EXHIBIT 2(a)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 31, 1996 (this "Agreement"),
by and among SCANFORMS, INC., a Delaware corporation (the "Company"), BIG FLOWER
PRESS HOLDINGS, INC., a Delaware corporation ("Buyer"), and SCANFORMS
ACQUISITION CORP., a Delaware corporation and a wholly owned, indirect
subsidiary of Buyer ("Merger Subsidiary").
WHEREAS, the respective Boards of Directors of Buyer, Merger Subsidiary and
the Company have determined that it is fair to and in the best interests of
their respective stockholders to consummate the acquisition of the Company by
Buyer upon the terms and subject to the conditions set forth herein; and
WHEREAS, the respective Boards of Directors of the Company, Buyer and Merger
Subsidiary have approved and declared advisable this Agreement and the merger of
Merger Subsidiary with and into the Company (the "Merger"), upon the terms and
subject to the conditions set forth herein, whereby each of the issued and
outstanding shares of common stock, par value $.01 per share, of the Company
(the "Shares"), will be converted into shares of common stock, par value $.01
per share, of Buyer ("Buyer Common Stock") and Buyer has caused its wholly owned
subsidiary, Webcraft Technologies, Inc., a Delaware corporation ("WTI"), as the
sole stockholder of Merger Subsidiary, to approve this Agreement and the Merger;
and
WHEREAS, it is intended that the Merger shall be recorded for accounting
purposes as a pooling-of-interests; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. (a) Upon the terms and subject to the conditions
of this Agreement, and in accordance with the Delaware General Corporation Law
(the "DGCL"), at the Effective Time (as defined in Section 1.1(b) hereof),
Merger Subsidiary shall be merged (the "Merger") with and into the Company,
whereupon the separate existence of Merger Subsidiary shall cease, and the
Company shall be the surviving corporation (the "Surviving Corporation") in the
Merger and shall continue to be governed by the laws of the State of Delaware.
(b) Subject to the fulfillment of the conditions of this Agreement, on the
Closing Date (as defined in Section 2.1 hereof) the Surviving Corporation will
cause a certificate of merger (the "Certificate of Merger") with respect to the
Merger to be executed and filed with the Secretary of State of the State of
Delaware (the "Secretary of State") as provided in the DGCL. The Merger shall
become effective at the time the Certificate of Merger is duly filed with the
Secretary of State or at such other time as is agreed between the parties and
specified in the Certificate of Merger, and such time is herein referred to as
the "Effective Time."
(c) The Merger shall have the effects set forth in Section 259 of DGCL and
from and after the Effective Time, the Surviving Corporation shall possess all
the rights, privileges, powers and franchises and be subject to all of the
restrictions, disabilities, liabilities and duties of the Company and Merger
Subsidiary.
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SECTION 1.2 EFFECT ON SHARES. At the Effective Time:
(a) CONVERSION OF SHARES; MERGER CONSIDERATION. Subject to the
provisions of Section 1.5 and Section 1.7 hereof, each Share issued and
outstanding immediately prior to the Effective Time (other than Dissenting
Shares (as defined in Section 1.11 hereof), Shares held by the Company as
treasury stock or owned by Buyer, Merger Subsidiary or any other Subsidiary
(as defined in Section 4.6) of Buyer) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive that fraction of a share (rounded to the nearest
ten-thousandth of a share) of duly authorized, validly issued, fully paid
and nonassessable shares of Buyer Common Stock (the "Merger
Consideration")(such applicable number of shares of Buyer Common Stock being
hereinafter referred to as the "Conversion Number"), equal to the quotient
obtained by dividing (x) $5.75 by (y) the Average Stock Price (as
hereinafter defined); PROVIDED, HOWEVER, that if the Average Stock Price is
$13.00 or less, the Conversion Number shall be .4423 or if the Average Stock
Price is $15.00 or more, the Conversion Number shall be .3833. The "Average
Stock Price" shall mean the average closing price per share of Buyer Common
Stock on the New York Stock Exchange (the "NYSE") as reported on the NYSE
Composite Tape during the ten consecutive trading day period (the
"Measurement Period") ending with (and including) the third trading day
prior to the Company Stockholder Meeting (as defined in Section 6.2 hereof).
(b) CANCELLATION OF SHARES. Each Share held by the Company as treasury
stock or owned by Buyer, Merger Subsidiary or any other Subsidiary of Buyer
immediately prior to the Effective Time shall automatically be canceled and
retired and cease to exist, and no payment shall be made with respect
thereto. All Shares to be converted into Buyer Common Stock pursuant to this
Section 1.2 shall, by virtue of the Merger and without any action on the
part of the holders thereof, cease to be outstanding, be canceled and
retired and cease to exist; and each holder of a certificate representing
prior to the Effective Time any such Shares shall thereafter cease to have
any rights with respect to such Shares, except the right to receive (i)
certificates representing shares of Buyer Common Stock into which such
Shares have been converted, (ii) any dividends and other distributions
(without interest) in accordance with Section 1.4 hereof and (iii) any cash
(without interest), to be paid in lieu of any fractional share of Buyer
Common Stock in accordance with Section 1.5 hereof.
(c) CAPITAL STOCK OF MERGER SUBSIDIARY. Each share of common stock of
Merger Subsidiary issued and outstanding immediately prior to the Effective
Time shall be converted into and become one share of common stock, par value
$0.01, of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
SECTION 1.3 EXCHANGE OF CERTIFICATES. (a) Prior to the Effective Time,
Buyer shall appoint Bank of New York to act as exchange agent hereunder (the
"Exchange Agent"). At the Effective Time, Buyer shall deposit with the Exchange
Agent, certificates (the "Buyer Certificates") representing the number of shares
of Buyer Common Stock required to be issued pursuant to Section 1.2(a) in
exchange for the outstanding Shares (together with cash as required to (i) pay
any dividends or distributions with respect thereto in accordance with Section
1.4 hereof and (ii) make payments in lieu of fractional shares of Buyer Common
Stock pursuant to Section 1.5 hereof, being hereinafter referred to as the
"Exchange Fund").
(b) Promptly after the Effective Time, Buyer shall cause the Exchange Agent
to mail or deliver to each holder of record of a certificate or certificates
which immediately prior to the Effective Time represented outstanding Shares
(the "Share Certificates") (i) a letter of transmittal (which shall specify,
among other things, that delivery shall be effected, and risk of loss and title
to the Share Certificates shall pass, only upon actual delivery thereof to the
Exchange Agent) and (ii) instructions
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for use in effecting the surrender of the Share Certificates in exchange for the
property described in the next sentence. Upon surrender for cancellation to the
Exchange Agent of Share Certificate(s) held by any record holder of a Share
Certificate, together with such letter of transmittal duly executed, such holder
shall be entitled to receive in exchange therefor (x) a Buyer Certificate
representing the number of whole shares of Buyer Common Stock into which the
Shares represented by the surrendered Share Certificate(s) shall have been
converted at the Effective Time pursuant to this Article I, (y) cash in lieu of
any fractional share of Buyer Common Stock (without interest) in accordance with
Section 1.5 hereof and (z) certain dividends and other distributions (without
interest) in accordance with Section 1.4 hereof; and the Share Certificate(s) so
surrendered shall forthwith be cancelled.
(c) Subject to the provisions of Section 1.4 and Section 1.5 hereof, each
Share Certificate which immediately prior to the Effective Time represented
Shares to be converted in the Merger shall, from and after the Effective Time
until surrendered in exchange for Buyer Certificate(s) in accordance with this
Section 1.3, be deemed for all purposes to represent only the ownership of the
number of whole shares of Buyer Common Stock into which such Shares shall have
been so converted, the right to receive cash in lieu of fractional share
interests pursuant to Section 1.5 hereof and the right to receive certain
dividends and other distributions pursuant to Section 1.4 hereof.
SECTION 1.4 DIVIDENDS; TRANSFER TAXES. No dividends or other distributions
that are declared on or after the Effective Time on Buyer Common Stock, or are
payable to the holders of record thereof who became such on or after the
Effective Time, shall be paid to any Person (as defined below in this Section
1.4) entitled by reason of the Merger to receive Buyer Certificates representing
Buyer Common Stock, and no cash payment in lieu of any fractional share of Buyer
Common Stock shall be paid to any such Person pursuant to Section 1.5 hereof,
until such Person shall have surrendered such Person's Share Certificate(s) as
provided in Section 1.3 hereof. Subject to applicable law, there shall be paid
to each Person receiving a Buyer Certificate representing shares of Buyer Common
Stock: (i) at the time of such surrender or as promptly as practicable
thereafter, the amount of any dividends or other distributions theretofore paid
with respect to the shares of Buyer Common Stock represented by such Buyer
Certificate and having a record date on or after the Effective Time and a
payment date prior to such surrender, and (ii) at the appropriate payment date
or as promptly as practicable thereafter, the amount of any dividends or other
distributions payable with respect to such shares of Buyer Common Stock and
having a record date on or after the Effective Time but prior to such surrender
and a payment date on or subsequent to such surrender. In no event shall the
Person entitled to receive such dividends or other distributions be entitled to
receive interest on such dividends or other distributions. Buyer shall make
available to the Exchange Agent the cash necessary for this purpose at the later
of (i) the Effective Time or (ii) the appropriate payment date with respect to
the applicable dividend or distribution. If any cash or Buyer Certificate
representing shares of Buyer Common Stock is to be paid to or issued in a name
other than that in which the Share Certificate surrendered in exchange therefor
is registered, it shall be a condition of such exchange that the Share
Certificate so surrendered shall be properly endorsed and otherwise in proper
form for transfer and that the Person requesting such exchange shall pay to the
Exchange Agent any transfer or other taxes required by reason of the issuance of
such Buyer Certificate and the distribution of such cash payment in a name other
than that of the registered holder of the Share Certificate so surrendered, or
shall establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not applicable. "Person" means an individual, a corporation, a
limited liability company, a partnership, an association, a trust or any other
entity or organization, including a government or political subdivision or any
agency or instrumentality thereof.
SECTION 1.5 NO FRACTIONAL SHARES. No certificates or scrip representing
fractional shares of Buyer Common Stock shall be issued upon the surrender for
exchange of Share Certificates pursuant to this Article I; no dividend or other
distribution by Buyer and no stock split, combination or reclassification shall
relate to any such fractional share; and no such fractional share shall entitle
the
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record or beneficial owner thereof to vote or to any other rights of a
stockholder of Buyer. In lieu of any such fractional share, each holder of
Shares who would otherwise have been entitled thereto upon the surrender of
Share Certificate(s) for exchange pursuant to this Article I will be paid an
amount in cash (without interest) rounded to the nearest whole cent, determined
by multiplying (i) the Average Stock Price by (ii) the fractional share to which
such holder would otherwise be entitled. Buyer shall make available to the
Exchange Agent the cash necessary for this purpose at the Effective Time.
SECTION 1.6 RETURN OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the former holders of the Shares for nine months
after the Effective Time shall be delivered to Buyer, upon its request, and any
such former holders who have not theretofore surrendered to the Exchange Agent
their Share Certificate(s) in compliance with this Article I shall thereafter
look only to Buyer for payment of their claim for shares of Buyer Common Stock,
any cash in lieu of fractional shares (without interest) of Buyer Common Stock
and any dividends or distributions (without interest) with respect to such
shares of Buyer Common Stock. Neither Buyer nor the Company shall be liable to
any former holder of Shares for any such shares of Buyer Common Stock held in
the Exchange Fund (and any cash, dividends and distributions payable in respect
thereof), or cash in lieu of fractional share interests which is delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
SECTION 1.7 ADJUSTMENT OF CONVERSION NUMBER. In the event of any stock
split, combination, reclassification or stock dividend with respect to Buyer
Common Stock, any change or conversion of Buyer Common Stock into other
securities or any other dividend or distribution with respect to Buyer Common
Stock (other than quarterly cash dividends issued in the ordinary course
consistent with past practice), including, without limitation, any distribution
by Buyer of shares of capital stock of any of its Affiliates (as defined in
Article XI), or if a record date with respect to any of the foregoing should
occur, prior to the Effective Time, appropriate adjustments shall be made to the
Conversion Number, and thereafter all references in this Agreement to the
Conversion Number shall be deemed to be the Conversion Number as so adjusted.
SECTION 1.8 NO FURTHER OWNERSHIP RIGHTS IN SHARES. All certificates
representing shares of Buyer Common Stock delivered upon the surrender for
exchange of any Share Certificate in accordance with the terms hereof (together
with any cash paid pursuant to Section 1.4 or Section 1.5 hereof) shall be
deemed to have been delivered (and paid) in full satisfaction of all rights
pertaining to the Shares previously represented by such Share Certificate.
SECTION 1.9 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, the
stock transfer books of the Company shall be closed, and no transfer of Shares
on the stock transfer books of the Surviving Corporation shall thereafter be
made. Subject to the last sentence of Section 1.6 hereof, if after the Effective
Time, Share Certificates are presented to the Surviving Corporation, they shall
be cancelled and exchanged as provided in this Article I.
SECTION 1.10 STOCK OPTIONS. At or immediately prior to the Effective Time,
each then outstanding stock option (an "Option") to purchase Shares granted
under the Company's 1992 Stock Option Plan (the "Stock Option Plan"), whether or
not then vested or exercisable, shall become and represent an option (a
"Substitute Option") to purchase the number of shares of Buyer Common Stock
(rounded down to the nearest whole share) determined by multiplying the number
of Shares subject to such Option immediately prior to the Effective Time by the
Conversion Number, at an exercise price per share of Buyer Common Stock (rounded
up to the nearest whole cent) equal to the exercise price per Share of such
Option immediately prior to the Effective Time divided by the Conversion Number.
After the Effective Time, subject to any adjustment necessary to conform the
Substitute Options to the requirements of Section 424 (a) of the Code, each
Substitute Option shall be exercisable upon substantially the same terms and
conditions as were applicable to the related Option immediately prior to the
Effective Time, and, at or prior to the Effective Time, Buyer shall take all
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corporate action necessary to reserve for issuance a sufficient number of shares
of Buyer Common Stock for delivery upon exercise of the Substitute Options. If
and to the extent required by, or deemed necessary or desirable under, the terms
of the Stock Option Plan and stock option agreements relating to the Options,
prior to the Effective Time, the Company shall use its reasonable efforts to
obtain the written consent of each Option holder, in form reasonably
satisfactory to Buyer, to the foregoing treatment of such Options.
SECTION 1.11 DISSENTING SHARES.
(a) NOT ENTITLED TO MERGER CONSIDERATION. Any Share outstanding
immediately prior to the Effective Time held by a holder, if any, who is
entitled to demand, and who properly demands, appraisal for such shares in
accordance with Section 262 of the DGCL ("Dissenting Shares") shall not be
converted into a right to receive the Merger Consideration unless such
holder fails to perfect or otherwise loses such holder's right to appraisal,
if any. Holders of Dissenting Shares will be entitled only to the rights of
a dissenting stockholder under Section 262 of the DGCL, and such Shares will
be cancelled and retired and will cease to exist.
(b) TERMINATION OF RIGHTS AS DISSENTING STOCKHOLDER. If, after the
Effective Time, any holder who has made a demand for dissenters' rights
under Section 262 of the DGCL fails to perfect or loses such right or such
rights are terminated for any reason other than the purchase by the Company
of the Shares subject to the demand, such Shares shall be treated as if they
had been converted, as of the Effective Time, into and represent only the
right to receive the Merger Consideration, without interest thereon, upon
surrender of the Share Certificates representing the Shares.
(c) NOTICE OF DEMANDS; PAYMENTS. The Company shall give prompt notice
to Buyer of any demands received by the Company for appraisal of Shares, and
Buyer shall have the right to participate in and, after the Effective Time,
direct all negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of Buyer, make any
payment with respect to, or settle or offer to settle, any such demands,
but, in any event, all payments made with respect to demands for appraisal
or settlement thereof shall be made solely by the Company and, following the
Merger, the Surviving Corporation.
ARTICLE II
CLOSING
SECTION 2.1 CLOSING. The closing of the Merger and the other transactions
referred to in this Agreement (the "Closing") will take place as soon as
practicable after the Company Stockholder Meeting, which shall be no later than
the first business day after satisfaction or waiver of all of the conditions set
forth in Article IX hereof (the "Closing Date"), at a time specified by the
parties, at the offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third
Avenue, New York, New York 10022 unless another time, date or place is agreed to
in writing by the parties hereto.
SECTION 2.2 DELIVERIES BY THE COMPANY. At the Closing, the Company will
deliver or cause to be delivered to Buyer and Merger Subsidiary, unless
previously delivered, the following:
(a) an officer's certificate, signed by the President of the Company, dated
the Closing Date, relating to the accuracy of representations and warranties of
the Company and the performance of agreements and covenants by the Company
referred to in Section 9.3(iii) hereof.
(b) an officer's certificate, signed by the President or Treasurer of the
Company, relating to:
(i) the requisite approval of this Agreement by the Company's
stockholders, referred to in Section 9.1(i) hereof;
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(ii) the absence of a Material Adverse Effect (as defined in Section 4.1
hereof) and the other matters referred to in Section 9.3(iv) hereof;
(iii) the financial conditions referred to in Section 9.3(vi) hereof;
and
(iv) the perfection of appraisal rights referred to in Section 9.3(vii)
hereof.
(c) the opinion of counsel to the Company referred to in Section 9.3(xii)
hereof.
(d) a certificate of the Secretary of the Company certifying as to (i) true
and complete copies attached thereto of the certificate of incorporation of the
Company (the "Company Certificate of Incorporation"), the by-laws of the Company
(the "Company By-laws"), and the resolutions adopted by the Board of Directors
and the stockholders of the Company as to the approval of the Merger and this
Agreement and (ii) the incumbency of certain officers of the Company who
executed this Agreement and other documents in connection with the Merger and
the transactions contemplated hereby.
(e) certificates of good standing and payment of taxes by the Company from
its state of incorporation and each jurisdiction in which it is qualified to do
business.
(f) the written agreements from each Company Rule 145 Affiliate as defined
and referred to in Section 8.11(a) hereof.
(g) the review letter referred to in Section 8.12(a) hereof.
(h) the consents and/or approvals referred to in Section 9.3(viii) hereof.
(i) the consents, if any, referred to in Section 1.10 above.
(j) pay-off letters for all outstanding Indebtedness (as defined in Article
XI hereof) of the Company.
(k) such other documents required to be delivered by the Company at or prior
to the Closing pursuant to this Agreement or in connection herewith.
SECTION 2.3 DELIVERIES BY BUYER. At the Closing, Buyer will deliver, or
cause to be delivered to the Company, unless previously delivered, the
following:
(a) an officer's certificate signed by the Chief Executive Officer or Chief
Operating Officer of Buyer, dated the Closing Date, as to the accuracy of the
representations and warranties of Buyer and Merger Subsidiary and the
performance of agreements and covenants by the Company and Merger Subsidiary
referred to in Section 9.2(iii) hereof.
(b) the opinion of counsel to Buyer referred to in Section 9.2(vi) hereof.
(c) a certificate of the Secretary of the Company as to (i) true and
complete copies being attached thereto of the certificate of incorporation of
Buyer and of Merger Subsidiary, the by-laws of Buyer and of Merger Subsidiary
and the resolutions adopted by the Board of Directors of Buyer, WTI, as the sole
stockholder of Merger Subsidiary, and Merger Subsidiary as to the approval of
the Merger and this Agreement and (ii) the incumbency of certain officers of
Buyer and Merger Subsidiary who executed this Agreement and other documents in
connection with the Merger and the transactions contemplated hereby.
(d) a certificate of good standing for Buyer and Merger Subsidiary from the
Secretary of State of the State of Delaware.
(e) the written agreements from each Buyer Rule 145 Affiliate as defined and
referred to in Section 8.11(c) hereof.
(f) the review letter referred to in Section 8.12(b) hereof.
(g) such other documents required to be delivered by Buyer or Merger
Subsidiary at or prior to the Closing pursuant to this Agreement or in
connection herewith.
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SECTION 2.4 OTHER DELIVERIES AND ACTIONS AT CLOSING. At the Closing, the
following other deliveries and actions will be made or taken by the following
Persons, if not previously made or taken:
(a) (i) the Samans Employment Agreement referred to in Section 8.4 hereof
will be entered into by the Company and Mr. Robert Samans, President of the
Company ("Samans"), (ii) the Employment Agreements referred to in Section 8.4
hereof will be entered into by the Company and the other individuals identified
pursuant to Section 8.4 hereof, (iii) the Non-Competition Agreement referred to
in Section 8.4 hereof will be entered into by Buyer and Samans, and (iv) Buyer
will deliver to Samans the Buyer Promissory Note referred to in Section 8.4
hereof.
(b) the tax opinion referred to in Section 9.2(iv) hereof will be delivered
to the Company, with a copy to Buyer.
(c) the letter regarding pooling referred to in Section 9.3(ix) hereof will
be delivered to Buyer, with a copy to the Company.
(d) Samans will execute the Amended Samans Promissory Note referred to in
Section 8.5 hereof and deliver such note to the Company.
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1 CERTIFICATE OF INCORPORATION. The certificate of incorporation
of Merger Subsidiary in effect at the Effective Time shall be the certificate of
incorporation of the Surviving Corporation until amended in accordance with
applicable law, except that Article First shall be amended in its entirety to
read as follows: "The name of the corporation shall be "Scanforms, Inc." (the
"Corporation")."
SECTION 3.2 BYLAWS. The by-laws of Merger Subsidiary in effect at the
Effective Time shall be the by-laws of the Surviving Corporation until amended
in accordance with applicable law.
SECTION 3.3 DIRECTORS AND OFFICERS. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, the directors of Merger Subsidiary at the Effective Time shall
be the initial directors of the Surviving Corporation and the officers of the
Company, who are listed on Schedule 3.3 hereof and who are officers of the
Company at the Effective Time, shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly elected and
appointed or qualified.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer and Merger Subsidiary that:
SECTION 4.1 CORPORATE EXISTENCE AND POWER. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, and except as set forth on Schedule 4.1 of the disclosure
schedule delivered by the Company in connection herewith (the "Company
Disclosure Schedule"), has all corporate power and authority required to carry
on its business as now conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary except for such failures to be so qualified
and in good standing which would not individually or in the aggregate have a
Material Adverse Effect (as defined below) with respect to the Company. The
Company has heretofore delivered or made available to Buyer true and complete
copies of the Company Certificate of Incorporation and the Company By-laws as
currently in effect. As used herein, the term "Material Adverse Effect" with
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respect to the Company, on the one hand, or Buyer and its Subsidiaries, on the
other hand, means a material adverse effect on the condition (financial or
otherwise), business, properties, assets (including intangible assets),
liabilities (fixed or contingent) or results of operations of the Company or
Buyer, its Subsidiaries and Merger Subsidiary, as the case may be, in each case
taken as a whole.
SECTION 4.2 CORPORATE AUTHORIZATION. The execution, delivery and
performance by the Company of this Agreement and, subject to approval and
adoption of this Agreement by the holders of a majority of the outstanding
Shares, the consummation by the Company of the transactions contemplated hereby
are within the Company's corporate powers and, except for the approval by the
affirmative vote of the holders of a majority of the outstanding Shares, have
been duly authorized by all necessary corporate and stockholder action. The
Board of Directors of the Company has determined that it is advisable and fair
to and in the best interests of the stockholders of the Company for the Company
to enter into this Agreement. This Agreement, assuming due and valid
authorization, execution and delivery by Buyer and Merger Subsidiary,
constitutes a valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, except that (i) enforcement may be subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, affecting creditors' rights generally,
and (ii) 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 4.3 GOVERNMENTAL AUTHORIZATION. Except as set forth in Schedule
4.3 of the Company Disclosure Schedule, the execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not require any action by or in respect of,
or filing with, any governmental body, agency, official or authority (each, a
"Governmental Entity") other than: (i) the filing of a Certificate of Merger in
accordance with the DGCL; (ii) compliance with any applicable requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), which has been so complied with; (iii) compliance with any applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (iv)
compliance with the applicable requirements of state blue sky laws and (v) such
other actions by or in respect of, or filings with, any Governmental Entity
which if not obtained or made would not, individually or in the aggregate, have
a Material Adverse Effect with respect to the Company and would not impair or
materially delay the ability of the Company to consummate the transactions
contemplated hereby.
SECTION 4.4 NON-CONTRAVENTION. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (i) contravene or conflict
with the Company Certificate of Incorporation or the Company By-laws, (ii)
except as set forth in Schedule 4.4 of the Company Disclosure Schedule and
assuming compliance with the matters referred to in Section 4.3 hereof,
contravene or conflict with or constitute a violation of any provision of any
law, judgment, injunction, order, decree or pronouncement having the effect of
any of the foregoing binding upon or applicable to the Company or its business,
(iii) except as set forth in Schedule 4.4 of the Company Disclosure Schedule,
with or without the giving of notice or passage of time or both, constitute a
default under or give rise to a right of termination, cancellation, acceleration
or modification of any right or obligation of the Company or to a loss of any
benefit to which the Company is entitled under any provision of any material
agreement, contract or other instrument binding upon the Company or any material
license, franchise, permit or other similar authorization held by the Company,
(iv) result in the creation or imposition of any Lien (as defined below) on any
asset of the Company or (v), except as set forth in Schedule 4.4 of the Company
Disclosure Schedule, result in or give to any Person any additional rights or
entitle any Person to increased, additional, accelerated or guaranteed payments
under any Material Contract (as defined in Section 4.23(b) hereof). For purposes
of this Agreement, "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset other than a "Permitted Lien" (as defined in Article XI hereof).
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SECTION 4.5 CAPITALIZATION. The authorized capital stock of the Company
consists of 6,000,000 Shares and 500,000 shares of preferred stock (the
"Preferred Stock"), par value $1.00 per share. As of the date hereof, there are
(i) 3,546,648 Shares issued and outstanding (including the 50,000 Shares
referred to in Section 9.3(vi) hereof); (ii) no Shares held in the Company's
treasury; and (iii) no shares of Preferred Stock issued and outstanding. As of
the date hereof, there are 205,000 outstanding Options pursuant to the Stock
Option Plan with an average exercise price of $1.11 per Share; Schedule 4.5 of
the Company Disclosure Schedule accurately sets forth information regarding the
exercise price, date of grant, vesting status and number of Options granted for
each holder of Options as of the date hereof. All outstanding shares of capital
stock of the Company have been duly authorized and validly issued and are fully
paid and nonassessable. Except as set forth in this Section 4.5, there are
outstanding (i) no shares of capital stock or other voting securities of the
Company, (ii) no securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company, (iii) except as set
forth on Schedule 4.5 of the Company Disclosure Schedule, no options, warrants,
rights (including "phantom" stock rights), preemptive rights or other rights to
acquire from the Company, and no obligation of the Company to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company and (iv) except for certain
employee bonus plans listed on Schedule 4.5 of the Company Disclosure Schedule,
no right granted by the Company or contractual commitment of the Company
(whether written or oral) that gives any Person any right to receive or exercise
any benefits or rights similar to any rights enjoyed by or accruing to a holder
of shares of capital stock of the Company, including without limitation any
right to participate in the equity or income of the Company or to participate in
or direct the election of any directors of the Company or the manner in which
any shares of capital stock of the Company are voted (the items in clause (i),
(ii), (iii) or (iv) being referred to collectively as the "Company Securities")
and the Company does not have any obligation to issue or deliver any Company
Securities. All Options are intended to qualify as incentive stock options
within the meaning of Section 422(b) of the Code. There are no outstanding
obligations of the Company to repurchase, redeem or otherwise acquire any
Company Securities. Except as set forth on Schedule 4.5 of the Company
Disclosure Schedule, there are no stockholder agreements, voting trusts or
understandings to which the Company is a party or by which the Company is bound
relating to the voting or registration of any shares of capital stock of the
Company. As of the date of this Agreement, all outstanding Options are vested in
their entirety.
SECTION 4.6 SUBSIDIARIES. The Company has no Subsidiaries. For purposes of
this Agreement, "Subsidiary" means with respect to any Person, any corporation
or other legal entity of which such Person owns, directly or indirectly, more
than 50% of the outstanding stock or other equity interests, the holders of
which are entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
SECTION 4.7 SEC DOCUMENTS. The Company has timely filed all reports,
registration statements, proxy statements, forms and other documents with the
Securities and Exchange Commission (the "SEC") required to be filed by it since
October 1, 1994 and prior to the date of this Agreement ("Company SEC
Documents"). As of their respective dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act, or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Company SEC Documents (including Rule
10b-5 under the Exchange Act and the applicable accounting rules and regulations
of the SEC).
SECTION 4.8 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES. The audited
and unaudited interim consolidated financial statements of the Company included
in the Company SEC Documents (the "Company Financial Statements") (i) have been
prepared in conformity with generally accepted accounting principles ("GAAP"),
applied on a consistent basis during the periods involved (except as may be
indicated in the related notes and schedules thereto) and (ii) are true, correct
and complete and fairly present in all material respects the consolidated
financial position of the Company and each
9
of its then existing Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments, which
in the aggregate were not and will not be materially adverse to the Company and
its Subsidiaries taken as a whole). Except as set forth in Schedule 4.8 of the
Company Disclosure Schedule and except as set forth in the Company SEC Documents
filed and publicly available prior to the date of this Agreement, and except for
liabilities and obligations reflected or reserved against in the Company
Financial Statements, the Company does not have any liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise or whether due
or to become due) or commitments which would reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect on the
Company.
SECTION 4.9 COMPANY PROXY STATEMENT/PROSPECTUS. The Company Proxy Statement
(as defined in Section 6.2 hereof) and all amendments and supplements thereto
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated thereunder. Neither the
Company Proxy Statement, nor any amendments thereof or supplements thereto,
will, on the date the Company Proxy Statement is first mailed to stockholders of
the Company, at the time of the Company Stockholder Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, provided, however, that the Company makes no representation or
warranty with respect to any information furnished to it by Buyer or Merger
Subsidiary or any of their accountants, counsel or other authorized
representatives in writing specifically for inclusion in the Company Proxy
Statement. None of the information with respect to the Company or any Affiliate
of the Company that has been supplied by the Company or any of its accountants,
counsel or other authorized representatives in writing specifically for use in
the Form S-4 Registration Statement (as defined in Section 7.2 hereof) will, at
the time the Form S-4 Registration Statement becomes effective and at the
Effective Time, contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading. If at any time prior to the Effective Time
any event with respect to the Company, its officers and directors should occur
which is required to be described in a supplement to the Company Proxy
Statement, such event shall be so described, and such supplement shall be
promptly filed with the SEC and, as required by law, disseminated to the
stockholders of the Company.
SECTION 4.10 BOARD OPTION APPROVAL; STATE TAKEOVER LAWS. The Board of
Directors of the Company has approved the grant by Samans and Sebastian
Carcioppolo ("Carcioppolo") to Buyer of the option referred to in the Option
Agreement among Buyer, Samans and Carcioppolo dated June 14, 1996 (the "Option
Agreement") and the exercise of such option by Buyer on the terms provided
therein; Section 203 of the DGCL will not apply to the Merger; and no state
takeover law of the Commonwealth of Pennsylvania is applicable to the Option
Agreement, this Agreement, the Merger, or the consummation of the transactions
contemplated thereby or hereby.
SECTION 4.11 SCFM AGREEMENT. The Amended and Restated Agreement and Plan of
Merger between SCFM Corp. and the Company, dated April 4, 1996 (the "SCFM
Agreement"), and all related agreements including with potential financing
sources, except for the agreements with Janney Montgomery Scott Inc. ("Janney"),
have been terminated, except as provided in the final sentence of this
paragraph, without any further liability or obligation on the part of the
Company, with all costs and expenses paid or payable by the Company with respect
to the transactions referred to in or contemplated by the SCFM Agreement and the
financing thereof already paid and expensed and accurately reflected in the
Company Financial Statements as of March 31, 1996, except for certain costs and
expenses which were not yet paid (and whether or not expensed), as of March 31,
1996 which are listed in Schedule 4.11 of the Company Disclosure Schedule. The
Company will send notice to Mellon Bank
10
N.A., within one business day following the date of this Agreement, terminating
the agreements it has with Mellon Bank N.A. relating to financing the
transactions contemplated by the SCFM Agreement, and such termination shall not
result in any costs in addition to those listed in Schedule 4.11.
SECTION 4.12 ELITE. The Company has provided Buyer with an unaudited
balance sheet and statement of income of Elite Mailing and Fulfillment Services,
Inc. ("Elite") as at and for the year ended December 31, 1995, which was
compiled by Frank Dzera, C.P.A. To the knowledge of the Company, there are no
existing circumstances which would cause Elite not to continue in business as a
going concern other than economic conditions generally affecting the business
segment in which Elite operates which are not unique to Elite.
SECTION 4.13 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company
SEC Documents filed by the Company or as set forth in Schedule 4.13 of the
Company Disclosure Schedule, the Company has conducted its business in the
ordinary course of business consistent with past practice and there has not been
since September 30, 1995:
(a) any change, event, occurrence, development or facts which has had or
reasonably would be expected to have a Material Adverse Effect or to result
in any significant reduction in revenues from each of the Company's two
largest customers;
(b) any change in the outstanding Company Securities (except for the
issuance of Shares pursuant to Options) or any declaration, setting aside or
payment of any dividend (other than regular quarterly dividends) or other
distribution with respect to any shares of capital stock of the Company or,
except as provided in Section 9.3(vi) hereof or the cancellation of
outstanding Options, any repurchase, redemption or other acquisition by the
Company of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company;
(c) except for the Samans Promissory Note, any amendment of any term of
any outstanding security issued by the Company;
(d) any incurrence or assumption by the Company of any Indebtedness (as
defined in Article XI hereof) which Indebtedness is presently outstanding;
(e) any creation or assumption by the Company of any material Lien on
any asset;
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than expense account advances to employees in
the ordinary course of business;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) in an amount of $10,000 or more affecting the business
or assets of the Company;
(h) any commitment made, or any contract or agreement entered into, by
the Company relating to its assets or business (including the acquisition or
disposition of any assets) or any relinquishment by the Company of any
contract or other right, other than capital expenditures (as defined by the
Company's accounting practices and in accordance with GAAP) indicated in the
capital expenditure budget set forth in Section 4.13(h) of the Company
Disclosure Schedule (the "Cap-Ex Budget") and purchases and sales of
inventory and supplies in the ordinary course of business and consistent
with past practice;
(i) any change, or any application or request to the SEC for any change,
in any method of accounting or accounting practice by the Company;
(j) (A) any change in the amount of compensation payable or to become
payable to any of the executive officers or directors of the Company or any
of its agents or consultants, (B) any general increase in base compensation
payable to the employees of the Company, or (C) the entering into or
amendment by the Company of any employment, severance, termination or other
11
similar agreement, or (D) any establishment of any borrowing or lending
program by the Company for its officers, directors, employees, agents or
consultants or any loans thereto which are presently outstanding except for
those which are listed in Section 4.13(j) of the Company Disclosure
Schedule.
(k) (A) any payment or agreement to pay or any accrual or arrangement
for payment of any pension, retirement allowance or other employee benefit
pursuant to any existing plan, agreement or arrangement to any executive
officer, director, employee, agent or consultant of the Company except in
the ordinary course of business and consistent with past practice, (B) any
payment, agreement to pay or any accrual (other than as required by GAAP) or
arrangement for payment to any executive officer of the Company of any
amount relating to unused vacation days, (C) any commitment to adopt or pay,
grant, issue, accelerate or accrue salary or other payments or benefits
pursuant to any pension, profit-sharing, bonus, extra compensation,
incentive, deferred compensation, group insurance, severance pay, retirement
or other employee benefit plan, agreement or arrangement, or any employment
or consulting agreement with or for the benefit of any director, officer,
employee, agent or consultant of the Company other than pursuant to plans,
agreements and commitments in effect on September 30, 1995 which are listed
in Schedule 4.16(a) of the Company Disclosure Schedule or (D) any amendment
in any material respect of any of the foregoing plans, agreements or
arrangements;
(l) any capital expenditures (as defined by the Company's accounting
practices and in accordance with GAAP) in excess of the amount set forth in
the Company's Cap-Ex Budget or made any changes in the capital expenditure
budget for the Company's 1997 fiscal year, which is set forth as Schedule
4.13(l) to the Company Disclosure Schedule, other than a decrease in the
amount of $970,000 (which amount shall be calculated in accordance with
GAAP) which may be paid as the principal amount under a capital lease
(having an effective interest rate, as calculated in accordance with GAAP,
of no more than 8.3%) for two Siemens duplex imagers which are now included
in the Cap-Ex Budget for the Company's 1996 fiscal year; or
(m) any authorization of any of, or commitment or agreement to take any
of, the foregoing actions except as otherwise expressly permitted by this
Agreement.
SECTION 4.14 LITIGATION. Except as set forth in Schedule 4.14 of the
Company Disclosure Schedule or the Company SEC Documents, there is no action,
suit, investigation, arbitration or proceeding pending against, or to the
Knowledge (as defined in Article XI hereof) of the Company, threatened against,
relating to or affecting the Company or any of its properties or assets before
any court or arbitrator or any Governmental Entity, which, (a) if determined or
resolved adversely to the Company, would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect with respect to the
Company or (b) as of the date hereof, questions the validity of this Agreement
or any action to be taken by the Company in connection with the consummation of
the transactions contemplated by this Agreement. There are no facts, to the
Knowledge of the Company, which would reasonably be expected to give rise to any
such action, suit, investigation, arbitration or proceeding. Except as set forth
in the Company SEC Documents, the Company is not subject to any outstanding
order, writ, injunction or decree which, more likely than not, would have a
Material Adverse Effect on the Company or prevent, impair or materially delay
the consummation of the transactions contemplated hereby. Except as set forth in
Schedule 4.14 of the Company Disclosure Schedule, to the Knowledge of the
Company, there are no actions, suits, investigations or proceedings pending or
threatened against any former or current director or officer of the Company
based on, or arising out of the fact that, such person is or was a director,
officer or employee, as the case may be, of the Company. There are no facts, to
the Knowledge of the Company, which reasonably would be expected to give rise to
any such action, suit, investigation or proceeding.
12
SECTION 4.15 TAXES. (a) Except as set forth on Schedule 4.15 of the
Company Disclosure Schedule:
(i) the Company and each of its Subsidiaries, which for the purposes of
this Section 4.15 shall include all Subsidiaries of the Company existing
prior to the date hereof, on or prior to the date hereof has filed or has
had filed on its behalf, and will have filed or have had filed on its behalf
prior to the Closing Date, in a timely manner (within any applicable
extension periods) with the appropriate Governmental Entity all income and
other material Tax Returns (as defined herein) required to be filed with
respect to Taxes (as defined herein) of the Company and each of its
Subsidiaries, and such Tax Returns are true, correct and complete in all
material respects;
(ii) all material Taxes with respect to the Company and its Subsidiaries
have been paid in full or have been provided for in accordance with GAAP on
the Company's most recent balance sheet which is part of the Company SEC
Documents (except for taxes accrued in accordance with GAAP subsequent to
the date of such balance sheet);
(iii) there are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal, state, local or
foreign income or other material Tax Returns required to be filed by or with
respect to the Company and its Subsidiaries;
(iv) none of the Tax Returns of or with respect to the Company or any of
its Subsidiaries is currently being audited or, to the Knowledge of the
Company, examined by any Governmental Entity, except that the Company may be
subject to audits of its Tax Returns to the extent such Tax Returns have not
been audited to date;
(v) no deficiency, delinquency or default for any Tax has been claimed,
proposed or assessed against the Company or any of its Subsidiaries which
has not been abated or paid in full, and the Company has not received
written notice of any such deficiency, delinquency or default nor does the
Company otherwise have Knowledge of any threat of any Governmental Entity to
assert such deficiency, delinquency or default or any facts or circumstances
that may form a basis of such threat;
(vi) there are no Liens for Taxes upon the assets of the Company except
statutory liens for current Taxes not yet due;
(vii) the Company has not filed as of or on the Closing Date a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)
apply to any disposition of a subsection (f) asset (as defined in Section
341(f) of the Code) owned by the Company;
(viii) no power of attorney has been executed by, or on behalf of, the
Company with respect to any matter relating to Taxes which is currently in
force, except those granted in the ordinary course of business to attorneys,
accountants or other professionals representing the Company;
(ix) the federal income and state and local income and franchise Tax
Returns for or including the Company and any of its Subsidiaries have been
audited by the relevant taxing authority or are closed under the applicable
statute of limitations for all taxable periods set forth in Schedule
4.15(ix) of the Company Disclosure Schedule; and
(x) the Company is not a party to or bound by or has any obligation
under any written or unwritten tax sharing or similar agreement or
arrangement.
(b) For purposes of this Agreement, (i) "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, sales, use, AD VALOREM, goods and services, capital,
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property or
other taxes, customs duties, fees,
13
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any taxing
authority and (ii) "Tax Return" shall mean any report, return, documents,
declaration or other information or filing required to be supplied to any taxing
authority or jurisdiction with respect to Taxes.
SECTION 4.16 EMPLOYEE MATTERS. (a) Schedule 4.16(a) of the Company
Disclosure Schedule contains a true and complete list of each employment, bonus,
deferred compensation, incentive compensation, stock purchase, stock option,
stock appreciation right, severance or termination pay, hospitalization or other
medical, life or other insurance, supplemental unemployment benefits, profit-
sharing, pension, or retirement plan, program, agreement or arrangement, and
each other employee benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to or required to be contributed to by the Company or
by any trade or business, whether or not incorporated (an "ERISA Affiliate"),
that together with the Company would be deemed a "single employer" within the
meaning of Section 4001(b)(1) of the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder
("ERISA"), for the benefit of any employee or former employee of the Company,
whether formal or informal and whether legally binding or not (the "Plans").
Schedule 4.16(a) of the Company Disclosure Schedule identifies each of the Plans
that is an "employee welfare benefit plan," or "employee pension benefit plan"
as such terms are defined in Sections 3(1) and 3(2) of ERISA (such plans being
hereinafter referred to collectively as the "ERISA Plans"). Neither the Company
nor any ERISA Affiliate has any formal plan or commitment, or any informal
understanding, whether legally binding or not, to create any additional Plan or
modify or change any existing Plan that would affect any employee or terminated
employee of the Company or any ERISA Affiliate, except as may be required by
law.
(b) With respect to each of the Plans, the Company has heretofore delivered
or made available to Buyer true and complete copies of each of the following
documents:
(i) a copy of the Plan or a description of all material terms thereof
(including all amendments thereto);
(ii) a copy of the annual report and actuarial report, if required under
ERISA, with respect to each such Plan for the last three years;
(iii) a copy of the most recent Summary Plan Description ("SPD") required
under ERISA with respect thereto, together with all Summaries of Material
Modification issued with respect to such SPD, if required under ERISA with
respect to such Plan;
(iv) if the Plan is funded through a trust or any other funding vehicle,
a copy of the trust or other funding agreement (including all amendments
thereto) and the latest financial statements thereof;
(v) all contracts relating to the Plans with respect to which the
Company or any ERISA Affiliate may have any liability, including without
limitation insurance contracts, investment management agreements,
subscription and participation agreements and record keeping arrangements;
and
(vi) the most recent determination letter received from the Internal
Revenue Service with respect to each Plan that is intended to be qualified
under Section 401(a) of the Code.
(c) Neither the Company nor any ERISA Affiliate currently sponsors,
maintains or is required to make contributions to, or has ever sponsored,
maintained or been required to make contributions to any employee benefit plan
subject to Title IV of ERISA or any "multiemployer plan" (as defined in Section
3(37) of ERISA).
(d) Neither the Company, any ERISA Affiliate, any of the ERISA Plans, any
trust created thereunder nor any trustee or administrator thereof has engaged in
a transaction or has taken or
14
failed to take any action in connection with which the Company, any ERISA
Affiliate, any of the ERISA Plans, any such trust, any trustee or administrator
thereof, or any party dealing with the ERISA Plans or any such trust would be
subject to either a civil penalty assessed pursuant to Section 409 or Section
502(i) of ERISA or a tax imposed pursuant to Section 4975, Section 4976 or
Section 4980B of the Code.
(e) Each of the Plans has been operated and administered in all material
respects in accordance with its terms and applicable laws, including but not
limited to ERISA and the Code.
(f) Each ERISA Plan that is intended to be "qualified" within the meaning
of Section 401(a) of the Code has been determined by the Internal Revenue
Service to be so qualified on a current basis as of the date of the
determination letter received from the Internal Revenue Service with respect to
such Plan and within the limitations set forth therein.
(g) No Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to current or former
employees of the Company or any ERISA Affiliate beyond their retirement or other
termination of service (other than (i) coverage mandated by applicable law, (ii)
death benefits or retirement benefits under any "employee pension benefit plan",
as that term is defined in section 3(2) of ERISA, (iii) deferred compensation
benefits accrued as liabilities on the books of the Company or the ERISA
Affiliates or (iv) benefits the full cost of which is borne by the current or
former employee (or his or her beneficiary)).
(h) The consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee or officer of the Company or
any ERISA Affiliate to severance pay, unemployment compensation or any other
payment or other right or (ii) accelerate the time of payment or vesting, or
increase the amount of any compensation due any such employee or officer.
(i) There are no pending or, to the Knowledge of the Company, threatened
claims by or on behalf of any Plan, by any employee or beneficiary covered under
any such Plan, or otherwise involving any such Plan (other than routine claims
for benefits). There are no facts, to the Knowledge of the Company, which may
form the basis of any such claim.
(j) No amounts payable under any Plan or any other agreement or arrangement
to which the Company or any ERISA Affiliate is a party will fail to be
deductible for federal income tax purposes, including without limitation, by
virtue of Section 280G of the Code.
(k) Each of the ERISA Plans that is intended to satisfy the requirements of
section 501(c)(9) of the Code has so satisfied such requirements.
(l) No "leased employee," as that term is defined in section 414(n) of the
Code, performs services for the Company or any ERISA Affiliate.
(m) With respect to each Plan that is funded wholly or partially through an
insurance policy, there will be no liability of the Company or an ERISA
Affiliate, as of the Effective Time, under any such insurance policy or
ancillary agreement with respect to such insurance policy in the nature of a
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring prior
to the Effective Time.
SECTION 4.17 LABOR MATTERS. Except to the extent set forth in Schedule 4.14
of the Company Disclosure Schedule or Schedule 4.16(a) of the Company Disclosure
Schedule or Schedule 4.17 of the Company Disclosure Schedule, (i) there is no
labor strike, dispute, slowdown, stoppage or lockout actually pending or, to the
Knowledge of the Company, threatened against the Company and during the past
three years there has not been any such action against the Company; (ii) to the
Knowledge of the Company, there is no current union organizing activities among
the Company's employees nor does any question concerning representation exist
concerning such employees; (iii) there is no unfair labor practice charge or
complaint pending against the Company or, to the Knowledge of the Company,
15
threatened against the Company before the National Labor Relations Board or any
similar state or foreign agency and there are no facts, to the Knowledge of the
Company, which would form the basis thereof; (iv) there is no grievance pending
against the Company relating to any collective bargaining agreement or other
grievance procedure and there are no facts, to the Knowledge of the Company,
which could form the basis thereof; (v) no charges with respect to or relating
to the Company or any Subsidiary of the Company (which was in existence prior to
the date hereof) are pending before the Equal Employment Opportunity Commission
or any other agency responsible for the prevention of unlawful employment
practices and there are no facts, to the Knowledge of the Company, which would
form the basis thereof, (vi) the Company has complied, other than with respect
to the transactions contemplated by this Agreement as to which the Company makes
no representation, with the Worker Adjustment and Retraining Notification Act
("WARN Act"), and other state or local laws substantially similar in effect to
the WARN Act, where the failure to be in compliance with such state or local
laws would, individually or in the aggregate have a Material Adverse Effect on
the Company; and (vii) there are no collective bargaining agreements, employment
contracts or severance agreements with any union which represents any employees
of the Company.
SECTION 4.18 NO EXISTING VIOLATION; COMPLIANCE. The Company is not in
violation of (i) the Company Certificate of Incorporation or Company By-laws or
(ii) any order, decree or judgment of any Governmental Entity having
jurisdiction over the Company or its assets. Except as set forth in Schedule
4.14 (as applicable) or Schedule 4.18 of the Company Disclosure Schedule, (i)
neither the Company nor any Subsidiary has received any notice since January 1,
1995 that they are not in compliance with, and (ii) the Company and its business
and operations, are presently in substantial compliance with, all laws,
statutes, ordinances or regulations, except that this representation does not
apply to Environmental Laws.
SECTION 4.19 FINDERS' FEES. Except for Janney, Wolf, Block, Schorr and
Solis-Cohen, the Company's special counsel, Lamb & Bouchard, and Grant Thornton,
L.L.P., the Company's independent accountants, (each, other than Janney, a
"Representative") there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of the
Company who would be entitled to any fee or commission from the Company or any
Affiliate of the Company, Buyer or any of Buyer's Affiliates upon consummation
of and in connection with the transactions contemplated by this Agreement. The
Representatives are being paid by the Company solely for providing legal and
accounting services to the Company, to Robert Samans in the case of Lamb &
Bouchard, and certain employees of the Company who are executing Employment
Agreements. An executed, true and complete copy of the engagement letter with
Janney, as amended and currently in effect, has been delivered to Buyer. In
connection with the Janney engagement (exclusive of indemnity of Janney for
certain matters as provided therein), the only amounts, which were or are
payable at any time to Janney, total no more than $300,000 in the aggregate,
plus the out-of-pocket expenses of Janney, and the only amounts which are
payable to Janney after the date of this Agreement total no more than $195,000,
including the out-of-pocket expenses of Janney.
SECTION 4.20 ENVIRONMENTAL MATTERS. (a) As used in this Agreement, the
following definitions shall have the following meanings:
(i) "Environmental Claim" means any written notice or, to the Knowledge
of the Company, oral notice, by any Person alleging potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) with respect to the
business and operations of the Company or its Subsidiaries arising out of,
based on or resulting from (a) the presence, or release into the
environment, including, without limitation, into ambient air, soil, surface
water, ground water, land surface or subsurface strata, of any Materials of
Environmental
16
Concern (as defined in subsection (iii) below) at any location, whether or
not owned by the Company or any Subsidiary of the Company, or (b)
circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.
(ii) "Environmental Laws" means all federal, state, local and foreign
laws and regulations relating to pollution or protection of human health,
safety or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), including
without limitation, the Occupational Health and Safety Act of 1970, as
amended, and the rules and regulations thereunder, laws and regulations
relating to emissions, discharges, releases or threatened releases of
Materials of Environmental Concern or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern.
(iii) "Materials of Environmental Concern" means chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products.
(b) Except as set forth in the Company SEC Documents or Schedule 4.20(b) of
the Company Disclosure Schedule, to the Knowledge of the Company the Company is
in substantial compliance with all Environmental Laws applicable to the business
and operations of the Company, including, without limitation, through the
holding of all permits and authorizations required by such laws and in
compliance with terms and conditions thereof and, to the Knowledge of the
Company, there are no circumstances that may prevent or interfere with such full
compliance in the future. All material permits and other governmental
authorizations currently held by Company pursuant to the Environmental Laws in
connection with its businesses and operations are identified in Schedule 4.20(b)
of the Company Disclosure Schedule.
(c) Except as set forth in the Company SEC Documents or Schedule 4.20(c) of
the Company Disclosure Schedule, since June 30, 1991, the Company has not
received, nor had any of its then existing Subsidiaries received, any written
or, to the Knowledge of the Company, oral communication from any Person stating
that it or its Subsidiaries may be a potentially responsible party under any
Environmental Law with respect to any actual or alleged environmental
contamination; neither the Company nor its Subsidiaries nor, to the Knowledge of
the Company, any Governmental Entity is conducting or has conducted any
environmental remediation or environmental investigation which would reasonably
be expected to result in any liability for the Company under any Environmental
Law; and neither the Company nor its Subsidiaries has received any written or,
to the Knowledge of the Company, oral request for information from any
Governmental Entity with respect to any actual or alleged environmental
contamination; and since June 30, 1991, neither the Company nor its Subsidiaries
have received any written communication from any Person stating or alleging that
the Company or its Subsidiaries may have violated any Environmental Law, that
the Company or its Subsidiaries has caused or contributed to any environmental
contamination that has caused any property damage or personal injury under any
Environmental Law or made or suffered on any of their respective properties any
release of any Materials of Environmental Concern.
(d) Except as set forth in Schedule 4.20(d) of the Company Disclosure
Schedule or the Company SEC Documents, to the Knowledge of the Company there are
no past or present actions, activities, circumstances, conditions, events or
incidents in connection with the business and operations of the Company and its
Subsidiaries, including, without limitation, the release, emission, discharge or
disposal of any Materials of Environmental Concern, that would reasonably be
expected to form the basis of any Environmental Claim against the Company or
against any Person whose liability for any Environmental Claim the Company or
any Subsidiary of the Company existing prior to the date hereof has or may have
retained or assumed either contractually or by operation of law or otherwise.
Except as set forth in the Company SEC Documents or Section 4.20(d) of the
Company Disclosure Schedule, there is no Environmental Claim pending or, to the
Knowledge of the Company, threatened against
17
the Company, or to the Knowledge of the Company, against any Person whose
liability for any Environmental Claim the Company (or any of its Subsidiaries
existing prior to the date hereof) has or may have retained or assumed either
contractually or by operation of law.
(e) Without in any way limiting the generality of the foregoing, (i) to the
Knowledge of the Company, all on-site and off-site locations where the Company
or its Subsidiaries has stored, disposed or arranged for the disposal of
Materials of Environmental Concern since June 30, 1991 are identified in
Schedule 4.20(e) of the Company Disclosure Schedule or the Company SEC
Documents, (ii) to the Knowledge of the Company, all underground storage tanks,
and the capacity and contents of such tanks, located on property owned or leased
by the Company or any Subsidiary of the Company since June 30, 1991 are
identified in Schedule 4.20(e) of the Company Disclosure Schedule or the Company
SEC Documents, (iii) to the Knowledge of the Company, except as set forth in
Schedule 4.20(e) of the Company Disclosure Schedule or the Company SEC
Documents, no asbestos has been contained in or formed part of any building,
building component, structure or office space owned or leased by the Company or
any Subsidiary of the Company since June 30, 1991 and (iv) to the Knowledge of
the Company, except as set forth in Schedule 4.20(e) of the Company Disclosure
Schedule or the Company SEC Documents, no polychlorinated biphenyls are
presently stored at any property owned or leased by the Company or any
Subsidiary of the Company.
(f) (i) The Company has made available to Buyer each material environmental
investigation, study, audit, test, review and other analysis in the possession
of the Company prepared in the last five years conducted in relation to the
business of the Company or its Subsidiaries or any property or facility now or
previously owned, operated or leased by the Company or any Subsidiary of the
Company; and (ii) the Company has made available to Buyer each consent decree,
consent order or similar document entered into since June 30, 1991, and to which
it is a party relating to any property owned, leased or operated by the Company
or its Subsidiaries since June 30, 1991.
(g) Except to the extent set forth in Section 4.20(g) of the Company
Disclosure Schedule, following the installation of the new printing press
contemplated to be installed by the Company, the Company will not be required to
make any additional capital expenditures (as defined by the Company's accounting
practices) to be in compliance with any Environmental Law in connection with the
operation of such press.
SECTION 4.21 PROPERTY. (a) The Company has good and valid title to, or in
the case of leased property, has valid leasehold interests in, all properties
and assets used in or necessary to conduct the business of the Company as
currently conducted free and clear of all Liens except as set forth in Section
4.21 of the Company Disclosure Schedule.
(b) There are no developments, including but not limited to, with respect
to condemnation, affecting any of such properties or assets pending or, to the
Knowledge of the Company, threatened, which would reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect with respect to
the Company.
(c) The buildings, structures, facilities and printing and converting
equipment owned or used by the Company in the conduct of its business are
structurally sound with no known material defects and are in good operating
condition and repair (subject to normal wear and tear) so as to permit the
operation by the Company of its business as presently conducted.
(d) Except as set forth in Section 4.21 of the Company Disclosure Schedule,
no written notice from any Governmental Entity has been received by the Company
requiring or calling attention to the need for any work, repair, construction,
alteration or installation, or in connection with, any buildings, structures,
facilities or printing and converting equipment located thereon which will
involve any expenditure other than as set forth in the Company's Budget.
18
SECTION 4.22 INTANGIBLE PROPERTY. (a) The Company owns or possesses
adequate licenses or other valid and enforceable rights to use all trademarks,
trademark rights, trade names, trade name rights, copyrights, service marks,
service mark rights, service mark names, trade secrets, other intellectual
property and applications therefor, which, individually or in the aggregate, are
material to the Company's business and operations (collectively, "Intangible
Property") and which are used or held for use in connection with the business of
the Company as currently conducted, and such Intangible Property (and any
application which has been filed relating thereto) is listed in Section 4.22 of
the Company Disclosure Schedule. The Company is in substantial compliance with
all licenses relating to Intangible Property listed in Section 4.22 of the
Company Disclosure Schedule. The Company has no registered trademarks.
(b) To the Knowledge of the Company, except as set forth in Schedule
4.22(b) of the Company Disclosure Schedule, there has not been asserted any
claim challenging the validity of the Company's use of any Intangible Property.
To the Knowledge of the Company, except as set forth in Schedule 4.22(b) of the
Company Disclosure Schedule, the conduct of the business of the Company as
currently conducted does not conflict with any trademark, trademark right, trade
name or trade name right of any Person in a manner that could reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect
with respect to the Company. To the Knowledge of the Company, there are no
material infringements of any Intangible Property by any Person.
SECTION 4.23 MATERIAL CONTRACTS. (a) Except as set forth on Schedule
4.16(a) or Schedule 4.23 of the Company Disclosure Schedule, the Company SEC
Documents list all Material Contracts (as defined below) of the Company (and all
material amendments thereto) and all agreements or commitments to enter into a
Material Contract, and except as set forth on Schedule 4.23 of the Company
Disclosure Schedule or in the Company SEC Documents, each Material Contract is
valid, binding and enforceable against the Company and in full force and effect
in all material respects and, to the Knowledge of the Company, each Material
Contract is valid, binding and enforceable against each other party thereto and
in full force and effect in all material respects against each other party
thereto, and there are no material defaults by the Company thereunder and there
is no event which is reasonably likely to have such effect and, to the Knowledge
of the Company, there are no material defaults by any other party to a Material
Contract. True and complete copies of all Material Contracts have been delivered
or made available to Buyer.
(b) For purposes of this Agreement, "Material Contracts" shall mean (i) any
contract, agreement or understanding with any customer or supplier of the
Company, which accounted during the Company's last fiscal year or which are
expected to account during the Company's present fiscal year, for more than
$100,000 of the annual revenues or payables, as the case may be, of the Company,
(ii) all acquisition, merger, asset purchase or sale agreements entered into by
the Company in the last two fiscal years with a transaction value in excess of
$100,000, other than purchase or sale orders for inventory or supplies; (iii)
all indemnification, termination, employment, severance, or "golden parachute"
agreements; (iv) credit agreements, notes, bonds, mortgages, indentures with
respect to, or other evidence of, Indebtedness of the Company or guarantees of
Indebtedness of any other Person and (v) any other agreement within the meaning
set forth in Item 601(b)(10) Regulation S-K of Title 17, Part 229 of the Code of
Federal Regulations (assuming for such purposes that the date of filing of the
Registration Statement is deemed to be the date of this Agreement).
(c) Except as set forth on Schedule 4.23 of the Company Disclosure
Schedule, no party to any such Material Contract has (i) given written notice to
the Company of or made a claim in writing against the Company or any Subsidiary
of the Company existing prior to the date hereof with respect to any breach or
default thereunder, or (ii) given written or, to the Knowledge of the Company,
oral notice to the Company or any Subsidiary of the Company existing prior to
the date hereof that it does
19
not intend to renew (where renewal is appropriate) or it intends to modify in
any significant way which is adverse to the Company or terminate a significant
portion of its business relationships with the Company or any Subsidiary of the
Company existing prior to the date hereof.
(d) Except as set forth in Schedule 4.16(a) of the Company Disclosure
Schedule or Schedule 4.23 of the Company Disclosure Schedule, the Company is not
a party to or bound by any non-competition agreement or any other agreement,
understanding or obligation which purports to limit in any material respect the
manner in which, or the localities in which, the Company is entitled to conduct
all or any material portion of the business of the Company.
(e) Schedule 4.23(e) of the Company Disclosure Schedule sets forth the
following with respect to each item of Indebtedness of the Company: (i) its
principal amount and (ii) any prepayment or other penalties which would be
payable if the Indebtedness is paid at anytime prior to or as of October 1,
1996. All Indebtedness may be prepaid by the Company prior to its scheduled
maturity subject only to the payment of the scheduled prepayment or other
scheduled penalties.
SECTION 4.24 ACCOUNTING MATTERS; REORGANIZATION. To the Knowledge of the
Company, neither the Company nor any of its Affiliates has taken or agreed to
take any action or failed to take any action that would prevent Buyer from
accounting for the transactions to be effected pursuant to this Agreement as a
pooling of interests in accordance with GAAP and applicable SEC regulations;
provided, however, that the Company makes no representation or warranty with
respect to any actions which would prevent Buyer from accounting for such
transactions as a pooling of interests because of actions or failures to take
any action by Buyer or any of its Affiliates. Neither the Company nor any of its
Affiliates has taken or agreed to take any action or failed to take any action
which action or failure would be reasonably likely to cause the Merger not to
qualify as a reorganization under Section 368(a) of the Code.
SECTION 4.25 FAIRNESS OPINION. The Board of Directors of the Company has
received the written opinion of Janney, to the effect that, as of the date of
this Agreement, the consideration to be received by holders of Shares pursuant
to the Merger is fair from a financial point of view to such holders and such
opinion has not been withdrawn. An executed, true and complete copy of such
opinion has been delivered to Buyer.
SECTION 4.26 LICENSES AND PERMITS. Except as regards environmental matters
(which are addressed in Section 4.20), the Company has received such
certificates, permits, licenses, variances, exemptions, franchises, consents,
approvals, orders, authorizations and clearances from appropriate Governmental
Entities ("Licenses") as are necessary to own or lease and operate their
respective properties and to conduct its business substantially in the manner
described in the Company SEC Documents and as currently owned or leased and
conducted, and all such Licenses are valid and in full force and effect in all
material respects except where the failure to obtain any such License or the
failure of such License to be valid and in full force and effect would not
subject the Company to significant penalties. Schedule 4.26 of the Company
Disclosure Schedule contains a listing of all material Licenses. The Company is
in compliance in all material respects with their respective obligations under
the Licenses and, to the Knowledge of the Company, no event has occurred that
allows, or after notice or lapse of time, or both, would allow, revocation or
termination of any material License. Each such License will continue to be in
full force and effect following the Merger and unaffected thereby without the
payment of any fee or other consideration or the posting of any additional bond
except where the failure of such License to remain in full force and effect
results from actions or failures to act on the part of Buyer or its Affiliates
or on facts specific to Buyer and its Affiliates.
SECTION 4.27 OWNERSHIP OF BUYER CAPITAL STOCK. The Company does not own any
shares of the capital stock of Buyer.
20
SECTION 4.28 INSURANCE. The Company maintains customary and appropriate
insurance policies with reputable insurers in such amounts as are customary in
the commercial printing industry and all required worker's compensation
insurance policies. True and complete copies of such insurance policies, and of
any directors and officers liability insurance policies, have been delivered or
made available to Buyer. All of such policies of insurance are in full force and
effect and are sufficient for compliance with all requirements of law and
contracts to which the Company is a party or otherwise bound. Prior to the
Effective Time, the Company will maintain all such insurance policies (or
appropriate replacement policies) in full force and effect and the Company will
not take any action to terminate or cancel any policy prior to the end of its
policy period.
SECTION 4.29 CUSTOMERS AND SUPPLIERS. Schedule 4.29 of the Company
Disclosure Schedule sets forth a listing of the names and amount of annual
revenues or expenses paid, as the case may be, of the (a) ten largest customers
of the Company in terms of sales during the Company's last fiscal year and (b)
ten largest suppliers to the Company in terms of purchases during the Company's
last fiscal year. Except as set forth in Schedule 4.29 of the Company Disclosure
Schedule, since September 30, 1995, there has not been any significant and
adverse change in the business relationship of the Company with any of such
customers or suppliers nor has the Company changed the terms in any material way
of doing business with such customers or suppliers (including, but not limited
to, any change in payment terms or pricing). All customer advances to the
Company are cash deposits made by such customers with the Company solely for the
purpose of paying postage and advance billings (which advance billings are
listed in Section 4.29 of the Company Disclosure Schedule by customer and
amount) in connection with services to be performed by the Company. The amount
to be paid for services to be provided by the Company with respect to such
advance billings is not on terms more favorable than if the customer had not
paid in advance. The Company does not expect the customer advance in the amount
of $700,000 which has been outstanding for the five years prior to the date of
this Agreement to be utilized prior to the Effective Time.
SECTION 4.30 ACCOUNTS RECEIVABLE. Except as set forth in Schedule 4.30 of
the Company Disclosure Schedule, the accounts and notes receivable and all other
receivables shown on the Company Financial Statements (subject to reserves for
non-collectibility as reflected therein), and all receivables acquired or
generated by the Company since March 31, 1996 (subject to reasonable reserves
for non-collectibility, consistent with past practice and in accordance with
GAAP), are bona fide receivables and represent amounts due with respect to
actual, arm's length transactions entered into in the ordinary course of
business consistent with past practice and are collectible at their recorded
amounts (net of reserves for non-collectibility). Reserves for
non-collectibility have been reflected on the Company Financial Statements in
accordance with GAAP and the Company's historical practice and are adequate. No
such account has been assigned or pledged to any other Person and, to the
Knowledge of the Company, no defense or set-off or similar right to any such
account has been asserted by the account obligor.
SECTION 4.31 INVENTORY. The inventories on the Company Financial Statements
are stated at the lower of cost (first in, first out) or market in accordance
with GAAP. Substantially all of the inventories used in or relating to the
conduct of the business of the Company are usable or saleable in the ordinary
course of business consistent with past practice (subject to reserves as
reflected on the Company Financial Statements) and are owned by the Company free
and clear of any Lien. Reserves with respect to inventories have been reflected
on the Company Financial Statements in accordance with GAAP and the Company's
historical practice and are adequate.
SECTION 4.32 RELATIONSHIPS WITH AFFILIATES. Except as set forth in Schedule
4.23(b), Schedule 4.13, Schedule 4.16(a) or Schedule 4.32 of the Company
Disclosure Schedule and except as reflected on the Company Financial Statements
or incurred in the ordinary course of business consistent with past practice in
connection with compensation owed to a director, officer or employee, the
Company does not have any outstanding liabilities, obligations or other
Indebtedness for amounts owing to, or notes
21
or accounts receivable from, or leases, contracts or other commitments or
arrangements with, any of their respective Affiliates, directors, officers or
employees and no officer or director of the Company or any Affiliate thereof has
any ownership or stock interest in any Person that is a customer of or supplier
to the Company or purchases or leases any property or equipment from, or sells
or leases any property or equipment to, the Company. For purposes of this
representation, ownership of not more than five percent of the voting stock of
any publicly held company whose stock is listed on any recognized securities
exchange or traded over the counter shall be disregarded. Notwithstanding the
requirements of Section 4.23(b), Section 4.13 or Section 4.16(a), all
disclosures required to be made with respect to Samans in the Company Disclosure
Schedule shall be made in Schedule 4.32 thereof.
SECTION 4.33 WORKMEN'S COMPENSATION. There shall be no cost to the Company
for withdrawal from the Graphic Arts Workers Compensation Self-Insurance Trust
(the "Trust") if withdrawal occurs as of December 31, 1996, provided at least
120-day prior written notice is given in accordance with Section 6.9 hereof. To
the Knowledge of the Company, such notice may be withdrawn without penalty at
any time prior to December 31, 1996.
SECTION 4.34 FLEET CREDIT. As of the date of this Agreement, the Company
has no financing arrangements or other facilities with Fleet Credit Corporation
("Fleet") and has no outstanding obligations or liabilities of any kind owing to
Fleet, all such financing arrangements or facilities having been terminated and
all obligations and liabilities owing by the Company to Fleet having been
fulfilled. Fleet is not entitled to any Lien on the assets or properties of the
Company. The Company agrees it will use its reasonable efforts to have Fleet
file, in the appropriate jurisdictions in which it has filed UCC-1s, UCC-3
termination statements within 15 business days following the date of this
Agreement.
SECTION 4.35 DISCLOSURE. No representation or warranty by the Company
contained in this Agreement and no statement contained in any certificate
delivered by the Company to Buyer or Merger Subsidiary pursuant to this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein and therein not
misleading when taken together in light of the circumstances in which they were
made.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER AND MERGER SUBSIDIARY
Buyer and Merger Subsidiary represent and warrant to the Company that:
SECTION 5.1 CORPORATE EXISTENCE AND POWER. Each of Buyer and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate power and authority required to carry on its business as now
conducted. Each of Buyer and Merger Subsidiary is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified and in good standing would not have a Material
Adverse Effect with respect to Buyer or Merger Subsidiary. Each of Buyer and
Merger Subsidiary has heretofore delivered or made available to the Company true
and complete copies of Buyer's and Merger Subsidiary's certificate of
incorporation and by-laws as currently in effect.
SECTION 5.2 CORPORATE AUTHORIZATION. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Buyer and Merger Subsidiary and have
been duly authorized by all necessary corporate action. This Agreement, assuming
due and valid authorization, execution and delivery by the Company, constitutes
a valid and binding agreement of each of Buyer and Merger Subsidiary enforceable
against Buyer and Merger Subsidiary in
22
accordance with its terms, except that (i) enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting creditors' rights generally and (ii)
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 5.3 GOVERNMENTAL AUTHORIZATION. Assuming the accuracy of the
Company's representations set forth in Section 4.10, the execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby require no action by or in respect of, or filing with, any Governmental
Entity other than: (i) the filing of a Certificate of Merger in accordance with
the DGCL; (ii) compliance with any applicable requirements of the HSR Act, which
has been so complied with; (iii) compliance with any applicable requirements of
the Securities Act and Exchange Act; (iv) compliance with the applicable
requirements of state blue-sky laws; and (v) such other actions by or in respect
of, or filings with, any Governmental Entity which if not obtained or made would
not, individually or in the aggregate, have a Material Adverse Effect with
respect to Buyer and its Subsidiaries and would not impair or materially delay
the ability of Buyer or Merger Subsidiary to consummate the transactions
contemplated hereby.
SECTION 5.4 NON-CONTRAVENTION. The execution, delivery and performance by
Buyer and Merger Subsidiary of this Agreement and the consummation by Buyer and
Merger Subsidiary of the transactions contemplated hereby do not and will not
(i) contravene or conflict with the Certificate of Incorporation or By-laws of
Buyer or Merger Subsidiary, (ii) assuming the accuracy of the Company's
representations set forth in Section 4.10, and assuming compliance with the
matters referred to in Section 5.3 hereof, contravene or conflict with or
constitute a violation of any provision of law, judgment, injunction, order or
decree binding upon or applicable to Buyer or Merger Subsidiary, (iii) provided
that an amendment to Buyer Credit Agreement (as defined in Article XI) has been
obtained prior to Closing, with or without the giving of notice or passage of
time or both, constitute a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of Buyer or Merger
Subsidiary or to a loss of any benefit to which Buyer or Merger Subsidiary is
entitled under any provision of any material agreement, contract or other
instrument binding upon Buyer or Merger Subsidiary or any material license,
franchise, permit or other similar authorization held by Buyer or Merger
Subsidiary, or (iv) result in the creation or imposition of any Lien on any
asset of Buyer or Merger Subsidiary.
SECTION 5.5 CAPITALIZATION. The authorized capital stock of Buyer consists
of 50,000,000 shares of Buyer Common Stock, 2,500,000 shares of Class B common
stock, par value $.01 per share ("Buyer Class B Common Stock"), and 10,000,000
shares of preferred stock ("Buyer Preferred Stock"), par value $0.01 per share.
As of July 15, 1996, there were issued and outstanding (i) 14,715,745 shares of
Buyer Common Stock, (ii) 1,738,692 shares of Buyer Class B Common Stock, and
(iii) no shares of Buyer Preferred Stock. All of the outstanding shares of
capital stock of Buyer have been duly authorized and validly issued and are
fully paid and nonassessable. Except as set forth in this Section 5.5 or in
Buyer SEC Documents, and except for 3,484,114 shares of Buyer Common Stock
reserved for issuance pursuant to outstanding and future awards under Buyer's
Restated 1993 Stock Award and Incentive Plan, as amended, as of the date of this
Agreement, there are outstanding (i) no other shares of capital stock or other
voting securities of Buyer, (ii) no other securities of Buyer or of any
Subsidiary of Buyer convertible into or exchangeable for shares of capital stock
or voting securities of Buyer, and (iii) no options or other rights to acquire
from Buyer, and no obligation of Buyer to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of Buyer (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "Buyer Securities").
23
SECTION 5.6 OWNERSHIP OF MERGER SUBSIDIARY; NO PRIOR ACTIVITIES; ASSETS OF
MERGER SUBSIDIARY.
(a) Merger Subsidiary was formed solely for the purpose of the Merger and
engaging in the transactions contemplated hereby.
(b) As of the date hereof and the Effective Time, all of outstanding shares
of capital stock of Merger Subsidiary are and will be directly owned by WTI and
all of the outstanding shares of capital stock of WTI are and will be directly
owned by Buyer and there are not as of the date hereof and there will not be at
the Effective Time any outstanding or authorized options, warrants, calls,
rights, commitments or any other agreements of any character which Merger
Subsidiary or WTI is a party to, or may be bound by, requiring it to issue,
transfer, sell, purchase, redeem or acquire any shares of capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the right
to subscribe for or acquire, any shares of capital stock of Merger Subsidiary or
WTI.
(c) As of the date hereof and the Effective Time, except for obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated hereby, Merger Subsidiary has not and will not
have incurred, directly or indirectly through any Subsidiary or Affiliate, any
obligations or liabilities or engaged in any business or activities of any type
or kind whatsoever or entered into any agreements or arrangements with any
Person.
SECTION 5.7 SEC DOCUMENTS. Buyer has filed all reports, proxy statements,
forms and other documents required to be filed with the SEC since November 28,
1995 and prior to the date of this Agreement ("Buyer SEC Documents"). As of
their respective dates, Buyer SEC Documents complied in all material respects
with the requirements of the Securities Act, or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Buyer SEC Documents (including Rule 10b-5 under the Exchange
Act and the applicable accounting rules and regulations of the SEC).
SECTION 5.8 FINANCIAL STATEMENTS. The consolidated financial statements of
Buyer included in the Buyer SEC Documents (i) have been prepared in conformity
with GAAP applied on a consistent basis during the periods involved (except as
may be indicated in the related notes and schedules thereto) and (ii) fairly
present in all material respects the consolidated financial position of Buyer
and its consolidated subsidiaries as of the dates thereof, and the results of
its operations and its cash flows for the periods then ended (subject, in the
case of the unaudited statements, to normal year-end audit adjustments, none of
which was material and that, in the case of financial statements included
therein which reflect an acquisition accounted for as a purchase, the financial
statements for the period succeeding the acquisition are presented on a
different basis of accounting than the period prior to the acquisition and are
not directly comparable.)
SECTION 5.9 FORM S-4 REGISTRATION STATEMENT. The Form S-4 Registration
Statement and all amendments thereto will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
promulgated thereunder. Neither the Form S-4 Registration Statement, nor any
amendments thereof, will, on the date the Company Proxy Statement is first
mailed to stockholders of the Company, at the time of the Company Stockholder
Meeting, at the Effective Time or at the time it becomes effective, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, provided, however,
that Buyer makes no representation or warranty with respect to any information
furnished to it by the Company or any of its accountants, counsel or other
authorized representatives in writing specifically for inclusion in the Form S-4
Registration Statement. None of the information with respect to Buyer or any
Affiliate of Buyer that has been supplied by Buyer or any of its accountants,
counsel or other authorized representatives in writing specifically for use in
the Company Proxy Statement will, on the date that the Company Proxy Statement
is first mailed to stockholders of the
24
Company, at the time of the Company Stockholder Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
SECTION 5.10 NO VOTE REQUIRED. No vote or special meeting of the
stockholders of Buyer, WTI or Merger Subsidiary, which has not been obtained, is
necessary or required by this Agreement or under applicable law or rule of any
national securities exchange to approve the Merger, this Agreement or the
transactions contemplated hereby.
SECTION 5.11 SHARE OWNERSHIP. As of the date hereof, neither Buyer nor any
of its Subsidiaries owns any Company Securities or have any option or right to
acquire any Company Securities except pursuant to the Option Agreement.
SECTION 5.12 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Buyer SEC Documents, since the date of the most recent consolidated balance
sheet included in the Buyer SEC Documents, there has not been a Material Adverse
Effect with respect to Buyer.
SECTION 5.13 AUTHORIZATION FOR BUYER COMMON STOCK. Buyer will take all
necessary action prior to the Closing Date to permit it to issue the number of
shares of Buyer Common Stock required to be issued pursuant to this Agreement.
All shares of Buyer Common Stock issued pursuant to this Agreement will, when
issued, be validly issued, fully paid and nonassessable and no Person will have
any preemptive right of subscription or purchase in respect thereof. All shares
of Buyer Common Stock will, when issued, be registered under the Securities Act
and the Exchange Act and registered or exempt from registration under any
applicable state securities laws and will, when issued, be listed on the NYSE,
subject to official notice of issuance.
SECTION 5.14 RELATIONSHIPS. To the Knowledge of Buyer, neither Buyer nor
any of its Affiliates has taken or failed to take any action that would
reasonably be expected to cause the largest customer of the Company not to
continue its present relationship with the Company for the foreseeable future
following the Merger on terms at least as favorable to the Company as those in
effect during the eight-month period prior to May 31, 1996.
SECTION 5.15 FINDERS' FEES. There is no investment banker, broker, finder
or other intermediary which has been retained by or is authorized to act on
behalf of Buyer or any Affiliate of Buyer who would be entitled to any finder's
fee or similar commission from Buyer, any Affiliate of Buyer, the Company or any
of Company's Affiliates upon consummation of the transactions contemplated by
this Agreement.
SECTION 5.16 ACCOUNTING MATTERS; REORGANIZATION. To the Knowledge of
Buyer, neither Buyer nor any of its Affiliates has taken or agreed to take any
action or failed to take any action that would prevent Buyer from accounting for
the transactions to be effected pursuant to this Agreement as a pooling of
interests in accordance with GAAP and applicable SEC regulations; provided,
however, that Buyer makes no representation or warranty with respect to any
actions which would prevent Buyer from accounting for such transactions as a
pooling of interests because of actions or failures to take any action by the
Company or any of its Affiliates. Neither Buyer nor any of its Affiliates has
taken or agreed to take any action or failed to take any action which action or
failure would be reasonably likely to cause the Merger not to qualify as a
reorganization under Section 368(a) of the Code.
SECTION 5.17 DISCLOSURE. No representation or warranty by Buyer contained
in this Agreement and no statement contained in any certificate delivered by
Buyer pursuant to this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained herein and therein not misleading when taken together in light of the
circumstances in which they were made.
25
ARTICLE VI
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 6.1 CONDUCT OF THE COMPANY. Except as contemplated by this
Agreement, and except as set forth in Schedule 6.1 of the Company Disclosure
Schedule, from the date hereof until the Effective Time, the Company shall
conduct its business only in the ordinary course and shall use its reasonable
efforts to preserve intact its business organizations and relationships with
suppliers, customers, employees, creditors and other third parties and to keep
available the services of its present officers and employees. Without limiting
the generality of the foregoing, except as contemplated by this Agreement, and
except as set forth in Schedule 6.1 of the Company Disclosure Schedule, other
than with the prior written consent of Buyer (which consent shall not be
unreasonably withheld), from the date hereof until the Effective Time, the
Company will not:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, or otherwise make any
payments to its stockholders in their capacity as such; (B) split, combine
or reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for shares
of its capital stock; or (C) purchase, redeem or otherwise acquire any
shares of its capital stock or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise encumber any
Company Securities (other than the issuance of Shares upon the exercise of
Options outstanding on the date of this Agreement in accordance with their
current terms) or incorporate or organize any Subsidiary;
(iii) amend or propose to amend the Company Certificate of Incorporation
or Company By-Laws;
(iv) adopt a plan of merger, complete or partial liquidation or
reorganization, acquire or agree to acquire, by merging or consolidating
with, by purchasing a substantial portion of the assets of or equity in or
by any other manner, any other Person, or otherwise acquire or agree to
acquire any assets except (x) as provided in the Cap-Ex Budget or (y) for
consideration in the amount of $50,000 in the aggregate for all such
acquisitions and except for inventory and supplies in the ordinary course of
business consistent with past practice;
(v) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets, other than transactions that are in
the ordinary course of business and consistent with past practice and not in
an amount, individually or in the aggregate, greater than $50,000;
(vi) incur any Indebtedness, or make any loans, advances or capital
contributions to, or other investments in, any other Person (other than (i)
expense account advances in the ordinary course of business consistent with
past practice, (ii) endorsement of checks made payable to the Company or
(iii) the acceptance of advances in respect of postage and cash advances for
services to be rendered by the Company, each of which shall be in the
ordinary course of business and consistent with past practice and, with
respect to cash advances for services, shall be for services to be rendered
on terms not different from customers not making cash advances for such
services), or retire any outstanding Indebtedness before its maturity date;
(vii) enter into or adopt any Plan, or amend any existing Plan, other
than as required by law;
(viii) (A) make any change in the compensation payable or to become
payable to any of the executive officers, directors, agents or consultants
of the Company, (B) grant any general increase in base compensation payable
to the employees of the Company, (C) enter into or amend any employment,
severance, termination or other similar agreement, (D) make any loans to any
of the
26
officers, directors, employees, agents or consultants of the Company (other
than expense advances in the ordinary course of business consistent with
past practice) or (E) except as provided above, make any change in the
existing borrowing or lending arrangements of the Company for or on behalf
of any of such persons, whether contingent on consummation of the Merger or
otherwise.
(ix) (A) pay, agree to pay or make any accrual or arrangement for payment
of any pension, retirement allowance or other employee benefit pursuant to
any plan, agreement or arrangement other than pursuant to those existing at
the date hereof which has been disclosed to Buyer in the Company Disclosure
Schedule to any executive officer, director, employee, agent or consultant
of the Company except in the ordinary course of business and consistent with
past practice, (B) pay or agree to pay or make any arrangement for payment
to any executive officer of the Company of any amount relating to unused
vacation days, (C) except for commitments existing on the date of this
Agreement which have been disclosed to Buyer in the Company Disclosure
Schedule, and except for bonus payments in the ordinary course of business
consistent with past practice which have been disclosed to Buyer in the
Company Disclosure Schedule, commit to adopt or pay, grant, issue,
accelerate or accrue salary or other payments or benefits pursuant to any
pension, profit-sharing, bonus, extra compensation, incentive, deferred
compensation, group insurance, severance pay, retirement or other employee
benefit plan, agreement or arrangement, or any employment or consulting
agreement with or for the benefit of any director, officer, employee, agent
or consultant of the Company, or (D) amend in any material respect any of
the foregoing plans, agreements or arrangements;
(x) violate or fail to perform any material obligation or duty imposed
upon the Company by any applicable federal, state, local, foreign or
provincial law, rule, regulation, guideline or ordinance;
(xi) make or revoke any Tax election or settle or compromise any disputed
Tax liability, in each case, material to the Company or change except as
required by law (or make a request to any taxing authority to change) any
material aspect of its method of accounting for Tax purposes;
(xii) acquire any shares of capital stock of Buyer;
(xiii) amend any term of any outstanding security of the Company;
(xiv) create, assume or suffer to exist any Lien on any asset, other than
in the ordinary course of business and consistent with past practice;
(xv) except as may be required pursuant to GAAP, revalue in any material
respect any of its assets, including, without limitation, writing down the
value of inventory or writing-off notes or accounts receivable other than in
the ordinary course of business;
(xvi) enter into any new Material Contract, amend in a material adverse
manner including, but not limited to, terminate or modify in a material
adverse manner (including, but not limited to, any change in payment terms
or pricing), any Material Contract in effect as of the date of this
Agreement or grant or consent to any waiver of any material provision
thereunder which would be materially adverse;
(xvii) make any capital expenditures (as defined by the Company's
accounting procedures in accordance with GAAP) except for those listed in
the Company's Cap-Ex Budget;
(xviii) except to the extent required by applicable law, make any material
change in pricing, marketing, purchasing, investment, accounting (including
policies and procedures), financial reporting, inventory, credit allowance
or Tax practice or policy, including with respect to the method of
calculating bad debt, contingency or other reserve;
27
(xix) enter into any new line of business;
(xx) enter into any transactions with an Affiliate other than as
disclosed in the Company Disclosure Schedule relating to (I) the payment of
compensation to a director, officer or employee or (II) with Graphic Forms,
Inc., in each case, on arms-length terms and for business in the amount no
greater than $15,000 per annum; or
(xxi) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
SECTION 6.2 STOCKHOLDER MEETING; PROXY MATERIAL. (a) The Company shall
cause a meeting of its stockholders (including any postponements or adjournments
thereto, the "Company Stockholder Meeting") to be duly called and held as soon
as reasonably practicable, but in any event within 20 business days after the
mailing of the Company Proxy Statement, for the purpose of voting on the
approval and adoption of this Agreement and the Merger. As promptly as
practicable following the date of this Agreement, the Company and Buyer shall
prepare a proxy statement with respect to the Company Stockholder Meeting (which
proxy statement will also constitute the prospectus of Buyer to be included in
the Form S-4 Registration Statement to be filed by Buyer pursuant to Section 7.2
hereof) (such proxy statement, together with any amendments thereof or
supplements thereto, in each case in the form or forms mailed to the Company's
stockholders, is herein called the "Company Proxy Statement"). The Company will
(i) as promptly as practicable following the preparation of the proxy statement
file the proxy statement with the SEC, and use its reasonable efforts to have it
cleared by the SEC and thereafter mail the Company Proxy Statement to its
stockholders; (ii) use its reasonable efforts to obtain the necessary approvals
by its stockholders of this Agreement and the Merger and (iii) otherwise comply
with all legal requirements applicable to such meeting. The Company agrees to
provide Buyer with all comments or correspondence received from the SEC as to
the Company Proxy Statement and the Company and Buyer shall prepare responses to
any such comments or correspondence as required to have the Company Proxy
Statement cleared by the SEC. The Company may, if it withdraws, modifies or
changes its recommendation in accordance with this Section 6.2, delay the filing
or mailing, as the case may be, of the Company Proxy Statement or the holding of
the Company Stockholder Meeting, in each case only to the extent necessary to
revise the Company Proxy Statement to reflect such withdrawal, modification or
change and, in the case of the Company Stockholder Meeting, to provide the
minimum notice thereof required under applicable law, the Company Certificate of
Incorporation and the Company By-laws. The Company will promptly provide Buyer
with all financial and other data regarding the Company as may be reasonably
requested by Buyer in connection with the Form S-4 Registration Statement.
(b) The Board of Directors of the Company shall recommend approval of the
Merger by the Company's stockholders; PROVIDED, HOWEVER, that such Board shall
not be required to make such recommendation, or may withdraw or modify such
recommendation, if the Company receives a Superior Proposal (as defined in
Section 6.4) or if such Board determines in good faith, on the basis of advice
from its outside legal counsel, that facts and circumstances unrelated to any
Acquisition Proposal (as defined in Section 6.4) have arisen which may require
such Board, in the exercise of its fiduciary duties under applicable law, to
take such action.
SECTION 6.3 ACCESS TO INFORMATION; CONFIDENTIALITY AGREEMENT. From the
date hereof until the Effective Time, the Company will give Buyer, its counsel,
financial advisors, auditors and other authorized representatives reasonable
access during normal business hours to the offices, properties, books and
records of the Company will furnish to Buyer, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating data
and other information as such Persons may reasonably request and will instruct
the Company's employees, counsel and financial advisors to cooperate with Buyer
in its investigation of the business of the Company; PROVIDED that all requests
for access to or to interview the Company's customers, suppliers, lenders or key
employees
28
will be directed to and coordinated with the President of the Company or other
senior executive of the Company designated by the President; and PROVIDED
FURTHER that no investigation pursuant to this Section 6.3 shall affect any
representation or warranty given by the Company to Buyer hereunder (although
Buyer agrees to advise the Company of any information which, to the knowledge of
Buyer, it obtains during such investigation which indicates that any of the
representations and warranties made by the Company to Buyer hereunder are not
true and correct in all material respects) and any information received by Buyer
or its representatives shall remain subject to the Confidentiality Agreement
dated June 10, 1996 between Buyer and the Company (the "Confidentiality
Agreement").
SECTION 6.4 NO SOLICITATION. From and after the date hereof, neither the
Company nor any Affiliates, directors, officers, employees, agents, attorneys,
accountants, financial advisors or other representatives (collectively,
"Representatives") of the Company shall, directly or indirectly, solicit,
initiate or encourage any Acquisition Proposal (as hereinafter defined) from any
Third Party (as hereinafter defined), or engage in or continue discussions or
negotiations with, or provide any information to, any Third Party which has made
or indicated an intention (whether or not conditional) to make an Acquisition
Proposal (or any Representatives of such Third Party), or take any steps in
furtherance of the transactions referred to in the SCFM Agreement; PROVIDED,
HOWEVER, that the Company may engage in discussions or negotiations with, or
provide information to, a Person which makes a Superior Proposal if the Board of
Directors of the Company determines in good faith, on the basis of advice from
its outside legal counsel, that the failure to take such action would violate
the fiduciary obligations of such Board of Directors under applicable law. The
Company shall promptly notify Buyer of any Acquisition Proposal received since
June 14, 1996, including the price and other significant terms and conditions of
and the identity of the Third Party making such Acquisition Proposal and the
names and affiliations of all Persons to whom the Company has furnished
information pursuant to the foregoing proviso and the nature of such
information. As used herein: (i) "Acquisition Proposal" means any proposal or
offer, or any expression of interest or intention (whether or not conditional
and whether by public announcement or regulatory filing or otherwise), by a
Third Party with respect to any acquisition (by tender or exchange offer or
otherwise) of 20% or more of the equity securities or assets of the Company or
any merger, consolidation or other business combination involving the Company or
any inquiry by a Third Party (or any of its Representatives) with respect to the
willingness or ability of the Company to receive or discuss any of the
foregoing; (ii) "Third Party" means any Person or group of Persons (including,
without limitation, any individual which, at any time since June 14, 1996, is or
was a director or officer of the Company, and any Person in which one or more
such individuals has a 10% or greater equity interest, and any group of which
any such individual is a member), but does not include Buyer or any of its
Subsidiaries; and (iii) "Superior Proposal" means a bona fide, written and
unsolicited (since June 14, 1996) proposal or offer made by a Third Party to
acquire 100% of the equity interests in the Company or all or substantially all
of the Company's assets which the Board of Directors of the Company determines
in good faith and in the exercise of reasonable judgment (based on the advice of
financial advisors of nationally recognized reputation as to financial matters
and on the advise of outside legal counsel as to legal and regulatory matters)
is more favorable to all the Company's stockholders than the Merger, and can be
consummated without any significant legal or regulatory impediments and with
respect to which the Board has determined, based on the advice of its investment
bankers, that such Third Party is financially capable of consummating.
SECTION 6.5 CONVEYANCE TAXES. The Company shall timely pay any real
property transfer or gains, sales, use, transfer, value added, stock transfer
and stamp taxes, any transfer, recording, registration and other fees, and any
similar Taxes (collectively, the "Conveyance Taxes") which become payable by the
Company prior to or as of the Effective Time in connection with the transactions
contemplated hereunder or that are required to be paid by the Company in
connection therewith. Buyer shall cooperate with the Company in the preparation,
execution and filing of all Tax Returns regarding any such Conveyance Taxes.
29
SECTION 6.6 MONTHLY FINANCIAL STATEMENTS. The Company shall provide Buyer,
within 10 days following the end of each month, with an unaudited balance sheet
and income and cash flow statement of the Company for each month during the
period from the date of this Agreement until the Effective Time which shall be
certified to by the Company's Treasurer.
SECTION 6.7 PAYMENT OF RECEIVABLES AND PAYABLES. The Company shall
collect, as of the Closing Date, all receivables owed to the Company by any
director, officer, employee or Affiliate of the Company and the Company shall
pay to the foregoing all payables owing to them other than (i) the loan in the
amount of $3,000 listed in item (1) of Schedule 4.13(f) and items 2 and 4 of
Schedule 4.32 of the Company Disclosure Schedule and (ii) with respect to the
matters expressly permitted by Section 6.1 (xx) hereof).
SECTION 6.8 DATA COMMAND. No later than ten business days following the
date of this Agreement, the Company shall purchase at no cash cost and hold in
its treasury not less than 39,304 of the 50,000 Shares (which Shares are
presently held by the Company as collateral against accounts receivable for
print orders placed by Data Command Ltd. ("Data Command")) with a market value
equal to the outstanding principal and interest of Data Command's payment
obligation to the Company and shall issue to Gene Schecter, the registered
holder of such collateral, a new stock certificate representing not more than
10,696 Shares, with a market value equal to the amount by which the market value
of the collateral exceeds such obligation. The interest claim is based upon
monthly account statements including a monthly 1.5% service charge (18% per
year) on amounts due over 60 days. The Company estimates the amount of principal
and unpaid interest in respect of the obligation of Data Command to be
approximately $226,000 as of the date of this Agreement.
SECTION 6.9 NOTICE OF WITHDRAWAL. The Company shall deliver, within five
business days after the date of this Agreement, proper written notice to the
Trust of its intention to withdraw from the Trust as of December 31, 1996.
SECTION 6.10 EXCESS CASH. The Company shall deliver to Buyer, within five
business days prior to the Company Stockholder Meeting, a certificate signed by
its President or Treasurer specifying the amount of Excess Cash which the
Company will have available on the Closing Date, which amount may be used to
pre-pay Indebtedness on the Closing Date, which prepayment shall still permit
the Company to meet its obligations set forth in Section 9.3 (vi) hereof. For
purposes of this Agreement, Excess Cash means the amount of cash so specified in
such certificate.
SECTION 6.11 NEW YORK QUALIFICATION. Within five business days from the
date of this Agreement, the Company shall file an application with all
appropriate Governmental Entities in the State of New York to qualify the
Company to transact business in the State of New York and shall use its
reasonable efforts to otherwise cause the Company to qualify to transact
business in the State of New York prior to the Effective Time.
ARTICLE VII
COVENANTS OF BUYER
Buyer and Merger Subsidiary agree that:
SECTION 7.1 VOTING OF SHARES. Except as otherwise permitted by the Option
Agreement, at the Company Stockholder Meeting, Buyer and Merger Subsidiary shall
vote all Shares, if any, which they have the right to vote in favor of adoption
and approval of this Agreement at the Company Stockholder Meeting.
SECTION 7.2 REGISTRATION STATEMENT AND COMPANY PROXY STATEMENT. Buyer
will, as promptly as practicable following the date of this Agreement, prepare
and, following receipt of notification from the SEC that it has no further
comments on the Company Proxy Statement, file with the SEC a
30
registration statement on Form S-4 (the "Form S-4 Registration Statement"),
containing the Company Proxy Statement, and the prospectus in connection with
the registration under the Securities Act of Buyer Common Shares issuable upon
conversion of the Shares and the other transactions contemplated hereby and will
use its reasonable efforts to have the Form S-4 Registration Statement declared
effective by the SEC as promptly as practicable. Buyer will cooperate with the
Company in the preparation and filing of the Company Proxy Statement and will
provide the Company with all financial and other data concerning Buyer
(including, if required, pro forma financial statements and financial and other
data regarding the other parties to the transactions described in Schedule 7.2
of Buyer Disclosure Schedule) as is necessary in order for the Company to
prepare the Company Proxy Statement.
SECTION 7.3 BLUE SKY PERMITS. Buyer shall use its reasonable efforts to
obtain, prior to the effective date of the Form S-4 Registration Statement, all
necessary state securities laws or "blue sky" permits and approvals required to
carry out the transactions contemplated by this Agreement and the Merger, and
will pay all expenses incident thereto; provided, however, that the foregoing
shall not require Buyer to submit to jurisdiction or require it to qualify to do
business in any jurisdiction where it is not presently required to submit to
jurisdiction or be qualified to do business.
SECTION 7.4 NYSE LISTING. Buyer shall use its reasonable efforts to cause
the shares of Buyer Common Stock constituting the Merger Consideration to be
listed on the NYSE, subject to notice of official issuance thereof.
SECTION 7.5 INDEMNIFICATION. Buyer agrees that all rights to
indemnification and limitation of liability now existing in favor of the
employees, agents, directors or officers of the Company as provided in the
Company Certificate of Incorporation and Company Bylaws shall survive the Merger
and shall continue in full force and effect for three years after the Effective
Time. Any permissive provision therein relating to rights of indemnification
shall be deemed mandatory to the maximum extent permitted by law.
SECTION 7.6 EMPLOYEE BENEFITS. For a period of at least one year following
the Effective Time, Buyer shall cause the Surviving Corporation to maintain
pension and welfare benefit plans for the employees of the Company providing
benefits in the aggregate at least substantially equivalent to benefit plans for
such employees in place immediately prior to the Effective Time and, following
the expiration of such one-year period, the Surviving Corporation shall, at its
sole option, continue to provide benefits to such employees which are either (x)
comparable to those provided pursuant to such pension and welfare benefit plans
as were maintained by the Company at March 31, 1996 or (y) comparable to those
provided to employees of WTI from time-to-time.
ARTICLE VIII
COVENANTS OF BUYER, MERGER SUBSIDIARY
AND THE COMPANY
The parties hereto agree that:
SECTION 8.1 REASONABLE EFFORTS; COOPERATION; POOLING OF INTERESTS. (a)
Upon the terms and subject to the conditions set forth in this Agreement, each
of Buyer, Merger Subsidiary and the Company agrees to use its reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things necessary,
proper or advisable, to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including, but not limited to: (i) the obtaining of all necessary
actions or non-actions, waivers, consents and approvals from all Governmental
Entities and the making of all necessary registrations and filings with, and the
taking of all other reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an
31
action or proceeding by, any Governmental Entity; (ii) the obtaining of all
necessary consents, approvals or waivers from Persons other than Governmental
Entities, including under Material Contracts; (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed; and (iv)
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by this Agreement.
(b) Each of Buyer, Merger Subsidiary and the Company shall cooperate and
work together, with its respective accountants, with the objective that the
Merger will qualify as a pooling of interests under GAAP.
(c) Each of Buyer, Merger Subsidiary and the Company shall use its
reasonable efforts not to take any action, or to enter into any transaction,
which would cause any of its representations or warranties contained in this
Agreement to be untrue in any material respect or to result in a material breach
of any of its covenants in this Agreement.
SECTION 8.2 PUBLIC ANNOUNCEMENTS. Buyer and the Company will consult with
each other before issuing any press release or making any public statement with
respect to this Agreement and the transactions contemplated hereby, and afford
each other a reasonable opportunity to review and comment on the foregoing and,
except as may be required by applicable law or any listing agreement with any
national securities exchange or National Association of Securities Dealers, Inc.
as determined by Buyer, Merger Subsidiary or the Company, as the case may be,
will not issue any such press release or make any such public statement prior to
such consultation and opportunity to review and comment.
SECTION 8.3 FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
SECTION 8.4 SAMANS AND OTHER EMPLOYMENT AGREEMENTS. At the Effective Time,
the Company and Samans shall enter into an employment agreement (the "Samans
Employment Agreement") and Buyer and Mr. Samans shall enter into the
Non-Competition Agreement in the form of Exhibits 1 and 2 hereto, respectively,
Buyer shall deliver to Samans a promissory note in form of Exhibit 3 hereto (the
"Buyer Promissory Note"), and the Company shall enter into employment agreements
with certain members of management specified by Buyer and reasonably agreed to
by Samans (the "Employment Agreements").
SECTION 8.5 AMENDMENT OF SAMANS PROMISSORY NOTE. At the Effective Time,
the promissory note, dated January 1, 1994, the outstanding principal balance of
which will be no more than $406,000, evidencing loans made by the Company to
Samans (the "Samans Promissory Note") will be replaced by an amended and
restated promissory note in the terms set forth on Exhibit 4 hereto (the
"Amended Samans Promissory Note").
SECTION 8.6 EFFECTIVE REGISTRATION STATEMENT. Buyer and the Company will,
and will cause their accountants and lawyers to, use their reasonable efforts to
have or cause the Form S-4 Registration Statement declared effective as promptly
as practicable, including, without limitation, causing their accountants to
deliver necessary or required instruments such as opinions and certificates, and
will take any other action required or necessary to be taken under federal or
state securities laws or otherwise in connection with the registration process.
32
SECTION 8.7 TAX-FREE REORGANIZATION TREATMENT. The Company and Buyer and
Merger Subsidiary shall execute and deliver to Wolf, Block, Schorr and
Solis-Cohen, special counsel to the Company, certificates substantially in the
form attached hereto as Exhibit 5 and Exhibit 6 (the "Company Tax Certificate"
and the "Buyer Tax Certificate", respectively) at such time or times as
reasonably requested by such law firm in connection with its delivery of an
opinion with respect to the transactions contemplated hereby, and shall provide
a copy thereof to Buyer and the Company. Prior to the Effective Time, none of
the Company, Buyer and Merger Subsidiary shall take or cause to be taken any
action which would cause to be untrue (or fail to take or cause not to be taken
any action which would cause to be untrue) any of the information,
representations or covenants in Exhibit 5 or Exhibit 6, as the case may be.
SECTION 8.8 NOTIFICATION OF CERTAIN MATTERS. (a) The Company shall give
prompt notice to Buyer, and Buyer shall give prompt notice to the Company, of
(i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence
of which would be likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time, (ii) any material failure of the Company, Buyer or Merger
Subsidiary, as the case may be, to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it hereunder, (iii) any notice of, or other communication relating to, a default
or event which, with notice or lapse of time or both, would become a default,
received by it or any of its Subsidiaries subsequent to the date of this
Agreement and prior to the Effective Time, under any material contract or
agreement, (iv) any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by this Agreement, or (v) any Material Adverse
Effect; PROVIDED, HOWEVER, that the delivery of any notice pursuant to this
Section 8.8 shall not cure such breach or noncompliance or limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
(b) Advice of Changes. The Company shall confer on a regular and frequent
basis with Buyer with respect to the Company's business and operations and other
matters relevant to the Merger, and Buyer and the Company shall promptly advise
the other, orally and in writing, of any change or event, including, without
limitation, any complaint, investigation or hearing by any Governmental Entity
(or communication indicating the same may be contemplated) or the institution or
threat of litigation, having, or which, insofar as can be reasonably foreseen,
would have, a Material Adverse Effect on the Company or Buyer or on the ability
of the Company or Buyer to consummate the transactions contemplated hereby.
SECTION 8.9 POOLING. The Company and Buyer each agrees that it will not,
to its Knowledge, take any action which could prevent the Merger from being
accounted for as a pooling of interests for accounting purposes (under
Accounting Principles Board Opinion No. 16) and the Company will bring to the
attention of Buyer, and Buyer will bring to the attention of the Company, any
actions, or agreements or understandings, whether written or oral, that would be
reasonably likely to prevent Buyer from accounting for the Merger as a pooling
of interests. Each of the Company and Buyer will use its reasonable efforts to
inform all of its Affiliates and other relevant employees as to those actions
that should or should not be taken by such Persons so that the Merger will be
accounted for as a pooling of interests.
SECTION 8.10 SEC FILINGS. Each of Buyer and the Company shall promptly
provide the other party (or its counsel) with copies of all filings made by the
other party or its Affiliates with the SEC or any other state or federal
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby and to provide each other with all of its SEC filings under
the Securities Act or Exchange Act after the date of this Agreement.
SECTION 8.11 AFFILIATES. (a) Prior to the Effective Time, the Company
shall cause to be prepared and delivered to Buyer a list (reasonably
satisfactory to counsel for Buyer) identifying each
33
Person who, at the time of the Company Stockholder Meeting, may be deemed to be
an "affiliate" of the Company, as such term is used in paragraphs (c) and (d) of
Rule 145 under the Securities Act (the "Company Rule 145 Affiliates"). The
Company shall use its reasonable efforts to cause each Person who is identified
as a Company Rule 145 Affiliate in such list to deliver to Buyer on or prior to
the Effective Time a written agreement, in form previously approved by the
parties hereto (the "Affiliate Letter"), that such Company Rule 145 Affiliate
will not (i) sell, pledge, transfer or otherwise dispose of, or in any other way
reduce such Company Rule 145 Affiliate's risk relative to, any Shares or any
shares of Buyer Common Stock issued to such Company's Rule 145 Affiliate in
connection with the Merger, except pursuant to an effective registration
statement or in compliance with such Rule 145 or another exemption from the
registration requirements of the Securities Act or (ii) sell or in any other way
reduce such Company Rule 145 Affiliate's risk relative to any Shares or any
shares of Buyer Common Stock received in the Merger (within the meaning of
Section 201.01 of the SEC's Financial Reporting Release No. 1) during the period
commencing 30 days prior to the Effective Time and ending at such time as
financial results (including combined sales and net income) covering at least 30
days of post-Merger operations have been published by Buyer except as permitted
by Staff Accounting Bulletin No. 76 issued by the SEC.
(b) Promptly upon the Company obtaining Knowledge of Persons who, to the
Knowledge of the Company, following the date of this Agreement until the
Effective Time, become "affiliates" of the Company for purposes of Rule 145 of
the Securities Act, the Company shall identify any such Person in writing to
Buyer, and will use its reasonable efforts to cause such Persons prior to the
mailing of the Company Proxy Statement, or if thereafter as soon as reasonably
practicable, to deliver to Buyer an Affiliate Letter; PROVIDED, HOWEVER, that
the Company will not affirmatively, without the prior written consent of Buyer,
take any action, by hiring or appointing a new officer or director or otherwise,
so as to cause any Person to become an "affiliate" unless such Person executes
an Affiliate Letter prior thereto.
(c) Prior to the Effective Time, Buyer shall cause to be prepared and
delivered to the Company a list (reasonably satisfactory to counsel for the
Company) identifying each Person who, at the time of the Company Stockholder
Meeting, may be deemed to be an "affiliate" of Buyer, as such term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act (the "Buyer Rule 145
Affiliates"). Buyer shall use its reasonable efforts to cause each Person who is
identified as a Buyer Rule 145 Affiliate in such list to deliver to the Company
on or prior to the Effective Time an Affiliate Letter that such Buyer Rule 145
Affiliate will not sell, pledge, transfer or otherwise dispose of, or in any
other way reduce such Buyer Rule 145 Affiliate's risk relative to, any Shares or
any shares of Buyer Common Stock during the period commencing 30 days prior to
the Effective Time and ending at such time as the financial results (including
combined sales and net income) covering at least 30 days of post-Merger
operations have been published by Buyer except as permitted by Staff Accounting
Bulletin No. 76 issued by the SEC. As soon as reasonably practicable, but in no
event later than 45 days after the end of the first full fiscal quarter of Buyer
which includes results covering at least 30 days of post-Merger combined
operations of Buyer and the Company, Buyer shall publish its results of
operations for such fiscal quarter.
SECTION 8.2 REVIEW LETTERS. (a) The Company shall use its reasonable
efforts to cause to be delivered to Buyer "review" letters of Grant Thornton
LLP, the Company's independent public accountants, dated the date on which the
Form S-4 Registration Statement shall become effective and as of the date of the
Company Stockholder Meeting, and addressed to Buyer and the Company, in the form
and substance reasonably satisfactory to Buyer and as is reasonably customary in
scope and substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
(b) Buyer shall use its reasonable efforts to cause to be delivered to the
Company "review" letters of Deloitte & Touche LLP, Buyer's independent public
accountants, dated the date on which the Form
34
S-4 Registration Statement shall become effective and as of the date of the
Company Stockholder Meeting, and addressed to the Company and Buyer, in form and
substance reasonably satisfactory to the Company and as is reasonably customary
in scope and substance for letters delivered by independent public accountants
in connection with transactions such as those contemplated by this Agreement.
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations
of the Company, Buyer and Merger Subsidiary to consummate the Merger are subject
to the satisfaction on or prior to the Effective Time of the following
conditions, subject, to the extent permitted by applicable law, that such
conditions may be waived by the Company and Buyer:
(i) STOCKHOLDER APPROVAL. The Merger shall have been duly approved by
a majority of the outstanding Shares entitled to vote thereon in accordance
with applicable law.
(ii) LISTING OF BUYER COMMON STOCK. The shares of Buyer Common Stock
issuable in accordance with the Merger shall have been approved for listing
on the NYSE, subject to official notice of issuance.
(iii) REGISTRATION STATEMENT. The Form S-4 Registration Statement
shall have become effective in accordance with the provisions of the
Securities Act, and no order suspending such effectiveness shall have been
issued and remain in effect.
(iv) APPROVALS. All authorizations, consents, orders, declarations or
approvals of, or filings with, or terminations or expirations of waiting
periods imposed by, any Governmental Entity, shall have been obtained, shall
have been made or shall have occurred.
(v) NO INJUNCTION OR LITIGATION. (A) No provision of any applicable
law or regulation and no judgment, injunction, order or decree shall make
illegal or otherwise restrict, prevent or prohibit the consummation of the
Merger or any transactions contemplated hereby and (B) there shall not have
been instituted or be pending, or threatened, any suit, action or proceeding
by (x) any Governmental Entity to restrain, prohibit or invalidate the
Merger or (y) by any other Person which is more likely than not to have such
effect.
SECTION 9.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations
of the Company to consummate the Merger are subject to the satisfaction on or
prior to the Effective Time of the following conditions, subject, to the extent
permitted by applicable law, that such conditions may be waived by the Company:
(i) PERFORMANCE OF OBLIGATIONS OF BUYER AND MERGER SUBSIDIARY. Each of
Buyer and Merger Subsidiary will have performed in all material respects its
agreements and covenants contained in or contemplated by this Agreement
which are required to be performed by it at or prior to the Effective Time.
(ii) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer and Merger Subsidiary set forth in this Agreement shall
be true and correct in all material respects (i) on and as of the date
hereof and (ii) on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing
Date (except for representations and warranties that expressly speak only as
of a specific date or time which need only be true and correct as of such
date and time).
35
(iii) CLOSING CERTIFICATE. The Company shall have received a
certificate signed by the Chief Executive Officer or Chief Operating Officer
of Buyer, dated the Closing Date, to the effect that, the conditions set
forth in Section 9.2(i) and 9.2(ii) hereof have been satisfied.
(iv) TAX OPINION. The Company shall have received an opinion of Wolf,
Block, Schorr and Solis-Cohen, counsel to the Company, in form and substance
reasonably satisfactory to the Company, dated as of the Effective Time,
substantially to the effect that on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts then existing, the Merger will be treated as a reorganization within
the meaning of Section 368(a) of the Code, and, accordingly, for United
States federal income tax purposes, that:
(A) no gain or loss will be recognized by the Company, Buyer or Merger
Subsidiary as a result of the Merger;
(B) no gain or loss will be recognized by any stockholder of the Company
whose Shares are exchanged solely for Buyer Common Stock pursuant to
the Merger (except with respect to cash received by a holder of
Shares in lieu of a fractional share interest in Buyer Common Stock);
(C) the tax basis of Buyer Common Stock received by a holder of Shares
in the Merger will be the same as the tax basis of the Shares
surrendered in exchange therefor (reduced by any amount allocable to
a fractional share interest in Buyer Common Stock for which cash is
received); and
(D) the holding period of the shares of Buyer Common Stock received by a
holder of Shares in the Merger will include the period during which
such Shares surrendered in exchange therefor were held, provided that
such Shares were held as capital assets at the Effective Time.
In rendering such opinion, such firm may require and rely upon
representations contained in the Buyer Tax Certificate, the Company Tax
Certificate and such other certificates from such other Persons as such firm may
reasonably require. Such an opinion may contain such further assumptions and
qualifications as are customary in legal opinions concerning federal income
taxation.
(v) BUYER RULE 145 AFFILIATE AGREEMENTS. The Company shall have
received the Affiliate Letters specified in Section 8.11(c) from Buyer Rule
145 Affiliates.
(vi) OPINION OF BUYER'S AND MERGER SUBSIDIARY'S COUNSEL. The Company
shall have received the opinion of Skadden, Arps, Slate, Meagher & Flom,
counsel to the Buyer and Merger Subsidiary, in a form reasonably
satisfactory to counsel to the Company, substantially to the effect set
forth in Annex A hereto.
SECTION 9.3 CONDITIONS TO THE OBLIGATIONS OF BUYER AND MERGER
SUBSIDIARY. The obligations of Buyer and Merger Subsidiary to consummate the
Merger are subject to the satisfaction on or prior to the Effective Time of the
following conditions, subject, to the extent permitted by applicable law, that
such conditions may be waived by Buyer:
(i) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company will have
performed in all material respects its agreements and covenants contained in
or contemplated by this Agreement which are required to be performed by it
at or prior to the Effective Time.
(ii) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct in all material respects (i) on and as of the
36
date hereof and (ii) on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date (except for representations and warranties that expressly speak
only as of a specific date or time which need only be true and correct as of
such date and time).
(iii) CLOSING CERTIFICATE. Buyer and Merger Subsidiary shall have
received a certificate signed by the President or Treasurer of the Company,
dated the Closing Date, to the effect that, the conditions set forth in
Section 9.3(i), 9.3(ii) and 9.3(vi) hereof have been satisfied.
(iv) MATERIAL ADVERSE EFFECT, ETC. Since the date of this Agreement,
there shall have been no event, occurrence or facts which have or would
reasonably be expected to have a Material Adverse Effect with respect to the
Company or result in any material reduction in revenues from its largest
customer and (ii) the Company shall reasonably expect, as of the Closing
Date, to generate net income, before net interest expense, income taxes,
depreciation and amortization, for its fiscal year ended September 30, 1996
in an amount not materially less than the amount specified in the Company's
budget dated as of June 21, 1996 which has previously been provided to
Buyer; and Buyer shall have received a certificate, dated the Closing Date,
signed on behalf of Company by its President or its Treasurer to such
effect.
(v) AFFILIATE AGREEMENTS. Buyer shall have received the Affiliate
Letters specified in Section 8.12(a) from Company Rule 145 Affiliates.
(vi) FINANCIAL CONDITIONS. As shown on the most recent monthly
financial statements of the Company delivered pursuant to Section 6.6 hereof
prior to the Effective Time, in each case, to the extent applicable, as
determined in accordance with GAAP and utilizing the same accounting
principles and practices as set forth in the audited Company Financial
Statements, the Company shall have (a) outstanding Indebtedness of no more
than $5,100,000, (b)(1) net working capital, including Cash ("Cash" for this
purpose meaning all cash and cash equivalents of the Company, less all costs
and expenses incurred or to be incurred or payable by the Company relating
to the Merger, whether or not accrued, and not yet paid as the date of such
balance sheet (but the calculation of net working capital shall exclude (i)
any such amounts reflected as current liabilities which have been already
accrued and (ii) any such amounts reflected in current assets as prepaid
expenses which have not yet been expensed)), of at least $4,800,000
(excluding the current portion of outstanding Indebtedness and notes
receivable), which minimum requirement shall be increased by any proceeds
received by the Company from any exercise of any Options and (2) cash and
cash equivalents (less Excess Cash) in excess of outstanding customer
advances; (c) book equity of at least $7,200,000; and (d) collected any
receivables owing to the Company from Affiliates and have no payables
accrued, unaccrued or contingent owing to Affiliates other than payables in
the ordinary course of business consistent with past practice for
compensation owing to directors, officers or employees or payables and
receivables which are permitted to be outstanding by Section 6.7 hereof;
PROVIDED, HOWEVER, that in the event that as of or prior to the Effective
Time (A) the Company has purchased, received delivery of and installed a new
printing press, with a fully installed cost of no more than $1,300,000 and
on terms (other than dollar amount) reasonably satisfactory to Buyer, and/or
(B) the Company has made a loan to Elite, in an amount of not more than
$200,000 and on terms (other than dollar amount) reasonably satisfactory to
Buyer, and/or (C) the Company has purchased two Siemens duplex imagers and
related equipment for not more than $970,000 and on terms other than the
dollar amount reasonably satisfactory to Buyer, the amount of Indebtedness
in clause (a) above and the amount of net working capital in clause (b)
above shall be adjusted as follows: (x) to the extent that the total cash
utilized for such transactions is $700,000 or less, the amount of net
working capital specified in the foregoing clauses shall be decreased by the
amount of cash so utilized and (y) to the extent that the total cash
utilized for such transactions is greater than $700,000, the amount of net
working capital specified shall be decreased by the amount of cash so
utilized and the amount of
37
Indebtedness specified shall be increased by the amount of Indebtedness
incurred in connection with such transactions but, in any event, (i) the
amount of Indebtedness shall be increased by no more than $1,000,000 and
(ii) the sum of the absolute value of the decrease in net working capital
and the increase in the amount of Indebtedness pursuant to this clause (y)
shall not exceed the amount by which total cash utilized for such
transactions is greater than $700,000.
(vii) DISSENTING SHARES. Appraisal rights pursuant to Section 262 of
the DGCL shall not have been perfected by holders of Shares with respect to
more than 225,000 Shares.
(viii) CONSENTS UNDER AGREEMENTS. The consent or approval of each
Person (other than Governmental Entities) whose consent or approval shall be
required in connection with the transactions contemplated hereby under any
indenture, mortgage, evidence of indebtedness, lease or other agreement or
instrument, except where the failure to obtain the same would not reasonably
be expected to have a Material Adverse Effect on the Company (or the
Surviving Corporation following the Merger), or the consummation of the
transactions contemplated hereby shall have been obtained.
(ix) POOLING. Buyer shall have received a letter from Deloitte &
Touche LLP to the effect that pooling of interests accounting (under
Accounting Principles Board Opinion No. 16) is appropriate for the Merger,
provided that the Merger is consummated in accordance with the terms of this
Agreement.
(x) EMPLOYMENT AND NON-COMPETITION AGREEMENTS. The Company and Samans
shall have entered into the Samans Employment Agreement; Samans shall have
entered into the Non-Competition Agreement with Buyer; and the other
individuals identified by Buyer pursuant to Section 8.4 hereof shall have
entered into the Employment Agreements with the Company.
(xi) EMPLOYEE STOCK OPTION CONSENTS. The Company shall have delivered
to Buyer all consents, if any, referenced in the last sentence of Section
1.10 relating to the treatment of outstanding Options.
(xii) OPINION OF COMPANY'S COUNSEL. Buyer and Merger Subsidiary shall
have received the opinion of Wolf, Block, Schorr and Solis-Cohen, counsel to
the Company, in a form reasonably satisfactory to counsel to Buyer and
Merger Subsidiary, substantially to the effect set forth in Annex B hereto.
(xiii) CONTINUED RELATIONSHIPS. Buyer shall be reasonably satisfied
that the Company's relationship with its largest customer will continue for
the foreseeable future following the Merger on terms at least as favorable
to the Company as those in effect during the eight-month period prior to May
31, 1996.
ARTICLE X
TERMINATION
SECTION 10.1 TERMINATION. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by the stockholders of the Company):
(i) by mutual written consent of the Company and Buyer;
(ii) by either the Company or Buyer, if the Merger has not been
consummated by January 31, 1997 (as such date may be extended by mutual
agreement or pursuant to the proviso to this sentence, the "Outside
Termination Date"); PROVIDED, HOWEVER, that the right to terminate
38
this Agreement under this paragraph shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure to consummate the Merger by the
Outside Termination Date;
(iii) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of the Merger illegal or if any judgment,
injunction, order or decree enjoining Buyer or the Company from consummating
the Merger is entered and such judgment, injunction, order or decree shall
become final and nonappealable;
(iv) by the Company if (A) there shall have been a breach of any
representation or warranty on the part of Buyer or Merger Subsidiary set
forth in this Agreement, or if any representation or warranty of Buyer or
Merger Subsidiary shall have become untrue, in either case such that the
condition set forth in Section 9.2(ii) would be incapable of being satisfied
by the Outside Termination Date or (B) there shall have been a breach by
Buyer or Merger Subsidiary of any of their respective covenants or
agreements hereunder having a Material Adverse Effect on Buyer or materially
adversely affecting (or materially delaying) the consummation of the Merger,
and Buyer or Merger Subsidiary, as the case may be, has not cured such
breach within 30 business days after notice by the Company thereof;
(v) by Buyer if (A) there shall have been a breach of any representation
or warranty on the part of the Company set forth in this Agreement, or if
any representation or warranty of the Company shall have become untrue, in
either case such that the condition set forth in Section 9.3(ii) would be
incapable of being satisfied by the Outside Termination Date or (B) there
shall have been a breach by the Company of its covenants or agreements
hereunder having a Material Adverse Effect on the Company or materially
adversely affecting (or materially delaying) the consummation of the Merger,
and the Company has not cured such breach within 30 business days after
notice by Buyer or Merger Subsidiary thereof;
(vi) by Buyer if the Board of Directors of the Company shall not have
recommended the Merger to the Company's stockholders, or shall have
withdrawn or modified in a manner adverse to Buyer such recommendation, or
shall have withdrawn or modified its approval of this Agreement, or shall
have resolved to do any of the foregoing;
(vii) by either Buyer or the Company if the Board of Directors of the
Company determines that an Acquisition Proposal is a Superior Proposal;
PROVIDED, HOWEVER, that the Company may not terminate this Agreement
pursuant to this clause (vii) unless (x) the Company has complied with its
obligations under Section 6.4, (y) ten business days (the "Period") shall
have elapsed after delivery by the Company to Buyer of a notice of such
determination by its Board of Directors and during the Period the Company
shall have fully cooperated with Buyer with the objective of enabling Buyer
to modify the terms of the Merger so that the Merger may be consummated, and
(z) at the end of the Period the Board of Directors shall have again made a
determination that such Acquisition Proposal is a Superior Proposal and
promptly thereafter the Company and the Third Party (as defined in Section
6.4) which made such Acquisition Proposal enter into a definitive agreement
to effect such Acquisition Proposal;
(viii) by either Buyer or the Company, if, at any time following the
receipt by the Company of an Acquisition Proposal (as defined in Section
6.4) or the taking by the Company of any action pursuant to the proviso to
Section 6.4, the Company Stockholder Meeting is held and the Company's
stockholders fail to approve the Merger by the requisite vote; PROVIDED,
HOWEVER, that Buyer may not terminate this Agreement under this subsection
unless Buyer shall have executed and delivered to the Company a proxy (which
it has not revoked) with respect to the Shares subject to the Option
Agreement voting such Shares in favor of the approval and adoption of this
Agreement;
39
(ix) by Buyer, if the Average Stock Price is greater than $16.50; or
(x) by the Company, if the Average Stock Price is less than $11.50.
The party desiring to terminate this Agreement pursuant to this Section 10.1
(other than with respect to Section 10.1 (i)) shall give written notice of such
termination to the other party.
SECTION 10.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 10.1 hereof, this Agreement shall become void and of no
effect with no liability on the part of any party hereto; PROVIDED that (i) the
agreement contained in Sections 8.2 and 12.4 hereof shall survive the
termination hereof; (ii) the Confidentiality Agreement and provisions in Section
6.3 hereof with respect thereto shall remain in full force and effect and (iii)
nothing contained in this Section 10.2 shall relieve any party from liability
for any breach of this Agreement.
ARTICLE XI
DEFINED TERMS
For the purposes of this Agreement, the following terms shall have the
following respective meanings:
"Acquisition Proposal" shall have the meaning set forth in Section 6.4. (a).
"Affiliate" shall have the meaning set forth in Rule 12b-2 under the
Exchange Act.
"Affiliate Letter" shall have the meaning set forth in Section 8.12 (a)
hereof.
"Agreement" shall have the meaning set forth in the Introduction.
"Amended Samans Promissory Note" shall have the meaning set forth in Section
8.5.
"Average Stock Price" shall have the meaning set forth in Section 1.2 (a).
"blue sky" shall have the meaning set forth in Section 7.3.
"Buyer" shall have the meaning set forth in the Introduction.
"Buyer Certificates" shall have the meaning set forth in Section 1.3 (a).
"Buyer Class B Common Stock" shall have the meaning set forth in Section
5.5.
"Buyer Common Stock" shall have the meaning set forth in the Introduction.
"Buyer Credit Agreement" shall mean the Credit Agreement, dated as of
November 28, 1995 and as amended and restated as of March 19, 1996, among Buyer,
Treasure Chest Advertising Company, Inc., various banks, Bank of America NT &
SA, The Industrial Bank of Japan Limited and Nationsbank, N.A. , as co-agents,
Credit Suisse, as Documentation Agent and Bankers Trust Company, as
Administrative Agent.
"Buyer Preferred Stock" shall have the meaning set forth in Section 5.5.
"Buyer Promissory Note" shall have the meaning set forth in Section 8.4.
"Buyer Rule 145 Affiliates" shall have the meaning set forth in Section 8.11
(c).
"Buyer SEC Documents" shall have the meaning set forth in Section 5.7.
"Buyer Securities" shall have the meaning set forth in Section 5.5.
"Buyer Tax Certificate" shall have the meaning set forth in Section 8.7.
"Cap-Ex Budget" shall have the meaning set forth in Section 4.13 (h).
40
"Carcioppolo" shall have the meaning set forth in Section 4.10.
"Cash" shall have the meaning set forth in Section 9.3 (vi).
"Certificate of Merger" shall have the meaning set forth in Section 1.1 (b).
"Closing" shall have the meaning set forth in Section 2.1.
"Closing Date" shall have the meaning set forth in Section 2.1.
"Code" shall have the meaning set forth in the Introduction.
"Company" shall have the meaning set forth in the Introduction.
"Company By-laws" shall have the meaning set forth Section 2.2 (d).
"Company Certificate of Incorporation" shall have the meaning set forth in
Section 2.2 (d).
"Company Disclosure Schedule" shall have the meaning set forth in Section
4.1.
"Company Financial Statements" shall have the meaning set forth in Section
4.8.
"Company Proxy Statement" shall have the meaning set forth in Section 6.2
(a).
"Company Rule 145 Affiliate" shall have the meaning set forth in Section
8.11 (a).
"Company SEC Documents" shall have the meaning set forth in Section 4.7.
"Company Securities" shall have the meaning set forth in Section 4.5.
"Company Stockholder Meeting" shall have the meaning set forth in Section
6.2.
"Company Tax Certificate" shall have the meaning set forth in Section 8.7.
"Confidentiality Agreement" shall have the meaning set forth in Section 6.3.
"Conversion Number" shall have the meaning set forth in Section 1.2 (a).
"Conveyance Taxes" shall have the meaning set forth in Section 6.5.
"Data Command" shall have the meaning set forth in Section 6.8 hereof.
"Dissenting Shares" shall have the meaning set forth in Section 1.11 (a).
"DGCL" shall have the meaning set forth in Section 1.1 (a).
"Effective Time" shall have the meaning set forth in Section 1.1 (b).
"Elite" shall have the meaning set forth in Section 4.12.
"employee pension benefit plan" shall have the meaning set forth in Section
4.16 (a).
"employee welfare benefit plan" shall have the meaning set forth in Section
4.16 (a).
"Employment Agreements" shall have the meaning set forth in Section 8.4
hereof.
"Environmental Claim" shall have the meaning set forth in Section 4.20 (a).
"Environmental Laws" shall have the meaning set forth in Section 4.20 (a).
"ERISA" shall have the meaning set forth in Section 4.16 (a).
"ERISA Affiliate" shall have the meaning set forth in Section 4.16 (a).
"ERISA Plans" shall have the meaning set forth in Section 4.16 (a).
"Excess Cash" shall have the meaning set forth in Section 6.10 hereof.
41
"Exchange Act" shall have the meaning set forth in Section 4.3.
"Exchange Agent" shall have the meaning set forth in Section 1.3 (a).
"Exchange Fund" shall have the meaning set forth in Section 1.3 (a).
"Fleet" shall have the meaning set forth in Section 4.34.
"Form S-4 Registration Statement" shall have the meaning set forth in
Section 7.2
"GAAP" shall have the meaning set forth in Section 4.8.
"Governmental Entity" shall have the meaning set forth in Section 4.3.
"HSR Act" shall have the meaning set forth in Section 4.3.
"Indebtedness" as applied to any Person, shall mean: (a) all indebtedness
for borrowed money; (b) that portion of obligations with respect to capital
leases that is properly classified as a liability on a balance sheet in
conformity with GAAP; (c) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money;
(d) any obligation owed for all or any part of the deferred purchase price of
property or services if the purchase price is due more than six (6) months from
the date the obligation is incurred or is evidenced by a note or similar written
instrument; (e) all indebtedness secured by any Lien on any property or asset
owned or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the credit
of that Person and (f) any guarantee of any of the above. For purposes of
Section 9.3 (vi), Indebtedness shall also include any amounts due, including
premiums and penalties, upon prepayment of outstanding Indebtedness and any
negative cash balance.
"Intangible Property" shall have the meaning set forth in Section 4.22 (a).
"Janney" shall have the meaning set forth in Section 4.11.
"Knowledge" shall mean, with respect to the Company, the actual knowledge,
after due inquiry, of any officer of the Company (and shall include for purposes
of the representation and warranties made pursuant to Section 4.20 hereof, the
person in charge of risk management or environmental matters for the Company)
and shall mean, with respect to Buyer, the executive officers of Buyer.
"Licenses" shall have the meaning set forth in Section 4.26.
"Lien" shall have the meaning set forth in Section 4.4.
"Material Adverse Effect" shall have the meaning set forth in Section 4.1.
"Material Contracts" shall have the meaning set forth in Section 4.23 (b).
"Materials of Environmental Concern" shall have the meaning set forth in
Section 4.20 (a).
"Measurement Period" shall have the meaning set forth in Section 1.2 (a).
"Merger" shall have the meaning set forth in the Introduction.
"Merger Consideration" shall have the meaning set forth in Section 1.2 (a).
"Merger Subsidiary" shall have the meaning set forth in the Introduction.
"multiemployer plan" shall have the meaning set forth in Section 4.16 (c).
"Non-Competition Agreement" set forth in Section 8.4.
"NYSE" shall have the meaning set forth in Section 1.2 (a).
"Option" shall have the meaning set forth in Section 1.10.
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"Option Agreement" shall have the meaning set forth in Section 4.10.
"Outside Termination Date" shall have the meaning set forth in Section 10.1
(ii).
"Period" shall have the meaning set forth in Section 10.1 (vii).
"Permitted Lien" shall mean, as to any Person: (a) Liens for Taxes,
assessments and governmental charges or levies not yet due and payable; (b)
Liens imposed by law, such as materialmen's, mechanics', carriers', workmen's
and repairmen's Liens and other similar Liens arising in the ordinary course of
business securing obligations that (i) are not overdue for a period of more than
30 days or (ii) are being contested in good faith (and for which adequate
reserves have been provided); and (c) with respect to real property to the
extent the same do not (x) render title to the property encumbered thereby
unmarketable and (y) individually or in the aggregate, materially adversely
affect the value or use of such property for its current purposes, (i) survey
exceptions, (ii) reciprocal easement agreements, and (iii) other customary
non-monetary encumbrances on title to real property; provided, however, that
none of the foregoing in clauses (a) through (c) shall have a Material Adverse
Effect on the Company.
"Person" shall have the meaning set forth in Section 1.4.
"Phase I Study Conclusions and Recommendations" shall have the meaning set
forth in Section 4.20 (b).
"Plans" shall have the meaning set forth in Section 4.16 (a)
"Preferred Stock" shall have the meaning set forth in Section 4.5.
"Representative" shall have the meaning set forth in Section 4.19.
"Representatives" shall have the meaning set forth in Section 6.4.
"Samans" shall have the meaning set forth in Section 2.4 (a).
"Samans Employment Agreement" shall have the meaning set forth in Section
8.4.
"Samans Promissory Note" shall have the meaning set forth in Section 8.5.
"SCFM Agreement" shall have the meaning set forth in Section 4.11
"SEC" shall have the meaning set forth in Section 4.7.
"Secretary of State" shall have the meaning set forth in Section 1.1 (b).
"Securities Act" shall have the meaning set forth in Section 4.3.
"Share Certificates" shall have the meaning set forth in Section 1.3 (b).
"Shares" shall have the meaning set forth in the Introduction.
"single employer" shall have the meaning set forth in Section 4.16 (a).
"SPD" shall have the meaning set forth in Section 4.16(b)
"Stock Option Plan" shall have the meaning set forth in Section 1.10.
"Subsidiary" shall have the meaning set forth in Section 4.6 (a).
"Substitute Option" shall have the meaning set forth in Section 1.10.
"Superior Proposal" shall have the meaning set forth in Section 6.4.
"Surviving Corporation" shall have the meaning set forth in Section 1.1 (a).
"Tax Return" shall have the meaning set forth in Section 4.15 (b) (ii).
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"Taxes" shall have the meaning set forth in Section 4.15(b)(i).
"Termination Fee" shall have the meaning set forth in Section 12.4 (b).
"Third Party" shall have the meaning set forth in Section 6.4.
"Trust" shall have the meaning set forth in Section 4.33.
"WARN Act" shall have the meaning set forth in Section 4.17.
"WTI" shall have the meaning set forth in the Introduction.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile or similar writing)
and shall be given,
if to Buyer or Merger Subsidiary, to:
Big Flower Press Holdings, Inc.
3 East 54th Street
New York, New York 10022
Facsimile: (212) 223-4074
Attention: Associate General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Facsimile: (212) 735-2000
Attention: Blaine V. Fogg, Esq.
if to the Company, to:
Scanforms, Inc.
181 Rittenhouse Circle
Keystone Park
Bristol, Pennsylvania 19007
Facsimile: (215) 785-1501
Attention: Robert A. Samans
Chairman and President
with a copy to:
Wolf, Block, Schorr and Solis-Cohen
S.E. Corner 15th and Chestnut Streets
Philadelphia, Pennsylvania 19102-2678
Facsimile: (215) 977-2334
Attention: Mark K. Kessler, Esq.
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (i) if
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given by facsimile, when such facsimile is transmitted to the telecopy number
specified in this Section 12.1 and the appropriate facsimile confirmation is
received or (ii) if given by any other means, when delivered at the address
specified in this Section 12.1.
SECTION 12.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time. All
covenants and agreements contained herein which by their terms are to be
performed in whole or in part subsequent to the Effective Time shall survive the
Merger in accordance with their terms.
SECTION 12.3 AMENDMENTS; NO WAIVERS. (a) Except as may otherwise be
provided herein, any provision of this Agreement may be amended or waived prior
to the Effective Time if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by the Company, Buyer and Merger
Subsidiary or in the case of a waiver, by the party against whom the waiver is
to be effective; PROVIDED that after the adoption of this Agreement by the
stockholders of the Company, no such amendment or waiver shall, without the
further approval of such stockholders, alter or change (i) the amount or kind of
consideration to be received in exchange for any shares of capital stock of the
Company or (ii) any of the terms or conditions of this Agreement if such
alteration or change could adversely affect the holders of any shares of capital
stock of the Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 12.4 EXPENSES AND TERMINATION FEE. (a) All fees and expenses
incurred in connection with the Merger, this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
(b) Notwithstanding any other provision of this Agreement, in the event this
Agreement is terminated pursuant to Section 10.1 (vi) or Section 10.1 (vii), the
Company shall immediately pay Buyer, in same day funds, a cash termination fee
of $750,000 (the "Termination Fee").
(c) The cost of printing the Form S-4 Registration Statement and the Company
Proxy Statement relating to the Merger shall be borne equally by the Company and
Buyer.
SECTION 12.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, PROVIDED that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto.
SECTION 12.6 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware without regard
to conflicts of laws.
SECTION 12.7 SEVERABILITY. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect against a party hereto, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and such invalidity, illegality or unenforceability shall only
apply as to such party in the specific jurisdiction where such judgment shall be
made.
SECTION 12.8 NO THIRD PARTY BENEFICIARIES. Except for Section 7.5 hereof,
no provision of this Agreement is intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder.
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SECTION 12.9 ENTIRE AGREEMENT. This Agreement, including any exhibits or
schedules hereto and the Confidentiality Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersede all other prior agreements or undertaking with respect thereto, both
written and oral.
SECTION 12.10 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, all of which shall be an original, with the same
effect as if considered one and the same instrument. This Agreement shall become
effective when each party hereto shall have received counterparts hereof signed
by all of the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
SCANFORMS, INC.
By: _________/s/_JOEL R. JACKS________
Name: Joel R. Jacks
Title: Director
BIG FLOWER PRESS HOLDINGS, INC.
By: _______/s/_MARK A. ANGELSON_______
Name: Mark A. Angelson
Title: Executive Vice President
SCANFORMS ACQUISITION CORP.
By: _______/s/_MARK A. ANGELSON_______
Name: Mark A. Angelson
Title: Treasurer and Secretary
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