SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 1, 1999
CADMUS COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 0-12954 54-1274108
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
6620 WEST BROAD STREET, SUITE 240, RICHMOND, VIRGINIA 23230
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (804) 287-5680
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 1, 1999, Cadmus Communications Corporation ("Cadmus" or the "Company")
consummated the purchase of all of the outstanding stock of Melham Holdings
Inc., a Delaware corporation. The purchase was pursuant to the terms of a Stock
Purchase Agreement dated April 1, 1999, (the "Agreement"), by and among Cadmus
Communications Corporation, Melham U.S. Inc., Purico (IOM) Limited, and Paul F.
Mack. A copy of the Agreement is filed as Exhibit 2.1 hereto and incorporated
herein by reference. Immediately prior to consummation of the transactions
contemplated by the Agreement, Melham U.S. Inc., Purico (IOM) Limited, and Paul
F. Mack (collectively the "Sellers") owned 100% of Melham Holdings Inc.
The principal operating subsidiary of Melham Holdings Inc. is Mack Printing
Company ("Mack"), a full-service printer that produces a wide variety of
short-to medium-run magazines and journals generally for customers in the
mid-Atlantic and northeast regions of the United States. Immediately prior to
consummation of the transactions contemplated by the Agreement, Melham Holdings
Inc. indirectly owned approximately 85% of Mack through Melham, Inc., a Delaware
corporation. In connection with the consummation of the transactions
contemplated by the Agreement, Mack repurchased approximately 15% of its
then-outstanding equity securities from other securityholders and repaid certain
indebtedness to such securityholders pursuant to the terms of a Stock and Note
Purchase Agreement, a copy of which is filed as Exhibit 2.2 hereto and
incorporated herein by reference.
The purchase price was approximately $200 million and consisted of the
following: approximately $110 million in Bridge Financing Notes with J.P. Morgan
Venture Corporation, First Union Investors, Inc. and the Sellers and former Mack
securityholders; approximately $66 million in cash used to repay certain
indebtedness of Mack; approximately 1.2 million shares of the Company's common
stock; and approximately $6.4 million in subordinated notes of the Company. The
Bridge Financing Notes are expected to be paid with the proceeds of $125 million
of senior subordinated notes that Cadmus plans to issue in its fiscal fourth
quarter. The senior subordinated notes are anticipated to have a 10 year term.
In connection with the transactions contemplated by the Agreement, the Company
elected Mr. Nathu R. Puri, a majority shareholder of Melham U.S. Inc. and Purico
(IOM) Limited, to the Board of Directors of the Company to serve until the next
annual meeting of shareholders of the Company.
The purchase price was established through arms-length negotiations among the
parties. The cash purchase price paid at closing was provided by a new $200
million revolving credit/term loan facility led by Wachovia Bank N.A., and
co-managed by First Union National Bank and Nationsbank N.A. The new facility
has a term of five years.
The facilities of Mack include its headquarters in Easton, Pennsylvania with
manufacturing facilities located in Easton, Ephrata, and East Stroudsburg,
Pennsylvania, as well as in Baltimore, Maryland. Cadmus intends to continue to
use these facilities for the same or similar purposes.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of Melham Holdings Inc.
The required financial statements of Melham Holdings Inc. are not
included in this report but will be filed by amendment within 60 days
of the due date of this report.
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(b) Pro forma financial statements of Cadmus Communications Corporation
The required pro forma financial statements of Cadmus Communications
Corporation are not included in this report but will be filed by
amendment within 60 days of the due date of this report.
(c) Exhibits
Index of Exhibits
Exhibit 2.1 Stock Purchase Agreement dated April 1, 1999, by and
among Cadmus Communications Corporation, Melham U.S. Inc., Purico
(IOM) Limited, and Paul F. Mack - The schedules and exhibits to
this Agreement are omitted in accordance with the instructions to
Item 601 (b) (2) of Regulation S-K. A listing of such schedules
and exhibits is found in the Agreement and Cadmus hereby
undertakes to supply the Securities and Exchange Commission
supplementally with a copy of any such exhibits upon request.
Exhibit 2.2 Stock and Note Purchase Agreement dated April 1,
1999, by and among Mack Printing Company, Mack Printing Group,
Inc., Science Craftsman Incorporated, Port City Press, Inc.,
Melham, Inc., and G.S. Mezzanine Partners, L.P., G.S. Mezzanine
Partners Offshore, L.P., Stone Street Fund 1997, L.P., and Bridge
Street Fund 1997, L.P.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized on April 14, 1999.
CADMUS COMMUNICATIONS CORPORATION
By: /s/ C. Stephenson Gillispie, Jr.
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C. Stephenson Gillispie, Jr.
Chairman, President, and Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT
2.1 Stock Purchase Agreement dated as of April 1, 1999, by
and among Cadmus Communications Corporation, Melham U.S. Inc.,
Purico (IOM) Limited, and Paul F. Mack.
2.2 Stock and Note Purchase Agreement dated as of April 1, 1999, by
and among Mack Printing Company, Mack Printing Group, Inc.,
Science Craftsman Incorporated, Port City Press, Inc., Melham,
Inc., and G.S. Mezzanine Partners, L.P., G.S. Mezzanine Partners
Offshore, L.P., Stone Street Fund 1997, L.P., and Bridge Street
Fund 1997, L.P.
Exhibit 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
CADMUS COMMUNICATIONS CORPORATION,
MELHAM U.S. INC.,
PURICO (IOM) LIMITED,
AND
PAUL F. MACK
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Dated as of April 1, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS........................................................1
Section 1.01. Accounts................................................1
Section 1.02. Adjusted Purchase Price.................................1
Section 1.03. Adjustment Amount.......................................1
Section 1.04. Affiliate...............................................2
Section 1.05. Assets..................................................2
Section 1.06. Assigned Receivables....................................2
Section 1.07. Assumed Debt............................................2
Section 1.08. Bank Accounts...........................................2
Section 1.09. Books and Records.......................................2
Section 1.10. Bridge Financing Notes..................................2
Section 1.11. Buyer...................................................2
Section 1.12. Buyer Common Stock......................................2
Section 1.13. Capital Expenditures....................................2
Section 1.14. Closing.................................................3
Section 1.15. Closing Date............................................3
Section 1.16. Closing Financial Statements............................3
Section 1.17. Closing Working Capital.................................3
Section 1.18. Code....................................................3
Section 1.19. Common Stock............................................3
Section 1.20. Company.................................................3
Section 1.21. Company Consolidated Financial Statements...............3
Section 1.22. Company Consolidating Financial Statements..............4
Section 1.23. Confidentiality Agreement...............................4
Section 1.24. Contracts...............................................4
Section 1.25. Current Assets..........................................4
Section 1.26. Current Balance Sheet...................................4
Section 1.27. Current Liabilities.....................................4
Section 1.28. Debt Payment Obligations................................5
Section 1.29. DOL.....................................................5
Section 1.30. Effective Time of Closing...............................5
Section 1.31. Equipment...............................................5
Section 1.32. Environmental Laws......................................5
Section 1.33. ERISA...................................................5
Section 1.34. Escrow Agent............................................5
Section 1.35. Escrow Agreement........................................5
Section 1.36. Escrow Funds............................................5
Section 1.37. Exchange Act............................................6
Section 1.38. Former Subsidiaries.....................................6
Section 1.39. GAAP....................................................6
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Section 1.40. Goldman Entities........................................6
Section 1.41. Goldman Notes...........................................6
Section 1.42. Goldman Purchase Agreement..............................6
Section 1.43. Goldman Stock...........................................6
Section 1.44. Governmental Authority..................................6
Section 1.45. Greenwood...............................................6
Section 1.46. Greenwood Purchase Agreement............................6
Section 1.47. Hazardous Materials.....................................6
Section 1.48. HSR Act.................................................7
Section 1.49. Initial Working Capital.................................7
Section 1.50. Intellectual Property...................................7
Section 1.51. Inventory...............................................7
Section 1.52. IRS.....................................................7
Section 1.53. Knowledge of the Buyer..................................8
Section 1.54. Knowledge of the Sellers................................8
Section 1.55. Labor Organization......................................8
Section 1.56. Law.....................................................8
Section 1.57. Leased Warehouses.......................................8
Section 1.58. Liability...............................................8
Section 1.59. Liens...................................................8
Section 1.60. Mack....................................................8
Section 1.61. Mack Common Stock.......................................8
Section 1.62. Mack Financial Statements...............................9
Section 1.63. Mack Group..............................................9
Section 1.64. Mack Tenant.............................................9
Section 1.65. Major Facilities........................................9
Section 1.66. Material Adverse Effect.................................9
Section 1.67. Melham, Inc.............................................9
Section 1.68. Melham, Inc. Financial Statements.......................9
Section 1.69. Melham US...............................................9
Section 1.70. PBGC....................................................9
Section 1.71. PCP....................................................10
Section 1.72. PCP Financial Statements...............................10
Section 1.73. Pay-Off Amount.........................................10
Section 1.74. Permits................................................10
Section 1.75. Permitted Liens........................................10
Section 1.76. Permitted Property Conditions..........................10
Section 1.77. Person.................................................11
Section 1.78. Pikesville Site........................................11
Section 1.79. Pre-Closing Transactions...............................11
Section 1.80. Prepaids...............................................11
Section 1.81. Promissory Notes.......................................11
Section 1.82. Property Surveys.......................................11
Section 1.83. Purchase Price.........................................11
Section 1.84. Purico.................................................11
Section 1.85. Real Estate Releases...................................11
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Section 1.86. Real Property..........................................12
Section 1.87. Real Property Lease....................................12
Section 1.88. Real Property Title Exceptions.........................12
Section 1.89. Recapitalization.......................................12
Section 1.90. Receivables Payment....................................12
Section 1.91. Regulated Asbestos-Containing Material.................12
Section 1.92. Releases...............................................12
Section 1.93. Required Consents......................................12
Section 1.94. Retained Liabilities...................................13
Section 1.95. SEC....................................................13
Section 1.96. Securities Act.........................................13
Section 1.97. Sellers................................................13
Section 1.98. Series A Preferred Stock...............................13
Section 1.99. Significant Customer...................................14
Section 1.100. Special Purpose Escrow Agreement......................14
Section 1.101. Special Purpose Escrow Funds..........................14
Section 1.102. Stock.................................................14
Section 1.103. Subsidiaries..........................................14
Section 1.104. Taxor Taxes...........................................14
Section 1.105. Tax Return............................................14
Section 1.106. Termination Agreements................................14
Section 1.107. VPI...................................................15
Section 1.108. Warrants..............................................15
Section 1.109. Working Capital.......................................15
ARTICLE II PURCHASE AND SALE................................................15
Section 2.01. Commitment to Sell.....................................15
Section 2.02. Commitment to Purchase; Repayment of Debt Payment
Obligations.....................................................15
Section 2.03. Transaction Prior to Closing...........................16
Section 2.04. Adjustment Amount and Payment..........................18
Section 2.05. Adjustment Procedure...................................18
Section 2.06. Deliveries at Closing..................................20
Section 2.07. Escrow.................................................22
Section 2.08. Special Purpose Escrow.................................22
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS.......................23
Section 3.01. Organization...........................................23
Section 3.02. Enforceability.........................................23
Section 3.03. Consents and Approvals; No Violation or Conflict by
Sellers.........................................................24
Section 3.04. Title to the Stock, the Warrants and the Promissory
Notes...........................................................24
Section 3.05. Capitalization.........................................25
Section 3.06. Organization...........................................26
Section 3.07. Subsidiaries...........................................26
Section 3.08. Company Financial Statements...........................27
Section 3.09. Melham, Inc............................................28
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Section 3.10. Mack Financial Statements; PCP Financial Statements....29
Section 3.11. Authority; Enforceability; Consents and Approvals; No
Violation or Conflict by Mack Group.............................29
Section 3.12. No Adverse Change......................................30
Section 3.13. No Litigation..........................................31
Section 3.14. Title to and Sufficiency of Assets.....................31
Section 3.15. Bank Accounts; Powers of Attorney......................32
Section 3.16. Condition of Equipment.................................32
Section 3.17. Books and Records......................................32
Section 3.18. Contracts..............................................32
Section 3.19. Real Property..........................................34
Section 3.20. Intellectual Property..................................38
Section 3.21. Insurance..............................................39
Section 3.22. Employee Benefit Plans.................................40
Section 3.23. Compliance with Law....................................48
Section 3.24. Transactions With Affiliates...........................48
Section 3.25. Fees and Expenses of Brokers and Others................49
Section 3.26. Tax Matters............................................49
Section 3.27. Environmental Matters..................................52
Section 3.28. Orders, Commitments and Returns........................53
Section 3.29. Significant Customers..................................53
Section 3.30. Labor Matters..........................................54
Section 3.31. Year 2000 Compliance...................................55
Section 3.32. Absence of Undisclosed Liabilities.....................55
Section 3.33. Accuracy of Information................................56
Section 3.34. Private Placement......................................56
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER......................58
Section 4.01. Organization...........................................58
Section 4.02. Authority; Enforceability..............................58
Section 4.03. Capitalization.........................................59
Section 4.04. Consents and Approvals; No Violation or Conflict by
Buyer...........................................................59
Section 4.05. Buyer Reports..........................................59
Section 4.06. No Adverse Change......................................60
Section 4.07. Fees and Expenses of Brokers and Others................60
Section 4.08. Year 2000 Compliance...................................61
Section 4.09. No Litigation..........................................61
Section 4.10. Knowledge of the Buyer.................................61
ARTICLE V COVENANTS.........................................................62
Section 5.01. Conduct of Business of the Company; Continued Ownership
of Common Stock.................................................62
Section 5.02. No Solicitation........................................65
Section 5.03. Access to Information..................................65
Section 5.04. Best Efforts...........................................66
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Section 5.05. Public Announcements...................................66
Section 5.06. Confidentiality Agreement..............................66
Section 5.07. HSR Waiting Period.....................................67
Section 5.08. Registration of Equity Consideration...................67
Section 5.09. Certain Labor Matters..................................67
Section 5.10. Financial Statements...................................67
Section 5.11. Asbestos...............................................68
Section 5.12. Groundwater Sampling...................................68
Section 5.13. VPI Taxes..............................................68
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING..................................69
Section 6.01. Conditions Precedent to Obligations of the Buyer.......69
Section 6.02. Conditions Precedent to Obligations of the Sellers.....71
ARTICLE VII TERMINATION; AMENDMENT; WAIVER..................................72
Section 7.01. Termination............................................72
Section 7.02. Effect of Termination..................................73
Section 7.03. Amendment..............................................73
Section 7.04. Extension; Waiver......................................73
ARTICLE VIII INDEMNITIES AND ADDITIONAL COVENANTS...........................74
Section 8.01. Survival...............................................74
Section 8.02. Sellers'Indemnity......................................74
Section 8.03. Buyer's Indemnity......................................78
Section 8.04. Sole and Exclusive Remedy..............................81
Section 8.05. Accounts Receivable Guarantee..........................81
Section 8.06. Cooperation With Respect to Tax and SEC Matters........82
Section 8.07. Records................................................83
Section 8.08. Litigation Support.....................................83
Section 8.09. Further Assistance.....................................84
Section 8.10. Bulk Sales Compliance..................................84
Section 8.11. Restricted Securities; Stand Still.....................84
ARTICLE IX MISCELLANEOUS....................................................86
Section 9.01. Entire Agreement; Assignment...........................86
Section 9.02. Notices................................................87
Section 9.03. Governing Law..........................................88
Section 9.04. Descriptive Headings...................................88
Section 9.05. Parties in Interest....................................88
Section 9.06. Counterparts...........................................89
Section 9.07. Specific Performance...................................89
Section 9.08. Fees and Expenses......................................89
Section 9.09. Severability...........................................89
Section 9.10. No Reliance............................................90
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Section 9.11. Consent to Jurisdiction................................90
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EXHIBIT INDEX
Exhibit 1.10 Bridge Financing Note
Exhibit 1.35 Escrow Agreement
Exhibit 1.42 Goldman Purchase Agreement
Exhibit 1.83 Subordinated Note
Exhibit 1.100 Special Purpose Escrow Agreement
Exhibit 1.106 Form of Termination Agreement
Exhibit 2.03(b) VPI Purchase Agreement
Exhibit 2.03(c) Assignment Agreement Assigning the Greenwood Purchase
Agreement from PCP to VPI
Exhibit 5.08 Form of Registration Rights Agreement
Exhibit 6.01(n) Form of Opinions of Sellers' Counsel
Exhibit 6.02(f) Form of Opinion of Buyer's Counsel
SCHEDULE INDEX
Schedule 1.08 Bank Accounts
Schedule 1.13 Capital Expenditures
Schedule 1.21 Company Consolidated Financial Statements
Schedule 1.22 Company Consolidating Financial Statements
Schedule 1.26 Current Balance Sheet
Schedule 1.31 Equipment
Schedule 1.50 Intellectual Property
Schedule 1.59 Liens
Schedule 1.62 Mack Financial Statements
Schedule 1.68 Melham, Inc. Financial Statements
Schedule 1.72 PCP Financial Statements
Schedule 1.74 Permits
Schedule 1.76 Permitted Exceptions
Schedule 1.85 Real Estate Releases
Schedule 1.86 Real Property
Schedule 1.93 Required Consents
Schedule 2.02 Allocation of Purchase Price
Schedule 2.03(d) Certain Pre-Closing Transactions
Schedule 2.04(a)(i) Certain Bonus Payments
Schedule 2.04(a)(ii) Sellers Payment Instructions
Schedule 3.04 Title to the Stock, the Warrants and the Promissory Notes
Schedule 3.05 Capitalization
Schedule 3.06 Foreign Qualifications
Schedule 3.07 Subsidiaries and Former Subsidiaries
Schedule 3.08 Company Assets
Schedule 3.09 Melham Inc. Assets
Schedule 3.12 Adverse Changes
Schedule 3.13 Litigation
Schedule 3.16 Certain Equipment
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Schedule 3.18 Contracts
Schedule 3.21 Insurance
Schedule 3.22 Employee Benefit Plans
Schedule 3.23 Compliance with Law Exceptions
Schedule 3.24 Transactions with Affiliates
Schedule 3.25 Sellers' Brokers
Schedule 3.26 Tax Matters
Schedule 3.27 Environmental Matters
Schedule 3.28 Claims
Schedule 3.29 Certain Significant Customers
Schedule 3.32 Certain Liabilities of the Company and Melham, Inc.
Schedule 3.30 Labor Matters
Schedule 4.07 Buyer's Brokers
Schedule 4.09 Buyer's Litigation
Schedule 6.01(h) Certain Withholding Taxes
Schedule 6.01(m) Certain Contracts
Schedule 8.02(a)(v) Certain Indemnifiable Environmental Matters
Schedule 8.02(a)(vi) Certain Indemnifiable Employment Matters
Schedule 8.02(a)(vii) Certain Other Indemnifiable Matters
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, made as of the 1st day of April, 1999, by and
among CADMUS COMMUNICATIONS CORPORATION, a Virginia corporation, as Buyer,
MELHAM U.S. INC., a Delaware corporation, PURICO (IOM) LIMITED, an Isle of Man
company, and PAUL F. MACK, a United States citizen, being the record and
beneficial owners of all of the issued and outstanding capital stock and
warrants of Melham Holdings Inc., a Delaware corporation, collectively as
Sellers.
RECITALS
WHEREAS, Sellers own the Stock, which comprises all of the issued and
outstanding capital stock of the Company, and the Warrants, which, together with
the Promissory Notes, comprise all warrants or options to acquire capital stock
of the Company;
WHEREAS, the Sellers desire to sell the Stock and the Warrants to Buyer,
and Buyer desires to purchase the Stock and the Warrants from Sellers.
NOW, THEREFORE, in consideration of the Recitals and of the mutual
covenants, conditions and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, and intending to be legally bound hereby, it hereby is agreed
that:
ARTICLE I
DEFINITIONS
Section 1.01. Accounts. 00"Accounts" shall mean all accounts
receivable, notes receivable and the associated rights owned by the Mack
Group.
Section 1.02.00 Adjusted Purchase Price. 00"Adjusted Purchase Price"
shall mean an amount equal to the Purchase Price, increased or decreased by
the Adjustment Amount.
Section 1.03.00 Adjustment Amount. "Adjustment Amount" shall have the
meaning set forth in Section 2.04 hereof.
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Section 1.04.00 Affiliate. "Affiliate" shall have the meaning set
forth in Rule 405 of the Securities Act.
Section 1.05.00 Assets. "Assets" shall mean all of the assets of the
members of the Mack Group, including, without limitation, the Accounts, Bank
Accounts, Books and Records, Contracts, Equipment, Intellectual Property,
Inventory, Prepaids and Real Property.
Section 1.06.00 Assigned Receivables. "Assigned Receivables" shall
have the meaning set forth in Section 8.05 hereof.
Section 1.07.00 Assumed Debt. "Assumed Debt" shall mean all debt
obligations of the Mack Group for monies borrowed and all obligations with
respect to capitalized leases, other than Current Liabilities and Debt Payment
Obligations.
Section 1.08.00 Bank Accounts. "Bank Accounts" shall mean the checking
accounts, savings accounts, custodial accounts, certificates of deposit, safe
deposit boxes and other bank accounts maintained by the Mack Group, all of such
Bank Accounts being listed on Schedule 1.08 attached hereto.
Section 1.09.00 Books and Records. "Books and Records" shall mean all
original books, records, data and information relating to each member of the
Mack Group, including without limitation, all minute books, corporate stock
books, customer lists, financial and accounting records, purchase orders and
invoices, sales orders and sales order log books, credit and collection records
with respect to customers and supply sources, the corporate seal and all other
general correspondence, records, books and files related to the referenced
party.
Section 1.10.00 Bridge Financing Notes. "Bridge Financing Notes"
shall mean the promissory notes issued by Buyer to the Sellers in the form of
Exhibit 1.10 attached hereto.
Section 1.11.00 Buyer. "Buyer" shall mean Cadmus Communications
Corporation, a Virginia corporation.
Section 1.12.00 Buyer Common Stock. "Buyer Common Stock" shall mean
the shares of common stock, par value $0.50 per share, of the Buyer.
Section 1.13.00 Capital Expenditures. "Capital Expenditures" shall mean
the sum of (i) the dollar amount of capital expenditures actually paid by the
Mack Group between December
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31, 1998 and the Closing Date as set forth on Schedule 1.13 hereto and (ii) any
prepayments or advances on capital expenditure commitments outstanding as of
December 31, 1998 and set forth on Schedule 1.13 hereto, which sum shall be
reduced by (iii) the amount paid or to be paid for the repair of roofs at the
Major Facilities, and the amount paid or to be paid for the repair and removal
of Regulated Asbestos Containing Material at the Major Facilities, in each case
during the period from December 31, 1998 to the Effective Time of Closing and
only to the extent of the scope of work described in the attached Schedule 1.13,
and also reduced by (iv) the aggregate depreciation with respect to all such
capital expenditures from December 31, 1998 through the Effective Time of
Closing.
Section 1.14.00 Closing. "Closing" shall mean the conference held at 10:00
a.m., local time, on the Closing Date, at the offices of Hunton & Williams, 951
E. Byrd Street, Richmond, Virginia 23219 or such other place as may be agreed
upon by Buyer and Sellers.
Section 1.15.00 Closing Date. "Closing Date" shall mean the date of
this Agreement.
Section 1.16.00 Closing Financial Statements. "Closing Financial
Statements" shall have the meaning set forth in Section 2.05 hereof.
Section 1.17.00 Closing Working Capital. "Closing Working Capital"
shall have the meaning set forth in Section 2.05 hereof.
Section 1.18.00 Code. "Code" shall mean the Internal Revenue Code of
1986, as amended.
Section 1.19.00 Common Stock. "Common Stock" shall mean all of the issued
and outstanding shares of common stock, par value $0.01 per share, of the
Company, consisting of 0 shares owned of record and beneficially by Melham US,
36,000 shares owned of record and beneficially by Purico and 4,000 shares owned
of record and beneficially by Paul F. Mack.
Section 1.20.00 Company. "Company" shall mean Melham Holdings Inc., a
Delaware corporation.
Section 1.21.00 Company Consolidated Financial Statements. "Company
Consolidated Financial Statements" shall mean the audited consolidated balance
sheets of the Company and its Subsidiaries, as of December 31, 1998, and the
notes thereto, and the related audited
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consolidated statements of income and cash flows for the year ended December 31,
1998 and the notes thereto, attached hereto as Schedule 1.21.
Section 1.22.00 Company Consolidating Financial Statements. "Company
Consolidating Financial Statements" shall mean the unaudited consolidating
balance sheets of the Company, as of December 31, 1998 and 1997, and the related
consolidating statements of income and cash flows for the year ended December
31, 1998 and for the nine month period beginning on the date of the Company's
formation and ended December 31, 1997, attached hereto as Schedule 1.22
Section 1.23.00 Confidentiality Agreement. "Confidentiality Agreement"
shall mean the letter agreement, dated as of July 8, 1998, by and between
Mack and Buyer.
Section 1.24.00 Contracts. "Contracts" shall mean all contracts,
agreements, leases and licenses, whether written or oral, to which any member of
the Mack Group is a party or by which any member of the Mack Group or any of
their respective properties is bound.
Section 1.25.00 Current Assets. "Current Assets" shall mean (a) with
respect to the Current Balance Sheet, items of the type identified as current
assets on the Current Balance Sheet and (b) with respect to the Closing
Financial Statements, items of the type identified as current assets on the
balance sheet included in the Closing Financial Statements.
Section 1.26.00 Current Balance Sheet. "Current Balance Sheet" shall mean
the unaudited consolidated balance sheet of the Mack Group as of December 31,
1998, prepared on the same basis and applying the same accounting principles,
policies, assumptions, methodologies and practices that were used in preparing
the balance sheet included in the Company Consolidated Financial Statements,
adjusted to reflect consummation of the Pre-Closing Transactions contemplated in
Section 2.03(b), (c), (d), (e) and (f) hereof, which balance sheet is included
in the financial statements attached as Schedule 1.26 hereto.
Section 1.27.00 Current Liabilities. "Current Liabilities" shall mean (a)
with respect to the Current Balance Sheet, items of the type identified as
current liabilities on the Current Balance Sheet and (b) with respect to the
Closing Financial Statements, items of the type identified as current
liabilities on the balance sheet included in the Closing Financial Statements,
but, in either case, shall exclude any current liabilities related to the Debt
Payment Obligations,
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and, in either case, shall also include all Taxes of the Company or its
Subsidiaries (other than VPI) arising from the transactions contemplated by this
Agreement, including, without limitation, Taxes arising from the transactions
described in Section 2.03(b), (c), (d), (e) and (f), but in no event to include
any Assumed Debt.
Section 1.28.00 Debt Payment Obligations. "Debt Payment Obligations"
shall have the meaning set forth in Section 2.03(a) hereof.
Section 1.29.00 DOL. "DOL" means the United States Department of
Labor.
Section 1.30.00 Effective Time of Closing. "Effective Time of
Closing" shall mean 12:01 a.m., Eastern Standard time, on the Closing Date.
Section 1.31.00 Equipment. "Equipment" shall mean all machinery, vehicles,
equipment, furniture, fixtures, furnishings, parts, tools, engineering and other
items of tangible personal property owned or leased by any member of the Mack
Group, including, without limitation, the Equipment listed on Schedule 1.31
attached hereto.
Section 1.32.00 Environmental Laws. "Environmental Laws" shall mean any
and all foreign or domestic federal, state, local or municipal laws, rules,
orders, regulations, statutes, common law, ordinances, codes, decrees or
requirements of any Governmental Authority regulating, relating to or imposing
liability or standards of conduct concerning any Hazardous Materials or
environmental protection or human health as affected by Hazardous Materials as
in effect as of Closing or at any time in the past.
Section 1.33.00 ERISA. "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
Section 1.34.00 Escrow Agent. "Escrow Agent" shall mean State Street
Bank and Trust Company, N.A.
Section 1.35.00 Escrow Agreement. "Escrow Agreement" shall mean the
Escrow Agreement in substantially the form attached hereto as Exhibit 1.35.
Section 1.36.00 Escrow Funds. "Escrow Funds" shall mean 849,085 shares of
Buyer Common Stock comprising part of the Equity Consideration and $6,414,640
aggregate principal
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amount of the Buyer Notes comprising part of the Debt Consideration to be
deposited by Buyer with the Escrow Agent in accordance with Section 2.07.
Section 1.37.00 Exchange Act. "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
Section 1.38.00 Former Subsidiaries. "Former Subsidiaries" shall have
the meaning set forth in Section 3.07 hereof.
Section 1.39.00 GAAP. "GAAP" shall mean generally accepted accounting
principles as in effect in the United States of America as of the date and
period covered by the subject financial statement.
Section 1.40.00 Goldman Entities. "Goldman Entities" shall mean G. S.
Mezzanine Partners, L.P., a Delaware limited partnership, G. S. Mezzanine
Partners Offshore, L.P., a Cayman Islands exempted limited partnership, Stone
Street Fund 1997, L.P., a Delaware limited partnership, and Bridge Street
Fund 1997, L.P., a Delaware limited partnership, collectively.
Section 1.41.00 Goldman Notes. "Goldman Notes" shall mean the subordinated
notes having an original principal amount of $25,000,000 of Mack or its
Subsidiaries held of record and beneficially by the Goldman Entities.
Section 1.42.00 Goldman Purchase Agreement. "Goldman Purchase Agreement"
shall mean the agreement in the form attached hereto as Exhibit 1.42 pursuant to
which Mack shall redeem or purchase the Goldman Stock and the Goldman Notes.
Section 1.43.00 Goldman Stock. "Goldman Stock" shall mean the 75,000
shares of Mack Common Stock previously owned of record and beneficially by the
Goldman Entities and redeemed pursuant to the Goldman Purchase Agreement.
Section 1.44.00 Governmental Authority. "Governmental Authority"
shall mean any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, or any court.
Section 1.45.00 Greenwood. "Greenwood" shall mean 1323 Greenwood LLC,
a Maryland limited liability company.
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Section 1.46.00 Greenwood Purchase Agreement. "Greenwood Purchase
Agreement" shall mean the Agreement of Purchase and Sale, dated November 12,
1998, as amended, by and between PCP and Mesirow Realty Sale-Leaseback, Inc.
Section 1.47.00 Hazardous Materials. "Hazardous Materials" shall mean
shall mean any hazardous material, hazardous waste, infectious medical waste,
hazardous or toxic substance defined or regulated as such in or under any
Environmental Law, including, without limitation, petroleum, crude oil or
fractions thereof, petroleum products, waste or used oil, natural or synthetic
gas, materials exhibiting the characteristics of ignitability, corrosivity,
reactivity or extraction procedure toxicity, as such terms are defined in
connection with hazardous materials or hazardous wastes or hazardous or toxic
substances in any Environmental Law.
Section 1.48.00 HSR Act. "HSR Act" shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
Section 1.49.00 Initial Working Capital. "Initial Working Capital"
shall have the meaning set forth in Section 2.05 hereof.
Section 1.50.00 Intellectual Property. "Intellectual Property" shall mean
(a) all inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto and all patents, patent
applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names and
corporate names, together with all translations, adaptations, derivations and
combinations thereof and including all goodwill associated therewith and all
applications, registrations and renewals in connection therewith, (c) all
copyrightable works, all copyrights and all applications, registrations and
renewals in connection therewith, (d) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information and business and marketing plans and proposals),
(e) all computer software (including data and related documentation), (f) all
other proprietary rights, (g) all rights as a licensee or authorized user of the
intellectual property of any third party and (h) all copies and tangible
embodiments thereof (in whatever form or medium)
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owned by or used in the business of the Mack Group, including, without
limitation, the Intellectual Property listed on Schedule 1.50 attached hereto.
Section 1.51.00 Inventory. "Inventory" shall mean all inventories of
goods and supplies owned by any member of the Mack Group.
Section 1.52.00 IRS. "IRS" shall mean the Internal Revenue Service.
Section 1.53.00 Knowledge of the Buyer. "Knowledge of the Buyer"
shall mean the actual knowledge of C. Stephenson Gillispie, Jr., David G.
Wilson, Jr., Bruce V. Thomas, Joseph J. Ward, David E. Bosher, Karen Snyder,
Carla S. Keeney, Walter Peter, Janet Ciarvino, Robert Eastep and Boyd Votens,
officers or employees of Buyer.
Section 1.54.00 Knowledge of the Sellers. "Knowledge of the Sellers"
shall mean the actual knowledge of Steve H. Smith, Mark R. Ploucha, Paul F.
Mack, Paul B. Knox, Frank A. Barry, Scott E. M. DeNardo, Thomas N. Plath, and
Robert C. Potts.
Section 1.55.00 Labor Organization. "Labor Organization" shall have
the meaning set forth in Section 2(5) of the National Labor Relations Act, as
amended.
Section 1.56.00 Law. "Law" shall mean any federal, state, local or other
law (including common law) or governmental requirement of any kind, domestic or
foreign, and the rules, regulations and orders promulgated thereunder.
Section 1.57.00 Leased Warehouses. "Leased Warehouses" shall mean
collectively, (i) the facility operated by PCP at 7190 Parkway Drive, Hanover,
Maryland, (ii) the facility operated by Mack at 7 Wynfield Drive, Building 14,
Lancaster, Pennsylvania, and (iii) the facility at 175 East King Street,
Ephrata, Pennsylvania, operated by a subsidiary of Mack.
Section 1.58.00 Liability. "Liability" shall mean any direct or indirect
liability, indebtedness, obligation, commitment, expense, claim, deficiency,
deferred income, guaranty or endorsement of or by any Person of any type,
whether known, unknown, accrued, unaccrued, absolute, contingent, matured or
unmatured.
Section 1.59.00 Liens. "Liens" shall mean those liens, encumbrances,
mortgages, charges, claims, restrictions, pledges, security interests, and other
matters affecting any of the
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Assets that are specifically listed on Schedule 1.59 attached hereto and all
liens for taxes, assessments and municipal charges that are not yet delinquent.
Section 1.60.00 Mack. "Mack" shall mean Mack Printing Company, a
Pennsylvania corporation.
Section 1.61.00 Mack Common Stock. "Mack Common Stock" shall mean all of
the issued and outstanding shares of common stock, par value $0.01 per share, of
Mack, consisting of 425,000 shares owned of record and beneficially by Melham
Inc., after giving effect to the transactions contemplated by the Goldman
Purchase Agreement.
Section 1.62.00 Mack Financial Statements. "Mack Financial Statements"
shall mean the audited consolidated balance sheets of Mack and its Subsidiaries,
as of December 31, 1998, 1997 and 1996, and the notes thereto, and the audited
consolidated statements of income and cash flows of Mack and its Subsidiaries
for the years ended December 31, 1998, 1997, and 1996, and the notes thereto,
attached hereto as Schedule 1.62.
Section 1.63.00 Mack Group. "Mack Group" shall mean the Company,
Melham, Inc., Mack and their respective Subsidiaries (other than VPI and
Greenwood).
Section 1.64.00 Mack Tenant. "Mack Tenant" has the meaning set forth
in Section 3.19.
Section 1.65.00 Major Facilities. "Major Facilities" shall mean the
facilities operated by Subsidiaries of the Company and located at (i) 1991
Northampton Street, Easton, Pennsylvania (consisting of more than one parcel of
land), (ii) 34 North Crystal Street, East Stroudsburg, Pennsylvania (consisting
of more than one parcel of land), (iii) 300 West Chestnut Street, Ephrata,
Pennsylvania, and (iv) 1323 Greenwood Road, Baltimore, Maryland. Any one of the
Major Facilities shall be a "Major Facility."
Section 1.66. 00Material Adverse Effect. "Material Adverse Effect"
with respect to any Person shall mean any material adverse event, change or
effect on the business, assets, liabilities, results of operations or
financial condition of such Person and its Subsidiaries taken as a whole.
Section 1.67.00 Melham, Inc.. "Melham, Inc." shall mean Melham, Inc.,
a Delaware corporation.
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Section 1.68.00 Melham, Inc. Financial Statements. "Melham, Inc.
Financial Statements" shall mean the unaudited consolidating balance sheet of
Melham, Inc., and its Subsidiaries, as of December 31, 1998, 1997 and 1996,
and the related consolidating statements of income and cash flows for the
years ended December 31, 1998, 1997 and 1996, attached hereto as
Schedule 1.68.
Section 1.69.00 Melham US. "Melham US" shall mean Melham U.S. Inc., a
Delaware corporation.
Section 1.70.00 PBGC. "PBGC" shall mean the Pension Benefit Guaranty
Corporation.
Section 1.71.00 PCP. "PCP" shall mean Port City Press, Inc., a
Maryland corporation.
Section 1.72.00 PCP Financial Statements. "PCP Financial Statements" shall
mean the audited balance sheets of PCP, as of September 1, 1998 and December 31,
1996 and 1995, and the notes thereto, and the audited consolidated statements of
income and cash flows of PCP for the years ended December 31, 1996 and 1995, and
the notes thereto, attached hereto as Schedule 1.72.
Section 1.73.00 Pay-Off Amount. "Pay-Off Amount" shall have the
meaning set forth in Section 2.03 hereof.
Section 1.74.00 Permits. "Permits" shall mean all permits, licenses and
governmental authorizations, registrations and approvals used or required in the
conduct of the businesses of the Mack Group, including, without limitation,
those Permits listed on Schedule 1.74 attached hereto.
Section 1.75.00 Permitted Liens. "Permitted Liens" shall mean those Liens
that are specifically identified on Schedule 1.59 as "Permitted Liens," and all
liens for taxes, assessments and municipal charges that are not yet delinquent.
Section 1.76.00 Permitted Property Conditions. "Permitted Property
Conditions" shall mean (i) the permitted exceptions listed in Schedule 1.76
attached hereto, (ii) all liens for taxes, assessments and municipal charges
that are not yet delinquent, (iii) all zoning, building, subdivision, wetlands
and other land use laws, codes, rules, ordinances and regulations, whether
state, federal or local, and all statutory and regulatory conditions and
restrictions, (iv) all matters, states of fact and defects that are or should be
apparent from a physical inspection of the Real
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Property or that would be disclosed by an on the ground survey that do not and
could not reasonably be expected to materially and adversely affect operations
or materially impair the marketability of title to such parcel, and (v) those
encumbrances (excluding mortgages, liens and charges with respect to a specified
monetary amount) exceptions, agreements, easements, defects, encroachments,
covenants, reservations, restrictions, conditions and other matters affecting
title that do not and could not reasonably be expected to materially and
adversely affect operations or materially impair the marketability of title to
such parcel.
Section 1.77.00 Person. "Person" shall mean any individual,
corporation, partnership, limited liability company or other entity.
Section 1.78.00 Pikesville Site. "Pikesville Site" shall have the
meaning set forth in Section 3.19(c) hereof.
Section 1.79.00 Pre-Closing Transactions. "Pre-Closing Transactions"
shall have the meaning set forth in Section 2.03.
Section 1.80.00 Prepaids. "Prepaids" shall mean all prepaid expenses
and deposits of the Mack Group.
Section 1.81.00 Promissory Notes. "Promissory Notes" means the $12 million
aggregate principal amount of 11% Promissory Notes of the Company, dated March
31, 1997, due March 31, 2007, consisting of $10.8 million aggregate principal
amount owned beneficially and of record by Melham US and $1.2 million aggregate
principal amount owned beneficially and of record by Paul F. Mack.
Section 1.82.00 Property Surveys. "Property Surveys" shall mean ALTA
surveys of the Major Facilities performed at the Buyer's direction and at the
Buyer's expense by surveyors licensed in the states in which the respective
Major Facilities are located.
Section 1.83.00 Purchase Price. "Purchase Price" for the Stock and
Warrants shall consist of (a) the aggregate principal amount of the Bridge
Financing Notes in the amount of $60,000,000.00, (b) an amount in cash equal to
$12,134,883.21 (the "Cash Consideration"), (c) 1,161,585 shares of Buyer Common
Stock (the "Equity Consideration"), and (d) $6,414,640 in original principal
amount of subordinated notes (the "Buyer Notes") of Buyer in the form attached
as Exhibit 1.83, (the Buyer Notes and the aggregate principal amount of the
Bridge
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Financing Notes referred to in clause (a) above shall be referred to herein as
the "Debt Consideration"), as adjusted pursuant to Section 2.05 hereof.
Section 1.84.00 Purico. "Purico" shall mean Purico (IOM) Limited, an
Isle of Man company.
Section 1.85.00 Real Estate Releases. "Real Estate Releases" shall mean
releases, in form sufficient for recording in the title records of the
jurisdictions in which the Real Property is located of the mortgages, deeds of
trust, and security interests encumbering the Real Property and listed on
Schedule 1.85 attached hereto.
Section 1.86.00 Real Property. "Real Property" shall mean the real
property owned or leased by the Mack Group, together with the improvements
located thereon, including all appurtenant rights, claims and interests, all of
such Real Property being listed on Schedule 1.86 attached hereto.
Section 1.87.00 Real Property Lease. "Real Property Lease" has the meaning
set forth in Section 3.19.
Section 1.88.00 Real Property Title Exceptions. "Real Property Title
Exceptions" shall mean all recorded or unrecorded liens, encumbrances,
mortgages, charges, claims, restrictions, pledges, security interests, and other
matters affecting the Real Property.
Section 1.89.00 Recapitalization. "Recapitalization" shall mean the series
of transactions constituting the corporate restructuring and redemption of
shares consummated by Mack, Melham, Inc., the Company and certain other parties
on, prior to and around March 28, 1997.
Section 1.90.00 Receivables Payment. "Receivables Payment" shall have the
meaning set forth in Section 8.05.
Section 1.91.00 Regulated Asbestos-Containing Material. "Regulated
Asbestos-Containing Material" ("RACM") means (a) Friable asbestos material, (b)
Category I nonfriable ACM that has become friable prior to Closing, (c) Category
I nonfriable ACM that has been subjected to sanding, grinding, cutting, or
abrading prior to Closing, or (d) Category II nonfriable ACM that has become
crumbled, pulverized, or reduced to powder prior to Closing. The terms used in
this definition and not otherwise defined in this Agreement shall have the
meaning set forth at 40 C.F.R. 61.141.
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Section 1.92.00 Releases. "Releases" shall mean all releases,
UCC-termination statements and other documents and instruments as may be
necessary to release all Liens listed on Schedule 1.59 attached hereto, other
than those liens identified as Permitted Liens.
Section 1.93.00 Required Consents. "Required Consents" shall mean those
material consents, approvals and waivers that are required in connection with
the consummation of the transactions contemplated herein and that are
specifically listed in Schedule 1.93 attached hereto.
Section 1.94.00 Retained Liabilities. "Retained Liabilities" shall mean
(i) except for Liabilities identified on Schedule 3.32, all Liabilities of
Melham, Inc., existing as of, or arising out of events, actions or circumstances
occurring on or prior to, the Closing Date, other than obligations, claims and
liabilities arising solely as a result of Melham, Inc.'s ownership of the
capital stock of Mack and, except as provided in (vi) below, other than Taxes
attributable to the activities of Mack and its Subsidiaries and for which
Melham, Inc. would not be liable but for Treas. Reg. ss. 1.1502-6 or analogous
provisions of state or local law; (ii) except for Liabilities identified on
Schedule 3.32, all Liabilities of the Company existing as of, or arising out of
events, actions or circumstances occurring on or prior to, the Closing Date,
other than obligations, claims and liabilities arising solely as a result of the
Company's indirect ownership of the capital stock of Mack and, except as
provided in (vi) below, other than Taxes attributable to the activities of Mack
and its Subsidiaries and for which the Company would not be liable but for
Treas. Reg. ss. 1.1502-6 or analogous provisions of state or local law; (iii)
all Liabilities of VPI and Greenwood, including any Liability arising or related
to the Accounts Receivable Management and Security Agreement, dated as of
February 5, 1999, between BNY Financial Corporation and VPI or the guaranty by
the Company of any such Liability; (iv) any Liability arising out of or related
to the guaranty of SPA lease; (v) any amounts due with respect to or arising out
of the Debt Payment Obligations that are not included in the Pay-off Amount;
(vi) any Liability of any member of the Mack Group for Taxes arising out of or
related to the Recapitalization; and (vii) Liabilities for withholding Taxes for
payments to or for the benefit of any Person that is a foreign person for United
States tax purposes made by the Company or any of its Subsidiaries on or prior
to the Closing Date.
Section 1.95.00 SEC. "SEC" shall mean the Securities and Exchange
Commission.
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Section 1.96.00 Securities Act. "Securities Act" shall mean the
Securities Act of 1933, as amended.
Section 1.97.00 Sellers. "Sellers" shall mean Melham U.S., Purico,
and Paul F. Mack.
Section 1.98.00 Series A Preferred Stock. "Series A Preferred Stock" shall
mean all of the issued and outstanding shares of Series A Preferred Stock, $100
liquidation preference, of the Company, consisting of 14,069 shares owned of
record by Melham U.S., 43,752 shares owned of record by Purico, and 6,422 shares
owned of record by Paul F. Mack.
Section 1.99.00 Significant Customer. "Significant Customer" shall mean
each of the 30 customers of the Mack Group to whom the Company had the highest
total sales for the calendar year 1998.
Section 1.100.00 Special Purpose Escrow Agreement. "Special Purpose Escrow
Agreement" shall mean the Special Purpose Escrow Agreement in substantially the
form attached hereto as Exhibit 1.100.
Section 1.101.00 Special Purpose Escrow Funds. "Special Purpose Escrow
Funds" shall mean, initially, the $2.0 million Bridge Financing Note issued in
the name of the Escrow Agent and, following repayment of the Bridge Financing
Notes, an amount in cash equal to the principal amount of such Bridge Financing
Note (as determined pursuant to the Special Purpose Escrow Agreement) to be
deposited with the Escrow Agent in accordance with Section 2.08.
Section 1.102.00 Stock. "Stock" shall mean all of the issued and
outstanding shares of capital stock of the Company, consisting of the Common
Stock and the Series A Preferred Stock.
Section 1.103.00 Subsidiaries. "Subsidiaries" means, as to any Person, all
corporations, limited liability companies, partnerships or other entities with
respect to which such Person owns or otherwise controls, directly or indirectly,
through one or more subsidiaries, corporations, limited liability companies,
partnerships, joint ventures or other business associations, shares representing
50% or more of the votes eligible to be cast in the election of directors,
managers or other applicable governors of each such entity.
Section 1.104.00 Tax or Taxes. "Tax" or "Taxes" shall mean any federal,
state, county, local, or foreign taxes, charges, levies, imposts, duties, other
assessments, or similar charges of
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any kind whatsoever, including any interest, penalties, and additions imposed
thereon or with respect thereto.
Section 1.105.00 Tax Return. "Tax Return" shall mean any report, return,
information return, or other information required to be supplied to a taxing
authority in connection with Taxes, including any return of an affiliated or
combined or unitary group.
Section 1.106.00 Termination Agreements. "Termination Agreements"
shall mean the agreements in the form attached as Exhibit 1.106 to terminate
the contracts specified as being terminated on Schedule 6.01(m).
Section 1.107.00 VPI. "VPI" means Vital Public Information, Inc., a
Delaware corporation.
Section 1.108.00 Warrants. "Warrants" shall mean the warrants to purchase
5,000 shares of Common Stock, owned beneficially and of record by Melham US
pursuant to the Warrant Agreement by and between Melham US and the Company dated
March 31, 1997.
Section 1.109.00 Working Capital. "Working Capital" shall have the meaning
set forth in Section 2.05 hereof.
ARTICLE II
PURCHASE AND SALE
Section 2.01.00 Commitment to Sell. Each of the Sellers hereby agrees that
at the Closing, and upon all of the terms and subject to all of the conditions
of this Agreement, it shall sell, transfer, assign, convey and deliver to Buyer,
by assignment, stock power or other appropriate instrument, free and clear of
all liens, encumbrances, charges, claims, restrictions, pledges or security
interests (other than those arising under the Securities Act or any state's
securities laws or pursuant to this Agreement), all of the then-outstanding
Stock and Warrants owned by it or him.
Section 2.02.00 Commitment to Purchase; Repayment of Debt Payment
Obligations. (a) Buyer hereby agrees that at the Closing, and upon all of the
terms and subject to all of the conditions of this Agreement, it shall purchase
from the Sellers all of the then-outstanding Stock
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and Warrants and, subject to Sections 2.04 and 2.05, in full and final payment
therefor Buyer shall deliver, after deduction of all applicable withholding
Taxes required under applicable law,
(i) the Cash Consideration, the Equity Consideration and the Debt
Consideration to Sellers (less the Escrow Funds and the Special Purpose Escrow
Funds) and (ii) the Escrow Funds and the Special Purpose Escrow Funds to the
Escrow Agent. The Cash Consideration, the Equity Consideration and the Debt
Consideration (less the Escrow Funds and the Special Purpose Escrow Funds) shall
be paid to the Sellers in accordance with the payment instructions and allocated
to each of the Sellers in accordance with Schedule 2.02.
(b) At the Closing, the Buyer will, or will cause a member of the
Mack Group to, satisfy the Debt Payment Obligations (as defined below) by (i)
issuing to the holders of the Promissory Notes an original principal amount of
Bridge Financing Notes equal to the portion of the Pay-off Amount attributable
to such Promissory Notes, (ii) paying to Fleet Capital Corporation and Fleet
Capital Leasing their respective portions of the Pay-Off Amount in cash by wire
transfer of immediately available funds and (iii) paying to the Goldman Entities
a combination of cash by wire transfer of immediately available funds and
promissory notes as provided in the Goldman Purchase Agreement (it being
understood that the Buyer's provision of funds for the payment of the Pay-off
Amount may, at Buyer's option, be reflected in one or more loans from Buyer to
the Mack Group entities that are the obligors of the Debt Payment Obligations).
Section 2.03.00 Transaction Prior to Closing. At or prior to Closing, the
Sellers (and, where specified, Buyer) shall cause the following transactions
("Pre-Closing Transactions") to occur:
(a) Prior to Closing, Sellers will deliver, or cause to be
delivered, to Buyer (i) pay-off letters from the Goldman Entities setting forth
the aggregate amount, including interest, prepayment penalties and other fees to
be paid as of the Closing Date to satisfy all of Mack's obligations to the
Goldman Entities and their affiliates for the Goldman Stock or under the Goldman
Notes or otherwise pursuant to the Goldman Purchase Agreement; (ii) a pay-off
letter from Fleet Capital Corporation setting forth the aggregate amount,
including interest, prepayment penalties and other fees, to be paid as of the
Closing Date to satisfy all of Mack's obligations under the Loan and Security
Agreement, dated as of March 28, 1997, by and among Fleet Capital Corporation, a
Rhode Island corporation, Mack Printing Company, a Pennsylvania
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corporation, Mack Printing Group, Inc., a Delaware corporation, Science
Craftsman, Inc., a New York corporation and Port City Press, Inc., a Maryland
corporation, as amended and modified from time to time; (iii) pay-off letters
from Melham US and Paul F. Mack setting forth the aggregate amount, including
interest, prepayment penalties and other fees, to be paid as of the Closing Date
to satisfy all of the Company's obligations under the Promissory Notes; and (iv)
pay-off letters from Fleet Capital Leasing setting forth the aggregate amount,
including interest, prepayment penalties and other fees, to be paid as of the
Closing Date to satisfy all of Mack's obligations under the promissory notes,
dated September 5, 1997 and January 30, 1998, in the original principal amounts
of $923,895.25 and $676,105.00, respectively. The obligations described in this
Section 2.03(a) are referred to as the "Debt Payment Obligations" and the
aggregate amount of such obligations is referred to as the "Pay-off Amount."
(b) Prior to Closing, the Sellers shall cause the Company to (i)
sell to Sanpur, Inc., a Delaware corporation owned by Purico, and Paul F. Mack,
all shares of capital stock of VPI owned beneficially and of record by the
Company pursuant to the agreement attached hereto as Exhibit 2.03(b).
(c) Prior to Closing, the Sellers shall cause PCP to assign to VPI
(or a wholly owned subsidiary of VPI), and shall cause VPI (or a wholly owned
subsidiary of VPI) to assume, all rights and obligations relating to the
Greenwood Purchase Agreement pursuant to the agreement attached hereto as
Exhibit 2.03(c).
(d) At or prior to Closing and as further discussed below, the
Sellers shall cause the following promissory notes to be paid off or canceled:
(i) promissory notes from VPI to the Company in the aggregate principal amount
of $1,740,000 at February 28, 1999, (ii) promissory notes from the Company to
Purico in the aggregate principal amount of $935,000 at February 28, 1999, (iii)
promissory notes from the Company to Melham US in the aggregate principal amount
of $250,000 at February 28, 1999, (iv) promissory notes from Melham US to
Melham, Inc. in the aggregate principal amount of $40,000 at February 28, 1999
and (v) promissory notes from Melham, Inc. to Purico in the aggregate principal
amount of $30,000 at February 28, 1999. These transactions will be accomplished
as set forth in Schedule 2.03(d). Sellers shall provide Buyer with original
copies of all of the promissory notes referenced herein, marked "canceled."
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(e) Notwithstanding anything to the contrary herein, any cash of the
Company or Melham, Inc. reflected on the Current Balance Sheet or the Company
Consolidated Financial Statements shall not be included in the Initial Working
Capital.
(f) At or prior to the Closing, Sellers will cause Mack to issue
checks for bonuses in the amounts (reduced by the amount of all withholding
Taxes required under applicable Law) set forth in Schedule 2.04(a)(i), as
authorized in the resolutions attached to Schedule 2.04(a)(i) (including
appropriate approvals pursuant to Section 280G(b)(5) of the Code), and Buyer
will cause Mack to honor such checks).
Section 2.04.00 Adjustment Amount and Payment.
The "Adjustment Amount" (which may be a positive or negative number)
will be equal to the amount determined by (a) subtracting the Initial Working
Capital from the Closing Working Capital, (b) adding to such amount the Capital
Expenditures, (c) subtracting from such amount the difference obtained by
subtracting the Assumed Debt, as set forth on the Company Consolidated Financial
Statement in the amount of $0, from the Assumed Debt, as set forth on the
balance sheet included in the Closing Financial Statements, which Assumed Debt
shall be determined in a manner consistent with and using the same accounting
methodologies and practices as the calculation thereof on the Company
Consolidated Financial Statements, and (d) adding to such amount, to the extent
not reflected in clause (a), the excess of (i) the reduction in Taxes realized
by the Company or its Subsidiaries for the current tax year by reason of the
payment of the bonuses at Closing set forth on Schedule 2.04(a)(i) over (ii) the
amount of any Taxes paid or payable by the Company or its Subsidiaries as a
result of the payment of such bonuses. The Adjustment Amount shall be paid
either (a) by Sellers to an account specified by Buyer (if the Adjustment Amount
is negative) directly by Sellers in cash by wire transfer of immediately
available funds or (b) by Buyer to accounts specified by each of the respective
Sellers in amounts corresponding to the applicable percentages set forth with
respect to each Seller on Schedule 2.04(a)(ii) (if the Adjustment Amount is
positive) in cash by wire transfer of immediately available funds. All payments
shall be made together with interest at 7.5% per annum, which interest shall
begin accruing on the Closing Date and end on the date the payment is made.
Within three (3) business days after the calculation of the Closing Working
Capital
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becomes binding and conclusive on the parties pursuant to Section 2.05 hereof,
Sellers or Buyer, as the case may be, shall make the wire transfer payment
provided for in this Section 2.04.
Section 2.05.00 Adjustment Procedure.
(a) "Working Capital" as of a given date shall mean the amount
calculated by subtracting the Current Liabilities of the Mack Group from the
Current Assets of the Mack Group as of the date of the Current Balance Sheet or
the Closing Financial Statements, as applicable. The Working Capital of the Mack
Group as of the date of the Current Balance Sheet (the "Initial Working
Capital") was nineteen million, five hundred thirty-seven thousand, six hundred
forty-two dollars ($19,537,642).
(b) Within sixty (60) days after the Closing Date, Buyer shall
prepare unaudited consolidated financial statements ("Closing Financial
Statements") of the Mack Group as of the Closing Date and for the period from
the date of the Current Balance Sheet through the Closing Date on the same basis
and applying the same accounting principles, policies, assumptions,
methodologies and practices that were used in preparing the Current Balance
Sheet. The Closing Financial Statements shall reflect consummation of the
Pre-Closing Transactions set forth in Section 2.03(b), Section 2.03(c), Section
2.03(d) and Section 2.03(e) and 2.03(f), but (except for any transfer or similar
tax imposed on or payable by the Company or any of its Subsidiaries) shall not
give effect to the Closing transactions set forth in Section 2.01 and Section
2.02. Buyer shall then determine the Working Capital as of the Closing Date (the
"Closing Working Capital") based on the Closing Financial Statements and using
the same methodology as was used to calculate the Initial Working Capital. Buyer
shall deliver the Closing Financial Statements and its determination of the
Closing Working Capital, the amount of Capital Expenditures and the Assumed Debt
to the Sellers within sixty (60) days following the Closing Date.
(c) If within forty-five (45) days following delivery of the Closing
Financial Statements and the calculations of Closing Working Capital, Capital
Expenditures and Assumed Debt, the Sellers have not given Buyer written notice
of their objection to any of such calculations (which notice must state the
basis of Sellers' objection), Buyer's calculations of the Closing Working
Capital, Capital Expenditures and Assumed Debt shall be binding and
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conclusive on the parties and be used in computing the Adjustment Amount and
such Closing Financial Statements shall be the final Closing Financial
Statements.
(d) If Sellers duly give Buyer such notice of objection, and if
Sellers and Buyer fail to resolve the issues outstanding with respect to the
Closing Financial Statements, the Closing Working Capital, the Capital
Expenditures and the Assumed Debt within thirty (30) days of Buyer's receipt of
Sellers' objection notice, Sellers and Buyer shall submit the issues remaining
in dispute to the Philadelphia office of KPMG Peat Marwick LLP, certified public
accountants (the "Independent Accountants"), for resolution applying the
principles, policies and practices referred to in Section 2.05(b). If issues
remaining in dispute are submitted to the Independent Accountants for
resolution, (i) Sellers and Buyer shall furnish or cause to be furnished to the
Independent Accountants such work papers and other documents and information
relating to the disputed issues as the Independent Accountants may request and
are available to that party or its agents and shall be afforded the opportunity
to present to the Independent Accountants any material relating to the disputed
issues and to discuss the issues with the Independent Accountants (provided,
that Sellers on the one hand, and the Buyer on the other hand, shall not have
any contact or communications with the Independent Accountants without the other
party being present or, in the case of written communications, contemporaneously
copied); and (ii) the determination by the Independent Accountants, as set forth
in a notice to be delivered to all such Sellers and Buyer within thirty (30)
days of the submission to the Independent Accountants of the issues remaining in
dispute, shall be final, binding and conclusive on the parties and shall be used
in the calculation of the Adjustment Amount.
(e) In connection with its review, the Sellers and their accountants
shall have the right to review the methods used in the preparation of the
Closing Financial Statements, including the right to review all work papers
reasonably related to the review of the Buyer's accountants, and to request and
receive reasonably relevant information from the Buyer and the Buyer's
accountants.
(f) All of the fees and expenses of the Independent Accountant, if
any, shall be paid equally by the Buyer, on the one hand, and the Sellers, on
the other hand; provided, however, that, if the Independent Accountant
determines that either party's position is totally
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correct, then the other party shall pay one hundred percent (100%) of the fees
and expenses charged by the Independent Accountant in connection with any such
determination.
Section 2.06.00 Deliveries at Closing.
(a) By Sellers to Buyer. At the Closing, Sellers shall deliver, or
cause to be delivered, to Buyer the following items, each properly executed and
dated as of the Closing Date (i) the opinions of Sellers' counsel required
pursuant to Section 6.01(n) hereof; (ii) executed resignations of those officers
and directors of the members of the Mack Group who have been designated at least
three (3) days prior to the Closing Date by Buyer; (iii) a Certificate of the
Secretary of each Seller and each member of the Mack Group, certifying as to the
articles of incorporation, bylaws and board resolutions of each such member,
(iv) the Certificates required pursuant to Section 6.01(i) hereof; (v) copies of
the executed and final documents referred to in Sections 2.03(a), (b), (c), (d),
(e) and (f) (vi) certificates representing the then-outstanding Stock and
Warrants, together with duly executed stock powers or instruments of assignment
therefor to convey the Stock and Warrants to the Buyer; (vii) the Releases and
the Real Estate Releases (provided, however, that any Real Estate Release shall
be deemed delivered for purposes of satisfying this condition if Sellers shall
have delivered to Buyer's title company documentation sufficient to cause the
title company to insure title to the applicable parcel of Real Property without
exception to the matter intended to be released by such Real Estate Release);
(viii) the Escrow Agreement; (ix) the Special Purpose Escrow Agreement; (x) the
Goldman Purchase Agreement; (xi) the executed Termination Agreements; (xii) a
statement, in the form set forth in Treasury Regulation ss. 1.1445-2(b)(2) and
made under penalties of perjury by each Seller, other than Purico, that (among
other things) such Seller is not a foreign person; (xiii) a statement of the
Company, in the form set forth in Treas. Reg. ss.ss. 1.1445-2(c)(3) and
1.897-2(h), that the Company is not (and was not at any time during the previous
five years) a United States real property holding corporation; (xiv) an IRS Form
W-9 completed by each Seller, other than Purico; and (xv) an IRS Form W-8
completed by Purico.
(b) By Buyer to Sellers. At the Closing, the Buyer shall deliver to
Sellers the following items, each (where applicable) properly executed and dated
as of the Closing Date: (i) the Cash Consideration, the Equity Consideration and
the Debt Consideration (less the Escrow Funds and the Special Purpose Escrow
Funds); (ii) the opinion of Buyer's counsel
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required pursuant to Section 6.02(f) hereof; (iii) a Certificate of the
Secretary of Buyer as to the articles of incorporation, bylaws and board
resolutions of Buyer; (iv) the Certificate required pursuant to Section 6.02(d)
hereof; (v) the Escrow Agreement; and (vi) the Special Purpose Escrow Agreement.
(c) By Buyer to Escrow Agent. At the Closing, the Buyer shall
deliver to the Escrow Agent the following items each (where applicable) properly
executed and dated as of the Closing Date: (i) the Escrow Agreement; (ii) the
Special Purpose Escrow Agreement; (iii) the Escrow Funds; and (iv) the Special
Purpose Escrow Funds.
Section 2.07.00 Escrow.
(a) Subject to the terms and conditions of this Agreement, on the
Closing Date, Buyer will deposit the Escrow Funds with the Escrow Agent in
accordance with the terms of this Agreement and the Escrow Agreement. For
purposes of this Agreement, the Buyer Common Stock in the Escrow Funds shall be
valued at $16.00 per share, including, without limitation, for the purpose of
valuing any disbursements made in connection with the Sellers' obligations under
Section 8.02 hereof.
(b) To the extent that any indemnity amounts are to be paid pursuant
to Section 8.02 hereof, such amounts shall be payable to Buyer initially from
the Escrow Funds in accordance with the Escrow Agreement, and thereafter by the
Indemnifying Parties as provided in Section 8.02 hereof; provided, however,
Sellers, at their option, may pay any indemnity amounts required to be paid
pursuant to Section 8.02 hereof in cash directly to Buyer and require the Escrow
Agent to release to Sellers that number of shares of Buyer Common Stock in the
Escrow Funds having a value equal to the amount of such indemnity payment
actually made to Buyer divided by $16.00 per share. Eighteen (18) months
following the Effective Time and provided no claims by Buyer or any other
Indemnified Party for indemnification pursuant to Section 8.02 are pending, the
Escrow Agent shall release 312,500 shares of Buyer Common Stock (or at the
Sellers' option $5 million in other Escrow Funds, other than the Buyer Notes) in
the Escrow Funds to the Sellers as provided in the Escrow Agreement. On the
fifth anniversary of the Effective Time and provided no claims by Buyer or any
other Indemnified Party for indemnification pursuant to Section 8.02 are
pending, the Escrow Agent shall release all Escrow Funds remaining with the
Escrow Agent to the Sellers as provided in the Escrow Agreement.
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Section 2.08.00 Special Purpose Escrow.
(a) Subject to the terms and conditions of this Agreement, on the
Closing Date, Buyer will deposit the Special Purpose Escrow Funds with the
Escrow Agent in accordance with the terms of this Agreement and the Special
Purpose Escrow Agreement. Upon repayment of the Bridge Financing Note initially
comprising the Special Purpose Escrow Funds, the Buyer and the Escrow Agent
shall cause an amount in cash in immediately available funds equal to the
outstanding principal amount of such note (as determined pursuant to the Special
Purpose Escrow Agreement) to be deposited with the Escrow Agent to replace such
note as Special Purpose Escrow Funds in accordance with the terms of this
Agreement and the Special Purpose Escrow Agreement.
(b) The Special Purpose Escrow Funds shall be disbursed in
accordance with the terms of the Special Purpose Escrow Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby jointly and severally represent and warrant to Buyer that
the following representations and warranties are, as of the date hereof, true
and correct:
Section 3.01.00 Organization. With respect to Melham US and Purico, each
such Seller is a corporation or company limited by shares duly organized,
validly existing and, in the case of Melham US, in good standing under the laws
of its jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.
Section 3.02.00 Enforceability. With respect to Melham US and Purico: (i)
the execution, delivery and performance of this Agreement and of all of the
documents and instruments required hereby from the Sellers are within the
corporate power of such Sellers; and (ii) the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby has been
duly authorized by the Board of Directors, and the shareholders, as applicable,
of such Seller, and no other corporate proceedings on the part of such Seller is
necessary to authorize this Agreement or to consummate the transactions
contemplated herein. With respect to Paul F. Mack, such Seller has full power,
legal right and capacity to execute and
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deliver this Agreement and all of the documents and instruments required hereby
from such Seller and to perform his respective obligations hereunder and
thereunder. This Agreement has been, and all of the other documents and
instruments required hereby to which such Seller is a party will be, duly and
validly executed and delivered by such Seller. This Agreement is, and the other
documents and instruments required hereby will be, when executed and delivered
by the parties hereto, the valid and binding obligations of such Seller,
enforceable against such Seller in accordance with their respective terms
subject to (i) applicable bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium or other similar laws relating
to creditors' rights or creditors' remedies generally; and (ii) general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
Section 3.03.00 Consents and Approvals; No Violation or Conflict by
Sellers. Except for any applicable filing requirements under the HSR Act, no
notice to, filing or registration with, and no permit, authorization, consent or
approval of, any governmental, regulatory or self-regulatory agency is necessary
or is required to be made or obtained by such Seller in connection with the
execution and delivery of this Agreement by such Seller or for the consummation
by such Seller of the transactions contemplated hereby. Assuming that the
Required Consents have been obtained, the execution, delivery and performance of
this Agreement by such Seller and the consummation of the transactions
contemplated hereby do not and will not (a) with respect to Melham US and
Purico, conflict with or result in any breach of any provision of the Articles
of Incorporation, Bylaws, Memorandum of Association or organizational documents
of such Seller, (b) conflict with or violate any Law, judgment, order, writ,
injunction or decree binding on such Seller, or any of its or his respective
properties or assets, or (c) conflict with or result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, modification or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, agreement or other instrument or
obligation to which such Seller is a party or by which such Seller or any of its
or his respective properties or assets may be bound (which would adversely
affect such Seller's ability to consummate the transaction contemplated hereby).
The Sellers shall use their reasonable best efforts (which shall not include the
payment of money, other than that which is currently due and payable, to the
party providing such consent) to obtain, or to cause the Company to obtain, all
Required Consents prior to the Effective Time of Closing.
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Section 3.04.00 Title to the Stock, the Warrants and the Promissory Notes.
Each such Seller owns of record and beneficially good and valid title to the
number of shares, the number or the aggregate principal amount, as applicable,
of the Stock, the Warrants and the Promissory Notes set forth opposite such
Seller's name on Schedule 3.04 hereto, free and clear of any and all liens,
encumbrances, charges, claims, restrictions, pledges or security interests
(other than those arising under the Securities Act or any state's securities
laws or pursuant to this Agreement). Upon delivery of the Stock and the Warrants
to Buyer at the Closing and registration of such securities in the name of Buyer
on the appropriate stock records and upon Buyer's payment of the Purchase Price
therefor, good and valid title to the Stock and the Warrants, free and clear of
all liens, encumbrances, charges, claims, restrictions, pledges or security
interests (other than those arising under the Securities Act or any state's
securities laws or pursuant to this Agreement), will pass to Buyer, except to
the extent the Buyer is a party to fraud or has notice of an adverse claim.
Section 3.05.00 Capitalization. The authorized equity capitalization of
the Company consists of: 50,000 shares of common stock, par value $0.01 per
share, and 250,000 shares of series A preferred stock, par value $0.01 and $100
liquidation preference per share. The Stock represents all of the issued and
outstanding capital stock of the Company, has been duly and validly issued and
is fully paid and non-assessable, and was not issued in violation of any
preemptive or other similar right. All of the Stock was offered and sold in
compliance with all applicable federal and state securities laws and
regulations. Schedule 3.05 describes any agreements to which the Company is a
party, and any agreements to which any Seller is a party, relating to the Stock,
and true and correct copies of such agreements have been delivered to the Buyer.
Sellers shall cause all those agreements listed on Schedule 3.05 hereto to be
terminated immediately prior to the Effective Time of Closing, except as noted
thereon. Except for the Warrants, the Series A Preferred Stock and the
Promissory Notes, there are no outstanding or authorized options, warrants,
purchase rights, conversion rights, exchange rights, or other contracts or
commitments to subscribe for or purchase any capital stock of the Company or
securities convertible into or exchangeable for, or which otherwise confer on
the holder thereof any right to acquire, any capital stock of the Company, nor
is the Company committed to issue any such option, warrant or other right. There
are no outstanding stock appreciation, phantom stock, profit participation or
similar rights with respect to the capital stock of the Company.
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Except as set forth on Schedule 3.05 hereto, there are no voting trusts, proxies
or other agreements or understandings with respect to the voting of any capital
stock of the Company, other than any to which the Buyer is a party.
Section 3.06.00 Organization. Each of the Company and its Subsidiaries is
a corporation or limited liability company, as the case may be, duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, and each has all requisite corporate or
organizational power and authority to own, lease and operate its properties and
to carry on its business as it is now being conducted. Each of the Company and
its Subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to so qualify will not result in a
Material Adverse Effect on the Mack Group, taken as a whole. Schedule 3.06
attached hereto is a true and complete list of all such jurisdictions referred
to in this Section for each of the Company and its Subsidiaries.
Section 3.07.00 Subsidiaries.
(a) Schedule 3.07(a) is a true and complete list of all of the
Company's Subsidiaries. Schedule 3.07(a) accurately sets forth for each such
Subsidiary (i) its name and jurisdiction of incorporation or organization, (ii)
the number of shares of authorized capital stock of each class of its capital
stock or membership interests, (iii) the number of issued and outstanding shares
of each class of its capital stock or membership interests, the names of the
holders thereof and the number of shares or membership interests held by each
such holder and (iv) the number of shares of its capital stock or membership
interests held in treasury (if any). All of the issued and outstanding shares of
capital stock or membership interests of each such Subsidiary have been duly
authorized and are validly issued, fully paid and nonassessable.
(b) Except as set forth on Schedule 3.07(b), giving effect to
consummation of the transactions contemplated by the Goldman Purchase Agreement,
all of the issued and outstanding shares of capital stock or membership
interests of each such Subsidiary are owned of record and beneficially by the
Company or another Subsidiary of the Company, free and clear of any and all
restrictions on transfer (other than restrictions under the Securities Act or
any state's
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securities laws or pursuant to this Agreement), taxes, liens, encumbrances,
charges, pledges, security interests, contracts, commitments, equities, claims
and demands.
(c) Except as set forth on Schedule 3.07(c), there are no
outstanding or authorized options, warrants, purchase rights, conversion rights,
exchange rights, subscription rights or other contracts or commitments that, by
their terms, could require the Company to sell, transfer or otherwise dispose of
any capital stock or membership interests of any of its Subsidiaries, other than
VPI or Greenwood, or that could require any of its Subsidiaries, other than VPI
or Greenwood, to issue, sell or otherwise cause to become outstanding any of its
own capital stock or membership interests. There are no outstanding stock
appreciation, phantom stock, profit participation or similar rights with respect
to any such Subsidiary. There are no voting trusts, proxies or other agreements
or understandings with respect to the voting of any capital stock of any such
Subsidiary, other than any to which the Buyer is a party. Schedule 3.07(c)
attached hereto is a true and complete list of all corporations, limited
liability companies, partnership or other entities, with respect to which the
Company or any of its Subsidiaries has owned or otherwise controlled a majority
of the outstanding voting securities, and all predecessor entities of the
Company and its Subsidiaries (the "Former Subsidiaries") and accurately sets
forth for each Former Subsidiary (i) its name and jurisdiction of incorporation
or organization, (ii) the nature and extent of the Company's or its Subsidiary's
interest in such Former Subsidiary, (iii) the date such interest was disposed of
and (iv) the manner of such disposition. Except as set forth on Schedule
3.07(c), the Company and its Subsidiaries do not own, and have not owned, any
equity interest in any corporate entity except its Subsidiaries and Former
Subsidiaries.
Section 3.08.00 Company Financial Statements. The Company Consolidated
Financial Statements and the Company Consolidating Financial Statements have
been prepared in accordance with GAAP (except as may be indicated in notes
thereto) and fairly present in accordance with GAAP throughout the periods
involved (except to the extent required by changes in GAAP or as described in
notes thereto) the consolidated financial position of the Company and its
consolidated Subsidiaries or the consolidating financial position of the
Company, as applicable, as of the respective dates thereof or for the respective
periods set forth therein and the consolidated or consolidating, as applicable,
results of its or their, as applicable, operation and cash flow from the periods
set forth therein. Except as set forth on the Company
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Consolidating Financial Statements or on Schedule 3.08, the Company does not own
any assets other than shares of capital stock of Melham, Inc., which consist of
425,000 shares of common stock, par value $0.01 per share, 539,978 shares of
Senior Preferred Stock, par value $0.01 and $20 liquidation preference per
share, and 548,296 shares of Junior Preferred Stock, par value $0.01 and $20
liquidation preference per share.
The shares of common and preferred stock of Melham, Inc. owned by the
Company represent all of the issued and outstanding capital stock of Melham,
Inc., and, except in respect of such preferred stock, Melham, Inc. has no
outstanding options, warrants, purchase rights, conversion rights or similar
rights for the issuance, sale or transfer of the capital stock of Melham, Inc.
The common and preferred shares of Melham, Inc. owned by the Company have been
duly and validly issued, are fully paid and non-assessable and were not issued
in violation of any preemptive or other similar rights, all such shares were
offered and sold in compliance with all applicable federal and state securities
laws and regulations.
Section 3.09.00 Melham, Inc. The Melham, Inc. Financial Statements have
been prepared in accordance with GAAP (except as may be indicated in notes
thereto) and fairly present in accordance with GAAP throughout the periods
involved (except to the extent required by changes in GAAP or as described in
notes thereto) the consolidating financial position of Melham, Inc. as of the
respective dates thereof or for the respective periods set forth therein and the
consolidating results of its operation and cash flow from the periods set forth
therein. Except as set forth on the Melham, Inc. Financial Statements or on
Schedule 3.09, Melham, Inc. does not own any assets other than shares of capital
stock of Mack, which, after giving effect to consummation of the transactions
contemplated by the Goldman Purchase Agreement, consist of 425,000 shares of
common stock, par value $0.01 per share, 539,978 shares of 13% Senior Preferred
Stock, par value $0.01 and $20 liquidation preference per share, and 548,296
shares of 14% Junior Preferred Stock, par value $0.01 and $20 liquidation
preference per share. Except as set forth in Schedule 3.09 and after giving
effect to consummation of the transactions contemplated by the Goldman Purchase
Agreement, the shares of common and preferred stock of Mack owned by Melham,
Inc., represent all of the issued and outstanding capital stock, options,
warrants, purchase rights, conversion rights and similar rights for the
issuance, sale or transfer of the capital stock of Mack. Such shares of capital
stock and warrants have been duly and validly issued, are fully paid and
non-assessable and were not issued in violation of any preemptive or
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other similar rights. All of such shares of capital stock and warrants were
offered and sold in compliance with all applicable federal and state securities
laws and regulations.
Section 3.10.00 Mack Financial Statements; PCP Financial Statements. The
Mack Financial Statements have been prepared in accordance with GAAP (except as
may be indicated in notes hereto) and fairly present in accordance with GAAP
throughout the periods involved (except to the extent required by changes in
GAAP or as described in notes thereto) the consolidated financial position of
Mack and its consolidated Subsidiaries as of the respective dates thereof or for
the respective periods set forth therein and the consolidated results of their
operation and cash flow from the periods set forth therein. The PCP Financial
Statements have been prepared in accordance with GAAP (except as may be
indicated in notes thereto) and fairly present in accordance with GAAP
throughout the periods involved (except to the extent required by changes in
GAAP or as described in notes thereto) the financial position of PCP as of the
respective dates thereof or for the respective periods set forth therein and the
results of its operation and cash flow from the periods set forth therein. PCP
owns no Subsidiaries.
Section 3.11.00 Authority; Enforceability; Consents and Approvals; No
Violation or Conflict by Mack Group.
(a) The execution, delivery and performance by each of the Company
and its Subsidiaries of all of the documents and instruments required hereby to
which it is a party are within the corporate or organizational power, as the
case may be, of each such entity, and have been duly and validly authorized by
all necessary actions by the boards of directors, or shareholders thereof, as
applicable. Each of the documents and instruments required hereby to which the
Company or any of its Subsidiaries is a party will be duly and validly executed
and delivered by each such entity prior to Closing. Each of the documents and
instruments required hereby to which the Company or any of its Subsidiaries is a
party will be, when executed and delivered by the parties thereto, the valid and
binding obligations of each such entity, enforceable against each such entity in
accordance with its terms subject to (i) applicable bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other
similar laws relating to creditors' rights or creditors' remedies generally; and
(ii) general principles of equity (regardless of whether enforcement is sought
in a proceeding at law or in equity).
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(b) Except for any applicable filing requirements under the HSR Act,
no notice to, filing or registration with, and no permit, authorization, consent
or approval of, any governmental, regulatory or self-regulatory agency is
necessary or is required to be made or obtained by the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement or
for the consummation by the Company or any of its Subsidiaries of the
transactions contemplated hereby, except for such notices, filings,
registrations, permits, authorizations, consents or approvals, the failure of
which to be obtained would not reasonably be likely to have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole.
(c) Assuming that the Required Consents have been obtained and
subject to the last statement made on Schedule 1.93, the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (a) conflict with or result in any
breach of any provision of the Articles of Incorporation or bylaws of the
Company or any of its Subsidiaries, (b) conflict with or violate any Law,
judgment, order, writ, injunction or decree binding on the Company or any of its
Subsidiaries or any of their respective properties or assets or (c) conflict
with or result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, modification or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective properties or assets may be bound,
including without limitation the Contracts identified on Schedule 3.18, other
than those notes, bonds, mortgages, indentures, licenses, contracts, agreements
or other instruments the breach of or default under which would not reasonably
be likely to result in a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole.
Section 3.12.00 No Adverse Change. Except as set forth in Schedule 3.12 or
as contemplated by this Agreement, since December 31, 1997, there has not been:
(a) any change in the business, financial condition or results of operations of
the Company or any of its Subsidiaries that could reasonably be expected to
result in a Material Adverse Effect on the Mack Group taken as a whole; (b) any
loss, damage, condemnation or destruction to any of the
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properties of any member of the Mack Group materially adversely affecting the
business or properties of any member of the Mack Group (whether covered by
insurance or not); (c) any material increase, other than in the ordinary course
of business, in the rates of pay of any of the employees of any member of the
Mack Group; (d) any labor dispute or disturbance, litigation, work stoppage or
other event or condition that could have an effect similar to a labor dispute,
disturbance, work stoppage or litigation and that has had or could reasonably be
expected to have a Material Adverse Effect on the Company or any of its
Subsidiaries; (e) any indebtedness for borrowed money or capitalized leases by
the Company or any of its Subsidiaries other than in the ordinary course of
business; (f) any mortgage, pledge, lien or encumbrance made on any of the
properties or assets of the Company or any of its Subsidiaries, except for
Liens, matters to be released by the Real Estate Releases listed on Schedule
1.85 hereto, and Permitted Property Conditions, or any of the foregoing that
have been fully and completely released since such date; (g) any sale, transfer
or other disposition of assets of the Company or any of its Subsidiaries other
than in the ordinary course of business and other than dispositions of obsolete
equipment, furniture and fixtures; or (h) any change in the methods of
accounting or accounting practices of any Mack Group entity. Since December 31,
1997, neither the Company nor any of its Subsidiaries nor any of the Sellers has
adopted or taken any action in contemplation of any plan of liquidation,
dissolution or merger involving the Company or any of its Subsidiaries.
Section 3.13.00 No Litigation. Except as listed in Schedule 3.13 attached
hereto, there is no litigation, arbitration proceeding, governmental
investigation or action of any kind pending or, to the Knowledge of the Sellers,
proposed or threatened (a) against any Seller or the Company or any of its
Subsidiaries, (b) relating to the business, assets, properties or products of
any Seller or the Company or any of its Subsidiaries or (c) that seeks
restraint, prohibition, damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby. Except
for the three (3) matters identified with an asterisk (*) on Schedule 3.13 which
are subject to the last paragraph of Schedule 3.13, the matters listed on
Schedule 3.13, if decided in a manner adverse to any Seller or the Company or
any of its Subsidiaries, have not had and could not reasonably be expected to
have a Material Adverse Effect on any Seller or on the Company or any of its
Subsidiaries.
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Section 3.14.00 Title to and Sufficiency of Assets. The Mack Group owns
good and valid title to the Assets (other than the Real Property) as constituted
as of the date hereof (excluding, for purposes of this sentence, Assets held
under leases or licenses), and good and marketable title to the Real Property
owned by the Mack Group as constituted as of the date hereof, in each case, free
and clear of any and all mortgages, liens, encumbrances, charges, claims,
restrictions, pledges or security interests, except the Permitted Liens and
Permitted Property Conditions and matters to be released by the Real Estate
Releases listed on Schedule 1.85 hereto and liens on personal property securing
obligations not exceeding $50,000. The Assets include all tangible and
intangible assets, contracts and rights necessary or required for the operation
of the businesses of the Mack Group in accordance with present practice.
Section 3.15.00 Bank Accounts; Powers of Attorney. The Bank Accounts
constitute all checking accounts, savings accounts, custodial accounts,
certificates of deposit, safe deposit boxes or other similar accounts maintained
by the Mack Group. Schedule 1.08 is a true and complete listing of the Bank
Accounts, and sets forth for each Bank Account: the bank name and branch
address; the account number; and the name of each person with signature
authority for each such account. Except as set forth on Schedule 1.08, the
members of the Mack Group have granted no outstanding powers of attorney to any
person with respect to any matter.
Section 3.16.00 Condition of Equipment. Except as set forth on Schedule
3.16, (a) the Equipment, taken as a whole, is (i) in working condition and
repair, subject to ordinary wear and tear, and (ii) capable of producing work of
the same quality as has been acceptable to the specific customers served, and
(b) to the Knowledge of the Sellers, no required rebuilds or unbudgeted major
repairs of the Equipment are necessary within the 12 months following the
Effective Time of Closing.
Section 3.17.00 Books and Records. The Books and Records are complete and
correct in all material respects and the Company has made available to the Buyer
for examination the originals or true and correct copies of all documents which
the Buyer and Buyer's counsel have requested in connection with the transactions
contemplated by this Agreement.
Section 3.18.00 Contracts. Schedule 3.18 attached hereto is a true and
complete list of all of the Contracts (and in the case of oral contracts with
Significant Customers a brief summary of the terms of payment, target selling
price, length of relationship, 1998 annual volume, special
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pricing arrangements, and any paper over-consumption and under-consumption
arrangement) that constitute: (a) a lease of any personal property with
aggregate annual rental payments in excess of $100,000 or remaining term in
excess of one year; (b) an agreement to purchase or sell a capital asset for a
price in excess of $100,000; (c) an agreement relating to the borrowing or
lending of money other than accounts payable or accounts receivable arising in
the ordinary course of business; (d) a guaranty, contribution agreement,
support, indemnity, letter of credit or other agreement that includes any
contribution, support or indemnity obligation that may exceed $100,000; (e) an
agreement limiting in any respect the ability of any member of the Mack Group to
compete in any line of business or with any person; (f) a license or franchise
agreement involving payments by, on behalf of or to any Mack Group entity in
excess of $100,000; (g) an agreement pursuant to which any Mack Group entity may
be expected to supply goods or to perform services in excess of $100,000; (h) an
agreement pursuant to which any Mack Group entity may be obligated to pay for
goods and services to be delivered or performed with a value in excess of
$100,000; (i) a collective bargaining agreement or other labor agreement or
employment agreement (other than at will employment agreements) or consulting
agreement pursuant to which services are rendered to a Mack Group entity; (j) an
agreement pursuant to which any Mack Group entity may become obligated to pay
any amount or receive any benefit in respect of indemnification obligations,
purchase price adjustments or otherwise in connection with any (i) acquisition
or disposition of assets having a value in the aggregate in excess of $100,000
other than sales or purchases of inventory in the ordinary course of business,
(ii) merger, consolidation or other business combination, or (iii) series or
group of related transactions or events of a type specified in clauses (i) or
(ii) above; and (k) any other agreement involving an amount over its term in
excess of $100,000 or pursuant to which any member of the Mack Group has any
obligation or Liability which exceeds $100,000. Schedule 3.18 includes a true
and correct copy of the Memorandum of Understanding between Carden Jennings
Publishing Company, Ltd. and The Mack Printing Group, dated April 14, 1997. The
Company has delivered to the Buyer true and complete copies of each Contract
listed on Schedule 3.18. Each contract listed on Schedule 3.18 (i) is in full
force and effect and (ii) is enforceable against the applicable Mack Group
entity in accordance with its terms, subject to (i) applicable bankruptcy,
insolvency, fraudulent conveyance, fraudulent transfer, reorganization,
moratorium or other similar laws relating to creditors' rights or creditors'
remedies generally; and (ii) general
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principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). Each member of the Mack Group has performed
and, to the Knowledge of the Sellers, every other party has performed, each
material term, covenant and condition of each of the Contracts identified on
Schedule 3.18 that is to be performed by any of them at or before the date
hereof. No event has occurred that would, with the passage of time or compliance
with any applicable notice requirements, constitute a default by any member of
the Mack Group or, to the Knowledge of the Sellers, any other party under any of
the Contracts identified on Schedule 3.18. To the Knowledge of the Sellers, no
party to any of the Contracts identified on Schedule 3.18 has advised any Mack
Group entity of its intention to cancel, terminate or exercise any option under
any of the Contracts. Sellers shall use reasonable best efforts to provide Buyer
with evidence, reasonably satisfactory to Buyer, of the termination of all
liabilities and obligations for borrowed monies identified on Schedule 3.18
prior to the Effective Time of Closing. Except for agreements with customers, no
member of the Mack Group is a party to any oral contract with aggregate payment
obligations or revenues of $100,000 or more.
Section 3.19.00 Real Property. Schedule 1.86 is a true and correct list of
all of the Real Property. With respect to each Major Facility and, where
representations and warranties set forth below are expressly applicable to
leased Real Property, with respect to each such parcel of Real Property, except
as set forth on Schedule 1.86:
(a) there are no pending or, to the Knowledge of the Sellers,
threatened condemnation proceedings, lawsuits or administrative actions relating
to the parcel;
(b) with respect to each parcel of Real Property leased by any
member of the Mack Group (the member of the Mack Group leasing such parcel being
referred to herein as the "Mack Tenant"), the lease (the "Real Property Lease")
under which such Real Property is leased is in full force and effect, the Mack
Tenant has received no notice of any default from the landlord or its agents,
and, after reasonable inquiry of the Mack Tenant, to the Knowledge of Sellers,
there exists no condition, event, act or omission which, with or without notice,
lapse of time or both, would constitute a default under the Real Property Lease.
The Company has made available to the Buyer a copy of such Real Property Lease,
and such copy is true, correct and complete in all material respects, and
includes any and all modifications and amendments thereof. The interest of the
Mack Tenant in and under such Real Property Lease is
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unencumbered and subject to no present Real Property Title Exception, except for
any Permitted Property Condition. To the Knowledge of Sellers, after reasonable
inquiry of the Mack Tenant and the Company, neither the Mack Tenant nor the
Company has received notice of any claim, contest, dispute, action, or
threatened action at law or in equity otherwise that could reasonably be
expected to (i) in the case of a Major Facility or a Leased Warehouse,
materially and adversely affect operations or materially impair the
marketability of title to such parcel, or (ii) in the case of any other parcel
of Real Property subject to a Real Property Lease, to have a Material Adverse
Effect upon the Mack Group taken as a whole. Schedule 1.86 completely and
accurately sets forth the termination date, rental rate and, where applicable,
current charges assessed by the lessor for maintenance, taxes, and other
operating expenses applicable to the Real Property Lease;
(c) the legal description for the parcel (together with the
appurtenances thereto) contained in the deed or deeds thereof or lease therefor
is not materially different than the description of the real property used in
connection with the operation of the facility located on such parcel.
Notwithstanding the foregoing, the Buyer acknowledges that the rear loading dock
of the facility operated by PCP at 1323 Greenwood Road, Pikesville, Maryland
(the "Pikesville Site") is served by a driveway located in part on the property
adjoining such facility to the north, and that the existence of such driveway on
such adjoining property shall not be deemed a violation of the Sellers'
representations and warranties under this Section 3.19;
(d) to the Knowledge of the Sellers, and except as shown on the
Property Survey for the Pikesville Site, which the Buyer has received and
accepted, (i) the buildings and improvements on such parcel are located within
the boundary lines of the described parcels and do not encroach on any easement
that may burden the parcel except to an extent that would constitute a Permitted
Property Condition, (ii) no building or improvement on any neighboring parcel
encroaches on such parcel except to an extent that would constitute a Permitted
Property Condition, (iii) and the building and improvements on such parcel
comply with all applicable setback requirements, parking requirements, zoning
laws and ordinances. Notwithstanding the foregoing, the Buyer acknowledges that
one or more of the Major Facilities may be improved with a structure or
structures that are legal non-conforming structures under the provisions of the
zoning ordinance applicable thereto. Buyer further acknowledges that the
building at 300 West
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Chestnut Street, Ephrata, Pennsylvania (the "Ephrata Site") violates certain
restrictive covenants applicable to the Ephrata Site. Such violations shall not
be deemed a violation of Sellers' representations and warranties herein.
The Sellers have received no notice that the zoning and Permits in
place for such parcel are inadequate to permit the use presently being made of
the parcel, and to the Knowledge of the Sellers, there is no pending or
threatened challenge to any zoning designation or Permit affecting the parcel
that could reasonably be expected to materially and adversely affect operations
or materially impair the marketability of title to such parcel.
(e) no parking or storm water drainage or management facilities
necessary to satisfy applicable zoning requirements or private restrictions of
record, or necessary for the continuation of the current use of the parcel as
presently operated, are located off the parcel and serve such parcel, except
pursuant to permanent, appurtenant easements benefiting the parcel or dedicated
to the public. Notwithstanding the foregoing, in connection with the present
operations at the Ephrata Site, some parking for the site is provided on the
land of a church facility across the street from the Real Property, pursuant to
an informal oral agreement with the church, as described in the report prepared
by Don Blair entitled "Mack Printing Group, Inspection, January 1999." The use
of such parking for the site shall not be considered a violation of the Sellers'
representations and warranties hereunder;
(f) the buildings on the parcel are not located within any flood
plain and the parcel is not subject to any similar type restriction for which
any Permits necessary to the use thereof have not been obtained;
(g) all facilities have received all approvals of governmental
authorities (including Permits) required in connection with the ownership,
occupation or present operation thereof and are currently being operated and
maintained in accordance with applicable Law;
(h) except for the permitted exceptions listed on Schedule 1.76,
there are no leases, subleases, licenses, concessions or other agreements,
written or oral, granting to any party or parties the right of use or occupancy
of any portion of the parcel (the representations and warranties in this
subparagraph are applicable to Real Property leased by any member of the Mack
Group). Notwithstanding the foregoing, Mack subleases approximately 11,500
square feet of the New York Sales Office at 708 third Avenue, New York, New
York, to Scott Jeffries
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Associates, Inc., under a Sublease dated August, 1995, at the rate of $2,500 per
month. The initial term of such sublease expired September 30, 1998, and such
subtenant has exercised its right to extend the term of such sublease for two
additional years;
(i) no member of the Mack Group has granted any options or rights of
first refusal that remain executory to purchase the parcel, or any portion
thereof or interest therein, and no member of the Mack Group occupying such
parcel has granted, and to the Knowledge of the Sellers, after reasonable
inquiry of the member of the Mack Group occupying such parcel, there are no
unrecorded restrictions, covenants, condition, or agreements, affecting such
parcel, except Permitted Property Conditions, and except matters of record in
the zoning or planning office of the jurisdiction in which such parcel is
located (the representations and warranties in this subparagraph are applicable
to Real Property leased by any member of the Mack Group);
(j) there are no parties (other than members of the Mack Group) in
possession of all or part of the parcel, other than tenants under any leases or
subleases disclosed in Schedule 1.86 or Section 3.19(h), who are in possession
of space to which they are entitled (the representations and warranties in this
subparagraph are applicable to Real Property leased by any member of the Mack
Group);
(k) the parcel is supplied with utilities and other services
necessary for the present operation of such facilities, including gas,
electricity, water, telephone, sanitary sewer or septic system, and storm water
management, all of which services are adequate for the present operation of the
facilities on the parcel, and, to the Knowledge of the Sellers, all such
utilities and other services are provided via public roads or via permanent,
irrevocable, appurtenant easements benefiting the parcel or dedicated to the
public; and
(l) each parcel abuts on and has direct vehicular access to a public
road, or has access to a public road via a permanent, irrevocable, appurtenant
easement benefiting the parcel, and access to the property is provided by paved
public right-of-way with adequate duly permitted curb cuts at each driveway on
the parcel.
(m) if the parcel is a Major Facility, improvements on the parcel
and the mechanical and utility systems serving the parcel are in fair condition,
considering the age and use (except as otherwise disclosed in Schedule 3.16).
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Buyer has raised certain objections to matters revealed by the title
examinations performed on the Major Facilities and by the surveys performed for
the Major Facilities (collectively, "Title Objections"). Sellers have undertaken
no obligation to correct any of the Title Objections, and, subject to Sellers'
delivery of the Real Property Releases, Buyer has waived all Title Objections.
The representations and warranties set forth in Subsections (c), (d), (e), (f),
(k), and (l) of this Section 3.19 shall not survive Closing and, notwithstanding
anything in this Agreement to the contrary, shall not be subject to the
indemnity provisions of Section 8.02.
Section 3.20.00 Intellectual Property.
(a) Except as set forth on Schedule 1.50 and except where a failure
to own or have the right to use would not have a Material Adverse Effect on the
Mack Group taken as a whole, to the Knowledge of the Sellers, the members of the
Mack Group own exclusively or have the right to use pursuant to license,
sublicense, agreement or permission all Intellectual Property necessary for the
operation of the businesses of the Mack Group as presently conducted. To the
Knowledge of the Sellers, each material item of Intellectual Property owned by
the Mack Group immediately prior to the Effective Time of Closing will be owned
or available for use by them on identical terms and conditions immediately
subsequent to the Effective Time of Closing, except as may be caused solely by
actions or the status of the Buyer. The members of the Mack Group have, in their
sole discretion, taken action, as deemed by the Mack Group to be necessary
and/or desirable to maintain and protect each item of Intellectual Property that
they own or use. To the Knowledge of the Sellers, each material item of
Intellectual Property used by the Mack Group pursuant to license or other
authorization of a third party is used with the authorization of the licensor or
authorizing party and, except as to those licenses or other authorizations that
are terminable upon a change of control of the licensee and specifically
identified on Schedule 1.50, the execution, delivery and performance of this
Agreement by the Sellers and the consummation of the transactions contemplated
herein will not impair such use, except where such impairment could not
reasonably be expected to have a Material Adverse Effect on the Mack Group taken
as a whole, and except as may be caused solely by actions or the status of the
Buyer.
(b) Except as set forth on Schedule 1.50, the Company and its
Subsidiaries have not received written notice of any unresolved charge,
complaint, claim, demand or notice
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alleging that the Company and its Subsidiaries have interfered with, infringed
upon, misappropriated or otherwise come into conflict with any intellectual
property rights of any third party (including any claim that the Company or any
Subsidiary must license or refrain from using any intellectual property rights
of any third party). To the Knowledge of the Sellers, the Company and its
Subsidiaries do not have any pending claims that a third party has interfered
with, infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property rights of the Mack Group.
(c) Schedule 1.50 identifies each patent, trademark and copyright
registration or other registration that has been issued to the Mack Group with
respect to any of its Intellectual Property, identifies each pending application
or application for registration that any member of the Mack Group has made with
respect to any of its Intellectual Property and identifies each material
license, agreement or other permission that any member of the Mack Group has
granted to any third party with respect to any of its Intellectual Property
(together with any exceptions thereto). The Company has made available to the
Buyer correct and complete copies of all such patents, registrations,
applications, and material licenses, agreements and permissions (as amended to
date). Schedule 1.50 also identifies each registered trade name used by the Mack
Group in the operation of its businesses. Except as set forth on Schedule 1.50,
with respect to each item of Intellectual Property required to be identified
therein:
(i) to the Knowledge of the Sellers, the item is not subject
to any outstanding injunction, judgment, order, decree, ruling or charge; and
(ii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or, to the Knowledge of the
Sellers, is threatened which challenges the legality, validity, enforceability,
use or ownership of the item; and
(iii) except as set forth on Schedule 1.50, neither the
Company nor any of its Subsidiaries has licensed or permitted any third party to
use any such item.
Section 3.21.00 Insurance. (a) Schedule 3.21 attached hereto accurately
sets forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability and worker's
compensation coverage and bond and surety arrangements) to which the Company or
any of its Subsidiaries or Former Subsidiaries has been
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a party, a named insured or otherwise the beneficiary of coverage at any time
since January 1, 1994:
(i) the name, address and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence or other basis) and amount (including
a description of how deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
(b) With respect to each such insurance policy which is still in
effect or under which the Company or any of its Subsidiaries or Former
Subsidiaries has any continuing rights or obligations: (i) the policy is legal,
valid, binding, enforceable and in full force and effect; (ii) the policy will
continue to be legal, valid, binding, enforceable and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby, other than as a result of any action taken by or the status of the
Buyer; (iii) neither the Company nor any of its Subsidiaries nor, to the
Knowledge of the Sellers, any other party to the policy is in breach or default
thereunder (including with respect to the payment of premiums or the giving of
notices), and no event has occurred that, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification
or acceleration under the policy; and (iv) to the Knowledge of the Sellers, no
party to the policy has repudiated any provision thereof. Schedule 3.21
describes any self-insurance arrangements affecting the Company or any of its
Subsidiaries.
Section 3.22.00 Employee Benefit Plans.
(a) Definitions. When used in this Section 3.22:
(i) "Affiliated Entity" means any corporation, trade or
business (whether or not incorporated) that is, along with the Company, a member
of a controlled group of corporations or a controlled group of trades or
businesses, as described in Section 414(b) or (c) of
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the Code or Section 4001(a)(14) of ERISA, or which, with the Company, is treated
as a single employer under the Code or ERISA;
(ii) "Employee Benefit Plan" means any employee pension
benefit plan (as defined in Section 3(2) of ERISA), welfare benefit plan (as
defined on Section 3(1) of ERISA), bonus, stock purchase, stock ownership, stock
options, deferred compensation, incentive, severance, termination or other
compensation or insurance plan or arrangement, or other material employee fringe
benefit plan or arrangement presently maintained, or contributed to, by the
Company or any Affiliated Entity.
(iii) "Employee" means any person employed by the Company or
an Affiliated Entity at the Effective Time of Closing. Any person who has ceased
employment with the Company or an Affiliated Entity before the Effective Time of
Closing shall not be an Employee for purposes of this Agreement, even if such
person has rights under an Employee Benefit Plan as a result of service with the
Company or an Affiliated Entity.
(b) Identification of Plans. Schedule 3.22 includes a complete list
of all Employee Benefit Plans. Each Employee Benefit Plan providing benefits
funded through a policy of insurance is so indicated by the word "insured" in
Schedule 3.22.
(c) Claims Against Employee Benefit Plans. Except as set forth on
Schedule 3.22, no actions, suits or claims (other than routine claims for
benefits) have been filed or, to the Knowledge of the Sellers, are contemplated
or threatened against any Employee Benefit Plan or against the assets of any
Employee Benefit Plan and, to the Knowledge of the Sellers, there is no basis
for any such action, suit or claim.
(d) Prohibited Transactions and Fiduciary Violations. Except as set
forth on Schedule 3.22, to the Knowledge of the Sellers, neither any Affiliated
Entity nor the Company has engaged in any prohibited transaction or breach of
fiduciary responsibility that could subject the Company or any Affiliated Entity
to any material tax or penalty imposed under Section 4975(a) of the Code or
Section 502(i) or 502(l) of ERISA with respect to any Employee Benefit Plan.
(e) Plan Documents. The Company has made available to Buyer a true,
correct and complete copy of each instrument constituting a part of each
Employee Benefit Plan
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or a summary of any such Employee Benefit Plan that is not evidenced by a
written plan document. Such documents include, without limitation, plan
documents, benefit schedules, insurance contracts, trusts and other funding
vehicles and published announcements, policy statements, procedures, summary
plan descriptions, summaries of material modifications and similar instruments
setting forth the provisions of any Employee Benefit Plan. As to each funded
Employee Benefit Plan, the Company has delivered to Buyer the most recent annual
financial report with respect to such plan, any information regarding subsequent
contributions or withdrawals and any subsequent interim report. Each such
financial report is an accurate description of the financial status of the
subject Employee Benefit Plan as of the date thereof, and there have been no
material adverse changes in the financial status of any such Employee Benefit
Plan since the date of the most recent report provided for each plan.
(f) Plan Provision Changes. Except as set forth on Schedule 3.22,
neither the Company nor any Affiliated Entity has made any written or oral,
implied or express representations that are inconsistent with the terms of the
documents described in the preceding paragraph (e). Further, except as set forth
on Schedule 3.22, neither the Company nor any Affiliated Entity has made any
written or oral, express or implied representations regarding the continuation
of any Employee Benefit Plan after the Effective Time of Closing; and except as
set forth on Schedule 3.22, each such Employee Benefit Plan may be amended or
terminated at any time with no obligation to provide any further benefits other
than those accrued to the date of the amendment or termination in the case of
pension benefits or earned and vested to the date of the amendment or
termination in the case of welfare or other benefits.
(g) Tax Status of Certain Plans. Schedule 3.22 specifically
identifies each Employee Benefit Plan that is represented or intended to be a
qualified plan under Code Section 401(a) using the words "Qualified Plan", that
is or is funded through a cafeteria plan under Code Section 125 using the words
"Cafeteria Plan", or that is funded with a trust intended to be a voluntary
employees' beneficiary association under Code Section 501(c)(9) using the term
"VEBA".
(i) With respect to each Employee Benefit Plan so identified
as a Qualified Plan and except as set forth on Schedules 3.22, the IRS has
issued a favorable determination letter to such plan to the effect that the form
of such Qualified Plan (or predecessor
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plan) satisfies the requirements of Code Section 401(a) as specified in such
determination letter. Each Qualified Plan has materially satisfied, in form and
operation, the qualification requirements of Code Section 401(a), and no action
that has been taken or not taken with respect to the Qualified Plan subsequent
to the date of the most recent determination letter has had or is reasonably
expected to have any adverse impact on the continued qualification of the
Qualified Plan through the Effective Time of Closing. The IRS has not revoked
any letter of determination or opinion letter to which reference is made above,
nor has the IRS threatened any such revocation. For this purpose, an operational
defect is material if it can not be corrected under the APRSC program or the VCR
program contained in IRS Rev. Proc. 98-22.
(ii) Except as set forth on Schedules 3.22, each identified
Cafeteria Plan and each related Employee Benefit Plan has been established and
operated in accordance with the applicable requirements of Code Section 125 for
all years subsequent to the establishment of the Cafeteria Plan and up to the
Effective Time of Closing, and with respect to which the Company's and the
Affiliated Entities' tax returns and the Cafeteria Plan's tax returns are open
to audit, has materially satisfied, in form and operation, the requirements of
Code Section 125, and no action that has been taken or not taken with respect to
the Cafeteria Plan has had or is reasonably expected to have any adverse impact
on the Cafeteria Plan's continued satisfaction of such requirements through the
Effective Time of Closing. The IRS has not threatened any denial of the
treatment of the Cafeteria Plan as a cafeteria plan under Code Section 125.
(iii) With respect to each Employee Benefit Plan so identified
as being funded by a VEBA and except as set forth on Schedules 3.22, the IRS has
issued an exemption letter for each such VEBA to the effect that the form of
such VEBA (or predecessor trust) satisfies the requirements of Code Section
501(c)(9). The VEBA has materially satisfied, in form and operation, the
requirements of Code Section 501(c)(9), and no action that has been taken or not
taken with respect to the VEBA subsequent to the date of the most recent
exemption letter has had or is reasonably expected to have any adverse impact on
the continued exemption of the VEBA through the Effective Time of Closing. The
IRS has not revoked any exemption letter to which reference is made above, nor
has the IRS threatened any such revocation.
(h) Funding Status.
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(i) Except as set forth on Schedule 3.22, no "accumulated
funding deficiency" within the meaning of either Code Section 412 or ERISA
Section 302 exists with respect to any Employee Benefit Plan subject to such
sections nor would any such deficiency exist but for the application of an
alternative minimum funding standard. No waiver of the minimum funding standards
imposed by the Code with respect to any such plan has been requested or issued.
(ii) Except as set forth on Schedule 3.22, no unfunded or
uninsured liability with respect to any Employee Benefit Plan or any
entitlement, including, without limitation, any entitlement under any executive
compensation, supplemental retirement or any employment continuity agreement,
other than a Qualified Plan, exists, nor are any actual or contingent reserves
maintained to fund the liabilities of such plans or entitlements; and all
contributions due to be made during the last five years have been made to each
Employee Benefit Plan by the Company and the Affiliated Entities on a timely
basis.
(iii) As to each plan identified in Schedule 3.22 with the
word "insured", all premiums due or payable for coverage through the Effective
Time of Closing have been paid in full, and no such premium is overdue or in its
grace period. Further, except as disclosed in Schedule 3.22, the Company and any
Affiliated Entity have funded each Employee Benefit Plan in accordance with its
terms through the Effective Time of Closing. Any premium stabilization and other
reserve held under such contract is also listed in Schedule 3.22.
(iv) Except as set forth on Schedule 3.22, the fair market
value of the assets of each funded defined benefit pension plan maintained by
the Company or an Affiliated Entity equals or exceeds the actuarial present
value of all accrued benefits under the plan (whether or not forfeitable),
including, without limitation, early retirement subsidies, automatic cost of
living adjustments and all other amounts considered to be benefit liabilities
upon a standard termination of a defined benefit plan subject to Title IV of
ERISA, with such actuarial present value being determined by application of the
actuarial methods and assumptions applied by the plan's enrolled actuary in the
most recent annual valuation of the plan.
(v) Schedule 3.22 discloses any liability for post-retirement
benefits that would be required to be recorded under Financial Accounting
Standards Board Statement No. 106, assuming that the Company or any Affiliated
Entity were subject to such standard and it
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was fully effective as of the Effective Time of Closing.
(i) Government Contract Matters. The Company has not received
reimbursement for any contributions made to, benefits accrued under or other
costs incurred in connection with any defined benefit pension plan under any
provision of any contract with the government of the United States, any agency
thereof, any state or any political subdivision thereof.
(j) Excise Tax Liability and Liens. To the Knowledge of the Sellers,
neither the Company nor any Affiliated Entity (i) has engaged in any transaction
that may result in the imposition on the Company or any Affiliated Entity of any
excise tax under Section 4971, 4972, 4976 through 4980B, 4980D, 4980E and 5000
of the Code, or otherwise incurred a liability for any excise tax, other than
excise taxes that have heretofore been paid or have been accrued, and, in either
case, are fully reflected on the Current Balance Sheets, or (ii) is now, nor at
any time will be by virtue of any action taken prior to the Effective Time of
Closing, subject to a requirement to provide security under Section 401(a)(29)
of the Code, nor shall any asset of the Company or any Affiliated Entity be
subject to a lien by reason of the provisions of Section 412(n) of the Code.
(k) Administrative Agency Matters. Except as identified in Schedule
3.22, there is not any investigation, proceeding, administrative review or other
administrative agency process pending or, to the Knowledge of the Sellers,
contemplated or threatened that could result in the imposition on the Company or
an Affiliated Entity of any penalty or other assessment in connection with any
of the Employee Benefit Plans identified in Schedule 3.22.
(l) Title IV Contingent Employer Liability. Except as identified in
Schedule 3.22, neither the Company nor any Affiliated Entity presently maintains
one or more qualified defined benefit pension plans which are subject to the
provisions of Title IV of ERISA.
(m) Plan Withdrawal/Termination Liability. Neither the Company nor
any Affiliated Entity is a party to any multiemployer plan, as defined in
Section 3(37) of ERISA. Neither the Company nor any Affiliated Entity is now
liable or has potential for liability under Sections 4063 or 4064 of ERISA, and
cannot be treated, whether by reason of the transactions contemplated in this
Agreement or otherwise, as a withdrawing substantial employer under a plan to
which more than one employer makes contributions by application of Section 4068
of
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ERISA. Neither the Company nor any Affiliated Entity has either primary or
secondary liability under the provisions of Section 4204 of ERISA or any
agreement entered into in accordance with the provisions of that Section.
(n) General Compliance with Plan Terms and Applicable Law. The
Company and each Affiliated Entity have operated, and have caused their
appointees and nominees to operate, each and every Employee Benefit Plan
identified on Schedule 3.22 (or improperly omitted from said Schedule) and each
and every plan or arrangement which would be considered an Employee Benefit Plan
if the definition of that term included any plan or arrangement maintained or
contributed to by the Company or an Affiliated Entity within the last five years
before the Closing in a manner which is in material compliance with the terms of
each such Employee Benefit Plan, plan or arrangement and with all Laws
applicable thereto. For this purpose, an operational defect relating to a plan
intended to be qualified under Code Section 401(a) is material if it can not be
corrected under the APRSC program or the VCR program contained in IRS Rev. Proc.
98-22. To the Knowledge of the Sellers, every Employee, every former employee of
the Company or any Affiliated Entity, and every dependent of the foregoing
entitled to continuation of benefit coverage under any employee welfare benefit
plan, has been accorded all of the rights to which such person is entitled as a
matter of the terms of each such Employee Benefit Plan and of Law.
(o) Information with Respect to Employees. The Company has provided
Buyer with the names of each of the Employees and each Employee's current
salary, age, employment date, position and address. Information provided to the
Buyer regarding the costs of benefits and administration of the Employee Benefit
Plans for Employees, former employees, and their spouses, former spouses,
dependents and beneficiaries is accurate and complete.
(p) SERP and Other Retirement Income Obligations. The Company shall
have taken the following action with respect to the Mack Printing Company
Supplemental Executive Retirement Plan ("SERP") and its related trust:
(i) At least two days before the occurrence of a "Change of
Control" (as defined for purposes of the Mack Printing Company Supplemental
Executive Retirement Plan ("SERP") and its related trust), the Company shall
have eliminated the requirement of the SERP and its related trust to fund the
related trust with an amount equal to the then present value
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of all then accrued benefit liabilities under the SERP upon the occurrence or in
connection with such a "Change of Control" and shall have revoked the SERP's
related trust.
(ii) At or prior to Closing, the Company shall have provided
for the cessation of benefit accrual under the SERP conditioned upon, and
effective as of or prior to the Effective Time, of Closing.
(iii) At or prior to Closing, the Company shall have received
the written consent of at least two-thirds of the ten participants in the SERP
to the actions described in clause (i) above, with such consent conditioned on
(A) in the case of the seven currently active employee participants in the SERP,
payment of their benefits earned under the SERP to the Effective Time of the
Closing in a lump sum amount, subject to any applicable tax withholding, equal
to the then present value of such accrued benefits (which the Company represents
will be in the approximate amount of $109,900) and (B) in the case of the three
currently retired participants in the SERP, benefit payments under a specific
payment schedule, in each case in complete satisfaction of all of their benefit
entitlements under the SERP, provided that Buyer commits irrevocably in
individual written agreements with the participants (1) to pay or cause the
Company to pay such present value to the seven currently active employee
participants as soon as practicable after the Closing, and (2) to pay or cause
the Company to continue to pay to the three retired participants currently
receiving retirement benefits the following monthly amounts for their respective
lives, subject to any applicable tax withholding:
Emerson H. Heilman $1,393
Paul F. Mack $7,989
Robert A. Sadler, III $6,525
Buyer also commits irrevocably to pay or cause the Company to continue to pay
the following monthly amounts to the five additional retirees currently
receiving nonqualified retirement benefits listed below for their respective
lives, subject to any applicable tax withholding:
John G. Burroughs $ 117
Charles E. Fessler $ 871
Cyrus S. Fleck $ 655
Walter Kowalick $ 619
John W. Mack $ 2,256
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Notwithstanding anything in this agreement to the contrary, the SERP
participants and the five additional retirees currently receiving nonqualified
retirement benefits listed above shall be considered third party beneficiaries
of this subsection of this Agreement and shall be entitled to enforce the
provisions of this subsection as if expressly named herein as parties to this
Agreement.
(q) ERISA Indemnity Agreement. At or prior to the Closing, that
certain ERISA Indemnity Agreement dated March 27, 1997 between Mack Printing
Company and others shall be terminated.
Section 3. 23.00 Compliance with Law. Except as set forth in Schedule 3.23
attached hereto, the conduct of the businesses of the Company and its
Subsidiaries and their use of the Assets does not violate or conflict with, and
has not violated or conflicted with, any Law, except for such violations or
conflicts that have not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Mack Group taken as a whole. Except for those
Permits that are not material to the operation of the business of the Company
and its Subsidiaries, all Permits required with respect to the conduct of the
businesses of the Company and its Subsidiaries are listed on Schedule 1.74, have
been obtained, are in full force and effect and are being complied with in all
material respects. The Permits will be in full force and effect immediately
following the consummation of the transactions contemplated hereby, other than
as a result of any action taken by or the status of Buyer.
Section 3.24.00 Transactions With Affiliates. Except as set forth in
Schedule 3.24(a) attached hereto, since December 31, 1997, the Company and its
Subsidiaries have not, in the ordinary course of business or otherwise,
purchased, leased or otherwise acquired any material property or assets or
obtained any material services from, or sold, leased or otherwise disposed of
any material property or assets or provided any material services to (except
with respect to remuneration for services rendered as a director, officer,
consultant or employee of the Company or any of its Subsidiaries in the ordinary
course), (i) any employee of the Company or any of its Subsidiaries, (ii) any
Affiliate of the Company or any of its Subsidiaries (other than another member
of the Mack Group), or (iii) any member of the immediate family of any of the
foregoing persons. Except as set forth in Schedule 3.24(b), (i) the Contracts do
not include any obligation or commitment between any Mack Group entity on the
one hand and any of the
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persons included in clauses (i), (ii) or (iii) of the preceding sentence on the
other hand (except for Contracts with employees for services rendered in the
ordinary course at regular wage rates), (ii) the Assets do not include any
receivable or other obligation or commitment from any of the persons included in
clauses (i), (ii) or (iii) of the preceding sentence to any Mack Group entity
and (iii) the liabilities reflected on the Current Balance Sheet do not include
any obligation or commitment to any of the persons included in clauses (i), (ii)
or (iii) of the preceding sentence (except for Contracts with employees for
services rendered in the ordinary course at regular wage rates).
Section 3.25.00 Fees and Expenses of Brokers and Others. Except as set
forth in Schedule 3.25, none of the Company, any of its Subsidiaries or any
Seller (i) is committed to any liability for any brokers' or finders' fees or
any similar fees in connection with the conveyance of the Stock and Warrants or
(ii) has retained any investment banking firm, broker or other intermediary to
act on its or their behalf in connection with the transactions contemplated by
this Agreement. The Sellers shall pay all fees and expenses in connection with
the obligations set forth on Schedule 3.25. All other fees and expenses
(including attorneys' and accountants' fees and any transfer, recording or
release fees and expenses or other special assessments) of the Sellers and any
Mack Group entity in connection with the transactions contemplated herein shall
be paid in full by the Sellers out of their own assets, except as otherwise
provided in Section 9.08.
Section 3.26.00 Tax Matters.
(a) Except as set forth on Schedule 3.26:
(i) the Company and its Subsidiaries are members of the
affiliated group, within the meaning of Section 1504(a) of the Code, of which
the Company is the common parent: such affiliated group files a consolidated
federal income Tax Return; and neither the Company, any of its Subsidiaries, any
of the Former Subsidiaries, nor any entity to whose liabilities the Company or
any of its Subsidiaries or any of the Former Subsidiaries has succeeded, has
ever filed a consolidated federal income Tax Return with (or been included in a
consolidated return of) a different affiliated group;
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(ii) each of the Company, its Subsidiaries and the Former
Subsidiaries has filed or caused to be filed all Tax Returns required to have
been filed by or for it, and all information set forth in such Tax Returns is
correct and complete in all material respects;
(iii) each of the Company, its Subsidiaries and the Former
Subsidiaries has paid all Taxes due and payable by it;
(iv) there are no unpaid Taxes due and payable by the Company,
its Subsidiaries or the Former Subsidiaries or by any other person that are or
could become a lien on any Asset, or otherwise materially adversely affect the
business, properties or financial condition, of the Company, any of its
Subsidiaries or any of the Former Subsidiaries;
(v) each of the Company, its Subsidiaries and the Former
Subsidiaries is in material compliance with, and the records of each of them
contain all information and documents (including, without limitation, properly
completed IRS Forms W-9) necessary to comply with, all applicable Tax
information reporting and Tax withholding requirements;
(vi) each of the Company, its Subsidiaries and the Former
Subsidiaries has collected or withheld all amounts required to be collected or
withheld by it for any Taxes, and all such amounts have been paid to the
appropriate governmental agencies or set aside in appropriate accounts for
future payment when due;
(vii) the Current Balance Sheet and the Company Financial
Statements fully and properly reflect, as of their dates, the liabilities of the
Company and its Subsidiaries and (insofar as the Company or any of its
Subsidiaries may be liable therefor) the Former Subsidiaries for all Taxes for
all periods ending on or before such dates, and the Books and Records of the
Company and its Subsidiaries fully and properly reflect all liabilities for
Taxes for all periods after December 31, 1998;
(viii) none of the Company or its Subsidiaries has granted
(nor is any of them subject to) any waiver currently in effect of the period of
limitations for the assessment of Tax, no unpaid Tax deficiency has been
asserted against or with respect to any of the Company or its Subsidiaries or
(insofar as the Company or any of its Subsidiaries may be liable therefor) the
Former Subsidiaries by any taxing authority, and there is no pending
examination, administrative or judicial proceeding, or deficiency or refund
litigation, with respect to any Taxes
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of the Company or any of its Subsidiaries or (insofar as the Company or any of
its Subsidiaries may be liable therefor) any of the Former Subsidiaries;
(ix) none of the Company or its Subsidiaries has made or
entered into, or holds any asset subject to, a consent filed pursuant to Section
341(f) of the Code and the regulations thereunder or a "safe harbor lease"
subject to former Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended before the Tax Reform Act of 1984, and the regulations thereunder;
(x) none of the Company or its Subsidiaries is required to
include in income any amount from an adjustment pursuant to Section 481 of the
Code or the regulations thereunder or any similar provision of state Law;
(xi) none of the Company or its Subsidiaries is a party to, or
obligated under, any agreement or other arrangement providing for the payment of
any amount that would be an "excess parachute payment" under Section 280G of the
Code;
(xii) there are no excess loss accounts or deferred
intercompany gains with respect to any member of the affiliated group of which
the Company is the common parent or any subgroup thereof;
(xiii) since April 16, 1997, neither the Company, any of its
Subsidiaries nor any of the Former Subsidiaries has distributed to its
stockholders or security holders stock or securities of a controlled corporation
in a transaction to which Section 355(a) of the Code applies;
(xiv) none of the Company or its Subsidiaries is, or has been
at any time within the last five years, a "United States real property holding
corporation" for purposes of Section 897 of the Code.
(b) Schedule 3.26 describes all material Tax elections, consents and
agreements made by or affecting any of the Company and its Subsidiaries that
will be in effect after the Closing Date, lists all material types of Taxes paid
and Tax Returns filed by or on behalf of the Company and its Subsidiaries for
any period ending after December 31, 1994, expressly indicates each Tax with
respect to which any of them is or has been included in a consolidated, unitary
or combined return, and describes the status of all examinations, administrative
or
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judicial proceedings, and litigation with respect to any Taxes of the Company,
any of its Subsidiaries or any of the Former Subsidiaries.
Section 3.27.00 Environmental Matters.
(a) Except as set forth in Schedule 3.27(a) attached hereto:
(i) the conduct of the business of the Company and its
Subsidiaries and their use of the Real Property or Assets does not materially
violate or conflict with, and has not materially violated or conflicted with,
any Environmental Law;
(ii) to the Knowledge of Sellers, none of the Sellers nor the
Company has received notice that any prior owner of such property or asset or
any tenant, subtenant, prior tenant or prior subtenant thereof has materially
violated any Environmental Law;
(iii) all Permits required with respect to the conduct of the
business of the Company and its Subsidiaries have been obtained, are in full
force and effect and are being complied with in all material respects.
Schedule 1.74 includes a true and complete list of all such Permits. The
consummation of the transactions contemplated herein will not cause the Permits
to cease to be in full force and effect.
(b) Except as set forth in Schedule 3.27(b):
(i) there has been no (A) off-site shipment of any Hazardous
Materials from the Real Property, or (B) use, treatment, storage, disposal, or
release of Hazardous Materials on, under, at, from or in any way affecting any
Real Property, which off-site shipment, use, treatment, storage, disposal or
release would reasonably be expected to give rise to material liabilities or
material obligations under Environmental Laws;
(ii) neither Sellers nor the Company nor any of its
Subsidiaries has received any notices or claims that it is a responsible party
in connection with any claim or notice asserted pursuant to 42 U.S.C. Section
9601 et seq., or any state superfund law, in connection with the Real Property,
the Company or the business of the Company and its Subsidiaries;
(iii) there are no storage tanks present, and no Regulated
Asbestos Containing Material remains in place, on the Real Property; and
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(iv) to the Knowledge of Sellers, there are no "wetlands" (as
that term has ever been defined by the U.S. Army Corps of Engineers or any other
Governmental Authority of competent jurisdiction) on any of the real property
owned, operated or leased by the Company or any of its Subsidiaries.
Section 3.28.00 Orders, Commitments and Returns. All accepted and
unfulfilled orders for the sale of products and the performance of services
entered into by any of the Mack Group entities with third parties and all
outstanding contracts or commitments for the purchase of supplies, materials and
services used or to be used in the businesses of the Mack Group were made in
bona fide transactions in the ordinary course of business. To the Knowledge of
Sellers, except as set forth on Schedule 3.28, as of January 31, 1999, there
were no claims in excess of $25,000 individually or $100,000 in the aggregate,
against any of the Mack Group entities relating to credits, billing errors,
adulterated, misbranded, damaged or otherwise defective products, to return
products by reason of alleged overshipments or otherwise related to the shipment
of goods or provision of services by the Mack Group entities to their customers
that could reasonably be expected to have a Material Adverse Effect on the Mack
Group taken as a whole. No products of any of the Mack Group entities are in the
hands of customers or distributors under a consignment arrangement or other
understanding that such products will be returnable.
Section 3.29.00 Significant Customers. Except as set forth on Schedule
3.29(a), since December 31, 1997, no member of the Mack Group has received
notice of, and to the Knowledge of Sellers there does not exist, any pending or
threatened loss of (a) more than $500,000 of annual sales to Significant
Customers in the aggregate or (b) more than 10% of annual sales to a single
Significant Customer as compared to annual sales to such customer in calendar
year 1997. Consummation of the transactions contemplated by this Agreement will
not conflict with, result in a breach of, or give rise to a right of
termination, of any written contract with a Significant Customer. Except as set
forth on Schedule 3.29(b), to the Knowledge of Sellers, no Significant Customer
that is not a party to a written contract has indicated that it will terminate
its relationship with any member of the Mack Group in the event of a change of
control of the Mack Group or any member thereof. Buyer acknowledges that the
Significant Customers without
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written contracts may terminate their oral contracts or arrangements with the
Mack Group at any time, including as a result of the transactions contemplated
hereby.
Section 3.30.00 Labor Matters.
(a) Except as set forth in Schedule 3.30 attached hereto, with
respect to employees of the Mack Group entities:
(i) to the Knowledge of the Sellers, no executive, key
employee or group of employees has any plans to terminate employment with any of
the Mack Group entities;
(ii) each of the Mack Group entities is, and has been at all
times during the last five years, in compliance in all material respects with
all applicable Laws governing employment and employment practices, terms and
conditions of employment and wages and hours, including without limitation any
such Laws respecting employment discrimination and occupational safety and
health requirements, and none of the Mack Group entities has engaged in any
unfair labor practice;
(iii) there is no unfair labor practice charge or complaint
against any of the Mack Group entities pending or, to the Knowledge of the
Sellers, threatened before the National Labor Relations Board or any other
comparable authority;
(iv) as of the date hereof, no grievance or any arbitration
proceeding arising out of or under collective bargaining agreements is pending
and, to the Knowledge of the Sellers, no claims therefor exist or have been
threatened; and
(v) there is no litigation, arbitration proceeding,
governmental investigation, administrative charge, or action of any kind pending
or, to the Knowledge of the Sellers, proposed or threatened against any of the
Mack Group entities relating to employment, employment practices, terms and
conditions of employment, wages and hours, or the safety and health of
employees.
(b) Except as described in Schedule 3.30 attached hereto, none of
the Mack Group entities has any collective bargaining relationship or duty to
bargain with any Labor Organization, and none of the Mack Group entities has
recognized any Labor Organization as the collective bargaining representative of
any of its employees. To the Knowledge of Sellers, no
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organizational effort seeking recognition by any Labor Organization is active or
threatened at any facility of any Mack Group entity.
(c) No Mack Group entity has received notice of, and to the
Knowledge of Sellers there has not been, any demand by a Labor Organization for
a collective bargaining agreement with terms materially less favorable than the
existing collective bargaining agreement with respect to such Labor
Organization.
Section 3.31.00 Year 2000 Compliance. The Company has (i) initiated a
review and assessment of all areas within the business and operations of the
Mack Group (including those affected by suppliers, vendors and customers) that
could be adversely affected by the "Year 2000 problem" (that is, the risk that
computer applications used by any Mack Group entity may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior to
and any date after December 31, 1999), (ii) developed a plan and time line for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan in accordance with that timetable. Based on the foregoing,
all computer applications of the Mack Group that are material to their business
and operations are reasonably expected on a timely basis to be able to perform
properly date-sensitive functions for all dates (that is, be "Year 2000
Compliant") on or prior to October 31, 1999.
Section 3.32.00 Absence of Undisclosed Liabilities. Except as set forth on
Schedule 3.32, the Company is not subject to any Liability except as set forth
on or reflected or reserved against in the consolidating balance sheet of the
Company as of December 31, 1998 included in the Company Consolidating Financial
Statements. Except as set forth on Schedule 3.32, Melham, Inc. is not subject to
any Liability except as set forth on or reflected or reserved against in the
consolidating balance sheet of Melham, Inc. as of December 31, 1998 included in
the Melham, Inc. Financial Statements. The Mack Group entities are not, as of
the date hereof, and will not be, as of the Effective Time of Closing, subject
to any Liability that (a) is not reflected on the Current Balance Sheet or the
Closing Financial Statements, as applicable, (b) was not incurred in the
ordinary course of business, (c) is not listed on a schedule attached hereto, or
(d) does not arise from a Contract.
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Section 3.33.00 Accuracy of Information. Neither Seller's representations
and warranties in Article III or Sections 5.11 and 5.12 of this Agreement nor
any of the Schedules attached hereto that pertain to Article III or the Exhibits
are untrue in any material respect.
Section 3.34.00 Private Placement.
(a) Each Seller understands that the shares of Equity Consideration
and the Buyer Notes (collectively the "Buyer Securities") being issued pursuant
to this Agreement have not been registered under the Securities Act, and the
Buyer Securities are being offered and sold under an exemption from registration
provided by the Securities Act in reliance, in good faith, upon the
representations and warranties of such Seller contained in this Section 3.34.
(b) Buyer has made available to each Seller Buyer's Annual Report on
Form 10-K for the year ended June 30, 1998, Buyer's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998 and Buyer's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1998, and the Buyer's Notice of
1998 Annual Meeting and Proxy Statement and (such documents are herein
collectively referred to as the "Buyer Information"). No Seller has been
furnished by Buyer with any offering literature, leaflet, public promotional
meeting, circular, newspaper or magazine article, radio or television
advertisement, or any other form of general advertising.
(c) Each Seller is able to (i) bear the economic risk of its
investment in the Buyer Securities and (ii) hold the Buyer Securities for an
indefinite period of time.
(d) Each Seller understands the business in which Buyer is engaged
and has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of his investment in the Buyer
Securities and of making an informed investment decision with respect thereto.
Each Seller has obtained sufficient information to evaluate the merits and risks
of its investment and to make such a decision.
(e) In making its decision to invest in the Buyer Securities, each
Seller has relied upon independent investigations made by it and by its
professional advisors and upon the representations of Buyer set forth in Article
IV hereof. Each Seller and its advisors have been given the opportunity to
obtain information and to examine this Agreement, including the representations
of Buyer set forth in Article IV, and the exhibits hereto and to ask questions
of,
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and to receive answers from, Buyer or any person acting on its behalf concerning
the Buyer Securities, Buyer and terms and conditions of this investment, and to
obtain any additional information to verify the accuracy of any information
previously furnished. All such questions have been answered to such Seller's
full satisfaction.
(f) Each Seller confirms that neither Buyer nor any of its
affiliates or agents have made any representations or warranties (oral or
written) concerning such Seller's investment in the Buyer Securities, Buyer, its
business, prospects or anticipated financial results, or other matters, other
than as set forth in this Agreement or any Schedule or Exhibit to this
Agreement.
(g) The Buyer Securities are being purchased solely for such
Seller's own account, as principal, for investment and not for the interest of
any other Person or entity and not with a current view to, or in connection
with, any resale, distribution, subdivision, or fractionalization of the Buyer
Securities.
(h) Each Seller understands that:
(i) Each Seller must bear the economic risk of the investment
for an indefinite period of time because the Buyer Securities cannot be resold
unless subsequently registered under the Securities Act and any applicable
state's securities laws or unless an exemption from such registration is
available, as described by an opinion of counsel satisfactory to Buyer.
(ii) The certificate(s) evidencing each of the Buyer
Securities will bear the following legend, except to the extent otherwise
provided in the Registration Rights Agreement attached as Exhibit 5.08 hereto:
THE SECURITIES REPRESENTED BY THIS [CERTIFICATE] [NOTE]
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES OR
"BLUE SKY" LAWS, AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED PURSUANT TO THE PROVISIONS OF SUCH ACT AND
BLUE SKY LAWS OR AN EXEMPTION THEREFROM IS AVAILABLE AS
DESCRIBED BY A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO
CADMUS COMMUNICATIONS CORPORATION.
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(iii) No federal or state agency has passed on or made any
recommendations or endorsements of the investment in the Buyer Securities.
(iv) Each Seller's investment in Buyer involves certain risks
in that, among other factors, (a) successful operation of Buyer may depend on
factors beyond the control of Buyer, and (b) the Buyer Securities may not be
transferred, sold or encumbered unless registered under federal and state
securities laws or an exemption from such registration is available therefor,
and, accordingly, it may not be possible for the Seller to liquidate its
investment in case of imminent need of funds or any other emergency, if at all.
(i) Such Seller was not organized for the specific purpose of
acquiring the Buyer Securities.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers that the following
representations and warranties are, as of the date hereof, true and correct:
Section 4.01.00 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Virginia and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Section 4.02.00 Authority; Enforceability. The execution, delivery and
performance of this Agreement and of all of the documents and instruments
required hereby from the Buyer are within the corporate power of Buyer. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Buyer, and no other corporate proceedings on the part of Buyer are
necessary to authorize this Agreement or to consummate the transactions
contemplated herein. This Agreement has been, and all of the other documents and
instruments required hereby, to which the Buyer is a party will be, duly and
validly executed and delivered by the Buyer. This Agreement is, and the other
documents and instruments required hereby, including, without limitation, the
Buyer Notes and the Bridge Financing Notes, will be, when executed and
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delivered by the parties hereto, the valid and binding obligations of the Buyer,
enforceable against the Buyer in accordance with their respective terms subject
to (i) applicable bankruptcy, insolvency, fraudulent conveyance, fraudulent
transfer, reorganization, moratorium or other similar laws relating to
creditors' rights or creditors' remedies generally; and (ii) general principles
of equity (regardless of whether enforcement is sought in a proceeding at law or
in equity).
Section 4.03.00 Capitalization. The authorized equity capitalization of
the Buyer consists of 16,000,000 shares of common stock, $0.50 par value. As of
the close of business on March 29, 1999, 7,846,263 shares of Buyer Common Stock
were issued and outstanding. All issued and outstanding shares of capital stock
of the Buyer have been duly and validly issued and are fully paid and
non-assessable, and were not issued in violation of any preemptive or other
similar right. Upon consummation of the transactions contemplated hereby, the
shares of Buyer Common Stock issued as the Equity Consideration will be validly
issued, fully paid and non-assessable and will not have been issued in violation
of any preemptive or other similar rights.
Section 4.04.00 Consents and Approvals; No Violation or Conflict by Buyer.
Except for any applicable filing requirements under the HSR Act and the Exchange
Act, no notice to, filing or registration with, and no permit, authorization,
consent or approval of, any governmental, regulatory or self-regulatory agency
is necessary or is required to be made or obtained by Buyer in connection with
the execution and delivery of this Agreement by Buyer or for the consummation by
Buyer of the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Buyer and the consummation of the transactions
contemplated hereby do not and will not (a) conflict with or result in any
breach of any provision of the Articles of Incorporation or Bylaws of Buyer, (b)
conflict with or violate any Law, judgment, order, writ, injunction or decree
binding on Buyer or any of its properties or assets or (c) conflict with or
violate any contract or agreement to which Buyer is a party or by which it is
bound, the breach of which could have a Material Adverse Effect on Buyer or
would adversely affect Buyer's ability to perform its obligations hereunder.
Section 4.05.00 Buyer Reports.
(a) Buyer has filed in a timely manner all forms, reports,
statements and other documents required to be filed with the SEC including,
without limitation, all Annual Reports on
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Form 10-K, all Quarterly Reports on Form 10-Q, all proxy statements relating to
meetings of stockholders (whether annual or special), all other reports or
registration statements and all amendments and supplements to all such reports
and registration statements (all such forms, reports, statements and other
documents being referred to herein, collectively, as the "Buyer Reports"). The
Buyer Reports were prepared in all material respects in accordance with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations promulgated by the SEC thereunder applicable to such
Buyer Reports and did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except for such statements, if any, as have been
modified by subsequent filings.
(b) The consolidated financial statements of Buyer included in the
Buyer Reports filed with the SEC comply in all material respects with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except as may be indicated in the notes
thereto, or, in the case of unaudited financial statements, for normal recurring
year-end audit adjustments or as permitted by Form 10-Q of the SEC) and fairly
present in accordance with GAAP throughout the periods involved (except to the
extent required by changes in GAAP or as described in the notes thereto) the
consolidated financial position of Buyer and its consolidated Subsidiaries as of
the respective dates thereof or for the respective periods set forth therein and
the consolidated results of their operation and cash flows from the periods set
forth therein.
Section 4.06.00 No Adverse Change. Since June 30, 1998, the business of
Buyer has been operated in the ordinary course and there has been no change (and
to the Knowledge of Buyer no fact or condition exists or is contemplated or
threatened that might cause such a change in the future) in the assets or
liabilities, or in the business or condition, financial or otherwise, or in the
results of operations, of Buyer that could reasonably be expected to result in a
Material Adverse Effect on Buyer.
Section 4.07.00 Fees and Expenses of Brokers and Others. Except as set
forth in Schedule 4.07 hereto the Buyer (a) has not had any dealings,
negotiations or communications with any investment banking firm, broker or other
intermediary in connection with the
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transactions contemplated in this Agreement, (b) has not committed to any
liability for any brokers' or finders' fees or similar fees, and (c) has not
retained any investment banking firm, broker or other intermediary to act on its
behalf in connection with the transactions contemplated by this Agreement. The
Buyer shall pay all fees and expenses in connection with the obligations set
forth on Schedule 4.07.
Section 4.08.00 Year 2000 Compliance. The Buyer has (i) initiated a review
and assessment of all areas within the business and operations of its business
(including those affected by suppliers, vendors and customers) that could be
adversely affected by the "Year 2000 problem" (that is, the risk that computer
applications used by Buyer may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999), (ii) developed a plan and time line for addressing the Year
2000 Problem on a timely basis, and (iii) to date, implemented that plan in
accordance with that timetable. Based on the foregoing, all computer
applications of the Buyer that are material to their business and operations are
reasonably expected on a timely basis to be able to perform properly
date-sensitive functions for all dates (that is, be "Year 2000 Compliant") on or
prior to October 31, 1999.
Section 4.09.00 No Litigation. Except as listed in Schedule 4.09 attached
hereto, there is no litigation, arbitration proceeding, governmental
investigation or action of any kind pending or, to the Knowledge of the Buyer,
proposed or threatened (a) against the Buyer or any of its Subsidiaries relating
to the business, assets, properties or products of the Buyer or any of its
Subsidiaries that could have a Material Adverse Effect or (b) that seeks
restraint, prohibition, damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby.
Section 4.10.00 Knowledge of the Buyer. To the Knowledge of the Buyer, as
of the date hereof, none of the representations and warranties of Sellers
included in Article III or Sections 5.11 or 5.12 of this Agreement, or the
Schedules or the Exhibits hereto, is untrue in any material respect.
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ARTICLE V
COVENANTS
Section 5.01.00 Conduct of Business of the Company; Continued Ownership
of Common Stock.
(a) Except as otherwise contemplated by this Agreement, during the
period from the date of this Agreement to the Effective Time of Closing or
earlier termination of this Agreement, the Sellers shall cause the members of
the Mack Group to conduct their operations according to their ordinary and usual
course of business and consistent with past practice, the Sellers shall cause
the members of the Mack Group to use their reasonable best efforts to preserve
intact their business organizations, to keep available the services of their
officers and employees and to maintain existing relationships with licensors,
licensees, suppliers, contractors, distributors, customers and others having
material business relationships with them. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this Agreement,
prior to the Effective Time of Closing or earlier termination of this Agreement,
the Sellers shall ensure that no Mack Group entity will, without the prior
written consent of the Buyer:
(i) amend its Articles of Incorporation or Bylaws;
(ii) authorize for issuance or issue, sell or deliver (whether
through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class or any
other debt or equity securities or membership interests, other than advances
from any member of the Mack Group to another member of the Mack Group;
(iii) split, combine or reclassify any shares of its capital
stock or membership interests, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock or membership interests, or redeem, repurchase or
otherwise acquire any of its securities or any securities of its Subsidiaries;
(iv) participate in any merger, consolidation or share
exchange or other business combination;
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(v) (A) incur or assume any indebtedness for money borrowed
not currently outstanding (except for trade payables or advances under its
outstanding line of credit in the ordinary course of business and consistent
with past practice), (B) assume, guarantee, endorse or otherwise become liable
or responsible for the obligations of any person or otherwise incur any other
contingent liability, other than contracts entered into in the ordinary course
of business, (C) make any loans, advances or capital contributions to, or
investments in, any other person, other than advances from any member of the
Mack Group to another member of the Mack Group, (D) enter into any contract or
agreement other than in the ordinary course of business or in connection with
the transactions contemplated by this Agreement or (E) authorize any single
capital expenditure which is in excess of $75,000 or capital expenditures which
are, in the aggregate, in excess of $500,000 for the Mack Group taken as a
whole, other than capital expenditures as to which a Mack Group entity is
contractually committed as of the date hereof;
(vi) adopt or amend (except as may be required by Law or as
provided in this Agreement) any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock, pension,
retirement, deferred compensation, employment, severance or other employee
benefit agreements, trusts, plans, funds or other arrangements for the benefit
or welfare of any present or former director, officer or employee or the
dependent or beneficiary of any present or former director, officer or employee,
or (except for normal increases in the ordinary course of business that are
consistent with past practices and that, in the aggregate, do not result in a
material increase in benefits or compensation expense to any Mack Group entity)
increase in any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any existing plan and
arrangement (including, without limitation, the granting of stock options, stock
appreciation rights, shares of restricted stock or performance units) or enter
into any contract, agreement, commitment or arrangement to do any of the
foregoing;
(vii) acquire, sell, lease or dispose of any assets outside
the ordinary course of business;
(viii) take any action other than in the ordinary course of
business and in a manner consistent with past practice with respect to
accounting policies or procedures;
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(ix) make any material Tax election (other than elections that
are made consistently with past practice) or settle or compromise any material
Tax liability;
(x) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of business
of liabilities reflected or reserved against in the Current Balance Sheet or
incurred in the ordinary course of business since the respective dates thereof;
(xi) incur any trade accounts payable or other expenses,
including without limitation, any commitment to purchase any Inventory in excess
of the respective levels normal in the ordinary course of business;
(xii) materially alter or accelerate its customary collection
practices;
(xiii) divert or deplete any cash or cash balances in the Bank
Accounts;
(xiv) pledge or hypothecate any of the Assets to secure
indebtedness of any Mack Group entity or any other Person other than Permitted
Liens;
(xv) make any dividend or other distribution to Sellers or
their shareholders or any third party (other than compensation, exclusive of
bonuses and raises, paid in the normal and ordinary course of business of the
Mack Group entity for services previously rendered);
(xvi) waive or release any right of substantial value;
(xvii) change financial or accounting methods or accounting
practices; or
(xviii) agree in writing or otherwise to take any of the
foregoing actions.
(b) Each Seller agrees that (except as otherwise expressly
contemplated herein) it will not sell, transfer, pledge, hypothecate, divide,
assign or otherwise alienate any shares of Stock or Warrants or the Promissory
Notes prior to the Effective Time of Closing.
(c) Sellers covenant that each Mack Group entity will during the
period from the date hereof to the Effective Time of Closing or earlier
termination of this Agreement: (i) at all times keep full and complete Books and
Records, both consistent with past practice; (ii) maintain in full force and
effect the insurance policies heretofore maintained by each Mack
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Group entity (or policies providing substantially the same coverage); (iii) take
such action as may be reasonably necessary to preserve the Assets in working
condition, ordinary wear and tear excepted; (iv) promptly advise Buyer in
writing of any loss or, to the Knowledge of the Sellers, threatened loss of a
Significant Customer or any material reduction in volume or threatened reduction
in volume of a Significant Customer or any material change in the business
prospects, properties or condition, financial or otherwise, of any Mack Group
entity that has occurred or that any Seller reasonably believes will occur; and
(v) conduct the business of each Mack Group entity in compliance with all
material Laws applicable to the Company.
Section 5.02.00 No Solicitation. The Sellers, the Company and its
Subsidiaries shall not, after the date hereof, through the date that this
Agreement is terminated in accordance with Section 7.01 hereof, or the Closing
Date, whichever shall occur sooner, directly or indirectly, through any officer,
director, employee, agent or otherwise, solicit, initiate or encourage
submission of proposals or offers from any person relating to any acquisition or
purchase of all or (other than in the ordinary course of business) a substantial
portion of the assets of, or any equity interest in, any of the Company or its
Subsidiaries or any business combination involving any of the Company or its
Subsidiaries or, participate in any negotiations regarding, or furnish to any
other person any information with respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do or seek any of the foregoing. The Sellers
shall promptly advise the Buyer if any such proposal or offer, or any inquiry or
contact with any person with respect to the Company or any of its Subsidiaries,
is made, shall promptly inform the Buyer of all the terms and conditions
thereof, and shall furnish to the Buyer copies of any such written proposal or
offer and the contents of any communications by the Company in response thereto.
None of the Company and its Subsidiaries shall waive any provisions of any
"standstill" agreement between any of the Company or its Subsidiaries and any
party.
Section 5.03.00 Access to Information. Between the date of this Agreement
and the Effective Time of Closing or earlier termination of this Agreement, the
Buyer and its authorized representatives will be given full and free access to:
(i) the Sellers, together with the Company's legal advisors and accountants; and
(ii) the Books and Records of the Company and its Subsidiaries, provided that
the parties contemplate that such Books and Records will be made
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available in a manner intended to preserve the confidentiality of the
transactions contemplated herein prior to Closing and in accordance with the
Confidentiality Agreement. During the period from the date hereof to the
Effective Time of Closing or earlier termination of this Agreement, the Sellers
shall also provide representatives of Buyer with reasonable access upon request
to other personnel of the Company and its Subsidiaries and to the premises of
the Company and its Subsidiaries; provided, however, that any such access shall
be conducted in a mutually satisfactory manner that is intended to preserve the
confidentiality of the transactions contemplated herein prior to Closing and in
a manner consistent with this Agreement. All such information shall be kept
confidential in accordance with the Confidentiality Agreement.
Section 5.04.00 Best Efforts. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
(which shall not include the payment of money, other than that which is
currently due and payable) to take, or cause to be taken, all action, and to do,
or cause to be done, all things necessary, proper and advisable under applicable
Law (including, without limitation, the HSR Act), necessary to consummate and
make effective the transactions contemplated by this Agreement. In case at any
time after the Effective Time of Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, each Seller and its
respective officers and directors and the proper officers and directors of the
Buyer shall take all such necessary action. The Sellers and the Buyer will
execute any additional instruments necessary to consummate the transactions
contemplated hereby.
Section 5.05.00 Public Announcements. The Buyer and the Sellers shall
consult with each other before the issuance of any press release or the making
of any other public statement with respect to this Agreement or any of the
transactions contemplated herein. Neither the Buyer nor any Seller nor the
Company nor its Subsidiaries shall issue any such press release or make any such
public statement prior to such consultation or as to which the Buyer or the
Sellers reasonably object, except as may be required by Law or by obligations
pursuant to any listing agreement with any national securities exchange or
inter-dealer quotation system.
Section 5.06.00 Confidentiality Agreement. Notwithstanding the execution
of this Agreement, except as modified by Section 5.05 above, the Confidentiality
Agreement shall remain in full force and effect through the Effective Time of
Closing, at which time the Confidentiality Agreement shall terminate and be of
no further force and effect.
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Section 5.07.00 HSR Waiting Period. Neither the Sellers nor the Buyer
shall request early termination of the HSR Waiting Period.
Section 5.08.00 Registration of Equity Consideration. Buyer will use its
best efforts to cause all shares constituting the Equity Consideration received
by Sellers to be registered for resale under the Securities Act in accordance
with the Registration Rights Agreement in the form attached as Exhibit 5.08
hereto.
Section 5.09.00 Certain Labor Matters. During the period from the date
hereof to the Effective Time of Closing or earlier termination of this
Agreement, the Sellers shall promptly notify the Buyer and keep Buyer informed,
to Buyer's reasonable satisfaction, of any developments or changes relating to,
and the status of any negotiations relating to, the collective bargaining
agreements identified on Schedule 3.30. The Sellers shall provide notice to
Buyer two (2) days prior to Closing that as of such date that no grievance of
arbitration proceeding arising out of or under collective bargaining agreements
is pending and, to the Knowledge of the Sellers, no claims therefor exist or
have been threatened except as set forth on Schedule 3.30 or except as provided
in such notice. Such notice shall be subject to and in accordance with Section
5.13.
Section 5.10.00 Financial Statements. The Sellers shall use their
reasonable best efforts (which shall not include the payment of money, other
than that which is currently due and payable) to assist Buyer to obtain all
financial statements and supporting information, and the unqualified reports of
Ernst &Young LLP relating thereto, required by Rule 3-05 of Regulation S-X
promulgated by the SEC with respect to Buyer's acquisition of the Company,
including without limitation, (a) an audited consolidated balance sheet of the
Company and its Subsidiaries as of December 31, 1997 and the notes thereto and
the related consolidated statements of income and cash flows for the twelve
months ended December 31, 1997 consisting of consolidated statements of income
and cash flows for the nine months ended December 31, 1997 of the Company and
its subsidiaries and consolidated statements of income and cash flows for the
three months ended March 31, 1997 of Melham, Inc. and its Subsidiaries and (b)
the audited consolidated balance sheet of Melham, Inc. and its Subsidiaries as
of December 31, 1996 and the notes thereto and the related audited consolidated
statements of income and cash flows for the year ended December 31, 1996.
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Section 5.11.00 Asbestos.
(a) Prior to Closing, Sellers have entered into a contract with a
contractor reasonably acceptable to Buyer for (i) removal of all material which
is now Regulated Asbestos-Containing Material in the press room, bindery and
boiler room areas of the facility in Easton, Pennsylvania and removal or repair
of damaged RACM in other portions of the Easton, Pennsylvania facility; (ii)
comprehensive asbestos survey of remaining asbestos containing material at the
Easton, Pennsylvania and Baltimore, Maryland facilities; and (iii) preparation
of an operations and maintenance plan for the facility in Easton, Pennsylvania.
(b) This work shall be at Sellers' expense and conducted in
accordance with all applicable or relevant and appropriate Environmental Laws
and industry standards, including but not limited to 40 C.F.R. Part 61, Subpart
M, 40 C.F.R. Part 763 and 29 C.F.R. ss. ss. 1901.1001 and 1926.58.
(c) If, within 90 days after Closing, Buyer discovers Regulated
Asbestos Containing Materials not included in the survey prepared in accordance
with Section 5.11(a)(ii) that meet the standards for repair or removal in
Section 5.11(a)(i) or (ii), as applicable, for reasons unrelated to Buyer's
activities or omissions, Sellers shall repair or remove such asbestos in
compliance with Section 5.11(a) and (b).
(d) Any material removed pursuant to Section 5.11(c) shall be
replaced with a suitable non-asbestos containing material of like insulating
capacity at Sellers' expense.
Section 5.12.00 Groundwater Sampling. Prior to the date hereof, Sellers
have sampled water from the existing deep well located at the Easton,
Pennsylvania facility and have had that sample analyzed for volatile organic
compounds. Sellers have provided Buyer with a written report describing the
results of such sampling and analytical results and Buyer acknowledges receipt
of such report.
Section 5.13.00 VPI Taxes. The Sellers shall cause VPI to pay to the
Company upon demand of the Buyer or the Company any portion of the consolidated
federal income Tax (including, without limitation, alternative minimum Tax)
liabilities of the Company and its Subsidiaries attributable to VPI for 1998 and
for the portion of 1999 ending on the Closing Date. For purposes of the
preceding sentence, the federal taxable income (or alternative minimum
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taxable income) of VPI (if any) for each such period shall be the amount shown
as such on its pro forma Tax Return prepared under Section 8.06(b).
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
Section 6.01.00 Conditions Precedent to Obligations of the Buyer. The
obligations of the Buyer to consummate the purchase of the Stock and the
Warrants as contemplated herein are subject to the satisfaction or waiver at or
prior to the Effective Time of Closing of the following conditions precedent:
(a) there shall have occurred no material adverse change in the
business, financial condition or results of operations of the Company and its
Subsidiaries taken as a whole from the date hereof to the Closing Date;
(b) each of the representations and warranties of the Sellers
contained in Article III that are qualified by materiality shall be true and
correct when made and at and as of the Closing Date (except with respect to such
representations and warranties that address matters only as of a particular
date, which shall be true and correct as of such particular date), and each of
the representations and warranties of the Sellers contained in Article III that
are not so qualified shall be true and correct in all material respects when
made and at and as of the Closing Date (except with respect to such
representations and warranties that address matters only as of a particular
date, which shall be true and correct in all material respects as of such
particular date), with the same force and effect as if those representations and
warranties had been made at and as of such time (with such exceptions, if any,
necessary to give effect to events or transactions expressly permitted herein);
provided that if any such representation or warranty is not true and correct as
of the Closing Date solely by reason of events occurring after the date hereof,
the failure of such representation or warranty to be true and correct shall not
result in a failure of the condition set forth in this Section 6.01(b) to be
fulfilled unless such failure of such representation or warranty to be true has
or would reasonably be expected to have a Material Adverse Effect on the Company
or any of its Subsidiaries;
(c) the Sellers and/or the Company, as the case may be, shall, in
all material respects, have performed all obligations and complied with all
covenants necessary to be performed or complied with by them or it on or before
the Closing Date;
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(d) the Sellers and the Company shall have obtained all of the
Required Consents;
(e) any waiting period applicable to the transactions contemplated
herein under the HSR Act shall have been terminated or shall have expired;
(f) the Pre-Closing Transactions referred to in Sections 2.03(a),
(b), (c), (d), (e) and (f) shall have been completed in accordance with the
agreements attached hereto as Exhibits 2.03(b) and 2.03(c), where applicable,
or, if requested by the parties to such agreements, with such changes as agreed
to by such parties with the consent of Buyer, not to be unreasonably withheld;
(g) the Sellers, the Company and the Goldman Entities shall have
consummated the transactions contemplated by the Goldman Purchase Agreement, in
accordance with the Goldman Purchase Agreement;
(h) the Sellers and the Company and its Subsidiaries shall have paid
all withholding Taxes set forth on Schedule 6.01(h) and shall have delivered
satisfactory evidence thereof to the Buyer;
(i) the Buyer shall have received a certificate executed by each of
the chief executive officers of Melham US and Purico, certifying fulfillment of
the matters referred to in paragraphs (a) through (h) of this Section 6.01 and a
certificate executed by Paul F. Mack certifying fulfillment of the matters
referred to in paragraph (a) through (f) of this Section 6.01;
(j) no investigation, suit, action or other proceeding shall be
threatened or pending before any court or governmental agency that seeks
constraint, prohibition, damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby and that
could reasonably be expected to have a Material Adverse Effect on the Company
and its Subsidiaries or the ability of the parties to consummate the
transactions contemplated hereby;
(k) the Buyer shall have received all Releases and Real Estate
Releases, except to the extent permitted pursuant to Section 2.06(a)(vii)
hereof;
(l) the Buyer shall have received the Escrow Agreement and the
Special Purpose Escrow Agreement executed by each Seller and the Escrow Agent;
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(m) the Contracts identified on Schedule 6.01(m) shall have been
terminated pursuant to the Termination Agreements; and
(n) the Buyer shall have received the opinions of Dechert, Price &
Rhoads, United States counsel for the Sellers and the Company, and Dickinson,
Cruikshank & Co., Isle of Man counsel to the Sellers dated the Closing Date, in
the form of Exhibit 6.01(n) hereto.
Section 6.02.00 Conditions Precedent to Obligations of the Sellers. The
obligation of the Sellers to consummate the sale of the Stock and the Warrants
as contemplated herein is subject to the satisfaction or waiver at or prior to
the Effective Time of Closing of the following conditions precedent:
(a) each of the representations and warranties of the Buyer
contained in Article IV that are qualified by materiality shall be true and
correct when made and at and as of the Closing Date (except with respect to such
representations and warranties that address matters only as of a particular
date, which shall be true and correct as of such particular date), and each of
the representations and warranties of the Buyer contained in Article IV that are
not so qualified shall be true and correct in all material respects when made
and at and as of the Closing Date (except with respect to such representations
and warranties that address matters only as of a particular date, which shall be
true and correct in all material respects as of such particular date), with the
same force and effect as if those representations and warranties had been made
at and as of such time (with such exceptions, if any, necessary to give effect
to events or transactions expressly permitted herein); provided that if any such
representation or warranty is not true and correct as of the Closing Date solely
by reason of events occurring after the date hereof, the failure of such
representation or warranty to be true and correct shall not result in a failure
of the condition set forth in this Section 6.01(a) to be fulfilled unless such
failure of such representation or warranty to be true has or would reasonably be
expected to have a Material Adverse Effect; provided, that if the
representations and warranties set forth in Section 4.10 are not true and
correct then Buyer shall deliver at Closing a schedule of all exceptions to such
representations and warranties;
(b) the Buyer shall, in all material respects, have performed all
obligations and complied with all covenants necessary to be performed or
complied with by it on or before the Closing Date;
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(c) any waiting period applicable to the transactions contemplated
herein under the HSR Act shall have been terminated or shall have expired;
(d) the Sellers shall have received a certificate of the Chief
Executive Officer of the Buyer, in form satisfactory to counsel for the Sellers,
certifying fulfillment of the matters referred to in paragraphs (a) through (c)
of this Section 6.02;
(e) no investigation, suit, action or other proceeding shall be
threatened or pending before any court or governmental agency that seeks
constraint, prohibition, damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby and that
could reasonably be expected to have a Material Adverse Effect on the Buyer or
the ability of the parties to consummate the transaction contemplated hereby;
(f) the Sellers shall have received the opinion of Hunton &
Williams, counsel for the Buyer, dated the Closing Date, with respect to such
matters as the Sellers may reasonably request and substantially in the form of
Exhibit 6.02(f) hereto; and
(g) the Buyer shall have delivered resolutions of Buyer's Board of
Directors providing that as of the Closing the number of directors constituting
Buyer's Board of Directors be increased by one (1) director and that Nathu R.
Puri be elected to the Board of Directors of Buyer to fill such vacancy and to
serve until the next annual meeting of shareholders of Buyer.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
Section 7.01.00 Termination. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time prior to the
Effective Time of Closing:
(a) by mutual written consent of the Buyer and the Sellers;
(b) by the Buyer at any time following the Buyer becoming aware that
the Sellers have breached any representation, warranty or covenant contained in
this Agreement in any material respect, if the Buyer has notified the Sellers of
the breach and the breach has continued without cure for a period of thirty (30)
days after the notice of breach; provided that Buyer has not breached any
representation, warranty or covenant contained in this Agreement
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(other than any representation, warranty or covenant contained in Section 4.10)
in any material respect;
(c) by the Sellers at any time following the Sellers becoming aware
that the Buyer has breached any representation, warranty or covenant contained
in this Agreement (other than any representation, warranty or covenant contained
in Section 4.10) in any material respect, if the Sellers have notified the Buyer
of the breach and the breach has continued without cure for a period of thirty
(30) days after the notice of breach; provided that the Sellers have not
breached any representation, warranty or covenant contained in this Agreement in
any material respect;
(d) by the Buyer or the Sellers, if the Effective Time of Closing
shall not have occurred on or before April 5, 1999; or
(e) by the Buyer or the Sellers, if any court of competent
jurisdiction in the United States or other United States governmental body shall
have issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated herein and such
order, decree, ruling or other action shall have become final and nonappealable.
Section 7.02.00 Effect of Termination. If this Agreement is terminated
pursuant to Section 7.01 hereof, this Agreement shall forthwith become void and
have no effect, without any liability on the part of any party or its directors,
officers or shareholders except as provided in this Section; provided, however,
that nothing contained in this Section 7.02 shall relieve any party from
liability for any breach of this Agreement.
Section 7.03.00 Amendment. This Agreement may be amended by action taken
by the Buyer and the Sellers; provided that no amendment to this Agreement shall
be made except by an instrument in writing signed on behalf of all of the
parties.
Section 7.04.00 Extension; Waiver. Subject to Section 5.13 hereof, at any
time prior to the Effective Time of Closing, the parties may (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance with any of the agreements or conditions
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contained herein. Subject to Section 5.13 on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE VIII
INDEMNITIES AND ADDITIONAL COVENANTS
Section 8.01.00 Survival. All representations, warranties, covenants, and
obligations in this Agreement, the Schedules, Exhibits, and any other
certificate or document delivered pursuant to this Agreement will survive the
Closing until the termination of the indemnification provisions contained in
Sections 8.02 and 8.03 hereof with respect to such representation, warranty or
covenant. Buyer acknowledges that Sellers have not made any representations or
warranties other than as set forth in this Agreement or the schedules or
exhibits attached hereto.
Section 8.02.00 Sellers' Indemnity.
(a) Each of the Sellers (collectively, the "Indemnifying Parties")
hereby jointly and severally agrees to indemnify and hold the Buyer and the Mack
Group entities, their officers, directors and shareholders and their successors
and permitted assigns (each, an "Indemnified Party"), harmless from and against,
any and all losses, damages, costs, expenses, liabilities, obligations, claims
of any kind, including, without limitation, reasonable attorneys' fees and other
legal costs and expenses and diminution in value, whether or not involving a
third party claim (hereinafter referred to collectively as "Losses"), that any
Indemnified Party may at any time suffer or incur, or become subject to, as a
result of or in connection with: (i) any breach or inaccuracy of any of the
representations and warranties made by the Sellers in or pursuant to this
Agreement (other than those contained in Section 3.19(c), (d), (e), (f), (k) and
(l); (ii) any failure of the Sellers to (or to cause any of the Company or its
Subsidiaries to) carry out, perform, satisfy and discharge any of their
covenants, agreements, undertakings, liabilities or obligations under this
Agreement or under any of the documents and instruments delivered by the
Company, its Subsidiaries, the Sellers pursuant to this Agreement; (iii) the
Retained Liabilities; (iv) the fees and obligations described on Schedule 3.25;
(v) environmental-related Losses to the extent arising from the operation of the
business or ownership of the Real Property or Assets by the Company or any of
its Subsidiaries prior to the Closing Date, including, without limitation, those
matters listed on Schedule 8.02(a)(v); (vi) Losses arising from the matters set
forth on Schedule 8.02(a)(vi); and (vii) Losses arising from the matters set
forth on Schedule 8.02(a)(vii); provided,
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however, that the Indemnifying Parties shall not be required to indemnify and
hold the Indemnified Parties harmless (A) pursuant to Section 8.02(a)(i) or (ii)
unless such right is asserted (whether or not the Losses have actually been
incurred) by written notice to the Indemnifying Parties within 18 months of the
Effective Time describing with specificity the facts giving rise to the asserted
right (unless such right is asserted pursuant to the representations,
warranties, covenants or obligations made in (x) Section 3.27 in which event
such right is asserted in the same manner (whether or not the Losses have
actually been incurred) within five (5) years of the Effective Time, (y) Section
3.26 in which event such right is asserted in the same manner (whether or not
the Losses have actually been incurred) prior to 90 days after the expiration of
the applicable statute of limitations relating to any Tax, or (z) Section 3.04
and Section 3.07(b) in which event there shall be no time limitation on when
each right is asserted) or (B) pursuant to Section 8.02(a)(v) or (vi) unless
such right is asserted in the same manner (whether or not the Losses have
actually been incurred) within five (5) years of the Effective Time of Closing;
provided, further, that the Indemnifying Parties shall not be required to
indemnify the Indemnified Parties under Section 8.02(a)(i) or (ii) unless and
until the amount of all Losses for which indemnification is sought with respect
to Sections 8.02(a)(i) and (ii) hereof shall exceed $500,000, and, thereafter,
the Indemnifying Parties shall indemnify the Indemnified Parties for all
additional Losses in excess of $500,000 with respect to Sections 8.02(a)(i) and
(ii); provided, further, however, that no Indemnifying Party shall have any
obligation to indemnify the Indemnified Parties under Section 8.02(a)(i), (ii),
(v), (vi), or (vii) for any Losses that, when added to all Losses for which
indemnification is sought pursuant to Section 8.02(a)(i), 8.02(a)(ii),
8.02(a)(v), 8.02(a)(vi) and 8.02(a)(vii) of this Agreement, exceed $20,000,000
(except that any Losses incurred by the Indemnified Parties as a result of the
breach of the representations, warranties or covenants made by Sellers in
Section 3.04 or 3.07(b) shall be indemnifiable without regard to the $500,000
and $20,000,000 limits and any Losses incurred by the Indemnified Parties as a
result of the breach of the representations, warranties, covenants or
obligations made by Sellers in Section 3.26, 3.27, 8.02(a)(v), 8.02(a)(vi) or
(vii), shall be indemnifiable without regard to the $500,000 limit but shall be
subject to the $20,000,000 limit).
(b) The amounts for which the Indemnifying Parties shall be liable
under Section 8.02(a) of this Agreement shall be net of any insurance proceeds
received by the Indemnified Parties in connection with the facts and
circumstances giving rise to the right of
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indemnification. In addition, such amounts shall be (i) net of any federal or
state income tax benefit realized or the then-present value (based on a discount
rate of 6%) of any such income tax benefit to be realized by the indemnified
party by reason of the facts and circumstances giving rise to the
indemnification, and (ii) increased by the amount of any federal or state income
tax required to be paid by the indemnified party as a result of the accrual or
receipt of the indemnification payment (including any amount payable pursuant to
this clause (ii)). For purposes of the preceding sentence, the amount of any
state income tax benefit or cost shall take into account the federal income tax
effect of such benefit or cost.
(c) In the event a claim against an Indemnified Party that is
covered by the indemnity provisions of Section 8.02(a) of this Agreement, notice
shall be given promptly by one of the Indemnified Parties to the Indemnifying
Parties. Provided that the Indemnifying Parties admit in writing to the party
seeking indemnification that such claim is covered by the indemnity provisions
of Section 8.02(a) hereof, the Indemnifying Parties shall have the right to
contest and defend by all appropriate legal proceedings such claim and to
control all settlements (unless the party seeking indemnification agrees to
assume the cost of settlement and to forgo such indemnity) and to select lead
counsel to defend any and all such claims at the sole cost and expense of the
Indemnifying Parties; provided, however, that the Indemnifying Parties may not
effect any settlement that could result in any cost, expense or liability to, or
have any Material Adverse Effect upon any Indemnified Party unless such party
consents in writing to such settlement and the Indemnifying Parties agree to
indemnify such party therefor. In the event the Indemnifying Parties do not
admit in writing to a party seeking indemnification that such claim is covered
by the indemnity provisions of Section 8.02(a) hereof, the Indemnified Party
shall take such actions as it deems necessary to defend such claim; provided,
however, that the Indemnified Parties may not effect any settlement that could
result in any cost, expense, liability to, or have any Material Adverse Effect
upon, any Indemnifying Party without consent of such Indemnifying Party, which
consent shall not be unreasonably withheld and which consent or objection
thereto must be provided in a timely manner as the circumstances dictate and in
any event within ten (10) business days of such request. The party seeking
indemnification may select counsel to participate in any defense, in which event
such counsel shall be at the sole cost and expense of such party. In connection
with any such third party claim, action or proceeding,
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the parties shall cooperate with each other and provide each other with access
to relevant books and records in their possession.
(d) The Buyer shall recover any Losses in accordance with the terms
of the Escrow Agreement for as long as such agreement is in effect. In the event
Buyer incurs any Losses after the Escrow Agreement has been terminated or in
amounts in excess of the funds available pursuant to the Escrow Agreement, Buyer
may offset such amounts, subject to the terms and conditions of this Section
8.02, against amounts due under the Buyer Notes or may proceed directly against
one or more Indemnifying Parties. In the event Buyer elects to offset any losses
against the Buyer Notes, the Buyer shall give the Sellers ten (10) business days
prior written notice of the amount of and grounds for any such offset. Unless,
within ten (10) business days following receipt of the Buyer's notice, the
Sellers object to such offset by a writing setting forth the grounds for such
objection, such offset shall become effective at the close of business on the
30th day following the Sellers' receipt of the Buyer's notice. If the Sellers
timely object to any offset, the Buyer and the Sellers will use their reasonable
best efforts to resolve such objection. If a final resolution is not obtained
within seven days after the Buyer's receipt of the Sellers' objections, the
Buyer and the Sellers will submit the matter for arbitration to a third party
selected by them. If the Buyer and the Sellers are unable to agree on the choice
of a third party arbitrator within 10 days after the Buyer's receipt of the
Sellers' objections, the Buyer and the Sellers will apply to the American
Arbitration Association for appointment of an arbitrator and shall accept such
appointment. The arbitrator shall rule on the Sellers' objections within 20 days
from submission of the matter to him, and the Buyer and the Sellers agree that
the arbitrator's decision shall be conclusive. The Buyer and the Sellers shall
share equally the fees and expenses of any arbitrator appointed under this
Section 8.02(d).
(e) Notwithstanding anything to the contrary in this Agreement, no
Indemnified Party shall be entitled to recover any Losses pursuant to Sections
8.02(a)(i) or (ii) arising out of any matter set forth on any schedule delivered
pursuant to Section 6.02(a) hereof or if Buyer has breached its representations
and warranties set forth in Section 4.10 hereof with respect to the matters
giving rise to the Loss claimed by the Indemnified Party.
(f) Notwithstanding anything to the contrary elsewhere in this
Agreement:
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(i) If a Loss relates to an environmental condition at or
remediation of Real Property then owned, operated or leased by Buyer or an
Affiliate, in no event shall Sellers be required to indemnify Buyer for Losses
relating to any remediation in excess of that acceptable to the government
agencies with jurisdiction thereof and which is achieved by the most
cost-effective means that can be implemented without unreasonable impact on
Buyer's or its Affiliates' activities at the Real Property;
(ii) if a Loss relates to violations of Environmental Laws, in
no event shall Sellers be required to indemnify Buyer for responses to such
violations in excess of the most cost-effective means to correct such violation
acceptable to the governmental agencies with jurisdiction thereof that does not
unreasonably interfere with the operations of Buyer;
(iii) if Sellers fail to complete work required by Section
5.11 before Closing, Sellers shall complete such work within the earlier of 120
after Closing, or 30 days after Buyer notifies Sellers of Regulated
Asbestos-Containing Material discovered after Closing under Section 5.11(c).
(iv) in no event shall Sellers be required to indemnify Buyer
for a Loss under Section 8.02(a)(i) for breach of Section 3.27, or for
environmental matters under Section 8.02(a)(ii) or under Section 8.02(a)(v)
unless: (A) the Loss arises from a claim by a government agency or third party
unrelated to Buyer (which claim was not instigated, initiated, or encouraged by
Buyer or its Affiliates) or from a mandatory obligation under Environmental
Laws; and (B) as to Losses related to a condition or violation on the Real
Property, the underlying condition or violation giving rise to the Loss was
discovered (1) in the course of an investigation mandated under Environmental
Law, (2) because of information learned in the day-to-day operation of the
Business or (3) during the renovation, expansion or repair of the Company's
facilities.
Section 8.03.00 Buyer's Indemnity.
(a) The Buyer hereby indemnifies and holds the Sellers and their
officers, directors and shareholders and their successors and permitted assigns
("Seller Indemnified Parties") harmless from and against, any and all Losses
that the Seller Indemnified Parties may at any time suffer or incur, or become
subject to, as a result of or in connection with: (i) any breach or inaccuracy
of any of the representations and warranties made by the Buyer in or pursuant to
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this Agreement; (ii) any failure by the Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement or under any of the documents and instruments
delivered by the Buyer pursuant to this Agreement; (iii) the fees and expenses
described in Schedule 4.07; and (iv) the operation and ownership of the Mack
Group entities by the Buyer from and after the Effective Time of Closing other
than with respect to the Retained Liabilities; provided, however, that the Buyer
shall not be required to indemnify and hold the Seller Indemnified Parties
harmless pursuant to Section 8.03(a)(i) or (ii) unless such right is asserted
(whether or not the Losses have actually been incurred) by written notice to the
Buyer within 18 months of the Effective Time of Closing describing with
specificity the facts giving rise to the asserted right; provided, further, that
the Buyer shall not be required to indemnify the Seller Indemnified Parties
under Section 8.03(a)(i) or (ii) unless and until the amount of all Losses for
which indemnification is sought with respect thereto, together with all Losses
for which indemnification is sought pursuant Section 7.03 of the Goldman
Purchase Agreement, shall exceed $500,000, and, thereafter, the Buyer shall
indemnify the Seller Indemnified Parties for all additional Losses with respect
thereto up to but not in excess of, when added to all Losses for which
indemnification is sought pursuant to Section 7.03 of the Goldman Purchase
Agreement, $20,000,000.
(b) The amounts for which the Buyer shall be liable under Section
8.03(a) of this Agreement shall be net of any insurance proceeds received by the
Sellers in connection with the facts and circumstances giving rise to the right
of indemnification. In addition, such amounts shall be (i) net of any federal or
state income tax benefit realized or the then-present value (based on a discount
rate of 6%) of any such income tax benefit to be realized by the indemnified
party by reason of the facts and circumstances giving rise to the
indemnification, and (ii) increased by the amount of any federal or state income
tax required to be paid by the indemnified party as a result of the accrual or
receipt of the indemnification payment (including any amount payable pursuant to
this clause (ii)). For purposes of the preceding sentence, the amount of any
state income tax benefit or cost shall take into account the federal income tax
effect of such benefit or cost.
(c) In the event a claim against the Indemnified Parties arises that
is covered by the indemnity provisions of Section 8.03(a) of this Agreement,
notice shall be given promptly
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by the Seller Indemnified Parties to the Buyer. Nathu R. Puri is designated as
representative for all Seller Indemnified Parties for purposes of Article VIII
of this Agreement (the "Seller Representative"). The Seller Representative shall
be authorized to act on behalf of, and to bind, all the Seller Indemnified
Parties, and Buyer shall be entitled to rely on the Seller Representative
without any investigation. Provided that the Buyer admits in writing to the
Seller Representative, that such claim is covered by the indemnity provisions of
Section 8.03(a) hereof, the Buyer shall have the right to contest and defend by
all appropriate legal proceedings such claim and to control all settlements
(unless Seller Representative agrees to assume the cost of settlement and to
forgo such indemnity) and to select lead counsel to defend any and all such
claims at the sole cost and expense of the Buyer; provided, however, that the
Buyer may not effect any settlement that could result in any cost, expense or
liability to, or have any Material Adverse Effect upon, Seller Indemnified
Parties unless Seller Representative consents in writing to such settlement and
the Buyer agrees to indemnify Seller Indemnified Parties therefor. In the event
the Buyer does not admit in writing to a party seeking indemnification that such
claim is covered by the indemnity provisions of Section 8.03(a) hereof, Seller
Representative shall take such actions as he deems necessary to defend such
claim; provided, however, that the Seller Representative and Seller Indemnified
Parties may not effect any settlement that could result in any cost, expense,
liability to, or have any Material Adverse Effect upon Buyer without consent of
Buyer, which consent shall not be unreasonably withheld and which consent or
objection thereto must be provided in a timely manner as the circumstances
dictate and in any event within ten (10) business days of request. The Seller
Representative may select counsel to participate in any defense, in which event
the Seller Indemnified Parties' counsel shall be at the sole cost and expense of
the Seller Indemnified Parties. In connection with any such third party claim,
action or proceeding, the parties shall cooperate with each other and provide
each other with access to relevant books and records in their possession.
(d) Notwithstanding the foregoing, in the event the Purchase Price
is adjusted pursuant to Section 2.04 hereof in a manner favorable to Buyer as a
result of the write-down or write-off of certain working capital items, the
Buyer shall not be entitled to make a claim for Losses as a result of a breach
of the representations or warranties of the Sellers set forth herein to the
extent any representation or warranty of the Sellers herein is untrue because
the Working Capital of the Mack Group was over-stated by the amount of the
write-down or write-off.
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Section 8.04.00 Sole and Exclusive Remedy. The provisions of
indemnification set forth in this Article VIII shall constitute the sole and
exclusive remedy of the Buyer, the Mack Group Entities, the Sellers, and their
respective officers, directors and shareholders for any Losses sustained by such
party except with respect to (a) Losses sustained by the Buyer, the Mack Group
Entities, or any of their respective officers, directors or shareholders as a
result of or in connection with (i) fraud under any applicable Law, or (ii) any
intentional misrepresentation in making any representations or (b) Losses
sustained by the Sellers or any of their respective officers, directors or
shareholders as a result of or in connection with (i) fraud under any applicable
Law, or (ii) any intentional misrepresentation in making any representations.
Section 8.05.00 Accounts Receivable Guarantee. (a) Buyer shall have the
right, at any time after the 180th day and before the 240th day following the
Effective Time of Closing, to cause the Company to assign to Sellers any
accounts receivable (meaning those items identified as accounts receivable on
the Current Balance Sheet or the Closing Financial Statements (less an allowance
for uncollectible accounts) which shall specifically exclude "recoverable income
taxes" on the Current Balance Sheet or Closing Financial Statements) outstanding
at the Effective Time of Closing that have not been collected by the Company
within 180 days after the Effective Time of Closing (the "Assigned
Receivables"); provided, however, that prior to such assignment, Buyer shall
cause the Company to use its reasonable commercial efforts to collect such
accounts receivable and the Company shall not release any party from liability
for any unpaid accounts receivable without the prior written consent of Sellers;
and provided, further the Assigned Receivables shall not include any notes
receivable that are being paid in accordance with their terms during the 120 day
period following the Effective Time of Closing. Buyer shall cause the Company to
deliver to Sellers all documents that relate to the Assigned Receivables and any
similar documents generated with respect thereto by the Company after the
Closing Date. Upon receipt of a document from the Company transferring the
Assigned Receivables to Sellers, Sellers shall promptly pay Buyer by wire
transfer an amount equal to the face amount of the Assigned Receivables (the
"Receivables Payment") to be paid to the Buyer. Buyer shall cause the Company to
cooperate with Sellers in any reasonable collection efforts relating to the
Assigned Receivables.
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(b) The parties agree that, subsequent to the Closing Date and prior
to the assignment of the Assigned Receivables, in the absence of specific
customer instructions to apply, or not to apply, payments to specific invoices,
the payments received by the Company from customers of the Company shall be
applied against the oldest outstanding balances of such Accounts. After the
Company has assigned the Assigned Receivables to Sellers, if Buyer receives
payment from a customer for such Assigned Receivable, Buyer shall cause the
Company to pay Sellers in cash the amount of such payment. After the Company has
assigned the Assigned Receivables to Sellers, a payment from a customer will not
be deemed to be payment of an Assigned Receivable unless (i) written
instructions received from the customer indicate that the payment is to be
applied to an Assigned Receivable or (ii) the Company has not continued to do
business with such customer after the Effective Time of Closing.
Section 8.06.00 Cooperation With Respect to Tax and SEC Matters. (a) The
Sellers agree to cooperate with the Buyer, at Buyer's expense, and the Buyer
agrees to cooperate with the Sellers, to the extent necessary in connection with
the filing, pursuant to any provision of the Code or regulations thereunder, of
any Tax Return relating to the Buyer's acquisition of the Company and any of the
other transactions contemplated by Article II of this Agreement. For purposes of
the preceding sentence, Buyer shall only be responsible for the reasonable
actual out-of-pocket costs of Sellers. In addition, the Sellers agree to
cooperate with the Buyer and the Company in preparing any historical and
pro-forma financial statements required to be filed by the Buyer with the SEC
under the Exchange Act with respect to the transactions contemplated herein.
(b) This paragraph relates solely to (i) the Delaware corporate
income Tax Returns to be filed by the Company and by Melham, Inc. for 1998 and
the portion of 1999 ending on the Closing Date and (ii) the separate company pro
forma Tax Returns of the Company, Melham, Inc., and VPI to be used in preparing
the consolidated federal income Tax Returns of the Mack Group for 1998 and the
portion of 1999 ending on the Closing Date. In the case of such actual or pro
forma Tax Returns of the Company, Melham, Inc., and VPI, the Buyer will cause
such Tax Returns to be prepared but will consult with the Seller Representative
in doing so, and the Seller Representative will provide (and cause VPI to
provide) any information reasonably requested by the Buyer to prepare such Tax
Returns. Each such Tax Return will be
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prepared using the same tax accounting methods and elections as used in the
corresponding Tax Return for 1997, except as otherwise required by Law or agreed
upon by the Buyer and the Seller Representative. The Buyer will submit a draft
of each such Tax Return, together with any workpapers reasonably requested by
the Seller Representative, at least 45 days before the due date (including any
extensions thereof) for the filing of the Tax Return. No later than 15 days
after the Buyer submits the draft Tax Return, the Seller Representative will
notify the Buyer in writing of any item on the draft Tax Return that the Seller
Representative believes should be changed. In such event, the Buyer and the
Seller Representative will consult in good faith to determine the appropriate
treatment of each such item, with the objective that the Tax reported on each
such Tax Return be the minimum amount required under applicable Law; provided,
however, that no item will be changed in any way that could increase any Tax
attributable to any period after the Closing Date; and, provided further, that
the Sellers shall not be relieved of any Retained Liability by reason of this
paragraph.
Section 8.07.00 Records. The Buyer shall cause the Company to preserve and
keep, free of charge, all original Books and Records of the Company and its
Subsidiaries that are in the possession of the Company at the Effective Time of
Closing in accordance with the Buyer's corporate document retention policy. The
Buyer agrees to permit the Sellers and their attorneys, accountants, agents and
designees access to such books, papers and records from and after the Closing
Date for all reasonable purposes. Any such examination shall be at the expense
of the Sellers, shall be performed at the place where such books, papers and
records are regularly maintained and shall not interfere unreasonably with the
Buyer's or the Company's normal business activities.
Section 8.08.00 Litigation Support. Except in connection with any action,
suit, proceeding, hearing, investigation, charge complaint or claim between
Sellers, on the one hand, and the Buyer or any Mack Group entity, on the other
hand, in the event and for so long as the Buyer, the Company, any Subsidiary of
the Company or the Sellers is actively contesting or defending against any
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand in connection with (i) any transactions contemplated under this
Agreement, or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act or
transaction on or prior to the Closing Date involving the
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Company or any of its Subsidiaries, each of the other parties will cooperate
with him or it and his or its counsel in the contest or defense, make available
their personnel and provide such testimony and access to their books and records
as shall be necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending party.
Section 8.09.00 Further Assistance. In case at any time after the Closing
Date any further action is necessary or desirable to carry out the purposes of
this Agreement, each of the parties to this Agreement will take, without
additional consideration, such further action (including the execution and
delivery of such further instruments and documents and the grant of access to
any individuals, premises, books or records) as any other party reasonably may
request. The Sellers acknowledge and agree that from and after the Closing Date,
and subject to Section 8.07 hereof, the Buyer will be entitled to possession of
all documents, Books and Records (including tax records), agreements and
financial data of any sort relating to the Company and its Subsidiaries and the
businesses of the Mack Group.
Section 8.10.00 Bulk Sales Compliance. The Buyer hereby waives compliance
by each member of the Mack Group with the provisions of the bulk sales laws of
any state, insofar as any such laws may apply to the transactions contemplated
herein. The Sellers hereby covenant and agree to pay and discharge when due all
claims of creditors that could be asserted against the Buyer or the Company by
reason of such non-compliance. The Sellers hereby agree to indemnify and hold
the Buyer and the Company harmless from and against and shall on demand
reimburse the Buyer and the Company for any and all losses, damages, costs,
expenses, liabilities, obligations and claims of any kind, including, without
limitation, reasonable attorneys' fees and other legal costs and expenses,
suffered by the Buyer or the Company by reason of Sellers' failure to pay and
discharge any such claims.
Section 8.11.00 Restricted Securities; Stand Still.
(a) Transfer Restricted. Subject to Section 2.07 hereof, each
Seller, for itself and for its permitted transferees pursuant to this Section
(all of which transferees will be made subject to the terms of this Agreement),
agrees that the shares of Buyer Common Stock constituting the Equity
Consideration (the "Shares") and the Buyer Notes may be sold, pledged,
transferred or otherwise disposed of only under the circumstances set forth
below:
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(i) At any time prior to the first anniversary of the Closing
Date, the Shares may not be sold, pledged, transferred or otherwise disposed of;
(ii) At any time after the first anniversary of the Closing
Date and prior to the second anniversary of the Closing Date, the Shares may be
sold only in compliance with Rule 144 of the Securities and Exchange Commission
(or any successor rule) or pursuant to the Registration Rights Agreement
attached as Exhibit 5.08 hereto;
(iii) thereafter only in compliance with the Securities Act
and applicable state securities Laws; and
(iv) with respect to any Shares or Buyer Notes held in escrow,
such Shares and Buyer Notes may be sold, transferred or otherwise disposed of
only in accordance with the terms of the Escrow Agreement and otherwise subject
to the foregoing provisions of this Section 8.11(a);
provided, however, that each of Purico and Melham US may transfer the Buyer
Notes held by such entity, subject to the provisions of the Escrow Agreement, to
a direct or indirect wholly owned Subsidiary of such entity if: (A) such
transferee delivers to Buyer a written agreement consenting to the provisions of
Sections 8.02, 8.11, 9.02 and 9.11 of this Agreement and the terms of the Buyer
Note; and (B) such transferor and transferee agree in writing to indemnify Buyer
for any Losses Buyer or its Affiliates may suffer or incur, or become subject
to, as a result of or in connection with such transfer; provided, further, that
such transfer or assignment shall not relieve the transferor of any of its
obligations under this Agreement or under the Buyer Note. Buyer shall cooperate
with any sales to be made pursuant to Section 8.11(a)(ii) (including by timely
filing SEC Reports).
(b) Standstill Agreement. Each Seller agrees that, during the
Standstill Period, as hereinafter defined, such Seller will not and will cause
its affiliates not to (i) directly or indirectly "solicit" proxies or become a
"participant" in any "election contest" (as such terms are used in Regulation
14A under the Exchange Act relating to the election of directors of Buyer or
seek to advise, encourage or influence any person or entity with respect to the
voting of any shares of any class of capital stock of Buyer, (ii) form, join or
in any way participate in a "group" (which, for purposes of this Agreement,
shall have the meaning set forth in Section 13(d)(3) of the Exchange Act and the
rules and regulations promulgated under the Exchange Act) with
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respect to any shares of any class of capital stock of Buyer, or (iii) otherwise
act in concert with others to seek to change the control of or exercise control
over the policies, management or Board of Directors of Buyer or to amend its
Articles of Incorporation; provided, that Sellers shall not be prohibited from
voting in accordance with the recommendation of the Board of Directors of Buyer
on any proposal for the merger, consolidation or sale of Buyer; and provided,
further that nothing in this paragraph (b) will limit or restrict in any way the
right of Nathu R. Puri to vote on any matter before the Board of Directors of
Buyer.
The "Standstill Period" shall commence on the Closing Date and shall end
on the earlier of: (i) the second anniversary of the Effective Time of Closing;
or (ii) the date on which the Board of Directors of the Buyer agrees to
recommend (or ceases to oppose) the consummation of any unsolicited tender or
exchange offer for securities representing more than 50% of the Total Voting
Power of Buyer, or takes any action to induce or materially facilitate such a
tender or exchange offer (including by redeeming any rights outstanding under
any stockholder rights plan). "Total Voting Power" with respect to the Buyer
means the voting power in the general election of directors of the Buyer of all
outstanding securities entitled to vote generally in the election of directors
of the Buyer.
(c) Voting of Shares. Each Seller agrees that during the Standstill
Period, such Seller shall and shall cause its direct and indirect wholly-owned
subsidiaries to (a) vote all Buyer Common Stock held by them in any annual or
special election of directors of Buyer in favor of those nominees recommended by
the management of Buyer, (b) vote all Shares held by them in any vote to
consider the removal from office of a director of Buyer (other than Nathu R.
Puri) in accordance with the recommendations of the management of Buyer and (c)
vote all shares of Buyer Common Stock held by them in any vote of Buyer Common
Stock or any other matter in accordance with the recommendations of the
management of Buyer, except with respect to a vote on any charter amendment that
would eliminate or reduce the rights of the Buyer Common Stock.
ARTICLE IX
MISCELLANEOUS
Section 9.01.00 Entire Agreement; Assignment. This Agreement, together
with any Schedules, Exhibits, and the Confidentiality Agreement (a) constitute
the entire agreement
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among the parties with respect to the subject matter hereof and supersede all
other prior agreements and understandings, both written and oral, between the
parties or any of them with respect to the subject matter hereof, and (b) shall
not be assigned by operation of law or otherwise; provided, that the Buyer may
assign its rights and obligations, in whole or in part, to any direct or
indirect wholly owned subsidiary of the Buyer, but no such assignment shall
relieve the Buyer of its obligations hereunder.
Section 9.02.00 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or, if mailed, ten (10) business days
after being mailed by United States first-class, certified or registered mail,
postage prepaid, or, if sent by overnight delivery by a nationally recognized
courier such as DHL, Federal Express or United Parcel Service, two (2) business
days after deposit with such courier, or, if sent by telecopy, upon confirmation
of receipt, to the other party at the following address (or at such other
address as shall be given in writing by any party to the other):
If to Buyer: Cadmus Communications Corporation
6620 West Broad Street
Richmond, Virginia 23230
Attention: Bruce V. Thomas
Chief Financial Officer
Telephone: (804) 287-5690
Facsimile: (804) 287-5683
With a copy to: Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Telephone: (804) 788-8464
Facsimile: (804) 788-8218
Attention: T. Justin Moore, III, Esq.
If to the Sellers: Purico (IOM) Limited
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P.O. Box 16
Analyst House
20-26 Peel Road
Douglas
Isle of Man
IM99 IAP
Facsimile No.: 44-1624-629-983
Attention: President
Melham U.S. Inc.
c/o Mack Printing Group
1991 Northampton Street
Easton, PA 18042-3189
Attention: President
Facsimile No.: (610) 250-7285
Paul F. Mack
3580 Magnolia Drive
Easton, Pennsylvania 18045
With a copy to: Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103-2793
Telephone: (215) 994-4000
Facsimile: (215) 994-2222
Attention: Christopher G. Karras, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 9.03.00 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its conflicts of laws principles or rules.
Section 9.04.00 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 9.05.00 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, their respective
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other
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person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
Section 9.06.00 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 9.07.00 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
Section 9.08.00 Fees and Expenses. Except as otherwise provided in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the transactions contemplated herein are consummated.
Notwithstanding the foregoing, all costs and expenses incurred in connection
with (a) Sellers' compliance with the covenant set forth in Section 5.10 hereof,
other than the preparation of the Company Consolidating Financial Statements,
the Company Consolidated Financial Statements, the Mack Financial Statements,
the Melham, Inc. Financial Statements, the PCP Financial Statements and the
Current Balance Sheet, and (b) the preparation of the Bridge Financing Notes,
shall be paid by the Buyer; provided, that Buyer shall not be obligated to pay
in excess of $125,000 in the aggregate of such costs and expenses referred to in
this sentence. Notwithstanding the foregoing, $300,000 of the fees and expenses
payable to J. P. Morgan Securities, Inc. and First Union Capital Markets in
connection with Buyer's issuance of the Bridge Financing Notes shall be paid by
Sellers.
Section 9.09.00 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effectuate the
original intent of the parties as closely as possible
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in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
Section 9.10.00 No Reliance. Except with respect to the rights of the Mack
Group entities under Section 8.02 hereof, no third party is entitled to rely on
any of the representations, warranties and agreements contained in this
Agreement; the Buyer and the Sellers assume no liability to any third party
because of any reliance on the representations, warranties and agreements of the
Buyer and the Sellers contained in this Agreement.
Section 9.11.00 Consent to Jurisdiction. Buyer and Sellers each
irrevocably submits to the exclusive jurisdiction of (a) the state courts of the
State of New York and (b) the United States District Court for the Southern
District of New York, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transactions contemplated hereby. Sellers
agree that process may be served in connection with any matter in New York in
accordance with the provisions of Section 9.02 hereof.
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IN WITNESS WHEREOF, the parties have caused this Stock Purchase Agreement
to be duly executed as of the day and year first above written.
BUYER:
CADMUS COMMUNICATIONS CORPORATION
By: /s/ Bruce V. Thomas
--------------------------------------------
Name: Bruce V. Thomas
Title: Senior Vice President, Finance and
Administrator
SELLERS:
MELHAM U.S. INC.
By: /s/ Scott E.M. DeNardo
--------------------------------------------
Name: Scott E.M. DeNardo
Title: Secretary
PURICO (IOM) LIMITED
By: /s/ Steven H. Smith
--------------------------------------------
Name: Steven H. Smith
Title: Attorney-in-Fact
/s/ Paul F. Mack
------------------------------------------------
PAUL F. MACK
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Exhibit 2.2
STOCK AND NOTE PURCHASE AGREEMENT
BY AND AMONG
MELHAM, INC.,
MACK PRINTING COMPANY,
MACK PRINTING GROUP, INC.,
SCIENCE CRAFTSMAN INCORPORATED,
PORT CITY PRESS, INC.
AND
GS MEZZANINE PARTNERS, L.P.,
GS MEZZANINE PARTNERS OFFSHORE, L.P.,
STONE STREET FUND 1997, L.P.,
AND
BRIDGE STREET FUND 1997, L.P.
--------------------------
Dated as of April 1, 1999
--------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS........................................................2
Section 1.01. Affiliate...............................................2
Section 1.03. Closing Date............................................2
Section 1.04. Collateral..............................................2
Section 1.05. Credit Documents........................................2
Section 1.06. Effective Time of Closing...............................2
Section 1.07. Issuers.................................................2
Section 1.08. Goldman Bridge Financing Notes..........................2
Section 1.09. Goldman Entities........................................3
Section 1.10. Law.....................................................3
Section 1.11. Liability...............................................3
Section 1.12. Liens...................................................3
Section 1.13. Mack....................................................3
Section 1.14. Mack Common Stock.......................................3
Section 1.15. MPG.....................................................3
Section 1.16. Material Adverse Effect.................................3
Section 1.17. Melham, Inc.............................................3
Section 1.18. Melham Purchase Agreement...............................4
Section 1.19. 1997 Purchase Agreement.................................4
Section 1.20. 1997 Notes..............................................4
Section 1.21. Pay-Off Goldman Bridge Financing Notes..................4
Section 1.22. PCP.....................................................4
Section 1.23. Person..................................................4
Section 1.24. Real Estate Releases....................................4
Section 1.25. Real Property...........................................4
Section 1.26. Releases................................................4
Section 1.27. Securities Act..........................................5
Section 1.28. Science.................................................5
Section 1.29. Shares..................................................5
Section 1.30. Subsidiaries............................................5
Section 1.31. Transaction Documents...................................5
ARTICLE II PURCHASE AND SALE.................................................5
Section 2.01. Mack's Commitment to Deliver Pay-Off Amount.............5
Section 2.02. Commitment to Sell......................................5
Section 2.03. Commitment to Purchase..................................6
Section 2.04. Deliveries at Closing...................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE GOLDMAN ENTITIES...........7
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Section 3.01. Organization............................................7
Section 3.02. Enforceability..........................................7
Section 3.03. Consents and Approvals; No Violation or Conflict
by the Goldman Entities.......................................7
Section 3.04. Title to the Shares and 1997 Notes......................8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MACK............................9
Section 4.01. Organization............................................9
Section 4.02. Authority; Enforceability...............................9
ARTICLE V CONDITIONS PRECEDENT TO CLOSING...................................10
Section 5.01. Conditions Precedent to Obligations of Mack............10
Section 5.02. Conditions Precedent to Obligations of the Goldman
Entities........................................................11
ARTICLE VI TERMINATION; AMENDMENT; WAIVER...................................12
Section 6.01. Termination............................................12
Section 6.02. Effect of Termination..................................13
Section 6.03. Amendment..............................................13
Section 6.04. Extension; Waiver......................................13
ARTICLE VII INDEMNITIES AND ADDITIONAL COVENANTS............................13
Section 7.01. Survival...............................................13
Section 7.02. The Goldman Entities'Indemnity.........................13
Section 7.03. Mack's Indemnity.......................................15
Section 7.04. Sole and Exclusive Remedy..............................17
Section 7.05. Further Assurances.....................................17
Section 7.06. Mutual Release.........................................18
Section 7.07. Termination of Transaction Documents...................19
ARTICLE VIII MISCELLANEOUS..................................................19
Section 8.01. Entire Agreement; Assignment...........................19
Section 8.02. Notices................................................20
Section 8.03. Governing Law..........................................21
Section 8.04. Descriptive Headings...................................21
Section 8.05. Parties in Interest....................................21
Section 8.06. Counterparts...........................................21
Section 8.07. Specific Performance...................................21
Section 8.08. Fees and Expenses......................................21
Section 8.09. Severability...........................................21
Section 8.10. No Reliance............................................22
Section 8.11. Consent to Jurisdiction................................22
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EXHIBIT INDEX
Exhibit 1.02 Form of Goldman Bridge Financing Note
SCHEDULE INDEX
Schedule 1.12 Liens
Schedule 1.24 Real Estate Releases
Schedule 1.31 Transaction Documents
Schedule 2.01 Payment Instructions
Schedule 2.03 Allocation of Purchase Price
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STOCK AND NOTE PURCHASE AGREEMENT
STOCK AND NOTE PURCHASE AGREEMENT, made as of the 1st day of April, 1999,
by and among MACK PRINTING COMPANY, a Pennsylvania corporation ("Mack"), MACK
PRINTING GROUP, INC., a Delaware corporation and wholly owned subsidiary of Mack
("MPG"), SCIENCE CRAFTSMAN INCORPORATED, a New York corporation and wholly owned
subsidiary of Mack ("Science"), PORT CITY PRESS, INC., a Maryland corporation
and wholly owned subsidiary to Mack ("PCP", and together with Mack, MPG and
Science, the "Issuers"), MELHAM, INC., a Delaware corporation and parent entity
of Mack ("Melham") and G.S. MEZZANINE PARTNERS, L.P., a Delaware limited
partnership ("Mezzanine"), G.S. MEZZANINE PARTNERS OFFSHORE, L.P., a Cayman
Islands exempted limited partnership ("Offshore"), STONE STREET FUND 1997, L.P.,
a Delaware limited partnership, and BRIDGE STREET FUND 1997, L.P., a Delaware
limited partnership.
RECITALS
WHEREAS, the Goldman Entities own of record and beneficially 75,000 shares
of Mack Common Stock (the "Shares");
WHEREAS, the Goldman Entities own of record and beneficially $25,000,000
in aggregate principal amount of 12% Senior Subordinated Notes due March 31,
2007 issued by the Issuers to the Goldman Entities;
WHEREAS, the Issuers desire to prepay the 1997 Notes in full, and the
Goldman Entities desire the Issuers to prepay the 1997 Notes in full;
WHEREAS, the Goldman Entities desire to sell the Shares to Mack, and Mack
desires to purchase the Shares from the Goldman Entities;
WHEREAS, the parties hereto in connection with the sale of the Shares and
prepayment of the 1997 Notes desire to terminate certain ancillary agreements
relating to the Shares and the 1997 Notes in connection with such prepayment and
sale and purchase;
NOW, THEREFORE, in consideration of the Recitals and of the mutual
covenants, conditions and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, and intending to be legally bound hereby, it hereby is agreed
that:
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01.00 Affiliate. "Affiliate" shall have the meaning set
forth in Rule 405 of the Securities Act.
Section 1.02.00 Closing. "Closing" shall mean the conference held at 10:00
a.m., local time, on the Closing Date, at the offices of Hunton & Williams, 951
E. Byrd Street, Richmond, Virginia 23219 or such other place and time as may be
agreed upon by Mack and the Goldman Entities.
Section 1.03.00 Closing Date. "Closing Date" shall mean April 1,
1999, or such other date as the parties hereto may mutually agree to in
writing.
Section 1.04. Collateral. "Collateral" shall mean any and all property and
assets of the Issuers upon which there exists a Lien in favor of the Goldman
Entities, including without limitation, stock certificates representing shares
of capital stock pledged to the Goldman Entities.
Section 1.05.00 Credit Documents. "Credit Documents" shall mean the
Indenture, the Note Purchase Agreement, the Goldman Bridge Financing Notes, the
Pay-Off Goldman Bridge Financing Notes, the Guarantee dated as of the date
hereof provided by Cadmus pursuant to the Indenture, and the Registration Rights
Agreement dated as of the date hereof by and among Mack and the Goldman
Entities.
Section 1.06.00 Effective Time of Closing. "Effective Time of
Closing" shall mean 12:01 a.m., Eastern Standard time, on the Closing Date.
Section 1.07.00 Issuers. "Issuers" shall have the meaning set forth
in the Preamble.
Section 1.08. 00Goldman Bridge Financing Notes. "Goldman Bridge Financing
Notes" shall mean $9,500,000 aggregate principal amount of the Senior
Subordinated Increasing Rate Notes Due March __, 2000 issued by Mack and
guaranteed by Cadmus Communications Corporation, a Virginia corporation
("Cadmus"), in the form of Exhibit 1.08 attached hereto (the "Series C Notes")
issued pursuant to (i) that certain indenture, dated as of the date hereof (the
"Indenture") among Mack, the Guarantors (as defined therein) and Wilmington
Trust Company, a Delaware banking corporation, as Trustee, and (ii) that certain
Note Purchase Agreement dated the date hereof among Mack, as Issuer, the
Guarantors named therein, and the Goldman Entities, as purchasers (the "Note
Purchase Agreement").
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Section 1.09.00 Goldman Entities. "Goldman Entities" shall mean
collectively, GS Mezzanine Partners, L.P., a Delaware limited partnership, GS
Mezzanine Partners Offshore, L.P., a Cayman Islands exempted limited
partnership, Stone Street Fund 1997, L.P., a Delaware limited partnership
("Stone Street"), and Bridge Street Fund 1997, L.P., a Delaware limited
partnership ("Bridge Street," and together with Stone Street, the successors in
interest entities to The Goldman Sachs Group, L.P.).
Section 1.10.00 Law. "Law" shall mean any federal, state, local or other
law (including common law) or governmental requirement of any kind, domestic or
foreign, and the rules, regulations and orders promulgated thereunder.
Section 1.11.00 Liability. "Liability" shall mean any direct or indirect
liability, indebtedness, obligation, commitment, expense, claim, deficiency,
deferred income, guaranty or endorsement of or by any Person of any type,
whether known, unknown, accrued, unaccrued, absolute, contingent, matured or
unmatured.
Section 1.12.00 Liens. "Liens" shall mean those liens, encumbrances,
mortgages, charges, claims, restrictions, pledges, security interests, and other
matters affecting any of the Collateral that are specifically listed on Schedule
1.12 attached hereto, all of which Liens shall be released and terminated
pursuant to the terms of this Agreement.
Section 1.13.00 Mack. "Mack" shall have the meaning set forth in the
Preamble.
Section 1.14.00 Mack Common Stock. "Mack Common Stock" shall mean all
of the issued and outstanding shares of common stock, par value $0.01 per
share, of Mack.
Section 1.15.00 MPG. "MPG" shall have the meaning set forth in the
Preamble.
Section 1.16. 00Material Adverse Effect. "Material Adverse Effect"
with respect to any Person shall mean any material adverse event, change or
effect on the business, assets, liabilities, results of operations or
financial condition of such Person and its Subsidiaries taken as a whole.
Section 1.17.00 Melham, Inc. "Melham, Inc." shall have the meaning
set forth in the Preamble.
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Section 1.18.00 Melham Purchase Agreement. "Melham Purchase
Agreement" shall mean the Stock Purchase Agreement, dated April 1, 1999, by
and among Cadmus Communications Corporation, Melham U.S., Inc., Purico (IOM)
Limited, and Paul F. Mack.
Section 1.19.00 1997 Purchase Agreement. "1997 Purchase Agreement"
shall mean the Purchase Agreement, dated as of March 27, 1997, as amended, by
and among the Issuers and the Goldman Entities.
Section 1.20.00 1997 Notes. "1997 Notes" shall mean the 12% Senior
Subordinated Notes having an original principal amount of $25,000,000 due March
31, 2007, as amended, of the Issuers held of record and beneficially by the
Goldman Entities.
Section 1.21.00 Pay-Off Goldman Bridge Financing Notes. "Pay-Off
Goldman Bridge Financing Notes" shall mean $500,000 aggregate principal
amount of the Series C Notes.
Section 1.22.00 PCP. "PCP" shall have the meaning set forth in the
Preamble.
Section 1.23.00 Person. "Person" shall mean any individual,
corporation, partnership, limited liability company or other entity.
Section 1.24.00 Real Estate Releases. "Real Estate Releases" shall mean
releases, in form sufficient for recording the title records of the
jurisdictions in which the Real Property is located of the mortgages, deeds of
trust, and security interests encumbering the Real Property and listed on
Schedule 1.24 attached hereto.
Section 1.25.00 Real Property. "Real Property" shall mean the real
property owned or leased by the Issuers, together with the improvements located
thereon, including all appurtenant rights, claims and interests.
Section 1.26.00 Releases. "Releases" shall mean all releases, including
the termination and release agreement (the "Termination and Release Agreement")
executed on the date hereof by and among the Issuers and Goldman Entities,
Uniform Commercial Code termination statements, Real Estate Releases and other
documents and instruments as may be necessary to release any and all Liens
including the return of any Collateral to the party who pledged such collateral
to perfect a security interest.
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Section 1.27.00 Securities Act. "Securities Act" shall mean the
Securities Act of 1933, as amended.
Section 1.28.00 Science. "Science" shall have the meaning set forth
in the Preamble.
Section 1.29.00 Shares. "Shares" shall have the meaning set forth in
the Recitals.
Section 1.30.00 Subsidiaries. "Subsidiaries" means, as to any Person, all
corporations, limited liability companies, partnerships or other entities with
respect to which such Person owns or otherwise controls, directly or indirectly,
through one or more subsidiaries, corporations, limited liability companies,
partnerships, joint ventures or other business associations, shares representing
50% or more of the votes eligible to be cast in the election of directors,
managers or other applicable governors of each such entity.
Section 1.31.00 Transaction Documents. "Transaction Documents" shall mean
the documents set forth on Schedule 1.31, all of which shall be terminated upon
the Closing of the transactions contemplated by this Agreement in accordance
with Section 7.07.
ARTICLE II
PURCHASE AND SALE
Section 2.01.00 Mack's Commitment to Deliver Pay-Off Amount. Prior to
Closing, the Goldman Entities will deliver, or cause to be delivered, to the
Issuers a pay-off letter (the "Goldman Pay-Off Letter") from each of the Goldman
Entities setting forth the $26,750,000 aggregate amount (the "Goldman Pay-Off
Amount"), including interest, prepayment penalties and other fees, to be paid as
of the Closing Date to satisfy all of the Issuers' obligations to each of the
Goldman Entities and their affiliates under the 1997 Notes. Mack hereby agrees
to deliver, or to cause to be delivered, (i) the Goldman Pay-Off Amount less
$500,000, in cash by wire transfer to the Goldman Entities at the Closing in
accordance with the payment instructions set forth on Schedule 2.01 and
allocated to each of the Goldman Entities in accordance with the amounts set
forth on Schedule 2.01 and (ii) the Pay-Off Goldman Bridge Financing Notes,
allocated to each of the Goldman Entities in accordance with the amounts set
forth on Schedule 2.03.
Section 2.02.00 Commitment to Sell. Each of the Goldman Entities hereby
agrees that at the Closing, and upon all of the terms and subject to all of the
conditions of this Agreement, it shall sell, transfer, assign, convey and
deliver to Mack, by assignment, stock power or other appropriate instrument,
free and clear of all liens, encumbrances, charges, claims, restrictions,
pledges or security interests (other than those arising under the Securities Act
or any state's securities laws or pursuant to this Agreement), all of the
Shares.
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Section 2.03.00 Commitment to Purchase. Mack hereby agrees that at the
Closing, and upon all of the terms and subject to all of the conditions of this
Agreement, it shall purchase from the Goldman Entities all of the Shares, and in
full and final payment therefor Mack shall issue and deliver, the Goldman Bridge
Financing Notes to the Goldman Entities allocated to each of the Goldman
Entities in accordance with the amounts set forth on Schedule 2.03.
Section 2.04.00 Deliveries at Closing.
(a) By the Goldman Entities to Mack. At the Closing, the Goldman
Entities shall deliver, or cause to be delivered, to Mack the following items,
each properly executed and dated as of the Closing Date: (i) certificates
representing the Shares together with duly executed stock powers therefor to
convey the Shares to Mack; (ii) the 1997 Notes; (iii) a statement, in the form
set forth in Treasury Regulations 1.1445.2(b)(2) and made under penalties of
perjury of each Goldman Entity, other than Offshore, that (among other things)
such Goldman Entity is not a foreign person; (iv) an IRS Form W-9 completed by
each Goldman Entity, other than Offshore; (v) from Offshore an IRS Form W-8 and
a certificate representing that Offshore is not a bank for purposes of Section
881(c) of the Internal Revenue Code of 1986, as amended ("the Code"), is not a
10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code)
of Mack and is not a controlled foreign corporation related to Mack (within the
meaning of Section 864(d)(4) of the Code); and (vi) the Releases (provided,
however, that any Real Estate Release shall be deemed delivered for purposes of
satisfying this condition if the Goldman Entities shall have delivered to Mack's
title company documentation sufficient to cause the title company to insure
title to the applicable parcel of Real Property without exception to the matter
intended to be released by such Real Estate Release), including the return of
any Collateral held by the Goldman Entities to Mack.
(b) By Mack to the Goldman Entities. At the Closing, Mack shall
deliver to the Goldman Entities (i) the Goldman Pay-Off Amount less, $500,000,
in cash by wire transfer in accordance with the payment instructions and
allocated to each of the Goldman Entities in accordance with Section 2.01 and
(ii) fully executed (other than by the Goldman Entities party thereto) Credit
Documents, including, without limitation, the Goldman Bridge Financing Notes and
the Pay-Off Goldman Bridge Financing Notes being allocated to each of the
Goldman Entities in accordance with Sections 2.01 and 2.03.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE GOLDMAN ENTITIES
The Goldman Entities hereby jointly and severally represent and warrant to
Mack that the following representations and warranties are, as of the date
hereof, true and correct:
Section 3.01.00 Organization. Each of the Goldman Entities is a
partnership duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization and has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted.
Section 3.02.00 Enforceability. The execution, delivery and performance of
this Agreement and of all of the documents and instruments required hereby from
the Goldman Entities are within the partnership power of the Goldman Entities;
and the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby has been duly authorized in accordance with the
applicable partnership agreement, of each of the Goldman Entities, and no other
partnership proceedings on the part of any of the Goldman Entities is necessary
to authorize this Agreement or to consummate the transactions contemplated
herein. This Agreement is, and the other documents and instruments required
hereby to which the Goldman Entities are parties will be, when executed and
delivered by the Goldman Entities party thereto, the valid and binding
obligations of each of the Goldman Entities, enforceable against each of the
Goldman Entities in accordance with their respective terms subject to (i)
applicable bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, moratorium or other similar laws relating to creditors' rights
or creditors' remedies generally; and (ii) general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
Section 3.03.00 Consents and Approvals; No Violation or Conflict by the
Goldman Entities. No notice to, filing or registration with, and no permit,
authorization, consent or approval of, any governmental, regulatory or
self-regulatory agency is necessary or is required to be made or obtained by any
of the Goldman Entities in connection with the execution and delivery of this
Agreement by any of the Goldman Entities or for the consummation by each of the
Goldman Entities of the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by each of the Goldman Entities and
the consummation of the transactions contemplated hereby do not and will not (a)
conflict with or result in any breach of any provision of the Certificate of
Limited Partnership, Partnership Agreement or organizational documents of such
Goldman Entity, (b) conflict with or violate any Law, judgment, order, writ,
injunction or decree binding on such Goldman Entity, or any of its respective
properties or assets, or (c) conflict with or result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, modification or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, agreement or other instrument or
obligation to which such Goldman Entity is a party or by which such Goldman
Entity or any of its respective properties or assets may be bound (which would
adversely affect such Goldman Entity's ability to consummate the transaction
contemplated hereby).
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Section 3.04.00 Title to the Shares and 1997 Notes. The Goldman Entities
own of record and beneficially good and valid title to the number of shares, the
number or the aggregate principal amount, as applicable, of the Shares and the
1997 Notes set forth opposite each such Goldman Entity's name on Schedules 2.01
and 2.03 hereto, free and clear of any and all liens, encumbrances, charges,
claims, restrictions, pledges or security interests (other than those arising
under the Securities Act or any state's securities laws or pursuant to this
Agreement). Upon delivery of the Shares to Mack at the Closing and upon Mack's
delivery of the Goldman Bridge Financing Notes in exchange therefor, good and
valid title to the Shares free and clear of all liens, encumbrances, charges,
claims, restrictions, pledges or security interests (other than those arising
under the Securities Act or any state's securities laws or pursuant to this
Agreement), will pass to Mack, except to the extent Mack is a party to fraud or
has notice of an adverse claim. Upon payment of the Goldman Pay-Off Amount to
the Goldman Entities in the amounts set forth on Schedule 2.01 all of the
Issuers' obligations under and with respect to the 1997 Notes and the 1997
Purchase Agreement shall be satisfied in full and the Issuers shall have no
remaining obligations thereunder.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MACK
Mack represents and warrants to the Goldman Entities that the following
representations and warranties are, as of the date hereof, true and correct:
Section 4.01.00 Organization. Mack is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Section 4.02.00 Authority; Enforceability. The execution, delivery and
performance of this Agreement and of all of the documents and instruments
required hereby from Mack are within the corporate power of Mack. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors of Mack,
and no other corporate proceedings on the part of Mack are necessary to
authorize this Agreement or to consummate the transactions contemplated herein.
This Agreement has been, and all of the other documents and instruments required
hereby to which Mack is a party will be, duly and validly executed and delivered
by Mack. This Agreement is, and the other documents and instruments required
hereby will be, when executed and delivered by the parties hereto, the valid and
binding obligations of Mack, enforceable against Mack in accordance with their
respective terms subject to (i) applicable bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer, reorganization, moratorium or other similar
laws relating to creditors' rights or creditors' remedies generally; and (ii)
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
Section 4.03.00 Consents and Approvals; No Violation or Conflict by Mack.
No notice to, filing or registration with, and no permit, authorization, consent
or approval of, any governmental, regulatory or self-regulatory agency is
necessary or is required to be made or obtained by Mack in connection with the
execution and delivery of this Agreement by Mack or for the consummation by Mack
of the transactions contemplated hereby. The execution, delivery and performance
of this Agreement by Mack and the consummation of the transactions contemplated
hereby do not and will not (a) conflict with or result in any breach of any
provision of the Articles of Incorporation or Bylaws of Mack, (b) conflict with
or violate any Law, judgment, order, writ, injunction or decree binding on Mack
or any of its properties or assets or (c) conflict with or violate any contract
or agreement to which Mack or any of its affiliates is a party or by which it or
any of its affiliates is bound, the breach of which could have a Material
Adverse Effect on Mack or would adversely affect Mack's ability to perform its
obligations hereunder.
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ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
Section 5.01.00 Conditions Precedent to Obligations of Mack. The
obligations of Mack to consummate the purchase of the Shares and to repay the
1997 Notes as contemplated herein are subject to the satisfaction or waiver at
or prior to the Effective Time of Closing of the following conditions precedent:
(a) each of the representations and warranties of the Goldman
Entities contained in Article III shall be true and correct in all material
respects when made and at and as of the Effective Time of Closing (except with
respect to such representations and warranties that address matters only as of a
particular date, which shall be true and correct in all material respects as of
such particular date), with the same force and effect as if those
representations and warranties had been made at and as of such time (with such
exceptions, if any, necessary to give effect to events or transactions expressly
permitted herein);
(b) the Goldman Entities shall have complied with the delivery
requirements of Section 2.04(a);
(c) the Goldman Entities shall, in all material respects, have
performed all other obligations and complied with all other covenants necessary
to be performed or complied with by them or it on or before the Effective Time
of Closing;
(d) Mack shall have received from the Goldman Entities all
Releases, including the return of all Collateral pledged to the Goldman
Entities;
(e) the Transaction Documents shall have been terminated
pursuant to Section 7.07; and
(f) the transactions contemplated by the Melham Purchase Agreement
shall have been consummated simultaneously with the Closing hereunder.
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Section 5.02.00 Conditions Precedent to Obligations of the Goldman
Entities. The obligation of the Goldman Entities to consummate the sale of the
Shares and deliver the 1997 Notes as contemplated herein is subject to the
satisfaction or waiver at or prior to the Effective Time of Closing of the
following conditions precedent:
(a) each of the representations and warranties of Mack contained
in Article IV shall be true and correct in all material respects when made and
at and as of the Effective Time of Closing (except with respect to such
representations and warranties that address matters only as of a particular
date, which shall be true and correct in all material respects as of such
particular date), with the same force and effect as if those representations and
warranties had been made at and as of such time (with such exceptions, if any,
necessary to give effect to events or transactions expressly permitted herein);
(b) Mack shall have compiled with the delivery requirements of
Section 2.04(b);
(c) Mack shall, in all material respects, have performed all
obligations and complied with all covenants necessary to be performed or
complied with by it on or before the Effective Time of the Closing;
(d) each of the representations and warranties of Mack contained
in each of the Credit Documents that are qualified by materiality shall be true
and correct when made and at and as of the time of closing of the transactions
contemplated by such Credit Document (except with respect to such
representations and warranties that address matters only as of a particular
date, which shall be true and correct as of such particular date), and each of
the representations and warranties of Mack contained in each of the Credit
Documents that are not so qualified shall be true and correct in all material
respects when made and at and as of the time of closing of the transactions
contemplated by such Credit Document (except with respect to such
representations and warranties that address matters only as of a particular
date, which shall be true and correct in all material respects as of such
particular date), with the same force and effect as if those representations and
warranties had been made at and as of such time (with such exceptions, if any,
necessary to give effect to events or transactions expressly permitted by such
Credit Document);
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(e) the conditions precedent in each of the Credit Documents
shall have been satisfied or waived; and
(f) each of the Credit Documents shall have been executed and
delivered to the Goldman Entities.
ARTICLE VI
TERMINATION; AMENDMENT; WAIVER
Section 6.01.00 Termination. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time prior to the
Effective Time of Closing:
(a) by mutual written consent of Mack and the Goldman Entities;
(b) by Mack at any time following Mack becoming aware that the
Goldman Entities have breached any representation, warranty or covenant
contained in this Agreement in any material respect, if Mack has notified the
Goldman Entities of the breach and the breach has continued without cure for a
period of thirty (30) days after the notice of breach; provided that Mack has
not breached any representation, warranty or covenant contained in this
Agreement in any material respect;
(c) by the Goldman Entities at any time following the Goldman
Entities' becoming aware that Mack has breached any representation, warranty or
covenant contained in this Agreement in any material respect, if the Goldman
Entities have notified Mack of the breach and the breach has continued without
cure for a period of thirty (30) days after the notice of breach; provided that
the Goldman Entities have not breached any representation, warranty or covenant
contained in this Agreement in any material respect;
(d) by Mack or the Goldman Entities, if the Effective Time of
Closing shall not have occurred on or before April 5, 1999; or
(e) by Mack or the Goldman Entities, if any court of competent
jurisdiction in the United States or other United States governmental body shall
have issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated herein and such
order, decree, ruling or other action shall have become final and nonappealable.
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Section 6.02.00 Effect of Termination. If this Agreement is terminated
pursuant to Section 6.01 hereof, this Agreement shall forthwith become void and
have no effect, without any Liability on the part of any party or its directors,
officers or shareholders except as provided in this Section; provided, however,
that nothing contained in this Section 6.02 shall relieve any party from
Liability for any breach of this Agreement.
Section 6.03.00 Amendment. This Agreement may be amended by action taken
by Mack and the Goldman Entities; provided that no amendment to this Agreement
shall be made except by an instrument in writing signed on behalf of all of the
parties.
Section 6.04.00 Extension; Waiver. At any time prior to the Effective Time
of Closing, the parties may (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE VII
INDEMNITIES AND ADDITIONAL COVENANTS
Section 7.01.00 Survival. All representations, warranties, covenants, and
obligations in this Agreement, the Schedules, Exhibits, and any other
certificate or document delivered pursuant to this Agreement will survive the
Closing until the termination of the indemnification provisions contained in
Sections 7.02 and 7.03 hereof with respect to such representation, warranty or
covenant. Mack acknowledges that the Goldman Entities have not made any
representations or warranties other than as set forth in this Agreement or the
schedules or exhibits attached hereto.
Section 7.02.00 The Goldman Entities' Indemnity.
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(a) Each of the Goldman Entities (collectively, the "Goldman
Indemnifying Parties") hereby jointly and severally indemnify and hold Mack and
its affiliates, and their respective officers, directors and shareholders and
their successors and permitted assigns (each, a "Mack Indemnified Party"),
harmless from and against any and all losses, damages, costs, expenses,
liabilities, obligations, claims of any kind, including, without limitation,
reasonable attorneys' fees and other legal costs and expenses and diminution in
value, whether or not involving a third party claim (hereinafter referred to
collectively as "Losses"), that any Mack Indemnified Party may at any time
suffer or incur, or become subject to, as a result of or in connection with: (i)
any breach or inaccuracy of any of the representations and warranties made by
the Goldman Entities in or pursuant to this Agreement; and (ii) any failure of
the Goldman Entities to carry out, perform, satisfy and discharge any of their
covenants, agreements, undertakings, liabilities or obligations under this
Agreement or under any of the documents and instruments delivered by the Goldman
Entities pursuant to this Agreement; provided, however, that the Goldman
Indemnifying Parties shall not be required to indemnify and hold the Mack
Indemnified Parties harmless pursuant to Section 7.02(a)(i) or (ii) unless such
right is asserted (whether or not the Losses have actually been incurred) by
written notice to the Goldman Indemnifying Parties within 18 months of the
Effective Time describing with specificity the facts giving rise to the asserted
right (unless such right is asserted pursuant to the representations and
warranties set forth in Section 3.04, in which event there shall be no time
limitation on where such right is asserted); provided, further, that no Mack
Indemnified Party shall be entitled to recover any Losses arising from a breach
of the representations and warranties set forth in Section 3.04 hereof to the
extent such breach arises directly or indirectly from the failure of any of the
representations and warranties made by Mack in the 1997 Purchase Agreement to be
true and correct.
(b) The amounts for which the Goldman Indemnifying Parties shall
be liable under Section 7.02(a) of this Agreement shall be net of any insurance
proceeds received by the Mack Indemnified Parties in connection with the facts
and circumstances giving rise to the right of indemnification. In addition, such
amounts shall be (i) net of any federal or state income tax benefit realized or
the then-present value (based on a discount rate of 6%) of any such income tax
benefit to be realized by the Mack Indemnified Parties by reason of the facts
and circumstances giving rise to the indemnification, and (ii) increased by the
amount of any federal or state income tax required to be paid by the Mack
Indemnified Parties as a result of the accrual or receipt of the indemnification
payment (including any amount payable pursuant to this clause (ii)). For
purposes of the preceding sentence, the amount of any state income tax benefit
or cost shall take into account the federal income tax effect of such benefit or
cost.
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(c) In the event a claim against a Mack Indemnified Party arises
that is covered by the indemnity provisions of Section 7.02(a) of this
Agreement, notice shall be given promptly by one of the Mack Indemnified Parties
to the Goldman Indemnifying Parties. Provided that the Goldman Indemnifying
Parties admit in writing to the party seeking indemnification that such claim is
covered by the indemnity provisions of Section 7.02(a) hereof, the Goldman
Indemnifying Parties shall have the right to contest and defend by all
appropriate legal proceedings such claim and to control all settlements (unless
the party seeking indemnification agrees to assume the cost of settlement and to
forgo such indemnity) and to select lead counsel to defend any and all such
claims at the sole cost and expense of the Goldman Indemnifying Parties;
provided, however, that the Goldman Indemnifying Parties may not effect any
settlement that could result in any cost, expense or liability to, or have any
Material Adverse Effect upon any Mack Indemnified Party unless such party
consents in writing to such settlement and the Goldman Indemnifying Parties
agree to indemnify such party therefor. In the event the Goldman Indemnifying
Parties do not admit in writing to a party seeking indemnification that such
claim is covered by the indemnity provisions of Section 7.02(a) hereof, the Mack
Indemnified Party shall take such actions as it deems necessary to defend such
claim; provided, however, that the Mack Indemnified Parties may not effect any
settlement that could result in any cost, expense, liability to, or have any
Material Adverse Effect upon, any Goldman Indemnifying Party without consent of
such Goldman Indemnifying Party, which consent shall not be unreasonably
withheld and which consent or objection thereto must be provided in a timely
manner as the circumstances dictate and in any event within ten (10) business
days of such request. The party seeking indemnification may select counsel to
participate in any defense, in which event such counsel shall be at the sole
cost and expense of such party. In connection with any such claim, action or
proceeding, the parties shall cooperate with each other and provide each other
with access to relevant books and records in their possession.
Section 7.03.00 Mack's Indemnity.
(a) Each of Cadmus Communications Corporation and Mack
(collectively, the "Mack Indemnifying Parties") hereby indemnifies and holds the
Goldman Entities and their partners, officers, directors and shareholders and
their successors and permitted assigns ("Goldman Indemnified Parties") harmless
from and against, any and all Losses that the Goldman Indemnified Parties may at
any time suffer or incur, or become subject to, as a result of or in connection
with: (i) any breach or inaccuracy of any of the representations and warranties
made by Mack in or pursuant to this Agreement and (ii) any failure by Mack to
carry out, perform, satisfy and discharge any of its covenants, agreements,
undertakings, liabilities or obligations under this Agreement or under any of
the documents and instruments delivered by Mack; provided, however, that the
Mack Indemnifying Parties shall not be required to indemnify and hold the
Goldman Indemnified Parties harmless pursuant to Section 7.03(a)(i) unless such
right is asserted (whether or not the Losses have actually been incurred) by
written notice to the Mack Indemnifying Parties within 18 months of the
Effective Time of Closing describing with specificity the facts giving rise to
the asserted right.
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(b) The amounts for which the Mack Indemnifying Parties shall be
liable under Section 7.03(a) of this Agreement shall be net of any insurance
proceeds received by the Goldman Indemnified Parties in connection with the
facts and circumstances giving rise to the right of indemnification. In
addition, such amounts shall be (i) net of any federal or state income tax
benefit realized or the then-present value (based on a discount rate of 6%) of
any such income tax benefit to be realized by the Goldman Indemnified Parties by
reason of the facts and circumstances giving rise to the indemnification, and
(ii) increased by the amount of any federal or state income tax required to be
paid by the Goldman Indemnified Parties as a result of the accrual or receipt of
the indemnification payment (including any amount payable pursuant to this
clause (ii)). For purposes of the preceding sentence, the amount of any state
income tax benefit or cost shall take into account the federal income tax effect
of such benefit or cost.
(c) In the event a claim against the Goldman Indemnified Parties
arises that is covered by the indemnity provisions of Section 7.03(a) of this
Agreement, notice shall be given promptly by the Goldman Indemnified Parties to
the Mack Indemnifying Parties which notice shall designate one of the Goldman
Indemnified Parties as representative for all Goldman Indemnified Parties for
purposes of this Section 7.03 (the "Goldman Representative"). The Goldman
Representative shall be authorized to act on behalf of, and to bind, all the
Goldman Indemnified Parties, the Mack Indemnifying Parties shall be entitled to
rely on the Goldman Representative without any investigation. Provided that the
Mack Indemnifying Parties admit in writing to the Goldman Representative that
such claim is covered by the indemnity provisions of Section 7.03(a) hereof, the
Mack Indemnifying Parties shall have the right to contest and defend by all
appropriate legal proceedings such claim and to control all settlements (unless
the Goldman Representative agrees to assume the cost of settlement and to forgo
such indemnity) and to select lead counsel to defend any and all such claims at
the sole cost and expense of the Mack Indemnifying Parties; provided, however,
that the Mack Indemnifying Parties may not effect any settlement that could
result in any cost, expense or liability to, or have any Material Adverse Effect
upon, the Goldman Indemnified Parties unless the Goldman Representative consents
in writing to such settlement and the Mack Indemnifying Parties agree to
indemnify the Goldman Indemnified Parties therefor. In the event the Mack
Indemnifying Parties do not admit in writing to a party seeking indemnification
that such claim is covered by the indemnity provisions of Section 7.03(a)
hereof, the Goldman Representative shall take such actions as it deems necessary
to defend such claim; provided, however, that the Goldman Representative and
Goldman Indemnified Parties may not effect any settlement that could result in
any cost, expense, liability to, or have any Material Adverse Effect upon any
Mack Indemnifying Party without consent of such Mack Indemnifying Party, which
consent shall not be unreasonably withheld and which consent or objection
thereto must be provided in a timely manner as the circumstances dictate and in
any event within ten (10) business days of request. The Goldman Representative
may select counsel to participate in any defense, in which event the Goldman
Indemnified Parties' counsel shall be at the sole cost and expense of the
Goldman Indemnified Parties. In connection with any such claim, action or
proceeding, the parties shall cooperate with each other and provide each other
with access to relevant books and records in their possession.
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Section 7.04.00 Sole and Exclusive Remedy. The provisions of
indemnification set forth in this Article VII shall constitute the sole and
exclusive remedy of the Mack Indemnified Parties and the Goldman Indemnified
Parties for any Losses arising under this Agreement sustained by such party
except with respect to (a) Losses sustained by any Mack Indemnified Party as a
result of or in connection with (i) fraud under any applicable Law, or (ii) any
intentional misrepresentation in making any representations or (b) Losses
sustained by any Goldman Indemnified Party as a result of or in connection with
(i) fraud under any applicable Law, or (ii) any intentional misrepresentation in
making any representations.
Section 7.05.00 Further Assurances. In case at any time after the Closing
Date any further action is necessary or desirable to carry out the purposes of
this Agreement, each of the parties to this Agreement will take, without
additional consideration, such further action (including the execution and
delivery of such further instruments and documents and the grant of access to
any individuals, premises, books or records) as any other party reasonably may
request.
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Section 7.06.00 Mutual Release.
(a) Except as otherwise provided in this Section 7.06, effective
upon the Closing and receipt of the amounts set forth in Schedules 2.01 and
2.03, each of the Goldman Entities, on behalf of itself and each of its
Affiliates hereby releases and forever holds harmless Melham Holdings, Inc.,
Melham, the Issuers and their Subsidiaries and their Affiliates, directors,
officers and agents (the "Released Parties") from and against all obligations,
actions, causes of action, claims, demands, damages, costs, expenses and
liabilities whatsoever, whether known or unknown, liquidated or contingent, at
law or in equity (collectively, "Claims"), which such Goldman Entity ever had,
now have or which they or their successors, assigns, heirs, executors and
administrators hereafter can, shall or may have against the Released Parties or
their successors or assigns with respect to all rights, obligations and other
matters arising out of or related to the Transaction Documents, including
without limitation (i) any obligations of the Released Parties arising under any
Transaction Document, and (ii) any rights of such Goldman Entity to any capital
stock or other securities of the Released Parties (or any security convertible
or exchangeable for, or any options, warrants or rights to purchase, such
capital stock or securities (and any claims arising therefrom); provided,
however, that nothing in this sentence shall release any Claims which such
Goldman Entity ever had, now have or which they or their successors, assigns,
heirs, executors and administrators hereafter can, shall or may have against the
Released Parties or their successors or assigns under this Agreement or any
agreement, certificate or instrument executed and delivered in connection with
this Agreement; and provided, further, that nothing in this Section 7.06 shall
be deemed to release any obligations of the Released Parties under the Credit
Documents.
(b) Effective upon the Closing, each of Melham Holdings, Inc.,
Melham and the Issuers, on behalf of themselves and each of their Subsidiaries
and Affiliates (the "Mack Group") hereby releases and forever holds harmless the
Goldman Entities and their Subsidiaries, Affiliates, partners, directors,
officers and agents (the "Goldman Released Parties") from and against all
Claims, which the Mack Group ever had, now have or which they or their
successors, assigns, heirs, executors and administrators hereafter can, shall or
may have against the Goldman Released Parties or their successors or assigns
with respect to all rights, obligations and other matters arising out of or
related to the Transaction Documents, including without limitation (i) any
obligations of the Goldman Released Parties arising under any Transaction
Document, and (ii) any rights of the Mack Group to any capital stock or other
securities of the Goldman Released Parties (or any security convertible or
exchangeable for, or any options, warrants or rights to purchase, such capital
stock or securities (and any claims arising therefrom); provided, however, that
nothing in this sentence shall release any Claims which the Mack Group ever had,
now have or which they or their successors, assigns, heirs, executors and
administrators hereafter can, shall or may have against the Goldman Released
Parties or their successors or assigns under this Agreement or any agreement,
certificate or instrument executed and delivered in connection with this
Agreement; and provided further, that nothing in this Section 7.06 shall be
deemed to release any obligations of the Goldman Released Parties under the
Indenture.
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Section 7.07. 00 Termination of Transaction Documents. Effective upon
consummation of the Closing on the Closing Date and receipt of the Goldman
Pay-Off Amount, as allocated in accordance with Schedule 2.01, and the Goldman
Bridge Financing Notes, as allocated in accordance with Schedule 2.03 by the
Goldman Entities and the receipt of the Shares and the 1997 Notes by Mack, each
of the parties hereto agrees that each of the Transaction Documents is
terminated and of no further force and effect. Melham Holdings, Inc., Melham and
the Issuers, on the one hand, and the Goldman Entities, on the other hand, each
agree to take any and all further action that is necessary or desirable to carry
out the purposes of this Section 7.07, including, without additional
consideration, such further action (including the execution and delivery of such
further instruments and documents and the grant of access to any individuals,
premises, books or records) as any other party reasonably may request in order
to evidence the termination of the Transaction Documents and the delivery of the
Releases.
ARTICLE VIII
MISCELLANEOUS
Section 8.01.00 Entire Agreement; Assignment. This Agreement, together
with any Schedules and Exhibits and the Credit Documents (a) constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both written and oral,
between the parties or any of them with respect to the subject matter hereof
with the exception of the Goldman Pay-Off Letter and the Termination and Release
Agreement, and (b) shall not be assigned by operation of law or otherwise.
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Section 8.02.00 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or, if mailed, ten (10) business days after
being mailed by United States first-class, certified or registered mail, postage
prepaid, or, if sent by overnight delivery by a nationally recognized courier
such as DHL, Federal Express or United Parcel Service, two (2) business days
after deposit with such courier, or, if sent by telecopy, upon confirmation of
receipt, to the other party at the following address (or at such other address
as shall be given in writing by any party to the other):
If to the Issuers:
Mack Printing Company
1991 Northampton Street
Easton, PA 18042-3189
Attention: President
Facsimile No.: (610) 250-7285
With a copy to:
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
Telephone: (804) 788-8200
Facsimile: (804) 788-8218
Attention: T. Justin Moore, III
If to one of the
Goldman Entities: to such Goldman Entity at the address
specified for such communications in
Schedule 2.03,
With a copy to: Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Paul Reinstein, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
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<PAGE>
Section 8.03.00 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its conflicts of laws principles or rules.
Section 8.04.00 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 8.05.00 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, their respective
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 8.06.00 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 8.07.00 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
Section 8.08.00 Fees and Expenses. Except as otherwise provided in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the transactions contemplated herein are consummated.
Section 8.09.00 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effectuate the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the extent
possible.
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Section 8.10.00 No Reliance. No third party is entitled to rely on any of
the representations, warranties and agreements contained in this Agreement.
Melham, the Issuers and the Goldman Entities assume no Liability to any third
party because of any reliance on the representations, warranties and agreements
of Mack and the Goldman Entities contained in this Agreement.
Section 8.11.00 Consent to Jurisdiction. Melham, the Issuers and the
Goldman Entities each irrevocably submits to the exclusive jurisdiction of (a)
the state courts of the State of New York and (b) the United States District
Court for the Southern District of New York, for the purposes of any suit,
action or other proceeding arising out of this Agreement or any transactions
contemplated hereby. Each of the parties hereto agree that process may be served
in connection with any matter in New York in accordance with the provisions of
Section 8.02 hereof.
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IN WITNESS WHEREOF, the parties have caused this Stock and Note Purchase
Agreement to be duly executed as of the day and year first above written.
MELHAM, INC.
By:__________________________________________
Name: Scott E. M. DeNardo
Title: Secretary
ISSUERS:
MACK PRINTING COMPANY
By:____________________________________________
Name: Steven H. Smith
Title: President, Chief Executive Officer and
Treasurer
MACK PRINTING GROUP, INC.
By:__________________________________________
Name: Scott E. M. DeNardo
Title: Vice President, Administration,
General Counsel and Secretary
SCIENCE CRAFTSMAN INCORPORATED
By:__________________________________________
Name: Steven H. Smith
Title: Vice President, Secretary and Treasurer
PORT CITY PRESS, INC.
By: __________________________________________
Name: Steven H. Smith
Title: President and Treasurer
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<PAGE>
THE GOLDMAN ENTITIES:
G.S. MEZZANINE PARTNERS, L.P.
By: GS Mezzanine Advisors, L.P.,
General Partner
By: GS Mezzanine Advisors, Inc.,
General Partner
By:__________________________________________
Name:
Title:
G.S. MEZZANINE PARTNERS OFFSHORE, L.P.
By: GS Mezzanine Advisors (Cayman), L.P.,
General Partner
By: GS Mezzanine Advisors, Inc.,
General Partner
By:__________________________________________
Name:
Title:
STONE STREET FUND 1997, L.P., as successor
in interest to THE GOLDMAN SACHS GROUP, L.P.
By: Stone Street Asset Corp.,
General Partner
By:__________________________________________
Name:
Title:
BRIDGE STREET FUND 1997, L.P., as successor
in interest to THE GOLDMAN SACHS GROUP, L.P.
By: Stone Street Asset Corp.,
General Partner
By: __________________________________________
Name:
Title:
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WITH RESPECT SOLELY TO EFFECTUATING
SECTION 7.03:
CADMUS COMMUNICATIONS CORPORATION
By:_______________________________________
Name: Bruce V. Thomas
Title: Senior Vice President,
Finance and Administration
WITH RESPECT SOLELY TO EFFECTUATING
SECTION 7.07:
__________________________________________
Nathu R. Puri
WITH RESPECT SOLELY TO EFFECTUATING
SECTION 7.07:
MELHAM HOLDINGS INC.
By:_______________________________________
Name: Scott E. M. DeNardo
Title: Secretary
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