<PAGE> 1
EXHIBIT 10.17
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement"), dated as of December 7, 2000, is
made among priNexus, Inc., a Delaware corporation (the "Purchaser"), Matt-One
Holding Corporation, a Delaware corporation ("Matt-One"), Tukaiz Litho, Inc.,
an Illinois corporation ("Litho", and collectively with Matt-One, the
"Sellers" or each individually a "Seller") and Tukaiz Communications, L.L.C.,
an Illinois limited liability company (the "Company").
R E C I T A L S
WHEREAS, the Sellers own beneficially and of record all of the issued and
outstanding membership interests of the Company (the "Company Membership
Interests").
WHEREAS, the Purchaser desires to purchase and the Sellers desire to sell, the
Company Membership Interests.
NOW, THEREFORE, in consideration of the foregoing, the agreements hereafter
set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1. PURCHASE AND SALE OF COMPANY MEMBERSHIP INTERESTS.
1.1 Agreement to Purchase and Sell. On the Closing Date (as defined in
Section 2.1) and upon the terms and subject to the conditions set forth in
this Agreement, the Sellers will sell, assign, transfer, convey and deliver to
the Purchaser, and the Purchaser will accept and purchase from the Sellers,
the Company Membership Interests, free and clear of all liens, charges,
pledges, security interests, claims and encumbrances whatsoever ("Liens").
1.2 Purchase Price; Allocation of Purchase Price.
(a) On the Closing Date, the Purchaser will deliver or cause to be delivered,
as consideration for the sale of the Company Membership Interests, an amount
equal to $31,086,470 (the "Purchase Price"). Subject to the Indebtedness
Adjustment (as defined below), the Purchase Price will be paid and allocated
as follows:
(i) to Matt-One:
$10,041,959 will be paid to Matt-One in immediately available funds;
(ii) to Litho:
(A) $1,140,000 will be paid to Litho in the form of a Subordinated Promissory
Note of the Purchaser, in the form attached hereto as Exhibit A (the "Note");
and
(B) $5,975,959 will be paid to Litho in immediately available funds;
<PAGE> 2
(C) $1,500,000 will be paid to Litho by the tranfer of the ownership of the
buildings located at 2950 Hart Drive, Franklin Park, Illinois 60131 in
accordance with the terms of the Real Estate Transfer Agreement (as defined
below);
(iii) up to $5,500,000 will be paid to satisfy the principal amount
outstanding under a subordinated note of the Company held by Venetian
Investment Corporation (the "Venetian Note");
(iv) up to $3,069,138 will be paid to satisfy the principal amount
outstanding under two notes of the Company held by Venetian Investment
Corporation (the "Venetian Additional Notes"); and
(v) up to $3,859,414 will be allocated to the indebtedness of the Company
outstanding on the Closing Date (the "Company Indebtedness"). The Purchaser
will have the option to satisfy the Company Indebtedness at Closing.
(b) If (i) the amount paid at Closing to satisfy the principal amount of the
Venetian Additional Notes is less than $3,069,138 or (ii) the Company
Indebtedness outstanding on the Closing Date is less than $3,859,414
(exclusive of Company Indebtedness incurred between September 30, 2000 and the
Closing Date to fund the purchase of capital equipment that was approved in
advance by the Purchaser), the aggregate difference will be paid to the
Sellers at Closing, as follows: (1) for Matt-One, 50% of any such amount will
be added to the amount to be paid to Matt-One pursuant to clause (a)(i) above,
and (2) for Litho, 50% of any such amount will be added to the amount to be
paid to Litho in cash pursuant to clause (a)(ii)(B) above.
(c) If (i) the amount paid at Closing to satisfy the principal amount of the
Venetian Note is more than $5,500,000, (ii) the amount paid at Closing to
satisfy the principal amount of the Venetian Additional Notes is more than
$3,069,138, or (iii) the Company Indebtedness outstanding on the Closing Date
is more than $3,859,414 (exclusive of Company Indebtedness incurred between
September 30, 2000 and the Closing Date to fund the purchase of capital
equipment that was approved in advance by the Purchaser), the aggregate
difference will be subtracted from the Purchase Price as follows: (1) for
Matt-One, 50% of any such amount will be subtracted from the amount to be paid
to Matt-One pursuant to clause (a)(i) above, and (2) for Litho, 50% of any
such amount will be subtracted from the amount to be paid to Litho in cash
pursuant to clause (a)(ii)(B) above (any adjustment under this paragraph or
paragraph (b) above, the "Indebtedness Adjustment").
<PAGE> 3
1.3 Audit of Closing Date Working Capital; Purchase Price Adjustment. As
promptly as practicable after the Closing Date (but in no event later than 60
days after the Closing Date), the Purchaser will deliver to the Sellers a
statement of the Net Current Assets (as hereinafter defined) of the Company as
of the Closing Date (the "Closing Working Capital Statement"). The Closing
Working Capital Statement will be prepared in accordance with United States
generally accepted accounting principles ("GAAP"), applied consistently with
the Financial Statements (as defined in Section 3.3 hereof). The term "Net
Current Assets" means the difference between (a) the sum of (1) cash, (2)
accounts receivable (net of allowance for doubtful accounts), (3) inventory
and (4) pre-paid expenses and other current assets, minus (b) the sum of (1)
accounts payable, (2) accrued compensation and benefits and accrued vacation
pay and the like, (3) other accrued expenses, and (4) other current
liabilities, all in accordance with GAAP applied consistently with the
Financial Statements (as hereinafter defined). The Closing Working Capital
Statement will not reflect as a current liability (i) amounts not to exceed
$138,000 related to medical insurance claims for any period prior to October
1, 1999, (ii) amounts paid or payable by the Company arising from any
agreement to purchase capital equipment entered into between September 30,
2000 and the Closing Date that has been approved by the Purchaser or any
Company Indebtedness incurred between September 30, 2000 and the Closing Date
to fund the purchase of such capital equipment, as referenced in Section
1.2(c)(iii) above, (iii) the current portion of long term debt, or (iv) the
current portion of the principal amounts of the Venetian Note or the
Additional Venetian Notes. Notwithstanding anything to the contrary in this
Section 1.3, the Closing Working Capital Statement will reflect as a current
liability all accrued and unpaid interest on Company Indebtedness.
(a) The Sellers will have 15 days after the delivery of the Closing Working
Capital Statement to object to any item or items shown thereon (the "Objection
Period"). The Sellers will notify the Purchaser of any objections to the
Closing Working Capital Statement, setting forth a description of such
objection and the dollar amount of such objection. If the Sellers do not
object during the Objection Period, the Closing Working Capital Statement will
be conclusive and binding on the parties hereto. If the Sellers object during
the Objection Period and the Purchaser and the Sellers are unable to resolve
such objections within 15 days after delivery by the Sellers of the Sellers'
objections, then all disagreements will be submitted for resolution to an
impartial certified public accounting firm of national standing reasonably
acceptable to the Purchaser and the Sellers (the "Independent Auditor"), which
will be selected as promptly as practicable, but in no event later than 10
days following the expiration of such 15-day period. If the Purchaser and the
Sellers cannot agree on the Independent Auditor within the 10-day period, the
selection of the Independent Auditor will be made in the following manner: the
Purchaser will, within (10) business days after the expiration on the 10 day
period set forth above, deliver to the Sellers a list of three (3) nationally
recognized certified public accounting firms together with the name of the
partner at each firm who will be responsible for handling the firm's
engagement (such firm or partners must not have performed services for any of
the Purchaser, the Sellers or the Company), from which list the Sellers will
select one (1) firm within ten (10) days after their receipt of the
Purchaser's list. The Independent Auditor will have up to 30 days after its
appointment to resolve the disputes submitted to it. The Closing Working
Capital Statement, either as agreed to by the Purchaser and the Sellers or as
adjusted by the Independent Auditor pursuant to the preceding sentence, will
be final and binding and will be referred to as the "Final Working Capital
Statement." The fees and expenses of the Independent Auditor will be shared
equally by the Sellers and the Purchaser.
<PAGE> 4
(b) (i) If the Net Current Assets of the Company as shown on the Final Working
Capital Statement (the "Closing Net Current Assets Value") is less than Two
Million Four Hundred Thousand Dollars ($2,400,000) (the "Minimum Benchmark Net
Current Assets Value"), the Sellers will pay to the Purchaser, in immediately
available funds, the amount by which the Closing Net Current Assets Value is
less than the Minimum Benchmark Net Current Assets Value. Litho and Matt-One
will each pay to the Purchaser 50% of the first $200,000 owed to the Purchaser
pursuant to this clause (c)(i) and Litho will pay to the Purchaser 100% of
such amount in excess of $200,000.
(ii) If the Closing Net Current Assets Value is greater than $3,000,000 (the
"Maximum Benchmark Net Current Assets Value"), the Company will pay legal and
accounting fees incurred by Litho in connection with the transactions
contemplated by this Agreement; provided that:
(A) Litho will provide the Company with written invoices for all such fees;
(B) the maximum amount of fees that the Company will be obligated to pay will
be the lesser of (1) Two Hundred and Fifty Thousand Dollars ($250,000) and (2)
the amount by which the Closing Net Current Assets Value is greater than the
Maximum Benchmark Net Current Assets Value.
(iii) If the Closing Net Current Assets Value is greater than the Minimum
Benchmark Net Current Assets Value but less than the Maximum Benchmark Net
Current Assets Value, there will be no adjustment under this Section 1.3.
1.4 Further Assurances. After the Closing (as defined in Section 2.1), the
Sellers will from time to time, at the reasonable request of the Purchaser,
execute and deliver such other instruments of conveyance and transfer and take
such other actions as the Purchaser may reasonably request, in order to more
effectively consummate the transactions contemplated hereby and to vest in the
Purchaser the right, title and interest in and to the Company Membership
Interests; provided that the Purchaser will prepare such additional documents
and instruments and will handle any submittal, applications, processing,
recording and registrations at the Purchaser's sole expense.
<PAGE> 5
ARTICLE 2. CLOSING.
2.1 Closing. Consummation of the transactions contemplated hereby (the
"Closing") will take place at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP, 4 Times Square, New York, New York 10036, at 10:00 a.m., local time,
on January 11, 2001, or such other business day that is the first business day
following the day on which the last of the conditions set forth in Sections
8.1 and 8.2 is fulfilled or waived, or at such other time and place and on
such other date as the Purchaser and the Sellers may agree (the "Closing
Date"). The closing of the transactions contemplated by this Agreement will
be deemed to be effective as of 12:01 a.m. on the Closing Date.
2.2 Sellers' Closing Deliveries. Subject to the conditions set forth in this
Agreement, at the Closing, simultaneous with the Purchaser's deliveries
hereunder:
(a) The Sellers will deliver or cause to be delivered to the Purchaser duly
executed instruments of assignment as required to transfer the Company
Membership Units to the Purchaser, in form and substance reasonably
satisfactory to the Purchaser and its counsel. At the Closing, the Company
Membership Interests will represent all of the outstanding membership
interests of the Company as at the Closing Date.
(b) The Sellers will deliver or cause to be delivered the following to the
Purchaser:
(i) a certificate of the Secretary of the Company certifying the Articles of
Organization and Operating Agreement and all amendments thereto of the
Company;
(ii) certificates of the Sellers and the Company certifying as to the matters
contemplated by Section 8.2(a);
(iii) an opinion of counsel to the Company, Litho and Frank Defino, Sr.
addressed to the Purchaser dated the Closing Date and substantially in the
form set forth as Exhibit B-1 attached hereto, and an opinion of counsel to
Matt-One and Matthews International Corporation ("Matthews") addressed to the
Purchaser dated the Closing Date and substantially in the form set forth as
Exhibit B-2 attached hereto, each of which will state that it may be relied
upon by any entity providing the Financing, as defined in Section 6.14 below;
(iv) executed copies of the consents referred to in Section 3.9 and evidence
reasonably acceptable to the Purchaser of the satisfaction, prior to or
simultaneous with the Closing, of the indebtedness described in Section 8.2(d)
below;
(v) employment agreements with each of the employees listed on Schedule
2.2(b) (the "Key Employees"), duly executed by the Company and each of the Key
Employees (the "Employment Agreements");
(vi) resignations dated the Closing Date from the managers of the Company as
requested in writing by the Purchaser prior to the Closing Date;
(vii) a Subscription Agreement (the "Subscription Agreement") in the form
annexed hereto as Exhibit C, duly executed by Frank Defino, Sr., whereby Frank
Defino, Sr. has made an investment in the amount of $300,000 in the equity of
DGI Holdings, L.L.C. (the "LLC"), as required by Section 8.2(f);
<PAGE> 6
(viii) a real estate transfer agreement pursuant to which the Company will
transfer to Frank Defino, Sr. (the "Landlord") the buildings located at 2950
Hart Drive, Franklin Park, Illinois 60131 (the "Buildings"), duly executed by
the Company and the Landlord, in the form annexed hereto as Exhibit D (the
"Real Estate Transfer Agreement");
(ix) a lease of the Buildings, duly executed by the Company and the Landlord,
in the form annexed hereto as Exhibit E (the "Lease");
(x) a certificate and affidavit as required by the Foreign Investors Real
Property Tax Act, in a form reasonably acceptable to the Purchaser;
(xi) all such other certificates, documents and instruments as Purchaser may
reasonably request in connection with the consummation of the transactions
contemplated by this Agreement.
2.3 Purchaser's Closing Deliveries. Subject to the conditions set forth in
this Agreement, at the Closing, simultaneous with the Sellers' deliveries
hereunder, the Purchaser will deliver or cause to be delivered to the Sellers
(and in the case of indebtedness of the Company to be repaid in connection
with the Closing, the holders of such indebtedness) the following:
(i) the cash consideration referred to in Section 1.2;
(ii) a certificate of the Secretary of the Purchaser certifying the
certificate of incorporation and by-laws and all amendments thereto of the
Purchaser;
(iii) a certificate certifying the existence and good standing of the
Purchaser issued by the Secretary of State of the state of Delaware as of a
recent date;
(iv) a certificate of the Purchaser certifying as to the matters contemplated
by Section 8.3(a);
(v) the Subscription Agreement, duly executed by the LLC;
(vi) the Note; and
(vii) all such other certificates, documents and instruments as the Sellers
may reasonably request in connection with the consummation of the transactions
contemplated by the Agreement.
<PAGE> 7
ARTICLE 3. REPRESENTATIONS AND WARRANTIES BY LITHO.
Litho represents and warrants to the Purchaser as follows:
3.1 Due Formation; Authority; No Violation.
(a) The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of Illinois and has all requisite
limited liability company power and authority to own, lease, operate or
otherwise hold its properties and assets and to carry on its business as now
being conducted except where the failure to be so existing and in good
standing or to have such power and authority would not have a material adverse
effect on the business, results of operations, prospects, assets, liabilities
or condition (financial or otherwise) of the Company taken as a whole (a
"Material Adverse Effect"). The Company is duly qualified or licensed and in
good standing as a foreign corporation authorized to do business under the
laws of each jurisdiction where the character of the properties owned, leased
or used by it or the nature of its activities makes such qualification or
licensing necessary. Schedule 3.1(a) sets forth a complete and correct list
of all jurisdictions in which the Company is qualified or licensed to do
business.
(b) The Company and Litho have the requisite limited liability company or
corporate power and authority necessary to execute, deliver and perform their
obligations under this Agreement and other agreements and instruments to be
executed and delivered by the Company or Litho hereunder or in connection
herewith and to carry out their respective obligations hereunder and
thereunder. The execution and delivery by the Company of this Agreement and
the other agreements and instruments to be executed and delivered by the
Company hereunder or in connection herewith and the consummation of the
transactions contemplated hereby by the Company has been duly authorized by
all necessary limited liability company action required on the part of the
Company. This Agreement and the other agreements and instruments to be
executed and delivered by the Company and Litho hereunder or in connection
herewith have been duly and validly executed and delivered by the Company or
Litho and constitute the valid and legally binding obligations of the Company
or Litho, enforceable against the Company or Litho in accordance with their
respective terms, except to the extent that (i) enforcement may be limited by
or subject to any bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to or limiting creditors'
rights generally, and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief are subject to certain equitable defenses
and to the discretion of the court or other similar person before which any
proceeding therefor may be brought.
(c) Except as set forth in Schedule 3.1(c) hereto, the execution and delivery
by the Company and Litho of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (i) conflict with or
result in a breach of any provision of the Articles of Organization and the
Operating Agreement of the Company or the Articles of Incorporation and the
By-laws of Litho; (ii) violate, or conflict with, or result in a breach of any
provisions of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or give rise to a
right of termination, cancellation, modification or acceleration of the
performance required by or a loss of a benefit under, any note, bond,
mortgage, indenture, deed of trust, real property lease or other material
lease to which the Company or Litho is a party or by which its properties are
bound or affected; (iii) violate any order, judgment, writ, injunction,
decree, statute, rule or regulation (each, an "Order") applicable to the
Company or Litho, or by which any of their properties are bound or affected;
or (iv) result in the creation of any Lien.
<PAGE> 8
3.2 Ownership of Membership Interests; Title; Articles of Organization;
Subsidiaries.
(a) Litho is the sole owner and beneficial holder of record of 50% of the
Company Membership Interests, which ownership is free and clear of all Liens,
and such Company Membership Interests represent 50% of all of the issued and
outstanding membership interests of the Company. Except as set forth in
Schedule 3.2(a), Litho is not a party to any agreement creating rights with
respect to the Company Membership Interests held by Litho in any person other
than Litho and Litho has the full power and legal right to sell, assign,
transfer and deliver the Company Membership Interests held by Litho. Litho
has not received any notice of any adverse claim to the ownership of any of
the Company Membership Interests held by Litho, does not have any reason to
know of any such adverse claim that may be justified and is not aware of
existing facts that would give rise to any adverse claim to the ownership of
the Company Membership Interests held by Litho. On the Closing Date, Litho
will have good title to the Company Membership Interests held by Litho, free
and clear of all Liens. The transfer of the Company Membership Interests held
by Litho pursuant to the provisions of this Agreement will transfer to the
Purchaser good title to such Company Membership Interests, free and clear of
all Liens, except for those created by the Purchaser.
(b) Except for the Company Membership Interests, there are no membership or
limited liability company interests or other equity securities or any security
convertible into or exchangeable for any such membership or limited liability
company interests or other equity securities of the Company issued and
outstanding; except as set forth on Schedule 3.2(b), there are no issued and
outstanding options, warrants, or rights to purchase or acquire any membership
or limited liability company interests or other equity securities of the
Company or any security convertible into or exchangeable for any such
membership or limited liability company interests or other equity securities
of the Company, and except as set forth on Schedule 3.2(b), there are no
contracts, commitments, understandings, arrangements or restrictions by which
the Company is bound to issue additional membership or limited liability
company interests or other equity securities or options, warrants or rights to
purchase or acquire any additional membership or limited liability company
interests or other equity securities or any security convertible into or
exchangeable for any such membership or limited liability company interests or
other equity securities of the Company.
(c) The Company has heretofore delivered to the Purchaser true and complete
copies of the Articles of Organization and the Operating Agreement of the
Company as in effect on the date hereof. The minute book of the Company
accurately reflects all actions taken by the managers required to be taken
under the Company's Articles of Organization, Operating Agreement or under
applicable law.
(d) The Company has no subsidiaries.
<PAGE> 9
3.3 Financial Statements. Litho has delivered to the Purchaser copies of (a)
the audited balance sheets of the Company as at September 30 in each of the
years 1997 through 2000 (the audited balance sheet of the Company as at
September 30, 2000 is hereinafter referred to as the "September 30 Balance
Sheet"), together with audited statements of operations, equity and cash flows
for each of the years then ended, certified by Wolf & Company, for the years
1997 and 1998, and by PricewaterhouseCoopers, for the years 1999 and 2000,
whose reports thereon are included therein, (b) an unaudited balance sheet of
the Company for each of the three month periods ending December 31, March 31,
June 30 and September 30 in each of the years 1999 and 2000 (collectively with
the September 30 Balance Sheet, the "Financial Statements"). True and
complete copies of the Financial Statements, together with the related
auditors reports, have been delivered to the Purchaser. The Financial
Statements have been prepared from, are in accordance with and accurately
reflect, the books and records of the Company, comply in all material respects
with applicable accounting requirements, have been prepared in accordance with
GAAP applied on a consistent basis during the periods involved (except as may
be stated in the notes thereto) and fairly present the financial position and
the results of operations and cash flows (and changes in financial position,
if any) of the Company as of the times and for the periods referred to
therein, subject, in the case of unaudited Financial Statements, to normal
year-end adjustments.
<PAGE> 10
3.4 Directors, Officers, Employees, Employee Benefit Plans; ERISA.
(a) Schedule 3.4(a) sets forth a true and complete list of (i) the names and
current salaries of all officers of the Company, including the Key Employees,
and the family relationships, if any, among such persons; (ii) the wage rates
for non-salaried and non-executive salaried employees of the Company by
classification; and (iii) all group insurance programs in effect for employees
of the Company. To the knowledge of Litho and the Company, no officer, Key
Employee or group of employees has any plans to terminate employment with the
Company as a result of the transactions contemplated hereby or otherwise.
(b) There is no (i) collective bargaining agreement or any other agreement
with any labor organization to which the Company is a party applicable to the
employees of the Company; (ii) unfair labor practice complaint pending or, to
the Company's knowledge, threatened against the Company before the National
Labor Relations Board or any other federal, state, local or foreign agency;
(iii) pending or, to the Company's knowledge, threatened, strike, slowdown,
work stoppage, lockout or other collective labor action by or with respect to
any employees of the Company; or (iv) grievance or unfair dismissal
proceedings pending against the Company. Except as set forth on Schedule
3.4(b), there is no (1) claim by employees of the Company alleging
discrimination based on race, color, creed, age, sex, sexual orientation,
national origin, religion or disability; (2) other pending or threatened
claims by employees of the Company, including those based on statute, contract
or tort; or (3) pending or, to the Company's knowledge, threatened
representation question or union organizing activities with respect to
employees of the Company.
(c) Schedule 3.4(c) contains a true and complete list of each pension, profit
sharing, retirement, savings, employee ownership, option, incentive,
severance, termination, employment, consulting, change in control, fringe
benefit, welfare, collective bargaining, bonus, insurance, medical or other
employee benefit plan, program, agreement or arrangement, including each
"employee benefit plan" as defined in section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), sponsored, maintained or
contributed to or required to be contributed to by the Company or any trade or
business (each, an "ERISA Affiliate"), whether or not incorporated, which
together with the Company would be deemed a "single employer" within the
meaning of Section 4001 of ERISA, for the benefit of current or former
employees (the "Employees") of the Company (each, a "Plan"). The Company does
not maintain any Plan that is subject to Title IV of ERISA. Neither the
Company nor any ERISA Affiliate have any formal plan or commitment to (i)
create any additional Plan, or (ii) materially modify or change any existing
Plan. No Plan is a "multiemployer plan" within the meaning of Section 3(37)
of ERISA.
<PAGE> 11
(d) True and complete copies of the following documents relating to each
Plan, where applicable, have been delivered to the Purchaser: (i) the Plan
document, including all amendments thereto; (ii) the most recent summary plan
description, summary of material modifications and all material employee
communications relating to such Plan; (iii) a copy of the annual report, if
required under ERISA, with respect to each such Plan for the last two years,
or since inception, if less than two years; (iv) a copy of the actuarial
report, if required under ERISA, with respect to each such Plan for the last
two years, or since inception, if less than two years; (v) if the Plan is
funded through a trust or any other funding vehicle, a copy of the trust or
other funding agreement (including all amendments thereto) and the latest
financial statements thereof; and (vi) the most recent determination letter
received from the Internal Revenue Service with respect to each Plan that is
intended to be qualified under section 401 of the Internal Revenue Code of
1986, as from time to time amended (the "Code").
(e) No liability under Title IV of ERISA has been incurred by the Company or
any ERISA Affiliate since the effective date of ERISA that has not been
satisfied in full, and no condition exists that presents a material risk to
the Company or an ERISA Affiliate of incurring a liability under such Title.
(f) There are no pending, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of, or against, any of the Plans or
any trust related thereto.
(g) To the knowledge of Litho or the Company, none of the Company, any of the
Plans, any trust created thereunder nor any trustee, fiduciary or
administrator thereof have engaged in a transaction or have taken or failed to
take any action in connection with which Litho, the Company, any of the Plans,
any such trust, any trustee, fiduciary or administrator thereof, or any party
dealing with the Plans or any such trust could be subject to either a civil
penalty assessed pursuant to section 409 or 502(i) of ERISA or a tax imposed
pursuant to section 4975, 4976 or 4980B of the Code in an amount that would be
material.
(h) Each of the Plans has been established, operated and administered in
accordance with its terms and in material compliance with applicable laws,
rules and regulations, including but not limited to ERISA and the Code;
provided that for the purposes of this Section 3.4(h), any non-compliance with
applicable laws, rules and regulations that could result in any Plans failing
to be "qualified" within the meaning of section 401(a) of the Code would be
material. All contributions that are required to be made to the Plans have
been timely made or have been properly accrued.
<PAGE> 12
(i) Each of the Plans that is intended to be "qualified" within the meaning
of section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service with respect to its qualification, and to
the knowledge of Litho or the Company, no circumstances exist that could
result in the disqualification of such Plan.
(j) Except as set forth on Schedule 3.4(j), no Plan provides benefits,
including without limitation death or medical benefits (whether or not
insured), with respect to current or former employees after retirement or
other termination of service, other than (i) coverage mandated by applicable
law, (ii) death benefits or retirement benefits under any "employee pension
benefit plan," as that term is defined in section 3(2) of ERISA, (iii)
deferred compensation benefits accrued as liabilities on the books of the
Company, or (iv) benefits, the full cost of which is borne by the current or
former employee (or his or her beneficiary).
(k) Schedule 3.4(k) contains a true and complete list of or otherwise
describes (i) all employee benefit arrangements to which the Company is a
party which contain "change of control," retention bonus or similar provisions
and (ii) all severance agreements, arrangements or understandings with
employees of the Company (collectively, the "Change of Control Benefit and
Severance Arrangements"). True and complete copies or descriptions of all such
Change of Control Benefit and Severance Arrangements have been delivered to
the Purchaser. No payments will be required to be paid under the Change of
Control Benefit and Severance Arrangements as of the Closing Date or as a
result of the transactions contemplated by this Agreement. Except as set forth
on Schedule 3.4(k), the consummation of the transactions contemplated by this
Agreement will not (1) entitle any current or former employee or officer of
the Company or any ERISA Affiliate to any severance pay, unemployment
compensation or any other payment, or (2) accelerate the time of payment or
vesting or increase the amount of compensation due to any employee or officer.
No amounts payable under the Plans or any other agreement or arrangement to
which the Company is a party will, as a result of the transaction contemplated
hereby, fail to be deductible for federal income tax purposes by virtue of
section 280G of the Code.
<PAGE> 13
3.5 Patents, Trademarks, Trade Names, Etc. Except as set forth in Schedule
3.5, the Company owns or is licensed to use all patents, trade names,
trademarks, copyrights and software used by the Company. Schedule 3.5
contains a complete and accurate list of (i) all patents, registered
trademarks, trade names, registered copyrights and material proprietary
software owned or used by the Company and all applications therefor and (ii)
all agreements relating to material technology, know-how or processes which
the Company is licensed or authorized to use by others or granting to others a
right to use or practice any rights under the Intellectual Property (as
hereinafter defined). Except as set forth in Schedule 3.5, no claims have
been asserted by any person to the ownership of or the right to use any such
patents, trademarks, trade names, copyrights, technology, trade secrets, or
processes or to the use of any know-how owned or used by the Company
(collectively, the "Intellectual Property") or challenging or questioning the
validity or effectiveness of any license or agreement with respect to the
Intellectual Property. Except as set forth in Schedule 3.5, to the knowledge
of Litho and the Company, the use by the Company of the Intellectual Property
does not infringe on the rights of any person and no person is infringing upon
or otherwise violating any of the Intellectual Property.
3.6 Litigation. Except as set forth on Schedule 3.6, (i) there is no claim,
action, suit, inquiry, judicial or administrative proceeding, arbitration or
investigation (each, an "Action") pending or, to the knowledge of Litho and
the Company, threatened against the Company before any court, arbitrator or
administrative or governmental body, and (ii) there is no Order of any court,
governmental, regulatory or administrative body, agency or authority,
department, commission, agency, instrumentality or arbitrator (each, a
"Governmental Authority") outstanding against the Company.
3.7 Title to Properties.
(a) Except as disclosed in Schedule 3.7(a): (i) the Company has good, and
valid title to all of its properties and assets (personal and mixed, tangible
and intangible), except for Permitted Liens and (ii) none of the Company's
properties or assets (real, personal and mixed, tangible and intangible) are
subject to any Liens except for Permitted Liens. "Permitted Liens" means (i)
statutory Liens not yet delinquent or the validity of which are being
contested in good faith by appropriate actions, (ii) Liens which are purchase
money liens arising in the ordinary course of business, (iii) Liens for taxes
not yet delinquent, (iv) Liens reflected in the Financial Statements (which
have not been discharged), and (v) Liens that are being contested in good
faith and for which adequate security has been pledged.
<PAGE> 14
(b) Except as disclosed in Schedule 3.7(b), to the knowledge of Litho and the
Company, neither the Company nor Litho have received notification that any of
the plants, structures or equipment of the Company or the Real Properties (as
defined in Section 3.7(f) below), or the use thereof, is in violation of any
applicable and material building, zoning, subdivision, health, insurance or
other law, ordinance or regulation (including, without limitation, the
Environmental Laws (as defined below)) and neither the Company nor Litho has
any knowledge that any such violation exists.
(c) The Company has a current, valid certificate of occupancy ("CO") or
equivalent thereof for each of the Fee Properties and the Company's use of all
such Fee Properties, and to the knowledge of Litho and the Company, the
Company's use of all Leased Properties, is in conformity with each CO issued
for such Real Properties. No proceeding is currently pending or threatened
regarding the revocation or limitation of any CO issued for the Fee
Properties, or, to the knowledge of Litho and the Company, of any CO issued
for the Leased Properties, and neither the Company nor Litho has any knowledge
that any basis or grounds exists for any such revocation of any CO for any of
the Real Properties;
(d) (i) No fact or condition exists which would prohibit adequate rights of
access to and from the Real Properties from and to public highways and roads;
(ii) public utilities adequate for the current uses of the Real Properties are
currently available for use on the Real Properties; and (iii) neither Litho
nor the Company has received written notice of any pending or threatened
restriction or denial, governmental or otherwise, upon such ingress and egress
which would adversely affect the operation of the Real Properties.
(e) There are no condemnation or real estate tax proceedings (other than
reassessments of real property in the ordinary course of business) pending or
threatened with respect to any of the Real Properties.
(f) Schedule 3.7(f) contains an accurate list setting forth (i) that portion
of the Company's assets constituting leasehold interests in real property,
including buildings, improvements and structures located thereon and
appurtenances thereto (the "Leased Properties"), (ii) the Company's assets
constituting real property owned in fee, including land, buildings,
improvements and structures thereon and appurtenances thereto (the "Fee
Properties), and (iii) an accurate and complete description of the Fee
Properties and the names of the record title owners of the Fee Properties.
The Fee Properties and the Leased Properties are sometimes collectively
referred to herein as the "Real Properties".
(g) The leases relating to the Leased Properties and all agreements relating
to such Leased Properties are in full force and effect, and constitute the
legal, valid and binding obligation of the parties thereto, except to the
extent that (1) enforcement may be limited by or subject to any bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to or limiting creditors' rights generally, and (2) the remedy
of specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court or
other similar person before which any proceeding therefor may be brought, and,
to the knowledge of Litho and the Company, there exists no event of default,
event, occurrence, condition or act which, with the giving of notice, the
lapse of time or the happening of any further event or condition would have,
individually or in the aggregate, a Material Adverse Effect.
<PAGE> 15
3.8 Customers. Schedule 3.8 lists by dollar volume paid during the fiscal
year ended September 30, 2000 the ten largest customers of the Company. To
the knowledge of Litho and the Company, since September 30, 2000, no such
customer has canceled, otherwise terminated its relationship or threatened to
cease to do business with the Company.
3.9 Consents and Approvals. Except for consents and approvals of, or filings
or registrations with, the Federal Trade Commission and the Antitrust Division
of the United States Department of Justice pursuant to the Hart-Scott Rodino
Antitrust Improvement Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), and as set forth on Schedule 3.9, no consent,
approval, permit, waiver, authorization, notice or filing is required to be
made or obtained by Litho or the Company in connection with the execution,
delivery and performance by the Company or Litho of this Agreement and the
consummation of the transactions contemplated hereby.
3.10 Contracts. Except as set forth in Schedule 3.10, there are no
outstanding agreements, commitments, purchase orders, or contracts, to which
the Company is a party or to which the Company is bound which (i) involve the
annual payment or receipt by or to the Company, of more than One Hundred
Thousand Dollars ($100,000), or (ii) are not cancellable by the Company on
less than sixty (60) days' notice without financial penalty (including all
non-competition and management agreements and arrangements) (collectively, the
"Material Contracts"). The Company has previously provided the Purchaser or
its representatives with complete and accurate copies of the Material
Contracts. Each of the Material Contracts is a legal, valid and binding
obligation of the Company, enforceable by and against it in accordance with
its terms, except to the extent that (1) enforcement may be limited by or
subject to any bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to or limiting creditors' rights
generally, and (2) the remedy of specific performance and injunctive and other
forms of equitable relief are subject to certain equitable defenses and to the
discretion of the court or other similar person before which any proceeding
therefor may be brought. To the knowledge of Litho and the Company, neither
the Company nor the other parties thereto are in default in any material
respect of any such agreement, commitment, purchase order or contract.
<PAGE> 16
3.11 Absence of Undisclosed Liabilities. Except as set forth on
Schedule 3.11, the Company does not have any liability whether accrued,
contingent, absolute, determined, indeterminable or otherwise which was
required to be disclosed, reflected or reserved against in the Financial
Statements, which was not disclosed, reflected or reserved against in the
Financial Statements; and except for liabilities which have been or are
incurred after September 30, 2000 in the ordinary course of business or in
connection with the transactions contemplated hereunder (which liabilities if
greater than Ten Thousand Dollars ($10,000) are also set forth on Schedule
3.11).
3.12 Licenses; Compliance with Laws. The Company holds all material
licenses, franchises, easements, variances, exemptions, permits and
authorizations necessary (the "Permits") for the lawful conduct of its
business under and pursuant to, and its business is not being conducted in
material violation of, any applicable laws, statutes, regulations, rules,
ordinances, decrees, orders and judgments (collectively, "Laws") of any
Governmental Authority. The Company is in compliance in all material respects
with the terms of the Permits, except where the failure to so comply would not
reasonably be expected to have a Material Adverse Effect. All of the
Company's Permits are listed in Schedule 3.12.
3.13 Tax Matters.
(a) All Tax Returns (as defined in Section 3.13(f)) required to be filed by
the Company have within the time and in the manner prescribed by law been duly
filed with the appropriate taxing authorities, all such Tax Returns are true,
correct and complete in all material respects and all Taxes (as defined in
Section 3.13(e)) shown to be due and payable on such Tax Returns have been
paid. The Company or Litho has timely paid or caused to be paid all Taxes for
all taxable years or periods ending on or before the Closing Date shown to be
due and payable on such Tax Returns and for the portion of the taxable year or
period through and including the Closing Date in the case of any Straddle
Period (as defined in Section 3.13(g)), all of which will have been required
to be paid on or prior to the Closing Date, the non-payment of which would
result in an encumbrance on any asset of the Company, would otherwise
adversely affect the Company or would result in Purchaser or any equity owner
of Purchaser becoming liable or responsible therefor.
<PAGE> 17
(b) Neither Litho nor the Company has received from any governmental or
regulatory authority any written notice of a proposed material adjustment,
deficiency or underpayment of any Taxes pertaining to the Company, which
notice has not been satisfied by payment or been withdrawn.
(c) There are no Liens for Taxes upon the Company, except for statutory Liens
for Taxes not yet due.
(d) The Company has constituted a partnership for United States federal
income tax purposes at all times since its taxable year beginning February 1,
1997 and will continue to constitute a partnership up to and including the
Closing Date. Neither Litho nor the Company has taken any action or position
that is inconsistent with such treatment.
(e) For purposes of this Agreement, the term "Tax" or "Taxes" means all
taxes, charges, fees, levies or other assessments, including without
limitation all net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding, payroll, value
added, employment, social security, unemployment, occupation, excise,
estimated, severance, stamp, property, environmental or other taxes, duties,
fees, assessments or charges of any kind whatsoever, including any interest,
penalties or additional amounts attributable thereto imposed by any United
States federal, state, local or foreign governmental authority.
(f) For purposes of this Agreement, the term "Tax Return" means any return,
report, information return, statement, declaration or other document
(including any related or supporting information) filed or required to be
filed with any United States federal, state, local or foreign governmental
authority in connection with any determination, assessment or collection of
any Tax or other administration of any laws, regulations or administrative
requirements.
(g) For purposes of this Agreement, "Straddle Period" means any taxable year
or period that commences before but ends after the Closing Date.
<PAGE> 18
3.14 Absence of Certain Changes or Events. Except as set forth on Schedule
3.14, since September 30, 2000, there has not been any material adverse change
in the business, operations, financial condition or, to the knowledge of Litho
and the Company, prospects of the Company taken as a whole, that would
reasonably be expected to have a Material Adverse Effect.
3.15 Affiliated Transactions. Except as set forth on Schedule 3.15 and
compensation and benefits arrangements in the ordinary course of business,
neither Litho, nor any officer or manager of the Company, nor any entity
controlled by any of the foregoing (i) has borrowed or loaned money or other
property to the Company which has not been repaid or returned; or (ii) has any
direct or indirect material interest in any person which is a customer or
supplier of the Company.
3.16 Names. The Company has not, during the preceding five years, conducted
business under any name other than the names set forth on Schedule 3.16.
3.17 Insurance. Schedule 3.17 sets forth a list of all insurance policies
covering the properties and activities of the Company. All such policies are
in full force and effect and will be kept in full force and effect through the
Closing Date. The Company has received no notice of cancellation or
nonrenewal with respect thereto. All premiums due with respect to such
policies have been timely paid and the Company is not in default with respect
to its obligations under such insurance policies. The Company has not been
refused any insurance coverage with respect to its assets or properties, nor
has coverage been limited or cancelled by any insurance carrier to which the
Company has applied for any such insurance or with which the Company has
carried insurance, nor has there been any significant increase in the premiums
paid under any such policy during the past five years (exclusive of premium
increases related to insurance markets generally).
3.18 Brokers and Finders. There are no outstanding broker, finder or
investment banker fees or commissions owed or to be owed by Litho or the
Company in connection with the transactions contemplated by this Agreement.
<PAGE> 19
3.19 Product Liability and Recalls.
(a) Except as disclosed in Schedule 3.19, there is no pending claim, or to
the knowledge of Litho and the Company, any threatened claim or the basis of
any claim, against the Company for injury to person or property of any person
suffered as a result of the sale of any product or performance of any service
by the Company, including claims arising out of the defective or unsafe nature
of its products or services, which would reasonably be expected to have a
Material Adverse Effect.
(b) Except as and to the extent expressly disclosed in Schedule 3.19, there
is no pending or, to the knowledge of Litho and the Company, threatened recall
or investigation of any product manufactured, sold and/or distributed by the
Company.
3.20 Absence of Certain Payments. To the knowledge of Litho or the Company,
neither the Company nor any manager, officer, member, agent or other person
acting on its behalf, has given or agreed to give any gift or similar benefit
of more than nominal value to any customer, supplier, or governmental employee
or official or any other person who is or may be in a position to help or
hinder the Company or assist the Company in connection with any proposed
transaction involving the Company. Neither the Company nor any manager,
officer, member, agent, employee or other person acting on his or its behalf
has (i) used any corporate or other funds for unlawful contributions,
payments, gifts or entertainment, or made any unlawful expenditures relating
to political activity to, or on behalf of, governmental officials or others or
(ii) accepted or received any unlawful contributions, payments, gifts or
expenditures.
3.21 Indebtedness. Schedule 3.21(a) lists all of the outstanding
indebtedness for borrowed money of the Company.
(a) Except as set forth on Schedule 3.21(b), all of the outstanding
indebtedness for borrowed money of the Company will be repaid in full in
connection with the consummation of the transactions contemplated hereby.
3.22 Potential Conflict of Interest. Except as set forth in Schedule 3.22,
neither Litho, nor any officer or manager of the Company nor, to the knowledge
of Litho and the Company, any Key Employee of the Company own or hold,
directly or indirectly, any interest in (excepting holdings solely for passive
investment purposes of securities of publicly held and traded entities
constituting less than 5% of the equity of any such entity), or is an officer,
manager, employee or consultant of any person that is, a competitor, lessor,
lessee, customer or supplier of the Company or which conducts a business
similar to the Company. Neither Litho, nor any officer or manager of the
Company nor, to the knowledge of Litho and the Company, any Key Employee of
the Sellers (a) have any claim, charge, action or cause of action against the
Company, except for claims for accrued salary and commissions not yet due,
reasonable unreimbursed travel or entertainment expenses, accrued vacation pay
<PAGE> 20
or accrued benefits under any employee benefit plan existing on the date
hereof; (b) have made, on behalf of the Company, any payment or commitment to
pay any commission, fee or other amount to, or to purchase or obtain or
otherwise contract to purchase or obtain any goods or services from, any other
person of which any officer or manager of the Company or any officer or Key
Employee of the Company (or, to the knowledge of Litho and the Company, a
relative of any of the foregoing) is a partner or shareholder (except holdings
solely for passive investment purposes of securities of publicly held and
traded entities constituting less than 5% of the equity of any such entity);
or (c) owe any money to the Company; or (d) (other than Litho) has any
material interest in any property, real or personal, tangible or intangible,
used in or pertaining to the Company.
3.23 Assets. Except as set forth on Schedule 3.23, all of the buildings,
improvements, machinery and equipment currently used in connection with the
business of the Company are in good working condition and repair to permit the
continued operation and conduct of the business of the Company as presently
conducted. Except as set forth in Schedule 3.23, the Company has good and
valid title to all of its properties and assets owned by it reflected in the
Financial Statements or acquired after September 30, 2000 (except inventory
and other properties disposed of in the ordinary course of business since
September 30, 2000 and accounts or notes receivable paid since September 30,
2000), free and clear of all Liens, except for Permitted Liens. Upon
consummation of the transactions contemplated by this Agreement, the Company
will have good, valid and marketable title to, or a valid leasehold on, all
the properties and assets currently used in the conduct of the business of the
Company, free and clear of all Liens, except for Permitted Liens and such
properties and assets are sufficient for the continued conduct of the business
of the Company after the Closing by the Purchaser in substantially the same
manner as conducted prior to the Closing.
3.24 Environmental Matters. Except as set forth on Schedule 3.24, the
Company is in material compliance with all applicable Environmental Laws (as
hereinafter defined). Except as set forth on Schedule 3.24, neither Litho nor
the Company has received any communication (written or oral), whether from a
Governmental Authority, citizens group, employee or otherwise, that alleges
that the Company is not in such material compliance, and, to the knowledge of
Litho and the Company, no event has occurred that would reasonably be expected
to prevent or interfere with such material compliance in the future.
(a) Except as set forth on Schedule 3.24, there is no Environmental Claim (as
hereinafter defined) pending or threatened against the Company or, to the
knowledge of Litho and the Company, against any person or entity whose
liability for any Environmental Claim the Company has or may have retained or
assumed either contractually or by operation of law.
<PAGE> 21
(b) Except as set forth on Schedule 3.24, there are no past or present
actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge or disposal of
any Hazardous Material (as hereinafter defined), that could form the basis of
any Environmental Claim against the Company or, to the knowledge of Litho and
the Company, against any person or entity whose liability for any such
Environmental Claim the Company has or may have retained or assumed either
contractually or by operation of law.
(c) For purposes of this Section 3.24:
(i) "Environmental Claim" means any notice delivered to Litho or the Company
(written or oral) by any person or entity alleging potential liability of the
Company (including, without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on or
resulting from (a) the presence, or release into the environments of any
Hazardous Material at any location, whether or not owned by the Company or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law by the Company.
(ii) "Environmental Laws" means all federal, state, and local laws and
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), and emissions, discharges, releases
or threatened releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
(iii) "Hazardous Material" means any substances, materials, chemicals,
compounds, pollutants or wastes regulated by, under or pursuant to any
Environmental Laws, or any similar common law theory of liability; including
but not limited to asbestos, polychlorinated biphenyls, radioactive materials,
crude oil, petroleum, and any fraction or product of crude oil or petroleum.
<PAGE> 22
3.25 Conduct of Business. Except as set forth on Schedule 3.25, since
September 30, 2000, the Company has not taken any action which, if taken after
the date hereof without the consent of the Purchaser, would violate Section
6.2 hereof.
3.26 Inventory. The inventories reflected on the books of the Company do not
include any inventory which is obsolete, surplus or not saleable or usable in
the ordinary course of the business of the Company as heretofore conducted.
The inventories reflected on the books of the Company do not include any
inventory held on consignment by third parties. The Company has no liability
(including, without limitation, inventory repurchase obligations) with respect
to the return of inventory shipped prior to the date hereof, except for the
rights of any purchaser of inventory to return damaged goods or materials, or
goods or materials which do not conform with the purchase orders with respect
thereto.
3.27 Accounts Receivable. The accounts receivable of the Company as
reflected in the Financial Statements, to the extent uncollected on the date
hereof, and the accounts receivable reflected on the books of the Company, are
valid and existing and represent monies due, and the Company has made reserves
reasonably considered adequate (subject to adjustment for operations and
transactions through the Closing Date in the ordinary course of business
consistent with past practices of the Company) for receivables not collectible
in the ordinary course of business.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY MATT-ONE.
Matt-One represents and warrants to the Purchaser the following
4.1 Authority; No Violation.
(a) Matt-One has the requisite corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and the
other agreements and instruments to be executed and delivered by Matt-One
hereunder or in connection herewith and to carry out its obligations hereunder
and thereunder. The execution and delivery by Matt-One of this Agreement and
the other agreements and instruments to be executed and delivered by Matt-One
hereunder or in connection herewith and the consummation of the transactions
contemplated hereby by Matt-One has been duly authorized by all necessary
corporate action required on the part of Matt-One. This Agreement and the
other agreements and instruments to be executed and delivered by Matt-One
hereunder or in connection herewith have been duly and validly executed and
delivered by Matt-One and constitute the valid and legally binding obligations
of Matt-One, enforceable against Matt-One in accordance with their respective
terms, except to the extent that (i) enforcement may be limited by or subject
to any bankruptcy, insolvency, reorganization, moratorium or similar laws now
or hereafter in effect relating to or limiting creditors' rights generally,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the
discretion of the court or other similar person before which any proceeding
therefore may be brought.
<PAGE> 23
(b) Except as set forth in Schedule 4.1(b), the execution and delivery by
Matt-One of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) conflict with or result in a
breach of any provision of the Articles of Incorporation or By-laws of Matt-
One; (ii) violate, or conflict with, or result in a breach of any provisions
of, or constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under, or give rise to a right of
termination, cancellation, modification or acceleration of the performance
required by or loss of a benefit under, any note, bond, mortgage, indenture,
deed of trust, real property lease or other material lease to which Matt-One
is a party or by which its properties are bound or affected; (iii) violate any
order, judgment, writ, injunction, decree, statute, rule or regulation
applicable to Matt-One, or by which any of their properties are bound or
affected; or (iv) result in the creation of any Lien.
4.2 Ownership of Membership Interests Title. Matt-One is the sole owner and
beneficial holder of record of 50% of the Company Membership Interests, which
ownership is free and clear of all Liens, and such Company Membership
Interests represent 50% of all of the issued and outstanding membership
interests of the Company. Except as set forth in Schedule 4.2, Matt-One is
not a party to any agreement creating rights with respect to the Company
Membership Interests in any person other than Matt-One and Matt-One has the
full power and legal right to sell, assign, transfer and deliver the Company
Membership Interests held by Matt-One. Matt-One has not received any notice
of any adverse claim to the ownership of any of the Company Membership
Interests held by Matt-One, does not have any reason to know of any such
adverse claim that may be justified and is not aware of existing facts that
would give rise to any adverse claim to the ownership of the Company
Membership Interests held by Matt-One. On the Closing Date, Matt-One will
have good title to the Company Membership Interests held by Matt-One pursuant
to the provisions of this Agreement will transfer to the Purchaser good title
to such Company Membership Interests, free and clear of all Liens. The
transfer of the Company Membership Interests held by Matt-One pursuant to the
provisions of this Agreement will transfer to the Purchaser good title to such
Company Membership Interests, free and clear of all Liens, except for those
created by the Purchaser.
<PAGE> 24
4.3 Consents and Approvals. Except for consents and approvals of, or filings
or registrations with, the Federal Trade Commission and the Antitrust Division
of the United States Department of Justice pursuant to the HSR Act, and as set
forth on Schedule 4.3, no consent, approval, permit, waiver, authorization,
notice or filing is required to be made or obtained by Matt-One in connection
with the execution, delivery and performance by Matt-One of this Agreement or
the consummation of the transactions contemplated hereby.
4.4 Brokers and Finders. There are no outstanding broker, finder or
investment banker fees or commissions owed or to be owed by Matt-One for which
the Company would be liable in connection with the transactions contemplated
by this Agreement.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES BY THE PURCHASER.
The Purchaser represents and warrants to the Sellers the following:
5.1 Organization; Authority.
(a) The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as now being conducted
except where the failure to be so existing and in good standing or to have
such power and authority would not have a material adverse effect on the
business, results of operations, prospects, assets, liabilities or condition
(financial or otherwise) of the Purchaser taken as a whole. The Purchaser has
full power and authority necessary to execute, deliver and perform its
obligations under this Agreement and the other agreements and instruments to
be executed and delivered by the Purchaser hereunder or in connection herewith
and to carry out its respective obligations hereunder and thereunder. The
execution and delivery of this Agreement and the other agreements and
instruments to be executed and delivered by the Purchaser hereunder or in
connection herewith by the Purchaser, and the consummation by the Purchaser of
the transactions contemplated hereby have been duly authorized pursuant to and
in accordance with the laws governing the Purchaser.
<PAGE> 25
(b) This Agreement and the other agreements and instruments to be executed
and delivered by the Purchaser hereunder or in connection herewith has been
duly and validly executed and delivered by the Purchaser and constitutes a
valid and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except to the extent that (i)
enforcement may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to or limiting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court or other similar
person before which any proceeding therefor may be brought.
5.2 No Violation. The execution and delivery by the Purchaser of this
Agreement and the transactions contemplated hereby do not and will not
conflict with or result in any breach of any provision of the charter
documents, by-laws or other organizational documents of the Purchaser,
violate, or conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or give rise to a right of termination,
cancellation, modification or acceleration of the performance required by or a
loss of a benefit under, any material agreement, permit or other instrument to
which the Purchaser is a party or to which the Purchaser is subject (except to
the extent such breach, violation or default is not reasonably likely to
materially impair the ability of the Purchaser to consummate the transactions
contemplated hereby or to hold the Company Membership Interests), or violate
any material order, judgment, writ, injunction, decree, statute, rule or
regulation applicable to the Purchaser or to which the Purchaser is subject.
5.3 Consents and Approvals. Except for consents and approvals of, or filings
or registrations with, the Federal Trade Commission and the Antitrust Division
of the United States Department of Justice pursuant to the HSR Act, no
consent, approval, permit, waiver, authorization, notice or filing is required
to be made or obtained by the Purchaser in connection with the execution,
delivery and performance by the Purchaser of this Agreement or the
consummation of the transactions contemplated hereby.
5.4 Investment Representation. The Purchaser is accepting the Company
Membership Interests being acquired hereunder for its own account and not for
any other person and for investment purposes only and without any view to
distribute, resell or otherwise transfer the same.
<PAGE> 26
5.5 Brokers and Finders. There are no outstanding broker, finder or
investment broker fees or commissions owed or to be owed by the Purchaser in
connection with the transactions contemplated by this Agreement.
ARTICLE 6. COVENANTS.
6.1 Satisfaction of Conditions. The Purchaser will use commercially
reasonable efforts to cause the conditions precedent to the obligations of the
Purchaser set forth in Article 8 to be fulfilled and the Company and the
Sellers will use commercially reasonable efforts to cause the conditions
precedent to the obligations of the Sellers set forth in Article 8 to be
fulfilled. The Purchaser will use commercially reasonable efforts to
cooperate with the Sellers to satisfy the conditions set forth in Article 8
and the Sellers will use commercially reasonable efforts to cooperate with the
Purchaser to satisfy the conditions set forth in Article 8.
6.2 Conduct of Business. The Sellers agree that on and after the date hereof
until the Closing, except as otherwise consented to by Purchaser in writing,
as set forth in Schedule 6.2 hereto, or as expressly provided by this
Agreement:
(a) the business, operations, activities and practices of the Company will be
conducted in the ordinary course of business in substantially the same manner
as currently conducted;
(b) the Sellers will use, and will cause the Company to use, its commercially
reasonable efforts to preserve the business organization of the Company
intact, to preserve the goodwill of suppliers, customers, independent
contractors and others with whom material business relationships exist and to
keep available the services of the present officers of the Company and the
services of those employed by the Company;
(c) except for trade or business obligations incurred in the ordinary course
of business and consistent with past practice, the Company will not incur, or
assume or become subject to, whether directly or by way of guarantee or
otherwise, any indebtedness in excess of $10,000 in any individual instance or
in excess of $100,000 in the aggregate;
(d) the Company will not issue, sell or dispose of any membership interests
or other equity interest in the Company or any options, warrants or other
rights to purchase any such membership interests or equity interest or any
securities convertible into or exchangeable for such membership interests or
equity interests or otherwise make or effect any change in the issued and
outstanding capitalization of the Company;
<PAGE> 27
(e) the Company will not (i) declare any dividend or make any distribution of
any assets of any kind whatsoever to any of its members including, without
limitation, distributions in redemption of or as the purchase price for any
capital Membership Interests or equity interest, or in discharge or
cancellation, in whole or in part, of any indebtedness, whether in payment of
principal, interest or otherwise or (ii) loan money to, make any investment in
or enter into any agreement or arrangement with any affiliate thereof;
provided that the Company may (x) make interest and scheduled principal
payments and pay accrued interest through the Closing Date on the Venetian
Note and the Venetian Additional Notes and (y) distribute to the Sellers a
percentage of the taxable earnings of the Company between September 30, 2000
and the Closing Date equal to Taxes payable on such earnings, at a rate
calculated in accordance with the rates used historically by the Company for
such distributions;
(f) the Company will not (i) sell, lease, transfer, assign or otherwise
dispose of any of its assets except for sales to customers or third party
distributors in the ordinary course of business, (ii) license, sell, transfer,
pledge, modify, disclose, dispose of or permit to lapse any right under or
respecting, or enter into any settlement regarding the breach or infringement
of, any Intellectual Property, except in the ordinary course of business, or
(iii) permit or allow any of its assets to be subject to any additional Lien
(other than Permitted Liens);
(g) the Company will not (i) purchase, lease, or otherwise acquire any assets
or make any capital expenditures or commitments therefor involving the
expenditure of more than $10,000 in any individual instance or $100,000 in the
aggregate or (ii) merge or consolidate with, purchase all or any substantial
part of the assets of, or otherwise acquire any person, corporation or firm or
division thereof;
(h) the Company will not increase the compensation or fringe benefits payable
or to become payable by the Company to any of its managers, officers or, other
than regular salary increases consistent with past practice, salaried
employees;
(i) the Company will not change its respective accounting principles, methods
or practices (including without limitation, any change in depreciation or
amortization policies or rates or any change in the policies pertaining to the
recognition of accounts receivable or the discharge of accounts payable or
accounting for inventories) and the Company will not change its respective tax
accounting principles, methods or practices (including, without limitation,
any change in depreciation or amortization policies or rates or any change in
the policies pertaining to the recognition of accounts receivable or the
discharge of accounts payable or accounting for inventories);
<PAGE> 28
(j) the Company will not make or revoke any tax election or settle or
compromise any Tax liability or agree to an extension of a statute of
limitations with respect to Taxes;
(k) the Company will not pay, discharge or satisfy any claims or liabilities
(absolute, accrued, asserted or unasserted, contingent or otherwise) other
than in the ordinary course of business and consistent with past practice or
claims or liabilities (x) reflected or reserved against in the Financial
Statements or incurred thereafter in the ordinary course of business and
consistent with past practice, or (y) paid, discharged or satisfied as
required under this Agreement; and
(l) neither the Sellers nor the Company will enter into any agreement or
commit to take any action which would, if taken on or before the Closing Date,
result in a breach of any of the foregoing covenants contained in this Section
6.2, make any of the representations or warranties of the Sellers or the
Company contained in this Agreement untrue or incorrect as of the Closing Date
or prevent the Sellers or the Company from performing or cause the Sellers or
the Company not to perform their respective covenants hereunder.
6.3 Tax Matters.
(a) The Purchaser will be responsible for and will pay all sales, use,
transfer, stamp duty, recording, value added, and other similar taxes and
fees, including without limitation, all bulk sales taxes ("Transfer Taxes"),
arising out of or in connection with the transactions contemplated by this
Agreement. The party which has the primary responsibility under applicable
law for the payment of any particular Transfer Tax will prepare and file the
relevant Tax Return and notify the other party in writing of the Transfer
Taxes shown on such Tax Return and how such Transfer Taxes were calculated.
<PAGE> 29
(b) The Purchaser and the Sellers agree to furnish or cause to be furnished
to each other, upon request, as promptly as practicable, such information and
assistance relating to the Company (including, without limitation, access to
books and records) as is reasonably necessary for the filing of all Tax
Returns, and making of any election related to Taxes, the preparation for any
audit by any taxing authority, and the prosecution or defense of any claim,
suit or proceeding relating to any Tax Return. The Purchaser and the Sellers
will retain all books and records with respect to Taxes pertaining to the
Company for a period of at least six years following the Closing Date. At the
end of such period, each party will provide the other with at least 30 days
prior written notice before destroying any such books and records, during
which period the party receiving such notice can elect to take possession, at
its own expense, of such books and records. The Sellers and the Purchaser
will cooperate with each other in the conduct of any audit or other proceeding
related to Taxes and each will execute and deliver such powers of attorney and
other documents as are necessary to carry out the intent of this Section
6.3(b).
(c) The Purchase Price will be allocated among the assets of the Company in
the manner required by Section 1060 of the Code. In making such allocation,
the relative fair market values will be agreed to in good faith by the Sellers
and the Purchaser within sixty (60) days after the Closing Date. If the
Sellers and the Purchaser are unable to agree upon the relative fair market
values of the assets of the Company within that period, they will jointly
engage an appraiser mutually acceptable to each of them to determine the
relative fair market values of the assets of the Company, and the cost of the
appraisal will be shared equally between the Sellers and the Purchaser. The
Sellers and the Purchaser will file, or cause to be filed, all Tax Returns and
other Tax information with any governmental agency consistently with such
allocation. The Sellers and the Purchaser will cooperate with each other in
meeting the requirements of Section 1060 of the Code and will each file Form
8594 in accordance with applicable rules and regulations.
6.4 Access. Subject to the terms of the Confidentiality Agreement between
the Purchaser and the Company dated April 25, 2000 (the "Confidentiality
Agreement"), the Company will permit the Purchaser and its representatives to
have full access at all reasonable times (upon reasonable notice) to all their
respective managers, officers, employees, representatives, properties, books,
records, operating instructions and procedures, Tax Returns, and all other
information with respect to the Company as the Purchaser (or its
representative) may from time to time request and to make copies of such
books, records and other documents, subject to applicable obligations of
confidentiality to third parties of the properties, books and records of the
Company in a manner which does not unreasonably interfere with the normal
operations of the Company.
<PAGE> 30
6.5 Books and Records; Personnel. The Purchaser hereby covenants and agrees
with the Sellers as follows:
(a) Retention of Records. The Purchaser will not, for a period of three
years after the Closing Date, dispose of or destroy any of the business
records and files of the Company relating to the period prior to the Closing
Date without first offering to turn over possession thereof to the Sellers by
written notice to the Sellers at least 30 days prior to the proposed date of
such disposition or destruction.
(b) Access to Records. The Purchaser will, for a period of three years after
the Closing Date, allow the Sellers access to all business records and files
of the Company relating to the period prior to the Closing Date, upon prior
written request of the Sellers and during normal working hours at the
principal places of business of the Company or at any location where such
records are stored, and the Sellers will have the right, at their own expense,
to make copies of any such records and files; provided, however, that any such
access or copying will be had or done in such a manner so as not to interfere
unreasonably with the normal conduct of the business of the Company.
(c) Assistance with Records. The Purchaser will make available to the
Sellers, consistent with the business requirements of the Company, (i) the
Company's personnel to assist the Sellers in locating and obtaining records
and files maintained by the Company, and (ii) any of the Company's personnel
whose assistance or participation is reasonably required by the Sellers in
anticipation of, or preparation for, any existing or future litigation, tax or
other matters in which the Sellers or any of their past, present or future
affiliates are involved and which related to the business of the Company.
6.6 Hart-Scott-Rodino. As promptly as practicable, and in any event within
ten business days following the execution and delivery of this Agreement by
the parties, the Purchaser and the Sellers will and the Sellers will cause the
Company to prepare and file any required notification and report form under
the HSR Act, in connection with the transactions contemplated hereby. The
Purchaser and the Sellers will cause the Company to request early termination
of the waiting period thereunder. The Purchaser and the Sellers will respond
with reasonable diligence to any request for additional information made in
response to such filings. Any filing fees incurred with filings pursuant to
this Section 6.6 will be paid by the Purchaser.
6.7 Solicitation. The Sellers will not, nor will the Sellers permit the
Company or any of its respective managers, officers, employees,
representatives (including any investment banker, attorney or accountant
retained by it or any of its subsidiaries) or agents to, directly or
indirectly, solicit, initiate, encourage, or facilitate, enter into
discussions concerning, or provide any data with respect to or respond to, any
Acquisition Proposal or any inquiry or proposal which may reasonably be
expected to lead to any Acquisition Proposal, and will promptly communicate
any such Acquisition Proposal to the Purchaser. Immediately after the
execution and delivery of this Agreement, the Company will and will cause its
respective officers, managers, employees, investment bankers, attorneys,
accountants and other agents and representatives to cease and terminate all
existing activities, discussions or negotiations with any parties heretofore
conducted with respect to any Acquisition Proposal and will notify each such
party that the Company no longer seeks the making of an Acquisition Proposal.
As used herein, the term "Acquisition Proposal" means any inquiry, offer or
proposal for the acquisition (by merger, purchase or otherwise) of the Company
or all or any portion of its assets or any equity interest therein.
<PAGE> 31
6.8 Further Assurances. Each of the Purchaser and the Sellers, as promptly
as practicable after the date hereof, will, and (in the case of the Sellers)
will cause the Company to, (i) deliver, or cause to be delivered, all notices
and make, or cause to be made, all such declarations, designations,
registrations, filings and submissions under all laws applicable to it as may
be required for it to consummate the transactions contemplated by this
Agreement; (ii) use their commercially reasonable efforts to obtain, or cause
to be obtained, all approvals, orders, consents and waivers from all persons
as may be required for it to consummate the transactions contemplated by this
Agreement; and (iii) cooperate in good faith, use their commercially
reasonable efforts to take, or cause to be taken, all other actions necessary,
proper or advisable in order for it to fulfill its respective obligations
hereunder.
6.9 Uncollected Accounts Receivable; Excess Payables;Work-in-Process
Valuation. (a) Following the Closing Date, the Purchaser will use
commercially reasonable efforts to cause the Company to collect its accounts
receivable outstanding as of the Closing Date as set forth in the Final
Working Capital Statement. All amounts received by the Company from customers
who have accounts receivable outstanding as of the Closing Date will be
applied first to the oldest accounts receivable of such customers outstanding
as of the Closing Date until all accounts receivable with respect to that
customer outstanding as of the Closing Date are paid in full, except when
customers specify a different designation. If as of the date six months from
the Closing Date (the "Adjustment Date"), the Company has not been paid in
full in respect of all of its accounts receivable outstanding as of the
Closing Date (net of the allowance for doubtful accounts) as set forth in the
Final Working Capital Statement, the Purchaser will so advise Litho in
writing.
(b) If as of the Adjustment Date, the Company has paid or accrued as a
liability on its books accounts payable arising out of or relating to the
operation of the Company on or prior to the Closing Date that were not
reflected in the Final Working Capital Statement ("Excess Payables"), the
Purchaser will so advise Litho in writing.
(c) If as of the Adjustment Date, the inventory value component of work in
process as shown on the Final Working Capital Statement ("Closing Date WIP")
exceeds the amount by which customers of the Company have been billed for such
Closing Date WIP ("Excess WIP"), the Purchaser will so advise Litho in
writing.
<PAGE> 32
(d) If the Net Current Assets of the Company on the Final Working Capital
Statement would have been less than the Minimum Benchmark Net Current Assets
Value (a "Working Capital Deficiency") if (i) the unpaid accounts receivable
referred to in clause (a) above had not been included as current assets in the
Final Working Capital Statement, (ii) the Excess Payables referred to in
clause (b) had been included as current liabilities in the Final Working
Capital Statement and (iii) the Excess WIP referred to in clause (c) above had
not been included as a current asset in the Final Working Capital Statement,
then within 10 business days of receipt of the last of the notices
contemplated by this Section 6.9, Litho will pay to the Purchaser the amount
of the Working Capital Deficiency.
6.10 [Intentionally Deleted]
6.11 [Intentionally Deleted]
6.12 Title Insurance. The Purchaser may at its cost order from a
reputable national title insurance company of the Purchaser's choice (the
"Title Company"), a title insurance report and commitment for a leasehold
owner's title insurance policy with respect to the Real Properties (the "Title
Commitment"). If the Purchaser orders the Title Commitment, it will furnish a
copy of the Title Commitment to the Sellers promptly after the Purchaser's
receipt thereof (but in no event less than thirty (30) days after the date of
this Agreement) together with the Purchaser's notice of any Liens or other
title defects that are not Permitted Liens ("Title Defects") disclosed by any
such Title Commitment with respect to the Real Properties. If the Purchaser
fails to object to any Title Defects set forth in the Title Commitment with
respect to the Real Properties within 15 days after the receipt thereof or any
other Title Defects disclosed by the Title Company in any update to the Title
Commitments for the Leased Properties within 5 days after the Purchaser's
receipt of such update, the Purchaser will be deemed to have waived such
objection with respect to any matter theretofore disclosed to it by the Title
Commitment or any update thereto to such date. Prior to or as of the Closing
Date, Litho will eliminate all monetary Title Defects and will use
commercially reasonable efforts to eliminate all non-monetary Title Defects.
(a) If Litho is unable to eliminate any non-monetary Title Defects with
respect to the Real Properties to which the Purchaser has objected in writing,
Litho will give prompt notice thereof to the Purchaser. Upon receipt of such
notice, if Litho is unable to eliminate any such Title Defects with respect to
the Real Properties that materially affect the use of the Real Properties, the
Purchaser will have the option to terminate this Agreement in its entirety.
(b) The Purchaser may at its option arrange, at its cost and expense, for (i)
a current A.L.T.A. survey of the Real Properties in a form reasonably
acceptable to the Purchaser (each, a "Survey") to be provided to the Purchaser
with respect to the Real Properties and (ii) a policy of title insurance (the
"Title Policy") from the Title Company based on the Title Commitments in
current A.L.T.A. Leasehold Owner's Extended Coverage Form with respect to the
Real Properties in coverage amount of $2,750,000, containing such endorsements
as the Purchaser reasonably requests, free and clear of all Title Defects that
have been objected to by the Purchaser pursuant to Section 6.12(a) above
(unless consented to by the Purchaser). All premiums, fees and charges for
the issuance of each of the Title Policies will be paid for by the Purchaser.
<PAGE> 33
(c) At or prior to the Closing, with respect to the Leased Properties, the
Sellers will furnish the Purchaser with an estoppel certificate in form and
substance reasonably satisfactory to the Purchaser.
(d) Litho will use commercially reasonable efforts to deliver or cause to be
delivered to the Title Company any affidavits or indemnities related to
mechanics liens or otherwise reasonably requested by the Title Company.
6.13 Disclosure Schedule Supplements. From time to time prior to the
Closing, the Sellers and the Purchaser will promptly supplement or amend the
Disclosure Schedule with respect to any matter hereafter arising which, if
existing or occurring at the date of this Agreement, would have been required
to be set forth or described in the Disclosure Schedule. For purposes of
determining the accuracy of the representations and warranties of the Sellers
contained in this Agreement in order to determine the fulfillment of the
conditions set forth in Article 8, the Disclosure Schedules delivered by the
Sellers will be deemed to include only that information contained therein on
the date of this Agreement and will be deemed to exclude any information
contained in any subsequent supplement or amendment thereto. For purposes of
determining any liability of the Sellers hereunder after the Closing, the
Disclosure Schedules delivered hereunder will be deemed amended by any
information supplied by the Sellers as contemplated by this Section 6.13.
6.14 Financing. In connection with the transactions contemplated by this
Agreement, the Purchaser will use commercially reasonable efforts to obtain,
and the Purchaser will execute and, at the Closing, the Sellers will cause the
Company to execute and deliver agreements and instruments relating to the
Financing (as defined below), and the Sellers will cause the Company to
provide to the Purchaser commercially reasonable cooperation in connection
with the arrangement of the Financing and any other financing to be
consummated contemporaneous with or at or after the Closing Date in respect of
the transactions contemplated by this Agreement, including without limitation,
the execution and delivery, at the Closing, of any pledge or security
documents, underwriting or placement agreements, other definite financing
documents, or other requested certificates, documents or financial information
as may be requested by the Purchaser in connection with the Financing, except
that in no event will the Sellers (i) have any direct obligations with respect
to the Financing, (ii) be required to guaranty the obligations of the
Purchaser or any other obligor with respect to the Financing, or (iii) be
required to execute any pledge or security documents, underwriting or
placement agreements or other definitive financing documents. "Financing"
means the financing required to consummate the transactions contemplated by
the Agreement, including without limitation, the use of the financing proceeds
to pay transaction fees and expenses associated herewith and to provide for
the working capital needs of the Company after the Closing, as reasonably
determined by the Purchaser. The Purchaser will be solely responsible for all
transaction fees and expenses associated with the Financing.
<PAGE> 34
6.15 Covenant Not to Compete. Without the express prior written consent of
the Purchaser, neither Litho nor any affiliate of Litho (the only such
affiliate of Litho as of the date hereof being Frank Defino, Sr.), will, at
any time during the five-year period immediately following the Closing Date,
directly or indirectly, own, manage, control or participate in the ownership,
management or control of, or be related or otherwise affiliated in any manner
with, any business similar to that engaged in by the Company as of the Closing
Date anywhere in Illinois or any other state in which the Company operates as
of the Closing Date, such states being listed on Schedule 6.15 hereto; and
provided, that the foregoing will not prohibit Litho from owning as a passive
investment 5% or less of the outstanding equity of any publicly-traded entity.
Litho agrees that it and its affiliates will not, for a period of five years
after the Closing Date, employ or solicit the employment of any person now
employed by the Company.
(a) Without the express prior written consent of the Purchaser, neither
Matthews, Matt-One nor their respective affiliates (the "Matthews Entities")
will at any time during the five-year period immediately following the Closing
Date, directly or indirectly, own, manage, control or participate in the
ownership, management or control of, or enter in a joint venture or similar
relationship with, any entity engaged in the Restricted Businesses (as defined
below) within a hundred mile radius of Franklin Park, Illinois (the
"Restricted Area"). Notwithstanding the foregoing, the Matthews Entities are
not prohibited from (i) engaging in the pre-press packaging business, (ii)
owning, managing or controlling, or entering into a joint venture or similar
relationship with, any business that derives twenty-five percent or less of
its revenues from the Restricted Businesses, (iii) owning as a passive
investment 5% or less of the outstanding equity of any publicly-traded entity,
or (iv) owning, managing or controlling, or entering into a joint venture or
similar relationship with any Restricted Business located outside the
Restricted Area, which has de miminus sales within the Restricted Area. The
Matthews Entities will not, for a period of five years after the Closing Date,
employ or solicit the employment of any person now employed by the Company;
provided, however, that general solicitations of employment by memo or
newspaper, periodical, trade, internet or general publication advertisement
not directed at employees of the Company and any employment of a person based
thereon, will not be a violation of this provision. For the purposes of this
Section 6.16(b), "Restricted Businesses" means (1) multimedia presentations,
(2) prepublishing services, (3) digital and offset printing, (4) marketing
consulting services, (5) website design and (6) website hosting.
<PAGE> 35
6.16 Confidentiality. The Sellers covenant that, after the Closing, they
will not, and will not permit any of their affiliates to, without the prior
written consent of the Purchaser, disclose to any person confidential
information relating to or concerning the Company (the "Confidential
Information"), except (i) information which has become generally known or
available to the public through no fault of the Sellers, (ii) to their
representatives who need to know such information for purposes of taxes,
accounting, pending litigation and other matters necessary in respect of the
Sellers' ownership, prior to the Closing Date, of the Company Membership
Interests and (iii) if in the opinion of the Sellers' outside counsel,
disclosure is required to be made under applicable law, including the
Securities Exchange Act of 1934, as amended. If the Sellers or any of their
affiliates are requested or required by documents subpoena, civil
investigative demand, interrogatories, requests for information, or other
similar process to disclose any Confidential Information, the Sellers will
provide the Purchaser with prompt notice of such request or demand or other
similar process so that the Purchaser may seek an appropriate protective order
or, if such request, demand or other similar process is not mandatory, waive
the Sellers' compliance with the provisions of this Section 6.17, as
appropriate. For purposes of this Section 6.17, the Sellers and their
affiliates includes any of their representatives.
6.17 Qualified Employee Benefit Plans. At the request of the Purchaser after
the date hereof but prior to the Closing Date, the Sellers will (i) cause the
Company to take all actions which are necessary and appropriate to terminate
the Company's 401(k) and profit sharing plans, effective as of the date
selected by the Purchaser or such other date as determined by the Internal
Revenue Service (in either case after the Closing Date) and (ii) otherwise
cooperate with the Purchaser in connection with the orderly transition of
benefit coverages, if necessary or desired by the Purchaser following the
Closing Date.
<PAGE> 36
6.18 Interim Monthly Financial Statements. Between the date hereof and the
Closing Date, the Sellers will provide the Purchaser with interim monthly
financial statements of the Company by the fifteenth of each month for the
preceding month, prepared consistently with the past practices of the Company,
and showing the results of the operations of the Company.
ARTICLE 7. INDEMNIFICATION; SURVIVAL.
7.1 Indemnification by Litho. Litho will indemnify the Purchaser and its
successors and permitted assigns and its officers, directors, employees and
affiliates (collectively, the "Purchaser Indemnified Parties") from and
against and will reimburse the same for and in respect of any and all losses,
costs, fines, liabilities, claims, penalties, damages and expenses (including
all legal fees and expenses) of any nature or kind, known or unknown, fixed,
accrued, absolute or contingent, liquidated or unliquidated (collectively
"Losses") which may be claimed or assessed against them or to which they may
be subject, in connection with any and all claims, suits or asserted Losses
which arise from or are related to (i) any breach of any representation or
warranty made by Litho pursuant to Article 3 of this Agreement, (ii) any
pollution or threat to human health or the environment that is related in any
way to the Company's or any previous owner's or operator's management, use,
control, ownership or operation of the Company, including, without limitation,
all on-site and off-site activities involving Hazardous Materials, and that
occurred, existed, arose out of conditions or circumstances that occurred or
existed, or was caused, in whole or in part, on or before the Closing Date,
whether or not the pollution or threat to human health or the environment is
described in Schedule 3.24; and (iii) any Environmental Claim against any
person or entity whose liability for such Environmental Claim the Sellers or
the Company have or may have assumed or retained either contractually or by
operation of law.
7.2 Indemnification by Matt-One. Matt-One will indemnify the Purchaser
Indemnified Parties for any Losses that may be claimed against them or to
which they may be subject, in connection with any and all claims, suits or
asserted Losses which arise from or are related to any breach of any
representation and warranty made by Matt-One pursuant to Article 4 of this
Agreement.
<PAGE> 37
7.3 Purchaser's Indemnification. The Purchaser will indemnify and hold
harmless the Sellers and their respective successors and permitted assigns and
their officers, directors, employees and affiliates (the "Seller Indemnified
Parties") from and against and in respect of any and all Losses which may be
claimed or assessed against any of them or to which any of them may be
subject, in connection with any and all claims, suits or asserted Losses which
arise from or are related to any breach of any representation or warranty of
the Purchaser pursuant to Article 5 of this Agreement.
7.4 Indemnification Procedures.
(a) Notice. A party entitled to indemnification under this Article 7 (an
"Indemnified Party") will give each party obligated to provide indemnification
pursuant to this Article 7 (an "Indemnifying Party") prompt written notice
(the "Claim Notice") of any claim, assertion, event, condition or proceeding
by or in respect of any third party (each, a "Third Party Claim") of which it
has knowledge concerning any liability or damage as to which it may request
indemnification hereunder. The Claim Notice will describe in reasonable
detail the nature of the claim, including an estimate, if practicable, of the
amount of Losses that have been or may be suffered or incurred by the
Indemnified Party attributable to such claim and the basis of the Indemnified
Party's request for indemnification under this Agreement.
(b) Conduct of Defense. An Indemnifying Party will have the right, upon
written notice to the Indemnified Party (the "Defense Notice") within fifteen
days of its receipt from the Indemnified Party of the Claim Notice, to conduct
at its expense the defense against such Third Party Claim in its own name, or,
if necessary, in the name of the Indemnified Party. When the Indemnifying
Party assumes the defense, the Indemnified Party will have the right to
approve the defense counsel, which approval or consent will not be
unreasonably withheld or delayed. The Indemnifying Party may not compromise
or settle any such claim without the prior written consent of the Indemnified
Party, unless the sole relief provided is monetary damages that are paid in
full by the Indemnifying Party. An Indemnified Party will not unreasonably
withhold or delay its consent to the compromise or settlement of any such
claim. If the Indemnifying Party does deliver a Defense Notice and thereby
elects to conduct the defense of such Third Party Claim, the Indemnified Party
will cooperate with and make available to the Indemnifying Party such
assistance, personnel, witnesses and materials as the Indemnifying Party may
reasonably request. Regardless of which party defends such Third Party Claim,
the other party will have the right at its expense to participate in the
defense assisted by counsel of its own choosing. If the Indemnifying Party
fails to give the Defense Notice within the time prescribed by Section 7.3(a),
the Indemnified Party will have the sole right to conduct such defense and the
Indemnified Party may pay, compromise or defend such claim or proceeding at
the Indemnifying Party's expense. If any Indemnified Party has a claim
against any Indemnifying Party hereunder which does not involve a Third Party
Claim, the Indemnified Party will promptly transmit to the Indemnifying Party
a written notice (the "Indemnity Notice") describing in reasonable detail the
nature of the claim and the basis of the Indemnified Party's request for
indemnification under this Agreement.
<PAGE> 38
7.5 Limitations on Indemnification. The aggregate liability of Litho
pursuant to this Article 7 for breaches of representations and warranties will
be $2,500,000. Notwithstanding the foregoing, at the end of the fifteenth
month following the Closing Date, Litho's liability under this Article 7 will
be limited to the amount of outstanding principal and interest payable to
Litho by the Purchaser in accordance with terms of the Note, and the
Purchaser's sole recourse against Litho will be the Purchaser's right to
setoff under Section 7.7 hereof. No claim for indemnification may be made by
the Purchaser Indemnified Parties against Litho pursuant to Article 7 for
breaches of representations and warranties until such claims for which Losses
are otherwise recoverable are in excess of $100,000, after which the Purchaser
Indemnified Parties will be entitled to make any such claim against Litho for
amounts in excess of such threshold; provided that the limitations set forth
in this sentence do not apply to Losses incurred by reason of a breach of a
representation or warranty contained in Sections 3.1, 3.2, 3.9, 3.13, and
3.18. No claim for indemnification may be made by the Purchaser Indemnified
Parties pursuant to this Article 7 with respect to any Losses that (i) are
covered by title insurance held by the Purchaser, or (ii) are covered by
occurrence-based insurance policies of the Company for the pre-Closing period.
(a) The aggregate liability of the Purchaser pursuant to this Article 7 for
breaches of representations and warranties will be $2,500,000. No claim for
indemnification may be made by the Seller Indemnified Parties pursuant to this
Article 7 for breaches of representations and warranties until such claims for
which Losses are otherwise recoverable are in excess of $100,000, after which
the Seller Indemnified Parties will be entitled to make any such claim for
amounts in excess of such threshold; provided that the limitations set forth
in this sentence do not apply to Losses incurred by reason of a breach of a
representation or warranty contained in Sections 5.1, 5.2, 5.3 and 5.5.
(b) Determinations of amounts of indemnification payable hereunder shall be
made with a view towards making the Indemnified Party whole (i) in the case of
the Purchaser, net of any insurance proceeds actually received with respect
thereto by the Company as a result of claims made under (A) occurrence-based
insurance policies maintained by the Company prior to the Closing or (B) the
Title Policy, if any and (ii) net of any cash Tax benefit actually received by
the Indemnified Party.
<PAGE> 39
7.6 Survival of Representations and Warranties. The representations and
warranties of the parties contained herein will survive until the second
anniversary of the Closing (the "Expiration Date"), and no party may seek
indemnification under this Article 7 with respect to a breach of a
representation or warranty after the Expiration Date; provided, however, that
(i) the representations and warranties contained in Sections 3.13 and 3.24
will survive until 90 days after the applicable statute of limitations
(including any and all valid extensions thereof); (ii) the representations in
Sections 3.1, 3.2, 3.9, 3.18, 4.1, 4.2, 4.3, 5.1, 5.2, 5.3 and 5.5 will
survive the Closing indefinitely; and (iii) a party may seek indemnification
with respect to a breach of such representation or warranty any time prior to
the expiration of such statute of limitations.
(a) Notwithstanding anything to the contrary contained herein, all
representations and warranties made by the Sellers, the Purchaser and the
Company in this Agreement or in any schedule or other document delivered
pursuant hereto, and the liability with respect thereto, will not terminate
with respect to any claim, whether or not fixed as to liability or liquidated
as to amount, with respect to which such party has been given written notice
stating the nature of the claim prior to the date on which such representation
or warranty expires.
(b) Notwithstanding anything to the contrary in this Agreement, but subject
to the provisions of Section 6.13, no investigation by a party will affect the
representations, warranties, covenants and agreements of the other parties
under this Agreement or in any certificate, schedule, list, exhibit,
agreement, document or other writing delivered pursuant hereto or in
connection with the transactions contemplated hereby furnished or to be
furnished to the other parties.
7.7 Limitation of Other Indemnification Rights. Notwithstanding anything to
the contrary in the Articles of Organization, Operating Agreement, agreements
(including without limitation the Employment Agreements) or other instruments
of the Company, the Sellers will have no right to indemnification or other
recovery thereunder or otherwise (whether as an officer, director, manager or
in any other capacity) from the Company with respect to any matter to the
extent that the Sellers are liable, or would be liable but for the limitations
on indemnification contained herein, to any of the Purchaser Indemnified
Parties for indemnification under this Article 7 with respect to such matter.
<PAGE> 40
7.8 Setoff Against Note. Notwithstanding anything to the contrary in this
Agreement, until such time as the Note is paid in full, in accordance with its
terms, any indemnification obligation of Litho set forth in this Article 7
will be satisfied by setoff against obligations of the Purchaser under the
Note, subject to the Litho's right to satisfy such indemnification obligation
in cash within 30 days of such obligation arising.
ARTICLE 8. CONDITIONS TO CLOSING.
8.1 Conditions to Each Party's Obligations. The respective obligations of
each party under this Agreement are subject to the satisfaction at or prior to
the Closing Date of each of the following conditions:
(a) No laws will have been adopted or promulgated and no temporary
restraining order, preliminary or permanent injunction or other Order issued
by a court or other governmental entity of competent jurisdiction will be in
effect having the effect of making the transactions contemplated hereby
illegal or otherwise prohibiting the consummation of the transactions
contemplated hereby.
(b) Any waiting period applicable to the consummation of the transactions
contemplated by this Agreement under the HSR Act will have expired or been
terminated.
(c) All consents, orders or approvals of, declarations or filings with, and
expirations of waiting periods imposed by, any Governmental Authority that are
legally required for the consummation of the transactions contemplated hereby,
if any, will have been obtained and in effect.
(d) The Purchaser will have exercised its renewal options in (i) the Lease
and (ii) the lease agreement dated as of January 31, 1997 between the Company,
as tenant, and Defino and Vitallo Enterprises, as landlord, on December 31,
2001; it being understood that Purchaser's decision will be in its sole
discretion and Purchaser will not have any liability under this Agreement or
otherwise as a result of the Purchaser's decision not to exercise either or
both of such renewal options.
8.2 Conditions to Obligations of the Purchaser. The obligations of the
Purchaser under this Agreement are subject to the satisfaction, at or prior to
the Closing Date, of the following conditions:
<PAGE> 41
(a) The representations and warranties made by the Sellers and the Company in
this Agreement will be true and correct in all material respects as of the
Closing Date with the same effect as if such representations and warranties
had been made at and as of the Closing Date. The Sellers and the Company will
have performed all obligations required to be performed by them under this
Agreement at or prior to the Closing Date. The Purchaser will have received a
certificate signed by each of the Sellers to the effect of this Article
8.2(a), with respect to the particular representations, warranties and
obligations required to be performed by such Seller.
(b) The Purchaser will have obtained Financing from such sources, in such
amounts and on such terms and conditions as the Purchaser may, in its sole
discretion, deem satisfactory.
(c) There will have been no developments or effects that have had or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(d) Except as set forth on Schedule 3.21(b), all outstanding indebtedness for
borrowed money of the Company will have been repaid or satisfied in full,
including without limitation the Venetian Notes and the Venetian Additional
Notes and any Liens on the assets of the Company incurred thereunder will have
been released, on terms satisfactory to the Purchaser and the Purchaser will
have received evidence thereof satisfactory to the Purchaser and its counsel.
(e) All waivers, licenses, agreements, permits, consents, approvals or
authorizations of third parties or any modifications or amendments to existing
agreements with third parties required to be obtained by the Company and the
Sellers will have been obtained and will be in full force and effect and
without conditions or limitations which unreasonably restrict the ability of
the parties hereto to carry out the transactions contemplated hereby and the
Purchaser will have been furnished with appropriate evidence, reasonably
satisfactory to it and its counsel, of the granting of same.
(f) Frank Defino, Sr. will have entered into the Subscription Agreement and
the transactions contemplated thereby will have been consummated.
(g) The Purchaser will have obtained the Title Policy based on the Title
Commitments containing such endorsements as the Purchaser reasonably requests,
free and clear of all Title Defects that have been objected to by the
Purchaser pursuant to Section 6.12(a) above (unless consented to by the
Purchaser).
(h) Frank Defino, Sr. will have repaid to the Company any outstanding
principal and interest under the Revolving Credit Note dated January 31, 1997.
(i) The Landlord and the Company will have entered into the Real Estate
Transfer Agreement and the transactions contemplated thereby will have been
consummated.
(j) The Landlord and the Company will have entered into the Lease.
8.3 Conditions to Obligations of the Sellers. The obligations of the Sellers
under this Agreement are subject to the satisfaction at or prior to the
Closing Date of each of the following conditions:
<PAGE> 42
(a) The representations and warranties made by the Purchaser in this
Agreement will be true and correct in all material respects as of the Closing
Date with the same effect as if such representations and warranties had been
made at and as of the Closing Date. The Purchaser will have performed the
obligations required to be performed by it under this Agreement at or prior to
the Closing Date. The Sellers will have received a certificate signed by an
authorized officer of the Purchaser to the effect of this Article 8.3(a).
8.4 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(a) by mutual written consent of the Sellers and the Purchaser;
(b) by either the Purchaser or the Sellers if the Closing has not occurred on
or before January 31, 2000; provided, however, that the right to terminate
this Agreement pursuant to this Section 8.4(b) will not be available to any
party whose breach of a covenant, representation or warranty has resulted in
the failure of the Closing to occur on or before such date;
(c) by the Purchaser, if there has been a violation or breach by the Sellers
of any covenant, agreement, representation or warranty contained in this
Agreement which has rendered the satisfaction of any condition contained in
Article 8 hereof incapable of fulfillment and such violation or breach has not
been waived by the Purchaser;
(d) by the Sellers, if there has been a violation or breach by the Purchaser
of any covenant, agreement, representation or warranty contained in this
Agreement which has rendered the satisfaction of any condition contained in
Article 8 hereof incapable of fulfillment and such violation or breach has not
been waived by the Sellers;
If either the Purchaser or the Sellers terminate this Agreement pursuant to
the provisions hereof, such termination will be effected by written notice to
the other party specifying the provision hereof pursuant to which the
termination is made.
8.5 Effect of Termination. In the event of the termination of this Agreement
pursuant to Section 8.4, this Agreement will become void and there will be no
liability or obligation on the part of any party hereto or any of its
affiliates, directors, officers or managers, except (a) this Section 8.5 and
Section 9.1 will survive such termination; (b) the Confidentiality Agreement
will remain in full force and effect; and (c) no such termination will relieve
any party hereto of any liability for the intentional breach of any covenant
or agreement hereunder by such party.
<PAGE> 43
ARTICLE 9. COSTS; POST-CLOSING COVENANTS.
9.1 Transactional Costs. Except as set forth in Sections 1.3(c), 9.1(b)
and 9.1(c), the Purchaser will be responsible for all of its legal,
accounting, advisory and other fees and expenses incurred in connection with
this Agreement and the consummation of the transactions contemplated hereby
(the "Purchaser Transactional Costs") and the Sellers will be responsible for
all legal, accounting, environmental advisory and other fees and expenses
incurred by the Company or the Sellers in connection with this Agreement and
the consummation of the transactions contemplated hereby (the "Seller
Transactional Costs").
(a) If the Closing has not occurred on or before January 31, 2001 as a result
of the termination of this Agreement by the Purchaser pursuant to Section
8.4(c) hereof, the Company will reimburse the Purchaser for the Purchaser
Transactional Costs, up to a maximum of $250,000.
(b) If the Closing has not occurred on or before January 31, 2001 as a result
of the termination of this Agreement by the Sellers pursuant to Section 8.4(d)
hereof, the Purchaser will reimburse the Sellers for the Seller Transactional
Costs, up to a maximum of $250,000.
ARTICLE 10. MISCELLANEOUS PROVISIONS.
10.1 Successors and Assigns. This Agreement and all provisions hereof will
be binding upon and enure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any
right, interest, or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party. Notwithstanding the
foregoing, the Purchaser may assign its rights to an affiliate of the
Purchaser but no such assignment will relieve the Purchaser of its obligations
hereunder or under the Note. Notwithstanding the foregoing, Litho may assign
the Note to Frank Defino, Sr. and/or the heirs or successors in interest to
Frank Defino, Sr. No party hereto or successor or assignee has the ability to
subrogate any other person to any right or obligation under this Agreement.
(a) Notwithstanding anything to the contrary set forth herein, the Purchaser
may assign its rights under Article 7 of this Agreement in connection with the
sale of the outstanding capital stock of the Company, the sale of all or
substantially all of the assets of the Company or the sale of any principal
facility of the Company.
<PAGE> 44
(b) Notwithstanding anything to the contrary set forth herein, the Purchaser
and the Company may assign and transfer to any entity providing financing for
the transactions contemplated by this Agreement (or any refinancing of such
financing) as security for such financing all of the interest, rights and
remedies of the Purchaser with respect to this Agreement. The Sellers hereby
expressly consent to such assignment. Any such assignment will be made for
collateral security purposes only and will not release or discharge the
Purchaser from any obligations it may have pursuant to this Agreement.
Notwithstanding anything to the contrary set forth herein, the Purchaser and
the Company may (i) authorize and empower such financing sources to assert,
either directly or on behalf of the Purchaser, any claims the Purchaser may
have against the Sellers under this Agreement and (ii) make, constitute and
appoint one agent bank in respect of such financing (and all officers,
employees and agents designated by such agent) as the true and lawful attorney
and agent-in-fact of the Purchaser for the purpose of enabling the financing
sources to assert and collect any such claims. Except as otherwise provided
herein, the remedies provided herein will be cumulative and will not preclude
the assertion by any of the parties hereto of any rights or the seeking of any
other remedies against the other parties hereto.
10.2 Notices. All notices, requests, consents, instructions and other
communications required or permitted to be given hereunder must be in writing
and hand delivered, sent by nationally-recognized, next-day delivery service
or mailed by certified or registered mail, return receipt requested, postage
prepaid, addressed as set forth below or by facsimile transmission; receipt
will be deemed to occur on the date of actual receipt if delivered personally
or by next-day delivery service, registered or certified mail and 24 hours
from the time of transmission if sent by facsimile.
(a) if to the Purchaser, to:
priNexus, Inc.
6625 The Corners Parkway
Suite 200
Norcross, GA 30092
Attention: William C. Korner
Fax: (770) 449-5806
<PAGE> 45
with a copy to:
Harvest Partners, Inc.
280 Park Avenue
New York, New York 10017
Attention: Thomas W. Arenz, General Partner
and a copy to:
Skadden, Arps, Slate, Meagher & Flom, LLP
4 Times Square
New York, NY 10036
Attention: Mark C. Smith, Esq.
Fax: 212-735-2000
(b) if to Litho or the Company, to:
Tukaiz Communications, L.L.C.
2917 Latoria Lane
Franklin Park, Illinois 60131
Attention: Frank Defino, Sr.
Fax: (847) 455-0507
with a copy to:
Seyfarth Shaw
55 East Monroe Street
Chicago, IL 60603-5803
Attention: Edward J. Karlin
Fax: (312) 269-8869
and a copy to:
930 York Road
Suite 102
Hinsdale, IL 60521
Attention: William Diamant
If to Matt-One, to:
Matthews International Corporation
Two Northshore Center
Pittsburgh, PA 15212
Attention: President
<PAGE> 46
with a copy to:
Reed Smith LLP
435 Sixth Avenue
Pittsburgh, PA 15219
Attention: Pasquale D. Gentile, Jr.
or such other address or persons as the parties may from time to time
designate in writing in the manner provided in this Section.
10.3 Entire Agreement. This Agreement, together with the Schedules and
Exhibits hereto and the Confidentiality Agreement, represents the entire
agreement and understanding of the parties hereto with respect to the subject
matter contemplated herein, and supersedes all prior agreements, promises,
covenants, arrangements, communications, representations or warranties,
whether oral or written, by any officer, employee or representative of either
party in respect of said subject matter.
10.4 Amendments and Waivers. This Agreement may be amended, superseded,
cancelled, renewed or extended only by a written instrument signed by all of
the parties hereto. This terms of this Agreement may be waived only by a
written instrument signed by the party waiving compliance or his or her
representative. The waiver of any party hereto of any right hereunder or of
any failure to perform or breach by any other party hereto will not be deemed
a waiver of any other right hereunder or of any other failure or breach by any
other party hereto, whether of the same or a similar nature or otherwise. No
such written waiver will be deemed a continuing waiver unless specifically
stated therein, and each such waiver will operate only as to the specific term
or condition waived and will not constitute a waiver of such term or condition
for the future or as to any act other than that specifically waived.
10.5 Governing Law. This Agreement will be governed by and in accordance
with the laws of the State of New York without regard to conflict of law rules
thereof.
<PAGE> 47
10.6 Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement, or the breach, termination or validity hereof,
will be finally settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect, as
modified herein (the "Rules"). The place of arbitration will be New York, New
York. There will be three arbitrators. If there are two parties to the
arbitration, the claimant and the respondent will each appoint one arbitrator
within 15 days of the receipt by the respondent of the demand for arbitration.
If there are more than two parties, then within 15 days of the receipt by the
respondent(s) of the demand for arbitration, all claimants will agree upon and
appoint one arbitrator and all respondents will agree on and appoint one
arbitrator. The two arbitrators so appointed will select the chair of the
arbitral tribunal within 15 days of the appointment of the second arbitrator.
If any arbitrator is not appointed within the time limits provided herein,
such arbitrator will be appointed by the American Arbitration Association (the
"AAA") in accordance with the Rules. Any arbitrator appointed by the AAA will
be a retired judge or a practicing attorney with no less than fifteen years of
experience, and an experienced arbitrator. Any arbitration proceedings,
decision or award rendered hereunder and the validity, effect and
interpretation of this arbitration agreement will be governed by the Federal
Arbitration Act, 9 U.S.C. 1 et seq. Any award rendered hereunder will be
final and binding on the parties and judgment upon such award may be entered
in any court having jurisdiction thereof. Notwithstanding the foregoing, by
agreeing to arbitration, the parties do not intend to deprive any court of its
jurisdiction to issue a pre-arbitral injunction, pre-arbitral attachment or
other order or remedy in aid of arbitration proceedings and the enforcement of
any award. Without prejudice to such provisional remedies in aid of
arbitration as may be available under the jurisdiction of a court of competent
jurisdiction, the arbitral tribunal will have full authority to grant
provisional remedies and any remedy contemplated by this agreement including
specific performance and any other type of permanent injunctive relief, and to
award damages for the failure of any party to respect the arbitral tribunal's
orders to that effect.
10.7 Consent to Jurisdiction. Except as otherwise contemplated by Section
10.6 above and subject in all respects thereto, the parties hereto agree that
any proceeding arising out of or relating to this Agreement or the breach or
threatened breach of this Agreement must be commenced and prosecuted in a
court in the State of New York. Each of parties hereto hereby irrevocably and
unconditionally consents and submits to the exclusive personal jurisdiction of
any court in the State of New York in respect of any such proceeding. Each of
the parties hereto consents to service of process upon it with respect to any
such proceeding by registered mail, return receipt requested, and by any other
means permitted by applicable laws and rules. Each of the parties hereto
waives any objection that it may now or hereafter have to the laying of venue
of any such proceeding in any court in the State of New York and any claim
that it may now or hereafter have that any such proceeding in any court in the
State of New York has been brought in an inconvenient forum.
<PAGE> 48
10.8 Waiver of Jury Trial. Subject in all respects to Section 10.6 above,
each party acknowledges and agrees that any controversy that may arise under
this agreement is likely to involve complicated and difficult issues, and
therefore each such party hereby irrevocably and unconditionally waives any
right such party may have to a trial by jury in respect of any litigation
directly or indirectly arising out of or relating to this Agreement, or the
transactions contemplated by this Agreement. Each party certifies and
acknowledges that (i) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in
the event of litigation, seek to enforce the foregoing waiver, (ii) each such
party understands and has considered the implications of this waiver and (iii)
each such party has been induced to enter into this agreement by, among other
things, the mutual waivers and certifications set forth herein.
10.9 Headings. The Article and Section headings contained in this Agreement
are solely for convenience of reference and do not affect the meaning or
interpretation of this Agreement or of any term or provision hereof.
10.10 Enforceability. If any of the provisions of this Agreement contravene
or are invalid under the laws of any state or other jurisdiction where it is
applicable but for such contravention or invalidity, such contravention or
invalidity will not invalidate all of the provisions of this Agreement, but
rather the Agreement will be reformed and construed, insofar as the laws of
that state or jurisdiction are concerned, as not containing the provision or
provisions, but only to the extent that they are contravening or are invalid
under the laws of that state or jurisdiction, and the rights and obligations
created hereby will be reformed and construed and enforced accordingly. In
particular, if any of the covenants or agreements set forth in Section 6.16,
or any part thereof, is held to be unenforceable because of the duration of
such provision or the area covered thereby, or otherwise, the parties hereby
expressly agree that the court or arbitral body making such determination will
have the power to reduce the duration and/or the areas of such provision or
otherwise limit any such provision, and, in its reduced form, such provision
will then be enforceable.
<PAGE> 49
10.11 Terms. All references herein to Articles, Sections, Schedules and
Exhibits will be deemed references to such parts of this Agreement, unless the
context otherwise requires. All references to singular or plural include the
other as the context may require.
10.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same instrument.
10.13 Schedules and Exhibits. The Schedules and Exhibits attached hereto are
a part of this Agreement as if fully set forth herein.
10.14 No Third Party Beneficiaries. Except as expressly contemplated in this
Agreement, this Agreement will be binding upon and inure solely to the benefit
of each party hereto and nothing in this Agreement is intended to confer upon
any other person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
10.15 Publicity. No party will issue or cause the publication of any press
release or other announcement with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the
other parties, except where such release or announcement is required by
applicable law and provided that the other parties are notified in writing as
to the content of such release or announcement prior to the publication
thereof and are given a reasonable opportunity to comment thereon.
10.16 Guaranty. Frank Defino, Sr. hereby unconditionally and irrevocably
guarantees to the Purchaser the full and timely payment, performance and
observance of all of the terms, covenants and conditions, whether monetary or
non-monetary, to be paid, performed and observed by Litho under each and every
provision of this Agreement (collectively, the "Litho Obligations"). This
Guaranty is an absolute, present, continuing, unlimited and unconditional
guaranty and undertaking of payment, performance and observance of all the
Litho Obligations, and, without limitation, is in no way conditioned or
contingent upon any effort or attempt by the Purchaser first to seek
performance or payment from Litho.
(a) Matthews hereby unconditionally and irrevocably guarantees to the
Purchaser the full and timely payment, performance and observance of all the
terms, covenants and conditions, whether monetary or non-monetary, to be paid,
performed and observed by Matt-One under each and every provision of this
Agreement (collectively, the "Matt-One Obligations"). This Guaranty is an
absolute, unlimited and unconditional guaranty and undertaking of payment,
performance and observance of all of the Matt-One Obligations, and, without
limitation, is in no way conditioned or contingent upon any effort or attempt
by the Purchaser first to seek performance or payment from Matt-One.
<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date first above written.
PRINEXUS, INC.
By:
Name:
Title:
MATT-ONE HOLDING CORPORATION
By:
Name:
Title:
TUKAIZ LITHO, INC.
By:
Name: Frank Defino, Sr.
Title:
TUKAIZ COMMUNICATIONS, L.L.C.
By:
Name:
Title:
Agreed and Acknowledged:
----------------------------------------
FRANK DEFINO, SR.
MATTHEWS INTERNATIONAL CORPORATION
By:
Name:
Title:
