EXHBIT 10.24
EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
DATE: July 19, 1996
PARTIES:
DynaMark, Inc.
a Minnesota corporation
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000 ("DynaMark")
Printronic Corporation of America, Inc.
a New York corporation
00 Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000 ("Printronic")
Xxx X. Xxxxxx
000 Xxxx Xxxxxx, Xxx. 00-X
Xxx Xxxx, Xxx Xxxx 00000
(individually a
"Shareholder and
collectively the
"Shareholders")
Xxxxx Xxxxxx
000 Xxxx Xxxxxx, Xxx. 00-X
Xxx Xxxx, Xxx Xxxx 00000
RECITALS:
A. Printronic is engaged in the direct mail computer processing
business and provides various services for clients in the direct marketing field
("Printronic's Business"). Printronic is a licensee under a non-exclusive
National Change of Address License with the United States Postal Service which
is an integral part of its service line.
B. The Shareholders own all of the issued and outstanding stock of
Printronic.
C DynaMark is a wholly-owned subsidiary of Fair, Xxxxx and Company,
Incorporated, a Delaware corporation ("Fair, Xxxxx").
D. Printronic desires to transfer substantially all of its assets to
DynaMark in exchange for shares of capital stock of Fair, Xxxxx, the assumption
by DynaMark of certain of Printronic's liabilities, and certain cash payments
upon the terms and conditions set forth herein.
AGREEMENTS:
NOW, THEREFORE, in consideration for the mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1.
EXCHANGE OF ASSETS
1.1) Exchange. On the Closing Date (as defined in Section 6.1 hereof),
upon the terms and conditions of this Agreement, Printronic shall transfer to
DynaMark all of the Assets (as defined in Section 1.2) and shall receive in
exchange therefor the Exchange Consideration described in Section 1.4 hereof
(the "Exchange"). Each of the parties intends that the Exchange constitute and
qualify as a tax-free reorganization pursuant to the provisions of Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the "Code"). No
consideration of any kind, other than the Exchange Consideration described in
Section 1.4 hereof, shall be paid or transferred by DynaMark to Printronic, or
to the Shareholders, in connection with the Exchange.
1.2) Assets to Be Transferred. The assets to be transferred to
DynaMark by Printronic shall consist of all of the business and assets, tangible
and intangible, used in Printronic's Business (the "Assets"). The Assets
comprise substantially all of the assets and properties of Printronic and
include, but not by limitation, the specific assets described in subsections (a)
through (g) hereof as follows:
(a) All furniture, equipment, vehicles, machinery, tooling,
trade fixtures and leasehold improvements used in Printronic's
Business, including those items described in Exhibit 1.2(a) hereto
("Equipment");
(b) All intangible personal property, business records,
customer lists and goodwill (together with all documents, records,
files, computer tapes or discs, or other media on or in which the same
may be evidenced or documented) ("Intangible Property"), including the
following:
(i) The corporate name of Printronic and all assumed
names under which it conducts Printronic's Business, as
identified on Exhibit 1.2(b)(i) hereto;
(ii) All trade names, trademarks or service xxxx
registrations and applications, common law trademarks,
copyrights and copyright registrations and applications
including those items identified on Exhibit 1.2(b)(ii) hereto,
and all goodwill associated therewith ("Trademarks"); and
(iii) All technology, know-how, trade secrets,
processes, formulae, drawings, designs and computer programs
related to or used or useful in Printronic's Business, and all
documentary evidence thereof ("Technology");
(c) All accounts receivable, including trade, employee and
other receivables, as of the Closing Date ("Accounts Receivable"), but
excluding the Excluded Receivables described in Section 1.3(a) below;
(d) All cash and cash equivalents as of the Closing
Date ("Cash");
(e) All assignable licenses, permits and approvals,
governmental or otherwise necessary to conduct Printronic's Business,
including the licenses and permits set forth in Exhibit 1.2(e) hereto
("Licenses and Permits");
(f) All other contract rights related to or useful in
Printronic's Business, including the contract rights set forth in
Exhibit 1.2(f), hereto ("Contracts") but excluding the Excluded
Contracts described in Section 1.3(f) below; and
(g) The work in process, supplies inventory, prepaid expenses,
deposits and other assets of Printronic as of the Closing Date,
including those described on Exhibit 1.2(g).
1.3) Excluded Assets. Notwithstanding anything herein to the contrary,
DynaMark does not receive, and Printronic does not transfer, any of the
following assets ("Excluded Assets"):
(a) Certain accounts receivable identified by the parties on
Exhibit 1.3(a) hereto (the "Excluded Receivables");
(b) Printronic's corporate minute book and corporate records
(provided that Printronic will provide copies thereof to DynaMark upon
request by DynaMark for reasonable business purposes);
(c) Miscellaneous personal property not material to
Printronic's Business and listed on Exhibit 1.3(c) hereto;
(d) Life insurance policies on the lives of the
Shareholders;
(e) Tax refunds; and
(f) Certain contract rights identified by the parties on
Exhibit 1.3(f) hereof (the "Excluded Contracts").
1.4) Exchange Consideration. Subject to the other provisions of this
Article 1, the "Exchange Consideration" shall mean: (i) the Permitted
Liabilities assumed by DynaMark as described in Section 1.6; (ii) the aggregate
number of shares of Pair, Xxxxx Common Stock (the Fair, Xxxxx Shares") to be
paid to Printronic pursuant to the Exchange, as described in Section 1.5, and
(iii) the Cash Payment as described in Section 1.7. The certificates evidencing
the Fair, Xxxxx Shares shall contain a legend restricting transfer under the
Securities Act of 1933, as amended, and identifying other restrictions or
limitations described in this Agreement, such legends to be substantially as
follows:
"The securities represented by this certificate have not been
registered or qualified under the Securities Act of 1933 or
the securities laws of any state, and may be offered and sold
only if registered and qualified pursuant to the relevant
provisions of federal and state securities laws or if the
company is provided an opinion of counsel satisfactory to the
company that registration and qualification under federal and
state securities laws is not required."
The Fair, Xxxxx Shares when issued shall be fully paid and nonassessable. The
Fair, Xxxxx Shares shall be subject to the terms of an agreement granting
limited registration rights in the form attached hereto as Exhibit 1.4.
1.5) Determination of Fair. Xxxxx Shares: Mechanics of Exchange. As
partial consideration for the transfer to DynaMark of the Assets, Printronic
shall receive the number of shares of Fair, Xxxxx Common Stock equal to the Base
Consideration (which Base Consideration shall be reduced by the amount of the
Cash Payment described in Section 1.7) divided by the Average Market Price. The
"Initial Base Consideration" shall be equal to Two Million Two Hundred Thousand
and 00/100 Dollars ($2,200,000.00). The Initial Base Consideration shall be
adjusted as proved in Section 1.8 to determine "Base Consideration." The
"Average Market Price" shall be equal to the average of the daily closing sale
prices of Fair, Xxxxx Common Stock as reported on the New York Stock Exchange
("NYSE") Composite Tape as reported in the Wall Street Journal for the twenty
(20) consecutive NYSE trading days ending on and including the trading day
immediately preceding the Closing Date. The parties acknowledge and agree that
they will be unable to accurately determine the total number of Pair, Xxxxx
Shares on the Closing Date due to the inability to determine the Base
Consideration and the Cash Payment. The parties have estimated the number of
Fair, Xxxxx Shares to be forty-two thousand three hundred (42,300) shares. On
the Closing Date, DynaMark shall cause Fair, Xxxxx to issue to Printronic
certificates representing the estimated number of Fair, Xxxxx Shares. A
certificate in the amount of twenty-eight thousand nine hundred sixty-seven
(28,967) shares of Fair, Xxxxx Common Stock shall be delivered to Printronic at
the Closing. A certificate in the amount of thirteen thousand three hundred
thirty-three (13,333) shares of Fair, Xxxxx Common Stock shall be delivered to
the Escrow Agent at the Closing pursuant to the terms of an Escrow Agreement in
the form attached hereto as Exhibit 1.5 (the "Escrow Agreement").
1.6) Liabilities Assumed: Permitted Liabilities. As partial
consideration for the transfer to DynaMark of the Assets, DynaMark shall assume,
and agrees with Printronic to pay according to their terms each of the following
liabilities of Printronic:
(a) Accounts payable which have been incurred in the ordinary
course of business by Printronic in connection with the operation of
Printronic's Business poor to the Closing Date (the "Accounts
Payable"). As soon as possible after the Closing (and in no event later
than ten (10) days after the Closing Date), Printronic shall provide
DynaMark with a detailed schedule of Accounts Payable as of the close
of business on the day immediately preceding the Closing Date;
(b) Loans payable (including accrued interest) and accrued
expenses which are described on Exhibit 1.6(b); and
(c) The liability for accrued sick leave and vacation benefits
described in Section 6.5; and
(d) All liabilities arising from and after the Closing Date
under all assumed Contracts, whether or not such liabilities under the
Contracts are reflected in Printronic's Final Balance Sheet as defined
in Section 1.8(a)(i).
(collectively, the "Permitted Liabilities"). Except as otherwise specifically
provided for herein, DynaMark shall not assume any liabilities, obligations or
undertaking of Printronic or the Shareholders of any kind or nature whatsoever,
whether fixed or contingent, known or unknown, determined or determinable, due
or not yet due and Printronic and the Shareholders shall indemnify DynaMark from
any such liabilities in accordance with the provisions of Section 8.2. Except as
otherwise specifically provided for herein, DynaMark specifically disclaims
assumption of (a) any liabilities or obligations with respect to negligence,
strict liability, product liability, or breach of warranty claims asserted with
regard to products or services sold prior to the Closing Date; or (b) any
liabilities and obligations growing out of or relating to relationships and
dealings with manufacturers representatives, distributors, licensees,
competitors, customers, suppliers, employees, or any other action or inaction of
Printronic or its predecessors in interest. No person not a party hereto, other
than beneficiaries of obligations specifically assumed by DynaMark, shall have
any right, claim or cause of action as a third party beneficiary of any
obligations created hereby.
1.7) Cash Portion of Exchange Consideration. As partial consideration
for the transfer to DynaMark of the Assets, DynaMark shall pay to Printronic in
cash an amount determined as follows:
(a) The book value of the Permitted Liabilities as reflected
on the Final Balance Sheet shall be added to Base Consideration to
determine "Total Consideration".
(b) Total Consideration shall be multiplied by Eighteen
One-Hundredths (18/100's) to determine the "Maximum Cash Payment".
(c) The amount of any liability assumed by DynaMark and the
amount of any liability to which any property acquired by DynaMark is
subject shall be determined in accordance with the provisions of Code
Section 368(a)(2)(B) and the regulations promulgated thereunder (the
"Allowed Liabilities").
(d) The amount of the Allowed Liabilities shall be subtracted
from the Maximum Cash Payment to determine the "Cash Payment";
provided, however, that if such difference constitutes a negative
number, the amount of the Cash Payment shall be Zero Dollars ($0).
The parties acknowledge and agree that the Cash Payment will not be able to be
finally determined by the Closing Date. The parties have estimated the Cash
Payment to be Three Hundred Twenty Thousand and no/100 Dollars ($320,000.00). On
the Closing Date, DynaMark shall deliver a certified or cashier's check, or
equivalent instrument or funds in the amount of Two Hundred Twenty Thousand and
no/100 Dollars ($220,000.00) to Printronic. On the Closing Date, DynaMark shall
deliver a certified or cashier's check, or equivalent instrument or funds in the
amount of One Hundred Thousand and no/100 Dollars ($100,000.00) to the Escrow
Agent pursuant to the terms of the Escrow Agreement. The final determination of
the Cash Payment shall be made concurrently with the final determination of Base
Consideration pursuant to Section 1.8.
1.8) Post-Closing Adjustments. After the Closing, Initial Base
Consideration and the estimated Cash Payment shall be adjusted as provided in
this Section 1.8.
(a)(i) Not later than sixty (60) days after the
Closing Date, Printronic shall deliver to DynaMark a balance
sheet of Printronic as of the close of business on the day
immediately preceding the Closing Date (the Final Balance
Sheet"). Except as otherwise provided in Sections 6.5 and 6.7,
the Final Balance Sheet shall be prepared by Printronic in
accordance with generally accepted accounting principles
consistently applied. In addition, the parties acknowledge
that the liability for deferred rent will be eliminated as a
liability on the Final Balance Sheet and prepaid taxes will be
eliminated on the Final Balance Sheet. The Final Balance Sheet
shall be reviewed by Gazer, Xxxx, Xxxxx & Company, certified
public accountants, and a statement by such accountants to
that effect shall accompany the Final Balance Sheet. The cost
of such review shall be borne by Printronic. The Final Balance
Sheet shall be accompanied by a report (the "Report"),
prepared by Printronic, containing a calculation of Base
Consideration and the Cash Payment. In determining Base
Consideration and the Cash Payment, Printronic shall first
determine the "Net Book Value of the Assets" which shall be
equal to the book value of the Assets as determined from the
Final Balance Sheet reduced by the book value of the
liabilities assumed by DynaMark pursuant to the provisions of
Sections 1.6(a), 1.6(b), 1.6(c) and 1.6(d). The "Adjustment
Amount" shall be equal to the difference between the Net Book
Value of the Assets and an amount equal to Six Hundred
Ninety-Two Thousand Forty-Eight and no/100 Dollars
($692,048.00) (the "Base Book Value") and shall be treated as
a positive number for purposes of this Section 1.8. DynaMark
and DynaMark's independent public accountants shall have the
opportunity to examine the work papers, schedules and other
documents prepared in connection with the preparation of the
Final Balance Sheet and the Report.
(ii) DynaMark shall have thirty (30) days after
delivery of the Final Balance Sheet and the Report within
which to present in writing to Printronic any objections
DynaMark may have to any of the matters set forth therein,
which objections shall be set forth in reasonable detail. If
no objections are presented within such thirty-day period, or
if DynaMark shall deliver to Printronic a notice stating that
DynaMark accepts and approves the Final Balance Sheet and the
Report and shall present no objection to any matter set forth
therein, the Final Balance Sheet and the Report shall be
deemed accepted and approved by DynaMark.
(iii) If DynaMark shall present any objections within
the thirty-day period, DynaMark and Printronic shall attempt
to resolve the matter or matters in dispute and, if resolved
within twenty (20) days (or such longer period as DynaMark and
Printronic may agree upon) after delivery of any such written
objections to Printronic, the parties shall adjust the number
of Fair, Xxxxx Shares payable to Printronic and the Cash
Payment payable to Printronic as provided in Section 1.8(b)
based upon the Final Balance Sheet and the Report, with such
changes therein, if any, as are required to reflect the
resolution of any such disputed matter or matters.
(iv) If such dispute cannot be resolved by DynaMark
and Printronic, then the specific matters in dispute shall be
submitted to the New York office of McGladrey & Xxxxxx, LLP
or, if such firm declines to act in such capacity, such other
firm of independent public accountants mutually acceptable to
DynaMark and Printronic, which firm shall make a final and
binding written determination as to such matter or matters
within sixty (60) days after submission. Such accounting firm
shall send its written determination to DynaMark and
Printronic and the parties shall adjust the number of Fair,
Xxxxx Shares payable to Printronic and the Cash Payment
payable to Printronic as provided in Section 1.8(b) in
accordance with such written determination. The fees and
expenses of the accounting firm referred to in this Section
1.8(a)(iv) shall be paid one-half by DynaMark and one-half by
Printronic.
(v) DynaMark and Printronic agree to cooperate with
each other's accountants and authorized representatives in
order that any matters in dispute under this Section 1.8 be
resolved as soon as possible.
(b) In the event the Adjustment Amount indicates that the Net
Book Value of the Assets exceeds the Base Book Value, and in the event
the Adjustment Amount exceeds Fifty Thousand and no/100 Dollars
($50,000.00), the Initial Base Consideration shall be increased by the
amount by which the Adjustment Amount exceeds Fifty Thousand and no/100
Dollars ($50,000.00). In the event the Adjustment Amount indicates that
the Base Book Value exceeds the Net Book Value of the Assets, and in
the event the Adjustment Amount exceeds Fifty Thousand and no/100
Dollars ($50,000.00), the Initial Base Consideration shall be decreased
by the amount by which the Adjustment Amount exceeds Fifty Thousand and
no/100 ($50,000.00). Following final determination of the Base
Consideration and the Cash Payment, the parties shall determine the
number of Fair, Xxxxx Shares transferable to Printronic in accordance
with the provisions of Section 1.5. The parties shall initially take
such actions to cause the number of shares of Fair, Xxxxx Stock held by
the Escrow Agent to be adjusted so that the Escrow Agent will hold a
whole number of shares of Fair, Xxxxx Common Stock as will equal Six
Hundred Thousand and no/100 Dollars ($600,000.00) or as close as
possible. If, thereafter, as a result of the adjustments described in
this Section 1.8, the number of Fair, Xxxxx Shares to which Printronic
is entitled is greater than the number delivered at Closing, DynaMark
shall cause Fair, Xxxxx to issue such additional Shares within ten (10)
business days after the determination of the number of Fair, Xxxxx
Shares. If instead the number of Fair, Xxxxx Shares to which Printronic
is entitled is less than the number of Fair, Xxxxx Shares delivered at
Closing, Printronic shall return the necessary number of Shares to
DynaMark for cancellation by Fair, Xxxxx within ten (10) business days
after the determination of the number of Fair, Xxxxx Shares. DynaMark
and Printronic shall instruct the Escrow Agent to disburse the Escrow
Funds (as defined in the Escrow Agreement) to the parties consistent
with the determination of the actual amount of the Cash Payment. The
Escrow Agent shall, in accordance with the terms of the Escrow
Agreement, disburse the Escrow Funds to the parties in accordance with
such instructions. If, as a result of the adjustments described in this
Section 1.8, the Cash Payment to which Printronic is entitled is
greater than the estimated Cash Payment, DynaMark shall deliver to
Printronic by certified or bank cashier's check or by wire transfer to
an account designated by Printronic, within ten (10) business days
after final determination of the Cash Payment, the difference between
the estimated Cash Payment and the actual amount of the Cash Payment.
If the Cash Payment to which Printronic is entitled is less than the
estimated Cash Payment and the Escrow Funds are not adequate to satisfy
the obligation to DynaMark, Printronic shall deliver to DynaMark by
certified or bank cashier's check or by wire transfer to an account
designated by DynaMark within ten (10) business days after final
determination of the Cash Payment, the difference between the estimated
Cash Payment (reduced by the amount of other Escrow Funds paid to
DynaMark) and the actual amount of the Cash Payment.
1.9) Distribution to Shareholders. Following the Closing and the final
determination of the number of Fair, Xxxxx Shares and the Cash Payment payable
to Printronic hereto in the Exchange, it is understood and agreed that
Printronic shall distribute, in complete liquidation of Printronic, to the
Shareholders, the Fair, Xxxxx Shares and the Cash Payment in exchange for the
surrender and cancellation of all of the Shareholders' stock; and that, in
connection therewith, and in accordance with the provisions of Code Section
368(a)(1)(G), Printronic shall distribute all of its remaining assets and
provide for the payment of any remaining liabilities, as required by law, and
shall thereupon dissolve, all subject to the Escrow Agreement and
indemnification provisions set forth in this Agreement. Each of the Shareholders
acknowledges the existence and effect of the indemnification provisions of
Section 8.2 and the provisions of this Section 1.9 upon the Fair, Xxxxx Shares t
which they will become entitled upon distribution thereof by Printronic in
connection with Printronic's dissolution. Nothing in this Section 1.9 shall have
the effect of reducing or mitigating any obligations of Printronic to DynaMark
which it may otherwise have under or as a result of this Agreement and the
transactions contemplated hereby.
1.10) NCOA License. The parties acknowledge that Printronic and the
United States Postal Service have entered into National Change of Address
License Agreement #10423087-D-2204, as modified from time to time (the "NCOA
License"), which NCOA License Agreement is listed on Exhibit 1.2(e). The parties
acknowledge and agree that any assignment of the NCOA License is subject to
approval of the United States Postal Service and execution of a novation
agreement by DynaMark, Printronic and the United States Postal Service. Within
two (2) business days after the Closing Date, DynaMark and Printronic shall
submit a novation request to the United States Postal Service in accordance with
the procedures set out in the United States Postal Service Procurement Handbook
including, specifically, Section 6.5.4c-33. Printronic shall provide all
reasonable assistance requested by DynaMark in connection with the assignment of
the NCOA License, including, but not limited to, preparing and executing the
documentation request to be submitted by Printronic under Section 6.5.4C-33 of
the United States Postal Service Government Handbook.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND PRINTRONIC
Printronic and the Shareholders, jointly and severally, covenant with
DynaMark and make the following representations and warranties to DynaMark with
the intention that DynaMark may rely upon the same and acknowledge that the same
shall be true as of the Closing Date (as if made at the Closing) and shall
survive the Closing of this transaction:
2.1) Organization. Printronic is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, and has
all requisite power and authority, corporate and otherwise, to own its
properties and assets and conduct its business.
2.2) Qualification. Printronic is not qualified to do business as a
foreign corporation in any state and qualification as a foreign corporation is
not required by the nature of its business.
2.3) Corporate Authority. Printronic has all requisite power and
authority to execute, perform and carry out the provisions of this Agreement.
Printronic has taken all requisite corporate action authorizing and empowering
Printronic to enter into this Agreement and to consummate the transactions
contemplated herein.
2.4) Shareholder's Authority.
(a) The Shareholders own one hundred percent (100%) of all
classes of stock of Printronic which is issued and outstanding.
(b) The Shareholders have all requisite power and authority
(without consent or approval of any other person) to enter into and
carry out their obligations under this Agreement and to cause
Printronic to enter into and carry out its obligations under this
Agreement.
2.5) Subsidiaries. Joint Ventures or Partnerships. Printronic does not
have any subsidiary, and Printronic is not a shareholder, partner or joint
venturer with any other person or legal entity.
2.6) Financial Statements.
(a) Financial Statements. Printronic has furnished DynaMark
true and complete copies of its reviewed balance sheets as of December
31, 1993, December 31, 1994 and December 31, 1995 and the related
statements of earnings and cash flows (collectively the Financial
Statements"), prepared in conformance with generally accepted
accounting principles applied on a basis consistent with prior periods,
and which fairly present in all material respects the financial
condition of Printronic as of the represented dates thereof and the
results of Printronic's operations for the periods covered thereby. For
purposes of this Agreement, the Financial Statements shall be deemed to
include any notes and schedules thereto.
(b) Printronic's Books and Records. Printronic's books of
account and records (including customer order files and production
records) are complete, true and correct in all material respects.
(c) Absence of Undisclosed Liabilities. As of December 31,
1995, except as set forth on Exhibit 2.6(c), Printronic had no material
liabilities or obligations of any kind, whether accrued, absolute,
contingent or otherwise, that were not disclosed in the Financial
Statements. Except for liabilities incurred since December 31, 1995, in
the ordinary course of business consistent with past practices and
except as set forth on Exhibit 2.6(c), there is no basis for the
assertion of any material claim or liability of any nature against
Printronic in any amount not fully reflected or reserved against on the
December 31, 1995 balance sheet.
(d) No Adverse Changes. Since December 31, 1995, there has not
occurred or arisen (whether or not in the ordinary course of business):
(i) any material adverse change in the financial condition, prospects,
or operations of Printronic's Business, (ii) any change in Printronic's
accounting methods or practices, (iii) any sale or transfer of any
asset or any amendment of any agreement of Printronic except in the
ordinary course of business, (iv) any loss of or damage to the Assets
due to abuse, misuse, fire or other casualty whether or not covered by
insurance, (v) any labor trouble, (vi) any reasonably foreseeable
increase in operating costs of Printronic's Business not commensurate
with increased production, (vii) any warranty or product liability
claims or losses, or (viii) any other event or condition known by
Printronic or the Shareholders to have occurred or to exist or which
Printronic or the Shareholder had reasonable grounds to know occurred
or existed which, singly or in the aggregate, materially and adversely
affects or may affect the Assets or Printronic's Business.
2.7) Tax Reports.
(a) Tax Reports and Payment. Printronic has accurately and
correctly prepared and timely filed all federal and applicable state,
local, and foreign tax or assessment reports and returns of every kind
required to be filed by Printronic with relation to Printronic's
Business, including, without limitation, income tax, sales and use tax,
real estate tax, personal property tax and unemployment tax, and has
duly paid all taxes and other charges (including interest and
penalties) shown as due and payable. True and correct copies of the
reports and returns filed by Printronic during the last three (3) tax
years have been delivered to DynaMark. Where required, timely estimated
payments or installment payments of tax liabilities have been made to
all governmental agencies in amounts sufficient to avoid underpayment
penalties or late payment penalties applicable thereto.
(b) Tax Proceedings. No unexpired waivers executed by or with
respect to the liability of Printronic of the statute of limitations
with respect to any taxes, duties or charges are in effect, nor has
Printronic otherwise agreed to any extension of time with respect to an
assessment or deficiency with respect to such taxes, duties or charges.
Printronic is not a party to any pending action or proceeding by any
governmental agency for assessment or collection of taxes relating to
Printronic's Business. No claim, proposed assessment or assessment for
collection of taxes relating to Printronic's Business have been
asserted or threatened and Printronic has no reasonable grounds to know
of, any facts or circumstances which would give rise thereto.
Printronic confirms Printronic's responsibility for, and agreement to
pay when due, any and all taxes, duties or charges based on
Printronic's Business, Printronic's income or sales, or otherwise,
incurred or relating to any period or occurrence on or prior to the
Closing Date.
2.8) Title to Assets. The Assets constitute all property necessary for
the conduct of Printronic's Business as now conducted. Printronic is the owner,
lessee or licensee of the Assets. Printronic holds title to or a leasehold
interest in such Assets free and clear of all liens, charges, encumbrances or
third-party claims or interests of any kind whatsoever,
except as disclosed in Exhibit 2.8 hereto.
2.9) Location of Assets. All Assets are located on the premises of
Printronic at 00 Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, and no Assets are under
consignment or are in storage outside of the premises of Printronic.
2.10) Tangible Personal Property. All assets described in Section
1.2(a) are in good repair and operating condition and will be maintained in good
repair and operating condition, ordinary wear and tear excepted, from the date
hereof until the Closing Date. Printronic will assign to DynaMark as of the
Closing Date any and all assignable warranties covering such
property existing as of the Closing Date.
2.11) Trademarks. Printronic has good title to, and the full and
unrestricted right use the assumed names listed on Exhibit 1.2(b)(i) and the
Trademarks free and clear of all liens, charges, encumbrances, or, to its
knowledge, third party claims or interests of any kind whatsoever. The use of
such assumed names and Trademarks does not, to its knowledge, infringe on any
rights of any other person or entity; such assumed names and Trademarks are not
licensed to or licensed from any other person or entity; and there have been no
claims of any infringement regarding such assumed names and Trademarks or
Printronic's use thereof.
2.12) Patents and Technology. Printronic does not own, lease, license
or use any domestic or foreign letter patent, patent applications or patent and
know-how license. Printronic has good title to or is a licensee of the
Technology, and the full and unrestricted right to use the same. With respect to
the Technology owned by Printronic, such rights are free and clear of all liens,
charges, encumbrances or, to its knowledge, third-party claims or interests of
any kind whatsoever. With respect to the Technology licensed by Printronic, such
rights are, to its knowledge, free and clear of all liens, charges, encumbrances
or third-party claims or interests of any kind whatsoever. The nature of the
practice of the Technology does not infringe on any rights of any other person
or entity and there have been no claims by any person of such infringement. None
of such rights is licensed to any other person or entity. The Shareholders do
not own or have any rights as individuals in or to any patents, inventions,
ideas or technology, which relate materially to Printronic's Business.
2.13) Accounts Receivables. All Accounts Receivable are collectable in
the amounts thereof as determined as of the Closing Date net of any allowance
for doubtful accounts specified in the Final Balance Sheet. There are no
defenses, offsets, or counterclaims thawed or pending with respect to any of the
Accounts Receivable.
2.14) Supplies Inventory. The supplies inventory described in Section
1.2(g) is and will be of a quality, quantity and mix consistent with
Printronic's past business practices.
2.15) Licenses and Permits. Printronic possesses all permits, licenses
and approvals, governmental or otherwise, which are necessary to conduct
Printronic's Business in its present form and at its present location, all of
which are listed on Exhibit 1.2(e). All of the Licenses and Permits are valid
and in good standing and Printronic has not received any notice that the
Licenses and Permits will lapse or be terminated by action of any governmental
authority or otherwise. Except as disclosed in Exhibit 1.2(e) and Section 1.10
with respect to the NCOA License, all of the Licenses and Permits are freely
assignable and transferable to DynaMark and will continue to be in full force
and effect after such transfer.
2.16) Leases. Exhibit 1.2(f) contains an accurate and complete list of
all leases of real and personal property related to or used in the operation of
Printronic's Business (collectively the "Leases"). Except as identified in
Exhibit 1.2(f), Printronic has not breached, nor has it received in writing any
claim or threat that it has breached, any of the terms or conditions of any
Lease. Each Lease is currently in full force and effect and is not subject to
any material default by any party thereto. Except as identified in Exhibit
1.2(f), Printronic has not received any notice of default under any of such
Leases and to the best of Printronic's knowledge there is no event existing
which, with notice or lapse of time, or both, would constitute a default under
any such Lease. There are no provisions of, or developments materially
affecting, any of such Leases which might prevent Printronic from realizing the
benefits thereof or which might prevent DynaMark from realizing such benefits
following completion of the transactions contemplated by this Agreement. No
repairs or improvements on any real estate leased by Printronic are presently in
process, and no such repairs or improvements will have been completed less than
one hundred twenty (120) days prior to the Closing Date unless payment in full
therefore has been made. All lienable utility payments on any real estate leased
by Printronic have been and will be paid in full when due and payable.
2.17) Agreements. Contracts and Commitments.
(a) Material Contracts. Except as disclosed on Exhibit 1.2(f),
Printronic is not a party to or bound by any written or oral:
(i) broker, dealer, agent, distributorship, sales
agent or similar agreement or arrangements;
(ii) advertising contract;
(iii) contract commitments, or arrangements for
capital expenditures having a remaining balance in excess of
One Thousand and no/100 Dollars ($1,000.00);
(iv) leases with respect to any property, real or
personal, whether as lessor or lessee;
(v) contracts, commitments, or arrangements
containing covenants by Printronic not to compete in any lines
of business or with any person or business entity;
(vi) franchise agreements, rights, or other similar
arrangements;
(vii) loans, credits, financing agreements,
promissory notes or other evidence of indebtedness, including
all agreements for any commitments for future loans, credit,
or financing;
(viii) guarantees;
(ix) agreements, contracts or commitments for the
purchase of any services, raw materials, supplies or
equipment, involving payments of more than One Thousand and
no/100 Dollars ($1,000.00) per annum or an aggregate of more
than Two Thousand Five Hundred and no/100 Dollars ($2,500.00);
(x) agreements, contracts or commitments for the sale
of assets, products or services, excluding customer orders for
the sale of products and services in the ordinary course of
Printronic's Business (and in compliance with this Agreement);
or
(xi) any other material contracts, commitments, or
arrangements of any kind.
Except for the contracts at will which are identified in Exhibit 1.2(f), no
contract, commitment, or arrangement referred to in such Exhibit is terminable
without penalty, cost, or liability (whether express, implied, or by operation
of law). All such contracts, commitments or other arrangements are assignable
without consent of any person other than as listed in Exhibit 1.2(f). The
provisions of any and all such contracts, commitments or arrangements comply in
all material respects with the laws of relevant jurisdictions.
(b) Breach. Printronic has performed all material obligations
required to be performed by Printronic to date under any contract,
commitment, or arrangement of any kind to which Printronic is a party
or by which Printronic is bound including those contracts, commitments
and arrangements identified on Exhibit 1.2(f); and neither Printronic
nor any other party is in material default under any contract,
commitment, or arrangement of any kind to which Printronic is a party
or by which Printronic is bound. No event has occurred which after the
giving of notice or the lapse of time or otherwise would constitute a
material default under, or result in a breach by Printronic or any
other party, of any contract, commitment, or arrangement to which
Printronic is a party or by which Printronic is bound.
(c) Copies of Contracts: Terms and Binding Effect. True,
complete and correct copies of all contracts, commitments,
understandings, and other documents referred to in the Exhibits have
been delivered to DynaMark; there are no amendments to or modifications
of, or agreements of the parties relating to, any such contracts,
commitments, and understandings which have not been delivered to
DynaMark; and each such contract, commitment, or understanding, as
amended, is considered valid and binding on the parties to it in
accordance with its respective terms, and the transaction contemplated
by this Agreement will not result in the violation or breach of any
such material contract, commitment, or understanding.
2.18) Employee Information.
(a) Employee List. Exhibit 2.18(a) hereto is an accurate and
complete list of the names of all directors and officers of Printronic
and the names, positions, titles, and salary rates for all employees of
Printronic, together with a summary of the bonuses, additional
compensation and other employee benefits, if any, paid or payable to
such persons as of the date of this Agreement and for the prior one (1)
year period and anticipated payments from the date of this Agreement to
the Closing Date.
(b) Terminated Employees. Exhibit 2.18(b) hereto is a true and
accurate list of all employees of Printronic whose employment has
terminated either voluntarily or involuntarily in the two (2) year
period preceding the date of the Agreement. Except as described on
Exhibit 2.18(b), no claims have been made or threatened against
Printronic by any former or present employee based on employment
discrimination, wrongful discharge, or any other circumstance relating
to or arising from the employment relationship with Printronic or the
termination thereof.
(c) Compliance with Employment Laws. To the best of
Printronic's knowledge, Printronic has complied with all applicable
federal and state laws relating to the employment of labor, including,
but not limited to, the provisions thereof relating to wages, hours,
collective bargaining, immigration, discrimination, and the payment of
withholding and social security taxes, and is not liable for any
arrears of wages, or any tax or penalties, for failure to comply with
any of the foregoing.
(d) Employee Plans. Printronic does not maintain any "Employee
Plans" except as set forth in Exhibit 2.18(d). "Employee Plans" mean
any pension, retirement, disability, medical, dental, or other health
insurance plan, life insurance or other death benefit plan, profit
sharing, deferred compensation, stock option, or bonus or other
incentive plan, vacation benefit plan, severance plan, or other
employee benefit plan or arrangement including, without limitation, any
"pension plan" as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and any "welfare
plan" as defined in Section 3(1) of ERISA, whether or not any of the
foregoing is funded, (i) to which Printronic is a party or by which it
is bound, or (ii) with respect to which Printronic has made any
payments or contributions or may otherwise have any liability
(including any such plan or other arrangement formerly maintained by
Printronic).
(e) Union and Employment Contracts. Printronic is not a party
to any collective bargaining agreement or any other written employment
agreement (including any employee policy manuals), nor is Printronic a
party to any other contract or understanding (oral or written) that
contains any severance pay liabilities or obligations, including
accrued and unused vacation pay or accrued and unused sick leave pay.
During the three (3) As year period preceding the date of this
Agreement, Printronic has experienced no work stoppages, walkouts or
strikes or attempts by its employees to organize a union.
2.19) Change In Customers. Neither Printronic nor either of the
Shareholders knows or has reasonable grounds to know that any significant
customers intend to cease doing business with Printronic or materially alter the
amount of business they do with Printronic.
2.20) Insurance. Printronic has maintained and will continue to
maintain until the Closing Date the insurance described in Exhibit 2.20,
including insurance on Printronic's tangible real and personal property and
assets, whether owned or leased, against loss or damage by fire or other
casualty, in amounts equal to or in excess of one hundred percent (100%) of the
replacement value thereof. All such insurance is in full force on the date of
this Agreement and is carried with reputable insurers. Printronic has promptly
and adequately notified Printronic's insurance carriers of any and all claims
known to Printronic with respect to the operations or products of Printronic for
which Printronic is insured.
2.21) Litigation and Related Matters. There is no pending or threatened
litigation, proceeding, or, to the best of Printronic's or the Shareholder's
knowledge, investigation (including any environmental, building or safety
investigation) by or against Printronic, or the Assets, nor is Printronic
subject to any existing judgment, order, decree, or other action affecting the
operation of Printronic's Business or the Assets or which would prevent, impede,
or make illegal the consummation of the transactions contemplated in this
Agreement, or which would have a material adverse effect on Printronic, or on
Printronic's Business or any of the Assets. Neither Printronic nor either of the
Shareholders know of any facts, circumstances or events which provide the basis
for any such litigation, proceeding or investigation of Printronic, the Assets
or Printronic's Business.
2.22) Laws and Regulations. To the best of Printronic's knowledge
during the three (3) year period prior to the date hereof, Printronic has
complied, and is in compliance, with all applicable laws, statutes, orders,
rules regulations and requirements promulgated by governmental or other
authorities relating to Printronic's Business, the Assets or the operation of
Printronic's Business, including, without limitation, any relating to wages,
hours, hiring, promotion, retirement, working conditions, environmental matters,
nondiscrimination, health, safety and benefits, and Printronic has not received
any notice of any sort of alleged violation of any such statute, order, rule,
regulation or requirement. DynaMark acknowledges that, notwithstanding the
foregoing, Printronic has had disagreements with the United States Postal
Service concerning the NCOA License and has had the United States Postal Service
temporarily suspend the NCOA License. The circumstances surrounding the
operation of the NCOA License have been fully disclosed to DynaMark.
2.23) Breaches of Contracts: Required Consents. Neither the execution
and delivery of this Agreement by Printronic or the Shareholders, nor compliance
by Printronic or the Shareholders with the terms and provisions of this
Agreement will:
(a) Conflict with or result in a breach of (i) any of the
terms, conditions or provisions of the Articles of Incorporation,
Bylaws or other governing instruments of Printronic, (ii) any judgment,
order, decree or ruling to which Printronic or the Shareholders is a
party, (iii) any injunction of any court or governmental authority to
which any of them is subject, or (iv) any agreement, contract or
commitment to which Printronic or the Shareholders is a party or by
which they are bound; or
(b) Except as disclosed in Exhibit 1.2(e) and Exhibit 1.2(f)
hereto, require the affirmative consent or approval of any third party.
2.24) Binding Obligation. This Agreement constitutes the legal, valid
and binding obligation of Printronic and the Shareholders in accordance with the
terms hereof.
2.25) Investment Representations.
(a) Transfer by Printronic. Printronic will not sell, assign,
transfer or otherwise dispose of the Fair, Xxxxx Shares issuable
pursuant to this Agreement, or any interest therein, to any person
other than the Shareholders in connection with the liquidation of
Printronic (the "Liquidation").
(b) Purchase Entirely for Own Account. The Fair, Xxxxx Shares
will be acquired by the Shareholders in connection with the Liquidation
for investment for such Shareholders' own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part
thereof, and the Shareholders have no present intention of selling,
granting any participation in, or otherwise distributing the same,
provided that the parties acknowledge that the Shareholders may
transfer all or part of the Fair, Xxxxx Shares to charitable remainder
trusts of which the Shareholders and/or members of their families are
income beneficiaries. The Shareholders further represent that the
Shareholders do not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations
to such person or to any third person, with respect to any of the Fair,
Xxxxx Shares, provided that the parties acknowledge that the
Shareholders may transfer all or part of the Furs Xxxxx Shares to
charitable remainder trusts of which the Shareholders and/or members of
their families are income beneficiaries.
(c) Reliance Upon Shareholders' Representations. The
Shareholders understand that the Fair, Xxxxx Shares are not registered
under the Securities Act on the ground that the transfer provided for
in this Agreement and the issuance of securities hereunder is exempt
from registration under the Securities Act of 1933, as amended (the
"Securities Act") pursuant to section 4(2) thereof, and that DynaMark's
and Fair, Isaac's reliance on such exemption is based on the
Shareholders' representations set forth herein. The Shareholders
realize that the basis for the exemption may not be present if,
notwithstanding such representations, the Shareholders have in mind
merely acquiring the Fair, Xxxxx Shares for a fixed or determinable
period in the future, or for a market rise, or for sale if the market
does not rise. Except for the contemplated transfer to the charitable
remainder trusts described above, the Shareholders have no such
intention.
(d) Receipt of Information. The Shareholders have reviewed
Fair, Isaac's recent periodic filings with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, and
believes they have received all the information they consider necessary
or appropriate for deciding whether to acquire the Fair, Xxxxx Shares.
(e) Investment Experience. Each Shareholder acknowledges that
he or she is able to fend for himself or herself, can bear the economic
risk of his or her investment, and has such knowledge and experience in
financial and business matters that he or she is capable of evaluating
the merits and risks of the investment in the Fair, Xxxxx Shares.
(f) Restricted Securities. The Shareholders understand that
except for the transfers to the charitable remainder trusts described
above, the Fair, Xxxxx Shares may not be sold, transferred or otherwise
disposed of without registration under the Securities Act or an
exemption therefrom, and that in the absence of an effective
registration statement covering the Fair, Xxxxx Shares or an available
exemption from registration under the Securities Act, the Fair, Xxxxx
Shares must be held indefinitely. In particular, the Shareholders are
aware that the Fair, Xxxxx Shares may not be sold pursuant to Rule 144
promulgated under the Securities Act unless all of the conditions of
that Rule are met. Among the conditions for use of Rule 144 is the
requirement that a minimum of two years elapse between the date of
acquisition of the Fair, Xxxxx Shares from Fair, Xxxxx and any resale
of the Fair, Xxxxx Shares in releases on Rule 144.
2.26) Completeness of Disclosures. None of the representations or
warranties made by Printronic and the Shareholders in this Agreement or the
Exhibits, and no written statement, certificate or Exhibit furnished or to be
furnished by or on behalf of Printronic or the Shareholders, to DynaMark or its
agents pursuant hereto, or in connection with the transaction contemplated by
this Agreement, contains or will contain any untrue statement of a material fact
or omits or will omit any material fact the omission of which would be
misleading. The Exhibits to this Agreement, where provided by or on behalf of
Printronic, completely and correctly present the information required by this
Agreement to be set forth in them in all material respects.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF DYNAMARK
DynaMark makes the following representations and warranties to
Printronic, with the intention that Printronic may rely upon the same, and
acknowledge that the same shall be true as of the Closing Date (as if made at
the Closing) and shall survive the Closing of this transaction:
3.1) Organization of DynaMark. DynaMark is a corporation, duly
organized, validly existing in good standing under the laws of the State of
Minnesota, and has all requisite power and authority, corporate and otherwise,
to own its properties and conduct the business in which it is presently engaged.
3.2) Corporate Authority. DynaMark has all requisite corporate power to
execute, perform and carry out the provisions of this Agreement. DynaMark has
taken all requisite corporate action authorizing and empowering DynaMark to
enter into this Agreement and to consummate the transactions contemplated
herein.
3.3) Binding Obligation. This Agreement constitutes the legal, valid
and binding obligation of DynaMark in accordance with the terms hereof.
ARTICLE 4.
CONDUCT OF BUSINESS PRIOR TO CLOSING
4.1) Access to Information. During the period prior to the Closing
Date, Printronic shall upon reasonable notice give to DynaMark and its
attorneys, accountants or other authorized representatives, full access during
normal business hours, to all of the property, books, contracts, commitments and
records of Printronic and shall furnish to DynaMark during such period all such
information concerning Printronic's Business and the Assets as DynaMark
reasonably may request. Such review shall not unreasonably interfere with the
normal operation of Printronic's Business.
4.2) Restrictions. Except as otherwise provided in this Agreement,
Printronic and the Shareholders represent and covenant that during the period
from the date of this Agreement to the Closing Date (except as DynaMark
otherwise has consented in writing):
(a) Printronic's Business has been and will be conducted in a
manner consistent with Printronic's past business practices.
(b) No change has been or will be made in Printronic's
authorized or issued corporate shares, or in its capital structure.
(c) No increase will be made in the compensation payable to or
to become payable to any employee of Printronic, and no bonus payment
will be made by Printronic to any such employee.
(d) Printronic will not embark upon any new line of business,
enter into or amend any leases or agreements, purchase any fixed assets
or equipment, amend any loan agreements, guarantee any obligation or
increase any existing lines of credit.
(e) Printronic will not sell, dispose, transfer, assign or
otherwise remove any of the Assets except supplies inventory in the
ordinary course of business.
(f) Printronic will timely pay and discharge all bills and
monetary obligations and timely and properly perform all of its
obligations and commitments under all existing contracts and agreements
pertaining to or affecting Printronic, Printronic's Business or any of
its properties or assets.
(g) Printronic and the Shareholders shall use their best
efforts to preserve the business organization and assets of Printronic
and to keep available to DynaMark the services of Printronic's present
employees, and to act reasonably with respect to relationships with
suppliers, customers and others having business relations with
Printronic.
(h) The Shareholders will not receive any payment or
distribution from Printronic's Business except for regular salary and
customary dividends to pay federal and New York state income taxes
resulting from income of Printronic attributable to the Shareholders
under the provisions of Subchapter S of the Internal Revenue Code of
1986, as amended, provided that each Shareholder may receive a
performance bonus in an amount not to exceed Seventy-Five Thousand and
no/100 Dollars ($75,000.00) prior to the Closing.
4.3) Risk of Loss. Prior to completion of the Closing, the risk of loss
or destruction to any of the Assets shall be that of Printronic. In the event of
damage or destruction of any of the Assets, Printronic shall replace such
damaged or destroyed Assets with similar assets of equal value and shall use any
insurance proceeds received for such damage to make such replacements.
4.4) Preserve Accuracy of Representations Warranties. Printronic and
the Shareholders shall refrain from taking any action, except with the prior
written consent of DynaMark, which would render any representation, warranty or
agreement of Printronic and the Shareholders in this Agreement inaccurate or
breached. At all times prior to the Closing, Printronic and the Shareholders
will promptly inform DynaMark in writing with respect to any matters that arise
after the date of this Agreement which, if existing or occurring at the date of
this Agreement, would have been required to be set forth or described in the
Exhibits. Printronic and the Shareholders promptly will notify DynaMark in
writing of all lawsuits, claims, proceedings and investigations that may be
threatened, brought, asserted or commenced against Printronic or Printronic's
officers or directors involving the transaction contemplated by this Agreement
or which might have a material adverse impact on the Assets or Printronic's
Business.
4.5) Obtaining Consents. Printronic and/or the Shareholders shall
obtain all consents and/or termination statements necessary for the valid and
effective consummation of the transactions contemplated by this Agreement,
including without limitation, the affirmative consent or approval of any third
party described in Exhibits 1.2(e) and 1.2(f).
4.6) Maintenance of Insurance. Printronic shall maintain in full force
until the Closing Date the insurance described in Exhibit 2.20.
4.7) Financial Statements. Printronic shall furnish DynaMark unaudited
monthly financial statements of Printronic for the periods subsequent to
December 31, 1995, to and including the Closing Date as they become available.
ARTICLE 5.
CONDITIONS OF CLOSING, ABANDONMENT OF TRANSACTION
5.1) Conditions to Obligations of DynaMark to Proceed on the Closing
Date. The obligations of DynaMark to proceed on the Closing Date shall be
subject (at DynaMark's discretion) to the satisfaction, on or prior to the
Closing Date, of all of the following conditions:
(a) Truth of Representations and Warranties and Compliance
with Obligations. The representations and warranties of Printronic and
the Shareholders herein shall be true in all material respects on the
Closing Date with the same effect as though made at such time.
Printronic and the Shareholders shall have performed all material
obligations and complied with all material covenants and conditions
that are required to be performed or complied with prior to or as of
the Closing Date. Printronic shall have delivered to DynaMark a
certificate of Printronic and the Shareholders in form and substance
satisfactory to DynaMark dated as of the Closing Date and executed by
the President of Printronic and by each Shareholder re all such
effects.
(b) Opinion of Counsel. DynaMark shall have received a duly
executed opinion letter from Printronic's legal counsel dated as of the
Closing Date, in substantially the form attached hereto as Exhibit
5.1(b) which shall be reasonably satisfactory to DynaMark and its
counsel.
(c) Required Consents. Printronic and the Shareholders shall
have obtained the consent, approval and/or the termination statements
of each person whose consent, approval and/or the termination
statements is necessary for the valid and effective consummation of the
transactions contemplated at the Closing by this Agreement.
(d) Delivery of Documents. Printronic and the Shareholders
shall have delivered all documents required to be delivered at the
Closing pursuant to Section 6.2 hereof.
(e) Litigation Affecting Closing. No suit, action or other
proceeding shall be pending or threatened by or before any court or
governmental agency in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated by this Agreement, and no
investigation that may result in any such suit, action or other
proceeding shall be pending or threatened.
(f) Legislation. No statute, rule, regulation or order shall
have been enacted, entered or deemed applicable by any government or
governmental or administrative agency or court which would make the
transaction contemplated by this Agreement illegal or otherwise
materially and adversely affect the Assets or the use and operation of
Printronic's Business in the hands of DynaMark.
(g) Payment of DynaMark Loan. Printronic shall have satisfied
in full the promissory note in the original principal amount of Eighty
Thousand and no/100 Dollars ($80,000.00) in favor of DynaMark.
5.2) Conditions to Obligation of Printronic and the Shareholders to
Proceed on the Closing Date. The obligation of Printronic and the Shareholders
to proceed on the Closing Date shall be subject (at Printronic's discretion) to
the satisfaction, on or before the Closing Date, of the following conditions:
(a) Truth of Representations and Warranties and Compliance
with Obligations. The representations and warranties of DynaMark herein
contained shall be true in all material respects on the Closing Date
with the same effect as though made at such time. DynaMark shall have
performed all material obligations and complied with all material
covenants and conditions that are required to be performed or complied
with prior to or as of the Closing Date. DynaMark shall have delivered
to Printronic a certificate of DynaMark in form and substance
reasonably satisfactory to Printronic dated as of the Closing Date and
executed by the President of DynaMark to all such effects.
(b) Opinion of Counsel. Printronic shall have received a duly
executed opinion letter from DynaMark's legal counsel dated as of the
Closing Date in substantially the form attached hereto as Exhibit
5.2(b) which shall be reasonably satisfactory to Printronic and its
counsel.
(c) Delivery of Documents. DynaMark shall have delivered all
documents required to be delivered at Closing pursuant to Section 6.3
hereof.
(d) Litigation Affecting Closing. No suit, action or other
proceeding shall be pending or threatened by or before any court or
governmental agency in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transaction contemplated by this Agreement, and no
investigation that might eventuate in any such suit, action or other
proceeding shall be pending or threatened.
(e) Legislation. No statute, rule, regulation or order shall
have been enacted, entered or deemed applicable by any government or
governmental or administrative agency or court which would make the
transaction contemplated by this Agreement illegal.
5.3) Termination of Agreement. This Agreement and the
transactions contemplated herein may be terminated at or prior to the
Closing Date as follows:
(a) By mutual written consent of all parties.
(b) By DynaMark pursuant to written notice delivered at or
prior to the Closing Date if Printronic or the Shareholders have failed
in any material respect to satisfy all of the conditions to the Closing
set forth in Section 5.1 or (with respect to those conditions set forth
in Section 5.1 for which DynaMark, Printronic or the Shareholders do
not have the responsibility to satisfy) there has been a failure to
satisfy such conditions in any material respect.
(c) By Printronic pursuant to written notice delivered at or
prior to the Closing if DynaMark has failed in any material respect to
satisfy the conditions set forth in Section 5.2 or (with respect to
those conditions set forth in Section 5.2 for which DynaMark,
Printronic or the Shareholders do not have the responsibility to
satisfy) there has been a failure to satisfy such conditions in any
material respect.
5.4) Consequences of Termination.
(a) Printronic and the Shareholders may pursue any remedies
available at law or equity in the event DynaMark terminates this
Agreement other than in compliance with Section 5.3(b) or in the event
Printronic terminates this Agreement in compliance with the provisions
of Section 5.3(c).
(b) DynaMark may pursue any remedies available at law or
equity in the event Printronic terminates this Agreement other than in
compliance with Section S.3(c), or in the event DynaMark terminates
this Agreement in compliance with the provisions of Section 5.3(b). The
parties recognize that the Assets to be transferred hereunder are
unique and that DynaMark's damages in the event of breach hereof by
Printronic or the Shareholders would be difficult to assess. Printronic
and the Shareholders therefore agree that DynaMark shall be entitled to
specific performance as relief in the event of breach by either
Printronic or the Shareholders of their obligations hereunder.
ARTICLE 6.
CLOSING
6.1) Closing. The closing of the transaction contemplated by this
Agreement ("Closing") shall be held at the offices of Warshaw, Burstein, Xxxxx,
Xxxxxxxxxxx & Kuh, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, on July 19,
1996, at 9:00 am., or at such later date or time as the parties may mutually
agree upon in writing. Such date of Closing shall be referred to herein as the
Closing Date. The Closing shall be effective at 12:01 a.m. July 19, 1996.
6.2) Documents to be Delivered by Printronic and the Shareholders at
the Closing. Printronic and the Shareholders agree to deliver the following
documents, duly executed as appropriate, to DynaMark at the Closing:
(a) All certificates, schedules, exhibits, and attachments in
completed form and specifying the information required by the
provisions of this Agreement.
(b) Articles of Incorporation of Printronic certified by the
New York Secretary of State.
(c) Bylaws of Printronic certified by Printronic's Secretary.
(d) Certificate of Good Standing for Printronic dated no
earlier than fifteen (15) days prior to the Closing Date.
(e) Certified copies of corporate resolutions of Printronic
authorizing it to enter into the transactions contemplated herein.
(f) A warranty xxxx of sale and instruments of assignment and
transfer for the sale of the Assets.
(g) Certificates of title and assignment thereof for all motor
vehicles transferred by Printronic to DynaMark as part of the Assets.
(h) Certificate of Printronic's President and the Shareholders
regarding representations and warranties as required under Section
5.1(a).
(I) Opinion of Printronic's counsel as required under Section
5.1(b).
(j) Documentation for all consents and/or termination
statements required in connection with the Closing described in this
Agreement.
(k) Noncompetition Agreements as required under Section 7.2.
(l) The Escrow Agreement described in Section 1.5.
(m) Instruments of assignment and transfer for the Contracts.
(n) Documentation relating to the novation of the NCOA License
to Printronic.
(o) Amendment to Printronic's Articles of Incorporation
changing Printronic's name, in form complete and adequate for filing,
as required under Section 6.6.
(p) Consulting Agreements as required under Section 7.3.
(q) Such other documents as DynaMark may reasonably request
for the purpose of assigning, transferring, granting, conveying, and
confirming to DynaMark or reducing to its possession, any and all
assets, property and rights to be conveyed and transferred by this
Agreement or to carry out transactions contemplated by the Agreement.
6.3) Documents Delivered by DynaMark at the Closing. DynaMark agrees to
deliver the following documents, duly executed as appropriate, to Printronic
and/or the Shareholders at the Closing:
(a) Articles of Incorporation of DynaMark certified by the
Minnesota Secretary of State.
(b) Bylaws of DynaMark certified by DynaMark's Secretary.
(c) Certificate of Good Standing of DynaMark dated no earlier
than fifteen (15) days prior to the Closing Date.
(d) Certified copies of corporate resolutions of DynaMark
authorizing it to enter into the transactions contemplated herein.
(e) Certified or cashier's checks, or equivalent instrument or
funds, from DynaMark, made payable to Printronic and the Escrow Agent
in the amounts determined pursuant to Section 1.7.
(f) The estimated number of the Fair, Xxxxx Shares as
determined pursuant to Section 1.5 which shall be delivered to
Printronic and the Escrow Agent.
(g) Agreement granting certain registration rights as
described in Section 1.4.
(h) Noncompetition Agreements as required under Section 7.2.
(I) The Escrow Agreement described in Section 1.5.
(j) Documentation relating to the novation of the NCOA License
to Printronic.
(k) Consulting Agreements as required under Section 7.3.
(l) Documentation relating to the assumptions of the
liabilities described in Section 1.6.
(m) Such other documents as Printronic reasonably may request
to carry out the transactions contemplated by this Agreement.
6.4) Failure to Obtain Transfer of NCOA License. The parties
acknowledge and understand that pending approval of the novation of the NCOA
License by the United States Postal Service, neither Printronic nor DynaMark
will be entitled to operate under the NCOA License. The parties acknowledge and
agree that the risk of obtaining approval of the novation of the NCOA License by
the United States Postal Service shall be on DynaMark after the Closing.
DynaMark and Printronic shall use their best efforts to obtain the novation of
the NCOA License after the Closing.
6.5) Employee Expenses. DynaMark may, but shall have no obligation to
hire any employees of Printronic after the Closing Date. Printronic agrees to
take appropriate action to enable DynaMark to hire such employees. All amounts
due to the employees of Printronic through the Closing Date for commissions,
salary, wages, fringe benefits, pension benefits, sick leave and vacation
benefits, including cash bonuses accrued through the Closing Date and all
employment taxes incurred thereon, will be paid in full as of the Closing Date,
but any such amounts not then due shall be paid thereafter but on or before the
due date; provided DynaMark agrees to assume any liabilities for accrued sick
leave and vacation benefits incurred by Printronic prior to the Closing Date;
provided further, that DynaMark's total obligation for such accrued sick leave
and vacation benefits shall not exceed Fifty Thousand and no/100 Dollars
($50,000.00). DynaMark shall thereafter hold Printronic harmless against any
claims by such employee for accrued sick leave and vacation benefits to the
extent such claims relate to the obligations for accrued sick leave and vacation
benefits for which DynaMark has assumed responsibility. At the request of
Printronic, with respect to any employees of Printronic hired by DynaMark after
the closing, DynaMark shall pay the commissions, salary, and wages accrued
through the Closing Date by Printronic and all employment taxes incurred thereon
which shall be paid with DynaMark's regular payroll. The accrued commissions,
salary, wages and employment take shall be listed as a liability on the Final
Balance Sheet. Any employment taxes advanced by DynaMark shall be advanced on
behalf of Printronic.
6.6) Printronic Chance of Name. Printronic shall deliver to DynaMark on
or before the Closing Date, in a form complete and adequate for filing, an
amendment to Printronic's Articles of Incorporation, changing Printronic's name
to a name that is not similar to Printronic's present name, and shall provide
such consents and take any other action required by DynaMark to enable DynaMark
to utilize Printronic's name, if DynaMark so desires.
6.7) Prorations. The business operations of Printronic and the income
and expenses attributable thereto through the date immediately preceding the
Closing Date shall be payable by and for the account of Printronic and for
periods thereafter shall be payable by and for the account of DynaMark. The
parties shall account to each other for all such items of income and expense.
Allocation of items under these proration provisions shall include but not be
limited to work in process, power and utility charges, real and personal
property taxes and rents and payments pertaining the Contracts being transferred
to DynaMark hereunder (to the extent not already included as prepaid expenses or
accrued expenses).
6.8) Reorganization Treatment. DynaMark and Printronic shall take all
actions necessary to cause the Exchange and the other transactions contemplated
by this Agreement to be treated for tax purposes as a reorganization under Code
Section 368(a)(1)(C), including all actions necessary to comply with the
"continuity of business enterprise" and "continuity of interest" requirements
with respect thereto.
ARTICLE 7.
POST-CLOSING OBLIGATIONS
7.1) Further Documents and Assurances. At any time and from time to
time after the Closing Date, each party shall, upon request of another party,
execute, acknowledge and deliver all such further and other assurances and
documents, and will take such action consistent with the terms of this
Agreement, as may be reasonably requested to carry out the transactions
contemplated herein and to permit each party to enjoy its rights and benefits
hereunder.
7.2) Covenant Not to Compete. Printronic and each of the Shareholders
agree not to engage in competition with DynaMark subsequent to the Closing Date
all as more particularly set forth in the Noncompetition Agreements attached
hereto as Exhibit 7.2.
7.3) Consulting Agreements. Each Shareholder agrees to provide
consulting services to DynaMark subsequent to the Closing Date all as more
particularly set forth in the Consulting Agreements attached hereto as Exhibit
7.3.
ARTICLE 8.
INDEMNIFICATION
8.1) Indemnification by DynaMark. DynaMark shall indemnify and hold
Printronic and the Shareholders, and each of them, harmless from and against all
losses or damages suffered by Printronic (including reasonable attorneys fees)
which arise out of, relate to, pertain to or concern any misrepresentation by
DynaMark, or any failure of DynaMark to disclose any material fact necessary to
make any statement herein or in any other document furnished by DynaMark to
Printronic not misleading, or any breach of DynaMark's warranties and
representations hereunder, or any breach, nonfulfillment or nonperformance by
DynaMark of any of their covenants, dudes, or obligations hereunder including,
without limitation, the payment and discharge of all Permitted Liabilities.
8.2) Indemnification by Printronic and the Shareholders. Printronic and
the Shareholders, jointly and severally, shall indemnify and hold DynaMark
harmless from and against all losses or damages suffered by DynaMark (including
reasonable attorneys' fees) which arise out of, relate to, pertain to or concern
any misrepresentation by Printronic or the Shareholders, or any failure of
Printronic or the Shareholders to disclose any material fact necessary to make
any statement herein or in any other document furnished by Printronic or the
Shareholders to DynaMark not misleading, or any breach of Printronic's and the
Shareholders' warranties and representations hereunder, or any claim, demand,
action or proceeding asserted by a creditor of Printronic under the provisions
of the New York Bulk Transfer Act, or any breach, nonfulfillment or
nonperformance by Printronic or the Shareholders of any of their covenants,
duties, or obligations hereunder. Without limiting the generality or the
foregoing, Printronic and the Shareholders, jointly and severally, guarantee to
DynaMark that the amount of the Accounts Receivable used for purposes of the
calculation of the Adjustment Amount under Section 1.8 will be paid during a
collection period of one hundred fifty (150) days immediately following the
Closing to the extent that the actual amount of Accounts Receivable collected
would have required an adjustment to the Base Consideration pursuant to the
provisions of Section 1.8. At any time after the end of this collection period
but on or prior to one hundred eighty (180) days after the Closing Date,
DynaMark shall deliver to Printronic and the Shareholders a schedule of all of
those Accounts Receivable unpaid at the end of the collection period. Printronic
or the Shareholders shall promptly pay to DynaMark the full amount of any
adjustment to the Base Consideration resulting from the failure to collect the
Accounts Receivable in a manner similar to that described in Section 1.8(b).
DynaMark shall not be obligated to undertake any legal action to collect the
Accounts Receivable. Printronic and the Shareholders shall have no liability to
DynaMark for any damages for such unpaid Accounts Receivable except for the
amount of any adjustment to the Base Consideration.
8.3) Third Party Claims. In the event of any claim for indemnification
hereunder resulting from or in connection with any claim or legal proceedings by
a third party, the party entitled to indemnification ("Indemnified Party") shall
promptly give written notice to the party from whom indemnification is sought
(the Indemnifying Party") and, if possible, no later than ten (10) days prior to
the time any response to the asserted claim is required. In the event of any
such claim for indemnification resulting from or in connection with a claim or
legal proceeding by a third party, the Indemnifying Party may, at its sole cost
and expense, assume the defense thereof; provided, however, that the
Indemnifying Party agrees in writing to pay the full amount of such
indemnification to the Indemnified Party. If the Indemnifying Party assumes the
defense of any such claim or legal proceeding, the Indemnifying Party shall be
entitled to select counsel and take all steps necessary in the settlement or
defense thereof; provided, however, that no settlement shall be made without the
prior written consent of the Indemnified Party which consent shall not be
unreasonably withheld; and, provided further, that the Indemnified Party may, at
its own expense, participate in any such proceeding with the counsel of its
choice. The parties shall cooperate with each other in the defense of such claim
and shall make available to each other any nonprivileged or nonconfidential
information which a party may reasonably request concerning such claim. So long
as the Indemnifying Party is in good faith defending such claim or proceeding,
the Indemnified Party shall not compromise or settle such claims without the
prior written consent of the Indemnifying Party; provided that the Indemnifying
Party shall not by this Agreement permit to exist any lien, encumbrance or other
adverse charge upon any assets of any Indemnified Party. If the Indemnifying
Party does not assume the defense of any such claim or litigation in accordance
with the terms hereof, the Indemnified Party may defend against such claim or
litigation in such manner as it may deem appropriate (including, but not limited
to; settling such claim or litigation after giving notice of the same to the
Indemnifying Party) on such terms as the Indemnified Party may deem appropriate,
and the Indemnifying Party shall promptly indemnify the Indemnified Party in
accordance with the provisions of this Article 8.
8.4) Set-Off. In the event Printronic (or either of the Shareholders)
fails to pay when due any claim DynaMark may have for indemnification pursuant
to this Article 8, or otherwise, DynaMark may, in addition to any other remedies
to which it may be entitled, set-off any amount equal to DynaMark's claim
against the amounts otherwise owed by DynaMark to Printronic or the Shareholders
or any of them, under this Agreement, the agreements executed pursuant to this
Agreement, or otherwise. DynaMark shall provide Printronic and/or the
Shareholders, as the case may be, written notice of such set-off which written
notice shall contain a description (in reasonable detail) of the claim on which
the setoff is based. Such written notice shall be provided within ten (10)
business days after the set-off is made.
8.5) Survival Periods. The parties hereto agree that all
representations and warranties contained in this Agreement, or any certificate,
document or other instrument delivered in connection herewith, shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, regardless of any investigation made by the
parties hereto or their independent accountants or legal representatives, for a
period ending on the third (3rd) anniversary of the Closing Date, except that
representations and warranties relating to any liability for taxes of Printronic
shall survive without limitation (in each case, the "Survival Period");
provided, however, that no claim for breach of a representation or warranty may
be brought under this Agreement by any person unless written notice of such
claim shall have been given on or prior to the last day of the applicable
Survival Period (in which event each such representation and warranty shall
survive the applicable Survival Period until such claim is finally resolved and
all obligations with respect thereto are fully satisfied).
ARTICLE 9.
GENERAL
9.1) Exhibits. Each Exhibit delivered pursuant to the terms of this
Agreement shall be in writing, and shall constitute a part of the Agreement.
9.2) Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given, when
received, if personally delivered, and, when deposited, if placed in the U.S.
mails for delivery by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
Printronic and the Shareholders: Printronic Corporation of America, Inc.
00 Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Xxx X. Xxxxxx
000 Xxxx Xxxxxx, Xxx. 00-X
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx Xxxxxx
000 Xxxx Xxxxxx, Xxx. 00-X
Xxx Xxxx, Xxx Xxxx 00000
with a copy to: Xxxxx X. Xxxx, Esq.
Warshaw, Burstein, Xxxxx, Xxxxxxxxxxx &
Kuh, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
DynaMark: DynaMark, Inc.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000
with a copy to: Xxxx X. Xxxxxx, Esq.
Xxxxxxxxxx & Xxxxx , P. A.
1100 International Centre
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Addresses may be changed by written notice given pursuant to this Section,
however any such notice shall not be effective, if mailed, until three (3)
working days after depositing in the U.S. mails or when actually received,
whichever occurs first.
9.3) Counterparts. This Agreement may be executed in counterparts and
by different parties on different counterparts with the same effect as if the
signatures thereto were on the same instrument.
9.4) Successors and Assign. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their successors or
assigns, provided that the rights of Printronic and the Shareholders under this
Agreement may not be assigned without the prior written consent of DynaMark
(except that the rights of Printronic may be assigned to the Shareholders
pursuant to the Liquidation of Printronic) and the rights of DynaMark may only
be assigned to its parent corporation, its subsidiary, or a subsidiary of its
parent or to such other business organization which shall succeed to
substantially all the assets and business of DynaMark or its parent.
9.5) Headings. The descriptive headings of the several Articles and
Sections of this Agreement and of the several Exhibits to this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
9.6) Expenses. Except as otherwise provided herein, each party hereto
shall each bear and pay for its own costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereby, including,
without limitation, all fees and disbursements of attorneys, accountants and
financial consultants. DynaMark shall be responsible for and shall pay any
sales, use or other transfer taxes associated with the transactions herein.
9.7) Brokers' Commissions. The parties represent and warrant to each
other that they have not engaged any broker or finder in connection with the
transaction described herein.
9.8) Entire Agreement: Modification and Waiver. This Agreement,
together with the Exhibits and the related written agreements specifically
referred to herein, represents the only agreement among the parties concerning
the subject matter hereof and supersedes all prior agreements (including the
Restated Memorandum of Intent dated June 24, 1996) whether written or oral,
relating thereto. No purported amendment modification or waiver of any provision
hereof shall be binding, unless set forth in a written document signed by all
parties (in the case of amendments or modifications) or by the party to be
charged thereby (in the case of waivers). Any waiver shall be limited to the
provision hereof and the circumstance or event specifically made subject thereto
and shall not be deemed a waiver of any other term hereof or of the same
circumstance or event upon any recurrence thereof.
9.9) Public Announcements. DynaMark will prepare any public
announcements of the transaction. Neither Printronic nor the Shareholders will
issue any press release or public announcement concerning, or otherwise divulge,
any provisions of this Agreement or the transaction contemplated by this
Agreement either prior to or after the Closing without the consent of DynaMark.
9.10) Governing Law. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of Minnesota.
9.11) Survival of Representations, Warranties and Agreements. Except as
otherwise provided in Section 8.5, the representations, warranties and
agreements contained m this Agreement shall survive the Closing and remain in
full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in the manner appropriate to each, all as of the day
and year first above written.
DYNAMARK, INC.
By /s/ Xxxxx Xxxxxxxxx
--------------------------------
Its Vice President
------------------------------
DYNAMARK
PRINTRONIC CORPORATION OF AMERICA, INC.
By /s/ Xxx X. Xxxxxx
--------------------------------
Its President
------------------------------
PRINTRONIC
/s/ Xxx X. Xxxxxx
---------------------------------------
Xxx X. Xxxxxx
/s/ Xxxxx Xxxxxx
---------------------------------------
Xxxxx Xxxxxx
SHAREHOLDERS
