SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 29, 1996
HERFF JONES, INC.
(Exact Name of registrant as specified in its charter)
INDIANA 33-96680 35-1637714
--------------- ----------- -------------------
(State or other Commission (IRS Employer
Jurisdiction) File Number Identification No.)
4501 West 62nd Street, Indianapolis, Indiana 46268
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(317) 297-3740
----------------------------------------------------
(Registrant's telephone number, including area code)
1
<PAGE>
Item 2. Acquisition or Disposition of Assets
On April 29, 1996 Herff Jones, Inc. closed the agreement to purchase
certain assets of the Delmar Companies Division ("Delmar") of Continental
Graphics Corporation. The assets acquired consist of the following:
Notes & Accounts Receivable
Inventories
Property, Plant & Equipment
Prepaid Expenses
The purchase price was determined based upon the book value of inventories,
property, plant & equipment, and prepaid expenses plus a premium over book value
of $3,257 million combined with accounts and notes receivable at 85% of net book
value.
The total purchase price is approximately $20 million in cash plus the
assumption of certain operating liabilities. The purchase will be funded from
Herff Jones' existing revolving credit facility.
Delmar operates a yearbook printing plant and a school photography
processing facility at a single site in Charlotte, North Carolina. Herff Jones
intends to continue to use the assets purchased to manufacture and sell
yearbooks and process school photography products.
Item 7. Financial Statements and Exhibits
Audited financial information for Delmar and pro forma financial
information for Herff Jones, giving effect to the Delmar acquisition, are not
available at the time of this report. Such financial information will be filed
as soon as practicable, in accordance with Form 8-K.
(c) The following exhibits are filed with this report:
Exhibit 2.1. Asset Purchase Agreement, dated as of March 28, 1996,
between Herff Jones, Inc. and Continental Graphics Corporation
Exhibit 2.2 Amendment No. 1 to Asset Purchase Agreement
2
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HERFF JONES, INC.
May 13, 1996 By: /s/ Lawrence F. Fehr
--------------------------
Lawrence F. Fehr
Vice President and
Chief Financial Officer
3
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
- - ----------- ----------- ----
2.1 Asset Purchase Agreement, dated as of March 28, 5
1996, between Herff Jones, Inc. and
Continental Graphics Corporation
2.2 Exhibit 2.2 Amendment No. 1 to Asset 55
Purchase Agreement
4
EXHIBIT 2.1
-----------
SALE OF CERTAIN ASSETS
OF
DELMAR COMPANIES DIVISION
OF
CONTINENTAL GRAPHICS CORPORATION
TO
HERFF JONES, INC.
5
<PAGE>
TABLE OF CONTENTS
ASSET PURCHASE AGREEMENT
ARTICLE 1 THE ASSET PURCHASE............................................... 1
Section 1.1 Sale and Transfer of Assets...................... 1
Section 1.2 The Excluded Assets.............................. 3
Section 1.3 Assumption of Liabilities........................ 5
Section 1.4 The Excluded Liabilities......................... 5
Section 1.5 Purchase Price and Payment Provisions............ 6
Section 1.6 Closing.......................................... 8
Section 1.7 Purchase Price and
Assumption Allocation........................ 10
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF PURCHASER...................... 10
Section 2.1 Organization and Qualification................... 10
Section 2.2 Authority Relative to This Agreement............. 10
Section 2.3 Absence of Breach; No Consents................... 11
Section 2.4 Brokers.......................................... 11
Section 2.5 Financial Ability to Perform......................11
Section 2.6 No Knowledge of Seller's Breach.................. 12
Section 2.7. Securities Regulation............................ 12
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER.................. 12
Section 3.1 Organization and Qualification................... 12
Section 3.2 Authority Relative to This Agreement............. 12
Section 3.3 Absence of Breach; No Consents................... 12
Section 3.4 Brokers.......................................... 13
Section 3.5 Financial Statements and Reports................. 13
Section 3.6 Lists of Properties, Contracts and
Other Data................................... 13
Section 3.7 Absence of Material Differences
from Disclosure Document......................... 15
(a) No Undisclosed Liabilities....................... 15
(b) No Material Adverse Change, Etc.................. 15
(c) Litigation....................................... 16
(d) Compliance with Laws............................. 17
(e) Environmental Matters............................ 17
(f) Assets........................................... 18
(g) Title............................................ 18
(h) Intangibles...................................... 19
(i) Inventory........................................ 19
(j) Labor Matters.................................... 19
(k) Division Facilities and Equipment................ 19
(l) Accounts Receivable.............................. 19
(m) Real Property........................... 19
(n) Employee Benefit Plans........................... 21
(o) Extraordinary Warranties................ 21
(p) Investment Representations.............. 21
i
6
<PAGE>
ARTICLE 4 COVENANTS OF EACH PARTY................................... 21
Section 4.1 Efforts to Consummate Transactions............... 21
Section 4.2 Cooperation...................................... 21
Section 4.3 Expenses......................................... 22
Section 4.4 Publicity........................................ 22
Section 4.5 Further Assurances............................... 22
Section 4.6 No Assignment If Breach.......................... 23
Section 4.7 "AS IS" Purchase................................. 23
Section 4.8 Notice of Changes................................ 23
Section 4.9 Transition of Representatives
and Employees.................................... 24
Section 4.10 Employee Matters................................. 24
ARTICLE 5 ADDITIONAL COVENANTS OF THE SELLER........................ 25
Section 5.1 Conduct Pending Closing.......................... 25
Section 5.2 Use of "Delmar" Name............................. 26
Section 5.3 Access To Information............................ 26
Section 5.4 Environmental Matters............................ 27
Section 5.5 Books and Records................................ 27
Section 5.6 Protective Covenants............................. 27
(a) Noncompetition....................................27
(b) Nonsolicitation...................................28
(c) Confidentiality...................................28
(d) Equitable Relief..................................28
(e) Reformation.......................................28
Section 5.7 No Negotiations.................................. 29
ARTICLE 6 ADDITIONAL COVENANTS OF PURCHASER......................... 29
Section 6.1 Employee Matters................................. 29
(a) Employment Offers................................ 29
(b) Hiring of Employees.............................. 29
(c) Health Benefits.................................. 29
(d) WARN ACT......................................... 30
(e) Third Party Beneficiaries........................ 30
(f) 401(k) Savings Plan.............................. 31
Section 6.2 Books and Records................................ 31
Section 6.3 Confidentiality.................................. 31
Section 6.4 Waiver of Bulk Sales Law Compliance.............. 31
Section 6.5 Resale Certificate............................... 31
ARTICLE 7 CONDITIONS TO CLOSING..................................... 32
Section 7.1 Conditions To Obligations
of Purchaser................................. 32
(a) Performance of Agreement......................... 32
(b) Accuracy of Representations
and Warranties............................... 32
(c) Officers' Certificate............................ 32
(d) Absence of Injunctions........................... 32
ii
7
<PAGE>
(e) Approvals and Consents of
Third Parties................................ 32
(f) Opinion of Counsel............................... 33
(g) Representative Agreements........................ 33
(h) Real Property Matters............................ 33
(i) Deeds...................................... 33
(ii) Surveys.................................... 33
(i) Employee Matters ............................... 34
(j) Health Insurance ................................ 34
Section 7.2 Conditions To Obligations of Seller.............. 34
(a) Performance of Agreement......................... 34
(b) Accuracy of Representations
and Warranties............................... 34
(c) Officers' Certificate............................ 34
(d) Absence of Injunctions........................... 34
(e) Approvals and Consents of
Third Parties................................ 35
(f) Opinion of Counsel............................... 35
(g) Health Insurance ................................ 35
ARTICLE 8 TERMINATION............................................... 35
Section 8.1 Termination...................................... 35
Section 8.2 Effect of Termination............................ 36
ARTICLE 9 SURVIVAL AND REMEDY; INDEMNIFICATION...................... 36
Section 9.1 Survival......................................... 36
Section 9.2 Exclusive Remedy................................. 36
Section 9.3 Indemnity by Seller.............................. 36
Section 9.4 Indemnity by Purchaser........................... 38
Section 9.5 Further Qualifications
Respecting Indemnification................... 39
Section 9.6 Procedures Respecting
Third Party Claims........................... 39
Section 9.7 Arbitration...................................... 40
ARTICLE 10 GENERAL PROVISIONS........................................ 40
Section 10.1 Entire Agreement; Amendment...................... 40
Section 10.2 Waiver........................................... 40
Section 10.3 Notices.......................................... 41
Section 10.4 Interpretation................................... 42
Section 10.5 Assignment....................................... 42
Section 10.6 Governing Law.................................... 42
Section 10.7 Savings Provision................................ 42
Section 10.8 Construction..................................... 42
Section 10.9 Time Is of the Essence........................... 42
Section 10.10 Index to Definitions............................. 43
iii
8
<PAGE>
EXHIBITS
Exhibit A Note
Exhibit B Bill of Sale and Assignment
Exhibit C Deed
Exhibit D Assumption Agreement
SCHEDULES
Schedule 1.1(n) Other Assets
Schedule 1.2(j) Other Excluded Assets
Schedule 1.4(f) Other Excluded Liabilities
Schedule 1.5 Estimated Balance Sheet
Schedule 3.3 Consents; Breaches
9
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made this 28th day of
March, 1996, by and between Herff Jones, Inc. (the "Purchaser"), an Indiana
corporation, and Continental Graphics Corporation (the "Seller"), a Delaware
corporation.
WITNESSETH
WHEREAS, the Delmar Companies, an unincorporated division of Seller (the
"Division"), is comprised of the Delmar Printing Company, which is principally
engaged in the printing of school yearbooks, as well as commemorative scholastic
and military books, textbooks and other casebound books and Delmar Studio, which
is principally engaged in supplying student portrait, sports and other related
photo processing, as well as certain computerized school services, including
yearbook prints and student I.D.s;
WHEREAS, Seller is the owner of all of the assets used in the conduct of
the business of the Division (the "Business");
WHEREAS, upon the terms and conditions set forth herein, Seller desires to
sell, and Purchaser desires to purchase, certain assets of Seller used in the
conduct of the Business; and
WHEREAS, upon the terms and conditions set forth herein, Purchaser desires
to assume, and Seller desires to transfer, certain liabilities of Seller
incurred in connection with the conduct of the Business.
NOW, THEREFORE, in consideration of the agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
THE ASSET PURCHASE
Section 1.1 Sale and Transfer of Assets. Subject to the terms and
conditions set forth in this Agreement, Seller and Purchaser agree that at the
Closing (as defined in Section 1.6), Seller will sell, convey, transfer, assign
and deliver to Purchaser, and Purchaser will purchase from Seller, all of
Seller's right, title and interest in and to, and only in and to, the following
assets, properties, privileges, claims, contracts, business and rights of Seller
used solely in the conduct of the Business, as of the Closing (all of which are
sometimes collectively referred to as the "Assets"), but excluding all Excluded
Assets (as defined in Section 1.2 below):
(a) all accounts and notes receivable as of the Closing, including
accounts receivable, and notes receivable from or advances to, the
Division's independent dealers and sales representatives (the
"Representatives") whether current or noncurrent, whether or not, in the
case of Representative advances, subject to off-set for commissions
10
<PAGE>
earned, generated by, or received in connection with, sales of the Division
(the "Receivables");
(b) all prepayments, prepaid expenses, advances to Representatives,
credits from suppliers, deposits and the like (the "Prepayments") made by
Seller in the ordinary course of business of the Division prior to the
Closing (other than with respect to insurance), which Prepayments (as of
the date set forth therein) are listed in the disclosure document delivered
to Purchaser simultaneously herewith (the "Disclosure Document");
(c) all items of tangible personal property (together "Personal
Property") owned, held or leased by the Division (or owned or held by
Seller on behalf of the Division) and located at the Division or in the
possession of Division sales representatives as of the Closing, used in the
conduct of the Business, including:
(i) raw materials, work-in-process, finished goods, supplies
(including production, marketing, maintenance, office, shop and
other supplies), and other inventories of tangible personal
property intended to be used, consumed, disposed of or sold in
the ordinary course of the Business ("Inventory"); and
(ii) machinery, equipment, fixtures, fittings, moveable plant,
furniture, tools, spare parts and other similar items; and
automobiles, trucks, trailers and other vehicles (collectively,
the "Equipment");
(d) all of Seller's sales representative agreements, independent
dealer agreements, finishing agreements and other similar agreements with,
or obligations of or to, Representatives including, without limitation, the
benefit, if any, of covenants not to compete with the Division or solicit
its customers or employees or similar covenants contained in any such
agreement (the "Representative Agreements") and Seller's consulting
agreements with James A. Blanchard, Jr. and Inenco, Inc., dated January 31,
1995, and the employment letter with Will Skow, dated October 31, 1995 (the
"Consulting Agreements");
(e) all contracts, agreements, arrangements and understandings, made
in the ordinary course of and relating solely to the Business, to which the
Division is a party (or Seller is a party on behalf of the Division) at the
Closing Date, including those sales and purchase agreements, yearbook
contracts with schools, orders (including sales backlog), supply and
distribution arrangements, consignment arrangements, personal property
leases and warranties relating solely to the Business including, without
limitation, the benefit, if any, of covenants not to compete with the
Division or solicit its customers or employees or similar covenants
contained in any such agreement, but excluding insurance policies,
contracts or arrangements, health or retirement or other employee benefit
plans or agreements or consulting agreements (other than the Representative
Agreements and the Consulting Agreements) (the "Contracts");
(f) all intangible assets of an intellectual property nature
associated solely with the Division, including registered and unregistered
trademarks, service marks and trade names, all other trademark rights
(including the name "Delmar" and all variations and
2
11
<PAGE>
permutations thereof), and all associated goodwill, all statutory,
common-law and registered copyrights, all patents, patent applications,
inventions, shop rights, know-how, trade secrets and confidential
information associated solely with the Division and all rights in respect
of any license held or granted by Seller to utilize or receive the benefit
of any of the foregoing (the "Intangibles");
(g) all proprietary computer software owned or developed by the
Division and used solely in the Business, including the Division's TOPS and
DELAVISION software systems and all rights in respect of any license held
or granted by Seller to utilize or receive the benefit of any of the
foregoing or any transferable computer software utilized by the Division in
the Business;
(h) the right to receive mail and other communications addressed to
the Division or Seller related to the Assets or the conduct of the Business
after the Closing Date, including, without limitation, mail and
communications from customers, suppliers, Representatives, agents and
others;
(i) all lists and records of the Division pertaining to customers,
suppliers, and distributors, subject to any confidentiality agreements that
may be in force, and all other books, ledgers, financial records, files,
correspondence, documents, plats, architectural plans, drawings and
specifications, catalogues, brochures, art work and creative or advertising
materials and business records and data of the Division in whatever form;
(j) all goodwill of the Business as a going concern and all other
intangible properties of the Division, including the assembled work force
of the Division;
(k) the real property owned in fee (the "Real Property") that is
identified in the Disclosure Document on which the facilities of the
Division (the "Division Facilities") are located, together with the
Division Facilities and all other buildings, fixtures and improvements
thereon, and all rights, privileges, permits and easements appurtenant
thereto;
(l) rights in any governmental permit, license or registration held by
Seller in respect of the Division or the operation of the Business, to the
extent transferable;
(m) Seller's rights to claims, refunds, causes of action, choses in
action, rights of recovery and rights of set-off related or incidental to,
or otherwise associated with, the Assets and any security interests in the
collateral securing the Receivables, other than insurance recoveries
pursuant to any insurance policies included in Excluded Assets as set forth
in Section 1.2 hereof; and
(n) all other assets listed on Schedule 1.1(n).
Section 1.2 The Excluded Assets. Notwithstanding Section 1.1, the parties
hereto agree that the following assets (the "Excluded Assets") are expressly
excluded from the purchase and sale contemplated hereby and, as such, are not
included in the Assets:
3
12
<PAGE>
(a) Cash, cash equivalents and marketable securities;
(b) Seller's rights in its corporate charter, qualifications to do
business as a foreign corporation, arrangements with registered agents
relating to such qualifications, taxpayer or other identification numbers,
seals, minute books, stock transfer books and blank stock certificates of
Seller;
(c) Seller's rights arising under this Agreement;
(d) Seller's rights to receive mail and other communications addressed
to it or to the Division with respect to Excluded Assets or Excluded
Liabilities (as defined in Section 1.4);
(e) Seller's rights to any refunds, credits or other payments
respecting federal, state, county, local, foreign and other taxes
(including, without limitation, income, profits, premium, estimated,
excise, sales, use, occupancy, gross receipts, franchise, ad valorem,
severance, capital levy, production, transfer, withholding, employment and
payroll related, and property taxes, import duties and other governmental
charges and assessments), whether attributable to statutory or nonstatutory
rules and whether or not measured in whole or in part by net income, and
including interest, additions to tax or interest, and penalties with
respect thereto ("Taxes") pertaining to the operation of the Business prior
to the Closing (as defined below);
(f) Seller's rights to claims, refunds, causes of action, choses in
action, rights of recovery and rights of set-off related or incidental to,
or otherwise associated with, the Excluded Assets or Excluded Liabilities;
(g) all insurance policies, insurance reserves and insurance deposits,
including, without limitation, reserves, deposits, dividends, refunds or
premium adjustments relating to workers' compensation, insurance
prepayments, and all rights thereunder pertaining to the operation of the
Business prior to the Closing (as defined below);
(h) all amounts due to the Division in respect of any intercompany
transaction between the Division (or Seller on behalf of the Division) on
the one hand, and Seller or an Affiliate of Seller on the other, or any
contract relating thereto, whether or not such transaction or contract
relates to the provision of goods and services, tax sharing arrangements,
payment arrangements, banking arrangements, intercompany charges or
balances, or the like ("Intercompany Transactions");
(i) Seller's and the Division's business records related to the
Excluded Assets or the Excluded Liabilities;
(j) any employment agreement with any Employee and any consulting
agreement with any person relating to the Business (other than the
Consulting Agreements); and
(k) all other assets listed on Schedule 1.2(k).
4
13
<PAGE>
Section 1.3 Assumption of Liabilities. Subject to the terms and conditions
set forth in this Agreement, Purchaser shall assume at the Closing and pay,
discharge and perform as and when due the following, and only the following,
debts, liabilities, obligations, and contracts of Seller related to the conduct
of the Business, as of the Closing, whether accrued, absolute, known, unknown,
contingent or otherwise (all of which are sometimes collectively referred to as
the "Assumed Liabilities"), but excluding all Excluded Liabilities (as defined
in Section 1.4 below):
(a) all accounts payable arising in the ordinary course of business of
the Division including any commissions or other amounts due
Representatives;
(b) all liabilities and obligations arising under any contract, lease,
guarantee, license, agreement, arrangement or understanding that is
included in the Assets;
(c) all liabilities and obligations of Seller with respect to (i)
accrued, regular payroll or salary which, in the normal payroll cycle of
the Division, will be payable to Hired Employees (as defined in Section
6.1(b)) (including relevant payroll taxes for such payroll) following the
Closing Date, and (ii) accrued vacation time or other accrued obligations
for paid time off that is vested and with respect to which a Hired Employee
(as defined in Section 6.1(b) below) would be entitled to payment upon
termination of his or her employment with Seller; and
(d) all other liabilities listed on Schedule 1.3(d).
Section 1.4 The Excluded Liabilities. Notwithstanding Section 1.3, the
parties hereto agree that there are expressly excluded from the purchase and
sale contemplated hereby, and, as such, are not included in the Assumed
Liabilities, and Seller shall pay, discharge and perform as and when due each
and every debt, liability, obligation and contract of Seller that is not
identified in Section 1.3 as an Assumed Liability, of any nature whatsoever,
whether accrued, absolute, known, unknown, contingent or otherwise, arising from
Seller's operation of the Business prior to the Closing (collectively, the
"Excluded Liabilities"). Without limiting the foregoing, the following are
specifically included among the Excluded Liabilities:
(a) any of Seller's liabilities or obligations arising under this
Agreement;
(b) any of Seller's liabilities or obligations (including, but not
limited to, any liabilities or obligations under any tax sharing
agreements) with respect to Taxes (except as provided in Section 1.3(c) for
payroll Taxes in respect of accrued payroll), it being understood that
Purchaser shall not be deemed to be Seller's transferee with respect to any
such tax liability;
(c) all amounts due from the Division in respect of any Intercompany
Transaction;
5
14
<PAGE>
(d) any of Seller's liabilities related to Excluded Assets and any
obligation in respect of any check drawn on any account of Seller;
(e) except as noted in Section 4.3, any fees or expenses incurred by
Seller in connection with the transactions contemplated by this Agreement;
and
(f) all other liabilities listed on Schedule 1.4(f).
Section 1.5 Purchase Price and Payment Provisions.
(a) Subject to the terms and conditions contained in this Agreement,
in consideration for the Assets, and in addition to the assumption of the
Assumed Liabilities, Purchaser will pay to the Seller as provided below a
purchase price comprised of the following (the "Purchase Price"):
(i) An amount equal to the net book value of the Assets (other than
the Receivables) less the net book value of the Assumed
Liabilities as of the close of business on the Closing Date (such
amount being referred to herein as the "Net Book Value") plus
$3,257,000 (such amount, together with the Net Book Value, being
referred to herein as the "Base Amount"); plus
(ii) An amount (the "Receivables Amount") equal to 85% of: (A) the net
book value of the Receivables (net of reserves) as of the close
of business on the Closing Date less (B) the difference between
the book value of any notes receivable and the reserves for such
notes as of the close of business on the Closing Date (the "Net
Notes Balance");
provided, however, that, for purposes of this Section 1.5(a), in
calculating the Base Amount and the Receivables Amount,
Receivables, Assumed Liabilities, territory receivables,
including notes receivable, and reserves shall be determined in a
manner consistent with the Accounts Receivable Reconciliation set
forth in Schedule 3.6(a), which, for purposes of the calculation
of Assumed Liabilities means that amounts shown on the Accounts
Receivable Reconciliation for Credit Balances will not be treated
as Assumed Liabilities and provided, further that the Kernodle
Note (as referred to in Schedule 3.6(a)) shall be treated as an
Assumed Liability. The parties acknowledge that the
classification of amounts used for Receivables, Assumed
Liabilities, territory receivables, including notes receivable
and reserves in calculating the Purchase Price pursuant to this
Section 1.5(a) may differ from the manner in which the Closing
Balance Sheet may be prepared by the Accountants pursuant to
Section 1.5(d).
(b) Attached hereto as Schedule 1.5 is the estimated balance sheet of
the Business, reflecting only the Assets and the Assumed Liabilities as of
the anticipated Closing Date (the "Estimated Balance Sheet"). The Estimated
Balance Sheet shows the
6
15
<PAGE>
estimated Net Book Value and the estimated Receivables Amount. At the
Closing, Purchaser shall pay to Seller by means of wire transfer in
immediately available funds to an account designated by Seller prior to the
Closing, an amount equal to $12,203,000 (i.e. 85% of the Base Amount
determined on the basis of the estimated Net Book Value shown on the
Estimated Balance Sheet), plus $4,335,000 (i.e. 85% of the estimated
Receivables Amount shown on the Estimated Balance Sheet), for a total of
$16,538,000 (the "First Base Payment").
(c) On or as promptly as practicable after the Closing Date
representatives of Purchaser shall be given an opportunity in all
reasonable respects and in good faith to (1) observe, along with the
Accountants, the taking of the Inventory of the Division by representatives
of the Division and (2) to conduct test counts of the Inventory and in
connection with such test counts Seller agrees not to release an area from
the Inventory taking process until such opportunity to take test counts has
been provided to Purchaser. Following preparation of an Inventory report of
the Division in accordance with generally accepted accounting principles as
of the Closing Date, and its review by the Accountants and Seller's
representatives, Purchaser shall be given an opportunity in all reasonable
respects and in good faith to review the Division's Inventory report and
the Accountant's work papers.
(d) On or before July 31, 1996, Seller shall have prepared and
delivered to Purchaser the closing balance sheet of the Business, audited
by Arthur Andersen LLP (the "Accountants") setting forth the assets and the
liabilities of the Business, each as of the close of business on the
Closing Date in accordance with generally accepted accounting principles as
applied by the Division in a manner consistent with prior periods and with
the same degree of diligence as used at the Division's year-end, giving
effect to the Inventory accounting conducted by the parties as provided in
the foregoing paragraph (the "Closing Balance Sheet"), together with the
Accountants' audit report thereon. On the same date, Seller shall also
deliver to Purchaser the calculation of the Purchase Price, which
calculation shall be done utilizing the Closing Balance Sheet and in
accordance with Section 1.5(a) (the "Purchase Price Sheet") and shall be
accompanied by a reserve analysis (in the format attached to Schedule
3.6(a)) prepared in a manner consistent with prior periods and with the
same degree of diligence as used at the Division's year-end. Purchaser and
Seller agree that the amounts to be received from Kodak with respect to
supplies purchased from Kodak shall be recorded as a prepaid expense which
shall not exceed $100,000. All property Taxes (including Real Property
Taxes), water and utility costs, rental and other similar ongoing periodic
charges associated with the operation of the Division covering a period
beginning before the Closing Date shall be duly accrued on the Closing
Balance Sheet so that such charges shall be duly apportioned, as of the
Closing Date.
(e) Within five (5) business days following its receipt of the Closing
Balance Sheet and the Purchase Price Sheet (or the settlement of any
objection thereto), Purchaser shall pay to the Seller by wire transfer of
immediately available funds to an account designated by Seller prior to
such payment date an amount (if greater than zero) which, when taken
together with the First Base Payment, shall be equal to 90% of the Base
Amount and the Receivables Amount (as set forth on the Purchase Price
Sheet) (the "Second Base Payment"); provided, however, that if such amount
is less than zero, Seller shall
7
16
<PAGE>
promptly pay such amount to Purchaser by means of wire transfer of
immediately available funds to an account designated by Purchaser.
(f) Purchaser may object to the Closing Balance Sheet or the Purchase
Price Sheet only on the basis of manifest error or on the basis that it was
not prepared as required by this Agreement. In the event it objects,
Purchaser shall provide written notice to Seller of its objection within
five (5) business days, providing the basis therefore in reasonable detail.
If Seller disagrees with Purchaser's objection, Purchaser shall pay the
Second Base Payment on the basis it determines to be accurate and the
disputed matter shall be referred to the Accountants. The Accountants'
determination with respect to the disputed matter shall be final and
binding in respect of any matter in which the aggregate disputed amount
involved is less than $1 million. If the amount involved is greater than $1
million, the party that disagrees with the Accountants' determination may
pursue arbitration under Section 9.7.
(g) On the date one year following the Closing Date, or the first
business day thereafter if such date is not a business day, Purchaser shall
be obligated to pay to Seller to an account designated by Seller prior to
such payment date (i) an amount which, when added to the First Base Payment
and the Second Base Payment, will equal the sum of the Base Amount plus the
Receivables Amount. Purchaser shall also be obligated to pay interest on
such amount accruing from the Closing Date through the first anniversary of
the Closing Date at a rate per annum equal to the prime rate as quoted for
major financial institutions in the Wall Street Journal (adjusted on each
payment date), which interest payment dates shall be quarterly commencing
on the last day of the month in which the Second Base Amount is paid and on
the last day of every third month thereafter and at maturity. On the date
of the Second Base Payment (or such later date as any dispute affecting the
calculation of such amount is resolved), Purchaser shall deliver to Seller
a promissory note, duly executed, in substantially the form of Exhibit A
attached hereto, in a principal amount calculated pursuant to the first
sentence of this Section 1.5 (g) (the "Note").
Section 1.6 Closing. Subject to the terms and conditions hereof, the
closing (the "Closing") of the purchase and sale contemplated hereby shall occur
at a mutually convenient time at the offices of Munger, Tolles & Olson, 355
South Grand Avenue, Los Angeles, California (or at such other location as the
parties may mutually agree upon) as soon as reasonably practicable following
satisfaction or waiver of the conditions set forth in Article 7 hereof, but in
no event later than the Termination Date set forth in Section 8.1(b) (the time
and date of the Closing being hereinafter called the "Closing Date").
(a) At the Closing and subject to the terms and conditions hereof,
Seller shall deliver to Purchaser:
(i) A Bill of Sale and Assignment in substantially the form of
Exhibit B;
(ii) Instruments of transfer in the form customarily used in
commercial transactions for the transfer of the Intangibles to
Purchaser or, at the election of Purchaser, its wholly-owned
subsidiary;
8
17
<PAGE>
(iii) All other documents and instruments necessary to transfer
to Purchaser all of Seller' right, title and interest in and to the
Assets (other than the Real Property, for which Purchaser will only
receive the real property deed delivered pursuant to Section
1.6(a)(viii) hereof and the Title Policy);
(iv) The documents described in Sections 7.1(c) and 7.1(f);
(v) Such documents evidencing the corporate authority and
existence of Seller as Purchaser shall reasonably request, including
(A) a certificate of good standing of the Secretary of State of the
State of Delaware; and (B) a certificate of the Secretary of Seller
certifying as to (1) the due adoption by the Board of Directors of
Seller of attached resolutions authorizing the execution, delivery and
performance of this Agreement by Seller, such resolutions being in
full force and effect as of the Closing, (2) the Seller's Certificate
of Incorporation and bylaws as of the Closing, and (3) the incumbency
and signatures of the officers of Seller executing the Agreement and
any other documents delivered by Seller at the Closing;
(vi) Possession of the Assets;
(vii) Payments required by Section 4.3 hereof; and
(viii) A corporate special warranty deed in the form attached
hereto as Exhibit C (the "Deed"), conveying to Purchaser fee simple
title to the real property located at 9555 and 9601 Monroe Road,
Charlotte, North Carolina (the "Real Property"), comprising the
headquarters and manufacturing facilities of the Division (the
"Division Facilities"), together with related fixtures and
improvements.
(b) At the Closing and subject to the terms and conditions
hereof, Purchaser shall deliver to Seller:
(i) The initial payment due under Section 1.5(b);
(ii) An Assumption Agreement, in substantially the form of
Exhibit D;
(iii) All other documents and instruments necessary to
evidence Purchaser's assumption of the Assumed Liabilities;
(iv) The documents described in Sections 7.2(c), 7.2(f) and
7.2(g);
(v) Such documents evidencing the corporate authority and
existence of Purchaser as Seller shall reasonably request,
including (A) a
9
18
<PAGE>
certificate of existence of the Secretary of State of the state
of incorporation of Purchaser; and (B) a certificate of the
Secretary of Purchaser certifying as to (1) the due adoption by
the Board of Directors of Purchaser of attached resolutions
authorizing Purchaser's execution, delivery and performance of
this Agreement by Purchaser, such resolutions being in full force
and effect as of the Closing, (2) the Purchaser's Articles or
Certificate of Incorporation and bylaws as of the Closing, and
(3) the incumbency and signatures of the officers of Purchaser
executing the Agreement and any other documents delivered by
Purchaser at the Closing; and
(vi) Payments required by Section 4.3 hereof.
Section 1.7 Purchase Price and Assumption Allocation. No later than twenty
(20) days after the date of the Second Base Payment, Purchaser and Seller shall
agree upon the basis upon which to allocate the Purchase Price and the Assumed
Liabilities to the Assets (the "Allocation") to be attached to this Agreement.
The parties agree that the value allocated to the covenant not to compete
granted in Section 5.6(a) shall be no greater than 5% of the amount not
otherwise allocated to the Assets other than the Intangibles, but in no event
shall such amount be greater than $10,000 nor less than $1.00. If Purchaser and
Seller cannot agree on an Allocation, then Purchaser and Seller shall engage an
independent third party mutually agreed upon by the parties hereto to resolve
any differences (the "Independent Party"). The Independent Party promptly shall
determine whether the objections raised by either party are appropriate. The
Independent Party shall determine the Allocation, which allocation shall be
attached to this Agreement. Seller and Purchaser shall account for and report
the purchase and sale contemplated hereby for federal and state tax purposes in
accordance with such allocations, and shall not take any reporting position in
connection with federal or state taxes which is inconsistent with such
allocations without the prior written consent of the other party except to the
extent, if any, required by applicable law or generally accepted accounting
principles or in connection with the disposition or settlement of any challenge
to such allocations by any taxing authority. Purchaser and Seller shall share
equally in the costs of such Independent Party.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller, as of the date hereof, as
follows:
Section 2.1 Organization and Qualification. Purchaser is a corporation duly
organized and validly existing under the laws of the State of Indiana and has
all requisite corporate power and authority to carry on its business as now
being conducted and as it will be conducted following the Closing.
Section 2.2 Authority Relative to This Agreement. Purchaser has the
requisite corporate power and authority to enter into this Agreement and the
Note and to carry out its obligations hereunder and thereunder. The execution
and delivery of this
10
19
<PAGE>
Agreement and any other documents required to be executed by Purchaser in
connection with the transactions contemplated hereby ("Purchaser's Transaction
Documents"), and the consummation of the transactions contemplated hereby,
including but not limited to the issuance of the Note by Purchaser, have been
duly authorized and approved by the Board of Directors of Purchaser to the
extent required, and all corporate proceedings on the part of Purchaser
necessary to approve and adopt this Agreement and to approve the consummation of
the transactions contemplated hereby, including the issuance of the Note, have
been taken. This Agreement has, and each of Purchaser's Transaction Documents,
including the Note, as of the Closing will have, been duly and validly executed
and delivered by Purchaser, and this Agreement constitutes, and at the Closing
each of this Agreement and Purchaser's Transaction Documents, including the
Note, will constitute, a valid and binding agreement of Purchaser, enforceable
against it in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws, now or hereafter
in effect, relating to creditors' rights generally and that the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
Section 2.3 Absence of Breach; No Consents. The execution, delivery and
performance of this Agreement and the Note by Purchaser (except for compliance
with the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act")), do not and, at the Closing, will not, (i) conflict with or result
in a breach of any of the provisions of the Articles of Incorporation or bylaws
of Purchaser, (ii) (A) contravene any law, rule or regulation of the United
States or of any state or political subdivision thereof, or of any applicable
foreign jurisdiction, (B) contravene any order, writ, judgment, injunction,
decree, determination or award of any court or other authority having
jurisdiction, or (C) cause the suspension or revocation of any governmental
authorization, consent, approval or license, presently in effect, which in each
case affects or binds Purchaser or any of its material properties, (iii)
conflict with or result in a breach of or default under any indenture or loan or
credit agreement or any other agreement or instrument to which Purchaser or any
of its subsidiaries is a party or by which Purchaser or any such subsidiary or
its or their properties may be affected or bound, or (iv) require the
authorization, consent, approval or license of any third party, except for such
matters which, in the case of any of the foregoing, would not have a materially
adverse effect on the Purchaser's right and ability to perform its obligations
under this Agreement.
Section 2.4 Brokers. No broker, finder, creditor or investment banker is
entitled to any brokerage, finder's, commitment or other fee or commission in
connection with this Agreement or the transactions contemplated hereby based
upon any agreements or arrangements or commitments, written or oral, made by or
on behalf of Purchaser or any of its affiliates, as such term is defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended ("Affiliates").
Section 2.5 Financial Ability to Perform. Purchaser has liquid capital or
committed sources therefor sufficient to permit it to perform timely its
obligations hereunder, including, but not limited to, the payment of the initial
payment under Section 1.5(b) to Seller at the Closing. Promptly after the
execution hereof, Purchaser will provide documentation relating to such
committed sources to Seller.
11
20
<PAGE>
Section 2.6 No Knowledge of Seller's Breach. None of Purchaser's executive
officers has actual knowledge of any breach of any representation or warranty by
Seller or of any other condition or circumstance that would cause any condition
precedent set forth in Section 7.1 not to be timely satisfied.
Section 2.7. Securities Regulation. Assuming the accuracy of Seller's
representation in Section 3.8, the issuance of the Note by Purchaser pursuant to
this Agreement is exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933, and applicable state securities or
blue sky laws and the rules and regulations promulgated thereunder.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser, as of the date hereof, as
follows:
Section 3.1 Organization and Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to carry on its business as it is now being conducted. Seller is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction in which the character of the properties owned or leased by it
or the nature of its activities makes such qualification necessary, except where
the failure to be so qualified will not have a Material Adverse Effect on the
Division or on Purchaser after the Closing. As used herein, a "Material Adverse
Effect" means a material adverse effect on the assets, business, condition
(financial or otherwise), or results of operations of the Division and the
Business taken as a whole.
Section 3.2 Authority Relative to This Agreement. Seller has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and any
other documents required to be executed by Seller in connection with the
transactions contemplated hereby ("Seller's Transaction Documents"), and the
consummation of the transactions contemplated hereby, have been duly authorized
and approved by the Board of Directors of Seller to the extent required, and all
corporate proceedings on the part of Seller or its stockholders necessary to
approve and adopt this Agreement or to approve the consummation of the
transactions contemplated hereby and thereby have been taken. This Agreement
has, and each of Seller's Transaction Documents as of the Closing will have,
been duly and validly executed and delivered by Seller, and this Agreement
constitutes, and at the Closing this Agreement and each of the Seller's
Transaction Documents will constitute, a valid and binding agreement of Seller,
enforceable against it in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and that the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
12
21
<PAGE>
Section 3.3 Absence of Breach; No Consents. The execution, delivery and
performance of this Agreement by Seller (except for compliance with the HSR
Act), do not and, at the Closing, will not, (i) conflict with or result in a
breach of any provisions of the Certificate of Incorporation or Bylaws of
Seller, (ii)(A) contravene any law, rule or regulation of the United States or
of any state or political subdivision thereof, or of any applicable foreign
jurisdiction, (B) contravene any order, writ, judgment, injunction, decree,
determination or award of any court or other authority having jurisdiction, or
(C) cause the suspension or revocation of any governmental authorization,
consent, approval or license, presently in effect, which affects or binds Seller
or any of its material properties, (iii) except as disclosed in Schedule 3.3 or
with respect to the Representative Agreements, conflict with or result in a
breach of or default under any indenture or loan or credit agreement or any
other agreement or instrument to which Seller is a party or by which any of its
properties may be affected or bound, or (iv) except as disclosed in Schedule 3.3
or with respect to the Representative Agreements, require the authorization,
consent, approval or license of any third party, except for such matters which,
in the case of any of the foregoing, would not have a Material Adverse Effect.
Section 3.4 Brokers. Except for Compass Capital Advisors, no broker,
finder, creditor or investment banker is entitled to any brokerage, finder's,
commitment or other fee or commission in connection with this Agreement or the
transactions contemplated hereby based upon any agreements or arrangements or
commitments, written or oral, made by or on behalf of Seller or any of its
Affiliates, and Seller and its Affiliates shall be solely responsible for the
payment of any such fee or commission to any such person or entity.
Section 3.5 Financial Statements and Reports. Seller has heretofore
delivered to Purchaser the audited balance sheet of the Division as of the end
of the Division's fiscal year ended on October 27, 1995 (the "1995 Balance
Sheet"), and the related audited statements of operations for the fiscal period
then ended (together with the 1995 Balance Sheet, the "1995 Financial
Statements"). The 1995 Financial Statements fairly present the financial
condition and results of operations of the Division as of and for the period
indicated in conformity with generally accepted accounting principles
consistently applied except as indicated in such 1995 Financial Statements.
Section 3.6 Lists of Properties, Contracts and Other Data. Seller is
delivering to Purchaser simultaneously herewith the Disclosure Document, which
contains a true and complete statement, listing or copies of:
(a) A Schedule of the Receivables as derived from Seller's internal
information systems in the ordinary course of business, as of the date set
forth thereon;
(b) A Schedule of the Prepayments as generated by Seller's internal
information systems in the ordinary course of business, as of the date set
forth thereon and showing each of the Prepayments having any book value on
the books of the Division as of such date;
(c) A Schedule of the Personal Property as generated by Seller's
internal information systems in the ordinary course of business, as of the
date shown thereon;
13
22
<PAGE>
(d) Forms of each type of Seller's standard Representative Agreements;
(e) All of the trade names or trademarks of the Division, the loss of
which would have a Material Adverse Effect on the Business, and all
licenses granted by or to Seller which relate in whole or in part to such
Intangibles;
(f) All compensation, bonus, incentive, deferred payment, retirement,
pension, severance, profit-sharing, stock purchase and stock option plans,
group life, automobile, medical, dental, disability, welfare or other
employee benefit plans or insurance policies, and other similar
arrangements (collectively, "Employee Benefit Arrangements") generally
applicable to the present or former officers or employees of the Division
and for which the Division is responsible or its assets may be subject;
(g) All material written or oral employment or consulting agreements
with, or similar commitments to, any employees, officers or consultants of
the Division to which the Division is a party or to which any of the
Division's properties may be subject and which are included in the
Contracts;
(h) The names and titles of each current officer, consultant or
salaried employee of the Division whose compensation as set forth on the
most recent IRS Form W-2 for such person exceeded $45,000, and the amount
of such compensation showing base compensation and bonus payments
separately for calendar year 1995;
(i) The top ten customers of the Division in terms of revenues during
each of the two fiscal periods ended the date of the 1995 Balance Sheet and
the top ten vendors of the Division ranked by accrued expenses during
fiscal 1995, together with the accrued expenses accounted for by such
vendors during fiscal 1994 and fiscal 1995;
(j) All other existing written or oral contracts or commitments to
which the Division is a party, or to which Seller is a party on behalf of,
or for, or in connection with its operation of, the Division or the
Business, or to which any of the Division's assets or properties are
subject, except (i) contracts or commitments otherwise listed in the
Disclosure Document, (ii) contracts or commitments, or any related group of
contracts or commitments, involving a liability, whether actual or
contingent, of or to the Division of less than $25,000, (iii) contracts for
the purchase or sale of merchandise, goods or services entered into in the
ordinary course of business the performance of which by the Division will
extend either over a period of less than one year from the date of such
contract or are cancellable or terminable within one year from the date of
such contract without penalty, and (iv) the Representative Agreements;
(k) Other than the Representative Agreements, all written or oral
contracts or arrangements (unless the particular provision described below
is expressly contained in another document otherwise identified in the
Disclosure Document) to which the Division is a party, or to which Seller
is a party on behalf of, or for, or in connection with its operation of,
the Division or the Business, or to which any of the Division's assets or
properties is subject, which (i) contains any covenant not to compete,
covenant of
14
23
<PAGE>
nonsolicitation or similar restrictive covenant or otherwise significantly
restricts the nature of the business activities in which the Division may
engage or the customers, vendors or employees it may have, (ii) with
respect to existing accounts receivable in excess of $25,000 for work
completed or with respect to existing backlog for future production of
orders in excess of $10,000, provides for the extension of credit on terms
other than payment within 60 days of shipment or acceptance, (iii) provides
for a guaranty or indemnity by the Division or by Seller other than
warranties of its products or services in the ordinary course of business,
or (iv) contains a right of first refusal in favor of another person or
entity; and
(l) Any governmental permit, license or registration held by Seller in
respect of the Division, the loss or termination of which could have a
Material Adverse Effect.
Except as otherwise set forth in the Disclosure Document, no breach of or
default under any item referred to in the Disclosure Document in response
to clauses (g), (j) and (k), (or event which would, with the passage of
time, notice or both, constitute a breach or default) by the Division or
Seller has occurred, which would have a Material Adverse Effect on the
Division and each such item remains in full force and effect, except for
such items, the failure of which to remain in effect individually or in the
aggregate, would not have a Material Adverse Effect on the Division.
Section 3.7 Absence of Material Differences from Disclosure Document.
Except as is contemplated by this Agreement or as otherwise disclosed in the
Disclosure Document:
(a) No Undisclosed Liabilities. Except as disclosed in the 1995
Financial Statements or the Disclosure Document, there are no liabilities
of the Division of any kind, whether absolute, accrued, contingent or
otherwise and whether due or to become due ("Liabilities"), except:
(i) Liabilities which either are adequately reserved against or
accrued for in the 1995 Balance Sheet or will be adequately reserved
against or accrued for by the Closing Date, in both cases in
accordance with generally accepted accounting principles;
(ii) Liabilities that are not required by generally accepted
accounting principles to be included in financial statements or the
notes thereto;
(iii) current Liabilities incurred in the ordinary course of the
Business since the date of the 1995 Balance Sheet; and
(iv) Liabilities contemplated or permitted by this Agreement.
(b) No Material Adverse Change, Etc. Since the date of the 1995
Balance Sheet, other than for matters or changes contemplated or permitted
by this Agreement or that relate to the execution of this Agreement or the
transactions contemplated
15
24
<PAGE>
herein, including, but not limited to, the fact that Purchaser will own and
operate the Business following the Closing, there has not been:
(i) any change or event affecting the operations, financial
condition, assets, business, prospects or results of operations of the
Division which has had or may reasonably be expected to have a
Material Adverse Effect on the Division or the Business as presently
conducted (other than changes or events which would generally
adversely affect the industry or geographic market in which the
Division participates);
(ii) any entry into, modification or termination by the Division
of any material commitment, contract, agreement or transaction, other
than in the ordinary course of Business;
(iii) any casualty, damage, destruction or loss that has had or
may reasonably be expected to have a Material Adverse Effect on the
Division or the Business as presently conducted;
(iv) any sale or other disposition of any fixed asset of the
Division having a net book value in excess of $25,000, or any
mortgage, pledge or imposition of any lien or other encumbrances on
any such asset of the Division, or sales, dispositions and mortgages
of assets of the Division having a net book value that exceeds $50,000
in the aggregate, other than in the ordinary course of Business;
(v) any default or breach by Seller or the Division under any
Contract which, when viewed individually or in the aggregate of all
such breaches or defaults, is reasonably likely to have a Material
Adverse Effect on the Division or on the Business as presently
conducted; or
(vi) any change made in executive compensation levels or in the
manner in which other employees of the Division are compensated or in
benefits provided to such employees except (A) in the ordinary course
of business and (B) for a compensation plan related to the sale of the
Division that has been previously disclosed, in general terms, to
Purchaser.
(c) Litigation. The Disclosure Document lists each action, suit or
proceeding pending or, to the Best Knowledge of Seller, threatened, against
or affecting the Division or its assets, at law or in equity, or before any
federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality. Each of such actions, suits and
proceedings is either (i) subject to and covered by automobile liability or
workers compensation insurance (except for any applicable deductibles
thereunder) to the extent of amounts claimed or (ii) not likely to have a
Material Adverse Effect on the Division in the hands of the Purchaser. No
privileged or non-public information to be withheld from Purchaser pursuant
to the last sentence of Section 5.3 would, if disclosed, materially impair
the value of the Division or its future operations in the hands of
Purchaser or is involved in
16
25
<PAGE>
any proceeding in connection with which the value of the Business or any
material Asset in the hands of Purchaser could be materially impaired.
(d) Compliance with Laws. The Seller, solely in respect of its
operation of the Division and the Business (i) has received no notice as
yet unremedied of any violation of any laws or regulations applicable to
its operations or with respect to which compliance is a condition of
engaging in its business including, without limitation, laws and
regulations relating to the assessment, reporting and collection of Taxes,
labor relations and labor practices and the Employee Retirement Income
Security Act of 1974, as amended, and excluding Environmental Laws, as
defined in Section 3.7(e) (such laws and regulations are referred to herein
as "Laws"), (ii) is in compliance with all Laws and (iii) has all permits,
licenses and other governmental authorizations necessary to conduct its
business as presently conducted, in each case of (i), (ii) and (iii),
except to the extent that any such failures to comply, unremedied
violations or lack of permits, licenses or authorizations would not,
individually or in the aggregate, have a Material Adverse Effect on the
Division or the Business in the hands of the Purchaser.
(e) Environmental Matters. Except as set forth in the Disclosure
Document or the Environmental Surveys, as defined in Section 5.4, in
connection with the Real Property or the operation of the Division
Facilities or the Business: (i) Seller has obtained all permits, licenses
and other authorizations required under Environmental Laws except to the
extent that any lack of permits, licenses or other authorizations would
not, individually or in the aggregate, have a Material Adverse Effect on
the Division or the Business in the hands of Purchaser and all such
permits, licenses and authorizations are listed in the Disclosure Document;
(ii) Seller is in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules
and timetables contained in the Environmental Laws except to the extent
that failure to comply with such other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules
and timetables would not, individually or in the aggregate, have a Material
Adverse Effect on the Division or the Business in the hands of Purchaser,
(iii) there are no actions, suits, arbitrations, claims, investigations (of
which Seller has received notice) or legal or administrative proceedings
pending or, to the knowledge of the Seller, threatened, involving Seller
and involving or alleging a violation of any Environmental Law; (iv) to the
actual knowledge of the Division's officers or its employees responsible
for environmental compliance, no act attributable to Seller and no notice
received by Seller with respect to any act (or any predecessor in its
interest in the Real Property) is likely to give rise to liability to any
governmental or non-governmental entity under CERCLA or other Environmental
Laws nor has the Seller submitted notice pursuant to Section 103 of CERCLA
to any government agency; (v) no underground storage tank containing a
regulated substance pursuant to Subchapter IX of RCRA is located on the
Real Property; and (vi) no Hazardous Materials, to the actual knowledge of
the Division's officers or its employees responsible for environmental
compliance, have been released, discharged, deposited, emitted, leaked,
spilled, poured, emptied, injected, dumped or disposed by Seller on, in or
under the Real Property, except in a manner as would not violate any
Environmental Laws and Seller has at all times transported, stored and used
any Hazardous Materials in compliance with the Environmental Laws.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund
17
26
<PAGE>
Amendments and Reauthorization Act of 1986 ("CERCLA"), 42 U.S.C. ss. 9601
et seq.; the Toxic Substance Control Act, 15 U.S.C. ss. 2601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. ss. 1802 et seq.; the
Resource Conservation and Recovery Act, 42 U.S.C. 9601 et seq. ("RCRA");
the Clean Water Act, 33 U.S.C. ss. 1251 et seq.; the Safe Drinking Water
Act, 42 U.S.C. ss. 1251 et seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et
seq.; Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss. 136
et seq.; Solid Waste Disposal Act, 42 U.S.C. ss. 6901 et seq. and all other
applicable federal and state laws regulating environmental hazards or
Hazardous Materials and any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered, promulgated
or approved thereunder provided, however, that any zoning, building or land
use ordinances shall not be included in the definition of Environmental
Law. "Hazardous Materials" means hazardous wastes, hazardous substances,
hazardous constituents, toxic substances or related materials, whether
solids, liquids or gases, including but not limited to, substances defined
as "hazardous wastes," "hazardous substances," "toxic substances,"
"pollutants," "contaminants," "radioactive materials," or other similar
designations in, or otherwise subject to regulation under any Environmental
Laws.
(f) Assets. There are no assets owned by Seller and used or useful in
the Business that are not included in the Assets (whether located on the
Real Property or elsewhere) the loss or unavailability of which
individually or in the aggregate would have a Material Adverse Effect. The
Assets to be sold or transferred to Purchaser at the Closing are sufficient
to conduct the Business in the manner presently conducted by Seller,
excluding ordinary course corporate support services provided by Seller to
the Division. The Disclosure Document generally describes any intercompany
support services between the Division and the Seller or any of its
Affiliates that occurred or was in effect during the 12 months prior to the
date hereof, the absence, loss or non-occurrence of which would have had
any Material Adverse Effect on the Division.
(g) Title. Seller at the Closing will have, and will transfer to
Purchaser, good and marketable title, or valid and effective leasehold
rights in the case of leased property, to all the Assets, free and clear of
all liens, charges, claims, pledges, security interests, equities and
encumbrances of any nature whatsoever, except for those created or allowed
to be suffered by Purchaser and except for (i) the lien of current Taxes
not yet due and payable, (ii) possible minor matters that in the aggregate
are not substantial in amount and do not materially detract from or
interfere with the present or intended use of the Assets, nor materially
impair business operations, (iii) sales, dispositions or liens expressly
permitted by this Agreement, (iv) liens, charges, claims, pledges, security
interests, equities and encumbrances discharged or released at or prior to
the Closing but for which public filings to record such discharges or
releases will be filed substantially simultaneously or immediately after
the Closing, (v) those items identified on Schedule 3.7(g) of the
Disclosure Schedule, and (vi) zoning, set back, building and other similar
restrictions including, without limitation, restrictions and requirements
affecting the Real Property imposed by deeds, leases, development
agreements, declarations and redevelopment authorities, which are not being
violated in any manner that would cause a Material Adverse Effect
(collectively, "Permitted Liens"). Notwithstanding the foregoing, Seller
does not own the equipment subject to the equipment leases identified on
Schedule 3.3 and holds such equipment subject to the interests of the
lessors thereof.
18
27
<PAGE>
(h) Intangibles. Seller has not received any notice of, and has no
knowledge of, any claim, or of any basis for a claim, which asserts the
rights of others with respect to any of the Intangibles, or which asserts
or may assert that Seller's conduct of the Business infringes or violates
intellectual property rights of others. The Division has in all material
respects performed all of the obligations required to be performed by it,
and is not in default (or with notice or lapse of time, or both, would be
in default), under any agreement relating to any of the Intangibles. The
Disclosure Schedule lists all intellectual property that is material to the
operations of the Business or the loss of which would have a Material
Adverse Effect. To the extent indicated in the Disclosure Document, the
Intangibles listed thereon have been duly registered with, filed in, or
issued by the appropriate domestic or foreign governmental agency
indicated. For purposes of this Agreement, "intellectual property" means
domestic and foreign patents, patent applications, registered and
unregistered trademarks, trade names, assumed business names, service
marks, copyrights, software programs and data bases, inventions,
technology, apparatus, processes, formulae, trade secrets, know-how,
licenses to use, interests in, and improvements or enhancements of, any of
the foregoing.
(i) Inventory. The Inventory is currently being maintained at levels
adequate for the Division's business as presently conducted and is usable
and salable in the ordinary course of the Business, except for items which
have been adequately reserved against on the 1995 Balance Sheet or are
immaterial to the financial condition or results of operations of the
Division.
(j) Labor Matters. There are, and during the past three years there
have been, no unfair labor practice complaints, labor strikes,
arbitrations, disputes, work slowdowns or work stoppages pending or, to the
Best Knowledge of Seller or the Division, threatened, between Seller or the
Division, on the one hand, and any of the employees, current or former, of
the Division, on the other hand, which would have, or would have had at the
time pending or threatened, a Material Adverse Effect on the Division.
(k) Division Facilities and Equipment. To Seller's Best Knowledge, (i)
the Division Facilities are not in need of material maintenance or repairs
and (ii) the Equipment is in working order and repair and is adequate for
the purposes for which it has been used.
(l) Accounts Receivable. All Receivables of the Division shown on the
1995 Balance Sheet and all Receivables of the Division created after the
date of the 1995 Balance Sheet arose from valid sales in the ordinary
course of business or advances or other similar extensions of credit to
sales representatives and dealers in the ordinary course of business. The
1995 Balance Sheet reflects reserves for doubtful accounts and trade
discounts in accordance with generally accepted accounting principles
applied on a basis consistent with that of prior years.
(m) Real Property.
(i) Real Property Complete. All real property (including, without
limitation, all interests in and rights to real property) and
19
28
<PAGE>
improvements located thereon which are owned or leased by Seller, and used
in connection with the Business and included in the Assets are listed in
the Disclosure Document and are included in the Real Property, as defined
in Section 1.6(a)(viii).
(ii) Leased Real Property. None of the Real Property is leased by
or to Seller, except as described in the Disclosure Document.
(iii) Access. To the best knowledge of Seller, Seller has all
authorizations and rights-of-way necessary to ensure ordinary
vehicular and pedestrian ingress and egress to and from the Real
Property.
(iv) Assessments or Hazards. Except as listed on the Disclosure
Document, Seller has received no notices, oral or written, from any
governmental body, that the assessed value of the Real Property has
been determined to be greater than that upon which county, township or
school Tax was paid for the most recently completed Tax year
applicable to each such Tax, other than such ordinary increases as may
be instituted by any taxing authority generally.
(v) Eminent Domain. Seller has received no notices, oral or
written, and has no reason to believe, that any governmental body
having the power of eminent domain over the Real Property has
commenced or intends to exercise the power of eminent domain or a
similar power with respect to all or any part of the Real Property.
(vi) Description. Seller has received no notices, oral or
written, that (i) the buildings and improvements on the Real Property
are in violation of applicable setback requirements, zoning laws, and
ordinances (or that any of the properties or buildings or improvements
thereon are subject to "permitted non-conforming structure"
classifications); or (ii) the buildings and improvements upon the Real
Property have not received approvals of governmental authorities
(including licenses and permits) required in connection with the
ownership or operation thereof or have not been operated and
maintained in substantial compliance with applicable laws, rules, and
regulations;
(vii) Rights of Third Parties. Except as described in the
Disclosure Document, 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 of Real Property; and there are no outstanding options or
rights of first refusal to purchase the parcel of Real Property, or
any portion thereof or interest therein;
(viii) Possession. There are no parties (other than the Seller)
in possession of any such parcel of Real Property; and
20
29
<PAGE>
(ix) Utilities. All facilities located on the Real Property are
supplied with gas, electricity, water, telephone, and sanitary sewer.
(n) Employee Benefit Plans. The Disclosure Document lists all
"employee pension benefit plans" and all "employee welfare benefit plans"
within the meaning of Sections 3(2) and 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), in which employees of
the Division participate (collectively, "Plans" or individually, a "Plan").
There are no "multiemployer plans" within the meaning of Section 3(37) of
ERISA in which the Division has been a participating employer within the
last six years and in which employees of the Division participate. The
employee benefit plans listed in the Disclosure Document ("Plans") that are
covered by ERISA to Seller's Best Knowledge, are, and during all applicable
limitation periods have been in substantial compliance with ERISA, and all
retirement or pension plans are qualified plans under the Internal Revenue
Code of 1986, as amended (the "Code"), and each Plan is in substantial
compliance with the applicable provisions of the Code. The Savings Plan (as
defined in Section 6.1(e)) is a qualified plan under Section 401(a) of the
Code.
(o) Extraordinary Warranties. To the Seller's Best Knowledge, it is
not subject to any extraordinary liability for breach of warranty in
connection with any product or series of products of the Division which
liability would be material to the business of the Division taken as a
whole. To the Seller's Best Knowledge, it has not sold any product of the
Division subject to any extraordinary warranty, guaranty or indemnity
agreement that would provide benefits to the purchaser thereof greater than
those generally applicable to other products of like nature of the Division
and that would represent an obligation material to the business of the
Division taken as a whole.
(p) Investment Representations. Seller is an "Accredited Investor" as
defined in Regulation 501 under the Securities Act of 1933, as amended
("Securities Act"). It has such knowledge and experience in business
matters as may be necessary to evaluate its investment in the Note. It is
acquiring the Note for investment and not with a view to the re-sale,
transfer or further distribution thereof. It acknowledges that transfer of
the Note will be restricted in accordance with the Securities Act.
ARTICLE 4
COVENANTS OF EACH PARTY
Section 4.1 Efforts to Consummate Transactions. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or to cause to be taken, all reasonable actions
and to do, or to cause to be done, all reasonable things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated
hereby, including the satisfaction of all conditions thereto set forth herein.
Section 4.2 Cooperation. Each of the parties hereto shall cooperate with
the other in every reasonable way in carrying out the transactions contemplated
herein, including, but not limited to, Purchaser making all reasonable efforts
to provide such
21
30
<PAGE>
substitute credit arrangements as may be necessary to provide for the release of
the standby letter of credit issued by Fleet Capital Corporation in connection
with the lease of certain equipment from Center Capital Corporation.
Section 4.3 Expenses. Whether or not the transactions contemplated hereby
are consummated, 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.
Notwithstanding the foregoing:
(a) All costs of the Environmental Surveys shall be borne by Seller;
(b) All fees and charges of governmental authorities in connection
with the transfer or issuance of any license, permit or similar
authorization shall be borne by Purchaser;
(c) All sales or similar taxes associated with the sale or transfer of
the Assets shall be borne one-half by Seller and one-half by Purchaser;
(d) All recording costs and charges respecting the Real Property will
be allocated between Purchaser and Seller in accordance with the customs of
the county in which the Real Property is located; and
(e) All transfer Taxes respecting Real Property will be borne by
Purchaser.
All such charges and expenses shall be promptly settled between the parties at
the Closing or upon termination or expiration of further proceedings under this
Agreement, or with respect to such charges and expenses not determined as of
such time, as soon thereafter as is reasonably practicable.
Section 4.4 Publicity. Prior to the Closing, any written or scripted public
announcements by Purchaser, or any of its Affiliates, on the one hand, or Seller
or the Division or any of their Affiliates, on the other hand, pertaining to the
transactions contemplated hereby shall be reviewed and approved prior to release
by the other party. Notwithstanding the foregoing, this Section 4.4 shall not
prohibit either party from making such disclosure as it deems necessary (based
on advice of counsel) to comply with Laws (including SEC regulations or a court
or administrative order).
Section 4.5 Further Assurances. From time to time after the Closing, Seller
will, at its own expense, execute and deliver, or cause to be executed and
delivered, such documents to Purchaser as Purchaser may reasonably request in
order more effectively to vest in Purchaser good title to the Assets and
otherwise to consummate the transactions contemplated by this Agreement, and
from time to time after the Closing, Purchaser will, at its own expense, execute
and deliver, such documents to Seller as Seller may reasonably request in order
more effectively to consummate the assumption of the Assumed Liabilities by
Purchaser and otherwise to consummate the transactions contemplated by this
Agreement.
22
31
<PAGE>
Section 4.6 No Assignment If Breach. Notwithstanding anything herein to the
contrary (but without affecting in any way the conditions to the Closing
specified in Sections 7.1 and 7.2, or the parties' rights under Article 9), this
Agreement shall not constitute an agreement to assign any claim, contract,
license, lease, commitment, sales order or purchase order or any benefit arising
thereunder or resulting therefrom included within the Assets if an attempted
assignment of the same, without the consent of a third party, would constitute a
breach thereof. If any such consent or authorization is not obtained, so that
Purchaser would not, in fact, receive all such rights, or assume the
obligations, of Seller with respect thereto as they exist prior to such
attempted assignment or assumption, then Seller and Purchaser shall enter into
such reasonable cooperative arrangements as may be reasonably acceptable to both
Purchaser and Seller (including without limitation, sublease, agency, partial
closing, indemnity or payment arrangements and enforcement at the cost of Seller
and for the benefit of Purchaser of any and all rights of Seller against an
involved third party) to provide for Purchaser the benefits of such Asset or to
relieve Seller from the obligations of such Assumed Liability.
Section 4.7 "AS IS" Purchase. Purchaser acknowledges that it will, subject
to the Seller's express representations, warranties, covenants and obligations
under this Agreement, purchase the Assets and assume the Liabilities at the
Closing in an "AS IS" condition, with all faults, in reliance upon Purchaser's
inspection thereof. Except as otherwise expressly set forth in this Agreement,
and without limiting Seller's express representations and warranties, Seller
makes no representations or warranty of any kind whatsoever with respect to any
of the Assets or the Assumed Liabilities, whether express or implied, including,
without limitation, any representations or warranties concerning or with respect
to (i) the value, nature, quality of condition, or state of repair of any of the
Assets; (ii) the compliance of the Real Property or the operation of the
Division Facility, with any Laws; or (iii) the habitability, merchantability,
marketability, profitability or fitness for a particular purpose of the Personal
Property, the Real Property or the Division Facility. Without limiting the
generality of the foregoing, and without in any way limiting Seller's express
representations, warranties and covenants in this Agreement, Purchaser hereby
acknowledges that, except as otherwise specifically provided in this Agreement,
neither Seller, nor any of its officers, employees or agents, has made any
warranty regarding the physical condition of the Assets, including, but not
limited to, any warranty of habitability or warranty of merchantability or
warranty of suitability for a particular purpose, and Purchaser hereby expressly
disclaims the implied warranty of habitability, the implied warranty of
merchantability, the implied warranty of fitness for a particular purpose, and
all express or implied warranties relating to the quality of or otherwise
relating to the physical condition of the Assets.
Section 4.8 Notice of Changes. Seller shall notify Purchaser of any
changes, additions or events which cause any change in or addition to any
Schedules or the Disclosure Document delivered by it under this Agreement
promptly after the occurrence of the same and at the Closing by the delivery of
updates of all Schedules and the Disclosure Document. Prior to the Closing,
Seller and Purchaser each agrees to give prompt notice to the other of the
occurrence of any event or the failure of any event to occur that might preclude
or interfere with the satisfaction of any condition precedent to the obligations
of Seller or Purchaser under this Agreement. Seller and Purchaser shall each
provide the other
23
32
<PAGE>
with prompt notice of any fact or condition that causes it to believe that the
condition set forth in Section 7.1(b) may not be satisfied for any reason. No
such notice or disclosure by any party pursuant to this provision shall be
deemed to amend any representation or warranty contained in this Agreement or
cure any misrepresentation or warranty without the written consent of the party
entitled to the benefit thereof.
Section 4.9 Transition of Representatives and Employees. Immediately upon
execution of this Agreement, Seller shall provide to Purchaser true and complete
copies of each Representative Agreement and a description of any material oral
arrangements, including (or accompanied by) information disclosing the
territory, sales volume, and identity of each such Representative and a listing
of each Representative's compensation, commission and draw for the twelve-month
period ending February 26, 1996 and a Schedule of the Receivables as generated
by Seller's internal information systems in the ordinary course of business.
Seller and Purchaser shall cooperate in good faith to accomplish the following
as expeditiously as reasonably possible following the date hereof: (i) Seller
shall introduce Purchaser to each of the Representatives, individually or
collectively, in such manner and at such times as the Seller reasonably
recommends is most likely to induce the Representatives to accept engagement by
Purchaser; (ii) Purchaser shall negotiate with the Representatives in good faith
and seek to obtain the agreement of the Representatives to continue as sales
representatives of Purchaser for the Division following the Closing on terms
Purchaser deems reasonable; (iii) Seller shall cooperate with Purchaser in
connection with Purchaser's negotiations, and if requested by Purchaser,
participate in such negotiations and use its reasonable efforts to induce the
Representatives to agree to continue as sales representatives of Purchaser for
the Division following the Closing; and (iv) Seller and Purchaser shall use
reasonable efforts to obtain such agreement of the Representatives by April 21,
1996. Purchaser shall provide Seller with written or telephonic notice on at
least a weekly basis of its plans to contact, and its schedule of meetings with,
Representatives and Joseph E. Peters and W.T. Smith for the purpose of
considering or negotiating their respective terms of engagement by Purchaser.
Purchaser shall allow an agent of Seller to participate in such meetings or
contacts if Seller notifies Purchaser of its desire to do so in writing or
orally in a timely manner. Seller shall use reasonable efforts to be available
on the schedule proposed by Purchaser for any such meetings or contacts. The
foregoing shall not prohibit Purchaser or its agents from accepting and
responding to unsolicited telephone calls from any Representative or employee.
Seller and Purchaser agree that time is of the essence with respect to their
respective efforts to develop arrangements between Purchaser and the
Representatives that are acceptable to Purchaser and the Representatives.
Purchaser agrees that the information provided to it, pursuant to the first
sentence of this Section 4.9, (i) will be accessible only to such of Purchaser's
employees who have been previously identified to Seller as having direct
responsibility for evaluating the Division and obtaining the satisfaction
necessary to eliminate the condition to Closing contained in Section 7.1(g) of
this Agreement and who will be advised of the limited purposes to which such
information may be used and the other terms of this Section and of the
Confidentiality Agreement, and (ii) prior to the Closing, will not be used for
any other business purpose, other than as specified above, under any
circumstances.
Section 4.10 Employee Matters. Seller shall deliver a certificate to
Purchaser within ten (10) business days of the date of this Agreement, which
sets forth as of the end of
24
33
<PAGE>
each December 1995, January 1996 and February 1996, the number of all (a) active
and inactive employees of the Division, (b) employees of the Division actively
working full or part-time; (c) employees of the Division on layoff or leave of
absence (showing the number separately by each reason of leave of absence); and
(d) for each month or a portion thereof between January 1, 1996 and the date
hereof, the number and date of all:
(1) layoffs and leaves of absence, showing the reasons therefor; (2)
discharges, showing the reasons therefor; (3) voluntary terminations and
retirements; (4) new hires; and (5) returns to active employment from
layoff or leave of absence.
ARTICLE 5
ADDITIONAL COVENANTS OF THE SELLER
Section 5.1 Conduct Pending Closing. Prior to the Closing or the
termination of this Agreement pursuant to its terms, and except as otherwise
contemplated by this Agreement, Seller shall cause the Division to:
(a) Conduct the Business only in the ordinary and usual course,
substantially as it is now being conducted;
(b) Use reasonable efforts to keep intact its business organization,
keep available the services of its officers and employees and maintain good
relationships with suppliers, distributors, customers, sales
representatives and dealers;
(c) Not, without the prior consent of Purchaser, which consent shall
not be unreasonably withheld or delayed:
(i) except as required by their terms, amend, terminate, or fail
to renew any material Contract or Representative Agreement or default
(or take or omit to take any action that, with or without the giving
of notice or passage of time, would constitute a default) in any of
its obligations under any material Contract or Representative
Agreement, or enter into any new material Contract other than
Contracts for the purchase or sale of Inventory or services in the
ordinary course of business;
(ii) terminate, amend (other than general amendments which the
carrier makes for a category of policy), renew or fail to renew any
existing insurance coverage for the Division;
(iii) incur or agree to incur any obligation, other than in the
ordinary course of business and consistent with past practices;
(iv) make any loan, guaranty or other extension of credit, or
enter into any commitment to make any loan guaranty or other extension
25
34
<PAGE>
of credit, to or for the personal benefit of any director, officer,
employee, or shareholder of Seller or officer or employee or sales
representative of the Division, or any of their respective Affiliates,
except for advances for ordinary business expenses, or advances to, or
draws against commission by, sales representatives in the ordinary
course of business, consistent with past practices;
(v) grant any general or uniform change in the rates of pay or
benefits to employees (or a class thereof), or any change in the rate
of pay or benefits of management employees of the Division,
individually or as a class;
(vi) sell, transfer, mortgage, encumber or otherwise dispose of
any Assets, except (i) for dispositions of property having a net book
value not greater than $25,000 in the aggregate, or (ii) in the
ordinary course of business;
(vii) make any capital expenditures or commitments aggregating
more than $50,000;
(viii) change any accounting methods or periods of accounting; or
(ix) terminate without cause or layoff or otherwise suspend from
active employment (other than for medical or similar reasons relating
to the particular circumstances of an employee) more than ten
employees.
Section 5.2 Use of "Delmar" Name. Seller agrees that, after the Closing
Date, neither Seller nor any Affiliate shall use the name "Delmar" or any other
trade name, trademark or service mark included in the Assets. On and after the
Closing Date, Seller shall not otherwise, through its actions or conduct,
represent or imply to third persons that it is affiliated with Purchaser.
Section 5.3 Access To Information. Between the date of this Agreement and
the Closing Date, Seller will, during regular business hours, (a) give Purchaser
and its agents reasonable access to all books and records of the Division and
the Assets, including, the Division Facilities and the Real Property, (b) permit
Purchaser and its agents to make such inspections, tests and surveys thereof as
Purchaser may reasonably request of Seller, and (c) furnish Purchaser with such
financial and operating data and other information with respect to the business,
operations and properties of the Division as Purchaser may from time to time
reasonably request; provided, that the provision of such information does not
violate any federal, state or other applicable laws, regulations or
interpretations thereof, including federal or state antitrust, fair trade or
unfair competition law, provided, further, that any such investigation shall be
conducted in such a manner as not to interfere with the business operations of
the Division. Seller shall cause its officers and other employees to assist
Purchaser in making such investigation and shall cause the accountants, officers
and other employees and representatives of Seller to be available to, cooperate
with, and assist
26
35
<PAGE>
Purchaser for such purposes. During such investigation Purchaser shall have the
right to make copies at Seller's expense of such records, files and other
materials as it may deem advisable. Seller shall respond as fully as possible to
all inquiries of Purchaser to the extent that it can do so without unreasonable
effort or expense. No investigation by Purchaser or its employees, attorneys,
independent accountants, business consultants or other representatives or agents
shall affect its right to rely upon the representations, warranties or covenants
of Seller set forth in this Agreement to the extent provided in this Agreement,
and such representations, warranties and covenants shall survive any such
investigation to the extent provided in this Agreement. Seller's covenants under
this Section are made with the understanding that Purchaser shall use all such
information in compliance with all federal, state or other applicable laws,
regulations or interpretations thereof. The foregoing notwithstanding, Purchaser
acknowledges and agrees that Purchaser's access to the books and records of the
Division shall not include access to any privileged information or to any
non-public information concerning any alleged dispute or any pending litigation,
investigation or proceeding involving Seller or its Affiliates, and Seller shall
not have any obligation to deliver any such information to Purchaser.
Section 5.4 Environmental Matters. Seller has previously provided to
Purchaser copies of two environmental surveys dated October 13, 1995 and March
28, 1996, respectively, prepared by ERM Southeast and conducted (at Seller's
expense) with respect to the Division Facilities (the "Environmental Surveys").
Without limiting Seller's express representations and warranties contained in
this Agreement, Purchaser hereby acknowledges receipt of such Environmental
Surveys, accepts the conclusions therein, and agrees that none of the matters
disclosed therein shall constitute any breach or failure of condition under this
Agreement.
Section 5.5 Books and Records. To the extent not then in the possession of
Purchaser, Seller will after the Closing cause to be delivered to Purchaser,
upon the reasonable request of Purchaser and in accordance with Purchaser's
reasonable instructions, copies of all books and records relating to the
Division and the Business then in the possession of Seller which constitute part
of the Assets.
Section 5.6 Protective Covenants.
(a) Noncompetition. Until the third (3rd) anniversary of the Closing
Date, Seller shall not, without the prior written consent of Purchaser:
(i) develop, manufacture, sell or distribute products or perform
services in competition with Purchaser in the businesses described in
the First Recital of this Agreement as presently conducted (the
"Competing Business"); or
(ii) perform any advisory or consulting services for, invest in
or otherwise become associated with in any capacity, any Person which
develops, manufactures, sells or distributes products or performs
services in competition with Purchaser in the Competing Business;
27
36
<PAGE>
anywhere in the United States of America. Nothing in this Subsection
4.10(a) shall prevent Seller from acquiring an equity interest of less
than five percent (5%) in a corporation whose shares are listed on a
national securities exchange or regularly quoted in the
over-the-counter market. The provisions of this Section 5.6(a) shall
not prohibit the conduct of a Competing Business for, on behalf of, or
by (A) any entity that is not Seller that acquires a majority
ownership or substantially all of the assets of Seller after the date
hereof, (B) any surviving entity of a consolidation, merger,
reorganization or spin-off (each, a "Reorganization") involving Seller
as a result of which shareholders directly or indirectly owning a
majority of Seller immediately before such Reorganization do not own a
majority of Seller immediately after such Reorganization or (C)
Seller, if as a result of an acquisition of a majority ownership or
substantially all of the assets of another entity Seller acquires a
business which includes the conduct of a Competing Business, provided,
however, that Seller uses its best efforts to dispose of such
Competing Business within six months after its acquisition.
(b) Nonsolicitation. Until four years following the Closing Date,
Seller shall not (and shall cause its directors, officers, employees
and agents not to) solicit any person or entity that is a
Representative or who becomes a Hired Employee (as of, and following,
the Closing Date) for employment or engagement as an employee,
salesperson, representative, distributor or independent contractor of
any kind, however designated.
(c) Confidentiality. For a period of four years after Closing,
Seller shall not, and shall cause its officers, directors, employees
and agents not to, disclose to any person any non-public information
contained in the Intangibles or any other proprietary non-public
information regarding the Division included in the Assets. This
covenant shall not prohibit Seller from disclosing information if
required (based on the advice of counsel) (i) to comply with Law or a
court or administrative order or decree or (ii) to facilitate the
prosecution or defense of litigation or administrative proceeding;
provided, that if Seller deems such disclosure to be required it shall
provide notice to Purchase of such disclosure and, to the extent
reasonably practicable, consult with Purchaser in advance of such
disclosure. Notwithstanding the foregoing, Seller's obligations under
this Section shall not apply to any information or document which is
or becomes available to the public other than as a result of a
disclosure by the Seller in violation of this Agreement or becomes
available to the party on a non-confidential basis from a source other
than Purchaser's officers, directors, employees, representatives or
agents.
(d) Equitable Relief. Seller agrees that money damages will not
be a sufficient remedy for breach of the provisions of this Section
5.6, and that Purchaser shall be entitled to specific performance and
injunctive or other equitable relief as a remedy for any such breach.
(e) Reformation. If any covenant contained in this Section 5.6 is
found by a court of competent jurisdiction to be invalid or
unenforceable as against public policy or for any other reason, such
court is directed to exercise its discretion to reform such covenant
to the end that Seller shall be subject to a noncompetition covenant
that is reasonable under the circumstances and enforceable by Buyer.
28
37
<PAGE>
Section 5.7 No Negotiations. Prior to Closing, Seller shall not, directly
or indirectly, solicit, initiate or participate in (i) the submission of any
proposal or offer from any person or entity relating to the acquisition of any
substantial assets of the Division (including any acquisition structured as a
merger, consolidation or share exchange) or (ii) any discussions or negotiations
or enter into any agreement to sell all or substantially all of the Assets with,
or to any third party. Seller shall immediately notify Purchaser in writing of
any person or entity who makes any proposal, offer, inquiry or contact with
respect to any of the foregoing.
ARTICLE 6
ADDITIONAL COVENANTS OF PURCHASER
Section 6.1 Employee Matters.
(a) Employment Offers. Purchaser shall offer to hire at the Closing
substantially all of those Employees of the Division actively employed by
Seller on the Closing Date ("Employees") as Purchaser in its discretion
deems reasonably necessary and appropriate to continue the operations of
the Business in substantially the same manner such operations were
conducted prior to Closing. Purchaser shall identify to Seller ten days
prior to the Closing Date the names of the Employees that it will not offer
to hire at the Closing. Seller or its Affiliates shall have the right to
employ or offer to employ any Employee who declines Purchaser's offer of
employment.
(b) Hiring of Employees. Purchaser shall hire at the Closing each
Employee who elects to accept Purchaser's offer of employment (if any) (the
"Hired Employees") and shall indemnify and hold Seller and its Affiliates
harmless, in accordance with Sections 9.4, 9.5 and 9.6, from and against
any Losses arising from or relating to any subsequent termination of any
such Hired Employee by Purchaser. Purchaser agrees to give the Hired
Employees due credit for the vacation time accrued on the Closing Balance
Sheet to which they are entitled as a result of their employment by Seller,
by allowing such Hired Employees such vacation time as to which such Hired
Employees would have been entitled as of the Closing Date if such Hired
Employees had remained employees of Seller or, upon termination of
employment, by making full payment to such Hired Employees of the vacation
time that such employees would have received had they taken such paid time
off.
(c) Health Benefits. Purchaser agrees that it will either (i) assume
the existing HMO and Point-of-Service Plan Agreements with Health Source of
North Carolina, Inc. ("Health Source") as of the Closing or (ii) enter into
a new contract establishing an HMO and Point-of-Service Plan covering all
employees currently covered under the existing Health Source Plans (the
"Plan Employees") on identical terms and conditions (with no pre-existing
condition exclusion). Either arrangement shall provide that all
administrative functions and employer obligations in respect of Plan
Employees other than Hired Employees (including, without limitation, any
former Plan Employee currently receiving or entitled to elect COBRA
coverage and any Plan Employee terminated on or prior to the Closing as a
result of the transactions contemplated herein and their qualified
beneficiaries (collectively, "COBRA Eligible Persons")) shall be
administered and accounted
29
38
<PAGE>
for by Health Source on a completely separate basis and shall be reported
directly to Seller and Seller shall remain responsible for satisfying all
employer obligations in respect of the health insurance contract relating
to such COBRA-Eligible Persons including the obligation to pay premiums in
respect of such COBRA-Eligible Persons and the responsibility to collect
premium payments in respect of such. Nothing herein prohibits Purchaser
from, after the Closing Date, terminating or changing the existing or any
future contract with Health Source and in the event of any such termination
or other event which would entitle such COBRA- Eligible Person to claim
COBRA coverage under any other plan, all obligations in respect of such
COBRA-Eligible Persons shall be Seller's obligations and not Purchaser's
and shall be satisfied by Seller through the provision of alternative
coverage to the extent required. In the event that Seller fails to provide
alternate coverage and Purchaser is, as a result, compelled to provide
coverage to any COBRA-Eligible Person or if Seller otherwise breaches this
covenant, then Seller's obligation to indemnify Purchaser in respect of
such obligations under Article IX shall apply until the expiration of the
statute of limitations applicable to any claims accruing on or prior to the
day after the third anniversary of the Closing Date and shall not be
subject to the claim minimums established in that Article and shall remain
Seller's absolute, primary obligation. All health care benefits shall be
immediately available to the Hired Employees as of the Closing, and the
Hired Employees shall become as of the Closing participants thereunder,
without regard to any applicable waiting period or with respect to
pre-existing conditions. Purchaser acknowledges and agrees that Purchaser
is a successor employer with respect to Hired Employees for purposes of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), that the Hired Employees will not, as a result, be deemed to
have had a termination of employment for purposes of COBRA and that any
COBRA notices or coverages required to be given or made available to any
Hired Employee shall be given or made by Purchaser and not Seller, provided
that Purchaser does not assume, and shall not be deemed to have assumed,
any COBRA obligations which Seller has to former employees of Seller whose
employment was terminated on or prior to the Closing.
(d) WARN ACT. Purchaser shall offer sufficient terms of employment to
a sufficient number of Employees such that, assuming the accuracy of
Seller's certificates delivered pursuant to Section 4.10 and Section
7.1(i), there would not occur, as a result of the closing, a "plant
closing" or "mass layoff" as defined in Section 2101 of the Worker
Adjustment, Retraining and Notification Act ("WARN Act"). As of the date
and time the Closing is effective, Purchaser (and not Seller) shall
thereupon be responsible for complying with the WARN Act with respect to
the Hired Employees. Purchaser shall indemnify and hold Seller and its
Affiliates harmless, in accordance with Section 9.4, 9.5 and 9.6 from and
against all losses from any breach of the foregoing covenant, including but
not limited to all losses resulting from any compliance obligation
(including, without limitation, the obligation to give notice or pay money)
Seller and its Affiliates or Purchaser has under the WARN Act arising from
any person who experiences an employment loss in a "plant closing" or "mass
layoff" as a result of the transactions contemplated in this Agreement.
(e) Third Party Beneficiaries. Notwithstanding the foregoing, nothing
in this Section 6.1 shall, or shall be deemed to, create any rights in
favor of any
30
39
<PAGE>
person not a party hereto or to constitute an employment agreement, an
offer of employment or condition of employment for any Employee.
(f) 401(k) Savings Plan. Seller agrees to treat all Hired Employees
who are participants in The Employee Savings Plan and Trust of the Delmar
Division and the other Divisions of CGC (the "Savings Plan") as of the
Closing Date as terminated employees under the Savings Plan and shall
provide for the vesting and distribution of such Hired Employees' account
balances in accordance with the Savings Plan and applicable Law. Purchaser
will have no responsibility or liability for the Savings Plan whatsoever.
Purchaser will provide an opportunity to Hired Employees to elect to "roll
over" account balances distributed to such Hired Employees by the Savings
Plan into the Herff Jones, Inc. 401(k) Profit Sharing Plan; provided that
Purchaser makes no undertaking as to when or on what terms Hired Employees
may be offered participation in such plan.
Section 6.2 Books and Records. Until the expiration of seven years from the
Closing, Purchaser will, to the extent necessary or helpful in connection with
any tax or other matter relating to the Business for any period ending at or
prior to the Closing, (i) retain and, as Seller may reasonably request, permit
Seller and its agents and representatives to inspect and copy at Seller's
expense all books and records of Purchaser that relate to the business and
affairs of the Division during any period prior to the Closing, and (ii) assist
Seller and its agents and representatives at Seller's expense in arranging
discussions with (and the calling as witnesses of) officers, directors,
employees, agents and representatives of Purchaser on matters that relate to the
Division with respect to any period prior to the Closing. After such seven year
period, Purchaser may destroy or dispose of any such records; provided that
prior to the end of such retention period, Seller may request specific records
it desires to have retained and not destroyed. Purchaser shall deliver to Seller
at Seller's expense any records so reasonably requested, following which
Purchaser shall have no further obligation with respect to such records.
Section 6.3 Confidentiality. Any non-public information provided to or
obtained by Purchaser or its representatives pursuant to Sections 5.3 or 5.4 or
otherwise under this Agreement shall be subject to the terms of the
Confidentiality Agreement, dated September 21, 1995, between Seller and
Purchaser (the "Confidentiality Agreement").
Section 6.4 Waiver of Bulk Sales Law Compliance. Purchaser hereby waives
compliance by Seller with the requirements of Article 6 of the Uniform
Commercial Code as in force in any state in which Assets are located and all
other similar laws applicable to bulk sales and transfers.
Section 6.5 Resale Certificate. Purchaser agrees to furnish to Seller any
resale certificate or other similar documents reasonably requested by Seller to
comply with pertinent sales and use tax laws.
31
40
<PAGE>
ARTICLE 7
CONDITIONS TO CLOSING
Section 7.1 Conditions To Obligations of Purchaser. The obligations of
Purchaser to consummate the transactions contemplated hereby shall be subject to
the fulfillment at or prior to the Closing of the following conditions, unless
Purchaser waives such fulfillment:
(a) Performance of Agreement. Seller shall have performed in all
material respects its agreements and obligations contained in this
Agreement required to be performed on or prior to the Closing.
(b) Accuracy of Representations and Warranties. The representations
and warranties of Seller set forth in this Agreement shall be true and
correct as of the date of this Agreement (unless the inaccuracy or
inaccuracies which would otherwise result in a failure of this condition
have been cured by the Closing) and as of the Closing as if made as of such
time.
(c) Officers' Certificate. Seller and the Division shall have each
delivered to Purchaser a certificate, signed on its behalf by its
respective chief executive officer and chief financial officer, dated the
Closing Date, certifying to the fulfillment of the conditions set forth in
Sections 7.1(a) and 7.1(b).
(d) Absence of Injunctions. There shall not be in effect (or to
Purchaser's or Seller's knowledge, threatened) a temporary restraining
order or a preliminary or permanent injunction or other order, decree or
ruling by a court of competent jurisdiction or by a governmental agency
which restrains or prohibits Purchaser's acquisition or operation of the
Assets, or any threat by governmental authorities or any person to exact
any penalty or impose any material economic detriment upon Purchaser if it
consummates the transactions contemplated hereby that would have an adverse
effect upon Purchaser following the Closing, provided that the parties will
use their reasonable efforts to litigate against the entry of, or to obtain
the lifting of, any such order, injunction or potential penalty or
imposition. The existence of any such temporary restraining order or
preliminary injunction, potential penalty or imposition arising out of
action by a regulatory agency shall operate, at the option of Seller, only
to delay the Closing (and extend the Termination Date) until the thirtieth
day following the lifting of any such order or injunction or threat, except
that such delay may not extend the original Termination Date beyond April
30, 1996.
(e) Approvals and Consents of Third Parties. Other than with respect
to the assignment and assumption of the Representative Agreements, all
approvals, consents, authorizations and waivers from governmental and other
regulatory agencies and consents from third parties including those listed
in Schedule 3.3, required to consummate the transactions contemplated
hereby (including the expiration of any applicable waiting period under any
regulation or statute including the HSR Act) shall have been obtained,
other than such consents as would not, in the aggregate if not obtained,
have a Material Adverse Effect on the Business in the hands of the
Purchaser as determined in the reasonable judgment of Purchaser.
32
41
<PAGE>
(f) Opinion of Counsel. Purchaser shall have received, on and as of
the Closing Date, an opinion of Munger, Tolles & Olson, counsel to Seller,
or Parker, Poe, Adams & Bernstein, North Carolina counsel to Seller,
substantially as to the matters set forth in Sections 3.1 (other than as to
qualification in a foreign jurisdiction, which opinion shall be limited to
qualification in those foreign jurisdictions identified to such counsel by
Seller), 3.2, 3.3 (to the best knowledge of such counsel with respect to
clauses (ii)(B), (ii)(C), (iii) and (iv)) and 3.7(c) (as to the knowledge
of such counsel, if any, concerning such litigation), subject to customary
conditions and limitations.
(g) Representative Agreements. On or before April 21, 1996, Purchaser
shall be satisfied, in its reasonable discretion, that Representatives of
the Division representing at least 85% of the fiscal 1995 revenues of the
Division (from customers other than colleges and commercial customers) have
agreed or have affirmatively indicated in form and manner satisfactory to
Purchaser that they will agree to be engaged by Purchaser to sell products
of the Division following the Closing on reasonable terms and conditions.
This condition shall be deemed satisfied unless Purchaser delivers notice
to Seller on or before April 21, 1996 that this condition has not been
satisfied.
(h) Real Property Matters.
(i) Deeds. The Seller shall have delivered to Purchaser or, at
Purchaser's option, Chicago Title Insurance Company (the "Title
Company") the Deed warranting fee simple title to each parcel of Real
Property in Purchaser free of all Liens except all Permitted Liens.
(ii) Surveys. Purchaser shall have received, at Seller's cost, a
survey of each parcel of land comprising the Real Property, prepared
by a registered land surveyor of Purchaser's choice, which shall
conform to current ALTA/ACSM Minimum Detail Requirements for Land
Title Surveys (1992) disclosing the location of all improvements,
easements, party walls, sidewalks, roadways, utility lines, setbacks,
physical encroachments from or on the Real Property and other matters
shown customarily on such surveys, and showing access affirmatively to
public streets and roads (the "Survey"). The Survey shall not disclose
any state of fact or any encroachment from or onto any Real Property
as presently used by Seller which materially adversely affects either
the use of the Real Property as presently used by Seller or the value
or transferability of the Real Property and if the Survey discloses
such items, then Seller shall either (i) remove the items prior to
Closing or (ii) if such items cannot be removed, then Purchaser may
waive this condition, or if Purchaser does not waive this condition,
Seller may terminate the Agreement without penalty or further
liability to Purchaser. The Survey shall be certified to Purchaser and
the Title Company, and shall be sufficient to cause the Title Company
to delete any general survey exception from the Title Policy.
33
42
<PAGE>
(iii) Purchaser shall have received, on and as of the Closing
Date, an ALTA Owner's Policy of Title Insurance (rev. 1992) (the
"Title Policy") issued by the Title Company in the amount of
$7,023,000 (or an unconditional written commitment, dated as of the
Closing Date, to issue such Title Policy within a reasonable time
following the Closing), together with the endorsements requested by
Purchaser as set forth on the Disclosure Schedule and such other
endorsements as are reasonably requested by Purchaser within five
business days of receipt of the Survey solely as a result of
disclosures made by the Survey that Purchaser could not have
anticipated as necessary prior to the receipt of such Survey
(provided, however, that any endorsements requested by Purchaser , and
that portion of the premium attributable to ALTA coverage shall be
obtained at Purchaser's expense), insuring Purchaser's fee title to
the Real Property, without exception, except for Permitted Liens.
(i) Employee Matters. An officer's certificate of Seller certifying
for each month or portion thereof between the date hereof and the Closing
Date the information called for in Section 4.10.
(j) Health Insurance. Purchaser shall have entered into an agreement
with Health Source or received its written consent to one of the
arrangements with Health Source set forth in Section 6.1(c).
Section 7.2 Conditions To Obligations of Seller. The obligations of Seller
to consummate the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing of the following conditions, unless
Seller waives such fulfillment:
(a) Performance of Agreement. Purchaser shall have performed in all
material respects its agreements and obligations contained in this
Agreement required to be performed on or prior to the Closing.
(b) Accuracy of Representations and Warranties. The representations
and warranties of Purchaser set forth in this Agreement shall be true in
all material respects as of the date of this Agreement (unless the
inaccuracy or inaccuracies which would otherwise result in a failure of
this condition have been cured by the Closing) and as of the Closing as if
made as of such time.
(c) Officers' Certificate. Purchaser shall have delivered to Seller a
certificate, signed on its behalf by its chief executive officer and chief
financial officer, dated the Closing Date, certifying to the fulfillment of
the conditions set forth in Sections 7.2(a) and 7.2(b).
(d) Absence of Injunctions. There shall not be in effect (or, to the
Seller's or Purchaser's knowledge, threatened) a temporary restraining
order or a preliminary or permanent injunction or other order, decree or
ruling by a court of competent jurisdiction or by a governmental agency
which restrains or prohibits Seller's consummation of the
34
43
<PAGE>
transactions contemplated hereby, or any threat by governmental authorities
or any person to exact any penalty or impose any material economic
detriment upon Seller if it consummates the transactions contemplated
hereby that would have an adverse effect upon Seller following the Closing,
provided that the parties will use their reasonable efforts to litigate
against the entry of, or to obtain the lifting of, any such order,
injunction or potential penalty or imposition, and the existence of any
such temporary restraining order, preliminary injunction or potential
penalty or imposition shall operate, at the option of Seller, only to delay
the Closing (and extend the Termination Date) until the thirtieth day
following the lifting of any such order or injunction or threat, except
that such delay may not extend the original Termination Date beyond April
30, 1996.
(e) Approvals and Consents of Third Parties. Other than with respect
to the assignment and assumption of the Representative Agreements, all
approvals, consents, authorizations and waivers from governmental and other
regulatory agencies and other third parties disclosed in Schedule 3.3,
required to consummate the transactions contemplated hereby (including the
expiration of any applicable waiting period under any regulation or statute
including the HSR Act) shall have been obtained other than such consents as
would not, in the aggregate if not obtained, have a material adverse effect
on the assets, business, condition (financial or otherwise), or results of
operations of Seller as determined in the reasonable judgment of Seller.
(f) Opinion of Counsel. Seller shall have received, on and as of the
Closing Date, an opinion of Barnes & Thornburg, counsel to Purchaser,
substantially as to the matters set forth in Sections 2.1 (other than as to
qualification in a foreign jurisdiction, which opinion shall be limited to
qualifications in those foreign jurisdictions identified to such counsel by
Purchaser), 2.2 and 2.3 (to the best knowledge of such counsel with respect
to clauses (ii)(B), (ii)(C), (iii) and (iv)), subject to customary
conditions and limitations.
(g) Health Insurance. Seller shall have entered into an agreement with
Health Source or received its written consent to one of the arrangements
with Health Source set forth in Section 6.1(c).
ARTICLE 8
TERMINATION
Section 8.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing:
(a) By mutual consent of Purchaser and Seller; or
(b) By either Purchaser or Seller upon written notice to the other, if
(i) the Closing shall not have occurred by April 30, 1996 (the "Termination
Date"); or (ii)(A) in the case of termination by Seller, the conditions set
forth in Section 7.2 cannot reasonably be met by the Termination Date, and
(B) in the case of termination by Purchaser, the conditions set forth in
Section 7.1 cannot reasonably be met by the Termination Date (or any
earlier or later date set forth in Section 7.1), unless in either of the
cases described in
35
44
<PAGE>
clauses (A) or (B), the failure of the condition is the result of the
material breach of this Agreement by the party, or an Affiliate of the
party, seeking to terminate and provided, however, that if Purchaser
provides written notice to Seller on or before April 21, 1996 that the
condition set forth in Section 7.1(g) has not been satisfied by April 21,
1996 or cannot reasonably be satisfied by April 21, 1996 and such failure
is not a result of Seller materially delaying or interfering with the
Purchaser's contacts with the Representatives, Purchaser shall pay to
Seller, by check, accompanying such notice, the amount of One Hundred and
Fifty Thousand Dollars ($150,000).
Each party's right of termination hereunder is in addition to any other
rights it may have hereunder or otherwise.
Section 8.2 Effect of Termination. In the event this Agreement is
terminated pursuant to Section 8.1, all further obligations of the parties
hereunder shall terminate, except that the obligations set forth in Sections
4.3, 6.3, and 8.2, shall survive. In the event of termination of this Agreement
as provided above, there shall be no liability on the part of a party to another
under and by reason of this Agreement or the transactions contemplated hereby
except as specified in Article 9 and except for intentionally fraudulent acts by
a party the remedies for which shall not be limited by the provisions of this
Agreement. No termination of this Agreement shall act to terminate or otherwise
impair the Confidentiality Agreement.
ARTICLE 9
SURVIVAL AND REMEDY; INDEMNIFICATION
Section 9.1 Survival. The representations and warranties of Purchaser and
Seller contained in this Agreement shall survive the Closing until October 1,
1997, provided that the representations and warranties set forth in Sections
2.1, 2.2, 2.4, 3.1, 3.2, 3.4, 3.7(d) with respect to Taxes and 3.7(e) shall
survive the Closing until all applicable statute of limitations periods shall
have run. Notwithstanding any other provision of this Agreement, neither
Purchaser nor Seller shall have any liability to the other following the Closing
for any breach of any representation or warranty set forth herein, unless a
claim is asserted prior to the termination of the respective periods of survival
stated in the preceding sentence.
Section 9.2 Exclusive Remedy. Absent intentional fraud or unless otherwise
specifically provided herein, the sole and exclusive remedy of any party hereto
for any breach of the covenants and agreements of the other parties contained in
this Agreement shall be the remedies contained in this Article, except that the
provisions of Sections 1.6(a), 4.4, 4.5, 5.6, 6.1, 6.3, 6.6 and this Article 9
shall be specifically enforceable. Any party entitled to, or seeking,
indemnification from the other party under any provision of this Agreement shall
be referred to herein as the "Indemnified Party" and such other party shall be
referred to herein as the "Indemnifying Party".
36
45
<PAGE>
Section 9.3 Indemnity by Seller.
(a) Seller shall indemnify Purchaser and hold Purchaser harmless from
and against any and all loss, liability, damage and expense, including
reasonable attorneys' fees and costs of investigation, litigation,
settlement and judgment (collectively "Losses"), which Purchaser may
sustain or suffer or to which Purchaser may become subject as a result of:
(i) The inaccuracy of any representation or the breach of any
warranty made by Seller herein;
(ii) The nonperformance or breach of any covenant or agreement
made or undertaken by Seller in this Agreement; or
(iii) If the Closing occurs, the existence of, or the failure of
Seller to pay, discharge or perform as and when due, any of the
Excluded Liabilities.
(b) The indemnification obligations of Seller provided above shall, in
addition to the qualifications and conditions set forth in Sections 9.5 and
9.6, be subject to the following qualifications:
(i) Purchaser shall not be entitled to indemnity under Section
9.3(a)(i) above unless:
(A) Written notice to Seller of such claim specifying the
basis thereof is made, or an action at law or in equity with
respect to such claim is served, before the earlier to occur of
the first anniversary of the Closing Date (or, in the case of an
inaccuracy in or breach of Sections 3.1, 3.2 or 3.4, before the
applicable statute of limitations periods shall have run) or the
first anniversary of the date on which this Agreement is
terminated, as the case may be;
(B) If the Closing occurs, Purchaser shall be entitled only
to recover the amount by which Purchaser's aggregate Losses
exceed two hundred and fifty thousand dollars ($250,000) (the
"Deductible Amount"), provided, however, that individual claims
of One Thousand Dollars ($1,000) or less shall not be aggregated
for purposes of calculating either the Deductible Amount or the
excess of Losses over the Deductible Amount; and
(C) If the Closing occurs, in no event shall Seller be
liable to Purchaser under Section 9.3(a)(i) for amounts which, in
the aggregate, exceed one hundred percent (100%) of the Purchase
Price.
37
46
<PAGE>
(ii) If the Closing occurs, Purchaser shall not be entitled to
indemnity under Sections 9.3(a)(ii) or (iii) above except for
out-of-pocket Losses actually suffered or sustained by Purchaser or to
which Purchaser may become subject as a result of circumstances
described in such Sections 9.3(a)(ii) or (iii), and such indemnity
shall not include Losses in the nature of consequential damages, lost
profits, diminution in value, damage to reputation or the like.
Section 9.4 Indemnity by Purchaser.
(a) Purchaser shall indemnify Seller and hold Seller harmless from and
against any and all Losses which they may sustain or suffer or to which
they may become subject as a result of:
(i) The inaccuracy of any representation or the breach of any
warranty made by Purchaser herein;
(ii) The nonperformance or breach of any covenant or agreement
made or undertaken by Purchaser in this Agreement;
(iii) If the Closing occurs, the existence of, or the failure of
Purchaser to pay, discharge or perform as and when due, any of the
Assumed Liabilities; and
(iv) If the Closing occurs, the ongoing operations of Purchaser,
the Division, the Business, the Assets and the Division Facilities
after the Closing Date.
(b) The indemnification obligations of Purchaser provided
above shall, in addition to the qualifications and conditions set
forth in Sections 9.5 and 9.6, be subject to the following
qualifications:
(i) Seller shall not be entitled to indemnity under Section
9.4(a)(i) above unless:
(A) Written notice to Purchaser of such claim
specifying the basis thereof is made, or an action at law or
in equity with respect to such claim is served, before the
earlier to occur of the first anniversary of the Closing
Date (or, in the case of an inaccuracy in or breach of
Sections 2.1, 2.2 or 2.4, before the applicable statute of
limitations periods have run) or the first anniversary of
the date on which this Agreement is terminated, as the case
may be; and
(B) If the Closing occurs, Seller shall be entitled
only to recover the amount by which Seller's aggregate
Losses exceed the Deductible Amount, provided, however, that
individual claims of One Thousand Dollars ($1,000) or less
shall not be aggregated for
38
47
<PAGE>
purposes of calculating either the Deductible Amount or the
excess of Losses over the Deductible Amount.
(ii) If the Closing occurs, Seller shall not be entitled to
indemnity under any of Sections 9.4(a)(ii) through (iv) above except
for out-of-pocket Losses actually suffered or sustained by Seller or
to which Seller may become subject as a result of circumstances
described in any of such Sections 9.4(a)(ii) through (iv), and such
indemnity shall not include Losses in the nature of consequential
damages, lost profits, diminution in value, damage to reputation or
the like.
Section 9.5 Further Qualifications Respecting Indemnification. The right of
the Indemnified Party to indemnity hereunder shall be subject to the following
additional qualifications:
(a) The Indemnified Party shall promptly upon its discovery
of facts or circumstances giving rise to a claim for
indemnification, including receipt by it of notice of any demand,
assertion, claim, action or proceeding, judicial, governmental or
otherwise, by any third party (such third party actions being
collectively referred to herein as "Third Party Claims"), give
notice thereof to the Indemnifying Party, such notice in any
event to be given within sixty (60) days from the date the
Indemnified Party obtains actual knowledge of the basis or
alleged basis for the right of indemnity or such shorter period
as may be necessary to avoid material prejudice to the
Indemnifying Party; provided, that the failure of such timely
notice shall only mitigate the obligations of the Indemnifying
Party to the extent it is actually materially prejudiced by such
failure; and
(b) In computing Losses, such amounts shall be computed net
of any related recoveries to which the Indemnified Party is
entitled under insurance policies or other related payments
received or receivable from third parties and net of any tax
benefits actually received by the Indemnified Party or for which
it is eligible, taking into account the income tax treatment of
the receipt of indemnification.
Section 9.6 Procedures Respecting Third Party Claims. In providing notice
to the Indemnifying Party of any Third Party Claim (the "Claim Notice"), the
Indemnified Party shall provide the Indemnifying Party with a copy of such Third
Party Claim or other documents received and shall otherwise make available to
the Indemnifying Party all relevant information material to the defense of such
claim and within the Indemnified Party's possession. The Indemnifying Party
shall have the right, by notice given to the Indemnified Party within fifteen
(15) days after the date of the Claim Notice, to assume and control and, at the
written election of the Indemnified Party, shall assume and control, the defense
of the Third Party Claim that is the subject of such Claim Notice, including the
employment of counsel selected by the Indemnifying Party subject to the prior
approval of the Indemnified Party (not to be unreasonably withheld), and the
Indemnifying Party shall pay all expenses of, and the Indemnified Party shall
cooperate fully with the Indemnifying Party in connection with, the conduct of
such defense. The Indemnified Party shall have the right to employ separate
counsel in any such proceeding and to participate in (but not control) the
defense of such Third Party Claim, but the fees and expenses of such counsel
shall be borne by the
39
48
<PAGE>
Indemnified Party unless the Indemnifying Party shall agree otherwise. If the
Indemnifying Party shall have failed to assume the defense of any Third Party
Claim in accordance with the provisions of this Section, then the Indemnified
Party shall have the absolute right to control the defense of such Third Party
Claim, and, if and when it is finally determined that the Indemnified Party is
entitled to indemnification from the Indemnifying Party hereunder, the fees and
expenses of Indemnified Party's counsel shall be borne by the Indemnifying
Party, provided that the Indemnifying Party shall be entitled, at is expense, to
participate in (but not control) such defense. The Indemnifying Party shall have
the right to settle or compromise any such Third Party Claim for which it is
providing indemnity so long as such settlement does not impose any obligations
on the Indemnified Party (except with respect to providing releases of the third
party). The Indemnifying Party shall not be liable for any settlement effected
by the Indemnified Party without the Indemnifying Party's consent. The
Indemnifying Party may assume and control, or bear the costs, of any such
defense subject to its reservation of a right to contest the Indemnified Party's
right to indemnification hereunder, provided that it gives the Indemnified Party
notice of such reservation within fifteen (15) days of the date of the Claim
Notice.
Section 9.7 Arbitration. Notwithstanding anything herein to the contrary,
in the event that there shall be a dispute among the parties after the Closing
arising from or related to this Agreement, including the indemnities provided
for hereby, the parties agree that such dispute shall be submitted to binding
arbitration in Los Angeles, California, before a single arbitrator jointly
agreed to by the parties, in accordance with the rules of the American
Arbitration Association, or in accordance with such other procedures as the
parties may agree to prior to the Closing and/or prior to such arbitration. Any
award issued as a result of such arbitration shall be final and binding between
the parties thereto, and shall be enforceable by any court having jurisdiction
over the party against whom enforcement is sought.
ARTICLE 10
GENERAL PROVISIONS
Section 10.1 Entire Agreement; Amendment. This Agreement, together with the
Exhibits and Schedules hereto, the Disclosure Document, the Real Property Lease
and the Confidentiality Agreement, constitute the entire understanding between
the parties concerning the subject matter hereof and thereof, and supersede all
prior understandings and agreements, whether oral or written, between them with
respect to such subject matter. There are no representations, warranties,
agreements, arrangements or understandings, oral or written, between the parties
hereto relating to the subject matter of this Agreement, together with the
Exhibits and Schedules hereto, the Disclosure Document, the Real Property Lease
and the Confidentiality Agreement, which are not fully expressed herein or
therein. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
Section 10.2 Waiver. The failure of a party to insist, in any one or more
instances, on performance of any of the terms, covenants and conditions of this
Agreement shall not be construed as a waiver or relinquishment of any rights
granted hereunder or of
40
49
<PAGE>
the future performance of any such term, covenant or condition, but the
obligations of the parties with respect thereto shall continue in full force and
effect. No waiver of any provision or condition of this Agreement by a party
shall be valid unless in writing signed by such party. A waiver by one party of
the performance of any covenant, condition, representation or warranty of the
other party shall not invalidate this Agreement, nor shall such waiver be
construed as a waiver of any other covenant, condition, representation or
warranty. A waiver by a party of the time of performing any act shall not
constitute a waiver of the time for performing any other act or the time for
performing an identical act required to be performed at a later time. At any
time prior to the Closing, a party hereto may (a) extend the time for the
performance of any of the obligations or other acts of any other party or
parties hereto that are for the benefit of such party, (b) waive any
inaccuracies in the representations and warranties that are for the benefit of
such party contained herein or in any document delivered pursuant hereto, or (c)
waive compliance with any of the agreements or conditions contained herein that
are for the benefit of such party. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
Section 10.3 Notices. All notices, requests, demands, waivers, consents and
other communications hereunder shall be in writing, shall be delivered either in
person, by overnight air courier or by mail, and shall be deemed to have been
duly given and to have become effective (a) upon receipt if delivered in person,
(b) one (1) business day after having been delivered to an air courier for
overnight delivery, or (c) three (3) business days after having been deposited
in the mails as certified or registered mail, return receipt requested, in each
case, with all fees prepaid, if directed to the parties at the following
addresses (or at such other address as shall be given in writing by a party
hereto):
A. If to the Purchaser:
Herff Jones, Inc.
4501 West 62nd Street
Indianapolis, Indiana 46268
Attention: Lawrence F. Fehr
With a copy to:
Barnes & Thornburg
1313 Merchants Bank Building
11 South Meridian Street
Indianapolis, Indiana 46204
Attention: Eric R. Moy
B. If to the Seller:
Continental Graphics Corporation
4525 Wilshire Boulevard
Suite 203
Los Angeles, CA 90010
41
50
<PAGE>
Attention: General Counsel
With a copy to:
Munger, Tolles & Olson
355 South Grand Avenue
35th Floor
Los Angeles, CA 90071
Attention: Sandra A. Seville-Jones
Section 10.4 Interpretation. The captions and headings contained in this
Agreement are for convenience only and are not a part of this Agreement and
shall not be used in construing it.
Section 10.5 Assignment. This Agreement shall not be assignable without the
prior written consent of the other party. Nothing contained in this Agreement,
express or implied, is intended to confer upon any person or entity other than
the parties hereto and their successors in interest and permitted assignees, any
rights or remedies under or by reason of this Agreement unless so stated to the
contrary.
Section 10.6 Governing Law. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of North Carolina, without regard to the principles of conflicts of law
thereof. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, and all of which together shall constitute
the same instrument.
Section 10.7 Savings Provision. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be valid, binding and
enforceable under applicable law, but if any provision of this Agreement is held
to be invalid, void (or voidable) or unenforceable under applicable law, such
provision shall be ineffective only to the extent held to be invalid, void (or
voidable) or unenforceable, without affecting the remainder of such provision or
the remaining provisions of this Agreement.
Section 10.8 Construction. This Agreement shall be construed without regard
to the identity of the person who drafted the various provisions of the same.
Each and every provision of this Agreement shall be construed as though the
parties participated equally in the drafting of the same. Consequently, the
parties acknowledge and agree that any rule of construction that a document is
to be construed against the drafting party shall not be applicable to this
Agreement.
Section 10.9 Time Is of the Essence. Time is hereby expressly made of the
essence with respect to each and every term and provision of this Agreement. The
parties acknowledge that each will be relying upon the timely performance by the
other of its obligations hereunder as a material inducement to each party's
execution of this Agreement.
42
51
<PAGE>
Section 10.10 Index to Definitions. As used herein, the following defined
terms have the meanings set forth in the Sections and parts of this Agreement as
are indicated below:
Affiliates 2.4
Agreement Introduction
Allocation Schedule 1.7
Assets 1.1
Assumed Liabilities 1.4
Best Knowledge 3.5
Base Amount 1.5
Business Recitals
Claim Notice 9.6
Closing 1.6
Closing Date 1.6
COBRA 6.1(c)
Code 6.1(f)
Confidentiality Agreement 6.3
Consulting Agreements 1.1(d)
Contracts 1.1(e)
Disclosure Document 1.1(b)
Division Recitals
Division Facilities 1.10
Employee Benefit Arrangements 3.6(h)
Employees 1.3(c)
Environmental Laws 3.7(d)
Environmental Surveys 5.4
Equipment 1.1(c)(ii)
ERISA 3.7(m)
Excluded Assets 1.2
Excluded Liabilities 1.3
Hazardous Materials 3.7(e)
Hired Employees 6.1(b)
HSR Act 2.3
Indemnified Party 9.2
Indemnifying Party 9.2
Independent Party 1.7
Intangibles 1.1(f)
Intercompany Transactions 1.2(h)
Laws 3.7(d)
Liabilities 3.7(a)
Losses 9.3(a)
Material Adverse Effect 3.1
Net Notes Balance 1.5
Notes Receivable 1.5
1995 Balance Sheet 3.5
Personal Property 1.1(c)
43
52
<PAGE>
Prepayments 1.1(b)
Purchase Price 1.5
Purchaser Introduction
Real Property 1.10
Real Property Lease 1.10
Receivables 1.1(a)
Receivables Amount 1.5
Representative 1.1(a)
Representative Agreements 1.1(l)
Savings Plan 6.1(f)
Seller Introduction
Successor Savings Plan 6.1(f)
Taxes 1.2(e)
Termination Date 8.1(b)
Third Party Claims 9.5(a)
WARN Act 6.1(d)
44
53
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written by their respective officers thereunto duly
authorized.
"SELLER"
CONTINENTAL GRAPHICS CORPORATION
By: /s/ Richard J. Agostinelli
----------------------------
Richard J. Agostinelli
Its: Executive Vice President &
Chief Operating Officer
"PURCHASER"
HERFF JONES, INC.
By: /s/ Lawrence F. Fehr
----------------------------
Lawrence F. Fehr
Its: Vice President &
and Chief Financial Officer
45
54
EXHIBIT 2.2
-----------
Amendment No. I to Asset Purchase Agreement
This Amendment No. I to Asset Purchase Agreement (the "Amendment") is made this
26th day of April, 1996, by and between Herff Jones, Inc. (the "Purchaser'), an
Indiana corporation, and Continental Graphics Corporation (the "Seller"), a
Delaware corporation.
WITNESSETH
Whereas, Purchaser and Seller entered into that certain Asset Purchase Agreement
dated March 28, 1996 pursuant to which, and on the terms and conditions set
forth therein, Seller agreed to sell and Purchaser agreed to purchase certain
assets used in the conduct of the Business and Purchaser agreed to assume
certain liabilities and Seller agreed to transfer certain liabilities incurred
by Seller in connection with the conduct of the Business (defined terms used
herein having the meanings ascribed to them in the Agreement); and
Whereas, Purchaser and Seller desire to amend the Agreement to address certain
matters that have arisen since the date of the Agreement.
NOW, THEREFORE, in consideration of the agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree to amend the Agreement as follows:
Section 1. Change to Schedules. Schedule 3.7(g) to the Agreement shall be
replaced with a reference to items 3 through 9 identified on Schedule B, Section
2 to ALTA Commitment attached hereto which shall constitute Schedule 3.7(g).
Section 2. Adjustments to the Second Base Payment. Section 1.5(e) of the
Agreement shall be amended to add the following sentences:
In connection with obtaining a consent from Pitney Bowes Corporation,
Seller was required to make an advance payment of $692.18 for the lease period
from May 20, 1996 to June 20, 1996. Purchaser agrees that it will increase the
Second Base Payment by $692.18 to compensate Seller for the payment of such
amounts. Seller agrees to reimburse Purchaser for $20,000 for repairs to fix
leaks occurring around certain air conditioning units used in the operation of
the studio, potholes located in the parking lot and the brick facing of the
building used in the operation of the printing company. Seller agrees that
Purchaser shall decrease the Second Base Payment by $20,000 for such repairs.
Section 3. Employment Offers. The following sentence is hereby added to the end
of Section 6. 1 (a) of the Agreement:
Purchaser shall offer to hire those employees of the Division who, on the
Closing Date, are on leave from the Division under the provisions of the Family
Medical Leave Act of 1993 ("FMLA") if, and only to the extent, required by the
FMLA.
55
<PAGE>
Section 4. Health Benefits. The second sentence of Section 6.1(c) of the
Agreement shall be amended to read in its entirety as follows:
Either arrangement shall provide that all administrative functions and
employer obligations in respect of Plan Employees (including, without
limitation, any former Plan Employee currently receiving or entitled to receive
COBRA coverage and any Plan Employee terminated on or prior to the Closing as a
result of the transactions contemplated herein and their qualified beneficiaries
(collectively, "COBRA Eligible Persons")) other than (i) Hired Employees and
(ii) certain (approximately 27) employees who are, at the Closing Date, on
lay-off status shall be administered and accounted for by Health Source on a
completely separate basis and shall be reported directly to Seller and Seller
shall remain responsible for satisfying all employer obligations in respect of
the health insurance contract relating to such COBRA-Eligible Persons including
the obligation to pay premiums in respect of such COBRA-Eligible Persons and the
responsibility to collect premium payments in respect of such; provided,
however, that if any employee of the Division who is on leave from the Division
under the provisions of the FMLA on the Closing Date does not return to active
duty upon the expiration of the leave to which such person is entitled under the
FMLA and such employee is entitled to elect COBRA coverage, then such person
shall be considered a COBRA-Eligible Person for purposes of this Section 6. 1
(c) and provided, further, that Seller shall reimburse Purchaser for the cost of
each such employee to be enrolled in the Health Source Plan until the expiration
of the leave to which such person is entitled under the FMLA.
Section 5. Accounts Payable and Payroll Accounting. Section 1.5(d) of the
Agreement shall be amended to add the following sentences:
Seller agrees to pay all accrued regular payroll or salary which is payable to
the Employees (including relevant payroll taxes for such payroll and all other
amounts withheld or deducted in accordance with the Division's regular payroll
practices) through and including the Closing Date, and Purchaser and Seller
agree that such payments to employees and related amounts withheld or deducted
and payable to other persons shall be recorded as outstanding checks on the
Closing Balance Sheet.
Section 6. Accounts Payable. A new Section 4.12 shall be added to the Agreement
which shall read in its entirety as follows:
Attached as Schedule 4.12 is a list of the Accounts Payable of the Seller
generated by its internal accounting system through and including April 26, 1996
(the "Accounts Payable"). On Wednesday of each week, beginning on May 8, 1996
and until the Accounts Payable shall have been paid, Seller shall forward to
Purchaser by facsimile transmission a list of particular Accounts Payable and
the amounts to be paid with respect thereto during the next five business days
("Weekly Accounts Payable Amount") and Purchaser shall forward to Seller by
Friday of each such week a check payable to Seller in an amount equal to the
Weekly Accounts Payable Amount. Seller shall pay the Weekly Accounts Payable
Amount in respect of the Accounts Payable promptly upon receipt of the Weekly
Accounts Payable Amounts from Purchaser and confirm such payment to Purchaser by
facsimile transmission. Seller shall have no obligation to
56
<PAGE>
make any payments to any party and shall have no obligation to any party as a
result of its agreement to make the payments described above unless and until
Seller receives from Purchaser the Weekly Accounts Payable Amount.
Section 7. Arrangement with Brian Hunter. Schedules 3.6(f) and 3.6(g) shall
be amended to include the following additional entry:
Letter Agreement between the Division and Brian Hunter dated December 5,
1995.
Section 8. Excluded Liabilities. Schedule 1.4(f) shall be amended to include the
following entry: Amounts due to Brian Hunter pursuant to Section 3 of the Letter
Agreement with the Division dated December 5, 1995.
Section 9. Books and Records. Section 6.2 of the Agreement shall be amended to
include the following sentence:
Purchaser agrees to cooperate with Seller by providing all information
reasonably requested by Seller for its use in determining amounts that are
payable to Brian Hunter pursuant to Section 3 of the Letter Agreement with the
Division dated December 5, 1995.
Section 10. Agreement. Section 10. 1 shall be amended to include the following
sentence:
All references to the Agreement in any document related to the transactions
contemplated by the Agreement shall include any amendments to the Agreement.
Section 11. Closing Date. Section 1.6 of the Agreement shall be amended to
include the following sentence:
The time and date of the Closing shall be deemed for all purposes to be
11:59 p.m. April 28,1996.
57
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written by their respective officers thereunto duly
authorized.
"SELLER"
CONTINENTAL GRAPHICS CORPORATION
By: /s/ Richard J. Agostinelli
----------------------------
Richard J. Agostinelli
Its: Executive Vice President &
Chief Operating Officer
"PURCHASER"
HERFF JONES, INC.
By: /s/ Lawrence F. Fehr
----------------------------
Lawrence F. Fehr
Its: Vice President &
and Chief Financial Officer
SCHEDULES
---------
Amended Schedule 3.7(g) - Title Exceptions
Schedule 4.12 - Accounts Payable Summary
58
