Agreement for Sale and Purchase of Corporate Stock - The Argus Press and Master Graphics Inc.
SEPTEMBER 22, 1997
AGREEMENT FOR SALE AND PURCHASE
OF CORPORATE STOCK
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THIS AGREEMENT is made on the 22 day of September, 1997, between THE ARGUS
PRESS, INC. ("Argus"), an Illinois corporation, Joseph M. Jensen ("Jensen") and
Allan R. Bartel ("Bartel") (Messrs. Jensen and Bartel collectively referred to
herein as "Sellers") and MASTER GRAPHICS, INC. ("Buyer") a Delaware corporation.
1. PURCHASE OF STOCK
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Sellers agree to sell, assign, transfer and convey to Buyer all of the
stock of Argus pursuant to this agreement. Buyer agrees to purchase from
Sellers, all of Sellers' 1,000 shares of common stock of Argus which constitutes
all of its issued and outstanding stock. Sellers understand, acknowledge and
agree that Argus will be merged into Premier Graphics, Inc., a Delaware
corporation ("Premier"), and that Premier shall be the surviving corporation.
2. PURCHASE PRICE
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The Purchase Price to be paid by Buyer to Sellers for said capital stock of
Argus shall be Twelve Million Two Hundred Fifty Thousand Dollars
($12,250,000.00).
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3. CLOSING
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(a) The Closing Date shall be September 30, 1997 or such earlier or
later date as may be mutually agreed upon by the parties.
(b) In the event Buyer fails to close on or before September 30, 1997,
this Agreement and all of Sellers' obligations hereunder shall become voidable
at Sellers' option. It is agreed the Closing date may be extended, but any such
extensions shall be in writing and signed by Buyer and Sellers.
(c) If the transaction described in this Agreement does not close on
the aforementioned date or at the end of any extension period, except for reason
of Sellers' refusal to dose or their failure to comply with the terms hereof,
Buyer shall, by no later than September 30, 1997, reimburse Sellers for all
costs and expenses incurred by them incident to this transaction.
4. DELIVERY OF STOCK AND PAYMENT OF PURCHASE PRICE
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(a) The delivery to Buyer of certificates for the shares of capital
stock sold hereunder by Sellers, and the payment of the cash portion of the
Purchase Price therefor by Buyer to Sellers, shall take place on the Closing
Date at the offices of Hamblet, Casey, Oremus & Vacin, SUITE 200 75 East Wacker
Drive, Chicago, Illinois.
(b) On the Closing Date, Sellers shall deliver to Buyer the
certificates evidencing the 1,000 shares of capital stock of Argus agreed to be
sold hereunder, duly endorsed for transfer,
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and Buyer shall pay Sellers or Seller's nominees the sum of Eight Million Five
Hundred Thousand Dollars ($8,500,000.00), by wire transfer in accordance with a
joint direction from Sellers at or before the Closing, and Three Million Seven
Hundred Fifty Thousand Dollars ($3,750,000.00) in subordinated debentures and
the warrant rights created under Section 4 (c) hereunder representing the
Purchase Price to be paid for said shares by Buyer. The sale proceeds, net of
any closing costs, commissions, fees and expenses paid at closing, shall be
shared equally between Jensen and Bartel The subordinated debentures shall
consist of seven-year promissory of Buyer in the total amount of Three Million
Seven Hundred Fifty Thousand Dollars ($3,750,000 00) bearing interest thereon at
the rate of 12% per annum payable from the Closing Date until the principal sum
and all accrued interest thereon have been paid in full, said promissory notes
to be in the form of the two Subordinated Notes attached as Exhibits "A- 1" and
"A-2" hereto. Interest on the said promissory notes shall be paid monthly. The
payment of the promissory notes and interest thereon shall be guaranteed by John
P. Miller, personally in the form of the Personal Guaranty attached to each of
the said Notes. In the event Buyer wishes to prepay the said promissory notes
without Sellers' consent, Buyer and/or the said guarantors shall pay to Sellers
a prepayment fee of Seven Hundred Fifty Thousand Dollars ($750,000.00), in
addition to the principal and interest due and payable on the promissory notes.
(c) In the event that Buyer shall cause to be made a public offering of its
stock (the "IPO") or in the event Buyer merges with or is acquired by any
publicly or privately held company, Sellers shall have the following rights:
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(i) In the event there is an IPO by Buyer, Sellers shall have
options to acquire for a price equal to the IPO Price those numbers of
shares in the IPO that aggregate to Three Million Seven Hundred Fifty
Thousand dollars ($3,750,000.00), such number of shares to be determined as
follows,
$$3.75 million / initial IPO price per share = number of shares Sellers
shall have option to purchase
(ii) In the event there has not been an IPO within three years of
the purchase, Sellers will have an option to buy Buyer's stock in share
value totaling Three Million Seven Hundred Fifty Thousand dollars
($3,750,000.00) at a price per share equal to the total value of Buyer
(based on the five (5) times EBITDA formulae for the preceding calendar
year divided by the total number of issued and outstanding shares of
capital stock.
(iii) In the event of an acquisition or merger, Sellers shall have
the option to acquire those numbers of shares in the company merging with
or requiring Buyer as would equal $3,750,000 in value, such number of
shares to be determined as follows,
$3.75 million / price per share of Company = number of shares
merging with or Sellers shall have option
acquiring Buyer to purchase
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stock options shall expire ten (10) years from the Closing Date and shall be in
the form of the stock warrants attached hereto Exhibits B-1 and B-2.
(d) Sellers agree to assume responsibility for any costs and expenses
incurred by Buyer in connection with the return of the Screen USA PIR 1080 Plate
Exposure Device and PIR AT AND The PIR Configurable Punch now being purchased by
Argus pursuant to a contract with Screen USA dated March 27, 1997 and numbered
MW-00334 in the event Premier shall reasonably decide in accordance with the
privileges afforded it under the said contract to return the replacement PIR
equipment by reason of its having failed to meet the performance standards
therein enumerated. Prior to the Closing, Sellers have procured the consent of
Screen USA to the assignment of this contract to Premier by document dated
September 19, 1997 entitled Acknowledgment and Consent. Subsequent to the
Closing, Buyer shall cause Premier to allow Screen USA to first attempt to make
the said equipment satisfy the contract standards for the ninety day period
after September 30, 1997 and then, if the existing equipment has not met the
said standards, to cause Premier to allow Screen USA to replace the said
equipment as provided in the said Acknowledgment and Consent In the event Buyer
calls upon Sellers to assume the aforesaid responsibility, Seller and Premier
shall fully cooperate with Sellers in asserting any rights Buyer or Premier have
under the said contract, including the assignment of the contract and any of
Buyer's or Premier's rights in and to the replacement equipment to Sellers.
Except to the extent of Sellers responsibilities for Argus liabilities under
this Section, Buyer shall purchase the stock of Argus subject to all of Argus'
existing corporate liabilities. Buyer and John P Miller will use their best
efforts to have Sellers released from any and all personal guarantees, if any,
of any Argus indebtedness and indemnify Sellers from any and all such
liabilities.
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5. ARGUS' NET WORTH
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The terms of this contract are premised on the representation to the Buyer
by Sellers that Argus' net worth on its May 31, 1997 balance sheet and as of the
Closing, or any other date shortly before the Closing that is agreed to by the
parties, shall have been, and shall be, no less than Three Million Four Hundred
Seventeen Thousand Six Hundred and Twenty Nine dollars ($3,417,629.00). Buyer
shall be entitled to retain the amount of any increase in Argus' Net Worth
between May 31, 1997 and the Closing, provided, however, Buyer shall reimburse
Sellers for the amount of the federal and state income taxes required to be paid
by them as "Subchapter Shareholders" on Argus' taxable earnings between May 31,
1997 and the Closing Date. In calculating Argus' said Net Worth as of the
Closing as well as the amount of Argus' taxable income after May 31, 1997,
Argus' historical accounting methods shall be used.
6. WARRANTIES AND REPRESENTATIONS OF SELLERS
-----------------------------------------
Sellers, jointly and severally, warrant and represent to Buyer as
follows,
(a) Sellers each have full, complete and absolute title to the
following number of capital stock of Argus:
NAME NUMBER OF SHARES
Joseph M. Jensen 500
Allan R. Bartel 500
(b) The title of each of Sellers to said shares is free and clear of
any lien, charge or encumbrance, and said shares, aggregating to 1,000 shares,
constitute all of the outstanding capital
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stock of Argus and, by sale of said shares of stock hereunder, Buyer will
receive good and absolute title thereto free of any liens, charges or
encumbrances.
(c) Argus is a corporation duly organized and existing under and by
virtue of the laws of the State of Illinois, and is in good standing with the
Illinois Secretary of State.
(d) The one thousand (1000) shares of capital stock of Argus have
been duly issued and are outstanding and are all of the outstanding shares of
Argus and said shares are valid, fully paid and non-assessable, and no
assessment is outstanding against the same or any part thereof
(e) If requested by Buyer, prior to the closing of this
transaction, Sellers will deliver to Buyer an opinion of Hamblet, Casey, Oremus
& Vacin, Sellers' counsel, addressed to Buyer, stating:
(i) that the 1,000 shares of the capital stock of Argus now issued
and outstanding have been lawfully issued under the laws of the State of
Illinois and are valid;
(ii) that all stock transfer restrictions affecting the transfer of
said shares of capital stock to Buyer hereunder have been complied with or
effectively waived
(iii) of the issued and outstanding shares of Argus free and clear of
all liens, charges or that upon the closing hereunder, Buyer will have full
and absolute title to all encumbrances; and,
(iv) that Sellers have full power and authority to execute this
agreement and perform and implement the terms hereof.
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(v) such other terms and provisions as Buyer or its counsel may
reasonably require.
(f) The present Directors and Officers of Argus are the following,
Directors, Joseph M. Jensen
Allan R. Bartel
Officers, Joseph M. Jensen Chairman, Secretary
Alan R. Bartel President, Treasurer
Diane M. Jensen Vice President
Lorie S. Bartel Vice President
Donald M. Harris Assistant Secretary
Michael J. Hamblet Assistant Secretary, Registered Agent
The written resignations of said Officers and Directors shall be tendered to
Buyer concurrently with the delivery of the certificates representing the
capital stock sold hereunder.
(g) Attached hereto and marked Exhibit "C" is a document styled,
THE ARGUS PRESS, INC.
Financial Statements and Additional Information
Month Ended May 31, 1997
which contains the following Financial Statements of Argus
I. Balance Sheet
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II. Statement of Income
and, have been prepared using accounting methods, consistent with Argus'
historical accounting methods. Argus has no material liabilities as of the date
of this Statement, whether absolute, contingent or otherwise, except those
disclosed on the Financial Statements. Said Financial Statements truly,
correctly and completely set forth the financial condition of Argus as of May
31, 1997 in all material respects. Title to all assets referred to and shown on
the balance sheet are vested in Argus as of said date.
(h) Between the date of this agreement and the Closing Date, Argus
and Sellers will not,
(i) Sell, assign or otherwise transfer any Argus property or assets
material to the operation of Argus' business other than in the ordinary and
usual course of its business as heretofore conducted, except as to any such
items that shall have become no longer useful or otherwise rendered of no
further use to Argus. Sellers shall use their best efforts to prevent Argus
from suffering any adverse change in assets, liabilities, or financial
condition or to suffer any damage, destruction, or loss (whether or not
covered by insurance) that materially and adversely affects Argus '
business or properties;
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(ii) Create, participate in, or agree to the creation of any liens or
encumbrances on Argus' property, save and except liens for current taxes
and liens created in the ordinary and usual course of its business as
heretofore conducted;
(iii) Enter into any leases, contracts, or agreements of any kind or
character or incur any liabilities, save and except those to which it is
presently committed and which are disclosed herein or in the exhibits
hereto and purchase orders placed for raw materials and supplies and
agreements to sell products to customers arising in the ordinary and usual
course of business as heretofore conducted and except for the prepress
equipment and telephone system which as previously disclosed to Buyer is
now being purchased by Argus;
(iv) Make any payments or distributions to any of its officers,
stockholders or employees, save and except: wages and salaries paid to
employees in the ordinary and usual course of Argus' business as
heretofore conducted.
(i) Amend or repeal its Articles of incorporation or Bylaws or
issue any shares of capital stock in addition to and other than the shares
heretofore issued or reissue any treasury stock.(i) Sellers shall instruct
Argus' accountants and legal counsel to cooperate and assist Buyer in its
due diligence efforts and activities incident to this transaction.
(j) Attached hereto, as Exhibit "D", is a schedule of all notes and
accounts payable, accrued taxes and other liabilities of Argus as reflected by
the balance sheet.
(k) Attached hereto, as Exhibit "E" is a list of the furniture,
fixtures and equipment owned by Argus and located on its premises at 7440
Natchez, Niles, Illinois, said furniture,
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fixtures and equipment being free from any liens, claims or encumbrances except
as otherwise disclosed pursuant to this agreement and the exhibits hereto.
(l) Attached hereto, as Exhibit "F", is a list of the insurance
policies presently in effect with respect to the corporate property and business
of Argus, and Sellers shall maintain such policies in full force and effect
through the Closing Date. As soon as practicable after the closing Buyer shall
elect whether to retain the "Key Man" policies now maintained by Argus on the
lives of the Sellers; should Buyer elect not to retain the said policies, Buyer
shall offer them to the Seller whose life is thereby insured at a price equal to
the cash value of such policy.
(m) There are no actions, suits, or proceedings pending or, to
Sellers' knowledge, threatened against Argus or affecting Argus before any
Court, administrative agency or arbitrator, except for the workers compensation
cases previously disclosed to Buyer which cases are being defended and insured
by Argus' workers compensation insurer(s). Argus is not subject to any order,
injunction, decree or decision of any Court, administrative agency or
arbitrator. No party has made a claim against Argus that might result in
litigation and Argus and Sellers represent that they have no knowledge of any
basis for such claim.
(n) All required federal, state and local tax returns of Argus have
been duly and timely filed, and all federal, state and local taxes required to
be paid with respect to the periods covered by such returns have been timely
paid. Argus is not delinquent in the payment of any tax, assessment or
governmental charge. No tax deficiency is proposed or assessed against Argus and
Argus has not executed any waiver of any statute of limitations on the
assessment or collection of any
<PAGE>
tax. Sellers are responsible for any Subchapter S income tax audit deficiencies
for periods prior to the Closing, subject to the provisions of Section 5 above.
Buyer and Premier shall fully cooperate with Seller in providing records and
other information needed for any such audits.
(o) Argus is not in violation of any federal, state, or municipal law,
statute, regulation, orders, judgments or decrees applicable to Argus or
shareholders in the operation of the business. Neither the Sellers nor Argus
have received any notice of any asserted present or past failure by Argus to
comply with such laws, statutes, ordinances, regulations, judgments or decrees.
(p) None of the products manufactured or sold by Argus infringe upon
any patents, patented formulas or private trademarks, trade secrets or
copyrights nor has Argus, in the past, manufactured or sold any products which
infringe upon any such patents, trademarks, trade secrets or copyrights.
(q) Sellers shall continue to conduct Argus' business in substantially
the same manner as Sellers have previously conducted it and will not introduce
or undertake any material new method of management, operation or accounting.
(r) Sellers shall maintain Argus' properties and facilities in as good
working order and condition as at present, ordinary wear and tear excepted.
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(s) Sellers shall perform all of Argus' duties, obligations and
undertakings pursuant to contracts and agreements relating to or affecting
Argus' assets, properties, rights and business.
(t) To the best of Sellers' knowledge, information and belief Argus is
currently, and at all times has been, in full compliance with, and has not been,
and is not, in violation or liable under any Environmental Law (as defined
below) except for such failure to comply or violation which would not have a
material adverse effect. Argus has not disposed of or released any hazardous
substances on any portion of its Real Property. Argus has possessed and
currently possesses all permits, licenses and other necessary governmental
authorizations required under applicable Environmental Laws to operate its
business and Argus is in compliance with the terms and conditions thereof. To
the best of Sellers' knowledge, information and belief all property previously
and currently owned, leased or subleased by Argus (the "Real Property") and the
use and operation thereof have been and are currently in compliance with all
applicable laws, ordinances, rates and regulations, relating to public health
and safety and protection of the environment, including those statutes,
regulations and ordinances identified in the definition of Hazardous Materials
(as defined below) all as now and hereafter amended ("collectively Environmental
Laws"). Argus has not stored any Hazardous Materials (as defined below) on any
of the Real Property or any property in which Argus has had an interest, except
in compliance with applicable Environmental Laws. There have been no actions,
activities, circumstances, conditions, events or incidents including, without
limitation, the release, emission, discharge, presence or disposal of any
Hazardous Materials that could form the basis of any environmental claim against
Argus which would have a material adverse effect, and
<PAGE>
neither Argus nor Sellers know of any such actions, activities, circumstances,
conditions, events or incidents.
There are no pending or threatened requests for information, claims,
actions or proceedings from or by any governmental agency or any other person or
entity regarding the condition or use of the Real Property or the release, use,
refinement, generation, discharge, manufacture, treatment, transportation or
disposal of Hazardous Materials on, in, under (including the underlying
groundwater) or from the Real Property, or regarding any Environmental Laws, or
to liens or governmental actions, notices or violations, notices of non-
compliance or other proceedings of any kind with respect to the Real Property.
Sellers shall immediately notify Buyer and provide copies upon receipt of all
oral or written complaints, claims, citations, inquiries, reports or notices
relating to the condition of the Real Property or compliance with Environmental
Laws received after the date hereof.
For purposes of this Agreement, 'Hazardous Materials' means,
(i) "Hazardous Substances" or "Toxic Substances" as those terms are
defined by the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. 9601, et seq.;
(ii) "Hazardous Waste" as that term is defined by the Resource
Conservation and Recovery Act, 42 U.S.C. 6902, et seq.;
<PAGE>
(iii) Any pollutant or contaminate or hazardous, dangerous or toxic
chemicals, waste, materials or substances within the meaning of any other
applicable federal, state or local law, regulation, ordinance or
requirement relating to or imposing standards or conduct concerning any
hazardous, toxic or dangerous waste substances or material;
(iv) Crude oil petroleum products, by-products, or other hydrocarbon
substances;
(v) Any radioactive material, including any source, special nuclear
or by-product material as defined by 42 U.S.C. 211, et seq., as amended;
(vi) Asbestos in any form or condition;
(vii) Polychlorinated biphenyls ("PCBs") or substances or compounds
containing PCBs; and,
(viii) Medical or infectious waste.
(u) Argus has good and marketable title, free and clear of all
liens, and charges and encumbrances, to all assets listed on the balance sheet
dated May 31, 1997, or property acquired thereafter, and all personal property
located on Argus' business premises on May 31,
<PAGE>
1997, except for assets subsequently sold thereafter in the ordinary course of
business and for assets secured by institutional indebtedness as previously
disclosed and as described in the December 31, 1996 financial statements
furnished to Buyer.
(v) Sellers have furnished Buyer such copies of the Articles of
Incorporation and Bylaws and Minutes of Argus. Such copies are true, correct and
complete copies of such corporate documents, with all amendments.
(w) Neither the execution of this Agreement nor the fulfillment of the
terms of this Agreement will result in a breach of the terms, provisions or
conditions of this Agreement. Neither the execution of this Agreement nor the
fulfillment of the terms of this Agreement will invalidate or constitute a
default under this Agreement, or give any other person any rights of
acceleration, cancellation, termination, or any other rights now existing under
Argus' Articles of Incorporation or Bylaws, or any contract, mortgage,
indenture, agreement, order, decree, rule or regulation of any court or of any
federal, state or local regulatory or administrative body, to which the Company
is a party or subject, or which Argus is bound other than with respect to
composite Exhibit "G". Neither the execution of this Agreement nor the
fulfillment of the terms of the Agreement will result in the creation of any
lien, charge, or encumbrance on any of the Stock or on any property or assets of
Argus.
(x) Sellers do not own or have a material beneficial interest, and
have not owned or had a beneficial interest within the past three years,
directly or indirectly, in any corporation, firm,
<PAGE>
association, partnership, or a proprietorship that (I) is similar to or
competitor of Argus, (2) is a customer or supplier of Argus, or (3) has any
existing contractual relationship with Argus.
(y) Attached hereto as Exhibit "H" is a list of all employees of
Argus and their current rates of compensation. Argus is not a party to any union
contract or any other agreement providing employee benefits except Argus does
provide its' employees with a health and dental insurance plan and profit
sharing plan.
(z) No person holds the power of attorney for Argus. Argus' bank
accounts are with American National Bank of Chicago, and the only persons
authorized to draw on such accounts are Sellers.
(aa) No license or permit is required to operate Argus' business,
except a business License issued by the Village of Niles, Illinois. Such license
is presently valid and effective, and in no danger of revocation or nonrenewal.
(bb) Without limiting the foregoing to the best of Sellers' knowledge,
information and belief, all information provided to Buyer by Sellers and Argus
is in compliance with the provisions of this Agreement and is accurate and
complete in all material respects. The information provided does not contain any
untrue statement of material fact, and does not omit any facts in order to make
such information misleading.
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(cc) Except for the compensation due MASI Ltd for their services in
this transaction which shall be the sole responsibility of Sellers, there are no
claims for brokerage commission, finder's fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of the Sellers or Argus.
(dd) There are no outstanding rights to purchase or convert any
obligations of Argus to stock or securities of Argus, nor is Argus obligated to
issue any stock, securities, options, warrants, or convert any obligations or
other such rights.
(ee) Argus has all requisite corporate power and authority and all
material licenses, permits and authorizations necessary to own and operate its
properties and to carry on its business as now being conducted.
(ff) Argus has no subsidiaries or affiliated companies and does not
otherwise own or control, directly or indirectly, any equity interest in any
corporation or other entity.
7. WARRANTIES AND REPRESENTATIONS OF BUYER
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Buyer warrants and represents to Sellers as follows,
(a) Buyer is a corporation duly organized and validly existing and in
good standing under the laws of the State of Delaware.
<PAGE>
(b) Buyer has the power and authority to enter into this agreement and
to perform its obligations hereunder.
(c) The execution and delivery of this agreement and the consummation
of the transaction contemplated have been duly authorized by Buyer's Board of
Directors and no other corporate proceedings are necessary to authorize its
officers to effectuate this agreement and the transaction contemplated hereby.
(d) When executed by Buyer, this agreement constitutes a valid
obligation binding on it and such execution and performance of this agreement
does not violate, or result in a breach of, or constitute a default under, any
judgment, order or decree to which it may be subject nor does such making or
performance constitute a violation of or conflict with any provision of its
Charter or Bylaws.
(e) That attached hereto as Exhibit "I" is the most current financial
statement of John P. Miller which is warranted to be accurate and correct.
(f) Attached hereto and marked Exhibit "J" is a document styled,
MASTER GRAPHICS, INC.
Financial Statements and Additional Information
Month Ended May 31, 1997
which contains the following Financial Statements of Master -
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(i) Balance Sheet
(ii) Statement of Income
(iii) Statement of Retained Earnings
(iv) Statement of Cash Flows
(v) Managements' notes to Financial Statements
and, have been prepared in accordance with generally accepted accounting
principles, consistently applied. Master has no material liabilities as of the
date of this Agreement, whether absolute, contingent or otherwise, except those
disclosed on the Financial Statements other than trade credit or debt otherwise
incurred in the normal course of business.. Said Financial Statements truly,
correctly and completely set forth the financial condition of Master as of May
31, 1997. Title to all assets referred to and shown on the balance sheet are
vested in Master as of said date.
(g) Attached hereto and marked Exhibit "K" is a document styled,
PREMIER GRAPHICS, INC.
Financial Statements and Additional Information
Month Ended May 31, 1997
which contains the following Financial Statements of Master- -
(i) Balance Sheet
(ii) Statement of Income
<PAGE>
(iii) Statement of Retained Earnings
(iv) Statement of Cash Flows
(v) Managements' notes to Financial Statements
and, have been prepared in accordance with generally accepted accounting
principles, consistently applied. Premier has no material liabilities as of the
date of this Agreement, whether absolute, contingent or otherwise, except those
disclosed on the Financial Statements other than trade credit or debt otherwise
incurred in the normal course of business. Said Financial Statements truly,
correctly and completely set forth the financial condition of Premier as of May
31, 1997. Title to all assets referred to and shown on the balance sheet are
vested in Master as of said date.
(h) Except for compensation due Asset Services, a company, of Memphis,
Tennessee, Buyer has not employed any broker, finder or agent, nor has it
otherwise become in any way obligated for any broker's, finder's or agent's or
similar fees with respect to the transaction contemplated by this agreement.
(i) Buyer does not have any knowledge of any claim, litigation or
threatened litigation or any other action which has been instituted or
threatened affecting its ability to lawfully perform its obligations under this
agreement.
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(j) At or prior to closing, Buyer will deliver to Sellers a letter
from its legal counsel verifying that the foregoing matters are true, accurate
and correct and that counsel is not aware of any legal impediment to the
consummation of the transaction described in this agreement.
8. INDEMNIFICATION PROVISIONS (a) Indemnification Provisions for Benefit
--------------------------
of Buyer. In the event the Sellers breach any of their representations,
warranties, and covenants contained herein, then Sellers agree to indemnify the
Buyer from and against any adverse consequences the Buyer shall suffer through
and after the date of the claim for indemnification caused proximately by the
breach; provided, however, that Sellers shall not have any obligation to
indemnify the Buyer from and against any adverse consequences caused by the
breach of any representations, warranties or covenants of the Sellers contained
above until the Buyer has suffered adverse consequences by reason of all such
breaches in excess of a $50,000.00 aggregate deductible.
(b) Indemnification Provisions for Benefit of the Sellers. In the
event the Buyer breaches any of its representations, warranties, and covenants
contained herein, then the Buyer agrees to indemnify the Sellers from and
against any adverse consequences the Seller shall suffer through and after the
date of the claim for indemnification caused proximately by the breach;
provided, however, that Buyer shall not have any obligation to indemnify the
Sellers from and against any adverse consequences caused by the breach of any
representations, warranties or covenants of the Buyer contained above until the
Sellers have suffered adverse consequences by reason of all such breaches in
excess of a $50,000.00 aggregate deductible.
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(c) Matters Involving Third Parties. If any third party shall notify
any Party (the "Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification against any other
party (the "Indemnifying Party") under this Section 8, then the Indemnified
Party shall promptly (and in any event within five (5) business days after
receiving notice of the Third Party Claim) notify each Indemnifying Party
thereof in writing. Any Indemnifying Party will have the right at any time to
assume and thereafter conduct the defense of the Third Party Claim with counsel
of his or its choice reasonably satisfactory to the Indemnified Party. Unless
and until an Indemnifying Party assumes the defense of the Third Party Claim as
provided above, the Indemnified Party may defend against the Third Party Claim
in any manner he or it reasonably may deem appropriate. In no event will the
Indemnified Party consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of each of the Indemnifying Parties, which will not be unreasonably
withheld.
(d) Determination of Adverse Consequences. The Parties shall make
appropriate adjustments for tax benefits and insurance coverage and take into
account the time cost of money in determining adverse consequences for purposes
of this Section 8.
(e) Limitations. The parties agree not to assert any claims against
the other Party for breaches of representations, warranties or covenants of this
Purchase Agreement, apart from the Debentures and Warrants and Guarantees
exchanged hereunder, more than two years after the
<PAGE>
Closing Date and to limit the aggregate amount of any and all claims so asserted
by either Seller's or Buyer against the other to the amount of the Purchase
Price, with the exception of the following items:
(i) A claim arising as a result of a breach of representation or
warranty contained in Section 6(g) shall be limited to the amount of the
subordinated debentures if the breach of such representation or warranty is
a result of the failure by the Sellers to disclose a liability or potential
liability which is unknown to them as of the date of this Agreement.
(ii) Buyer shall have no recourse against Sellers for a breach of
representation and warranties contained in sections 6(j) and 6(k) provided
that the omission from the schedules referenced in such sections is
unintentional and the omitted items are properly reflected on the financial
statements attached to this Agreement.
(iii) A claim arising as a result of a breach of representation or
warranty contained in Section 6(m) shall be limited to the amount of the
subordinated debentures if the breach of such representation or warranty is
a result of a matter to which Sellers had no knowledge as of the date of
this Agreement.
(iv) A claim made as a result of a breach of a representation or
warranty contained in the first sentence of Section 6(o) shall be limited
to the amount of the subordinated debentures if such breach is a result of
a violation to which the Sellers had no knowledge as of the date of the
Agreement.
<PAGE>
(v) A claim made as a result of a breach of a representation or
warranty contained in Section 6(p) shall be limited to the amount of the
subordinated debentures if such breach is a result of an infringement which
Sellers had no knowledge of as of the date of this Agreement.
(vi) A claim made as a result of a breach of a representation or
warranty contained in Section 6(t) shall be limited to the amount of the
subordinated debentures provided such breach was a result of events or
occurrences to which Sellers had no knowledge of as of the date of this
Agreement.
(vii) A claim made as result of a breach of a representation or
warranty contained in Section 6(w) shall be limited to the amount of the
subordinated debentures if such breach related to a matter to which Sellers
had no knowledge of as of the date of this Agreement.
(viii) Buyer shall have no claim for a breach of a representation or
warranty contained in Section 6(y) if the omission from the schedule
referenced therein was inadvertent and immaterial to the overall operations
of Argus.
<PAGE>
(ix) A claim for a breach of a representation or warranty contained in
Section 6(ee) shall be limited to the amount of the subordinated debentures
if the breach results from the failure of Argus to have licenses, permits
or authorizations to which Sellers did not know were required.
(f) Source of Recovery. In the event the Buyer successfully asserts a
claim against the Sellers pursuant to this Section 8, the amount of such claim
shall go first to reduce the amount owed under the Subordinated Debentures
delivered as part of the Purchase Price. In the event the amount of the claim is
in excess of the amount owed under the Subordinated Debentures, Sellers shall
pay Buyer such excess by wire transfer or cashier' s check.
9. EMPLOYMENT AGREEMENT AND COVENANT NOT TO COMPETE
------------------------------------------------
(a) At closing Buyer and each Seller shall enter into an employment
agreement for a S-year period which shall also include the terms and conditions
indicated in the contract attached hereto as Exhibit "L-1" for Joseph M. Jensen
and "L-2" for Allan R. Bartel.
(b) During the term that the subordinated debenture is outstanding,
the Stockholders will be entitled but not required to attend all of Master
Graphics, Inc. and of Premier Graphics Inc. corporate board meetings and shall
receive notice of all such meetings of the Shareholders and of the Board of
Directors. This right shall not be extinguished if Sellers' employment under the
aforesaid Employment Agreement is terminated.
<PAGE>
(c) After the merger of Argus into Premier Master will cause Premier
to offer 3-year employment contracts to the following Argus employees or
commissioned salespersons: Victor Giarnpietro, Ralph Johnson, Joseph Jensen Jr.,
Patrick McCowan and Jeffrey Jensen with compensation terms substantially as now
prevail for the said persons, provided, each such employee so entitled to the
said contract continues to perform his duties and responsibilities substantially
as well as they are presently being performed by him The parties intend by this
provision to make the aforesaid persons third party beneficiaries of the
contractual provisions of this Section.
10. CONDITIONS PRECEDENT TO CLOSING
-------------------------------
The parties shall comply with the following prior to Closing,
(a) The representations and warranties set forth in the Agreement are
accurate and correct in all material respects as of the date of Closing to the
best of the parties' knowledge, information and belief and Sellers shall each
have executed and delivered a certificate to that effect before closing.
(b) The Buyer and Sellers shall have performed and complied with all
of their covenants contained in the Agreement and Sellers shall each have
executed and delivered a certificate to that effect on or before the Closing
<PAGE>
(c) There shall be no injunctions, judgments, orders, decrees or
ruling in effect preventing consummation of any of the transactions contemplated
by the Agreement.
(d) Sellers and Buyer shall have received from each other's legal
counsel opinions in the form and substance as set forth in Exhibit "M-l" and
"M-2", respectively, attached hereto, addressed to Sellers and Buyer as the case
may be and dated as of the Closing Date.
(e) Buyer shall have obtained the financing necessary to consummate
the transactions contemplated and described in this Agreement.
11. PAYMENT OF FEES AND EXPENSES
----------------------------
The parties hereto shall be responsible for, and will pay all of their own
fees and expenses, including those for their own legal counsel, accountants,
financial advisors and the M & A specialists separately retained by them in this
matter, incurred in the negotiation, preparation and consummation of this
Agreement.
12. SURVIVORSHIP
------------
All representations and warranties made by the parties to this Agreement
and in certificates and other documents to be delivered at closing, and the
liability of the parties for the breach, accuracy or other failure of such
representations and warranties, shall not be extinguished
<PAGE>
at closing. The parties, in executing, and in carrying out the provisions of,
this Agreement, are relying solely on the representations, warranties and
agreements contained in this Agreement or in any writing delivered pursuant to
provisions of this Agreement or at the closing of this transaction and not upon
any representation, warranty, agreement, promise or information, written or
oral, made by any person other than as specifically set forth herein.
13. ENTIRE AGREEMENT
----------------
The parties understand, agree and represent that this agreement constitutes
the entire agreement among the parties concerning the subject matter hereof, and
that no amendment, modification, deletion or addition hereto shall be valid
unless set out in writing and signed by all parties to this agreement. Buyer
expressly acknowledges and agrees that Sellers' warranties and representations
contained in this agreement constitute the only warranties and representations
of Sellers relied upon by Buyer in completing in this transaction, and that
Sellers have made no warranties or representations upon which Buyer relies
except as are expressly set out in writing, signed by Sellers.
14. INCORPORATION OF TERMS OF LETTER OF INTENT
------------------------------------------
Except to the extent that any of its terms and provisions would conflict or
be inconsistent with the provisions hereof, the terms and provisions of the
Letter of Intent dated June 25, 1997, between Sellers and Buyer are hereby
adopted and ratified by Sellers and Buyer and made a part hereof. A copy of said
Letter of Intent is attached hereto as Exhibit "N".
<PAGE>
15. BINDING EFFECT
--------------
This agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, legal representatives, successors and
assigns.
16. ASSIGNMENT
----------
Buyer shall not assign this agreement, or any rights contained herein,
without the prior written approval of Sellers.
17. MISCELLANEOUS
-------------
(a) All notices, approvals or other communications to be sent or given
by or to the parties shall be deemed validly and properly given or made if in
writing and delivered by hand or by registered or certified mail, return receipt
requested, and addressed to,
SELLERS Joseph M. Jensen Michael J. Hamblet
6917 N. Lexington Lane Hamblet, Casey, Oremus & Vacin
Niles, Illinois 60714 75 East Wacker Drive
Chicago, Illinois 60601
Allan R. Bartel Michael J. Hamblet
338 W. Sibley Hamblet, Casey, Oremus & Vacin
Park Ridge, Illinois 60068 75 East Wacker Drive
<PAGE>
Chicago, Illinois 60601
BUYER Premier Graphics, Inc. and Michael P. Morgan, Esq.
Master Graphics, Inc. Black Bobango & Morgan
2500 Lamar 530 Oak Court Dr., Ste. 345
Memphis, Tennessee 38114 Memphis, Tennessee 38117
(b) The parties agree, upon the request of any other party, to execute
any agreements or instruments consistent with this agreement which are necessary
to effectuate and consummate the transactions contemplated in this agreement.
(c) This agreement may be executed in any number of counterparts, each
of which shall be taken to be an original.
(d) No waiver of any provision of this agreement shall be valid unless
in writing and signed by the person or party against whom charged.
(e) The validity or enforceability of any particular provision of this
agreement shall not affect the other provisions of this agreement, and this
agreement shall be construed as if such invalid or unenforceable provision was
omitted. All patties hereto having participated actively in the negotiation and
drafting of this agreement, and each party having been represented by counsel,
it is agreed that the terms of this agreement shall not be construed against,
nor more favorably to, any party, regardless of their responsibility for its
preparation.
18. GOVERNING LAW
-------------
<PAGE>
This agreement shall be governed by and construed in accordance with the
laws of the State of Tennessee.
BUYER:
MASTER GRAPHICS, INC.
By: /s/ John P. Miller Date: 9/22/97
------------------
President
GUARANTORS:
/s/ John P. Miller Date: 9/22/97
------------------
John P. Miller
SELLERS:
/s/ Joseph M. Jensen Date: 9/22/97
--------------------
Joseph M. Jensen
/s/ Allan R. Bartel Date: 9/22/97
-------------------
Allan R. Bartel
THE ARGUS PRESS, INC.
By: /s/ Allan R. Bartel Date: 9/22/97
-------------------
Allan R. Bartel, President