ASSET PURCHASE AGREEMENT

 

                                                                     EXHIBIT 2.1

                                                                     -----------

 

 

                                                               EXECUTION VERSION

 

 

 

 

 

 

 

 

 

 

 

 

                            ASSET PURCHASE AGREEMENT

 

                                  BY AND AMONG

 

                                 PRESSTEK, INC.,

 

                           SILVER ACQUISITIONS CORP.,

 

                        PARAGON CORPORATE HOLDINGS, INC.,

 

                               A.B. DICK COMPANY,

 

                          INTERACTIVE MEDIA GROUP, INC.

 

                                       AND

 

                        A.B. DICK COMPANY OF CANADA, LTD.

 

                            DATED AS OF JULY 13, 2004

 

 

<PAGE>

 

                            ASSET PURCHASE AGREEMENT

 

         This Asset Purchase Agreement (this "AGREEMENT") is entered into as of

July 13, 2004, by and among Presstek, Inc., a Delaware corporation ("PLATINUM"),

Silver Acquisitions Corp., a Delaware corporation ("Purchaser"), Paragon

Corporate Holdings, Inc., a Delaware corporation ("PARENT"), A.B. Dick Company,

a Delaware corporation and a wholly-owned subsidiary of Parent ("SELLER"), A.B.

Dick Company of Canada, Ltd., a Canada corporation and wholly-owned subsidiary

of Seller ("CANADA SUB") and Interactive Media Group, Inc., an Ohio corporation

and a wholly-owned subsidiary of Parent ("IMG" and together with Canada Sub and

Seller, the "Sellers"). Platinum, Purchaser, Parent and the Sellers may be

referred to herein individually as a "PARTY" or collectively as the "PARTIES."

 

                                    RECITALS

 

         WHEREAS, Seller expects to file, pursuant to the terms of this

Agreement, in the United States Bankruptcy Court for the District of Delaware

(the "BANKRUPTCY COURT"), a petition in bankruptcy under Chapter 11 of the

Bankruptcy Code (as hereinafter defined);

 

         WHEREAS, the Sellers currently wish to sell, transfer, convey, assign

and deliver to Purchaser, in accordance with Sections 363 and 365 and the other

applicable provisions of the Bankruptcy Code, all of the Assets (as hereinafter

defined), together with the Assumed Liabilities (as hereinafter defined), of

Seller upon the terms and subject to the conditions set forth in this Agreement;

 

         WHEREAS, Purchaser wishes to purchase and take delivery of such Assets

and Assumed Liabilities upon such terms and subject to such conditions; and

 

         WHEREAS, the Parties expect that the Assets will be sold pursuant to a

Sale Order (as hereinafter defined) of the Bankruptcy Court approving such sale

under Section 363 of the Bankruptcy Code and such Sale Order will include the

assumption and assignment of certain executory contracts, unexpired leases and

liabilities thereunder under Section 365 of the Bankruptcy Code and the terms

and conditions of this Agreement.

 

         NOW, THEREFORE, in consideration of the premises and the mutual

promises herein made, and in consideration of the representations, warranties,

and covenants herein contained, the Parties agree as follows:

 

1.        DEFINITIONS AND USAGE OF CERTAIN TERMS

 

         1.1    Definitions. For purposes of this Agreement, the following terms

have the meanings specified or referred to in this Section 1.1:

 

         "ACCOUNTS RECEIVABLE" means (i) all trade accounts receivable and other

rights to payment from customers of Seller or its Subsidiaries and the full

benefit of all security for such accounts or rights to payment, including all

trade accounts receivable representing amounts receivable in respect of goods

shipped or products sold or services rendered to customers of Seller or its

Subsidiaries, and (ii) all other accounts or notes receivable of Seller or its

Subsidiaries and the full benefit of all security for such accounts or notes,

and (iii) any claim, remedy or other right related to any of the foregoing.

 

         "AFFILIATE" means with respect to any Person, any Person which directly

or indirectly, Controls, is Controlled by, or is under common Control with, such

Person.

<PAGE>

         "ANCILLARY AGREEMENTS" means either of or both the "Seller Ancillary

Agreements" and the "Platinum Ancillary Agreements" as the context requires.

 

         "BANKRUPTCY ACTION" means the occurrence of any of the following events

with respect to any Seller: (i) the appointment of a receiver, trustee or

liquidator for all or a substantial part of its assets; (ii) the making of a

general assignment for the benefit of creditors; (iii) the filing of any

petition or commencement of any proceeding for any relief under any bankruptcy

or insolvency laws, or any laws relating to the relief of debtors, readjustment

of indebtedness, reorganizations, compositions, or extensions; or (iv) the

filing against it of any petition or the commencement of any proceeding against

it for any relief under any bankruptcy or insolvency laws, or any laws relating

to the relief of debtors, readjustment of indebtedness, reorganizations,

compositions or extensions.

 

         "BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.

Section 101, et seq., as amended, or any successor thereto, and any rules and

regulations promulgated thereunder.

 

         "BANKRUPTCY COURT" has the meaning set forth in the preface above.

 

         "BANKRUPTCY RULES" means the Federal Rules of Bankruptcy Procedure, as

amended, or any successor rules.

 

         "BREACH" means any breach of, or any inaccuracy in, any representation

or warranty or any breach of, or failure to perform or comply with, any covenant

or obligation, in or of this Agreement or any other Contract, or any event which

with the passing of time or the giving of notice, or both, would constitute such

a breach, inaccuracy or failure.

 

         "BUSINESS" means the business conducted by the Sellers on the date

hereof.

 

         "BUSINESS DAY" means any day other than (i) Saturday or Sunday or (ii)

any other day on which banks in New York, New York are permitted or required to

be closed.

 

         "CASH EQUIVALENTS" means (i) marketable direct obligations issued or

unconditionally guaranteed by the United States Government or issued by an

agency thereof and backed by the full faith and credit of the United States, in

each case maturing within one (1) year after the date of acquisition thereof;

(ii) marketable direct obligations issued by any state of the United States of

America or any political subdivision of any such state or any public

instrumentality thereof maturing within one (1) year after the date of

acquisition thereof and, at the time of acquisition, having one of the two

highest ratings obtainable from either Standard & Poor's Corporation or Moody's

Investors Service, Inc. (or, if at any time neither Standard & Poor's

Corporation nor Moody's Investors Service, Inc. shall be rating such

obligations, then from such other nationally recognized rating services

reasonably acceptable to the DIP Lenders) and not listed in Credit Watch

published by Standard & Poor's Corporation; (iii) commercial paper, other than

commercial paper issued by the Seller or its Subsidiaries, maturing no more than

ninety (90) days after the date of creation thereof and, at the time of

acquisition, having a rating of at least A-1 or P-1 from either Standard &

Poor's Corporation or Moody's Investors Service, Inc. (or, if at any time

neither Standard & Poor's Corporation nor Moody's Investors Service, Inc. shall

be rating such obligations, then the highest rating; from such other nationally

recognized rating services reasonably acceptable to the DIP Lenders); (iv)

domestic and Eurodollar certificates of deposit or time deposits or bankers'

acceptances maturing within ninety (90) days after the date of acquisition

thereof issued by any commercial bank organized under the laws of the United

States of America or any state thereof or the District of Columbia or Canada

having combined capital and surplus of not less than $500,000,000; (v)

repurchase obligations of the type referred to in clauses (i) through (iv)

above; and (vi) money market

 

                                         2

<PAGE>

and mutual funds substantially all of whose assets are comprised of securities

of the types described in clauses (i) through (v) above and cash.

 

          "CHAPTER 11 CASE" means the voluntary case which will be commenced by

Seller under Chapter 11 of the Bankruptcy Code pursuant to this agreement and

the Bankruptcy Court.

 

         "CLOSING DATE" means the date on which the Closing actually takes

place.

 

         "CODE" means the Internal Revenue Code of 1986, as amended.

 

          "COMPETING BID" has the meaning set forth in Section 8.3(c) hereof.

 

         "COMPETING BIDDER" has the meaning set forth in Section 8.3(c) hereof.

 

         "CONFIDENTIAL INFORMATION" means any and all of the following

information of Seller or its Subsidiaries, Parent, Purchaser or Platinum that

has been or may hereafter be disclosed in any form, whether in writing, orally,

electronically, or otherwise, or otherwise made available by observation,

inspection or otherwise by either party (Purchaser and Platinum on the one hand

or Seller and Parent collectively on the other hand) or its representatives

(collectively, a "DISCLOSING PARTY") to the other party or its representatives

(collectively, a "RECEIVING PARTY"):

 

                  (a) all information that is a trade secret under applicable

trade secret or other law;

 

                  (b) all information concerning product specifications, data,

know-how, formulae, compositions, processes, designs, sketches, photographs,

graphs, drawings, samples, inventions and ideas, past, current, and planned

research and development, current and planned manufacturing or distribution

methods and processes, customer lists, current and anticipated customer

requirements, price lists, market studies, business plans, computer hardware,

software and computer software and database technologies, systems, structures

and architectures;

 

                  (c) all information concerning the business and affairs of the

Disclosing Party (which includes historical and current financial statements,

financial projections and budgets, tax returns and accountants' materials,

historical, current and projected sales, capital spending budgets and plans,

business plans, strategic plans, marketing and advertising plans, publications,

client and customer lists and files, Contracts, the names and backgrounds of key

personnel, and personnel training techniques and materials, however documented),

and all information obtained from review of the Disclosing Party's documents or

property or discussions with the Disclosing Party regardless of the form of the

communication; and

 

                  (d) all notes, analyses, complications, studies, summaries,

and other material prepared by the Receiving Party to the extent containing or

based, in whole or in part, on any information included in the foregoing.

 

         "CONTRACT" means, with respect to any Person, any written agreement,

contract, subcontract, lease, license, sublicense, understanding, arrangement,

instrument, note, guaranty, indemnity, representation, warranty, deed,

assignment, power of attorney, purchase order, work order, commitment, covenant,

obligation, promise or undertaking of any nature to which such Person is a party

or by which its properties or assets may be bound.

 

         "CONTROL" (including with correlative meaning, Controlled by and under

common Control with) shall mean, with respect to any Person, the possession,

directly or indirectly, of the power to direct or

 

                                        3

<PAGE>

cause the direction of the management and policies of such Person, whether

through the ownership of voting securities, by Contract or otherwise.

 

         "DIP FINANCING" means that certain $7,000,000 senior secured loan

facility dated July 13, 2004 between Seller as borrower and KeyBank, N.A. as

agent for the DIP Lenders.

 

         "DIP LENDERS" means KeyBank, N.A. and Platinum.

 

         "EFFECTIVE TIME" means 11:59 p.m. on the Closing Date.

 

         "ENCUMBRANCE" means any charge, claim, community property interest,

condition, equitable interest, lien, option, pledge, security interest,

mortgage, right of way, easement, encroachment, servitude, right of first

option, right of first refusal or similar restriction, including any restriction

on use, voting (in the case of any security or equity interest), transfer,

receipt of income, or exercise of any other attribute of ownership.

 

         "ENVIRONMENT" means soil, land surface or subsurface strata, surface

waters (including navigable waters and ocean waters), groundwaters, drinking

water supply, stream sediments, ambient air (including indoor air), plant and

animal life, and any other environmental medium or natural resource.

 

         "ENVIRONMENTAL, HEALTH AND SAFETY LIABILITIES" means any cost, damages,

expense, liability, obligation, or other responsibility arising from or under

any Environmental Law or Occupational Safety and Health Law, which either

results from a notice or claim by a Governmental Authority or other Third Party

or application of any Environmental Law or Occupational Safety and Health Law,

including those consisting of or relating to:

 

         (a) any environmental, health, or safety matter or condition (including

on-site or off-site contamination, safety and health matters, and regulation of

chemical substances or products);

 

         (b) fine, penalty, judgment, award, settlement, legal or administrative

proceeding, damage, loss, claim, demand or response, remedial, or inspection

cost or expense arising under any Environmental Law or Occupational Safety and

Health Law;

 

         (c) financial responsibility under any Environmental Law or

Occupational Safety and Health Law for cleanup costs or corrective action,

including any cleanup, removal, containment, or other remediation or response

actions ("CLEANUP") required by any Environmental Law or Occupational Safety and

Health Law and for any natural resource damages; or

 

         (d) any other compliance, corrective, or remedial measures required

under any Environmental Law or Occupational Safety and Health Law.

 

         The terms "REMOVAL," "REMEDIAL," and "RESPONSE ACTION" include the

types of activities covered by the United States Comprehensive Environmental

Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as

amended ("CERCLA") and "remediation standard" means a numerical standard that

defines the concentrations of Hazardous Materials that are permitted to remain

without liability in any environmental media after completion of all

investigation, remediation and/or containment of a release of Hazardous

Materials.

 

         "ENVIRONMENTAL LAW" means any applicable environmental or health and

safety related Legal Requirement, including those requiring or relating to:

 

                                        4

<PAGE>

         (a) advising appropriate authorities, employees, and the public of

intended or actual releases of pollutants or Hazardous Materials, violations of

discharge limits, or other prohibitions and the commencements of activities,

such as resource extraction or construction, that could have significant impact

on the Environment;

 

         (b) preventing or reducing to acceptable levels the release of

Hazardous Materials into the Environment, including such discharges, emissions

and releases under permits and licenses issued by a Governmental Authority;

 

         (c) reducing the quantities, preventing the discharge, emission or

release, or minimizing the hazardous characteristics of wastes that are

generated and complying with waste disposal and recycling requirements;

 

         (d) assuring that products are designed, formulated, packaged, and used

so that they do not present unreasonable risks to human health or the

Environment when used or disposed of;

 

         (e) assuring that any Hazardous Materials are properly containerized,

used and stored;

 

         (f) protecting resources, species, or ecological amenities;

 

         (g) reducing to acceptable levels the risks inherent in the

transportation of hazardous substances, pollutants, oil, or other potentially

harmful substances;

 

         (h) cleaning up pollutants that have been released, preventing the

threat of release, or paying the costs of such clean up or prevention; or

 

         (i) making responsible parties pay private parties, or groups of them,

for damages done to their health or the Environment, or permitting self

appointed representatives of the public interest to recover for injuries done to

public assets.

 

         "ERISA" means the Employee Retirement Income Security Act of 1974, as

amended.

 

          "ERISA AFFILIATE" means any entity which is a member of: (i) a

"controlled group of corporations", as defined in Section 414(b) of the Code;

(ii) a group of entities under "common control", as defined in Section 414(c) of

the Code; or (iii) an "affiliated service group", as defined in Section 414(m)

of the Code, or treasury regulations promulgated under Section 414(o) of the

Code, any of which includes Seller or any Subsidiary of Seller.

 

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

 

         "FACILITIES" means any real property, leasehold or other interest in

real property currently owned or operated by any Person including the Tangible

Personal Property currently being used or operated by Seller or its Subsidiaries

at the respective locations of the Real Property specified in Section 3.13.

Notwithstanding the foregoing, for purposes of Sections 3.24 and 11.6,

"FACILITIES" shall mean any real property, leasehold or other interest in real

property currently or formerly owned or operated by Seller or its Subsidiaries,

including the Real Property and Tangible Personal Property being used or

operated by Seller or its Subsidiaries at the respective locations of the Real

Property specified in Section 3.13.

 

         "FINAL ORDER" shall mean an order or judgment, the operation or effect

of which is not stayed, and as to which order or judgment (or any revision,

modification or amendment thereof), the time to

 

                                        5

<PAGE>

appeal or seek review or rehearing has expired, and as to which no appeal or

petition for review or motion for reargument has been taken or been made and is

pending for argument.

 

         "GAAP" means U.S. generally accepted accounting principles, applied on

a consistent basis from period to period.

 

         "GOVERNMENTAL AUTHORITY" means any: (a) nation, state, commonwealth,

province, territory, county, municipality or district; (b) federal, state,

local, municipal, foreign or other government; or (c) governmental or

quasi-governmental authority of any nature (including any governmental division,

department, agency, commission, instrumentality, official, organization, unit,

body or entity and any court or other tribunal).

 

         "GOVERNMENTAL AUTHORIZATION" any approval, consent, ratification,

waiver, license, permit or authorization issued, granted, given, or otherwise

made available by or under the authority of any Governmental Authority or

pursuant to any Legal Requirement.

 

         "GROUND LEASE" means any long term lease of land in which most of the

rights and benefits comprising ownership of the land and the improvements

thereon or to be constructed thereon, if any, are transferred to the tenant for

the term thereof.

 

         "GROUND LEASE PROPERTY" means any land, improvements and appurtenances

subject to a Ground Lease in favor of Seller or its Subsidiaries.

 

         "INVENTORIES" all inventories of the Seller or its Subsidiaries,

wherever located, including all finished goods, work in process, raw materials,

spare parts and all other materials and supplies to be used or consumed by

Seller or its Subsidiaries in the production of finished goods.

 

         "INVESTMENT" means, with respect to any Person, (i) any purchase or

other acquisition by that Person of Securities, or of a beneficial interest in

Securities, issued by any other Person, (ii) any purchase by that Person of all

or substantially all of the assets of a business conducted by another Person,

and (iii) any direct or indirect loan, advance (other than prepaid expenses,

accounts receivable, advances to employees and similar items made or incurred in

the ordinary course of business as presently conducted) or capital contribution

by that Person to any other Person, including all indebtedness to such Person

arising from a sale of property by such Person other than in the ordinary course

of its business. The amount of any Investment shall be the original cost of such

Investment, plus the cost of all additions thereto less the amount of any return

of capital or principal to the extent such return is in cash with respect to

such Investment without any adjustments for increases or decreases in value or

write-ups, write-downs or write-offs with respect to such Investment.

 

         "KNOWLEDGE" when used with respect to any entity, means the actual

knowledge of the directors and executive officers of such entity after due

inquiry, and when used with respect to Seller shall also mean the actual

knowledge of the directors and officers of Parent after due inquiry and when

used with respect to Purchaser, shall also mean the actual knowledge of the

executive officers of Platinum after due inquiry.

 

         "LAND" means all parcels and tracts of land in which Seller or any of

its Subsidiary has an ownership interest.

 

                                         6

<PAGE>

         "LEASE" means any Real Property Lease or any lease or rental agreement,

license, right to use or installment and conditional sale agreement to which

Seller or any Subsidiary is a party and any other Seller Contract pertaining to

the leasing or use of any Tangible Personal Property.

 

         "LEGAL REQUIREMENT" means any federal, state, local, municipal,

foreign, international, multinational, or other constitution, law, ordinance,

by-law, principle of common law, regulation, statute, or treaty.

 

         "LIABILITY" with respect to any Person, any liability or obligation of

such Person of any kind, character or description, whether known or unknown,

absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated

or unliquidated, secured or unsecured, joint or several, due or to become due,

vested or unvested, executory, determined, determinable or otherwise and whether

or not the same is required to be accrued on the financial statements of such

Person.

 

         "LIMITED" means A.B.Dick UK Limited, a wholly-owned subsidiary of

Seller organized in the United Kingdom.

 

         "MATERIAL ADVERSE EFFECT" means

 

                  (a) if Seller shall fail to recognize a minimum of (i)

         $8,200,000 in revenue from its U.S. operations (or $11,000,000 on a

         consolidated basis) for the month of July, 2004, (ii) $8,750,000 in

         revenue from its U.S. operations (or $11,500,000 on a consolidated

         basis) for the month of August, 2004 and (iii) $9,750,000 in revenue

         from its U.S. operations (or $12,750,000 on a consolidated basis) for

         the month of September, 2004, measured in each case in accordance with

         GAAP; but excluding in each case any "Material Adverse Effect" arising

         from or related to the outbreak of civil unrest, hostilities, terrorist

         activities, or war (whether or not formally declared) which causes, in

         a measurable manner, the Material Adverse Effect, or

 

                   (b) any inability of the Seller to transfer to the Purchaser,

         and the Purchaser to acquire, the Assets, or

 

                  (c) any material increase or other material adverse change in

         the nature of the Assumed Liabilities, taken as a whole.

 

         "OCCUPATIONAL SAFETY AND HEALTH LAW" means any Legal Requirement

designed to provide safe and healthful working conditions and to reduce

occupational safety and health hazards, including the Occupational Safety and

Health Act, and any program, whether governmental or private (such as those

promulgated or sponsored by industry associations and insurance companies),

designed to provide safe and healthful working conditions.

 

         "ORDER" any order, injunction, judgment, decree, ruling, assessment or

arbitration award of any Governmental Authority or arbitrator.

 

         "PERMITTED ENCUMBRANCE" means the encumbrances identified on Section

2.1 of the Seller Disclosure Schedule, together with the following: (i) any

liens of mechanics, suppliers, vendors, materialmen, laborers, employees,

repairmen and other like liens arising in the ordinary course of Seller's

business securing obligations which are not due and payable or the amount or

validity of which is being contested in good faith by appropriate proceedings if

and to the extent that an adequate reserve shall have been made therefor on

Seller' balance sheet; (ii) liens incurred or deposits to secure the performance

of surety and appeal bonds, bids, leases, performance and return money bonds and

similar obligations, in

 

                                        7

<PAGE>

each case in the ordinary course of business, consistent with past practice as

and to the extent that adequate reserves have been made therefor on Seller'

balance sheet; (iii) purchase money liens incurred in the ordinary course of

business, consistent with past practice as and to the extent that adequate

reserves have been made therefor on Seller' balance sheet; and (iv) with respect

to Real Property, privileges, easements, rights of way, licenses, covenants,

zoning and other restrictions of record, which individually or in the aggregate,

do not affect the current uses or marketability of the Real Property.

 

         "PERSON" means any individual, corporation, partnership, limited

liability company, joint venture, trust or unincorporated organization or any

government or any agency or political subdivision thereof.

 

         "PETITION DATE" means the date on which the Seller files the Chapter 11

Case.

 

         "PROCEEDING" any action, arbitration, audit, hearing, investigation,

litigation, or suit (whether civil, criminal, administrative, judicial or

investigative, whether formal or informal, whether public or private).

 

         "REAL PROPERTY" means the Land and improvements and all appurtenances

thereto and any Ground Lease Property.

 

         "REAL PROPERTY LEASE" means any Ground Lease or Space Lease.

 

         "RECORD" means any information that is inscribed on a tangible medium

or that is stored in an electronic or other medium and is retrievable in

perceivable form.

 

         "RELEASE" means any releasing, spilling, leaking, pumping, pouring,

emitting, emptying, discharging, injecting, escaping, leaching, disposing, or

dumping into the Environment.

 

         "RESTRICTED PAYMENT" means (i) any dividend or other distribution,

direct or indirect, on account of any shares of any class of capital stock of,

partnership interest of or other equity interest of Seller or its Subsidiaries

now or hereafter outstanding (ii) any redemption, retirement, sinking fund or

similar payment, purchase or other acquisition for value, direct or indirect, of

any shares of any class of capital stock of, partnership interest of or other

equity interest of, Seller or its Subsidiaries now or hereafter outstanding,

(iii) any payment or prepayment of principal of, premium, if any, or interest,

fees or other charges on or with respect to, and any redemption, purchase,

retirement, defeasance, sinking fund or similar payment and any claim for

rescission with respect to, any permitted subordinated indebtedness, (iv) any

payment made to redeem, purchase, repurchase or retire, or to obtain the

surrender of, any outstanding warrants, options or other rights to acquire

shares of any class of capital stock of, partnership interest of or other equity

interest of, Seller or its Subsidiaries now or hereafter outstanding, or (v) any

other payment or distribution made by Sellers to Parent or to another Affiliate

of Sellers (other than inter-company loans permitted under the DIP Financing).

 

         "SALE ORDER" shall mean one or more orders of the Bankruptcy Court, in

form and substance reasonably satisfactory to Platinum, and Purchaser and

consistent with the terms of this Agreement, (i) authorizing the sale of the

Assets to Purchaser, free and clear of any and all Liens, (ii) finding that

Purchaser is a good faith purchaser of the Assets under Section 363(m) of the

Bankruptcy Code and that the provisions of Section 363(n) of the Bankruptcy Code

have not been violated, (iii) approving the assignment to and assumption by

Purchaser of the Assumed Contracts and declaring that all Assumed Contracts are

valid and binding and in full force and effect, (iv) determining that Purchaser

is not a successor to Seller or otherwise liable for any of the Retained

Liabilities or Excluded Assets and

 

                                        8

<PAGE>

permanently enjoining each and every holder of any of the Retained Liabilities

or Excluded Assets from commencing, continuing or otherwise pursuing or

enforcing any remedy, claim, cause of action or encumbrance against Purchaser or

the Purchased Assets related thereto, and (v) the consummation of the

transactions contemplated herein.

 

         "SECURITIES ACT" means the Securities Act of 1933, as amended.

 

         "SECURITIES LAWS" means the Securities Act, the Exchange Act, the

Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940,

as amended, the Trust Indenture Act of 1939, as amended, and the rules and

regulations of the SEC and any other Governmental Authority promulgated

thereunder.

 

         "SEC" means the United States Securities and Exchange Commission.

 

         "SELLER CONTRACT" means any Contract: (a) to which Seller or its

Subsidiaries is a party; or (b) by which Seller or its Subsidiaries or any of

their assets is bound or subject to any obligation.

 

         "SELLER DISCLOSURE SCHEDULE" means that Disclosure Schedule dated as of

the date hereof and provided by Parent and Seller to Platinum and Purchaser

simultaneously with the execution and delivery of this Agreement.

 

         "SPACE LEASE" means any lease or rental agreement pertaining to the

occupancy of any improved space on any Land.

 

         "SECURITIES" means any stock, shares, voting trust certificates, bonds,

debentures, notes or other evidences of indebtedness, secured or unsecured,

convertible, subordinated or otherwise, or any certificates of interest, shares,

or participations in temporary or interim certificates for the purchase or

acquisition of, or any right to subscribe to, purchase or acquire any of the

foregoing, but shall not include any evidence of the DIP Financing.

 

         "SELLER EMPLOYEE PLANS" means, collectively, (i) each "employee benefit

plan", as defined in Section 3(3) of ERISA; and (ii) all other written or formal

plans, enforceable policies or practices or Contracts involving direct or

indirect compensation or benefits (including any employment Contracts entered

into between Seller or any Subsidiary of Seller and any employee of Seller or

any Subsidiary of Seller) currently or previously maintained, contributed to or

entered into by Seller or any Subsidiary of Seller under which Seller or any

Subsidiary of Seller of any ERISA Affiliate has any present or future Liability.

 

         "SUBSIDIARY" means, when used with reference to any Person, any

corporation more than fifty percent (50%) of the outstanding voting securities

of which, or any partnership, limited liability company, joint venture or other

entity more than fifty percent (50%) of the total equity interest of which, is

directly or indirectly owned or Controlled by such Person.

 

         "TANGIBLE PERSONAL PROPERTY" means all machinery, equipment, tools,

furniture, office equipment, computer hardware, supplies, materials, vehicles

and other items of tangible personal property (other than Inventories) of every

kind owned or leased by a Person (wherever located and whether or not carried on

such Person's books), together with any express or implied warranty by the

manufacturers or Seller or lessors of any item or component part thereof, and

all maintenance records and other documents relating thereto.

 

                                        9

<PAGE>

         "THIRD PARTY" means a Person that is not a party to this Agreement or

an Affiliate of a party to this Agreement.

 

         "THIRD PARTY CLAIM" means any claim against any Indemnified Person by a

Third Party, whether or not involving a Proceeding.

 

         "THREAT OF RELEASE" mean a substantial likelihood of a Release which

requires action to prevent or mitigate damage to the Environment which may

result from such Release.

 

         1.2       Usage

 

                  (a)   Interpretation. In this Agreement, unless a clear

contrary intention appears:

 

                        (i) the singular number includes the plural number and

vice versa;

 

                       (ii) references to any Person includes such Person's

successors and assigns but, if applicable, only if such successors and assigns

are not prohibited by this Agreement, and reference to a Person in a particular

capacity excludes such Person in any other capacity or individually;

 

                       (iii) reference to any gender includes each other gender;

 

                       (iv) reference to any agreement, document or instrument

means such agreement, document or instrument as amended or modified and in

effect from time to time in accordance with the terms thereof;

 

                       (v) reference to any Legal Requirement means such Legal

Requirement as amended, modified, codified, replaced or reenacted, in whole or

in part, and in effect from time to time, including rules and regulations

promulgated thereunder and reference to any section or other provision of any

Legal Requirement means that provision of such Legal Requirement from time to

time in effect and constituting the substantive amendment, modification,

codification, replacement and reenactment of such section or other provision;

provided, however, that the foregoing shall not apply in instances in which the

Legal Requirement refers to a specific date, time or period;

 

                       (vi) "hereunder", "hereof", "hereto" and words of similar

import shall be deemed references to this Agreement as a whole and not to any

particular Article, Section or other provision thereof;

 

                       (vii) "including" (and with correlative meaning

"include") means including without limiting the generality of any description

preceding such term;

 

                       (viii) "or" is used in the inclusive sense of "and/or";

 

                       (ix) with respect to the determination of any period of

time, "from" means "from and including" and "to" means "to but excluding";

 

                       (x) references to documents, instruments or agreements

shall be deemed to refer as well to all addenda, exhibits, schedules or

amendments thereto, and

 

                       (xi) all references to "dollars" or "$" shall mean U.S.

dollars.

 

                                       10

<PAGE>

                   (b) Accounting Terms and Determinations. Unless otherwise

specified herein, all accounting terms used therein shall be interpreted and all

accounting determinations thereunder shall be made in accordance with GAAP.

 

                  (c) Legal Representation of the Parties. This Agreement was

negotiated by the parties with the benefit of legal representation and any rule

of construction or interpretation otherwise requiring this Agreement to be

construed or interpreted against any party shall not apply to any construction

or interpretation hereof.

 

2.        SALE AND TRANSFER OF ASSETS; CLOSING

 

         2.1       Assets to be Sold. Upon the terms and subject to the

conditions set forth in this Agreement, effective as of the Effective Time,

Sellers shall sell, convey, assign, transfer and deliver to Purchaser, free and

clear of all Encumbrances other than the Permitted Encumbrances (including those

set forth on Schedule 2.1), and Purchaser shall purchase and acquire from

Sellers, Sellers' right, title and interest in and to all of Sellers' property

and assets, real, personal or mixed, tangible and intangible, of every kind and

description, wherever located, including the following (but excluding the

Excluded Assets (as defined below)):

 

                   (a) all Real Property and Real Property Leases described in

Section 2.1(a) of the Seller Disclosure Schedule currently owned or leased by

Seller or any of its Subsidiaries (the "ASSUMED REAL ESTATE"), but excluding the

Real Property and Real Property Leases relating to Seller's facilities in

Rexdale, Ontario and Henrietta, New York (together, the "EXCLUDED REAL ESTATE

INTERESTS");

 

                  (b) all Tangible Personal Property of Seller and its

Subsidiaries, including those items described in Schedule 2.1(b) of the Seller

Disclosure Schedule;

 

                  (c) all Inventories of Sellers and their Subsidiaries;

 

                  (d) all Accounts Receivable of Sellers and their Subsidiaries,

including all intercompany receivables due to Seller;

 

                  (e) all Seller Contracts set forth on Schedule 2.1(e) of the

Seller Disclosure Schedule, and all other Seller Contracts and outstanding

offers or solicitations made by or to Seller to enter into any Contract after

the date hereof that are made in accordance with the provisions of this

Agreement, in each case which are assignable by their terms or with respect to

which consent to assignment is obtained (the "ASSUMED SELLER CONTRACTS");

 

                  (f) all Governmental Authorizations and all pending

applications therefor or renewals thereof, in each case to the extent

transferable to Purchaser, including those listed in Section 3.5(c) of the

Seller Disclosure Schedule;

 

                  (g) all data and Records related to the operations of Seller,

including client and customer lists and Records, referral sources, research and

development reports and Records, production reports and Records, service and

warranty Records, equipment logs, operating guides and manuals, financial and

accounting Records, creative materials, advertising materials, promotional

materials, studies, reports, correspondence and other similar documents and

Records (all in the state in which such records and information presently

exists) and, subject to Legal Requirements, copies of all personnel Records and

other Records described in Section 2.2(m);

 

                                       11

<PAGE>

                  (h)   all of the intangible rights and property of Seller,

including Intellectual Property Rights (as defined in Section 3.15), good-will,

telephone and telecopy numbers to the extent transferable, and e-mail addresses,

websites and listings and those items listed in Section 3.15(b) of the Seller

Disclosure Schedule;

 

                  (i) All rights (including all Intellectual Property Rights) of

the Seller in and to the trademarks, service marks, trade names, trade dress and

other names and brand identifiers held or used by any of the Seller or its

Subsidiaries, including, without limitation, the name "A.B. Dick Company," "A.B.

Dick Company of Canada, Ltd." and "A.B. Dick UK Limited" and the applications

and registrations therefore identified in Section 3.15(b) of the Seller

Disclosure Schedule (collectively, the "MARKS"), and further including all

filings associated therewith and all specimens, samples, illustrations and

files, correspondence, records or other documentation arising from or relating

to such registrations, applications, and filings;

 

                  (j)   all insurance benefits, including rights and proceeds,

arising from or relating to the Assets or the Assumed Liabilities prior to the

Effective Time, unless expended in accordance with this Agreement;

 

                  (k) all claims of Seller against third parties relating to the

Assets, whether choate or inchoate, known or unknown, contingent or

non-contingent;

 

                  (l) all rights of Seller relating to deposits and prepaid

expenses, claims for refunds and rights to offset in respect thereof which are

not excluded under Section 2.2(g);

 

                  (m) all of the capital stock of Limited; and

 

                  (n) certain assets of Canada Sub, as more fully described on a

schedule to be provided by Purchaser prior to the Closing.

 

All of the foregoing property and assets are herein referred to collectively as

the "ASSETS".

 

         Notwithstanding the foregoing, the transfer of the Assets pursuant to

this Agreement shall not include the assumption of any Liability in respect

thereof unless the Purchaser expressly assumes such Liability pursuant to

Section 2.4(a).

 

         2.2       Excluded Assets Notwithstanding anything to the contrary

contained in Section 2.1 or elsewhere in this Agreement, the following assets of

Seller (collectively, the "EXCLUDED ASSETS") are not part of the sale and

purchase contemplated hereunder, are excluded from the Assets, and shall remain

the property of Seller after the Closing:

 

                  (a) all cash and cash equivalents;

 

                  (b) except for Limited, the shares of capital stock of each

Subsidiary of Seller;

 

                  (c) all of the Seller Contracts listed in Schedule 3.21 of the

Seller Disclosure Schedule, with the specific exception of the Assumed Seller

Contracts described in Section 2.1(e) (the "EXCLUDED SELLER CONTRACTS");

 

                  (d) all current claims for refund of Taxes and other

governmental charges of whatever nature;

 

                                       12

<PAGE>

                  (e) all rights in connection with and assets of the Seller

Employee Plans);

 

                  (f) all rights of Seller under this Agreement, the Bill of

Sale, the Assignment and Assumption Agreement and the Escrow Agreement;

 

                  (g) the Excluded Real Property Interests and all Governmental

Authorizations relating exclusively to the operation of such Real Property;

 

                  (h) personal property and assets expressly designated in

Schedule 2.2(h) of the Seller Disclosure Schedule;

 

                  (i) any prepaid or current assets relating to directors' fees,

affiliate company charges and bank fees and charges;

 

                  (j) claims against third parties to the extent related solely

to any Excluded Asset or Excluded Liabilities;

 

                  (k) all insurance policies, including all rights, benefits and

proceeds thereunder (except to the extent specified in Section 2.1(j) and (k));

 

                  (l) Seller's corporate seals, stock Record books, corporate

Record books containing minutes of meetings of directors and stockholders; Tax

returns and Records, books of account and ledgers and such other Records having

to do solely with the Seller's organization or stock capitalization or Excluded

Assets or Excluded Liabilities;

 

                  (m) all personnel Records and other Records that Seller is

required by law to retain in its possession; and

 

                  (n) Seller's claims, causes of action, choices of action and

rights of recovery pursuant to Sections 544 through 550 and Section 553 of the

Bankruptcy Code and any other avoidance action under any other applicable

provisions of the Bankruptcy Code.

 

         2.3       Consideration. The consideration for the Assets (the "PURCHASE

PRICE") will be Forty Million Dollars ($40,000,000), which is payable in cash

and by converting any amount of principal, interest or any other obligation

(including, without limitation, fees or costs) which is owed by Seller or Parent

to Platinum or its Affiliates on account of the DIP Financing, and the

assumption of the Assumed Liabilities as provided in Section 2.4.

 

         2.4       Liabilities.

 

                  (a)   Assumed Liabilities. Subject to Section 2.4(b) and

effective as of the Effective Time, Purchaser shall assume and become

responsible for and shall thereafter pay, perform, and discharge in accordance

with their terms the following Liabilities of Seller (the "ASSUMED

LIABILITIES"):

 

                       (i) Any liability arising after the Effective Time under

the Assumed Real Estate Leases;

 

                       (ii) any Liability to Seller's customers under written

warranty agreements in the forms disclosed in Section 3.17 of the Seller

Disclosure Schedule given by Seller to its customers in the ordinary course of

business prior to the Effective Time;

 

                                        13

<PAGE>

                       (iii) any Liability arising after the Effective Time

under the Assumed Seller Contracts; and

 

                       (iv) any Liability of Seller described on Schedule

2.4(a)(iv)of the Seller Disclosure Schedule.

 

                  (b)   Retained Liabilities. The Retained Liabilities shall

remain the sole responsibility of and shall be retained by Seller. "RETAINED

LIABILITIES" shall mean every Liability of Seller and every Liability of any

Subsidiary of Seller, other than the Assumed Liabilities, including:

 

                       (i) any Liability arising out of or relating to products

of Seller to the extent manufactured or sold prior to the Effective Time other

than to the extent assumed under Section 2.4(a)(ii), (iii), or (iv);

 

                       (ii) any Liability for Taxes, including (A) any Taxes

arising as a result of Seller's, Limited's or any Subsidiary's operation of its

business or ownership of the Assets prior to the Effective Time, (B) subject to

Section 12.1, any Taxes that will arise as a result of the sale of the Assets

pursuant to this Agreement and (C) any deferred Taxes of any nature;

 

                       (iii) any Liability under any Seller Contract (other than

the Assumed Seller Contracts) and including without limitation any Liability

arising out of or relating to Seller's credit facilities, trade payables,

indebtedness for money borrowed, amounts due to Affiliates or any security

interest related thereto;

 

                        (iv) any Environmental, Health and Safety Liabilities, in

each case relating to a period or occurrence prior to the Effective Time

relating to Seller or its predecessors, Subsidiaries or Affiliates, the

operation of the Business, or the leasing, ownership or operation of any Real

Property, including, without limitation any such liabilities related to any Real

Property listed on Schedule 3.13(c) of the Seller Disclosure Schedule;

 

                       (v) any Liability under the Seller Employee Plans or

relating to payroll, vacation, sick leave, worker's compensation, unemployment

benefits, pension benefits, employee stock option or profit-sharing plans,

health care plans or benefits, or any other employee plans or benefits of any

kind for Seller's employees or former employees, or both;

 

                       (vi) any Liability under any employment, severance,

retention or termination agreement with any employee of Seller or any of its

Affiliates;

 

                       (vii) any Liability arising out of or relating to any

employee grievance whether or not the affected employees are hired by Purchaser;

 

                       (viii) any Liability of Seller to any Affiliate of

Seller;

 

                       (ix) any Liability to indemnify, reimburse or advance

amounts to any officer, director, employee or agent of Seller, Parent or any

Subsidiary;

 

                       (x) any Liability to distribute or otherwise apply all of

any part of the consideration received hereunder;

 

                                        14

<PAGE>

                       (xi) any Liability arising out of any Proceeding pending

as of the Effective Time, whether or not set forth in the Seller Disclosure

Schedule;

 

                       (xii) any Liability of Seller under this Agreement or any

other document executed in connection with the transactions contemplated hereby;

 

                       (xiii) any Liability of Seller based upon Seller's acts

or omissions occurring after the Effective Time; and

 

                        (xiv) any Liability of Seller not specifically described

above but which may otherwise be set forth in Schedule 2.4(b).

 

         2.5       Deposit. An earnest money deposit (the "DEPOSIT") in the

amount of Two Million Dollars ($2,000,000) shall be paid by Purchaser on the

entry of the Sale Procedures Order (as defined in Section 8.1) into an escrow

account in accordance with customary escrow agreement (the "ESCROW AGREEMENT").

The Deposit shall be applied to the Purchase Price payable by Purchaser on the

Closing Date. If this Agreement shall be terminated by any Party hereto pursuant

to Sections 11.1(a), (b), (c), (d), (e)(B), (f) or (g), or in the event that a

Person other than Purchaser or an Affiliate of Purchaser purchases all or any

portion of the Assets, then the Deposit shall be returned to Purchaser. If this

Agreement shall be terminated by Seller pursuant to Section 11.1(e)(A), hereof,

the Deposit shall be paid to Seller. Notwithstanding any other provision to the

contrary contained herein, the Deposit shall be the sole and exclusive remedy of

Seller against Platinum and Purchaser under this Agreement.

 

         2.6       Tax Allocation of Purchase Price. Purchaser and Seller agree

that the Purchase Price shall be allocated among the Assets in accordance with

an allocation to be prepared by Purchaser and agreed upon by Seller and Parent,

which agreement shall not be unreasonably withheld. Such allocation shall be in

accordance with Section 1060 of the Code and the applicable Treasury Regulations

promulgated thereunder and such other laws as may be applicable to the Assets of

Canada Sub. Purchaser and Seller shall report and file all of their respective

Tax Returns (including amended Tax Returns and claims for refund) consistent

with such allocation, and shall take no position contrary thereto or

inconsistent therewith (including, without limitation, in any audits or

examinations by any taxing authority or in any other proceedings). Purchaser and

Seller shall cooperate in the filing of any forms (including Forms 8594) with

respect to such allocation. Notwithstanding any other provisions of this

Agreement, the foregoing agreement shall survive the Closing Date without

limitation, and shall not be an admission of and shall not be evidence of the

value of any of the Assets in the Seller's Chapter 11 Case or any other related

proceeding, and shall be for Tax purposes only; provided, however, that the

portion of the Purchase Price allocated to the Assets to be purchased from IMG

or from Canada Sub shall be paid directly to those entities.

 

         2.7       Closing. The closing of the transactions contemplated by this

Agreement (the "CLOSING") shall take place at the offices of McDermott Will &

Emery LLP in Boston, Massachusetts commencing at 9:00 a.m. local time on the

Monday following the satisfaction or waiver of all conditions to the obligations

of the Parties to consummate the transactions contemplated hereby (other than

conditions with respect to actions the respective Parties will take at the

Closing itself) or such other date as Purchaser and Seller may mutually

determine (the "CLOSING Date"). The Parties shall use their commercially

reasonable efforts to consummate the transactions contemplated hereby within

fifteen (15) calendar days after the Bankruptcy Court has entered the Sale Order

approving such sale to Purchaser.

 

                                       15

<PAGE>

3.        REPRESENTATIONS AND WARRANTIES OF SELLER

 

         In connection with this Section 3, all representations and warranties

of Seller set forth in the following Sections 3.1 through 3.28 shall apply to

both IMG and to Seller. Except as set forth in the Seller Disclosure Schedule

delivered to Platinum and Purchaser herewith, the parts of which are numbered to

correspond to the Section numbers of this Agreement and which thereby qualify

the corresponding representations and warranties contained in this Article 3,

Seller hereby represents and warrants to Platinum and Purchaser, subject to the

effects of the anticipated filing of the Chapter 11 Case, as follows:

 

         3.1       Organization and Good Standing. Seller and each Subsidiary of

Seller is a corporation duly organized, validly existing and in good standing

under the laws of the jurisdiction of its incorporation and has all requisite

corporate power and authority, and all requisite qualifications to do business

as a foreign corporation, to conduct its business in the manner in which its

business is currently being conducted, except where the failure to be so

organized, existing or in good standing or to have such power, authority or

qualifications would not, individually or in the aggregate, be reasonably

expected to have a Material Adverse Effect on Seller. All jurisdictions in which

Seller and each Subsidiary of Seller is duly qualified or registered to do

business as a foreign corporation is listed on Section 3.1 of the Seller

Disclosure Schedule. Seller has delivered or made available to Platinum a true

and correct copy of its certificate of incorporation and bylaws and similar

governing instruments of each of its Subsidiaries, each as amended to date

(collectively, the "SELLER CHARTER DOCUMENTS"), and each such instrument is in

full force and effect. Neither Seller nor any Subsidiary is in violation of any

of the provisions of the Seller Charter Documents.

 

         3.2       Subsidiaries and Guaranties. Each of Seller's Subsidiaries are

listed on Section 3.2 of the Seller Disclosure Schedule, each of which is

directly or indirectly wholly-owned by Seller. Except as set forth in Section

3.2 of the Seller Disclosure Schedule, Seller does not have any other

Subsidiaries or any interest, direct or indirect, in any corporation,

partnership, joint venture, limited liability company or other business entity.

Section 3.2 of the Seller Disclosure Schedule indicates the jurisdiction of

organization of each entity listed therein and Seller's direct or indirect

equity interest therein.

 

         3.3       [Intentionally Omitted]

 

         3.4       Power, Authorization and Non-Contravention.

 

                   (a)   Seller and each Subsidiary of Seller has the requisite

corporate power, legal capacity and authority to: (i) carry on its business as

now conducted; (ii) own, operate and lease its properties in the manner in which

its properties are currently owned, used and leased; (iii) perform its

obligations under all Seller Contracts constituting Assets to be purchased under

Section 2.1, and (iv) upon entry of the Sale Order (as defined in Section

8.1(b)) enter into and perform its obligations under this Agreement and all

agreements to which it is or will be a party that are required to be executed

pursuant to or in connection with this Agreement (the "SELLER ANCILLARY

AGREEMENTS"); except in the case of clause (iii) of this Section 3.4 where the

failure to have such power, capacity or authority would not, individually or in

the aggregate, reasonably be expected to have a Material Adverse Effect on

Seller, the Business or the Assets. The execution and delivery of this Agreement

and the consummation of the transactions contemplated hereby have been duly

authorized by all necessary corporate and stockholder action on the part of

Seller. The written consent of Parent, as the sole stockholder of Seller, a

certified copy of which has previously been delivered to Purchaser, is

sufficient for the approval of the transactions contemplated hereby by Seller's

stockholders and no other approval of any holder of any

 

                                       16

<PAGE>

securities of Seller is required in connection with the consummation of the

transactions contemplated hereby.

 

                  (b)   No consent, approval, Order or authorization of, or

registration, declaration or filing with any Governmental Authority or other

Person, is required to be obtained or made by Seller or any Subsidiary of Seller

in connection with the execution and delivery of this Agreement or the

consummation of the transactions contemplated hereby, except for: (i) the

consents set forth in Section 3.4(b) of the Seller Disclosure Schedule, (ii)

such consents, approvals, Orders, authorizations, registrations, declarations

and filings as may be required under applicable federal, foreign and state

Securities (or related) Laws and the Antitrust Filings and (iii) such other

consents, authorizations, filings, approvals and registrations which if not

obtained or made would not be material to Seller, Platinum or Purchaser or

prevent, alter or materially delay the consummation of the transactions

contemplated hereby.

 

                  (c)   Upon entry of the Sale Order, this Agreement and the

Seller Ancillary Agreements are, or when executed and delivered by Seller and

Canada Sub and the other parties thereto will be, valid and binding obligations

of Seller and Canada Sub (to the extent a party thereto) enforceable against

Parent, Seller and Canada Sub (to the extent a party hereto) in accordance with

their respective terms, except as to the effect, if any, of (i) applicable

bankruptcy, insolvency, moratorium, reorganization, or other similar laws

affecting the rights of creditors generally and (ii) rules of law governing

specific performance, injunctive relief and other equitable remedies; provided,

however, that the Seller Ancillary Agreements will not be effective until the

earlier of the Effective Time or the date provided for therein.

 

         3.5       No Violation of Charter Documents and Contracts; Compliance

with Legal Authorizations; Governmental Authorizations.

 

                  (a)   Neither the execution and delivery of this Agreement or

any Seller Ancillary Agreement, nor the consummation of the transactions

provided for herein or therein will conflict with, or (with or without notice or

lapse of time, or both) result in a termination, Breach, impairment or violation

of any provision of the Seller Charter Documents, as currently in effect, except

as set forth in Section 3.5 of the Seller Disclosure Schedule, or any material

Assumed Seller Contract.

 

                  (b)   Except as set forth in Section 3.5(b) of the Seller

Disclosure Schedule:

 

                       (i) Each of Seller and each Subsidiary of Seller is, and,

to Seller's knowledge, at all times since January 1, 2000 has been, in material

compliance with each Legal Requirement that is or was applicable to it or to the

conduct of operation of its business or the ownership or use of any of the

Assets;

 

                       (ii) no event has occurred or circumstance currently

exists that (with or without notice or lapse of time) constitutes or will result

in a violation by Seller or any Subsidiary of Seller of, or a failure on the

part of Seller or any Subsidiary of Seller to comply with, any applicable

material Legal Requirement; and

 

                       (iii) Each of Seller and each Subsidiary of Seller has

not received, at any time since January 1, 2000, any written notice or, to

Seller's knowledge, other communication from any Governmental Authority or any

other Person regarding any actual, alleged, possible, or potential violation of,

or failure to comply by Seller or any Subsidiary of Seller with, any applicable

material Legal Requirement.

 

                                       17

<PAGE>

                  (c)   Section 3.5(c) of the Seller Disclosure Schedule contains

a complete and accurate list of each material Governmental Authorization that

are collectively necessary to permit Seller to lawfully conduct and operate its

business in the manner it currently conducts and operates its business and to

permit Seller to own and use the Assets in the manner in which it currently owns

and uses such Assets. To Seller's knowledge, each Governmental Authorization

listed or required to be listed in Section 3.5(c) of the Seller Disclosure

Schedule is valid and in full force and effect. Except as set forth in Section

3.5(c) of the Seller Disclosure Schedule:

 

                       (i) Each of Seller and each Subsidiary of Seller is, and

at all times since January 1, 2000 has been, in full compliance with all of the

material terms and requirements of each Governmental Authorization identified or

required to be identified in Section 3.5(c) of the Seller Disclosure Schedule;

 

                       (ii) To Seller's knowledge, no event has occurred since

January 1, 2000 or circumstance currently exists that (with or without notice or

lapse of time) (A) constitutes or will result directly or indirectly in a

violation of or a failure to comply with any material term or requirement of any

Governmental Authorization listed or required to be listed in Section 3.5(c) of

the Seller Disclosure Schedule, or (B) will result directly or indirectly in the

revocation, withdrawal, suspension, cancellation, or termination of, or any

modification to, any Governmental Authorization listed or required to be listed

in Section 3.5(c) of the Seller Disclosure Schedule;

 

                       (iii) Seller has not received, at any time since January

1, 2000, any written notice or, to Seller's knowledge, other communication from

any Governmental Authority or any other Person regarding (A) any actual,

alleged, possible, or potential violation of or failure to comply by Seller or

any Subsidiary of Seller with any term or requirement of any Governmental

Authorization listed or required to be listed in Section 3.5(c) of the Seller

Disclosure Schedule, or (B) any actual, proposed, possible, or potential

revocation, withdrawal, suspension, cancellation, termination of, or

modification to any Governmental Authorization listed or required to be listed

in Section 3.5(c) of the Seller Disclosure Schedule; and

 

                        (iv) all applications required to have been filed for the

renewal of the Governmental Authorizations listed or required to be listed in

Section 3.5(c) of the Seller Disclosure Schedule have been duly filed on a

timely basis with the appropriate Governmental Authorities, and all other

filings required to have been made with respect to such Governmental

Authorizations have been duly made on a timely basis with the appropriate

Governmental Authorities, except to the extent that such failure would not have

a Material Adverse Effect on Seller.

 

         3.6       Documents and Disclosures.

 

                  (a) Seller has made available to Platinum for examination true

and complete copies of all documents and information listed in the Seller

Disclosure Schedule, as well as (i) Seller's minute book containing all records

of all proceedings, consents, actions and meetings of the stockholders, the

Board of Directors and any committees of the Board of Directors of Seller; (ii)

all Governmental Authorizations, permits, Orders and consents issued by any

regulatory agency or other Governmental Authority with respect to Seller and

(iii) all of the foregoing documents and information with respect to the

Subsidiaries.

 

                                       18

<PAGE>

                   (b) There has not been any violation of any of the provisions

of the Seller Charter Documents, or of any resolution adopted by the

stockholders or boards of directors, of Seller or any Subsidiary of Seller, and

to Seller's knowledge, no event has occurred and is continuing, and no condition

or circumstance exists, that likely would (with or without notice and/or lapse

of time) constitute or result directly or indirectly in such a violation.

 

                  (c) The books of account, stock records, minute books and

other records of Seller and its Subsidiaries: (i) are in all material respects

true and complete, (ii) have been maintained in accordance with reasonable

business practices and (iii) accurately and fairly reflect in all material

respects the transactions and dispositions of the assets of Seller and its

Subsidiaries.

 

         3.7       Seller Financial Statements. Included in Section 3.7 of the

Seller Disclosure Schedule are the consolidated financial statements of Seller

(including, in each case, any related notes thereto) for the fiscal years ended

December 31, 2002 and 2003 (the "SELLER FINANCIAL STATEMENTS") and for the

three-month period ended March 31, 2004 and each: (i) was prepared in accordance

with GAAP (except as may be indicated in the notes thereto); (ii) fairly present

in all material respects the consolidated financial position of Seller and the

Subsidiaries as at the respective dates thereof and the consolidated results of

Seller's operations and cash flows for the periods indicated, except that the

unaudited interim financial statements do not contain any footnotes and were or

are subject to normal and recurring year-end adjustments and (iii) contain no

adverse opinion or disclaimer of opinion and except as set forth in Section 3.7

of the Seller Disclosure Schedule were not qualified or modified as to

uncertainty, audit scope or accounting principal. Except as set forth on Section

3.7 of the Seller Disclosure Schedule, since December 31, 2003 (the "BASE

BALANCE DATE"), neither Seller nor any Subsidiary has any Liabilities required

under GAAP to be set forth on a balance sheet (absolute, accrued, contingent or

otherwise) except for Liabilities incurred since the Base Balance Sheet Date in

the ordinary course of business consistent with past practices which are not,

individually or in the aggregate, material to the business, results of

operations or financial condition of Seller and the Subsidiaries taken as a

whole and Liabilities incurred in connection with this Agreement. There has been

no change in Seller's accounting policies during the periods covered by the

Seller Financial Statements, except as described in the notes to the Seller

Financial Statements. Seller has no material debt, Liability or obligation of

any nature, whether accrued, absolute, contingent or otherwise, and whether due

or to become due, that is not reflected, reserved against or disclosed in the

Seller Financial Statements or under Section 3.7 of the Seller Disclosure

Schedule, except for those that may have been incurred after the Base Balance

Sheet Date in the ordinary course of Seller's business, consistent with past

practice and that are in an aggregate amount not to exceed $50,000, and (ii)

those that occur after the date of this Agreement in compliance with this

Agreement or with the express written consent of Platinum.

 

         3.8       Internal Control Over Financial Reporting. Seller has

implemented a process, designed by, or under the supervision of, Seller's

principal executive and principal financial officers, and effected by Seller's

board of directors, management and other personnel, to provide reasonable

assurance regarding the reliability of the preparation of financial statements

in accordance with GAAP and includes those policies and procedures that: (i)

pertain to the maintenance of records that in reasonable detail accurately and

fairly reflect the transactions and dispositions of the assets of Seller and its

Subsidiaries; (ii) provide reasonable assurance that transactions are recorded

as necessary to permit preparation of financial statements in accordance with

GAAP, and that receipts and expenditures of Seller and its Subsidiaries are

being made only in accordance with authorizations of management and directors of

Seller and its Subsidiaries; and (iii) provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition, use or disposition

of Seller's assets.

 

                                       19

<PAGE>

         3.9       Accounts Receivable. The Accounts Receivable shown in the

December 31, 2003 balance sheet contained in the Seller Financial Statements

(the "BASE BALANCE SHEET") and which constitute Assets to be purchased under

Section 2.1 arose in the ordinary course of business consistent with past

practice. Allowances for doubtful accounts and warranty returns are adequate and

have been prepared in accordance with GAAP and in accordance with the past

practices of Seller and its Subsidiaries. The Accounts Receivable of Seller and

its Subsidiaries constituting Assets to be purchased under Section 2.1 arising

after the Base Balance Sheet Date and prior to the Closing Date arose or will

arise in the ordinary course of business consistent with past practice. To the

knowledge of Seller, the Accounts Receivable are not subject to any material

claim of offset, recoupment, setoff or counter-claim and it has no knowledge of

any specific facts or circumstances (whether asserted or unasserted) that could

give rise to any such claim in any such case, except to the extent otherwise

reflected in the allowances for doubtful accounts as provided for in the Base

Balance Sheet or, with respect to Accounts Receivable arising after the Base

Balance Sheet Date and prior to the Closing Date, as determined in the ordinary

course of business consistent with the past practices of Seller and its

Subsidiaries. Except as set forth in Section 3.9 of the Seller Disclosure

Schedule, no material amount of Accounts Receivable are contingent upon the

performance by Seller or any of its Subsidiaries of any obligation or Contract

other than normal warranty repair and replacement and other than products'

progress bills in the ordinary course of business consistent with past practice.

No Person has any Encumbrance on any of such Accounts Receivable and no

agreement for deduction or discount has been made with respect to any of such

Accounts Receivable. Section 3.9 of the Seller Disclosure Schedule sets forth an

aging of Accounts Receivable of Seller and its Subsidiaries in the aggregate and

by customer, and indicates the amounts of allowances for doubtful accounts and

warranty returns and Section 3.9 of the Seller Disclosure Schedule sets forth

such amounts of Accounts Receivable which are subject to asserted warranty

claims known to Seller by information regarding asserted warranty claims known

to Seller made within the last year, including the type and amounts of such

claims. Except as set forth on Section 3.9 of the Seller Disclosure Schedule,

Seller has no Accounts Receivable from any person, firm or corporation which is

affiliated with Seller or from any director, officer or employee or Affiliate of

Seller, Parent or any Subsidiary of Seller.

 

         3.10      [Intentionally Omitted]

 

         3.11      Litigation. Except as set forth in Section 3.11 of the Seller

Disclosure Schedule, there is no Proceeding pending against Seller or any of its

Subsidiaries, nor, to Seller's knowledge, is any Proceeding threatened against

Seller or any of its Subsidiaries before any Governmental Authority or

arbitrator that, if determined adversely to Seller or any of its Subsidiaries,

may reasonably be expected to have a Material Adverse Effect on Seller, the

Business or the Assets. There is no material unsatisfied adverse Order of a

Governmental Authority or arbitrator outstanding against Seller or any of its

Subsidiaries. There is no Proceeding pending as to which Seller has received

notice of assertion against Seller, which in any manner could prevent, enjoin,

alter or materially delay any of the transactions contemplated by this

Agreement.

 

         3.12      Taxes.

 

                  (a)   Seller and each Subsidiary of Seller has timely filed all

material federal, state, local and foreign returns, reports, estimates,

information statements or other documents or information ("RETURNS") required to

be supplied to any "Tax" (as defined below) authority relating to "Taxes" (as

defined below) required to be filed by or on behalf of Seller, and each

Subsidiary of Seller. Such Returns are true, correct and complete in all

material respects. Seller and each Subsidiary of Seller has paid all material

Taxes required to be paid, has made all necessary estimated Tax payments, and

has no Liability for Taxes in excess of the amount so paid, except to the extent

adequate reserves have been

 

                                       20

<PAGE>

established in the Seller Financial Statements or, with respect to Taxes that

are not yet due on or prior to the date of this Agreement and which have become

due thereafter, adequate reserves have been established by Seller and each

Subsidiary of Seller prior to the Closing Date.

 

                  (b) Seller and each Subsidiary of Seller has withheld and paid

all material Taxes required by applicable Legal Requirement to be withheld and

paid in connection with any amounts paid or owing to any employee, independent

producer or contractor, creditor, stockholder, or other Third Party.

 

                  (c) To Seller's knowledge, no claim has ever been made by a

Governmental Authority in a jurisdiction where Seller or any Subsidiary of

Seller does not file Tax Returns that Seller, or any Subsidiary of Seller is or

may be subject to Taxation by that jurisdiction.

 

                  (d) Except as set forth in Section 3.12(d) of the Seller

Disclosure Schedule, neither Seller nor any Subsidiary of Seller is party to or

has any obligation under any Tax-sharing, Tax indemnity or Tax allocation

agreement or arrangement.

 

                  For the purposes of this Agreement, "TAX" or "TAXES" refers to

(i) any and all federal, state, local and foreign Taxes, assessments and other

governmental charges, duties, impositions and Liabilities relating to Taxes,

including Taxes based upon or measured by gross receipts, income, profits,

sales, use and occupation, and value added, ad valorem, transfer, franchise,

withholding, payroll, recapture, employment, excise and property Taxes, together

with all interest, penalties and additions imposed with respect to such amounts,

(ii) any Liability for payment of any amounts of the type described in clause

(i) as a result of being a member of an affiliated, consolidated, combined or

unitary group, and (iii) any Liability for amounts of the type described in

clauses (i) and (ii) as a result of any express or implied obligation to

indemnify another Person or as a result of any obligations under any agreements

or arrangements with any other person with respect to such amounts and including

any Liability for Taxes of a predecessor entity.

 

         3.13      Sufficiency of Assets; Title to Properties.

 

                  (a) The Assets constitute all of the assets, tangible and

intangible, of any nature whatsoever, necessary to operate the Business in the

manner presently operated by Seller and includes substantially all of the

operating assets of Seller, subject to any Excluded Assets or Retained

Liabilities.

 

                  (b) Seller and each of the Subsidiaries have good and

marketable title to all of their respective Assets as shown on the Base Balance

Sheet, or with respect to leased Assets, valid leasehold interests in, or with

respect to licensed Assets, valid licenses to use, free and clear of all

Encumbrances (other than Permitted Encumbrances). The machinery and equipment

included in the Assets are in all material respects in good condition and

repair, normal wear and tear excepted, and all Leases of Real Property or

Tangible Personal Property to which Seller or any Subsidiary of Seller is a

party are fully effective and afford Seller or such Subsidiary peaceful and

undisturbed possession of the subject matter of the Lease. To Seller's

Knowledge, neither Seller nor any Subsidiary is in violation of any zoning,

building, or safety ordinance, regulation or requirement or other Legal

Requirement applicable to the operation of owned or leased properties, and

Seller has not received any notice of such violation with which it has not

complied or had waived.

 

                  (c) Section 3.13(c) of the Seller Disclosure Schedule sets

forth the addresses and uses of all Real Property that Seller, its predecessors,

Affiliates or the Subsidiaries own, lease or sublease or have ever owned, leased

or subleased since January 1, 2003. All Leases of Real Property or Tangible

Personal Property constituting Assets to which Seller or any Subsidiary of

Seller is a party are

 

                                       21

<PAGE>

effective and afford Seller peaceful and undisturbed possession of the subject

matter of the Lease. As a result of the transactions contemplated by this

Agreement, Purchaser will obtain a valid ownership or leasehold interest in all

Tangible Personal Property that Seller or its Subsidiaries currently own or

lease and all Real Property that Seller or its Subsidiaries currently own or

lease, as of the date of this Agreement, (subject to any Real Property retained

by Seller or its Subsidiaries as Excluded Assets), in each case free and clear

of all title defects and Encumbrances of any kind, except (i) Permitted

Encumbrances; (ii) mechanics', carriers', workers' and other similar liens

arising in the ordinary course of business, and (iii) liens for current Taxes

not yet due and payable.

 

         3.14      Absence of Certain Changes or Events. Excluding the effect of

filing and administration of the Chapter 11 Case, since the Base Balance Sheet

Date, Seller and the Subsidiaries have carried on their business in the ordinary

course substantially in accordance with the procedures and practices in effect

on the Base Balance Sheet Date.

 

                  (a)   To Seller's knowledge, except as set forth under Section

3.14 of the Seller Disclosure Schedule, since the Base Balance Sheet Date there

has not been with respect to Seller or any Subsidiary of Seller:

 

                       (i) any change, event, circumstance or effect, which by

itself or in conjunction with all other such changes, whether or not arising in

the ordinary course of business, has had or would reasonably be expected to have

a Material Adverse Effect on Seller or on Seller's or its Subsidiaries' ability

to conduct the Business as presently conducted, or that is reasonably likely to

impede the performance by Seller of its obligations under this Agreement or any

of the Seller Ancillary Agreements;

 

                       (ii) any Encumbrance placed on any of the properties of

Seller or any Subsidiary except Permitted Encumbrances;

 

                       (iii) any Liability incurred by Seller or any Subsidiary

of Seller other than trade accounts payable and other Liabilities arising in the

ordinary course of business;

 

                        (iv) any purchase, license, sale or other disposition, or

any agreement or other arrangement for the purchase, license, sale or other

disposition, of any of the Assets other than in the ordinary course of business

and consistent with past practice or which do not exceed in the aggregate

$50,000 through the date of this Agreement;

 

                       (v) any material damage, destruction or loss of any

material property or asset, whether or not covered by insurance;

 

                        (vi) any material labor dispute or material claim of

unfair labor practices;

 

                       (vii) any increase in the compensation payable or to

become payable to any of Seller's or any of its Subsidiary's officers, employees

or agents earning compensation at an anticipated annual rate in excess of

$50,000, or any bonus payment or arrangement made to or with any of such

officers, employees, consultants or agents; or any increase in the compensation

payable or to become payable to any of Seller's or any of its Subsidiary's other

officers, employees, consultants or agents (other than normal annual raises for

non-officers in the ordinary course of business consistent with past practice)

or any bonus payment or arrangement made to or with any of such officers,

employees or agents other than normal bonuses or

 

                                       22

<PAGE>

compensation increases granted prior to the date of this Agreement as disclosed

under Section 3.14 of the Seller Disclosure Schedule;

 

                        (viii) any termination or resignation of any executive

officer of Seller or any Subsidiary of Seller; or

 

                       (ix) any loss of one or more material customers of Seller

or any Subsidiary of Seller, which, individually or in the aggregate, account

for more than five percent (5%) of the consolidated revenues of Seller and its

Subsidiaries as of the Base Balance Sheet Date.

 

                  (b) Except as set forth under Section 3.14 of the Seller

Disclosure Schedule, since the Base Balance Sheet Date neither Seller nor any

Subsidiary of Seller has:

 

                       (i) amended their certificates of incorporation, bylaws

or any other organizational document of a Subsidiary of Seller;

 

                       (ii) made any material payment or discharged any material

Encumbrance or Liability of Seller or any Subsidiary;

 

                       (iii) incurred any material obligation or Liability to

any of their employees, officers, directors, stockholders or Affiliates, or any

loans or advances made to any of its employees, officers, directors,

stockholders or Affiliates, except normal compensation and reasonable travel

related expense allowances payable to employees, officers or directors;

 

                       (iv) declared, set aside or paid any dividend on, or made

any other distribution in respect of, their capital stock, or made any changes

in any rights, preferences, privileges or restrictions of any of their

outstanding capital stock;

 

                       (v) effected or been a party to any transaction relating

to a merger, consolidation, sale of all or substantially all of their assets, or

similar transaction; or accepted or otherwise entered into any Acquisition

Proposal (as defined in Section 5.6);

 

                        (vi) executed, amended, relinquished, terminated or

failed to renew any material Contract constituting an Asset, lease, transaction

or legally binding commitment other than in the ordinary course of their

business (nor has there been any written or oral indication or assertion by the

other party thereto of its desire to so amend, relinquish, terminate or not

renew any such Contract, lease transaction or legally binding commitment);

 

                       (vii) deferred the payment of any accounts payable

outside the ordinary course of business or provided any discount, accommodation

or other concession outside the ordinary course of business in order to

accelerate or induce the collection of any receivable;

 

                       (viii) incurred indebtedness for borrowed money, entered

into any capital lease or guaranteed any such indebtedness other than in the

ordinary course of their business, and not in excess of $50,000 in the

aggregate; or

 

                                       23

<PAGE>

                        (ix) entered into any other material transaction or taken

any other material action outside the ordinary course of their business (other

than as disclosed in Section 3.14 of the Seller Disclosure Schedule).

 

         3.15      Intellectual Property.

 

                  (a)   De