Exhibit 2.1
STOCK PURCHASE AGREEMENT
BETWEEN
▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
AND
▇▇▇▇▇ BUSINESS FORMS, INC.,
a Texas corporation
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Effective as of November 14, 2002
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TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE 1
1.01 Stock Purchase 1
1.02 Purchase Price 1
1.03 Earn-Out 2
ARTICLE II CLOSING 2
2.01 Place and Time 2
2.02 Delivery of Documents 2
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS 2
3.01 Organization 2
3.02 No Conflict 3
3.03 Stock; Capitalization 3
3.04 Financial Statements 3
3.05 Undisclosed Liabilities 4
3.06 Absence of Changes 4
3.07 Tax Matters 4
3.08 Condition and Title to the Assets 5
3.09 Insurance 6
3.10 Compliance with Laws 6
3.11 Litigation and Claims 6
3.12 Contracts and Consents 6
3.13 Intangible Assets 7
3.14 Environmental Protection 7
3.15 Major Suppliers and Customers 7
3.16 No Conflict 7
3.17 Labor Relations 8
3.18 Employees 8
3.19 Inventory 8
3.20 Receivables 8
3.21 Real Property 9
3.22 Subsidiaries and Investments 9
3.23 Records 10
3.24 Transactions With Related Parties 10
3.25 Warranties 10
3.26 Employee Benefits 10
3.27 Disclosure 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER 12
4.01 Organization and Authorization 12
4.02 No Conflict 12
ARTICLE V COVENANTS 13
5.01 Conduct of Business 13
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5.02 Confidential Information 14
5.03 Non-Competition and Non-Solicitation 14
5.04 Brokerage Fees 14
5.05 Exclusivity 14
5.06 Access and Information 14
5.07 Audit 15
5.08 Expenses 15
ARTICLE VI CONDITIONS TO PURCHASER'S OBLIGATIONS 15
6.01 Obligations of Purchaser 15
ARTICLE VII CONDITIONS TO SELLERS' OBLIGATIONS 16
7.01 Obligations of Sellers 16
ARTICLE VIII TERMINATION PRIOR TO CLOSING 17
8.01 Termination of Agreement 17
8.02 Termination of Obligations 17
ARTICLE IX SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION 17
9.01 Survival of Representations and Warranties 17
9.02 Obligations of Sellers 18
9.03 Obligations of Purchaser 18
9.04 Notice of Loss or Asserted Liability 19
9.05 Third Party Claims 19
9.06 Disputes with Customers or Suppliers 19
9.07 Release of Escrow Fund to Purchaser 19
9.08 Return of Escrow Fund to Purchaser 20
9.09 Waiver and Release 20
9.10 Remedies Not Exclusive 20
ARTICLE X CONDITIONS SUBSEQUENT TO CLOSING 20
10.01 Obligations of Purchaser 20
10.02 Obligations of Purchaser and Sellers 22
ARTICLE XI MISCELLANEOUS 22
11.01 Entire Agreement 22
11.02 Parties Bound by Agreement;
Successors and Assigns 22
11.03 Counterparts 22
11.04 Headings 22
11.05 Knowledge 22
11.06 Stock Transfer Taxes 22
11.07 Notices 23
11.08 Public Disclosure 23
11.09 Governing Law 23
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STOCK PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement"), dated November 13, 2002, and
effective as of November 14, 2002, among ▇▇▇▇▇ ▇. ▇▇▇▇, a
resident of Tolar, Texas, and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, a resident of
Columbus, Kansas (collectively, "Sellers"), and ▇▇▇▇▇ Business
Forms, Inc., a Texas corporation ("Purchaser").
WHEREAS, Sellers own all of the capital stock (the "Stock")
of Calibrated Forms Co., Inc., a Kansas corporation (the
"Company"), engaged in the wholesale manufacturing of business
forms; and
WHEREAS, Purchaser desires to acquire all of the Stock from
Sellers on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and the
covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are
acknowledged, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
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1.01 Stock Purchase. Subject to the terms and conditions
set forth below, Purchaser shall purchase from Sellers at closing
("Closing") all of the Stock. At Closing, the Company shall own
the following assets (the "Assets"), free and clear of all liens,
claims, encumbrances and security interests:
(a)All products, supplies, inventory, contracts,
accounts, receivables, deposits, cash and prepaid expenses.
(b)All customer lists, computer software, licenses,
patents, trademarks and trade names, the corporate name of
the Company, inventions, trade secrets, confidential
information and proprietary technology used in the
Company's business.
(c)All furniture, fixtures, machinery and equipment,
real estate and buildings, leasehold improvements and other
personal property used in the Company's business, except
for excluded personal property set forth on Schedule
1.01(c) prepared by, and acceptable to, Purchaser and
Sellers.
1.02 Purchase Price. The purchase price ("Purchase Price")
of the Stock is $22,000,000.00, less the excluded liabilities set
forth on Schedule 1.02 prepared by, and acceptable to, Purchaser
and Sellers (the "Excluded Liabilities"). The Purchase Price
will be paid at Closing by
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delivery to Sellers of Purchaser's Promissory Notes in the
aggregate amount of $14,804,940.46 ($22,000,000.00 less the
Excluded Liabilities), with interest at the rate of 3.75% per
annum, to be paid on January 3, 2003. Purchaser shall not have
the right to prepay all or any portion of the Promissory Notes.
1.03 Earn-Out. As additional consideration, Sellers shall
receive an earn-out commencing upon completion of Purchaser's
2003 fiscal year calculated on the basis of 50% of the amount, if
any, of the Company's EBITDA (excluding earnings from post-
closing mergers and acquisitions of the Company) in excess of
$6,300,000 for each fiscal year of Purchaser, up to the aggregate
amount of $3,000,000. The earn-out shall be paid to Sellers
within 90 days of the end of each of Purchaser's fiscal years
commencing with its 2003 fiscal year, and shall be allocated as
follows: 50% to ▇▇▇▇▇ ▇. ▇▇▇▇ and 50% to ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇. It
shall be a condition precedent to the obligation of Purchaser to
make any earn-out payment that one of Sellers, who shall be
acceptable to Purchaser, shall have been employed as General
Manager of the Company on a full-time basis during the entire
fiscal year for which the earn-out is paid. The earn-out payable
to Sellers prior to the Expiration Date, as defined in the escrow
agreement (the "Escrow Agreement"), among the parties and the
escrow agent, shall be deposited in escrow with the escrow agent
to be administered in accordance with the terms and provisions of
the Escrow Agreement.
ARTICLE II
CLOSING
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2.01 Place and Time. Closing shall take place at the
offices of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, on November 13, 2002 at 10:00 a.m.,
Dallas, Texas time.
2.02 Delivery of Documents. At Closing, Purchaser shall
deliver to Sellers the Promissory Notes referenced in Section
1.02, and Sellers shall deliver to Purchaser certificates
representing all of the Stock, duly endorsed or accompanied by
stock transfer powers duly executed in like manner, with
signatures guaranteed by a national bank or member firm of the
New York Stock Exchange, or a duly executed and notarized
affidavit of lost certificate, in form and substance acceptable
to Purchaser. Sellers shall also deliver to Purchaser at Closing
copies of all minute books, stock transfer records, income tax
filings and returns, correspondence, files and records pertaining
to the business and operations of the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
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Sellers, jointly and severally, represent and warrant to
Purchaser as follows:
3.01 Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Kansas and has all requisite power and authority
to carry on and conduct its business as it is now being conducted
and to own or lease its properties and assets, and is duly
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qualified and in good standing in the State of Kansas and every
other state (if any) in which the conduct of its businesses or
the ownership of its properties and assets requires it to be so
qualified. Sellers have the right, power and capacity to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Sellers and constitutes the
legal, valid and binding obligation of Sellers, enforceable in
accordance with its terms.
3.02 No Conflict. Neither the execution and delivery of
this Agreement nor the consummation of the transactions
contemplated will (a) result in the breach, violation or
contravention of, or constitute a default under, or conflict
with, or give rise to a right of termination of, or accelerate
any obligation under any of the provisions of (i) any agreement,
lease, note, bond, debenture or other evidence of indebtedness or
any mortgage, deed of trust, indenture or other instrument to
which Sellers are a party or by which any of them is bound or to
which any of their assets is subject, (ii) any judgment, decree,
order or award of any court, regulatory agency or other
governmental body or arbitrator to which Sellers or any of their
assets is subject or by which Sellers are bound or (iii) any
statute, rule or regulation or other law applicable to Sellers,
(b) result in the creation of any pledge, lien, encumbrance or
security interest upon any of its assets, or (c) require the
authorization, approval, consent or order of, or filing with, or
other action by any court, regulatory agency or other
governmental body.
3.03 Stock; Capitalization. The authorized capital stock
of the Company consists of 500 shares of common stock, $.50 par
value per share, of which 200 shares are issued and outstanding,
and 600 shares of preferred stock, $1,000.00 par value per share,
all of which are held in the Company's treasury. The Stock
constitutes all of the issued and outstanding shares of capital
stock of the Company. All of the Stock is owned of record,
legally, beneficially and exclusively by Sellers. Sellers hold
the exclusive right and power to vote the Stock. The Stock is
free and clear of any and all adverse claims. No legend or other
reference to any adverse claims appears upon any certificate
representing the Stock, except pursuant to applicable securities
law. Upon delivery of the Stock under this Agreement, Purchaser
will acquire good and valid legal and exclusive title to the
Stock, free and clear of any adverse claims. The Stock is
validly issued, fully paid and nonassessable. The Stock was
issued in compliance with all applicable federal and state
securities laws and is not subject to preemptive rights. The
stock transfer records of the Company are correct and complete
and all certificates representing Stock which is not outstanding
and owned by Sellers have been cancelled and placed in the stock
transfer records. Schedule 3.03 identifies all outstanding
guarantees, letters of credit, performance bonds, assurance
bonds, surety agreements, indemnity agreements and any other
legally binding forms of assurance or guaranty in connection with
the business of the Company, whether or not issued by the Company
or Sellers.
3.04 Financial Statements. Sellers have provided Purchaser
with true and correct copies of the Company's unaudited financial
statements for the three years ended July 31, 2002 (collectively,
the "Financial Statements"). The Financial Statements have been
prepared from the books and records of the Company, are true and
correct in all material respects and present fairly the Company's
financial position and results of operations as of their
respective dates and for the respective periods.
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3.05 Undisclosed Liabilities. Except as set forth on
Schedule 3.05, the Company has no liabilities except: those
reflected or reserved against on the Company's July 31, 2002
balance sheet ("Balance Sheet") in the amounts identified on the
Balance Sheet and those of the same nature as those set forth on
the Balance Sheet that have arisen in the ordinary course of
business of the Company after the Balance Sheet date, none of
which is materially different in amount as reflected in the
Financial Statements ("Post-Financial Statement Liabilities").
All Post-Balance Sheet liabilities are consistent in amount and
character with past practice and experience. No Post-Balance
Sheet liability has had or will have an adverse effect on the
business of the Company, financial condition or prospects of the
Company. No Post-Balance Sheet liability is a result of a breach
of contract or warranty, a tort or infringement, or violation of
any property rights or legal requirements.
3.06 Absence of Changes. Except as disclosed on Schedule
3.06, since July 31, 2002, none of the following has occurred:
(a)Any change in the financial condition, assets,
liabilities, business, prospects, or operations, other than
changes in the ordinary course of business or changes
affecting the economy or industry as a whole, which in the
aggregate would have a material adverse effect on the
Company;
(b)Any material damage, destruction, or loss, whether
or not covered by insurance, of the Company;
(c)Any event or condition that could materially and
adversely affect the Company or its business, operations,
properties or prospects; or
(d)Any receipt of notice (formal or informal), that
any supplier or customer has taken or contemplates taking
any steps that could disrupt the Company's business
relationship with the supplier or customer.
3.07 Tax Matters.
(a)Sellers have furnished to Purchaser true, correct,
and complete copies of all annual federal, state and local
tax returns that the Company has filed during the past three
(3) years and all quarterly and monthly sales and use tax
returns filed for the Company during the past six (6)
months. Except as disclosed on Schedule 3.07(a), none of
the Company's tax returns have been audited by any taxing
authority during the past five (5) years, and the Company
has not received any notice of deficiency or other
adjustment from any taxing authority that is unresolved as
of Closing. Except as described on Schedule 3.07(a), no
audit or examination, claim or proposed assessment by any
taxing authority is pending or, threatened against the
Company or any portion of its business.
(b)Except as disclosed on Schedule 3.07(b), the
Company has withheld or collected from each payment made to
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each of its employees the amount of all taxes (including
federal income taxes, Federal Insurance Contributions Act
("FICA") taxes, and state and local income, payroll, and
wage taxes, among others) required to be withheld or
collected. The Company has paid or made provision for the
same to the proper tax depositories or collecting
authorities. All ad valorem and other property taxes
imposed on Sellers, or that may become a lien on the
Company, and that are due and payable have been paid in
full, and all ad valorem taxes paid with respect to the
Company for 2000, 2001 and 2002 are listed on Schedule
3.07(b).
(c)All of the Company's federal, state, local, or
foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under IRC
Section 59A), customs duties, capital stock, franchise,
profits, withholding, social security (or similar),
unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative
or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not and including any
obligation to indemnify or otherwise assume or succeed to
the tax liability of any other person, due and owing has
been paid.
(d)Except as disclosed on Schedule 3.07(d), the
Company is not a party to any income tax allocation or
sharing agreement. The Company has not filed a consent
under IRC Section 341(f) concerning collapsible
corporations. The Company has not made any payment, nor is
it obligated to make any payment, nor is it a party to any
agreement that under any circumstances could obligate it to
make any payment, that will not be deductible under IRC
Sections 280G or 162(m). Other than the current affiliated
group of Sellers and the Company, the Company has not been a
member of an affiliated group during any part of any
consolidated return year in which any other corporation was
also a member of such group. The Company is not and has not
been during the applicable period specified in IRC Section
897(c)(1)(A)(ii) a United States real property holding
corporation as defined in IRC Section 897(c)(2). No member
of the Selling Group has any losses subject to the
limitations of IRC Section 382. The Company has not, nor
within the five-year period preceding Closing has the
Company been, an "S" corporation.
(e)Sellers and the Company do not constitute an
affiliated group within the meaning of Section 1504 of the
IRC.
3.08 Condition and Title to the Assets. Except as
specified in Schedule 3.08, (i) the Assets are in good condition
and repair, ordinary wear and tear excepted, (ii) the present use
and location of the Assets conform with all applicable laws,
ordinances, and regulations of all federal, state, and local
governmental agencies, and (iii) the Company has not received
notice of any breach or violation of any such laws, ordinances,
or regulations. At Closing, the Company will have good and
marketable title to the Assets, free and clear of all liens,
claims and encumbrances.
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3.09 Insurance. Schedule 3.09 lists all insurance policies
held by the Company and now in force relating to the Company.
3.10 Compliance with Laws.
(a)The Company has complied and are in compliance
with all laws, regulations, and orders applicable to the
Company, and have obtained all permits, licenses, orders,
and approvals of federal, state, and local governmental and
regulatory bodies that are required for it to own, maintain,
and operate its business; (ii) no threat of cancellation,
modification, or non-renewal of any such permits, licenses,
orders, or approvals is pending, nor does any basis exist
for cancellation, modification, or non-renewal; (iii) except
as otherwise set forth on Schedule 3.10(a), the Company is
not currently in violation or default of any such permit,
license, order, or approval and the present uses of the
Company does not violate any law, regulation, or order; and
(iv) except as disclosed in Schedule 3.10(a), the Company
does not have or need governmental permits or licenses to
transact its business as currently conducted and, except as
listed on Schedule 3.10(a), none of the permits or licenses
that the Company hold will be adversely affected in any way
by reason of this Agreement or the consummation of the
transactions contemplated here, including assignment of the
permits and licenses to Purchaser. No governmental
authority has issued or threatened any notice or warning
with respect to any failure or alleged failure of the
Company to comply with any law, regulation or order.
(b)Except as set forth in Schedule 3.10(b), no
consent or approval of, prior filing with, notice to, or
other action by, any governmental body or agency is required
for the Company to execute and deliver this Agreement or any
assignment, agreement, or other instrument to be executed
and delivered pursuant to this Agreement by or to consummate
the transactions provided for here.
3.11 Litigation and Claims. No judgments, orders, writs,
decrees, injunctions, or quasi judicial or administrative
decisions are outstanding to which the Company or its properties
are subject. Except as disclosed on Schedule 3.11, no
litigation, claim, action, suit, investigation, or proceeding is
pending or has been filed at any time since January 1, 2002, or
threatened against or relating to the Company or the Assets.
Except as disclosed on Schedule 3.11, the Company has no "loss
contingencies" (as defined in Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 5 ("FASB
5")), that FASB 5 would require to be disclosed or accrued in the
Company's Financial Statements if they were prepared when this
representation and warranty is made or deemed made.
3.12 Contracts and Consents. Schedule 3.12 lists each
material written or oral agreements (the "Company Contracts")
related to or affecting the Assets. Copies of all the Company
Contracts have been made available to Purchaser. No party is in
breach or default of any Company Contract, nor does any basis for
any claim of breach or default, whether upon the passage of time,
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giving notice, or otherwise with regard to the foregoing exist
with respect to any party to any Company Contract. Except as set
forth on Schedule 3.12, no Company Contract has been modified or
amended, and the Company has not received any notice of any
proposed modification or amendment. Sellers shall have obtained
all required consents or approvals by other parties. Each
Company Contract is a valid, legal, and binding agreement of its
parties, enforceable in accordance with its terms.
3.13 Intangible Assets. Schedule 3.13 lists all
inventions, licenses, trademarks, service marks, trade names,
service names, copyrights, know-how, patents, and related
registrations and applications owned by, registered in the name
of, or used in connection with the Company's business, or for
which application has been made. There are no pending or
threatened infringement claims against the Company by any person
with respect to any of the items listed on Schedule 3.13, nor has
any such item been declared invalid or been limited by any court
or agreement. The intangible assets will afford Purchaser at all
times after Closing the rights to use all technology, proprietary
information, know-how or patented ideas, designs, inventions,
trademarks, copyrights, trade names and service marks owned by
the Company or others necessary for the conduct of the Company as
presently being conducted. The use of these intangible assets
will not and, the conduct of the Company as presently conducted
does not, infringe on the intellectual property rights of any
other person.
3.14 Environmental Protection. The Company has obtained
all permits, licenses, and other authorizations and filed all
notices that it is required to obtain or file to operate its
business under federal, state, and local environmental protection
laws. Permits, licenses, and authorizations for 2000, 2001 and
2002 are listed on Schedule 3.14. The Company is in compliance
with all terms and conditions of its permits, licenses, and
authorizations. The Company is in compliance with all other
applicable limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and
timetables contained in those laws or in any law, regulation,
code, plan, order, decree, judgment, notice, or demand letter
issued, entered, promulgated, or approved under those laws.
Except as disclosed on Schedule 3.14, no past or present events,
conditions, circumstances, activities, practices, incidents,
actions, or plans could interfere with or prevent continued
compliance, or could give rise to any common law or statutory
liability, or otherwise form the basis of any claim, action,
suit, proceeding, hearing, or investigation, based on or related
to the Company's manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the
emission, discharge, runoff, release, or threatened release into
the environment, of any pollutant, contaminant, hazardous or
toxic material, waste, water, effluent, or other substance.
3.15 Major Suppliers and Customers. Schedule 3.15 lists
each supplier of goods or services and each customer to whom the
Company paid or billed more than $50,000 during 2002 and the
total amount paid or billed during 2002. Except as set forth on
Schedule 3.15, the Company has no dispute with any supplier or
customer and have received no notice (formal or informal) that
any supplier or customer has taken or contemplates taking any
steps that could disrupt Sellers' business relationship with a
supplier or customer.
3.16 No Conflict. Except as set forth on Schedule 3.16,
neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein except for
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the contracts and lease for which consents or approvals to the
assignment are to be delivered at Closing, will (a) result in the
violation of the Articles or Bylaws of the Company, result in the
breach, violation or contravention of, or constitute a default
under, or conflict with, or give rise to a right of termination
of, or accelerate any obligation under any of the provisions of
(i) any agreement, lease, note, bond, debenture or other evidence
of indebtedness or any mortgage, deed of trust, indenture or
other instrument to which the Company is a party or by which any
of them is bound or to which any of their assets is subject, (ii)
any judgment, decree, order or award of any court, regulatory
agency or other governmental body or arbitrator to which Sellers
or any of their assets are subject or by which the Company is
bound or (iii) any statute, rule or regulation or other law
applicable to the Company, (b) result in the creation of any
pledge, lien, encumbrance or security interest upon any of their
assets, or (c) require the authorization, approval, consent or
order of, or filing with, or other action by any court,
regulatory agency or other governmental body.
3.17 Labor Relations. Except to the extent set forth in
Schedule 3.17, the Company is not subject to any collective
bargaining agreements respecting employment and employment
practices, terms and conditions of employment, wages and hours,
and occupational safety and health, and is not engaged in any
unfair labor practice within the meaning of National Labor
Relations Act (section) 8.
3.18 Employees. Schedule 3.18 discloses all compensation
(including wages, salaries, severance, commissions and actual or
anticipated bonuses) and describes other benefits paid or
provided to each of the Company's employees, consultants, agents,
representatives or independent contractors for 2000, 2001 and
2002. No unpaid compensation, other than recurring salary or
compensation pursuant to the Company's existing employment
agreements or bonus, commissions, incentive compensation, or
profit-sharing arrangements or deferred compensation plans or
severance compensation is payable to any officers, directors, or
employees. No vacation or sick leave is accrued or payable for
any employee, except as specified in Schedule 3.18. No employee
is subject to any non-competition or non-solicitation agreement
which would prevent Purchaser from hiring such employee.
3.19 Inventory. All of the inventory owned by the Company
is valued on the books and records of the Company and in the
Financial Statements at lower of cost or market. All inventory is
accounted for using the FIFO basis of accounting in accordance
with generally accepted accounting. All of the raw materials and
work-in-process inventory of the Company can reasonably be
expected to be utilized in the ordinary course of business within
a reasonable period of time. Except as reserved in the Financial
Statements, none of the Company's inventory is obsolete, slow-
moving, has been consigned to others or is on consignment from
others. The quantities of each item of inventory are not
excessive, but are reasonable in the present circumstances of the
Company. All of the Company's inventory is located at the
Company's premises.
3.20 Receivables. Schedule 3.20 identifies each trade or
other account receivable of the Company ("Receivable")
outstanding as of July 31, 2002 on an aged basis by account
debtor. All Receivables arose from bona fide sale transactions.
No portion of any Receivable is subject to any counterclaim,
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defense or set-off, or is otherwise in dispute. Except to the
extent of the recorded reserve for doubtful accounts specified in
the Financial Statements, all of the Receivables are collectible
in the ordinary course of business and will be fully collected
without setoff within 90 days after having been created using
commercially reasonable efforts (excluding litigation and
assignment to a collection agency).
3.21 Real Property. Schedule 3.21 discloses and summarizes
all real properties currently owned by the Company (collectively,
the "Real Property") and identifies the record title holder of
all Real Property. Schedule 3.21 separately identifies all real
property previously owned, used or leased by the Company or in
which the Company had an interest. The Company has good and
marketable fee simple title to all Real Property shown as owned
by it on Schedule 3.21, free and clear of all Encumbrances. The
Company has the right to quiet enjoyment of all Real Property in
which it holds a leasehold interest for the full term, including
all renewal rights, of the leasehold interest. Copies of all
title insurance policies written in favor of the Company, and all
surveys, deeds, opinions and abstracts relating to the Real
Property have been delivered to Purchaser. All structures and
other improvements on all Real Property owned by the Company are
within the lot lines and do not encroach on the properties of any
other person. The use and operation of all Real Property conform
to all applicable building, zoning, safety and subdivision laws,
environmental laws and other legal requirements and all
restrictive covenants and restrictions and conditions affecting
title. No portion of any Real Property is located in a flood
plain, flood hazard area or designated wetlands area. The Company
has not received any written or oral notice of assessments for
public improvements against any Real Property or any written or
oral notice or order by any governmental body, insurance company
or board of fire underwriters or other body exercising similar
functions that (i) relates to violations of building, safety or
fire ordinances or regulations, (ii) claims any defect or
deficiency with respect to any Real Property or (iii) requests
the performance of any repairs, alterations or other work to or
in any Real Property or in any streets bounding the Real
Property. Each parcel of Real Property owned by the Company is
considered a separate parcel of land for taxing and conveyancing
purposes. There is no pending condemnation, expropriation,
eminent domain or similar proceeding affecting all or any portion
of the Real Property. All public utilities (including water, gas,
electric, storm and sanitary sewage, and telephone utilities)
required to operate the Real Property are available to the Real
Property and enter the boundaries of the Real Property through
adjoining public streets, easements or rights-of-way of record in
favor of the Company. These public utilities are all connected
according to valid permits, are all in good working order and are
adequate to service the operations on the Real Property as
currently conducted and permit full compliance with all legal
requirements. The Company has not received any written notice of
any proposed, planned or actual curtailment of service of any
utility supplied to any facility of the Company. All Real
Property used by the Company has access to a publicly-opened
street. There exists no outstanding option, right of first
refusal or other contractual right to purchase, sell, assign or
dispose of any owned Real Property. The Company has all
certificates of occupancy and governmental approvals necessary
for current and continued use and operation of the Real Property.
The Company does not lease any Real Estate.
3.22 Subsidiaries and Investments. Except as set forth on
Schedule 3.22, the Company does not own, nor has it ever owned,
any equity interest in any corporation, partnership, limited
liability company, joint venture or other entity.
9
3.23 Records. The books of account and related records of
the Company reflect accurately and in detail its assets,
liabilities, revenues, expenses and other transactions. The
books of account of the Company have been maintained in
accordance with sound business practices. The minute books of
the Company contain accurate and complete records of all meetings
held of, and corporate action taken by, the stockholders, the
Board of Directors of the Company, and committees of the Board of
Directors of the Company. No meeting of stockholders, the Board
of Directors of the Company, and committees of the Board of
Directors of the Company has been held for which minutes have not
been prepared and are not contained in the minute books of the
Company. All minute books of the Company have been made available
to Purchaser and, at Closing, will be in the possession of the
Company.
3.24 Transactions With Related Parties. No Seller,
executive officer or director (a "Related Party") is or has been
for the past three years a party to any transaction, agreement or
understanding with the Company except for arrangements disclosed
on Schedule 3.24. Schedule 3.24 separately identifies all
services that Seller or one or more Seller affiliates provide to
the Company, all assets that Seller or a Seller affiliate owns or
leases that are used by the Company and all outstanding
liabilities of Seller and its other affiliates that are related
to the business of the Company. Schedule 3.24 separately
discloses all cash dividends from the Company since the Balance
Sheet Date. No Related Party uses any assets of the Company
except directly in connection with the business of the Company.
No Related Party owns any asset used in the business of the
Company. No Related Party has any claim of any nature, including
any inchoate claim, against the Company, and the Company has no
claim of any nature, including any inchoate claim, against any
Related Party. No Related Party directly or indirectly owns or
is engaged in any business that competes directly or indirectly
with the Company. Except as disclosed on Schedule 3.24 or as
otherwise expressly provided by this Agreement or by any other
agreement, (i) no Related Party will at any time after Closing
for any reason, directly or indirectly, be or become entitled to
receive any payment or transfer of money or other property of any
kind from the Company with respect to facts, circumstances or
events existing or occurring on or before Closing, and (ii) the
Company will not at any time after Closing for any reason,
directly or indirectly, be or become subject to any obligation to
any Related Party with respect to facts, circumstances or events
existing or occurring on or before Closing.
3.25 Warranties. Schedule 3.25 discloses and describes the
terms of all express product warranties under which the Company
may have liability after Closing. The Company's product warranty
reserve as of July 31, 2002 is identified on Schedule 3.25.
Schedule 3.25 discloses the product warranty claims experience of
the Company for the past 5 years.
3.26 Employee Benefits.
(a)Company Plans. Schedule 3.26(a) discloses all
written and unwritten benefit Plans, whether or not funded
and whether or not terminated, (i) maintained or sponsored
by the Company, (ii) with respect to which the Company (or
Seller with respect to the Company) has or may have
10
Liability or is obligated to contribute, (iii) that
otherwise covers any of the current or former employees of
the Company or their beneficiaries, or (iv) as to which any
current or former employees of the Company or their
beneficiaries participated or were entitled to participate
or accrue or have accrued any rights (each, a "Company
Plan").
(b)Company Group Matters; Funding. Neither the
Company, nor any corporation that may be aggregated with the
Company under Sections 414(b), (c), (m) or (o) of the IRC
(the "Company Group"), has any obligation to contribute to,
or any direct or indirect Liability with respect to, any
benefit plan of the type described in Sections 4064 of ERISA
or Section 414(c) of the IRC. The Company does not have any
Liability, and after Closing, the Company will not have any
Liability, with respect to any benefit plan of any other
member of the Company Group, whether as a result of
delinquent contributions, distress terminations, fraudulent
transfers, failure to pay premiums to the PBGC, withdrawal
liability or otherwise. No accumulated funding deficiency
(as defined in Section 402 of ERISA and Section 412 of the
IRC) exists nor has any funding waiver from the IRS been
received or requested with respect to any Company Plan or
Benefit Plan of any member of the Company Group. No excise
or other Tax is due or owing because of any failure to
comply with the minimum funding standards of the IRC or
ERISA with respect to any Company Plan or Benefit Plan of
any member of the Company Group.
(c)Compliance. Each of the Company Plans and all
related trusts, insurance contracts and funds have been
created, maintained, funded and administered in compliance
with all applicable Legal Requirements and in compliance
with the underlying or applicable plan document, trust
agreement, insurance policy or other writing. No Company
Plan is, or is proposed to be, under audit or investigation.
No completed audit of any Company Plan has resulted in the
imposition of any Tax, fine or penalty. There are no
actions or proceedings (other than routine claims for
benefits) pending, threatened or anticipated with respect to
the Company Plans.
(d)Qualified Plans. Schedule 3.26(d) separately
discloses each Company Plan that purports to be a qualified
plan under Section 401(a) of the IRC and exempt from United
States federal income tax under Section 501(a) of the IRC (a
"Qualified Plan"). A determination letter (or opinion or
notification letter, if applicable) has been received from
the IRS that each Qualified Plan is qualified under Section
401(a) of the IRC and exempt from federal income tax under
Section 501(a) of the IRC. No Qualified Plan has been
amended since the date of the most recent IRS letter. No
member of the Company Group, fiduciary of any Qualified
Plan, or of any of the foregoing, has done anything that
would adversely affect the qualified status of a Qualified
Plan or the qualified status of any related trust.
(e)No Defined Benefit Plans. No Company Plan is a
defined benefit plan within the meaning of Section 3(35) of
ERISA (a "Defined Benefit Plan"). No Defined Benefit Plan
sponsored or maintained by any member of the Company Group
has been terminated or partially terminated during the past
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ten years, except as set forth on Schedule 3.26(e). Each
Defined Benefit Plan identified as terminated on Schedule
3.26(e) has met the requirement for standard termination of
single-employer plans contained in Section 4041(b) of ERISA.
During the five-year period ending on Closing, no member of
the Company Group has transferred a Defined Benefit Plan to
a corporation that was not, at the time of transfer, related
to the transferor in any manner described in Sections
414(b), (c), (m) or (o) of the IRC.
(f)Multiemployer Plans. No Company Plan is a
multiemployer plan within the meaning of Section 3(37) or
Section 4001(a)(4) of ERISA (a "Multiemployer Plan"). No
member of the Company Group has withdrawn from any
Multiemployer Plan or incurred any withdrawal liability to
or under any Multiemployer Plan. No Company Plan covers any
employees of any member of the Company Group in any foreign
country or territory.
3.27 Disclosure. Sellers' representations, warranties,
assurances, or statements in this Agreement and all statements in
any document (including the Financial Statements and the
Schedules), certificate, or other writing furnished or to be
furnished by Sellers (or caused to be furnished by them) to
Purchaser or any of its representatives pursuant to this
Agreement, contains or will contain any untrue statement of
material fact or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was made,
to make the statements made not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser represents and warrants to Sellers as follows:
4.01 Organization and Authorization. Purchaser is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Texas and has all requisite power
and authority to carry on and conduct its business as it is now
being conducted and to own or lease its properties and assets,
and is duly qualified and in good standing in every state in
which the conduct of its businesses or the ownership of its
properties and assets requires it to be so qualified. Purchaser
has the right, power and capacity to execute, deliver and perform
this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this
Agreement by Purchaser and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Purchaser. This Agreement has
been duly and validly executed and delivered by Purchaser and
constitutes the legal, valid and binding obligation of Purchaser,
enforceable in accordance with its terms.
4.02 No Conflict. Neither the execution and delivery of
this Agreement nor the consummation of the transactions
contemplated will (a) result in the breach, violation or
contravention of, or constitute a default under, or conflict
with, or give rise to a right of termination of, or accelerate
12
any obligation under any of the provisions of (i) any agreement,
lease, note, bond, debenture or other evidence of indebtedness or
any mortgage, deed of trust, indenture or other instrument to
which Purchaser is a party or by which any of them is bound or to
which any of their assets is subject, (ii) any judgment, decree,
order or award of any court, regulatory agency or other
governmental body or arbitrator to which Purchaser or any of its
assets is subject or by which Purchaser is bound or (iii) any
statute, rule or regulation or other law applicable to Purchaser,
(b) result in the creation of any pledge, lien, encumbrance or
security interest upon any of its assets, or (c) require the
authorization, approval, consent or order of, or filing with, or
other action by any court, regulatory agency or other
governmental body.
ARTICLE V
COVENANTS
---------
5.01 Conduct of Business. Until the earlier of Closing or
the termination of this Agreement, Sellers shall not cause the
Company, without the prior written consent of Purchaser, to enter
into any material contractual obligations or any other material
transactions, or make any material commitments regarding the
business, other than in the ordinary course of business. Sellers
shall cause the Company to carry on its business diligently and
substantially in the manner as heretofore conducted. By way of
illustration and not in limitation of the foregoing:
(a)The Assets shall be maintained in their present
state or repair, ordinary wear and tear excepted, and
Sellers shall use their best efforts to cause the Company to
preserve and keep intact its business organization, to keep
available the services of its employees and preserve for
Purchaser the goodwill of its business and its relationships
with its customers, suppliers and others with whom it has
business relations. Sellers shall cause the Company to
conduct its business only in the ordinary course.
(b)Without the prior written consent of Purchaser,
prior to Closing, Sellers shall not cause the Company to
take any of the following actions:
(i) Dispose of any Assets other than in the
ordinary course of business consistent with past
practice;
(ii) Mortgage, pledge or subject to liens,
security shares, or other encumbrances any Assets;
(iii) Purchase or commit to purchase any Asset for
a price exceeding $5,000;
(iv) Amend or terminate any contract or other
material agreement, including any employee benefit
plan or any insurance policy in force on the date
hereof;
(v) Declare or pay any dividend, distribution or
bonus; or
13
(vi) Do any act, omit to do any act or permit any
act within their control which will cause a breach of
any representation, warranty or obligation contained
in this Agreement or any obligations contained in any
contract;
(vii) Increase any compensation or otherwise
change any compensation arrangements with officers,
directors, employees, consultants, agents or
representatives.
5.02 Confidential Information. Each of Sellers (on their
behalf and on behalf of the Company) and Purchaser will hold in
strict confidence and not disclose to third parties any data and
information obtained from the other parties, except (i) to its
sources of financing, lawyers and accountants, (ii) as may be
required by law and (iii) except for certain creditors of Seller
who have executed confidentiality agreements satisfactory to
Purchaser.
5.03 Non-Competition and Non-Solicitation. For a period of
five (5) years commencing upon Closing, Sellers shall not,
directly or indirectly, jointly or severally, on either his or
her own behalf or on behalf of or in conjunction with any other
person or entity (i) solicit, divert or attempt to divert any
person or entity that is a customer or supplier or a prospective
customer or supplier of the Company from becoming a customer or
supplier of Purchaser; (ii) manage, operate, control, participate
in, invest in or be involved or connected with, in any way, as an
officer, director, shareholder, employee, consultant, agent,
representative, independent contractor, partner, creditor, or
guarantor of any person or entity that directly or indirectly
competes with Purchaser in the wholesale manufacturing of
business forms in any metropolitan market in which the Company or
Purchaser are then doing business or have customer relationships;
or (iii) solicit or induce, or in any manner attempt to solicit
or induce any employee, consultant, independent contractor,
agent, representative or distributor of the Company to terminate
his or its relationship with Purchaser.
5.04 Brokerage Fees. Sellers shall indemnify Purchaser,
its officers, directors and shareholders against any other fee or
commission payable to any broker, agent or finder retained by
Sellers in connection with the sale of the Assets to Purchaser.
Purchaser shall indemnify Sellers against any fee or commission
payable to any broker, agent or finder retained by Purchaser in
connection with the purchase of the Assets by Purchaser.
5.05 Exclusivity. Sellers agrees that until December 31,
2002, neither they nor the Company nor its officers, directors,
shareholders, agents or representatives shall enter into any
agreement, understanding, negotiation or discussion with any
third party relating to the sale or other disposition of the
capital stock or assets of the Company.
5.06 Access and Information. Subsequent to the execution
of this Agreement, Sellers shall cooperate fully with Purchaser,
shall supply such information and data as Purchaser may request,
including the books and records, and the tax returns and filings
of the Company and shall permit Purchaser's auditors, legal
counsel and other authorized representatives access at the
Company's offices during regular business hours to inspect and
investigate the Assets and the Company's records, business,
Assets, operations and properties.
14
5.07 Audit. If Purchaser determines that an audit of the
financial statements of the Company is required prior to Closing,
Sellers and Purchaser shall share that expense equally.
5.08 Expenses. Except as provided in Section 5.07 or in
this Section 5.08, Purchaser and Sellers agree that they will
each bear and pay all costs and expenses incurred by them
respecting the transactions contemplated herein and all
investigations and proceedings in connection therewith,
including, without limitation, fees and expenses of their
respective counsel, accountants and advisors. In addition, it is
expressly understood that Sellers will provide or cause to be
provided, an updated appraisal of Sellers real and personal
property, plant and equipment by an independent nationally
recognized appraisal firm approved by Purchaser. Such appraisal
costs to be paid equally by Sellers and Purchaser at Closing.
ARTICLE VI
CONDITIONS TO PURCHASER'S OBLIGATIONS
-------------------------------------
6.01 Obligations of Purchaser. The obligations of
Purchaser are subject to the satisfaction or waiver at Closing of
each of the following conditions:
(a)Representations and Warranties True at Closing.
Sellers' representations and warranties contained in this
Agreement shall be true in all material respects on and as
of Closing with the same force and effect as though made on
and as of such date; Sellers shall have complied in all
material respects with its covenants and agreements in this
Agreement on or before Closing; and Sellers shall have
delivered to Purchaser a certificate dated as of Closing to
all such effects.
(b)Litigation. No suit, investigation, action or
other proceeding shall be threatened or pending against
Sellers before any court or governmental agency which (i)
could result in the restraint or prohibition of Sellers, or
the obtaining of damages or other relief from any such
party, in connection with this Agreement or the consummation
of the transactions contemplated here or (ii) an order
restricting the Company from conducting its business as now
being conducted.
(c)No Material Adverse Changes. The Company shall
not have suffered any material adverse change in its
businesses, prospects, financial condition, working capital,
assets, liabilities (absolute, accrued, contingent, or
otherwise) or operations.
(d)Documents and Schedules Satisfactory. All
schedules, stock certificates, stock transfer powers and
other documents delivered by Sellers to Purchaser at Closing
will be in form and substance satisfactory to Purchaser and
its counsel.
(e)Required Governmental Approvals. All governmental
authorizations, consents, and approvals necessary to
consummate the transactions contemplated herein shall have
been obtained by Sellers and shall be in full force and
effect.
15
(f)Other Necessary Consents. Sellers shall have
obtained all other consents and approvals necessary to
consummate the transactions contemplated herein.
(g)Release of Liens. At Closing, the Assets and the
Stock shall not be subject to any liens, adverse claims,
encumbrances or security interests.
(h)Employment Agreements. The Company shall have
executed and delivered employment agreements with each of
Sellers on terms and conditions satisfactory to Sellers and
Purchaser.
(i)Due Diligence. Purchaser shall have
satisfactorily completed its due diligence of the Company
and its business, Assets, operations, properties and
prospects.
(j)Opinion of Sellers' Counsel. Purchaser shall have
received the opinion of Sellers' counsel, which shall be in
form and substance satisfactory to Purchaser and its
counsel.
(k)Cancellation of Preferred Stock. All of the
Company's issued preferred stock, whether held in treasury
or otherwise, shall have been cancelled.
(l)Title Policy and Survey. The Company shall have
delivered to Purchaser current title policies and surveys
covering all of the Company's real estate, which shall be
satisfactory in all respects to Purchaser.
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATIONS
----------------------------------
7.01 Obligations of Sellers. The obligations of Sellers
are subject to the satisfaction or waiver at Closing of each of
the following conditions:
(a)Representations and Warranties True at Closing.
Purchaser's representations and warranties contained in this
Agreement shall be true in all material respects on and as
of Closing with the same force and effect as though made on
and as of such date; Purchaser will have complied in all
material respects with its covenants and agreements in this
Agreement on or before Closing; and Purchaser shall have
delivered to Sellers a certificate dated as of Closing
signed by an authorized officer to all such effects.
(b)Litigation. No suit, investigation, action or
other proceeding shall be overtly threatened or pending
against Purchaser before any court or governmental agency
which (i) could result in the restraint or prohibition of
Purchaser, or the obtaining of damages or other relief from
any such party, in connection with this Agreement or the
consummation of the transactions contemplated here or (ii)
an order restricting Purchaser from conducting its business
as now being conducted.
16
(c)Employment Agreements. The Company shall have
executed and delivered employment agreements with each of
Sellers on terms and conditions satisfactory to Sellers and
Purchaser.
ARTICLE VIII
TERMINATION PRIOR TO CLOSING
----------------------------
8.01 Termination of Agreement. This Agreement may be
terminated at any time prior to Closing:
(a)By the mutual written consent of the parties;
(b)By Sellers in writing, without liability, if
Purchaser (i) fails to perform in any material respect any
act required at Closing, or (ii) materially breaches any
covenant in this Agreement;
(c)By Purchaser in writing, without liability, if
Sellers (i) fail to perform in any material respect any act
required on or prior to Closing, or (ii) materially breach
any of their representation, warranty, or covenant in this
Agreement; or
(d)By any party in writing, without liability, if any
court or governmental or regulatory agency order, writ,
injunction, or decree prohibits or restrains any party from
consummating the transactions contemplated here.
8.02 Termination of Obligations. Termination of this
Agreement pursuant to this article will terminate all of the
parties' obligations, except for the obligations under Sections
5.02, 5.04, 5.05, 5.07 and 5.08 hereof. However, termination
pursuant to Sections 8.01(b) or (c) hereof will not relieve a
defaulting or breaching party from any liability to any other
party. Within fifteen (15) days after this Agreement is
terminated, each party will, upon written request from any other
party, return all documents and copies previously delivered to it
or made in connection with this Agreement.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION
--------------------------------------------------------------
9.01 Survival of Representations and Warranties. All
representations, warranties, covenants, and agreements made or to
be performed by Sellers or Purchaser pursuant to this Agreement
will survive the execution and delivery hereof and Closing
hereunder, and will thereafter terminate and expire (a) on the
date which is two (2) fiscal years of Purchaser after Closing,
with respect to any "General Claim" (as herein defined) which has
not occurred or arisen on or before such date, and (b) with
17
respect to any "Tax Claim" (as herein defined), on the later of
(i) ninety (90) days after the date upon which the liability to
which any such Tax Claim may relate is barred by all applicable
statutes of limitation, and (ii) ninety (90) days after the date
upon which any claim for refund or credit related to such Tax
Claim is barred by all applicable statutes of limitation. With
respect to any "Environmental Claim," such representations,
warranties, covenants and agreements will survive until ninety
(90) days after the date upon which the liability to which such
Environmental Claims is barred by the applicable statute of
limitations. With respect to a Corporate Stock Claim, or the
date upon which the liability as to any Corporate Stock Claim is
barred by the applicable statute of limitations. As used in this
Agreement, the following terms have the following meanings:
(a)"General Claim" means any claim based upon,
arising out of or otherwise related to any material
inaccuracy in any representation or warranty or any breach
of any covenant or agreement made by Sellers in or pursuant
to this Agreement, other than a Tax Claim, an Environmental
Claim or a Corporate Stock Claim.
(b)"Tax Claim" means any claim based upon, arising
out of or otherwise related to any material inaccuracy in
any representation or warranty or any breach of any covenant
or agreement made or to be performed by Sellers pursuant to
this Agreement and related to any federal, state, or local
taxes of any kind or description; or any claim related to of
any taxes (including interest and penalties relating
thereto) now or hereafter due and relating to the business
of Sellers or the Assets prior to Closing.
(c)"Environmental Claim" means any claim based on,
arising out of or otherwise related to any matters disclosed
by Sellers on Schedule 9.01(c) or any material inaccuracy in
any representation or warranty of Sellers related to
environmental matters contained herein.
(d)"Corporate Stock Claim" means any claim based
upon, or arising out of or otherwise related to any material
inaccuracy in any representation or warranty of Sellers
related to Section 3.02 or 3.03.
9.02 Obligations of Sellers. Sellers agree, jointly and
severally, to indemnify, defend and hold Purchaser (and each of
its shareholders, directors, officers, employees, affiliates and
assigns) harmless from and against all losses, costs,
deficiencies, damages, consequential damages (including, but not
limited to, interruptions of business and costs of remedial
actions), fines, penalties and liabilities incurred, and all
expenses (including, but not limited to reasonable attorneys'
fees) arising out of or otherwise related to any General Claim,
Tax Claim, Corporate Stock Claim or any Environmental Claim
(collectively, "Losses," and individually, a "Loss"), net of any
insurance recovery actually received relating to such Loss.
9.03 Obligations of Purchaser. Purchaser agrees to
indemnify, defend and hold Sellers harmless from and against all
losses, costs, deficiencies, damages, fines, penalties and
liabilities incurred, and all expenses (including, but not
limited to reasonable attorneys' fees) arising out of or
otherwise related to any General Claim (collectively, "Losses,"
and individually, a "Loss"), net of any insurance recovery
actually received relating to such Loss.
18
9.04 Notice of Loss or Asserted Liability. Promptly after
(a) becoming aware of circumstances that have resulted in a Loss
for which any party hereto (the "Indemnitee") intends to seek
indemnification under Sections 9.02 and 9.03 hereof or (b)
receipt by the Indemnitee of written notice of any demand, claim
or circumstances which, with or without the lapse of time, the
giving of notice or both, would give rise to a claim or the
commencement (or threatened commencement) of any action,
proceeding or investigation (an "Asserted Liability") that may
result in a Loss, the Indemnitee will give notice thereof to any
other party (or parties) obligated to provide indemnification
pursuant to Sections 9.02 and 9.03 hereof (the "Indemnifying
Party"). The failure of an Indemnitee to give any notice
required by this Section shall not affect any of such party's
rights under this Section or otherwise, except and to the extent
that such failure is actually prejudicial to the rights or
obligations of the Indemnifying Party.
9.05 Third Party Claims. The Indemnitee shall have the
right to conduct and control, through counsel of its choosing,
the defense of any third-party claim, action or suit and to
compromise or settle any third-party claim, action or suit. The
Indemnitee may permit the Indemnifying Party to participate in
the defense of any such claim, action or suit (except those
involving Tax Claims, Environmental Claims and Corporate Stock
Claims) through counsel chosen by the Indemnifying Party, so long
as the fees and expenses of that counsel are borne by the
Indemnifying Party. If the Indemnitee permits the Indemnifying
Party to undertake, conduct and control the conduct and
settlement of such claim, action or suit: (i) the Indemnifying
Party shall not permit any encumbrance to exist upon any Asset of
the Indemnified Party; (ii) the Indemnifying Party shall not
consent to any settlement that includes equitable relief and does
not include as an unconditional term of the settlement the giving
of a complete release from liability with respect to such action
or suit to the Indemnified Party; (iii) the Indemnifying Party
shall permit the Indemnitee to participate in such conduct or
settlement through counsel acceptable to the Indemnitee; and (iv)
the Indemnifying Party shall agree promptly to reimburse the
Indemnitee for the full amount of any damages, including fees and
expenses of counsel for the Indemnitee.
9.06 Disputes with Customers or Suppliers. Notwithstanding
any other provision to the contrary, in the case of any Asserted
Liability by any supplier or customer of Sellers in connection
with which Purchaser makes a claim for indemnification hereunder,
Purchaser shall give a claims notice with respect thereto and
shall have the exclusive right, at Purchaser's option, to defend
any such matter, at Sellers' expense.
9.07 Release of Escrow Fund to Purchaser. The deposit of
the Escrow Fund is made to facilitate payments to Purchaser on
account of the indemnification obligations of Sellers pursuant to
Section 9.02 hereof. If, from time to time and at any time on or
after Closing, Purchaser notifies the Escrow Agent and Sellers in
writing (the "Purchaser's Notice") that Purchaser has received
notice from a third party of a claim for Losses for which Sellers
have provided indemnification to Purchaser hereunder, and
Purchaser intends to pay all or any portion of any such Losses,
or that Purchaser has otherwise incurred Losses for which Sellers
have provided indemnification to Purchaser hereunder, the Escrow
Agent shall administer such claim in the manner provided in the
Escrow Agreement.
19
9.08 Return of Escrow Fund to Sellers. On the Expiration
Date (as defined in the Escrow Agreement), the Escrow Agent shall
disburse to each Seller his or her pro rata share of any amount
(including accrued and undistributed interest thereon) in the
Escrow Fund, less any offsets for Claimed Funds as provided in
the Escrow Agreement. Such pro rata share shall be determined
based upon the pro rata share of the Purchase Price received by
such Seller pursuant to Section 1.02 of this Agreement. The
right to return of any portion of the Escrow Fund shall be
subordinate and junior to the rights of Purchaser pursuant to the
Escrow Agreement, and if Purchaser's Notice has been given,
Purchaser shall have the right to have such claim resolved prior
to distribution of such amount to Sellers.
9.09 Waiver and Release. Each Seller hereby agrees that he
or she waives and releases any claim, and will not make any claim
against the Company by reason of the fact that he or she was a
director, officer, shareholder, employee, or agent of the Company
or was serving at the request of the Company as a partner,
trustee, director, officer, shareholder, employee, or agent of
another entity.
9.10 Remedies Not Exclusive. The remedies provided in this
Section 9 shall not be exclusive of any other rights or remedies
available by one Party against the other, either at law or in
equity.
ARTICLE X
CONDITIONS SUBSEQUENT TO CLOSING
--------------------------------
10.01 Obligations of Purchaser. The obligations of
Purchaser are subject to the satisfaction or waiver of the
following conditions subsequent, and, if not satisfied or waived,
this Agreement shall have no force or effect.
(a)On or before five (5) days after Closing, Sellers
will furnish Purchaser three (3) surveys of all the Real
Property (the "Surveys") prepared by ▇▇▇ ▇▇▇▇▇▇ & Associates
(the "Surveyor"). The Surveys shall each: (i) show all
rights of access (ingress and egress) to and from the Real
Property; (ii) show all dedicated public rights-of-way
adjacent to the Real Property and a certification that such
rights-of-way are contiguous to the Real Property; (iii)
show all encroachments, if any, encumbering the Real
Property and all encroachments, if any, of the Real Property
on property belonging to others; (iv) show all easements
(recorded or visible on the ground) encumbering or
benefiting the Real Property, identifying same by the
recorded document number, if appropriate; (v) include a
certification by the Surveyor to Purchaser that the Real
Property does not lie in an area designated as a special
flood hazard area as shown on the most recent F.E.M.A. Map
covering the Real Property; (vi) show all improvements
located on the Real Property, and all setback requirements
affecting the Real Property, whether such setback
requirements are established by municipal ordinance,
restrictive covenants encumbering the Real Property, or
otherwise; (vii) show where all utilities abut the perimeter
of the Real Property; (viii) contain a certification of the
survey results dated not earlier than the Effective Date
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hereof and certified to Purchaser, Sellers, Title Company,
and Title Insurer, including a certification of the total
area of the Real Property; and (ix) be sufficient for Title
Company to delete all exceptions relating to the existence
of a survey, except "shortages in area" and matters
disclosed thereon. The Survey shall comply with the State
Surveyors Association standards and specifications for a
Category 1A, Condition II survey.
(b)On or before seven (7) days after Closing, Sellers
shall furnish to Purchaser Revised Commitments For Title
Insurance issued by the Cherokee County Abstract Company or
another title company acceptable to Purchaser ("Title
Company"), as issuing agent on behalf of First American
Title Insurance Company of Kansas or another title insurer
acceptable to Purchaser ("Title Insurer"), for Commitment
No. T-11184, Commitment No. T-11184-A, and Commitment No. T-
11184-B, covering the three (3) non-contiguous real
properties owned by the Company, binding Title Insurer to
issue three (3) Owner's Policies of Title Insurance on the
standard form of policy prescribed by the Department of
Insurance, in the full amount of $1,000,000.00, $25,000.00
and $381,000.00, respectively (the "Title Commitment"), with
copies of all title exception instruments referenced
therein. The followings items shall be removed from the
Title Commitments:
(i) Title Commitment Number T-11184 - Schedule B
items 2(c), 8, 9, 10, 11, 13 and 14.
(ii) Title Commitment Number T-11184-A - Schedule
B items 4 and 5.
(iii) Title Commitment Number T-11184-B - Schedule
B items 2(c), 4, 6, 8 and 10.
(c)On or before the tenth (10th) day following its
receipt of the Title Commitments and the Surveys, Purchaser
shall notify Sellers in writing of Purchaser's objections to
any matters reflected in the Title Commitments or the
Surveys. If Purchaser does not timely notify Sellers of
objections, Purchaser shall be deemed to have rejected the
title to the Real Property as reflected in the Title
Commitments and by the Surveys. If Purchaser does timely
notify Sellers of objections, Sellers shall have a period of
five (5) days from the date of Sellers' receipt of
Purchaser's written objections to attempt to remove or cure
Purchaser's objections (the "Curative Period"), and prior to
the termination of the Curative Period, Sellers shall either
provide Purchaser written notice (i) of such cure, or (ii)
that Sellers are unwilling to cure all such objections. If
Sellers are unable or unwilling to remove or cure
Purchaser's objections before the end of the Curative
Period, this Agreement shall automatically terminate without
further required action by either party, unless Purchaser
notifies Sellers in writing on or prior to 5:00 p.m.,
Dallas, Texas time, on the last day of the Curative Period
that Purchaser has waived Purchaser's objections.
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(d)On or before January 3, 2003, Title Company shall
issue to Purchaser and the Company the three (3) Owner's
Policies of Title Insurance referenced in clause (b) above,
containing such terms, provisions and exclusions acceptable
to Purchaser in its sole discretion.
10.02 Obligations of Purchaser and Sellers. The obligations
of Purchaser and Sellers are subject to the satisfaction or
waiver of the following conditions subsequent, and, if not
satisfied or waived, this Agreement shall have no force or
effect.
(a)Payment of Excluded Liabilities. The Company
shall pay all of the Excluded Liabilities set forth on
Schedule 1.02 on or before January 3, 2003.
ARTICLE XI
MISCELLANEOUS
-------------
11.01 Entire Agreement. This Agreement constitutes the sole
understanding of the parties with respect to the subject matter
hereof. No amendment, modification or alteration of the terms or
provisions of this Agreement shall be binding unless the same
shall be in writing and duly executed by the parties hereto. Any
of the terms or conditions of this Agreement may be waived in
writing at any time by the party which is entitled to the
benefits thereof. No waiver of any of the provisions of this
Agreement shall be deemed to or shall constitute a waiver of any
other provision hereof (whether or not similar).
11.02 Parties Bound by Agreement; Successors and Assigns.
The terms, conditions and obligations of this Agreement shall
inure to the benefit of and be binding upon the parties hereto
and the respective successors and assigns thereof. Without the
prior written consent of the other party, neither party may
assign its rights, duties, or obligations hereunder or any part
hereof to any other person or entity.
11.03 Counterparts. This Agreement may be executed in one
or more counterparts, each of which will for all purposes be
deemed to be an original and all of which will constitute the
same instrument.
11.04 Headings. The headings of the Articles, Sections and
Schedules of this Agreement are inserted for convenience only and
shall not be deemed to constitute part of this Agreement or to
affect the construction hereof.
11.05 Knowledge. As used in this Agreement, "knowledge" and
"to the knowledge of" means actual, imputed or constructive
knowledge of a Party.
11.06 Stock Transfer Taxes. Any stock transfer tax or sales
or other tax due or to become due as a result of the consummation
of the transactions contemplated hereby shall be borne solely by,
and paid to the appropriate taxing authorities by Sellers.
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11.07 Notices. Any notice, request, instruction, or other
document to be given must be in writing and delivered personally
or sent by certified mail or by United States Express Mail,
postage or fees prepaid, or by Federal Express as follows:
If to Sellers to: ▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
P. O. ▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser to: ▇▇▇▇▇ Business Forms, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman, President & CEO
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice delivered personally in the manner provided here will
be deemed given to the party to whom it is directed upon the
party's (or its agent's) actual receipt. Any notice addressed
and mailed in the manner provided here will be deemed given to
the party to whom it is addressed at the close of business, local
time of the recipient, on the fourth (4th) business day after the
day it is placed in the mail or, if earlier, the time of actual
receipt.
11.08 Public Disclosure. Sellers shall not issue any press
release or make other public statement or disclosure concerning
the transaction contemplated hereby, without the consent of
Purchaser as to the content and the manner of presentation and
publication thereof.
11.09 Governing Law. This Agreement will be construed in
accordance with and governed by the laws of the State of Texas,
without regard to its conflict of laws principles, and exclusive
jurisdiction and venue shall be in the federal or state courts of
Dallas County, Texas.
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IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed and delivered as of the date hereof.
SELLERS:
/s/▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇
/s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
PURCHASER:
▇▇▇▇▇ BUSINESS FORMS, INC.,
a Texas corporation
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman, President and CEO
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