reports. Buyer shall deliver to
Sellers' Representatives a copy of its quarterly magnetics report
together with an estimate of the Net Income Amount no later than
45 days following the end of each fiscal quarter (or 90 days
following the end of Buyer's fiscal year) which estimates of the
Net Income Amount shall be subject to adjustment at the end of
each fiscal year.
7.11 Representations and Warranties on Closing Date.
Each of the Sellers hereby covenants and agrees that the
representations and warranties contained in Articles 4 and 5
shall be true in all material respects on and as of the Closing
Date with the same force and effect as though such
representations and warranties had been made on and as of the
Closing Date. Buyer hereby covenants and agrees that the
representations and warranties contained in Article 6 shall be
true in all material respects on and as of the Closing Date with
the same force and effect as though such representations and
warranties had been made on and as of the Closing Date.
7.12 Tax-Free Exchange. The parties intend that the
exchange of the Shares for Anacomp Shares provided for in this
Agreement be treated as a tax-free exchange pursuant to a plan of
reorganization within the meaning of Section 368(a) of the Code.
8. Conditions Precedent to the Obligation of the
Buyer to Close. The obligation of the Buyer to enter into and
complete the Closing is subject, at the option of the Buyer
acting in accordance with the provisions of Section 12 with
respect to termination of this Agreement, to the fulfillment on
or prior to the Closing Date of the following conditions, any one
or more of which may be waived by it:
8.1 Representations and Covenants. The
representations and warranties of the Sellers contained in this
Agreement shall be true in all material respects on and as of the
Closing Date with the same force and effect as though made on and
as of the Closing Date. Each of the Sellers shall have performed
and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied
with by such Seller on or prior to the Closing Date. The
Sellers' Representative shall have delivered to the Buyer a
certificate, dated the date of the Closing and signed by the
Seller's Representative, to the foregoing effect.
8.2 Consents and Approvals. All Required Consents
shall have been obtained and be in full force and effect, and the
Buyer shall have been furnished with evidence reasonably
satisfactory to it of the granting of such Required Consents.
8.3 Opinion of Counsel to the Sellers. The Buyer
shall have received the opinion of Dewey Ballantine, counsel to
the Sellers, dated the date of the Closing, addressed to the
Buyer, in the form of Exhibit C.
8.4 Approval of Counsel to the Buyer. All actions and
proceedings hereunder and all Documents, and all other related
matters, shall have been approved by Cadwalader, Wickersham &
Taft, counsel to the Buyer, as to their form and substance.
8.5 Releases. Each current and former officer and
director of the Company and each of the Subsidiaries, and such
other persons and entities related to or affiliated with the
Company and each of the Subsidiaries as the Buyer may reasonably
designate by name in writing at least ten business days prior to
the Closing Date, shall have executed and delivered to the
Company and the Buyer duplicate counterparts of a Release, dated
the date of the Closing, in the form of Exhibit G.
8.6 Resignations. All resignations of directors and
officers of the Company and each of the Subsidiaries which have
been previously requested by name in writing by the Buyer at
least ten business days prior to the Closing Date, and all bank
documentation necessary to permit such officers of Buyer as
designated by Buyer in writing to replace the current authorized
signatories of the Company's bank accounts effective as of the
Closing, shall have been delivered to the Buyer.
8.7 No Claims. No Claims shall be pending or, to the
knowledge of the Buyer or any of the Sellers, threatened, before
any Governmental Body which has had or would have, in the
reasonable judgment of the Buyer, a materially adverse effect on
the Condition of the Companies.
8.8 HSR Act Filing. Any person required in connection
with the Contemplated Transactions to file a notification and
report form in compliance with the HSR Act shall have filed such
form and the applicable waiting period with respect to each such
form (including any extension thereof by reason of a request for
additional information) shall have expired or been terminated.
8.9 No Threatened or Pending Litigation. On the
Closing Date, no suit, action or other proceeding, or injunction
or final judgment relating thereto, shall, to the knowledge of
the Buyer, be threatened or be pending before any court or
Governmental Body in which it is sought to restrain or prohibit
the consummation of the transactions contemplated hereby.
8.10 Shareholders of the Company. Sellers owning 92.5%
or more of the Shares will have executed and delivered this
Agreement.
8.11 Investments in Other Persons. On the Closing
Date, the Company will not own any stock or other equity interest
in any corporation, partnership or other person or entity other
than the Subsidiaries.
8.12 Management Consulting Services. The Agreement for
Management Consulting Services between Lepercq, de Neuflize and
Co. and Graham Magnetics, dated as of June 30, 1992 shall have
been amended to provide that all remaining fees to be paid by
Graham thereunder be capped at $250,000 and Section 4 thereof be
deleted.
8.13 Employment Agreements. On or prior to the Closing
Date, the Buyer and the Management Employees shall have entered
into the New Employment Agreements.
8.14 Conversion of Subordinated Debt. At or prior to
the Closing, the Buyer and the Company's subordinated debtholder
shall have entered into an agreement substantially in accordance
with the terms and provisions of Exhibit H to this Agreement.
8.15 Board Approval. On or prior to the Closing Date,
the Board of Directors of the Buyer shall have approved and
authorized this Agreement and the transactions contemplated
herein.
9. Conditions Precedent to the Obligation of the
Sellers to Close;. The obligation of the Sellers to enter into
and complete the Closing is subject, at the option of the Sellers
acting in accordance with the provisions of Section 12 with
respect to termination of this Agreement, to the fulfillment on
or prior to the Closing Date of the following conditions, any one
or more of which may be waived by the Sellers' Representative:
9.1 Representations and Covenants. The repre-
sentations and warranties of the Buyer contained in this
Agreement shall be true in all material respects on and as of the
Closing Date with the same force and effect as though made on and
as of the Closing Date. The Buyer shall have performed and
complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied
with by it on or prior to the Closing Date. The Buyer shall have
delivered to the Sellers a certificate, dated the date of the
Closing and signed by an officer of the Buyer, to the foregoing
effect.
9.2 Consents and Approvals. All consents and
approvals of Buyer shall have been obtained and be in full force
and effect and the Sellers shall have been furnished with
evidence reasonably satisfactory to it of the granting of such
consents and approvals.
9.3 Opinion of Counsel to the Buyer. The Sellers
shall have received the opinion of Cadwalader, Wickersham & Taft,
counsel to the Buyer, dated the date of the Closing, addressed to
the Sellers, in the form of Exhibit I.
9.4 Approval of Counsel to Sellers. All actions and
proceedings hereunder and all Documents, and all other related
matters, shall have been approved by Dewey Ballantine, counsel to
the Sellers, as to their form and substance.
9.5 No Claims. No Claims shall be pending or, to the
knowledge of the Buyer, the Company, any of the Subsidiaries or
any of the Sellers, threatened, before any Governmental Body to
restrain or prohibit, or to obtain damages or a discovery order
in respect of, this Agreement or the consummation of the
Contemplated Transactions.
9.6 HSR Act Filing. Any person required in connection
with the Contemplated Transactions to file a notification and
report form in compliance with the HSR Act shall have filed such
form and the applicable waiting period with respect to each such
form (including any extension thereof by reason of a request for
additional information) shall have expired or been terminated.
9.7 No Threatened or Pending Litigation. On the
Closing Date, no suit, action or other proceeding, or injunction
or final judgment relating thereto, shall, to the knowledge of
Sellers, be threatened or be pending before any court or
Governmental Body in which it is sought to restrain or prohibit
the consummation of the transactions contemplated hereby.
9.8 Agreement With Sellers' Representatives. On or
prior to the Closing Date, the Sellers and the Sellers'
Representatives shall have entered into the Sellers'
Representatives Agreement.
9A. Non-Competition by Restricted Sellers.
9A.1 Covenants Against Competition. John C. Belsly,
Michael B. Bryan, Milton D. Smith, Scott D. Whittenburg and
Lepercq, de Neuflize & Co., Incorporated (each a "Restricted
Seller") each acknowledges that (i) the Company is engaged in the
business of manufacturing products and selling products and
services in the Magnetic Media Business (the "Core Business");
(ii) such Restricted Seller is one of the limited number of
persons who developed such Core Business for the Company; (iii)
the Core Business is conducted throughout the Restricted Area;
(iv) such Restricted Seller's work for the Company has given such
Restricted Seller (and will continue to give such Restricted
Seller) trade secrets of, and confidential information
concerning, the Core Business; (v) the agreements and covenants
contained in this Article 9A are essential to protect the Core
Business and related goodwill; (vi) all of the outstanding Shares
are being purchased by Buyer and Buyer would not purchase the
Shares but for such agreements and covenants; and (vii) in the
case of a Restricted Seller who is a natural person, such
Restricted Seller has means to support himself and his dependents
other than by engaging in the Core Business and the provisions of
this Article 9A will not impair such ability. Accordingly, each
Restricted Seller covenants and agrees as follows:
9A.1.1 Non-Compete. (a) The "Restricted Area"
shall be worldwide.
(b) For a period commencing on the Closing
Date and ending on the fourth anniversary of the Closing Date
(the "Restricted Period"), the Restricted Seller shall not,
directly or indirectly:
(i) manufacture, sell or offer to sell
magnetic media products or similar products included in the
Magnetic Media Business to any customers of Buyer or any of its
affiliates, prospective customers or other persons (including,
without limitation, the Significant Customers);
(ii) assist or offer to assist in the
referral of Significant Customers to any third party;
(iii) own, conduct, manage, operate, control,
participate in, aid or assist anyone else, or otherwise be
connected or associated with the ownership, management,
operation, control, or participation in any business involved in
manufacturing, selling or offering to sell magnetic media
products, or similar products included in the Magnetic Media
Business, to any customers of Buyer or any of its affiliates,
prospective customers, or other persons (including, without
limitation, the Significant Customers); provided, however, that
(A) ownership of Anacomp Shares or (B) ownership of less than
5.0% stock holdings for investment purposes in securities of
publicly held and traded companies shall not constitute a
violation of this Section 9A.1.1; or
(iv) recruit, hire or offer to hire any
person who is, or within the preceding twelve months was, an
employee of Buyer or any affiliate thereof.
9A.1.2 Confidential Information. Each
Restricted Seller promises and agrees that, during the Restricted
Period, he will not disclose to any person not employed by Buyer
or any affiliate thereof or engaged by Buyer or any affiliate
thereof after Closing to render services to Buyer or any
affiliate thereof with respect to the Core Business, and that he
will not use for the benefit of himself or others, any
confidential information of the Company or Buyer regarding the
Core Business obtained by him while employed by the Company,
Buyer or otherwise, including, without limitation, Trade Secrets,
customer lists, details of client or consultant contracts,
pricing policies, financial data, operational methods, marketing
and sales information, marketing plans or strategies, product
development techniques or plans, business acquisition plans, new
personnel acquisition plans and other personnel data, methods of
manufacture, technical processes, designs and design projects,
inventions and research projects, and other proprietary
information of the Company or Buyer regarding the Core Business;
provided, however, that (a) this provision shall not preclude any
Restricted Seller from use or disclosure of information known
generally to the public (other than information known generally
to the public as a result of a violation of this Section 9A.1 by
any Restricted Seller), from use or disclosure of information
acquired by any Restricted Seller from a third person not
affiliated with Buyer and outside of such Restricted Seller's
affiliation with Buyer, from making disclosure required by law or
court order, or from making disclosure appropriate and in the
ordinary course of carrying out his duties as an employee of
Buyer (if such Restricted Seller is then employed by Buyer) and
(b) nothing herein shall preclude any Restricted Seller from
applying his or personal skills and general knowledge of the
magnetic media products industry and magnetic media technology,
in employment or otherwise, after the expiration of the
Restricted Period (if such Restricted Seller is not then employed
by Buyer).
9A.1.3 Property of the Company. All memoranda,
notes, lists, records and other documents (and all copies
thereof), including such items stored in computer memories, on
microfiche or by any other means, made or compiled by or on
behalf of any Seller, or made available to any Seller relating to
the Core Business, are and shall be the property of the Company,
as the case may be, and shall be delivered to Buyer promptly
after the Closing or at any other time on request (except that
the Sellers may retain copies of such financial, accounting and
legal records for use solely in preparing and filing tax returns
and otherwise properly accounting for, recording and reporting
the activities, assets and obligations of each Seller).
9A.2 Rights and Remedies Upon Breach; Specific
Performance. If any Restricted Seller breaches, or threatens to
commit a breach of, any of the provisions of Section 9A.1 (the
"Restrictive Covenants"), Buyer and the Company shall, in
addition to, and not in lieu of, any other rights and remedies
available to Buyer or the Company under law or in equity, each of
which rights and remedies shall be independent of the others and
severally enforceable, have the right and remedy to have the
Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or
threatened breach of the Restrictive Covenants would cause
irreparable injury to Buyer or the Company and that money damages
would not provide an adequate remedy to Buyer or the Company.
9A.3 Severability of Covenants. Each Restricted Seller
acknowledges and agrees that the Restrictive Covenants are
reasonable and valid in geographical and temporal scope and in
all other respects. If any court determines that any of the
Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall
not thereby be affected and shall be given full effect, without
regard to the invalid portions.
9A.4 Enforceability in Jurisdictions. Buyer and the
Restricted Sellers intend to and hereby confer jurisdiction to
enforce the Restrictive Covenants upon the courts of any
jurisdiction within the geographical scope of the Restrictive
Covenants and the Restricted Area. If the courts of any one or
more of such jurisdictions hold the Restrictive Covenants
unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of Buyer and the Restricted
Sellers that such determination not bar or in any way affect the
Company's right to the relief provided above in the courts of any
other jurisdiction within the geographical scope of the
Restrictive Covenants and the Restricted Area, as to breaches of
the Restrictive Covenants in such other respective jurisdictions,
the Restrictive Covenants as they relate to each jurisdiction
being, for this purpose, severable into diverse and independent
covenants.
10. Survival of Representations and Warranties of the
Sellers and the Buyer After Closing. (a) Notwithstanding any
right of the Buyer fully to investigate the affairs of the
Company and the Subsidiaries and notwithstanding any knowledge of
facts determined or determinable by the Buyer pursuant to such
investigation or right of investigation, the Buyer has the right
to rely fully upon the representations, warranties, covenants and
agreements of the Sellers made in this Agreement (including,
without limitation, the Schedules and Exhibits hereto and all
certificates and closing documents delivered hereunder, the
"Documents"). All such representations, warranties, covenants
and agreements shall survive the execution and delivery of this
Agreement and the Closing hereunder as provided herein. All
representations and warranties of the Sellers made in this
Agreement or in any Documents delivered pursuant to this
Agreement shall thereafter terminate and expire (i) 18 months
after the Closing Date, with respect to any General Claim (as
defined below) based upon, arising out of or otherwise in respect
of any fact, circumstance, action or proceeding of which the
Buyer shall not have given notice on or prior to 18 months after
the Closing Date to the Sellers and (ii) with respect to any
Environmental Claim (as defined below) or Tax Claim (as defined
below) based upon, arising out of or otherwise in respect of any
fact, circumstance, action or proceeding of which the Buyer shall
not have given prior notice, on the earlier of (A) the fourth
Payment Date, (B) the payment in full of the Post-Closing Payment
or (C) the expiration of the applicable statute of limitation (or
any extension thereof). Any notice to be given pursuant to this
Section shall be made with reasonable specificity. As used in
this Agreement, the following terms have the following meanings:
(x) "General Claim" means any claim (other than a
Tax Claim or an Environmental Claim) based upon, arising out of
or otherwise in respect of any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of the Sellers or
of any Seller contained in this Agreement or in any Documents
delivered pursuant to this Agreement.
(y) "Tax Claim" means any claim based upon,
arising out of or otherwise in respect of any inaccuracy in or
any breach of any representation, warranty, covenant or agreement
of the Sellers contained in this Agreement related to Taxes.
(z) "Environmental Claim" means any claim based
upon, arising out of or otherwise in respect of any inaccuracy in
or any breach of any representation or warranty of the Sellers
contained in this Agreement related to Environmental Laws or
Hazardous Substances.
(b) All representations and warranties of the Buyer
contained in this Agreement shall terminate and expire 18 months
after the Closing Date.
11. General Indemnification.
11.1 Obligation of the Sellers to Indemnify.
(i) Subject to the limitations contained in
Article 10, Section 11.4 and this Section 11.1, the Sellers
severally agree to indemnify, defend and hold harmless the Buyer
(and its directors, officers, employees, affiliates, successors
and assigns (other than successors and assigns of the Graham
Entity pursuant to a Change in Control)) from and against all
losses, liabilities, damages, deficiencies, demands, claims,
actions, judgments or causes of action, assessments, costs or
expenses (including, without limitation, interest, penalties and
reasonable attorneys' fees and disbursements) (collectively,
"Losses") based upon, arising out of or otherwise in respect of
any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of the Sellers in this Agreement or in any
Document delivered pursuant to this Agreement.
(ii) Subject to the limitations contained in
Article 10 and Section 11.4, from and after the Closing Date,
each Seller shall severally be liable for, and each agrees to
indemnify, defend and hold harmless the Buyer, the Company and
its Subsidiaries (and their directors, employees, officers,
affiliates, successors and assigns (other than successors and
assigns of the Graham Entity pursuant to a Change in Control))
from and against all Losses arising out of or otherwise in
respect of, any and all Tax Claims of the Company or its
Subsidiaries for any Pre-Closing Period. The Sellers shall make
payments to the Buyer, the Company or its Subsidiaries, as the
case may be, pursuant to this Section 11.1(ii) for amounts paid
by the Company, its Subsidiaries or Buyer in respect of any item
for which the Sellers are liable, and obligated to indemnify the
Buyer or the Company and its Subsidiaries, pursuant to this
Section 11.1(ii). However, the Sellers will not be liable for
any Taxes properly payable by the Company or its Subsidiaries
after the Closing Date to the extent of the amount of any tax
reserve established on the books of the Company and its
Subsidiaries in respect of such Taxes as of the Closing Date
which was reflected on the 1993 Audited Financials as adjusted
for current operating income arising in the ordinary course of
business through the Closing Date, in accordance with GAAP. The
Sellers shall have the rights of notice, opportunity to defend
and consent to settlement or compromise of any Tax Claim given in
accordance with Section 11.3 hereof, provided, however, the
Sellers shall not have any right or ability to control any audit
by any taxing authority of any Tax Return of the Buyer.
(iii) Subject to the limitations contained in
Article 10 and Section 11.4, from and after the Closing Date,
each Seller shall be severally liable for, and each agrees to
indemnify, defend and hold harmless the Buyer, the Company and
the Subsidiaries (and their directors, employees, officers,
affiliates, successors and assigns (other than successors and
assigns of the Graham Entity pursuant to a Change in Control))
from and against all Losses arising out of or otherwise in
respect of, any and all Environmental Claims made against Buyer,
the Company, the Subsidiaries or their respective directors,
employees, officers and affiliates, by any person or entity
arising from events, circumstances, or conditions occurring
after, and that are the results of acts or omissions occurring
after, June 30, 1992 to the Closing Date, other than as disclosed
on Schedule 4.12. In addition to the foregoing and
notwithstanding any provision of this Agreement to the contrary,
each Seller shall be severally liable for, and each agrees to
indemnify, defend and hold harmless the Buyer, the Company and
the Subsidiaries (and their directors, officers, affiliates,
successors and assigns (other than successors and assigns of the
Graham Entity pursuant to a Change in Control)) from and against
all material Losses arising out of or otherwise in respect of
claims by or liability to any third party arising out of or based
on any and all Safety and Environmental Laws concerning, arising
out of or based on any state of facts, circumstances, violations,
contamination or events occurring after June 30, 1992 to the
Closing Date. This provision applies regardless of whether any
such state of facts, circumstances, violations, contamination or
events are disclosed on the Seller's Schedules or are otherwise
disclosed to Buyer. Any claim relating to or arising out of the
provisions of the two preceding sentences shall be deemed to be
an Environmental Claim for the purposes of this Agreement and
shall be subject to the limitations herein applicable thereto.
11.2 Obligation of the Buyer to Indemnify. Subject to
the limitations contained in Article 10, the Buyer agrees to
indemnify, defend and hold harmless the Sellers from and against
all Losses based upon, arising out of or otherwise in respect of
any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of the Buyer made in this Agreement or in
any Documents delivered pursuant to this Agreement.
11.3 Notice and Opportunity to Defend.
11.3.1 Notice of Asserted Liability. Promptly after
receipt by any party hereto (the "Indemnitee") of notice of any
demand, claim or circumstances which, with the lapse of time,
would or might give rise to a claim or the commencement (or
threatened commencement) of any action, proceeding or
investigation (an "Asserted Liability") that may result in a
Loss, the Indemnitee shall give notice thereof (the "Claims
Notice") to any other party (or parties) obligated to provide
indemnification pursuant to Section 11.1 or 11.2 (the
"Indemnifying Party"). The Claims Notice shall describe the
Asserted Liability in reasonable detail, and shall indicate the
amount (estimated, if necessary and to the extent feasible) of
the Loss that has been or may be suffered by the Indemnitee.
11.3.2 Opportunity to Defend. The Indemnifying
Party may elect to compromise or defend, at its own expense and
by its own counsel, any Asserted Liability. If the Indemnifying
Party elects to compromise or defend such Asserted Liability, it
shall within 30 days (or sooner if the nature of the Asserted
Liability so requires) notify the Indemnitee of its intent to do
so, and the Indemnitee shall cooperate, at the expense of the
Indemnifying Party, in the compromise of, or defense against,
such Asserted Liability. If the Indemnifying Party elects not to
compromise or defend the Asserted Liability, fails to notify the
Indemnitee of its election as herein provided or contests its
obligation to indemnify under this Agreement (and does not defend
the Asserted Liability), the Indemnitee may pay, compromise or
defend such Asserted Liability. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or
compromise any claim over the objection of the other and must
provide notice of any proposed settlement or compromise to the
other; provided, however, that consent to settlement or
compromise shall not be unreasonably withheld. In any event, the
Indemnitee and the Indemnifying Party may participate, at their
own expense, in the defense of such Asserted Liability. If the
Indemnifying Party chooses to defend any claim, the Indemnitee
shall make available to the Indemnifying Party any books, records
or other documents within its control that are necessary or
appropriate for such defense.
11.3.3 Disputes with Customers, Distributors, Sales
Agents or Suppliers. Anything in Section 11.3.2 to the contrary
notwithstanding, in the case of any Asserted Liability by any
supplier, distributor, sales agent or customer of the Company or
any of the Subsidiaries with respect to the business conducted by
the Company or any of the Subsidiaries prior to the Closing in
connection with which the Buyer may make a claim against the
Sellers for indemnification pursuant to Section 11.1, the Buyer
shall give a Claims Notice with respect thereto but, unless the
Buyer and the Indemnifying Party otherwise agree, the Buyer shall
have the exclusive right at its option to defend, at its own
expense, any such matter, subject to the duty of the Buyer to
consult with the Indemnifying Party and its attorneys in
connection with such defense and provided that no such matter
shall be compromised or settled by the Buyer without the prior
consent of the Indemnifying Party, which consent shall not be
unreasonably withheld. The Indemnifying Party shall have the
right to recommend in good faith to the Buyer proposals to
compromise or settle claims brought by a supplier, distributor,
sales agent or customer, and the Buyer agrees to present such
proposed compromises or settlements to such supplier, distributor
or customer. All amounts required to be paid in connection with
any such Asserted Liability pursuant to the determination of any
Governmental Body, and all amounts required to be paid in
connection with any such compromise or settlement consented to by
the Indemnifying Party, shall be borne and paid by the
Indemnifying Party. The parties agree to cooperate fully with
one another in the defense, compromise or settlement of any such
Asserted Liability.
11.4 Limitations on Indemnification. The
indemnification provided for in Section 11.1 shall be subject to
the following limitations:
(i) No Seller shall be obligated to pay any
amounts for indemnification under this Article 11, except those
based upon, arising out of or otherwise in respect of Sections
7.4 and 7.6 and Article 5 (the "Basket Exclusions") until the
aggregate amounts of Losses exceed $150,000 (the "Basket
Amount"), whereupon each Seller shall be obligated to pay all
such amounts for indemnification (as calculated pursuant to this
Section 11.4) in excess of the Basket Amount.
(ii) The Sellers shall be obligated to pay any
amounts for indemnification based on the Basket Exclusions (in
accordance with their liability as set forth in Section 11.1)
without regard to the individual or aggregate amounts thereof and
without regard to whether the aggregate of all other
indemnification payments shall have exceeded, in the aggregate,
the Basket Amount.
(iii) The indemnification provided for in Section
11.1 shall be net of any actual tax benefits received prior to
September 30, 1997, if any, from Losses and shall be reduced by
the insurance proceeds, if any, received and any other amount
recovered, if any, by Buyer or Sellers with respect to any Losses
and the Buyer or Sellers, as appropriate, shall be promptly
reimbursed by the other party for any amounts paid which are
subsequently so recovered.
(iv) No Seller shall be obligated to pay any
amount for indemnification under this Agreement except from that
portion of the Seller's proportionate share of the Post-Closing
Payment which is actually received by such Seller pursuant to
Section 2.4, as set forth on Exhibit A or accrued in favor of
such Seller from time to time pursuant to Section 2.4. Any
amounts owed by Sellers for indemnification under this Agreement
shall be paid, at each Seller's option, either in cash or in
Anacomp Shares (valued at the issue price as calculated pursuant
to Section 2.4).
(v) Subject to the provisions of subsection (iii)
above, with respect to any Loss other than a Loss relating to the
representations and warranties contained in Section 5 of this
Agreement, each Seller's liability shall be limited to such
Seller's ownership percentage as set forth on Exhibit A
multiplied by the total amount of the Loss.
(vi) Subject to the provisions of subsection
(iii) above, with respect to any Loss arising out of a Seller's
breach of the representations and warranties contained in Section
5 of this Agreement, such Seller shall be liable for the full
amount of such Seller's breach, without duplication among
Sellers.
11.5 Set-off Rights. Each of the Sellers agrees that
in addition to any other remedies provided for in this Agreement,
the Buyer shall have the right, but not the obligation, to
set-off against any of its payment obligations under the Post-
Closing Payment, the full amount of any Losses required to be
paid by such Seller pursuant to Section 11.1 (subject to the
limitations of Section 11.4) only if such Losses are not
otherwise paid within 30 days after the Buyer has requested
payment and (a) Sellers have not disputed the amount of such
Losses within 30 days of Buyer's request for payment or (b) if
Sellers have disputed the amount of such Losses within 30 days of
Buyer's request for payment and such Losses have been determined
by an arbitrator of competent jurisdiction to be final and
quantifiable. Buyer shall not be obligated to issue to the
Sellers the portion of the Post-Closing Payment equal to the
amount of such Losses during the pendency of the Loss
determination by such arbitrator. If the Buyer elects to
exercise its set-off rights hereunder against any portion of the
Post-Closing Payment, it will give to the Sellers written notice
of such election which includes the amount to be set-off, and
upon giving of such notice the amount of Post-Closing Payment
obligations shall automatically be reduced by the amount set
forth in such notice. Any offsets made by Buyer against the
Post-Closing Payment shall permanently reduce the Post-Closing
Payment by the amount of such offsets, and the Sellers shall not
be entitled to recover the offset amounts in any subsequent
payments of the Post-Closing Payment.
12. Termination of Agreement.
12.1 Termination. This Agreement may be terminated
prior to the Closing as follows:
(i) at the election of the Sellers'
Representative if any one or more of the conditions to the
obligation of the Sellers to close has not been fulfilled as of
the Closing Date;
(ii) at the election of the Buyer, if any one or
more of the conditions to its obligation to close has not been
fulfilled as of the Closing Date;
(iii) at the election of the Sellers'
Representative if the Buyer has breached any material repre-
sentation, warranty, covenant or agreement contained in this
Agreement, which breach cannot be or is not cured by the Closing
Date;
(iv) at the election of the Buyer, if any of the
Sellers has breached any material representation, warranty,
covenant or agreement contained in this Agreement, which breach
cannot be or is not cured by the Closing Date;
(v) at the election of the Buyer or Sellers'
Representative if the Closing has not taken place prior to April
30, 1994; or
(vi) at any time on or prior to the Closing Date,
by mutual written consent of the Sellers' Representative and the
Buyer.
If this Agreement so terminates, it shall become null
and void and have no further force or effect, except as provided
in Section 12.2.
12.2 Survival After Termination. If this Agreement is
terminated in accordance with Section 12.1 and the Contemplated
Transactions are not consummated, this Agreement shall become
void and of no further force and effect, except for (i) the
provisions of Section 7.2 relating to the obligation of the Buyer
to keep confidential and not to use certain information and data
obtained by it from the Company or the Subsidiaries and to return
documents to the Company or the Subsidiaries, and (ii) the
provisions of Sections 7.4 and 13.5; provided, however, that none
of the parties shall have any liability in respect of a
termination of this Agreement except to the extent that failure
to satisfy the conditions of Article 8 or Article 9, as the case
may be, results from the intentional or willful violation of such
party contained in this Agreement or any Documents.
13. Miscellaneous.
13.1 Consent to Jurisdiction and Service of Process.
Any legal action, suit or proceeding arising out of or relating
to this Agreement or the Contemplated Transactions may be
instituted in any Federal court of the Southern District of New
York or any state court located in New York County, State of New
York, and each party agrees not to assert, by way of motion, as a
defense or otherwise, in any such action, suit or proceeding, any
claim that it is not subject personally to the jurisdiction of
such court, that the action, suit or proceeding is brought in an
inconvenient forum, that the venue of the action, suit or
proceeding is improper or that this Agreement or the subject
matter hereof may not be enforced in or by such court. Each
party further irrevocably submits to the jurisdiction of such
court in any such action, suit or proceeding. Each party hereby
appoints Lepercq, de Neuflize & Co. Incorporated (the "Agent"),
at the Agent's offices of 1675 Broadway, New York, New York
10019, or its office at such other address in New York, New York,
as it hereafter furnishes to the other parties, as such party's
authorized agent to accept and acknowledge on such party's behalf
service of any and all process that may be served in any such
action, suit or proceeding. Any and all service of process and
any other notice in any such action, suit or proceeding shall be
effective against any party if given personally or by registered
or certified mail, return receipt requested, or by any other
means of mail that requires a signed receipt, postage prepaid,
mailed to such party as herein provided. Nothing herein
contained shall be deemed to affect the right of any party to
serve process in any manner permitted by law or to commence legal
proceedings or otherwise proceed against any other party in any
other jurisdiction.
<PAGE>
13.2 Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be
delivered personally, telegraphed, telexed, sent by facsimile
transmission or sent by certified, registered or express mail,
postage prepaid. Any such notice shall be deemed given when so
delivered personally, or sent by facsimile transmission or, if
mailed, five days after the date of deposit in the United States
mails, to a party at its address set forth below:
(i) if to the Buyer, to:
Anacomp, Inc.
One Buckhead Plaza
Suite 1700
3060 Peachtree Road, N.W.
Atlanta, GA 30305
Attention: Mr. Jack R. O'Donnell
Executive Vice President and
Chief Financial Officer
Facsimile: (404) 262-3884
with copies to:
Anacomp, Inc.
One Buckhead Plaza
Suite 1700
3060 Peachtree Road, N.W.
Atlanta, GA 30305
Attention: George C. Gaskin, Esq.
Facsimile: (404) 264-9877
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: Michael C. Ryan, Esq.
Facsimile: (212) 504-6666
(ii) if to the Sellers, to the Sellers'
Representative at the address listed on
Exhibit A, with a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, NY 10019
Attention: Douglas L. Getter, Esq.
Facsimile: (212) 259-6333
Any party may by notice given in accordance with this
Section to the other parties designate another address or person
for receipt of notices hereunder.
<PAGE>
13.3 Entire Agreement. This Agreement (including the
Exhibits and Schedules) and any collateral agreements executed in
connection with the consummation of the Contemplated Transactions
contain the entire agreement among the parties with respect to
purchase of the Shares and supersede all prior agreements,
written or oral, with respect thereto.
13.4 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Agreement may be amended,
superseded, cancelled, renewed or extended, and the terms hereof
may be waived, only by a written instrument signed by the Buyer
and the Sellers' Representative or, in the case of a waiver, by
the party waiving compliance. No delay on the part of any party
in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single
or partial exercise of any such right, power or privilege,
preclude any further exercise thereof or the exercise of any
other such right, power or privilege. The rights and remedies
herein provided are cumulative and are not exclusive of any
rights or remedies that any party may otherwise have at law or in
equity. The rights and remedies of any party based upon, arising
out of or otherwise in respect of any inaccuracy in or breach of
any representation, warranty, covenant or agreement contained in
this Agreement or any Documents shall in no way be limited by the
fact that the act, omission, occurrence or other state of facts
upon which any claim of any such inaccuracy or breach is based
may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement or
any Documents (or in any other agreement between the parties) as
to which there is no inaccuracy or breach.
13.5 Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of New
York applicable to agreements made and to be performed entirely
within such State.
13.6 Binding Effect; No Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties and
their respective successors (other than successors to the Graham
Entity pursuant to a Change in Control) and legal
representatives. This Agreement is not assignable, except that
the Buyer may assign its rights hereunder to any of its
affiliates.
13.7 Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all
of the parties hereto.
13.8 Exhibits and Schedules. The Exhibits and
Schedules are a part of this Agreement as if fully set forth
herein. All references herein to Sections, Exhibits and
Schedules shall be deemed references to such parts of this
Agreement, unless the context shall otherwise require.
13.9 Headings. The headings in this Agreement are for
reference only, and shall not affect the interpretation of this
Agreement.
13.10 Severability of Provisions. If any provision or
any portion of any provision of this Agreement, or the
application of any such provision or any portion thereof to any
person or circumstance, shall be held invalid or unenforceable,
the remaining portion of such provision and the remaining
provisions of this Agreement, and the application of such
provision or portion of such provision as is held invalid or
unenforceable to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected
thereby.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date first above written.
BUYER:
ANACOMP, INC.
By:________________________________
Jack R. O'Donnell
Executive Vice President and
Chief Financial Officer
SELLERS:
___________________________________
Laszlo Adam
By_____________________
Attorney-in-fact
___________________________________
John C. Belsly
By_____________________
Attorney-in-fact
___________________________________
Gregory J. Berlacher
By_____________________
Attorney-in-fact
___________________________________
Franz J. Berlacher
By_____________________
Attorney-in-fact
___________________________________
Julie T. Berlacher
By_____________________
Attorney-in-fact
___________________________________
George E. Bingham
By_____________________
Attorney-in-fact
___________________________________
Nicholas A. Boccella
By_____________________
Attorney-in-fact
___________________________________
Michael B. Bryan
By_____________________
Attorney-in-fact
___________________________________
IRA FBO Frank J. Campbell, III
DLJSC as Rollover Custodian
A/C 698 - 101714
By_____________________
Attorney-in-fact
___________________________________
CIP Capital L.P.
By_____________________
Attorney-in-fact
___________________________________
Timothy Cotton
By_____________________
Attorney-in-fact
___________________________________
DSLT INC
By_____________________
Attorney-in-fact
___________________________________
Barton P. Ferris, Jr.
By_____________________
Attorney-in-fact
___________________________________
Marcel Fournier
By_____________________
Attorney-in-fact
___________________________________
Arthur B. Gauss
By_____________________
Attorney-in-fact
___________________________________
Miriam J. Gauss
By_____________________
Attorney-in-fact
___________________________________
Henry D. Gottmann
By_____________________
Attorney-in-fact
___________________________________
Kathleen M. Gottmann
By_____________________
Attorney-in-fact
___________________________________
Andrew Merz Hanson
By_____________________
Attorney-in-fact
___________________________________
Bertil Hanson
By_____________________
Attorney-in-fact
___________________________________
Hesperia Corporation
By_____________________
Attorney-in-fact
___________________________________
Peter C.R. Huang
By_____________________
Attorney-in-fact
___________________________________
Arnold S. Laspina
By_____________________
Attorney-in-fact
___________________________________
Lepercq, de Neuflize & Co.,
Incorporated
By_____________________
Attorney-in-fact
___________________________________
James P. Maguire
By_____________________
Attorney-in-fact
___________________________________
Patricia A. Maguire
By_____________________
Attorney-in-fact
___________________________________
Christopher J. Maurizi
By_____________________
Attorney-in-fact
___________________________________
Hayden McIlroy
By_____________________
Attorney-in-fact
___________________________________
John J. Miller
By_____________________
Attorney-in-fact
___________________________________
R&K ASSOCIATES
By_____________________
Attorney-in-fact
___________________________________
Raijacur N.V.
By_____________________
Attorney-in-fact
___________________________________
Peter S. Rawlings
By_____________________
Attorney-in-fact
___________________________________
Milton D. Smith
By_____________________
Attorney-in-fact
___________________________________
Lt. General Thomas P. Stafford
By_____________________
Attorney-in-fact
___________________________________
Tavira Corporation ref. sub
a/c Tavira 121
By_____________________
Attorney-in-fact
___________________________________
Edward Thomas
By_____________________
Attorney-in-fact
___________________________________
Scott D. Whittenburg
By_____________________
Attorney-in-fact
___________________________________
Matthew P. Weiner
By_____________________
Attorney-in-fact
___________________________________
Chemical Bank
For the purposes of Sections 7.4
and 7.6 only:
GRAHAM ACQUISITION CORPORATION
By:________________________________
Name:
Title:
<PAGE>
LIST OF EXHIBITS TO STOCK PURCHASE AGREEMENT
Exhibit A - List of Sellers
Exhibit B - Defintion of Net Income Amount
Exhibit C - Opinion of Dewey Ballantine
Exhibit D - Form of Employment Agreement
Exhibit E - Shareholder Approval Form
Exhibit F - Payment of Management Bonuses
Exhibit G - Release
Exhibit H - Terms of Agreement with Subordinated Debtholder
Exhibit I - Opinion of Cadwalader, Wickersham & Taft
<PAGE>
LIST OF SCHEDULES TO THE STOCK PURCHASE AGREEMENT
Schedule 4.2 - Subsidiaries
Schedule 4.3 - Jurisdictions
Schedule 4.4 - Capital Stock of Subsidiaries
Schedule 4.5 - Options or Other Rights
Schedule 4.9 - Tax Matters
Schedule 4.10 - Compliance with Laws
Schedule 4.11 - Permits
Schedule 4.12 - Environmental Matters
Schedule 4.13 - Required Consents
Schedule 4.14 - Claims and Proceedings
Schedule 4.15 - Contracts
Schedule 4.16 - Description of Real Estate
Schedule 4.18 - Receivables
Schedule 4.19 - Tangible Property
Schedule 4.20 - Intangible Property
Schedule 4.22 - Accounts Payable
Schedule 4.23 - Undisclosed Liabilities
Schedule 4.24 - Suppliers and Customers
Schedule 4.25 - Employee Benefit Plans
Schedule 4.26 - Employee Relations
Schedule 4.27 - Insurance
Schedule 4.28 - Company Products
Schedule 4.29 - Employees
Schedule 4.30 - Operations of the Company
Schedule 4.31 - Potentional Conflicts of Interest
Schedule 4.32 - Banks, Brokers and Proxies
Schedule 5.2 - Sellers' Authority to Execute and Perform
Schedlule 6.2 - Buyer's Authority to Execute and Perform
Schedule 6.6 - Buyer Undisclosed Liabilities
Schedule 7.5 - Payments to Related Parties
<PAGE>
<PAGE>
EXHIBIT 4
<PAGE>
NOTE PURCHASE AND LOAN AGREEMENT
This Note Purchase and Loan Agreement ("Agreement"),
dated May 4, 1994, is by and among ANACOMP, INC., an Indiana
corporation ("Buyer" and "Borrower"), CARLISLE COMPANIES
INCORPORATED, a Delaware corporation ("Carlisle"), CARLISLE
MEMORY PRODUCTS GROUP INCORPORATED, a Delaware corporation
("CMPG"), and IMG MANUFACTURING, INC. (f/k/a Graham Magnetics,
Inc.), a Delaware corporation ("Old Graham") (Carlisle, CMPG and
Old Graham are referred to together as "Seller" and "Lender").
RECITALS
A. Seller is the holder of an unsecured 10%
subordinated term note, dated June 30, 1992, in the principal
amount of $5,525,270 (the "Graham Note") of Graham Asset Corp., a
Delaware corporation now known as Graham Magnetics, Inc. ("Graham
Magnetics"). Seller wishes to sell the Graham Note and Buyer
wishes to purchase the Graham Note upon the terms and subject to
the conditions of this Agreement.
B. As payment of the purchase price of the Graham
Note, Buyer will execute and deliver to Seller its promissory
note evidencing Buyer's obligations under a loan made by Seller
to Buyer in the amount of the purchase price of the Graham Note
(the "Term Loan").
AGREEMENT
In consideration of the mutual promises and covenants
made by each party to the other, the parties agree as follows:
1. Sale and Purchase of the Graham Note.
1.1 Sale and Purchase. At the closing provided for in
Section 2 (the "Closing") and upon the terms and subject to the
conditions of this Agreement, Seller shall sell, transfer and
assign to Buyer, and Buyer shall purchase from Seller, the Graham
Note. The aggregate purchase price (the "Purchase Price") for
the Graham Note shall be Five Million Five Hundred Twenty Five
Thousand Two Hundred and Seventy Dollars ($5,525,270).
1.2 Payment of Purchase Price. The Purchase Price
shall be paid on the Closing Date by Buyer executing and
delivering its promissory note to the order of Seller evidencing
Buyer's obligations under the Term Loan in the principal amount
of $5,525,270, which promissory note shall be (i) dated the
Closing Date; (ii) subject to prepayment, in whole or in part, as
provided in Section 4 of this Agreement; (iii) in the form
attached hereto as Exhibit A; and (iv) otherwise subject to the
terms and conditions of this Agreement (the "Anacomp Note").
1.3 Reservation of Anacomp Shares and Adjustments.
From and after the Closing Date, Buyer shall reserve, set aside
and keep available out of its authorized common stock for the
benefit of Seller a total of 2,149,911 shares of Buyer's common
stock solely for issuance to Seller upon Seller's election to
have all or any portion of the Anacomp Note prepaid pursuant to
Section 4 of this Agreement (the "Anacomp Shares"). Buyer shall
make appropriate adjustments in the number of Anacomp Shares
issuable to Seller under this Agreement in order to give effect
to changes made in the number of outstanding shares of Buyer's
common stock as a result of a merger, consolidation,
recapitalization, reclassification, combination, stock dividend,
stock split, or other similar change.
1.4 Registration of Anacomp Shares. As soon as
reasonably possible after the Closing, Buyer shall prepare and
file with the Securities and Exchange Commission (the "SEC") a
registration statement for the resale of all Anacomp Shares that
might be issued to Seller upon Seller's election to have all or
any portion of the Anacomp Note prepaid pursuant to Sections 4.2
and 4.3 of this Agreement. Buyer shall use its reasonable best
efforts to cause such registration statement to become effective
on or as soon as possible after the Closing Date (the "Effective
Date") and to remain effective for a period of five years
following the Effective Date or one year following the last
possible issuance of Anacomp Shares pursuant to Section 4 of this
Agreement, whichever shall first occur. Buyer shall also use its
reasonable best efforts to list the Anacomp Shares for trading on
the New York Stock Exchange as soon as possible after the Closing
Date. Buyer shall pay all costs (including without limitation
all legal, accounting and printing fees) arising from such
registration. It is understood and agreed that Seller shall have
no right to require registration of the shares of Buyer's common
stock except as provided in this Section 1.4.
2. Closing; Closing Date. The Closing of the sale
and purchase of the Graham Note contemplated hereby shall occur
at the offices of Cadwalader, Wickersham & Taft in New York, New
York at 10:00 a.m. local time on May 2, 1994 (the "Closing
Date"). The Closing shall be effective as of 11:59 p.m. on the
Closing Date.
2.1 Delivery by Seller. At the Closing, Seller shall
deliver to Buyer the original executed copy of the Graham Note,
together with any such other documents as may be necessary to
effect the transfer of the Graham Note. Seller's delivery of the
Graham Note to Buyer shall be without recourse and without any
representation or warranty of any kind or description whatsoever
including, without limitation: (a) any representation or warranty
with respect to the validity, enforceability, genuineness,
collectibility or value of the Graham Note or obligations
described in the Graham Note; and (b) any warranty of transfer or
presentment including, without limitation, any warranty pursuant
to Uniform Commercial Code Sections 3-417 and 8-306, or any other
applicable provisions of law.
2.2 Deliveries by Buyer. At the Closing, Buyer shall
deliver or cause to be delivered to Seller (i) the Anacomp Note
fully and properly executed by an authorized representative of
Buyer; and (ii) the legal opinion of Cadwalader, Wickersham &
Taft, counsel to Buyer, dated as of the Closing Date, in the form
attached hereto as Exhibit B.
3. The Term Loan.
3.1 Purpose of the Term Loan. Lender agrees to make
the Term Loan to Borrower for the sole purpose of applying and
crediting the loan as payment against the Purchase Price due by
Buyer to Seller under the terms of this Agreement.
3.2 Interest. The Term Loan shall bear and accrue
interest from April 15, 1994 at a fixed per annum rate of ten
percent (10%). Interest on the Term Loan shall be payable in
arrears by Borrower to Carlisle on behalf of Lender on each
January 15, April 15, July 15 and October 15 commencing on July
15, 1994 and continuing thereafter until the entire amount of the
Term Loan is paid by Borrower in full.
3.3 Principal Payments. Borrower shall make sixteen
(16) equal quarterly payments of principal of $345,329.38,
payable to Carlisle on behalf of Lender on each January 15, April
15, July 15 and October 15 commencing on July 15, 1994 until the
entire principal amount of the Term Loan is paid in full.
4. Prepayments; Terms of Payment.
4.1 Optional Prepayment. Borrower, at its option and
sole discretion, may at any time and from time to time prepay any
amount of the Term Loan, in whole or in part, without premium or
penalty provided that each such prepayment shall be in an amount
of at least Fifty Thousand Dollars ($50,000).
4.2 Mandatory Prepayment. Lender, at its option and
sole discretion, may at any time and from time to time, upon
notice to Borrower as provided in Section 4.5 (the "Mandatory
Prepayment Notice"), elect to require Borrower to prepay any
amount of the Term Loan without premium or penalty in whole or in
part in accordance with the terms of this Section 4.
4.3 Form of Prepayment. In the event Lender delivers
to Borrower a Mandatory Prepayment Notice, Borrower shall prepay
the amount of outstanding principal under the Term Loan as
designated in the Mandatory Prepayment Notice by issuing and
delivering to Lender within five business days after receipt of
the Mandatory Prepayment Notice the number of Anacomp Shares
equal to the outstanding principal amount under the Term Loan so
designated in the Mandatory Prepayment Notice divided by $3.57,
subject to recalculation as set forth in Section 4.4 below.
Borrower shall issue the Anacomp Shares to Lender by delivering
or causing to be delivered to Carlisle on behalf of Lender or to
Carlisle's designee, a stock certificate issued in the name of
Carlisle or by transferring the Anacomp Shares in such other
customary and reasonable manner as may be designated by Carlisle.
If the Anacomp Shares to be delivered pursuant to this Section
4.3 would include a fractional share, then Borrower shall, in
lieu of such fractional share, pay to Lender an amount in cash
equal to the value of such fractional share. Borrower shall pay
the amount of unpaid interest accrued on the outstanding
principal under the Term Loan designated in the Mandatory
Prepayment Notice in cash or, at the option of Borrower, in
registered Anacomp Shares issued to Carlisle or its designee on
behalf of Lender in the manner specified in this Section 4.3 to
Carlisle on behalf of Lender.
4.4 Recalculation to Number of Anacomp Shares.
Notwithstanding anything to the contrary in this Agreement, in
the event the closing sales price of the Anacomp Shares on the
Effective Date is less than $3.57, the devisor set forth in
Section 4.3 above ($3.57) shall be recalculated to equal the
greater of (A) the closing sales price of the Anacomp Shares on
the Effective Date; or (B) in the event that the Effective Date
occurs (1) on or within thirty days following the Closing Date
$3.07, (2) more than thirty days but less than sixty days
following the Closing Date, $2.82 or (3) more than sixty days
following the Closing Date, $2.57.
4.5 Mandatory Prepayment Notice. Lender shall deliver
each Mandatory Prepayment Notice to Borrower in the manner
described in Section 9.8 not less than five business days nor
more than sixty days prior to the date fixed for mandatory
prepayment, specifying the date fixed for prepayment, the
principal amount of the Term Loan to be prepaid, the accrued
interest applicable to such prepayment and the number of Anacomp
Shares issuable on account of the prepayment.
4.6 Additional Mandatory Prepayment. In addition to
any mandatory prepayment elected by Lender in Section 4.2 above,
in the event Borrower refinances in any form or manner its 15%
Senior Subordinated Notes, as described in Borrower's Form 10-K
for its fiscal year ended September 30, 1993, upon the closing of
such refinancing (or first closing in any series of closings),
the entire principal balance of and accrued and unpaid interest
on the Term Loan due under the Anacomp Note shall become
immediately due and payable in cash to Lender.
4.7 Adjustments to Scheduled Installments. All
prepayments of the Term Loan pursuant to this Section 4 shall
include all interest accrued to the date of prepayment and shall
be credited against the remaining scheduled installments of
principal due on the Term Loan in inverse chronological order of
maturity. Upon receipt by Carlisle or its designee of any
Anacomp Shares pursuant to Section 4.3, the outstanding principal
balance of the Anacomp Note (and, to the extent Borrower issues
Anacomp Shares in payment of accrued interest, such amount of
accrued interest) shall be satisfied in an amount equal to the
number of Anacomp Shares received multiplied by the devisor set
forth in Section 4.3, as may have been recalculated pursuant to
Section 4.4.
4.8 Terms of Payment. Except as provided in Sections
4.3 and 4.4, all payments of principal and interest in respect of
the Term Loan shall be made in lawful money of the United States
of America to the bank account of Carlisle on behalf of Lender
(as designated in writing for such purpose by Carlisle).
Whenever any payment on the Term Loan shall be stated to be due
on a day which is not a Business Day, such payment shall be made
on the next succeeding Business Day. For purposes hereof,
"Business Day" shall mean any day, other than a Saturday, Sunday
or legal holiday in the State New York, on which banks are open
for substantially all their banking business in New York City.
4.9 Status of Term Loan. Lender and Borrower
acknowledge and agree that notwithstanding any other provision or
construction of this Agreement to the contrary, the Term Loan
represents general, unsecured indebtedness of Borrower and the
issuance of the Anacomp Shares upon a mandatory prepayment of the
Anacomp Note is solely a method of prepayment of general,
unsecured indebtedness of Borrower.
5. Representations and Warranties of the Seller.
Each of the following representations and warranties of Seller to
Buyer shall be deemed to be those of Seller and each of its
subsidiaries and shall survive the Closing of the transactions
contemplated by this Agreement.
5.1 Due Incorporation and Authority. Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
5.2 Authority to Execute and Perform Agreement.
Seller has the full legal right and power and all authority and
approvals required to execute and deliver this Agreement and to
perform fully Seller's obligations hereunder. This Agreement has
been duly executed and delivered by Seller and (assuming the due
authorization, execution and delivery hereof by Buyer) is a valid
and binding obligation of Seller enforceable in accordance with
its terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium, or similar laws affecting creditors'
rights generally and subject, as to enforceability, to equitable
principles of general application (regardless of whether
enforcement is sought in a proceeding in equity or at law)).
5.3 No Breach. The execution, delivery and
performance of this Agreement by Seller and the consummation of
the transactions contemplated hereby will not (i) violate any
provision of the Certificate of Incorporation or By-laws (or
comparable instruments) of the Seller; (ii) require Seller to
obtain any consent, approval or action of, or make any filing
with or give any notice to, any governmental body or any other
person or (iii) violate any order of any governmental body
against, or binding upon, Seller.
5.4 Anacomp Shares; No Solicitation or Distribution.
Seller acknowledges and understands that the Anacomp Shares that
may be issued to the Seller pursuant to this Agreement have not
been registered under the Securities Act of 1933, as amended (the
"Act"), and may not be sold except pursuant to an effective
registration statement, or pursuant to a duly available exemption
from the registration requirements of the Act. Seller
acknowledges that the Anacomp Shares were not offered or sold to
it by any form of general solicitation or general advertising,
and that in making any subsequent offering or sale of the Anacomp
Shares, Seller will be acting only for itself and not as part of
a sale or planned distribution that would be in violation of the
Act. Seller hereby represents that it is its intention not to
transfer, sell or otherwise dispose of any Anacomp Shares prior
to the registration of such shares pursuant to Section 1.4 other
than through a transaction that would not require registration of
such Anacomp Shares under the Act.
5.5 Knowledge and Experience. Seller has such
knowledge and experience in financial and business matters that
Seller is capable of evaluation of the merits and risks of the
acquisition of the Anacomp Shares, and having had access to such
information with respect to the Anacomp Shares as it considered
necessary, has concluded that Seller is able to bear those risks.
Seller hereby acknowledges receipt of the Buyer's 1993 Annual
Report to Shareholders, including its Annual Report on Form 10-K
for the year ended September 30, 1993, and any and all documents
made publicly available since that date. Seller has had the
opportunity to discuss any questions regarding the Anacomp Shares
with appropriate officers of Buyer.
5.6 Legended Certificates. Seller acknowledges that,
until the Anacomp Shares are registered under the Act, a legend
similar to the following will appear on the Anacomp Shares:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND MAY BE REOFFERED AND SOLD ONLY IF SO REGISTERED OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE."
5.7 Brokers. No broker, finder, agent or similar
intermediary has acted on behalf of Seller in connection with
this Agreement or the transactions contemplated by this
Agreement, and there are no brokerage commissions, finder's fees
or similar fees or commissions payable in connection therewith
based on any agreement, arrangement or understanding with Seller.
6. Representations and Warranties of the Buyer. Each
of the following representations and warranties of Buyer to
Seller shall be deemed to be those of Buyer and each of its
subsidiaries and shall survive the Closing of the transactions
contemplated by this Agreement.
6.1 Due Incorporation and Authority. Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Indiana, and has all requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as now being and as
heretofore conducted.
6.2 Authority to Execute and Perform Agreement. Buyer
has the full legal right and power and all authority and
approvals required to execute and deliver this Agreement and to
perform fully its obligations hereunder. This Agreement has been
duly executed and delivered by Buyer and (assuming the due
authorization, execution and delivery hereof by Seller) is a
legal, valid and binding obligation of Buyer enforceable in
accordance with its terms (subject to applicable bankruptcy,
reorganization, insolvency, moratorium, or similar laws affecting
creditors' rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of
whether enforcement is sought in a proceeding in equity or at
law)).
6.3 No Breach. The execution and delivery by Buyer of
this Agreement, the consummation of the transactions contemplated
by this Agreement and the performance by Buyer of this Agreement
in accordance with its terms will not (i) require Buyer to obtain
any consent, approval or action of, or make any filing with or
give any notice to, any governmental body or any other person;
(ii) conflict with or result in any breach or violation of any of
the terms and conditions of, or constitute (or with notice or
lapse of time or both constitute) a default under, the
Certificate of Incorporation or By-laws of Buyer, or any
obligation, contract or agreement to which Buyer is a party or by
or to which Buyer or any of its properties is bound or subject;
or (iii) result in the creation of any lien on any of the
properties of Buyer.
6.4 Anacomp Shares. The Anacomp Shares, when issued
in accordance with this Agreement, will be duly authorized,
validly issued, fully paid and non-assessable and free and clear
of any liens or encumbrances.
6.5 Solvency of Buyer. The Term Loan, when added to
all the other debts and liabilities of Borrower are, and will be,
less than the fair market value of the aggregate of all of its
assets. Borrower will not be rendered insolvent (either
inability to pay debts as they mature or that the sum of its
aggregate debts are greater than all of its aggregate property at
fair market valuation) by incurring the obligations and
indebtedness as set forth in this Agreement pursuant to any
definition of insolvency under any applicable law. The Borrower
has received fair value consideration, fair equivalent value, and
reasonable value in exchange for its obligations under this
Agreement. Borrower is not presently engaged and is not
contemplating engaging in any business for which the property
remaining with it would constitute unreasonably small capital.
Borrower does not intend or believe that it will incur debts
beyond which it will have the ability to pay as they mature by
reason of the execution and performance of its obligations under
this Agreement.
6.6 SEC Reports, Financial Statements and Anacomp
Disclosure Documents. Buyer has filed with the SEC all reports,
schedules, statements and other documents required to be filed by
it since September 30, 1993 under the Securities Exchange Act of
1934 (the "Exchange Act") and the Act (as such documents have
been amended since the time of their filing). Such documents,
including, without limitation, any financial statements or
schedules included therein, at the time filed (a) complied in all
material respects with the applicable requirements of the
Exchange Act and the Act, as the case may be, and the applicable
rules and regulations of the SEC thereunder and (b) did not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6.7 Absence of Undisclosed Liabilities and
Obligations. As at September 30, 1993, Buyer did not have any
direct or indirect material indebtedness, liability, claim, loss,
damage, deficiency, obligation or responsibility, known or
unknown fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute,
contingent, or otherwise, of a kind required by generally
accepted accounting principles to be set forth on a financial
statement or in the notes thereto that were not fully and
adequately reflected or reserved against on the audited
consolidated balance sheet of the Buyer and its subsidiaries as
of September 30, 1993 ("Buyer Undisclosed Liabilities"). Buyer
has not, except in the ordinary course of business, incurred any
Buyer Undisclosed Liabilities since September 30, 1993. Buyer
has no knowledge of any circumstance, condition, event or
arrangement that may hereafter give rise to any material Buyer
Undisclosed Liabilities of Buyer or any successor to its business
except in the ordinary course of business.
6.8 Financial Statements. The consolidated balance
sheets of Buyer as of September 30, 1993, September 30, 1992 and
September 30, 1991 and the related consolidated statements of
income, shareholders' equity and changes in financial position
for the years then ended, including the footnotes thereto,
certified by Arthur Andersen & Co., independent certified public
accountants, which have been delivered to Carlisle on behalf of
Seller are true, correct and complete in all material respects,
fairly present the consolidated financial position of Buyer as at
such dates and the consolidated results of operations of Buyer
for such respective periods, in each case in accordance with
generally accepted accounting principles consistently applied for
the periods covered thereby.
6.9 No Material Adverse Change. Since September 30,
1993, there has been no material adverse change in the
properties, business, prospects, results of operations and
financial condition of Buyer, and Buyer does not know of any such
change which is threatened, nor has there been any damage,
destruction or loss which to the best of buyer's knowledge, would
have or has had a material adverse effect on the financial
condition of the Buyer.
6.10 Brokers. No broker has acted on behalf of Buyer
in connection with this Agreement or the transactions
contemplated by this Agreement, and there are no brokerage
commissions, finders' fees or similar fees or commissions payable
in connection therewith based on any agreement, arrangement or
understanding with Buyer, or any action taken by Buyer.
7. Affirmative Covenants. Borrower covenants to
Lender that, from the date of this Agreement until all amounts
owing hereunder and under the Anacomp Note have been paid in
full, Borrower and each of its subsidiaries shall:
7.1 Financial Statements. Furnish to Lender (i)
annual financial statements, promptly and as soon as available,
but in no event more than 120 days after the end of Borrower's
fiscal year, such statements at the end of and for the entire
fiscal year as reviewed and prepared by an independent certified
public accounting firm which is of national recognition; such
statement shall fairly present the results of Borrower's
operation for the period covered and Borrower's financial
condition as at the end of such period in accordance with
generally accepted accounting principles applied on a consistent
basis and be accompanied by the management letter prepared by
such accounting firm; and (ii) quarterly financial statements,
promptly and as soon as available but no more than 60 days after
the end of each fiscal quarter (other than the fiscal quarter for
which Borrower is obligated to provide annual financial
statements) showing Borrower's financial condition and results of
its operation for each such quarter.
7.2 Further Assurances. Upon request of Lender, duly
execute and deliver and cause to be executed and delivered to
Lender such further instruments and do and cause to be done such
further acts as may be reasonably necessary to carry out the
provisions of this Agreement.
7.3 Notices. (i) Defaults. Promptly notify Lender
in writing of the occurrence of any Event of Default (as defined
in Section 8.1). If any person shall give any notice or take any
other action in respect of a claimed default (whether or not
constituting an Event of Default) under this Agreement or any
other note, evidence of indebtedness, indenture or other
obligation to which or with respect to which Borrower or any of
its subsidiaries is a party or obligor, whether as principal,
guarantor, surety or otherwise, Borrower shall forthwith give
written notice thereof to Lender, describing the notice or action
and the nature of the claimed default and promptly providing
Lender with a copy of each and every notice so received.
(ii) Certifications and Other Reports. Simultaneously
with the delivery thereof to any other person pursuant to the
terms of any indenture, loan or credit or similar agreement,
Borrower shall furnish to Lender copies of any and all
certifications, statements, or reports delivered to such person
not otherwise required to be furnished pursuant to this Section
7.
8. Rights and Remedies on Default.
8.1 Events of Default. Upon the occurrence of any of
the following, an Event of Default shall have occurred and, at
Lender's option by giving notice to Borrower in writing,
Borrower's indebtedness under this Agreement and the Anacomp Note
shall become immediately due and payable without notice,
presentation or demand of any kind, all of which are hereby
waived; provided that in the event of any Event of Default
specified in Sections 8.1(v), (vi), (vii) or (viii), all such
amounts shall become immediately due and payable automatically
and without any requirement of notice from Lender:
(i) Borrower fails to pay or prepay when due any
principal or interest payments as provided in Sections 3 or 4 of
this Agreement;
(ii) Borrower fails in any material respect to perform
any other term, covenant, condition, warranty or representation
in this Agreement or in the Anacomp Note and such failure shall
continue for thirty (30) days after Lender notifies Borrower in
writing of such failure;
(iii) Any representation or warranty made by Borrower
in this Agreement or in any other instrument given in connection
herewith or any officer of Borrower in any instrument given in
connection herewith or with any other obligation of Borrower to
Lender, shall prove to be false or erroneous when made and shall
have a material adverse effect on Borrower or its ability to meet
its obligations hereunder;
(iv) Borrower or any of its subsidiaries shall: (i)
fail to pay any indebtedness, including but not limited to
indebtedness for borrowed money, of Borrower or any such
subsidiaries, as the case may be, or any interest or premium
thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise); or (ii) fail to
perform or observe any term, covenant or condition on its part to
be performed or observed under any agreement or instrument
relating to any such indebtedness, when required to be performed
or observed if the effect of such failure to perform or observe
is to accelerate, or to permit the acceleration of, after the
giving of notice or passage of time, or both, the maturity of
such indebtedness, unless such failure to perform or observe
shall be waived by the holder of such indebtedness; or any such
indebtedness shall be declared to be due and payable, or required
to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(v) Borrower or any of its subsidiaries becomes
insolvent or generally fails to pay, or admit in writing its
inability to pay, debts when due;
(vi) Borrower or any of its subsidiaries makes a
general assignment for the benefit of creditors, commences (as
the debtor) a case in bankruptcy, or commences (as a debtor) any
proceeding under any other insolvency law;
(vii) A case in bankruptcy or any proceeding under any
other insolvency law is commenced against Borrower or any of its
subsidiaries (as the debtor) and the case or proceeding is not
dismissed within 60 days;
(viii) A trustee, receiver or agent is appointed or
authorized to take charge of substantially all of the property of
Borrower or any of its subsidiaries for the purpose of enforcing
a lien against such property or for the purpose of general
administration of such property or for the benefit of creditors
and such appointment or authorization is not stayed or rescinded
within 60 days.
8.2 Remedies and Expenses. Upon the occurrence of any
Default or Event of Default, Lender shall have all of the rights,
powers and remedies against Borrower as provided for at law or in
equity. Borrower agrees to pay all reasonable out-of-pocket
expenses (including without limitation reasonable attorneys'
fees) incurred by Lender in connection with the enforcement of or
preservation of its rights under this Agreement or the Anacomp
Note or the administration thereof after the occurrence of an
Event of Default.
9. Miscellaneous.
9.1 Waivers and Enforcement of Rights. To the extent
permitted by law, Borrower hereby waives demand, notice of
default, protests, presentment, notice of acceptance of this
Agreement, notice of loans made, credit extended or other action
taken in reliance thereon and all other demands and notices of
any description except as otherwise expressly provided herein.
The failure by Lender to exercise any right, remedy or option
under this Agreement or delay by Lender in exercising the same
will not operate as a waiver. No waiver by Lender will be
effective unless it is confirmed in writing and then only to the
extent specifically stated therein. All rights and remedies of
Lender hereunder shall be cumulative and may be exercised
singularly or concurrently.
9.2 Entire Agreement. This Agreement and the exhibits
attached constitute the entire agreement between the parties with
respect to the subject matter hereof. None of the terms or
provisions hereof may be waived, altered, modified or amended in
respect of Borrower except by an agreement in writing signed by
Lender and Borrower.
9.3 Severability. Wherever possible, each provision
of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
9.4 Assignment. Lender may assign all or a portion of
its interests, rights and obligations under this Agreement.
Borrower shall not assign or transfer any of its interests,
rights or obligations under this Agreement or the Anacomp Note
without the prior written consent of Lender.
9.5 Governing Law. This Agreement shall be deemed to
have been made, be governed by and construed under the laws of
the State of New York.
9.6 Headings. The headings preceding each of the
above paragraphs are for convenience only and shall not be
considered in the construction or interpretation of this
Agreement.
9.7 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
<PAGE>
9.8 Manner of Notices. Any notice or other
communication required or permitted hereunder shall be in writing
and shall be delivered personally, telegraphed, telexed, sent by
facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, or sent by facsimile
transmission or, if mailed, five days after the date of deposit
in the United States mail, follows:
(i) if to Buyer/Borrower, to:
Anacomp, Inc.
One Buckhead Plaza
Suite 1700
3060 Peachtree Road, N.W.
Atlanta, GA 30305
Attention: Mr. Jack O'Donnell
Chief Financial Officer
Facsimile: (404) 262-3884
with copies to:
Anacomp, Inc.
One Buckhead Plaza
Suite 1700
3060 Peachtree Road, N.W.
Atlanta, GA 30305
Attention: George C. Gaskin, Esq.
Facsimile: (404) 262-3884
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, NY 10038
Attention: Michael C. Ryan, Esq.
Facsimile: (212) 504-6666
(ii) if to Seller/Lender, to:
Carlisle Companies Incorporated
250 S. Clinton Street,
Suite 201
Syracuse, NY 13202-1258
Attention: Executive Vice President and
Chief Financial Officer
Facsimile: (315) 474-2008
Any party may by notice given in accordance with this
Section 9.8 to the other parties designate another address or
person for receipt of notices hereunder.
<PAGE>
The parties hereto have caused this Note Purchase and
Loan Agreement to be executed and delivered by their duly
authorized officers as of the date and year first above written.
ANACOMP, INC.
By: ______________________________
Jack R. O'Donnell
Executive Vice President,
Treasurer and Chief Financial
Officer
CARLISLE COMPANIES INCORPORATED
By: ______________________________
Dennis J. Hall
Executive Vice President,
Treasurer and Chief Financial
Officer
CARLISLE MEMORY PRODUCTS GROUP
INCORPORATED
By: ______________________________
Dennis J. Hall
Vice President & Treasurer
IMG MANUFACTURING, INC.
By: ______________________________
Dennis J. Hall
Vice President & Treasurer
<PAGE>
LIST OF EXHIBITS TO THE NOTE PURCHASE AND LOAN AGREEMENT
Exhibit A - Term Note
Exhibit B - Form of Opinion of Cadwalader, Wickersham & Taft
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EXHIBIT 99
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FOR IMMEDIATE RELEASE Contact: Jerry Manzi
Corporate Communications
Anacomp, Inc.
404-262-2667
ANACOMP ACQUIRES GRAHAM MAGNETICS
ATLANTA, May 4, 1994 -- Anacomp, Inc. (NYSE: AAC) today announced
that it has finalized its acquisition of Graham Magnetics, Inc.,
a worldwide marketer and manufacturer of magnetic media products
with 1993 sales of $60 million. The acquisition is a linchpin in
Anacomp's overall strategy to further develop its profitable
magnetics business.
"The Graham acquisition leverages Anacomp's strength in the
magnetics arena by expanding our market share and providing us
with economies of scale that we can pass along to our customers
in the form of an unequalled mix of quality, products, and cost
efficiencies," commented Lang Lowrey, president of Anacomp's
magnetics group.
Anacomp is a worldwide manufacturer and marketer of information
management products and services, with clients in banking,
insurance, manufacturing, health care, retailing and other
information-intensive organizations. The company has more than
4,000 employees, and operates in 40 countries.
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