1
STOCK PURCHASE AGREEMENT
BY AND AMONG
GLOBAL IMAGING SYSTEMS, INC.,
("BUYER")
CAPITOL OFFICE SOLUTIONS, INC.
("COMPANY")
AND
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ FUND IV L.P.
("GTCR IV")
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇▇")
AND
EACH OF THE OTHER STOCKHOLDERS SIGNATORY
HERETO
(COLLECTIVELY, THE "STOCKHOLDERS")
DATED NOVEMBER 19, 1998
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IN MAKING AN INVESTMENT DECISION REGARDING WHETHER TO ACCEPT SHARES OF COMMON
STOCK OF GLOBAL IMAGING SYSTEMS, INC. REFERRED TO HEREIN AS THE "BUYER SHARES"
AS PAYMENT, STOCKHOLDERS MUST RELY ON THEIR OWN EXAMINATION OF GLOBAL IMAGING
SYSTEMS, INC. AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THE BUYER SHARES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
STOCKHOLDERS IN FLORIDA WHO ELECT TO ACCEPT BUYER SHARES HAVE THE RIGHT TO
CHANGE THEIR ELECTION AND RECEIVE CASH INSTEAD WITHIN THREE DAYS OF THE CLOSING
WITHOUT ANY PENALTY
THE BUYER SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, (THE "SECURITIES ACT") AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTIONS THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME.
NO BUYER SHARES WILL BE ISSUED TO ANY PERSON WHO IS NOT AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501 UNDER THE SECURITIES ACT. THIS AGREEMENT SHALL
NOT CONSTITUTE AN OFFER TO SELL BUYER SHARES TO, OR A SOLICITATION OF AN OFFER
TO BUY BUYER SHARES FROM, ANY PERSON WHO IS NOT AN ACCREDITED INVESTOR.
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TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS........................................................................................................ 21
ARTICLE II PURCHASE AND SALE OF THE COMPANY SHARES........................................................................... 26
2.1 Basic Transaction................................................................................................ 26
2.2 Purchase Price................................................................................................... 26
(a) Generally.................................................................................................. 26
(b) Consideration in the Form of Buyer Shares.................................................................. 26
(c) Payment.................................................................................................... 27
2.3 Purchase Price Adjustments....................................................................................... 27
(a) Funded Indebtedness Adjustment............................................................................. 27
(b) Working Capital Adjustment................................................................................. 27
(c) Adjusted Purchase Price.................................................................................... 28
(d) Allocation................................................................................................. 28
2.4 Example.......................................................................................................... 28
2.5 Closing.......................................................................................................... 28
(a) Deliveries................................................................................................. 28
(b) Time and Place............................................................................................. 28
2.6 GTCR Representative.............................................................................................. 28
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND STOCKHOLDERS............................................................................................. 29
3.1 Capitalization................................................................................................... 30
3.2 Acquisition of Buyer Shares...................................................................................... 30
3.3 Other Rights to Acquire Capital Stock............................................................................ 31
3.4 Due Organization................................................................................................. 31
3.5 No Subsidiaries.................................................................................................. 32
3.6 Due Authorization................................................................................................ 32
3.7 Financial Statements............................................................................................. 32
3.8 Certain Actions.................................................................................................. 33
3.9 Properties....................................................................................................... 34
3.10 Licenses and Permits............................................................................................ 34
3.11 Intellectual Property........................................................................................... 35
3.12 Compliance with Laws............................................................................................ 35
3.13 Insurance....................................................................................................... 35
3.14 Employee Benefit Plans.......................................................................................... 36
(a) Employee Welfare Benefit Plans............................................................................. 36
(b) Employee Pension Benefit Plans............................................................................. 36
(c) Employment and Non-Tax Qualified Deferred Compensation Arrangements........................................ 36
3.15 Contracts and Agreements........................................................................................ 37
3.16 Claims and Proceedings.......................................................................................... 37
3.17 Taxes........................................................................................................... 37
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3.18 Personnel...................................................................................................... 38
3.19 Business Relations............................................................................................. 39
3.20 Accounts Receivable; Inventory................................................................................. 39
(a) Accounts Receivable....................................................................................... 39
(b) Inventory................................................................................................. 40
3.21 Bank Accounts.................................................................................................. 40
3.22 Agents......................................................................................................... 40
3.23 Warranties..................................................................................................... 40
3.24 Brokers........................................................................................................ 40
3.25 Interest in Competitors, Suppliers, Customers, Etc............................................................. 40
3.26 Indebtedness To and From Officers, Directors, Stockholders,
and Employees................................................................................................. 40
3.27 Information Furnished.......................................................................................... 41
3.28 No Liens on Shares............................................................................................. 41
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
BUYER............................................................................................................... 41
4.1 Due Organization................................................................................................ 41
4.2 Due Authorization............................................................................................... 41
4.3 No Brokers..................................................................................................... 42
4.4 Issuance of the Buyer Shares.................................................................................... 42
4.5 No Undisclosed Agreement........................................................................................ 42
ARTICLE V COVENANTS OF THE COMPANY AND THE
STOCKHOLDERS........................................................................................................ 42
5.1 Conduct of Business Pending Closing............................................................................. 42
(a) Payment of Funded Indebtedness............................................................................ 42
(b) Negative Covenants........................................................................................ 42
(c) Conduct of Business....................................................................................... 43
(d) Nature of Breach.......................................................................................... 43
(e) Access to Information..................................................................................... 43
(f) Transfers or Restrictions................................................................................. 43
(g)........................................................................................................... 43
5.2 Consents of Others.............................................................................................. 44
5.3 Reasonable Efforts.............................................................................................. 44
5.4 Powers of Attorney.............................................................................................. 44
5.5 Transfer Taxes.................................................................................................. 44
5.6 Notice of Developments; Update of Disclosure Schedules.......................................................... 44
ARTICLE VI POST-CLOSING COVENANTS........................................................................................... 45
6.1 General......................................................................................................... 45
6.2 Litigation Support.............................................................................................. 45
6.3 ▇▇▇▇▇▇▇▇▇'▇ Transition Obligations.............................................................................. 46
6.4 Confidentiality................................................................................................. 46
6.5 ▇▇▇▇▇▇▇▇▇'▇ Covenant Not to Compete............................................................................. 46
ARTICLE VII CONDITIONS TO OBLIGATION OF PARTIES TO
CONSUMMATE CLOSING.................................................................................................. 47
7.1 Conditions to the Buyer's Obligations........................................................................... 47
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(a) Satisfaction with Due Diligence............................................................................ 47
(b) Covenants, Representations and Warranties.................................................................. 47
(c) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇; Other Consents.......................................................................... 48
(d) Financing.................................................................................................. 48
(e) Material Adverse Change.................................................................................... 48
(f) Deliveries by the Stockholders and the Company............................................................. 48
(i) Opinions of Counsel................................................................................. 48
(ii) Fairness Opinion................................................................................... 49
(iii) Certificates...................................................................................... 49
(iv) Release............................................................................................ 49
(v) Stock Certificates.................................................................................. 49
(vi) Stock Certificates................................................................................. 49
7.2 Conditions to the Company's and the Stockholders' Obligations.................................................... 49
(a) Covenants, Representations and Warranties.................................................................. 49
(b) Consents................................................................................................... 50
(c) Deliveries by the Buyer.................................................................................... 50
(i) Opinion of the Buyer's Counsel...................................................................... 50
(ii) Stock Certificates................................................................................. 50
(iii) Adjusted Purchase Price........................................................................... 50
ARTICLE VIII INDEMNIFICATION................................................................................................. 50
8.1 Indemnification by the Stockholders.............................................................................. 50
8.2 Defense of Claims................................................................................................ 51
8.3 Tax Audits, Etc.................................................................................................. 52
8.4 Indemnification of the Stockholders and the Company.............................................................. 52
8.5 Limits on Indemnification........................................................................................ 52
ARTICLE IX TERMINATION....................................................................................................... 53
9.1 Termination...................................................................................................... 53
(a) Mutual Consent............................................................................................ 53
(b) Litigation................................................................................................ 53
(c) Conditions to the Buyer's Obligations..................................................................... 53
(d) Conditions to the Stockholders' and the Company's
Obligations............................................................................................. 53
9.2 Effect of Termination............................................................................................ 53
ARTICLE X MISCELLANEOUS...................................................................................................... 54
10.1 Modifications................................................................................................... 54
10.2 Notices......................................................................................................... 54
10.3 Counterparts; Facsimile Transmission............................................................................ 56
10.4 Expenses........................................................................................................ 56
10.5 Binding Effect; Assignment...................................................................................... 57
10.6 Entire and Sole Agreement....................................................................................... 57
10.7 Governing Law................................................................................................... 57
10.8 Survival of Representations, Warranties and Covenants........................................................... 57
10.9 Invalid Provisions.............................................................................................. 57
10.10 Public Announcements........................................................................................... 57
10.11 Remedies Cumulative............................................................................................ 58
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10.12 Waiver......................................................................................................... 58
10.13 Further Assurances............................................................................................. 58
10.14 Headings....................................................................................................... 58
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LIST OF EXHIBITS
Exhibit A June 30, 1998 Balance Sheet
Exhibit B-1 Officer's Certificate
Exhibit B-2 Secretary's Certificate
Exhibit C General Release
LIST OF SCHEDULES
Schedule 2.2(b) Cash and Stock Allocation Schedule
Schedule 2.3 Funded Indebtedness
Schedule 2.4 Example of Purchase Price Adjustments and Funding Mechanics
Schedule 3.1 Company's Capitalization Schedule
Schedule 3.4A Certificate and Bylaws
Schedule 3.4B Due Organization
Schedule 3.5 Subsidiaries
Schedule 3.7 Financial Statements
Schedule 3.8A Certain Actions
Schedule 3.8B Material Changes
Schedule 3.9 Properties
Schedule 3.10 Licenses and Permits
Schedule 3.11 Intellectual Property
Schedule 3.13 Insurance
Schedule 3.14 Employee Benefit Plans
Schedule 3.15 Contracts and Agreements
Schedule 3.16 Claims and Proceedings
Schedule 3.18 Personnel
Schedule 3.20 Accounts Receivable; Inventory
Schedule 3.21 Bank Accounts
Schedule 3.22 Agents
Schedule 3.23 Warranties
Schedule 3.25 Interest in Competitors, Suppliers, Customers, Etc.
Schedule 3.26 Indebtedness with Officers, Directors and Stockholders
Schedule 3.27 Information Furnished
Schedule 7.1(e) Funded Indebtedness
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is entered into as
of November 19, 1998, by and among GLOBAL IMAGING SYSTEMS, INC., a Delaware
corporation (the "BUYER"), CAPITOL OFFICE SOLUTIONS, INC., a Delaware
corporation (the "COMPANY"), ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ FUND IV, L.P., a
Delaware limited partnership ("GTCR IV"), on behalf of itself and certain other
Persons listed on the signature pages to this Agreement (GTCR IV and the other
signatories shall be referred to herein each individually as a "GTCR PARTY" and
collectively as the "GTCR PARTIES"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇";
▇▇▇▇▇▇▇▇▇, together with the GTCR Parties are sometimes referred to herein as
the "STOCKHOLDERS" and each individually as a "STOCKHOLDER").
RECITALS
A. The Stockholders collectively own all of the outstanding
capital stock of the Company.
B. This Agreement contemplates a transaction in which the
Buyer will purchase from the Stockholders and the Stockholders will sell to the
Buyer all of the outstanding capital stock of the Company, which is engaged in
the office equipment sales and service industry in the Washington, DC
metropolitan area (the "BUSINESS").
AGREEMENT
Accordingly, in consideration of the mutual premises and covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto covenant and
agree as follows:
ARTICLE I
DEFINITIONS
When used in this Agreement, and in addition to those terms defined
in the Preamble and the Recitals above, the following terms have the meanings
specified or referred to in this Article I and shall be equally applicable to
both the singular and plural forms. Any agreement referred to below shall mean
such agreement as amended, supplemented and modified from time to time to the
extent permitted by the applicable provisions thereof and by this Agreement.
"ADJUSTED PURCHASE PRICE" has the meaning specified in Section
2.3(d).
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"AFFILIATE" means, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person.
"BUYER COMMON STOCK" means the Buyer's Common Stock, par value $0.01
per share.
"BUYER SHARES" means the shares of Buyer Common Stock which may be
issued to the Stockholders pursuant to this Agreement.
"CASH AND STOCK ALLOCATION SCHEDULE" means the summary of
Stockholders and their respective allocation of the Adjusted Purchase Price
attached hereto as Schedule 2.2(b)
"CASH ONLY SELLERS" means those Stockholders who are not Accredited
Investors as such term is defined in Rule 501 of the Securities Act and, as
such, shall receive cash only as consideration for such Stockholder's Company
Shares, and shall not be given the option to receive their respective portion
of the Adjusted Purchase Price in the form of Buyer Shares.
"CASH PORTION OF THE ADJUSTED PURCHASE PRICE" has the meaning
specified in Section 2.2(b).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq., any amendments
thereto, any successor statutes, and any regulations promulgated thereunder.
"CLOSING" has the meaning specified in Section 2.5(b).
"CLOSING DATE" has the meaning specified in Section 2.5(b).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY SHARES" means all of the shares of the Company's issued
and outstanding capital stock being purchased pursuant to this Agreement.
"CONFIDENTIAL INFORMATION" means all confidential information and
trade secrets of the Company including, without limitation, the identity, lists
or descriptions of any customers, referral sources or organizations; financial
statements, cost reports or other financial information; contract proposals, or
bidding information; business plans and training and operations methods and
manuals; personnel records; fee structure; and management systems, policies or
procedures, including related forms and manuals. Confidential Information shall
not include any information (i) which is disclosed pursuant to subpoena or
other legal process, (ii) which has been publicly disclosed, (iii) which
subsequently becomes known to a third party not subject to a confidentiality
agreement with the Company, or (iv) which is
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subsequently disclosed by any third party not in breach of a confidentiality
agreement.
"CONTRACTS" has the meaning specified in Section 3.15.
"COURT ORDER" means any judgment, order, award or decree of any
foreign, federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"ENCUMBRANCE" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title, covenant or other restrictions of any kind, other than a
Permitted Exception.
"ENVIRONMENTAL OBLIGATIONS" has the meaning specified in Section
3.12.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERNST & YOUNG" means Ernst & Young, independent public accountants.
"FINANCIAL STATEMENTS" has the meaning specified in Section 3.7.
"FUNDED INDEBTEDNESS" means all (i) indebtedness of such Person for
borrowed money or other interest-bearing indebtedness; (ii) capital lease
obligations of such Person other than those set forth on Schedule 2.3; (iii)
obligations of such Person to pay the deferred purchase or acquisition price for
goods or services, other than trade accounts payable or accrued expenses in the
ordinary course of business; (iv) indebtedness of others guaranteed by such
Person or secured by an Encumbrance on such Person's property other than those
set forth on Schedule 2.3; or (v) extended credit terms from manufacturers
provided to such Person.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"GOVERNMENTAL BODY" means any foreign, federal, state, local or
other governmental authority or regulatory body.
"GOVERNMENTAL PERMITS" has the meaning specified in Section 3.10.
"GTCR REPRESENTATIVE" has the meaning specified in Section 2.6.
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"INDEMNIFIABLE COSTS" has the meaning specified in Section 8.1.
"INDEMNIFIED PARTIES" has the meaning specified in Section 8.1.
"INTELLECTUAL PROPERTY" has the meaning specified in Section 3.11.
"INVENTORY" has the meaning specified in Section 3.20(b).
"IRS" means the Internal Revenue Service.
"▇▇▇▇▇▇▇▇▇ EXECUTIVE AGREEMENT" has the meaning specified in Section
6.3.
"▇▇▇▇▇▇▇▇▇ SHARES" means the Company Shares being purchased by the
Buyer from ▇▇▇▇▇▇▇▇▇ pursuant to this Agreement.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means a
material adverse change or effect on the assets, properties, Business or the
operations, liabilities, or conditions (financial or otherwise) of the Company;
provided, however, that when such terms are used in Article III hereof, they
shall have the meaning set forth in the preamble to Article III.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
Sections 651 et seq., any amendment thereto, and any regulations promulgated
thereunder.
"PER SHARE PRICE" shall be determined, as of any applicable payment
date, by taking the average of the closing bid prices per share of Buyer Common
Stock as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or other market on which the Buyer Common Stock may
trade for the ten (10) trading days prior to the second trading day prior to the
Closing Date; provided, however, that in no event shall the Per Share Price be
less than $12 per share (which is the price per share which Global sold shares
of Buyer Common Stock in its initial public offering).
"PERMITTED EXCEPTION" means (a) liens for Taxes and other
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable, (c) other liens or imperfections on property which
are not material in amount or do not materially detract from the value of or
materially affect the existing use of the property affected by such lien or
imperfection and (d) such statement of facts shown on any title insurance
policies delivered to the Buyer. In respect of Inventory, the term "PERMITTED
EXCEPTION" also includes liens arising out of vendor financing in the ordinary
course of business for the deferred purchase price of Inventory, provided
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that an aggregate of 80% of the obligations secured by such liens is paid within
45 days of the incurrence of the obligations giving rise to such liens.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or Governmental Body.
"PRELIMINARY CLOSING BALANCE SHEET" shall mean the Company's best
estimate of the Company's unaudited balance sheet as of the Closing Date. The
Preliminary Closing Balance Sheet shall be delivered by the Company to the Buyer
and Stockholders not less than three (3) nor more than seven (7) days prior to
the Closing Date.
"PURCHASE PRICE" has the meaning specified in Section 2.2(a).
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq., and any successor statute, and any regulations
promulgated thereunder.
"REQUIREMENTS OF LAWS" means any federal, state and local laws,
statutes, regulations, rules, codes or ordinances enacted, adopted, issued or
promulgated by any Governmental Body (including, without limitation, those
pertaining to electrical, building, zoning, environmental and occupational
safety and health requirements) or common law.
"RESTRICTED SECURITIES" means the Buyer Shares issued to the
Stockholders hereunder, and any securities issued with respect thereto by way of
a stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Restricted Securities, such securities will cease to be Restricted
Securities when they have (a) been effectively registered under the Securities
Act and disposed of in accordance with the registration statement covering them,
(b) become eligible for sale and have actually been sold pursuant to Rule 144
(or any similar provision then in force) under the Securities Act or (c) been
otherwise transferred and new certificates for them not bearing the Securities
Act legend set forth in Section 6.7 have been delivered by the Buyer in
accordance with Section 6.6(b). Whenever any particular securities cease to be
Restricted Securities, the holder thereof will be entitled to receive from the
Buyer, without expense, new securities of like tenor not bearing a Securities
Act legend of the character set forth in Section 6.7.
"SEC" means the United States Securities and Exchange Commission and
any Governmental Body succeeding to the functions thereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
any similar federal law then in force.
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"STOCK PORTION OF THE ADJUSTED PURCHASE PRICE" has the meaning
specified in Section 2.2(a).
"STOCKHOLDERS AGREEMENT" means that certain stockholders agreement,
dated as of June 30, 1997, by and among the Company and the Stockholders, as
amended, supplemented or otherwise modified from time to time prior to the date
hereof, which Stockholders Agreement will terminate upon consummation of the
transactions contemplated by this Agreement.
"TAX" or "TAXES" means any federal, state, local or foreign income,
alternative or add-on minimum, gross income, gross receipts, windfall profits,
severance, property, production, sales, use, transfer, gains, license, excise,
employment, payroll, withholding or minimum tax, transfer, goods and services,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed by any Governmental Body.
"TAX RETURN" means any return, report or similar statement required
to be filed with respect to any Taxes (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return and declaration of estimated Tax.
"WORKING CAPITAL" shall mean the difference between the Company's
current assets and its current liabilities as such items are calculated in
accordance with GAAP, consistent with the Company's past practices.
ARTICLE II
PURCHASE AND SALE OF THE COMPANY SHARES
2.1 BASIC TRANSACTION. On and subject to the terms and conditions
of this Agreement, the Buyer agrees to purchase from each Stockholder, and each
Stockholder agrees to sell to the Buyer, all of such Stockholder's shares of
Company Common Stock for the consideration specified below in this Article II.
2.2 PURCHASE PRICE. (a) GENERALLY. Subject to clause (b) hereof,
the Buyer agrees to pay to the Stockholders in the aggregate the sum of
$58,000,000 in cash (the "PURCHASE PRICE"), to be adjusted dollar for dollar
pursuant to Section 2.3.
(b) CONSIDERATION IN THE FORM OF BUYER SHARES. The
Stockholders who are Cash Only Sellers shall receive 100% of the Adjusted
Purchase Price in cash, while those Stockholders who are not Cash Only Sellers
shall, by marking the appropriate line set forth opposite their respective
signature blocks at the time of execution of this Agreement, each exercise the
option either to receive all
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of the Adjusted Purchase Price in cash or to receive a portion of the Adjusted
Purchase Price (as defined herein) in cash (in either event, the "CASH PORTION
OF THE ADJUSTED PURCHASE PRICE"), and a portion in the form of Buyer Shares
(the "STOCK PORTION OF THE ADJUSTED PURCHASE PRICE"); provided, however, that
(i) the Buyer will not issue any Buyer Shares to any person who is not an
accredited investor within the meaning of Rule 501 under the Securities Act,
regardless of whether such person is or is not identified on the signature
pages hereof as a "Cash Only Seller"; (ii) the Buyer shall not issue Buyer
Shares the value of which, in the aggregate (determined by multiplying the
total number of Buyer Shares being issued to the electing Stockholders by the
Per Share Price), exceeds 20% of the Purchase Price (as defined herein); (iii)
if less than all of the Stockholders (other than the Cash Only Sellers) elect
to receive Buyer Shares in accordance with clause (i), then those Stockholders
who elected to receive Buyer Shares shall receive their pro-rata share of the
Buyer Shares to which such non-electing Stockholders would have been entitled;
and (iv) the Adjusted Purchase Price shall be allocated (in cash and Buyer
Shares) among the Stockholders in accordance with a preliminary Cash and Stock
Allocation Schedule which, based on the foregoing and on the elections made by
the Stockholders (other than the Cash Only Sellers) on execution of this
Agreement, shall be attached hereto as Schedule 2.2(b), and, ultimately, a
final Cash and Stock Allocation Schedule which the Buyer shall prepare and
append to this Agreement as a final Schedule 2.2(b) no later than two days
prior to the Closing.
(c) PAYMENT. The Cash Portion of the Adjusted Purchase Price shall
be paid by the Buyer to the Stockholders at the Closing by delivery of cash by
wire transfer of funds in the amounts set forth on the Cash and Stock Allocation
Schedule next to such Stockholder's name. The Stock Portion of the Adjusted
Purchase Price shall be issued by the Buyer to the Stockholders at the Closing
by the delivery of Buyer Shares in the amounts set forth on the Cash and Stock
Allocation Schedule next to such Stockholder's name. Cash will be paid in lieu
of any fractional shares which would otherwise be issued in accordance with this
Agreement.
2 .3 PURCHASE PRICE ADJUSTMENTS.
(a) FUNDED INDEBTEDNESS ADJUSTMENT. The Purchase Price shall be
reduced by an amount equal to the total amount of any Funded Indebtedness of
the Company which is paid or refinanced at the Closing by the Buyer.
(b) WORKING CAPITAL ADJUSTMENT. The Purchase Price shall be
further adjusted upward (or downward) at Closing by the amount, if any, by
which the Working Capital as reflected on the Preliminary Closing Balance Sheet
is more (or less) than that amount which is $50,000 less than the average of
the working capital balances of the Company at the end of each of the six full
calendar months prior to the month in which the Closing occurs, assuming for
purposes of each such average, that the cash component of Working Capital shall
be the actual cash for each such month or $800,000, whichever is the lesser
amount.
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(c) ADJUSTED PURCHASE PRICE. The Purchase Price less any reduction
thereto pursuant to paragraph (a) or (b) of this Section 2.3 shall be referred
to as the "ADJUSTED PURCHASE PRICE".
(d) ALLOCATION. The Adjusted Purchase Price shall be allocated
pro-rata among each of the Stockholders in accordance with their interest in
the Company. The Adjusted Purchase Price shall be payable to the Stockholder
either in the form of cash, or in the form of a combination of cash and Buyer
Shares in accordance with Section 2.2(b), as specified in the elections made by
the Stockholders on the signature pages to this Agreement.
2.4 EXAMPLE. An example of the foregoing provisions relating to the
Purchase Price adjustments and the Cash Portion and the Stock Portion of the
Adjusted Purchase Price allocation and funding mechanics is attached hereto as
Schedule 2.4.
2.5 CLOSING.
(a) DELIVERIES. At the Closing, the parties shall make the
deliveries specified in Sections 7.1(f) and 7.2(c).
(b) TIME AND PLACE. The closing (the "CLOSING") of the transactions
contemplated by this Agreement shall occur at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇
L.L.P. in Washington, DC commencing at 10:00 a.m., local time, on Monday,
November 30, 1998 or such other time as the Buyer, the Company and the
Stockholders may mutually agree (the "CLOSING DATE").
2.6 GTCR REPRESENTATIVE.
(a) In order to administer efficiently (i) the implementation of
this Agreement by the GTCR Parties, (ii) the waiver of any condition to the
obligations of the GTCR Parties to consummate the transactions contemplated
hereby and (iii) the settlement of any dispute with respect to this Agreement,
the GTCR Parties hereby designate ▇▇▇▇ ▇. ▇▇▇▇▇ as their representative (the
"GTCR REPRESENTATIVE").
(b) The GTCR Parties hereby authorize the GTCR Representative (i)
to take all action necessary in connection with the implementation of this
Agreement on behalf of the GTCR Parties, the waiver of any condition to the
obligations of the GTCR Parties to consummate the transactions contemplated
hereby, or the settlement of any dispute, (ii) to give and receive all notices
required to be given under this Agreement and (iii) to take any and all
additional action as is contemplated to be taken by or on behalf of the GTCR
Parties by the terms of this Agreement.
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16
(c) In the event that the GTCR Representative dies, becomes legally
incapacitated or resigns from such position, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ shall fill
such vacancy and shall be deemed to be the GTCR Representative for all purposes
of this Agreement; however, no change in the GTCR Representative shall be
effective until the Buyer is given notice of it by the GTCR Parties.
(d) All decisions and actions by the GTCR Representative shall be
binding upon all of the GTCR Parties, and no individual GTCR Party shall have
the right to object, dissent, protest or otherwise contest the same, in the
absence of fraud, gross negligence or willful misconduct of the GTCR
Representative.
(e) By their execution of this Agreement, the GTCR Parties agree
that: (i) the Buyer shall be able to rely conclusively on the instructions and
decisions of the GTCR Representative as to any actions required or permitted to
be taken by the GTCR Parties or the GTCR Representative hereunder, and no party
hereunder shall have any cause of action against the Buyer for action taken by
the Buyer in reliance upon the instructions or decisions of the GTCR
Representative; (ii) all actions, decisions and instructions of the GTCR
Representative shall be conclusively and binding upon all of the GTCR Parties;
no GTCR Party shall have any cause of action against the Buyer or the Company
for any action taken or omitted to be taken, decision made or omitted to be
made or any instruction given or omitted to be given by the GTCR
Representative; and no GTCR Party shall have any cause of action against the
GTCR Representative for any action taken, decision made or instruction given by
the GTCR Representative under this Agreement, except for fraud, gross
negligence or willful breach of this Agreement by the GTCR Representative;
(iii) the GTCR Representative shall be deemed to fulfill any fiduciary
obligation to the GTCR Parties so long as no GTCR Party is adversely affected
by any action or failure to act of the GTCR Representative in a
disproportionate measure compared to any other GTCR Party; (iv) remedies
available at law for any breach of the provisions of this Section are
inadequate; therefore, the Buyer shall be entitled to temporary and permanent
injunctive relief without the necessity of proving damages if the Buyer brings
an action to enforce the provisions of this Section; (v) the provisions of this
Section are independent and severable, shall constitute an irrevocable power of
attorney, coupled with an interest and surviving death, granted by the GTCR
Parties to the GTCR Representative and shall be binding upon the executors,
heirs, legal representatives and successors of each GTCR Party; and (vi) all
fees and expenses incurred by the GTCR Representative shall be paid by the GTCR
Parties.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND STOCKHOLDERS
In making the representations and warranties set forth below, the
term "material" shall be deemed to mean an amount of money greater than
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17
$50,000, the terms "material adverse change," "material adverse trend,"
"material adverse effect," "materially affect," or any other term of like
import shall mean the occurrence of any single event, or any series of related
events, or set of related circumstances, which proximately causes an actual,
direct economic loss to the Company, taken as a whole, in excess of $50,000 per
occurrence or $100,000 in the aggregate. The term "knowledge" shall (i) mean
actual knowledge of the applicable party, individually, after reasonable
investigation and (ii) be deemed to exist with respect to any matter for which
a reserve was provided for in the Company's financial statements, regardless of
whether the reserve is sufficient to cover any loss in respect of such matter.
Subject to the foregoing, in connection with the transactions contemplated by
this Agreement, the Company and the Stockholders represent and warrant jointly
and severally with respect to matters relating to the Company, and each
Stockholder represents and warrants severally but not jointly with respect to
matters relating to such Stockholder and the Company Shares held by such
Stockholder, as set forth in this Article III:
3.1 CAPITALIZATION. The authorized, issued and outstanding capital stock
of the Company as of the date hereof is as set forth in the Company's
Capitalization Schedule attached hereto as Schedule 3.1. All of the outstanding
shares of capital stock of the Company are duly authorized, validly issued,
fully paid, and nonassessable. All of the outstanding shares of capital stock
of the Company are owned of record by the Stockholders, with the GTCR Parties
owning two-thirds and ▇▇▇▇▇▇▇▇▇ owning one-third of such shares. None of the
outstanding shares of capital stock of the Company was issued or will be
transferred pursuant to the transactions contemplated by this Agreement in
violation of any preemptive or preferential rights of any Person.
3.2 ACQUISITION OF BUYER SHARES. With respect to each Stockholder who has
elected to receive a portion of their share of the Adjusted Purchase Price in
the form of Buyer Shares in accordance with Section 2.2(b), such Stockholder:
(a) is acquiring the Buyer Shares pursuant to this Agreement for his
or its own account and not with a view to, or intention of, distribution
thereof;
(b) is an accredited investor, as such term is defined in Rule 501
of Regulation D promulgated under the Securities Act and was not organized for
the specific purpose of acquiring the Buyer Shares;
(c) has sufficient knowledge and experience in investing in
companies similar to the Buyer in terms of the Buyer's stage of development so
as to be able to evaluate the risks and merits of its investment in the Buyer
and such Stockholder is able financially to bear the risks thereof. Such
Stockholder is a sophisticated investor for purposes of applicable foreign and
U.S. federal and state
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18
securities laws and regulations and is able to evaluate the risks and benefits
of the investment in the Buyer Shares;
(d) is able to bear the economic risk of his or its investment in
the Stock for an indefinite period of time. Such Stockholder understands that
the Buyer Shares have not been registered under the Securities Act by reason of
their issuance in a transaction exempt from the registration requirements of
the Securities Act pursuant to Section 4(2) thereof or Rule 506 promulgated
under the Securities Act, and that the Buyer's reliance on such exemption is
predicated on such Stockholder's representations set forth herein;
(e) understands that (i) because the Buyer Shares have not been
registered under the Securities Act, they cannot be sold unless subsequently
registered under the Securities Act or an unless an exemption from the
requirement for such registration is available, (ii) the Buyer Shares will bear
a legend to such effect and (iii) the Buyer will make a notation on its
transfer books to such effect;
(f) agrees not to sell, transfer, or otherwise dispose of the Buyer
Shares in violation of the Securities Act; and
(g) has had an opportunity to ask questions and receive answers
concerning the terms and conditions of the offering of the Buyer Shares and has
had full access to such other information concerning the Buyer as such
Stockholder has requested.
3.3 OTHER RIGHTS TO ACQUIRE CAPITAL STOCK. Except as set forth in this
Agreement, there are no authorized or outstanding warrants, options, or rights
of any kind to acquire from the Company any equity or debt securities of the
Company, or securities convertible into or exchangeable for equity or debt
securities of the Company, and there are no shares of capital stock of the
Company reserved for issuance for any purpose nor any contracts, commitments,
understandings or arrangements which require the Company to issue, sell or
deliver any additional shares of its capital stock.
3.4 DUE ORGANIZATION. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the state of Delaware
and has full corporate power and authority to carry on the Business as now
conducted and as proposed to be conducted through Closing. Complete and correct
copies of the Certificate of Incorporation and Bylaws of the Company, and all
amendments thereto, have been heretofore delivered to the Buyer and are
attached hereto as Schedule 3.4A. Set forth in Schedule 3.4B hereto is a list
of each jurisdiction in which the Company is qualified to do business. The
Company is qualified to do business in Maryland, Virginia, the District of
Columbia and in each jurisdiction in which the nature of the Business or the
ownership of its properties
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requires such qualification except where the failure to be so qualified does
not and would not have a Material Adverse Effect.
3.5 NO SUBSIDIARIES. Except as set forth in Schedule 3.5, the Company
does not directly or indirectly have any subsidiaries or any direct or indirect
ownership interests in any Person.
3.6 DUE AUTHORIZATION. The Company and such Stockholder has full power
and authority to execute, deliver and perform this Agreement and to carry out
the transactions contemplated hereby. The execution, delivery, and performance
of this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action of the Company and such
Stockholder, all in accordance with applicable law. This Agreement has been
duly and validly executed and delivered by the Company and such Stockholder and
constitutes the valid and binding obligations of the Company and such
Stockholder, enforceable in accordance with its terms. The execution, delivery,
and performance of this Agreement (as well as all other instruments,
agreements, certificates, or other documents contemplated hereby) by the
Company and such Stockholder do not (a) violate any Requirements of Laws or any
Court Order of any Governmental Body applicable to the Company or such
Stockholder, or any of their properties, (b) violate or conflict with, or
permit the cancellation of, or constitute a default under, any agreement to
which the Company or such Stockholder is a party, or by which they or any of
their respective properties are bound, (c) permit the acceleration of the
maturity of any indebtedness of, or indebtedness secured by the property of,
the Company or such Stockholder, or (d) violate or conflict with any provision
of the Certificate of Incorporation or Bylaws or partnership agreements (as
applicable) of the Company or, if applicable, such Stockholder.
3.7 FINANCIAL STATEMENTS. The unaudited balance sheets of the Company,
income statements, statements of retained earnings and cash flows of the
Company as of and for the year ended June 30, 1998, have been delivered to the
Buyer by the Stockholders prior to the execution of this Agreement (together
with the Company's (i) balance sheets, income statements, statements of
retained earnings and cash flows as of and for the year ended June 30, 1998, as
audited by Deloitte & Touche, the Company's outside accountants, and (ii)
unaudited profit and loss statements and balance sheets as of and for the three
months ended September 30, 1998 to be delivered in accordance with Section
5.1(g), the "FINANCIAL STATEMENTS").
Except as disclosed on Schedule 3.7, the Financial Statements have been prepared
in accordance with GAAP throughout the periods indicated and fairly present the
financial position, results of operations and changes in cash flows of the
Company as of the indicated dates and for the indicated periods, subject (in the
case of the interim Financial Statements) to year end accruals made in the
ordinary course of the Business which are not adversely material and which are
consistent with past
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practices. Except to the extent reflected or provided for in the balance sheets
included in the Financial Statements or as disclosed in Schedule 3.7, the
Company has no liabilities, nor any obligations (whether absolute, contingent,
or otherwise) which are (individually or in the aggregate) material (in amount
or to the conduct of the Business); and neither the Company nor the
Stockholders have knowledge of any basis for the assertion of any such
liability or obligation. Since June 30, 1998, there has been no Material
Adverse Change.
3.8 CERTAIN ACTIONS. Since June 30, 1998, the Company has not, except as
disclosed on Schedule 3.8A hereto: (a) discharged or satisfied any Encumbrance
or paid any obligation or liability, absolute or contingent, other than current
liabilities incurred and paid in the ordinary course of the Business; (b) paid
or declared any dividends or distributions, or purchased, redeemed, acquired,
or retired any stock or indebtedness from any stockholder; provided, however,
that dividends or distributions of cash may be made subject to the minimum cash
threshold closing condition contained in Section 7.1(d); (c) made or agreed to
make any loans or advances or guaranteed or agreed to guarantee any loans or
advances to any party whatsoever; (d) suffered or permitted any Encumbrance to
arise or be granted or created against or upon any of its assets, real or
personal, tangible or intangible; (e) canceled, waived, or released or agreed
to cancel, waive, or release any of its debts, rights, or claims against third
parties in excess of $10,000 individually or $50,000 in the aggregate; (f)
sold, assigned, pledged, mortgaged, or otherwise transferred, or suffered any
damage, destruction, or loss (whether or not covered by insurance) to, any
assets (except in the ordinary course of the Business); (g) amended its
Certificate of Incorporation or Bylaws; (h) paid or made a commitment to pay
any severance or termination payment to any employee or consultant other than
commitments or payments in the ordinary course of business which do not, in the
aggregate, exceed $25,000; (i) made any material change in its method of
management or operation or method of accounting; (j) made any capital
expenditures, including, without limitation, replacements of equipment in the
ordinary course of the Business, or entered into commitments therefor, except
for capital expenditures or commitments therefor which do not, in the
aggregate, exceed $100,000; (k) made any investment or commitment to invest in
any Person; (l) made any payment or contracted for the payment of any bonus,
gratuity, or other compensation, other than (A) wages, salaries and bonuses
paid in the ordinary course of the Business, and (B) wage and salary
adjustments made in the ordinary course of the Business for employees who are
not officers, directors, or stockholders of the Company; (m) made, amended, or
entered into any written employment contract or created or made any material
change in any bonus, stock option, pension, retirement, profit sharing or other
employee benefit plan or arrangement; (n) amended or experienced a termination
of any material contract, agreement, lease, franchise or license to which the
Company is a party, except in the ordinary course of the Business; or (o)
entered into any other material transactions except in the ordinary course of
the Business. Since June 30, 1998, except as disclosed on Schedule 3.8B hereto,
there has not been (a) any Material Adverse Change including, but not limited
to, the loss of any material customers or suppliers
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of the Company, or in any material assets of the Company, (b) any extraordinary
contracts, commitments, orders or rebates, (c) any strike, material slowdown,
or demand for recognition by a labor organization by or with respect to any of
the employees of the Company, or (d) any shutdown, material slow-down, or
cessation of any material operations conducted by, or constituting part of, the
Company, nor has the Company agreed to do any of the foregoing.
3.9 PROPERTIES. Attached hereto as Schedule 3.9 is a list containing a
description of all interests in real property (including, without limitation,
leasehold interests) and personal property utilized by the Company in the
conduct of the Business having a book value in excess of $25,000 as of the date
hereof. Except as expressly set forth on Schedule 3.9 (or in respect of the
Company's accounts receivable or Inventory, on Schedule 3.20), such real and
personal properties are free and clear of Encumbrances. All of the properties
and assets necessary in the Business as currently conducted (including, without
limitation, all books, records, computers and computer software and data
processing systems) are owned, leased or licensed by the Company and are
suitable for the purposes for which they are currently being used. The material
physical properties of the Company, including the real properties leased by the
Company, are in good operating condition and repair, normal wear and tear
excepted, and are free from any defects of a material nature. The operation of
the properties and Business of the Company in the manner in which they are now
and have been operated does not violate any zoning ordinances, municipal
regulations, or other Requirements of Laws, except for any such violations which
would not, individually or in the aggregate, have a Material Adverse Effect.
Except as set forth on Schedule 3.9, no covenants, easements, rights-of-way, or
regulations of record impair the uses of the properties of the Company for the
purposes for which they are now operated. All leases of real or personal
property by the Company are legal, valid, binding, enforceable and in full force
and effect and will remain legal, valid, binding, enforceable and in full force
and effect on identical terms immediately following the Closing. The Company has
obtained all required material approvals of any Governmental Body (including
Governmental Permits) required to be obtained by the Company in connection with
the operation thereof, and the facilities owned or leased by the Company have
been operated and maintained by the Company in accordance with all Requirements
of Laws.
3.10 LICENSES AND PERMITS. Attached hereto as Schedule 3.10 is a list of
all material licenses, certificates, privileges, immunities, approvals,
franchises, authorizations and permits held or applied for by the Company from
any Governmental Body (herein collectively called "GOVERNMENTAL PERMITS") the
absence of which could have a Material Adverse Effect. The Company has complied
in all material respects with the terms and conditions of all such Governmental
Permits, and no violation of any such Governmental Permit or the Requirements
of Laws governing the issuance or continued validity thereof has occurred other
than violations (if any) which would not individually or in the aggregate have
a Material Adverse Effect. No additional Government Permit is required from any
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Governmental Body thereof in connection with the conduct of the Business which
Governmental Permit, if not obtained, would have a Material Adverse Effect.
3.11 INTELLECTUAL PROPERTY. Attached hereto as Schedule 3.11 is a list
and brief description of all patents, trademarks, tradenames, copyrights,
licenses, computer software or data (other than general commercial software),
trade secrets, or applications therefor owned by or registered in the name of
the Company or in which the Company has any rights, licenses, or immunities
(collectively, the "INTELLECTUAL PROPERTY"). The Company has furnished the
Buyer with copies of all license agreements to which the Company is a party,
either as licensor or licensee, with respect to any Intellectual Property.
Except as described on Schedule 3.11 hereto, the Company has good and
marketable title to or the right to use such Intellectual Property and all
inventions, processes, designs, formulae, trade secrets and know-how necessary
for the conduct of its Business, in its Business as presently conducted without
the payment of any royalty or similar payment, and the Company is not
infringing on any patent right, tradename, copyright or trademark right or
other Intellectual Property right of others, and neither the Company nor the
Stockholders are aware of any infringement by others of any such rights owned
by the Company.
3.12 COMPLIANCE WITH LAWS. The Company has (i) complied in all material
respects with all Requirements of Laws, Governmental Permits and Court Orders
applicable to the Business and has filed with the proper Governmental Bodies
all statements and reports required by all Requirements of Laws, Governmental
Permits and Court Orders to which the Company or any of its employees (because
of their activities on behalf of the Company) are subject and (ii) conducted
the Business and is in compliance in all material respects with all federal,
state and local energy, public utility, health, safety and environmental
Requirements of Laws, Governmental Permits and Court Orders including the Clean
Air Act, the Clean Water Act, RCRA, the Safe Drinking Water Act, CERCLA, OSHA,
the Toxic Substances Control Act and any similar state, local or foreign laws
(collectively "ENVIRONMENTAL OBLIGATIONS") and all other federal, state, local
or foreign governmental and regulatory requirements, except, in the case of
both (i) and (ii) above, where any such failure to comply would not, in the
aggregate, have a Material Adverse Effect. No claim has been made by any
Governmental Body (and, to the knowledge of the Company and the Stockholders,
no such claim is anticipated) to the effect that the Business fails to comply,
in any material respect, with any Requirements of Laws, Governmental Permit or
Environmental Obligation or that a Governmental Permit or Court Order is
necessary in respect thereto.
3.13 INSURANCE. Attached hereto as Schedule 3.13 is a list of all
policies of fire, liability, business interruption or other forms of insurance
and all fidelity bonds held by or applicable to the Company, which Schedule
sets forth in respect of each such policy the policy name, policy number,
carrier, term, type of coverage, deductible amount or self-insured retention
amount, limits of coverage and annual premium. Copies of all such insurance
policies have been delivered to the
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Buyer. Except as set forth on Schedule 3.13, no event relating to the Company
has occurred which will result in (i) cancellation of any such insurance
policies; (ii) a retroactive upward adjustment of premiums under any such
insurance policies; or (iii) any prospective upward adjustment in such
premiums. All of such insurance policies will remain in full force and effect
following the Closing.
3.14 EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE WELFARE BENEFIT PLANS. Except as disclosed on
Schedule 3.14, the Company does not maintain or contribute to any "employee
welfare benefit plan" as such term is defined in Section 3(1) of ERISA. With
respect to each such plan: (i) the plan is in material compliance with ERISA;
(ii) the plan has been administered in accordance with its governing documents;
(iii) neither the plan, nor any fiduciary with respect to the plan, has engaged
in any "prohibited transaction" as defined in Section 406 of ERISA other than
any transaction subject to a statutory or administrative exemption; (iv) except
for the processing of routine claims in the ordinary course of administration,
there is no material litigation, arbitration or disputed claim outstanding; and
(v) all premiums due on any insurance contract through which the plan is funded
have been paid.
(b) EMPLOYEE PENSION BENEFIT PLANS. Except as disclosed in Schedule
3.14, the Company does not maintain or contribute to any arrangement that is or
may be an "employee pension benefit plan" relating to employees, as such term
is defined in Section 3(2) of ERISA. With respect to each such plan: (i) the
plan is qualified under Section 401(a) of the Code, and any trust through which
the plan is funded meets the requirements to be exempt from federal income tax
under Section 501(a) of the Code; (ii) the plan is in material compliance with
ERISA; (iii) the plan has been administered in accordance with its governing
documents as modified by applicable law; (iv) the plan has not suffered an
"accumulated funding deficiency" as defined in Section 412(a) of the Code; (v)
the plan has not engaged in, nor has any fiduciary with respect to the plan
engaged in, any "prohibited transaction" as defined in Section 406 of ERISA or
Section 4975 of the Code other than a transaction subject to statutory or
administrative exemption; (vi) the plan has not been subject to a "reportable
event" (as defined in Section 4043(b) of ERISA), the reporting of which has not
been waived by regulation of the Pension Benefit Guaranty Corporation; (vii) no
termination or partial termination of the plan has occurred within the meaning
of Section 411(d)(3) of the Code; (viii) all contributions currently required
to be made to the plan or under any applicable collective bargaining agreement
have been made to or on behalf of the plan; (ix) there is no material
litigation, arbitration or disputed claim outstanding; and (x) all applicable
premiums due to the Pension Benefit Guaranty Corporation for plan termination
insurance have been paid in full on a timely basis.
(c) EMPLOYMENT AND NON-TAX QUALIFIED DEFERRED COMPENSATION
ARRANGEMENTS. Except as disclosed in Schedule 3.14, the Company
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does not maintain or contribute to any retirement or deferred or incentive
compensation or stock purchase, stock grant or stock option arrangement entered
into between the Company and any current or former officer, consultant,
director or employee of the Company that is not intended to be a tax qualified
arrangement under Section 401(a) of the Code.
3.15 CONTRACTS AND AGREEMENTS. Attached hereto as Schedule 3.15 is a
list and brief description of all written or oral contracts, commitments,
leases, and other agreements (including, without limitation, promissory notes,
loan agreements, and other evidences of indebtedness, guarantees, agreements
with distributors, suppliers, dealers, franchisors and customers, and service
agreements) to which the Company is a party or by which the Company or its
properties are bound pursuant to which the obligations thereunder of either
party thereto are, or are contemplated as being, $50,000 or greater
(collectively, the "CONTRACTS"). The Company is not and, to the best knowledge
of the Company and the Stockholders, no other party thereto is in default (and
no event has occurred which, with the passage of time or the giving of notice,
or both, would constitute a default) under any of the Contracts, and the
Company has not waived any right under any of the Contracts. Subject to the
foregoing, all of the Contracts to which the Company is a party are legal,
valid, binding, enforceable and in full force and effect and will remain legal,
valid, binding, enforceable and in full force and effect on identical terms
immediately after the Closing. Except as set forth in Schedule 3.15, the
Company has not guaranteed any obligations of any other Person.
3.16 CLAIMS AND PROCEEDINGS. Attached hereto as Schedule 3.16 is a list
and brief description of all material claims, actions, suits, proceedings, or
investigations pending (or, to the Company's knowledge, threatened against) or
affecting the Company or any of its properties or assets, at law or in equity,
or before or by any court, municipality or other Governmental Body. Except as
set forth on Schedule 3.16, none of such claims, actions, suits, proceedings,
or investigations will result in any material liability or loss to the Company.
The Company has not been, and the Company is not now, subject to any Court
Order, stipulation, or consent of or with any court or Governmental Body. No
inquiry, action or proceeding has been asserted, threatened or instituted to
restrain or prohibit the carrying out of the transactions contemplated by this
Agreement or to challenge the validity of such transactions or any part thereof
or seeking damages on account thereof. Except as set forth on Schedule 3.16,
there is no basis for any such valid claim or action.
3.17 TAXES.
All Federal, foreign, state, county and local income, gross receipts, excise,
property, franchise, license, sales, use, withholding, and other Taxes and all
Tax Returns which are required to be filed by the Company on or before the date
hereof have been filed within the time and in the manner provided by law, and
all such Tax Returns are true and correct and accurately reflect the Tax
liabilities of the
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Company. No Tax Returns of the Company or the Stockholders are presently
subject to an extension of the time to file. All Taxes, assessments, penalties,
and interest of the Company which have become due pursuant to such Tax Returns
or any assessments received have been paid or adequately accrued on the
Company's Financial Statements. The provisions for Taxes reflected on the
balance sheets contained in the Financial Statements are adequate to cover all
of the Company's Tax liabilities for the respective periods then ended and all
prior periods. The Company has not executed any presently effective waiver or
extension of any statute of limitations against assessments and collection of
Taxes, and there are no pending or threatened claims, assessments, notices,
proposals to assess, deficiencies, or audits with respect to any such Taxes.
For Governmental Bodies with respect to which the Company does not file Tax
Returns, no such government body has claimed that the Company is or may be
subject to taxation by that government body. The Company has withheld and paid
all Taxes currently required to have been withheld and paid in connection with
amounts paid or currently owing to any employee, stockholder, creditor,
independent contractor or other party. There are no tax liens on any of the
property or assets of the Company.
Neither the Company nor any other corporation has filed an election
under section 341(f) of the Code that is applicable to the Company or any
assets held by the Company. The Company has not made any payments, is not
obligated to make any payments, and is not a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code Sec. 280G. The Company has not been a United States real
property holding corporation within the meaning of Code Sec. 897(c)(2) during
the applicable period specified in Code Sec. 897(c)(1)(A)(ii). The Company is
not a party to any Tax allocation or sharing agreement. Since September 1992,
the Company has not been (nor does the Company have any liability for unpaid
Taxes because it once was) a member of an affiliated group during any part of
which return year any corporation other than the Company also was a member of
the affiliated group. The Company has never made an election to be taxed under
subchapter S of the Code.
No transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Code and no stock transfer taxes, real
estate transfer taxes or similar taxes will be imposed upon the issuance and
sale of the Company Shares pursuant to this Agreement.
3.18 PERSONNEL. Attached hereto as Schedule 3.18 is a list of the names
and annual rates of compensation of the directors and executive officers of the
Company, and of the employees of the Company whose annual rates of compensation
during the fiscal year ended June 30, 1998 (including base salary, bonus and
incentive pay) exceed (or by December 31, 1998 are expected to exceed) $75,000.
Schedule 3.18 also summarizes the bonus, profit sharing, percentage
compensation, company automobile, club membership, and other like benefits, if
any, paid or
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payable to such directors, officers, and employees during the Company's fiscal
year ended June 30, 1998 and to the date hereof. Schedule 3.18 also contains a
brief description of all material terms of employment agreements to which the
Company is a party and all severance benefits which any director, officer or
employee of the Company is or may be entitled to receive. The employee
relations of the Company are good and there is no pending or threatened labor
dispute or union organization campaign. None of the employees of the Company
are represented by any labor union or organization. The Company is in
compliance in all material respects with all Requirements of Laws respecting
employment and employment practices, terms and conditions of employment, and
wages and hours, and are not engaged in any unfair labor practices. Neither the
Company nor the Stockholders has been advised, or has any reason to believe,
that any of the persons whose names are set forth on Schedule 3.18 or any other
employee will not agree to remain employed by the Company after the
consummation of the transactions contemplated hereby. There is no unfair labor
practice claim against the Company before the National Labor Relations Board,
or any strike, dispute, slowdown, or stoppage pending or, to the knowledge of
the Company and the Stockholders, threatened against or involving the Company,
and none has occurred.
3.19 BUSINESS RELATIONS. Neither the Company nor the Stockholders know
or have any reason to believe that any supplier of the Company or customer
comprising more than 5% of the Company's sales or service revenues will cease
to do business with the Company after the consummation of the transactions
contemplated hereby in the same manner and at the same levels as previously
conducted with the Company, except for any reductions which do not result in a
Material Adverse Change. Neither the Company nor the Stockholders have received
any notice of any material disruption (including delayed deliveries or
allocations by suppliers) in the availability of any material portion of the
materials used by the Company nor are the Company or the Stockholders aware of
any facts which could lead it reasonably to believe that the Business will be
subject to any such material disruption.
3.20 ACCOUNTS RECEIVABLE; INVENTORY.
(a) ACCOUNTS RECEIVABLE. All of the accounts, notes, and loans
receivable that have been recorded on the books of the Company are bona fide
and represent amounts validly due for goods sold or services rendered and all
such amounts (net of reserves for doubtful accounts and valuation allowances
recorded in accordance with GAAP) will be collected in full within 180 days
following the Closing Date. Except as disclosed on Schedule 3.20 hereto, (i)
all of such accounts, notes, and loans receivable are free and clear of any
Encumbrances; (ii) none of such accounts, notes, or loans receivable is subject
to any offsets or claims of offset; and (iii) none of the obligors of such
accounts, notes, or loans receivable has given notice that it will or may
refuse to pay the full amount or any portion thereof.
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(b) INVENTORY. Except as disclosed on Schedule 3.20, all of the
Company's Inventory (as defined below) are free and clear of any Encumbrances.
For purposes of this Agreement, "INVENTORY" means all of the Company's
photocopiers, facsimile equipment, automated office equipment, office furniture
and related parts and supplies held for resale or lease or to be furnished
under contracts for service.
3.21 BANK ACCOUNTS. Attached hereto as Schedule 3.21 is a list of all
banks or other financial institutions with which the Company has an account or
maintains a safe deposit box, showing the type and account number of each such
account and safe deposit box and the names of the persons authorized as
signatories thereon or to act or deal in connection therewith.
3.22 AGENTS. Except as set forth on Schedule 3.22 hereto, the Company has
not designated or appointed any Person to act for it or on its behalf pursuant
to any power of attorney or agency which is presently in effect.
3.23 WARRANTIES. Except as set forth on Schedule 3.23 and except for
warranty claims that are typical and in the ordinary course of the Business,
(i) no claim for breach of product or service warranty to any customer has been
made against the Company since June 30, 1998; and (ii) to the Company's
knowledge, no state of facts exists, and no event has occurred, which may form
the basis of any present claim against the Company for liability on account of
any express or implied warranty to any third party in connection with products
sold or services rendered by the Company.
3.24 BROKERS. Neither the Company nor such Stockholder has engaged, or
caused to be incurred any liability to any finder, broker, or sales agent in
connection with the origin, negotiation, execution, delivery, or performance of
this Agreement or the transactions contemplated hereby.
3.25 INTEREST IN COMPETITORS, SUPPLIERS, CUSTOMERS, ETC. Except as
disclosed in Schedule 3.25 hereto, no officer, director, or Stockholder or any
affiliate of any such officer, director, or Stockholder, has any ownership
interest in any competitor, supplier, or customer of the Company (other than
ownership of securities of a publicly-held corporation of which such Person
owns, or has real or contingent rights to own, less than one percent of any
class of outstanding securities) or any property used in the operation of the
Business.
3.26 INDEBTEDNESS TO AND FROM OFFICERS, DIRECTORS, STOCKHOLDERS, AND
EMPLOYEES. Attached hereto as Schedule 3.26 is a list and brief description of
the payment terms of all indebtedness of the Company to officers, directors,
Stockholders and employees of the Company and all indebtedness of officers,
directors, Stockholders and employees of the Company to the Company, excluding
indebtedness for travel advances or similar advances for expenses incurred on
behalf of and in the ordinary course of the Business, consistent with past
practices.
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3.27 INFORMATION FURNISHED. The Company has made (or, prior to the
Closing, will make) available to the Buyer true and correct copies of all
corporate records of the Company and all agreements, documents, and other items
listed on the Schedules to this Agreement or referred to herein and except as
disclosed in Schedule 3.27 hereto, neither this Agreement, the Schedules
hereto, nor any information, instrument, or document delivered to the Buyer
pursuant to this Agreement contains any untrue statement of a material fact or
omits any material fact necessary to make the statements herein or therein, as
the case may be, not misleading.
3.28 NO LIENS ON SHARES. Except as otherwise set forth in the
Stockholders Agreement which shall, on the Closing Date, terminate and be of no
further force or effect, in respect of the sale of the Company Shares being
purchased pursuant hereto, such Stockholder owns the Company Shares, free and
clear of any Encumbrances other than the rights and obligations arising under
this Agreement, and none of such shares is subject to any outstanding option,
warrant, call, or similar right of any other Person to acquire the same, and
none of such shares is subject to any restriction on transfer thereof except
for restrictions imposed by applicable federal and state securities laws. Such
Stockholder has full power and authority to convey good and marketable title to
the Company Shares owned by him or it free and clear of any Encumbrances.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Company and the
Stockholders as follows:
4.1 DUE ORGANIZATION.
The Buyer represents and warrants that it is a Delaware corporation duly
incorporated, validly existing, and in good standing under the laws of the State
of Delaware and has full power and authority to enter into and perform this
Agreement.
4.2 DUE AUTHORIZATION. The execution, delivery and performance of this
Agreement has been duly authorized by all necessary corporate action on the
part of the Buyer, and this Agreement has been duly and validly executed and
delivered by the Buyer and constitutes the valid and binding obligation of the
Buyer, enforceable in accordance with its terms. The execution, delivery, and
performance of this Agreement (as well as all other instruments, agreements,
certificates or other documents contemplated hereby) by the Buyer shall not (a)
violate any Requirements of Laws or Court Order of any Governmental Body
applicable to any Buyer or its property, (b) violate or conflict with, or
permit the cancellation of, or constitute a default under any agreement to
which the Buyer is a party or by which the Buyer or its property is bound, (c)
permit the acceleration of the maturity of any indebtedness of, or any
indebtedness secured by the property of, the Buyer, or (d) violate or conflict
with any provision of the Certificate of Incorporation or Bylaws of the Buyer.
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4.3 NO BROKERS. The Buyer has not engaged, or caused to be incurred any
liability to, any finder, broker or sales agent in connection with the origin,
negotiation, execution, delivery, or performance of this Agreement or the
transactions contemplated hereby.
4.4 ISSUANCE OF THE BUYER SHARES. The issuance and delivery of the
Buyer Shares in accordance with this Agreement have been duly authorized by all
necessary corporate action on the part of the Buyer, and the Buyer Shares when
so issued and delivered in accordance with this Agreement will be duly and
validly issued, fully paid and nonassessable. Except as provided in this
Agreement, there are no statutory or contractual stockholders preemptive rights
with respect to the issuance of the Buyer Shares hereunder. Based in part on
the representations of the Stockholders in Section 3.2, the Company has not
violated any applicable federal or state securities laws in connection with the
offer, sale or issuance of any of its capital stock, and the offer, sale and
issuance of the Buyer Shares hereunder do not require registration under the
Securities Act or any applicable state securities laws.
4.5 NO UNDISCLOSED AGREEMENT. Other than as described in the Exhibits
hereto or as set forth on Schedule 4.5, there are no undisclosed agreements
between the Buyer or any Affiliate of the Buyer, on the one hand, and the
Company and/or any of the Stockholders.
ARTICLE V
COVENANTS OF THE COMPANY AND THE STOCKHOLDERS
5.1 CONDUCT OF BUSINESS PENDING CLOSING. From the date hereof to the
Closing Date:
(a) PAYMENT OF FUNDED INDEBTEDNESS. Subject to the closing
conditions set forth in Section 7.1(d) in respect of the Company's minimum cash
requirements at Closing, the Company shall utilize all excess cash to pay down
its Funded Indebtedness on or before the Closing Date.
(b) NEGATIVE COVENANTS. Except as otherwise contemplated by this
Agreement, or as the Buyer may otherwise consent to orally or in writing, the
Company will not and the Stockholders shall cause the Company not to engage in
any material activity or enter into any material transaction outside of the
ordinary and usual course of the Business. Without limiting the generality of
the foregoing, except as contemplated by this Agreement, the Company will not
and the Stockholders shall cause the Company not to: (i) declare, set aside, or
pay any dividend or other distribution in respect of its capital stock, or make
any redemption, purchase or other acquisition of any shares of its capital
stock; (ii) issue or sell any shares of its capital stock or any options,
warrants or other rights to purchase any such shares or any securities
convertible into or exchangeable for such shares or any other securities of the
Company or take any action to reclassify or recapitalize or split up its
capital stock; (iii) merge with any other company, consolidate or sell or
consent to the sale of
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any of the material assets of the Company; (iv) outside of the ordinary course
of the Business (A) change or increase compensation payable, or to become
payable by the Company to its officers or employees, (B) increase benefits or
benefit plan costs, or (C) change any bonus, insurance, pension, compensation
or other benefit plan or arrangement made for or with or covering any officers
or employees of the Company; (v) waive any rights of substantial value which,
singly or in the aggregate, are material to the Business; (vi) change the
Certificate of Incorporation or Bylaws of the Company; (vii) borrow or agree to
borrow any funds other than through existing credit relationships; (viii)
pledge or mortgage or agree to pledge or mortgage any of the properties or
assets of the Company; (ix) guarantee or agree to guarantee the obligations of
any Person; (x) make or commit to make any capital expenditures in excess of
$25,000 individually, and $100,000 in the aggregate; (xi) make any loans to any
of the Company's officers, directors and stockholders (except for ordinary
course of business advances for out-of-pocket expenses incurred in the
performance of the Business); or (xii) dispose of or acquire any material
assets outside of the ordinary course of the Business, or agree to do any of
the foregoing.
(c) CONDUCT OF BUSINESS. The Company will and the Stockholders
shall cause the Company to continue to record its transactions and to prepare
its financial statements consistently and in accordance with GAAP, consistent
with past practice. The Company will and the Stockholders shall cause the
Company to preserve substantially intact its business organization and present
relationships with its customers, suppliers and employees and to maintain all
of its insurance currently in effect.
(d) NATURE OF BREACH. The Company shall give prompt notice to the
Buyer of any notice of material default received by the Company subsequent to
the date hereof under any material instrument or agreement, or any Material
Adverse Change occurring prior to the Closing Date.
(e) ACCESS TO INFORMATION. The Stockholders shall cause the
Company to afford the Buyer access, during normal business hours and upon
reasonable notice, to all of the assets, properties, books, records, and
agreements of the Company, and shall furnish to the Buyer and their
representatives such information regarding the Company as the Buyer may
reasonably request; provided, however, that any such investigation shall be
conducted in such a manner as not to interfere unreasonably with the operation
of the Business.
(f) TRANSFERS OR RESTRICTIONS. The Stockholders shall not sell,
transfer, pledge or grant a security interest in, or otherwise dispose of or
encumber, any of the outstanding shares of the capital stock of the Company
without the consent of the Buyer.
(g) ADDITIONAL FINANCIAL STATEMENTS. Prior to the Closing, the
Company shall provide to the Buyer (i) the audited (by Deloitte & Touche)
profit
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and loss statements and balance sheets of the Company as of and for the year
ended June 30, 1998, and (ii) the unaudited profit and loss statements and
balance sheets of the Company as of and for the three months ended September
30, 1998, referenced in Section 3.7.
(h) DELIVERY OF DISCLOSURE SCHEDULES. The Company shall have
until close of business on Wednesday, November 25, 1998 to deliver to the Buyer
the disclosure schedules provided under Article III; provided, however, that if
such schedules reveal a material (defined as in the preamble to Article III)
adverse disclsoure, the Buyer shall notify the Company and the Stockholders
within five (5) business days of receipt of such disclosure schedules that the
same contains a material adverse disclosure. If after a period of five (5)
business days from the receipt of the Buyer's notice, the parties are unable to
reach an agreement regarding an appropriate adjustment to the Purchase Price or
other amendment to this Agreement that adequately compensates the Buyer for the
adverse impact of such material disclosure, then the Buyer may, at its option,
either (i) terminate this Agreement or (ii) waive the right to claim that such
matter constitutes a breach of the representations and warranties of this
Agreement for purposes of Section 7.1(b) or Article VIII.
5.2 CONSENTS OF OTHERS. Prior to the Closing, the Stockholders shall
use their commercially reasonable best efforts to obtain and to cause the
Company to obtain all authorizations, consents and permits required of the
Company or the Stockholders to permit them to consummate the transactions
contemplated hereby, including without limitation any consents required under
the Canon License Agreement described on Schedule 3.11 or under any of the
Company's leases.
5.3 REASONABLE EFFORTS. The Company and the Stockholders shall use all
reasonable efforts to cause all conditions for the Closing to be met.
5.4 POWERS OF ATTORNEY. The Stockholders shall cause the Company to
terminate at or prior to Closing all powers of attorney granted by the Company,
other than those relating to service of process, qualification or pursuant to
governmental regulatory or licensing agreements, or representation before the
IRS or other government agencies.
5.5 TRANSFER TAXES. Each Stockholder shall be responsible for and shall
pay all stock transfer or gains taxes (if any) incurred in connection with the
purchase of his or its Company Shares pursuant hereto.
5.6 NOTICE OF DEVELOPMENTS; UPDATE OF DISCLOSURE SCHEDULES. The Company
and the Stockholders will give prompt written notice to the Buyer of any
material development affecting the assets, liabilities, Business, financial
condition, operations or results of operations of the Company and each party
hereto will give prompt written notice to the others of any material
development affecting
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the ability of any of such parties to consummate the transactions contemplated
hereby. The Company and the Stockholders shall have the right, for a period
from the date of delivery of the disclosure schedules to the Buyer pursuant to
Section 5.1(g) to that date which is not later than five (5) business days
prior to the Closing Date, to update any of the disclosure schedules provided
under Article III; provided, however, that if such updated schedules reveal a
change that is material (defined as in the preamble to Article III), the Buyer
shall notify the Company and the Stockholders within three (3) business days of
receipt of such updated schedule that the same contains such a material change.
If after a period of ten (10) business days from the receipt of the Buyer's
notice, the parties are unable to reach an agreement regarding an appropriate
adjustment to the Purchase Price or other amendment to this Agreement that
adequately compensates the Buyer for the adverse impact of such material
change, then the Buyer may, at its option, either (i) terminate this Agreement
or (ii) waive the right to claim that such matter constitutes a breach of the
representations and warranties of this Agreement for purposes of Section 7.1(b)
or Article VIII.
ARTICLE VI
POST-CLOSING COVENANTS
6.1 GENERAL. In case at any time after the Closing any further action is
legally necessary or reasonably desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
party reasonably may request, all at the sole cost and expense of the
requesting party (unless the requesting party is entitled to indemnification
therefor under Article VIII below). Each Stockholder acknowledges and agrees
that from and after the Closing the Buyer will be entitled to possession of all
documents, books, records, agreements, and financial data of any sort relating
to the Company, which shall be maintained at the chief executive office of the
Company; provided, however, that the Stockholders, upon reasonable notice to
the Buyer, shall be entitled to reasonable access to and to make copies of such
books and records at its sole cost and expense and the Buyer shall cause the
Company to maintain the books, records and material financial data relating to
the Company for a period of at least three (3) years.
6.2 LITIGATION SUPPORT. In the event and for so long as any party actively
is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or before the Closing Date
involving the Company, each of the other parties will cooperate with it and its
counsel in the contest or defense, make available their personnel, and provide
such testimony and access to their books and records as shall be reasonably
necessary in connection
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with the contest or defense, all at the sole cost and expense of the contesting
or defending party (unless the contesting or defending party is entitled to
indemnification therefor under Article VIII below).
6.3 ▇▇▇▇▇▇▇▇▇'▇ TRANSITION OBLIGATIONS. For a period of two (2) years
following Closing, ▇▇▇▇▇▇▇▇▇ will not take any action that primarily is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Company from maintaining
the same business relations with the Company after the Closing as it maintained
with the Company prior to the Closing. For a period of two (2) years following
Closing, ▇▇▇▇▇▇▇▇▇ will refer all customer inquiries relating to the Business
to the Company. In respect of ▇▇▇▇▇▇▇▇▇'▇ commitment pursuant to this Section
6.3, it is acknowledged that his agreement thereto is in consideration of his
receipt of his portion of the Adjusted Purchase Price.
6.4 CONFIDENTIALITY. The Stockholders will treat and hold as such all
Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement for a period of two (2)
years from the Closing, and deliver promptly to the Buyer or destroy, at the
request and option of the Buyer, all tangible embodiments (and all copies) of
the Confidential Information which are in its possession except as otherwise
permitted herein. In the event that any of the Stockholders is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, such Stockholder will notify
the Buyer promptly of the request or requirement.
6.5 ▇▇▇▇▇▇▇▇▇'▇ COVENANT NOT TO COMPETE. For and in consideration of
the allocation of $50,000 of the Adjusted Purchase Price paid to ▇▇▇▇▇▇▇▇▇ by
the Buyer, ▇▇▇▇▇▇▇▇▇ covenants and agrees that , for a period of two (2) years
from and after the Closing Date, he will not, directly or indirectly without
the prior written consent of the Buyer, for or on behalf of any entity:
(a) become interested or engaged, directly or indirectly, as a
shareholder, bondholder, creditor, officer, director, partner, agent,
contractor with, employer or representative of, or in any manner associated
with, or give financial, technical or other assistance to, any Person, firm or
corporation for the purpose of engaging in the copier and facsimile equipment
dealer and service business in competition with the Company, within the greater
of (i) a 100 mile radius of the Company's office facilities in the District of
Columbia (the "CURRENT TRADE AREA") or (ii) in any geographic area in which the
Company currently conducts business;
(b) enter into any agreement with, service, assist or solicit the
business of any customers of the Company for the purpose of providing copier
and facsimile equipment sales or service to such customers in competition with
the
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Company in the Current Trade Area or to cause them to reduce or end their
business with the Company; or
(c) enter into any agreement with, or solicit the employment of
employees, consultants or representatives of the Company for the purpose of
causing them to leave the employment of the Company;
provided, however, if ▇▇▇▇▇▇▇▇▇ is the owner of less than five percent (5%) of
the outstanding stock of any publicly-traded corporation, he shall not be
deemed to be in violation of this Section 6.5 solely by reason of any actions
of such corporation; provided, further, however, in respect of ▇▇▇▇▇▇▇▇▇'▇
commitment pursuant to this Section 6.5, it is acknowledged that his agreement
thereto is in partial consideration of his receipt of his portion of the
Adjusted Purchase Price.
This Section 6.5 supersedes and replaces Section 1.7 of that certain Executive
Agreement dated as of June 30, 1997 between the Company and ▇▇▇▇▇▇▇▇▇. Such
Executive Agreement, and all other agreements, commitments and undertakings
between the Company and ▇▇▇▇▇▇▇▇▇, are hereby terminated effective upon the
Closing and shall thereafter be of no further force or effect, except to the
extent that they relate to actions taken or rights or obligations arising prior
to the Closing Date or compensation (including $62,500, which is the prorated
portion of ▇▇▇▇▇▇▇▇▇'▇ annual bonus through December 31, 1998) or reimbursement
to ▇▇▇▇▇▇▇▇▇ for periods prior to the Closing Date.
ARTICLE VII
CONDITIONS TO OBLIGATION OF PARTIES TO CONSUMMATE CLOSING
7.1 CONDITIONS TO THE BUYER'S OBLIGATIONS. The obligation of the Buyer
under this Agreement to consummate the Closing is subject to the conditions
that:
(a) SATISFACTION WITH DUE DILIGENCE. The Buyer shall have the
right to conduct its due diligence on the Company and the Business, and it is a
condition precedent to the consummation of the transactions contemplated hereby
that the Buyer shall be satisfied in all reasonable and material respects with
its due diligence investigation of the Company.
(b) COVENANTS, REPRESENTATIONS AND WARRANTIES. The Company and
the Stockholders shall have performed in all material respects all obligations
and agreements and complied in all material respects with all covenants
contained in this Agreement to be performed and complied with by any of them
prior to or at the Closing Date. The representations and warranties of the
Company and the Stockholders set forth in this Agreement shall be accurate in
all material respects at and as of the Closing Date with the same force and
effect as though made on and
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as of the Closing Date except for any changes resulting from activities or
transactions which may have taken place after the date hereof and which are
permitted or contemplated by this Agreement or which have been entered into in
the ordinary course of the Business and except to the extent that such
representations and warranties are expressly made as of another specified date
and, as to such representation, the same shall be true as of such specified
date.
(c) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇; OTHER CONSENTS. All statutory requirements
for the valid consummation by the Company and the Stockholders of the
transactions contemplated by this Agreement, including without limitation the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), shall have been fulfilled and all authorizations, consents and
approvals, including without limitation those of all federal, state, local and
foreign governmental agencies and regulatory authorities required to be
obtained in order to permit the consummation of the transactions contemplated
hereby shall have been obtained in form and substance reasonably satisfactory
to the Buyer unless such failure shall not have a Material Adverse Effect;
provided, however, if, as of the Closing Date, the waiting period under the HSR
Act in respect of the acquisition of Buyer Shares by GTCR IV has not expired,
then such Buyer Shares as are to be allocated to GTCR IV shall be held in
escrow by Buyer's counsel and not released to GTCR IV until such waiting period
has expired; provided, further, however, that if Global has paid the filing fee
in respect of the HSR Act filing referenced in the foregoing proviso, Global
shall deduct such fee from GTCR IV's allocated Cash Portion of the Adjusted
Purchase Price at Closing. In addition, the Company shall have obtained a
consent from Canon under the License Agreement described on Schedule 3.11, if
same is required under the terms thereof as a result of the transactions
contemplated hereby. Finally, the Boards of Directors of the Company shall have
approved the consummation of this Agreement and the transactions contemplated
hereby.
(d) FINANCING. The Buyer shall have obtained financing in an
amount and on terms satisfactory to the Buyer.
(e) MATERIAL ADVERSE CHANGE. There has been no Material Adverse
Change.
(f) DELIVERIES BY THE STOCKHOLDERS AND THE COMPANY. The following
shall be delivered at the Closing by the Stockholders and the Company:
(i) OPINIONS OF COUNSEL. The Buyer shall have received
favorable opinions of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, and Reichelt, Nussbaum,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to ▇▇▇▇▇▇▇▇▇ and the Company, respectively,
dated the Closing Date, in form and substance mutually satisfactory to
the parties, such terms of opinions in substantially the forms to be
agreed upon by the parties hereto prior to Closing.
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(ii) FAIRNESS OPINION. The Buyer shall have received a
fairness opinion, as to the fairness of the transactions contemplated
hereby, from an investment bank of the Buyer's choosing, in form and
substance satisfactory to the Buyer.
(iii) CERTIFICATES. The Buyer shall have received an
officer's certificate and a secretary's certificate of the Company, each
executed by the appropriate individuals at the Company, dated the Closing
Date, in form and substance mutually satisfactory to the parties, such
forms of certificates to be in substantially the forms attached hereto as
Exhibits B-1 and B-2.
(iv) RELEASE. Each of the Stockholders shall have delivered
to the Company a general release in substantially the same form attached
hereto as Exhibit C.
(v) STOCK CERTIFICATES. The Stockholders shall have
delivered the Company Shares to the Buyer accompanied by duly executed
stock powers, together with any stock transfer stamps or receipts for any
transfer taxes required to be paid thereon as a result of the stock
purchase hereunder.
(vi) RESIGNATIONS. The Company shall deliver the written
resignations of all directors of the Company designated prior to the
Closing by the Buyer, and the Buyer shall cause replacement director(s)
to be duly elected and appointed upon such resignations.
7.2 CONDITIONS TO THE COMPANY'S AND THE STOCKHOLDERS' OBLIGATIONS.
The obligations of the Company and the Stockholders under this Agreement to
consummate the Closing is subject to the conditions that:
(a) COVENANTS, REPRESENTATIONS AND WARRANTIES. The Buyer
shall have performed in all material respects all obligations and agreements
and complied in all material respects with all covenants contained in this
Agreement to be performed and complied with by the Buyer prior to or at the
Closing and the representations and warranties of the Buyer set forth in
Article IV hereof shall be accurate in all material respects, at and as of the
Closing Date, with the same force and effect as though made on and as of the
Closing Date except for any changes resulting from activities or transactions
which may have taken place after the date hereof and which are permitted or
contemplated by this Agreement or which have been entered into in the ordinary
course of business and except to the extent that such representations and
warranties are expressly made as of another specified date and, as to such
representations, the same shall be true as of such specified date.
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(b) CONSENTS. All statutory requirements for the valid
consummation by the Buyer of the transactions contemplated by this Agreement
including without limitation the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended (if applicable), shall have been fulfilled and all
authorizations, consents and approvals, including those of all federal, state,
local and foreign governmental agencies and regulatory authorities required to
be obtained in order to permit the consummation by the Buyer of the
transactions contemplated hereby shall have been obtained unless such failure
shall not have a Material Adverse Effect. The Buyer shall have used its
reasonable best efforts to have obtained the release of the Stockholders from
all personal guarantees with respect to the Company, if any.
(c) DELIVERIES BY THE BUYER. The following shall be delivered at
the Closing by the Buyer:
(i) OPINION OF THE BUYER'S COUNSEL. The Stockholders
shall have received from ▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P., counsel to the Buyer, a
favorable opinion, dated the Closing Date, in form and substance mutually
satisfactory to the parties, such form of opinion to be agreed upon by
the parties hereto prior to Closing.
(ii) STOCK CERTIFICATES. The Buyer shall have issued and
delivered the Buyer Shares to the appropriate Stockholders (allocated as
per the Cash and Stock Allocation Schedule).
(iii) ADJUSTED PURCHASE PRICE. Each Stockholder shall
have received from the Buyer such Stockholder's respective allocation (in
cash or stock form) of the Adjusted Purchase Price in accordance with the
Cash and Stock Allocation Schedule.
ARTICLE VIII
INDEMNIFICATION
Notwithstanding anything to the contrary in this Agreement, the Buyer,
the Company and the Stockholders shall have no claim of entitlement for
reimbursement of losses or damages in any way related to the transactions
contemplated hereby under this Agreement except as provided in this Article
VIII.
8.1 INDEMNIFICATION BY THE STOCKHOLDERS. After the Closing and subject
to the limits set forth in Section 8.5, each Stockholder, individually and not
jointly and severally, shall indemnify and hold harmless the Buyer or the
Company and each officer, director and affiliate of the Buyer or the Company
(collectively, the "INDEMNIFIED PARTIES") from and against any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs and
expenses (including court costs and reasonable attorneys' fees and expenses
incurred in investigating and preparing for any litigation or proceeding)
(collectively, the "INDEMNIFIABLE COSTS"),
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which any of the Indemnified parties may sustain, or to which any of the
Indemnified Parties may be subjected, arising out of any misrepresentation,
breach or default by such Stockholder of or under any of its covenants,
agreements or other provisions of this Agreement or any document executed by it
in connection herewith, exclusive of representations and warranties relating to
the Company. After the Closing, the Stockholders, jointly and severally, shall
indemnify and hold harmless the Buyer or the Company and each officer, director
and affiliate of the Buyer or the Company (collectively, the "INDEMNIFIED
PARTIES") from and against any and all damages, losses, claims, liabilities,
demands, charges, suits, penalties, costs and expenses (including court costs
and reasonable attorneys' fees and expenses incurred in investigating and
preparing for any litigation or proceeding) (collectively, the "INDEMNIFIABLE
COSTS", which any of the Indemnified Parties may sustain, or to which any of
the Indemnified Parties may be subjected, arising out of any breach of a
representation and warranty regarding the Company. Determination of whether the
Company, on the one hand, or the Buyer, on the other hand, is entitled to
indemnification hereunder shall be made by such parties in light of the
economic impact or loss caused by the matter which is the subject of the claim
of indemnification. By way of example, a claim of indemnification for breaches
of the representation made in Section 3.17 (Taxes) would impact the Company so
that the Company would be entitled to indemnification. A claim of
indemnification based on a breach of Section 3.28 (No Liens on Shares) would
affect the Buyer's investment in the Company directly (as opposed to
derivatively), so that the Buyer would be entitled to indemnification.
8.2 DEFENSE OF CLAIMS. If any legal proceeding shall be instituted, or
any claim or demand made, against any Indemnified Party in respect of which the
Stockholders may be liable hereunder, such Indemnified Party shall give prompt
written notice thereof to the Stockholders and, except as otherwise provided in
Section 8.5 below, the Stockholders shall have the right to defend any
litigation, action, suit, demand, or claim for which they may seek
indemnification unless, in the reasonable judgment of the Buyer, such
litigation, action, suit, demand, or claim, or the resolution thereof, would
have an ongoing effect on the Buyer, the Company or its successors, and such
Indemnified Party shall extend reasonable cooperation in connection with such
defense, which shall be at the Stockholders' expense. In the event the
Stockholders fail to defend the same within a reasonable length of time, the
Indemnified Parties and/or the Company (as appropriate) shall be entitled to
assume the defense thereof, and the Stockholders shall be liable to repay the
Indemnified Parties and/or the Company (as appropriate) for all expenses
reasonably incurred in connection with said defense (including reasonable
attorneys' fees and settlement payments) if it is determined that such request
for indemnification was proper. If the Stockholders shall not have the right to
assume the defense of any litigation, action, suit, demand, or claim in
accordance with either of the two preceding sentences, the Indemnified Parties
shall have the right to control the defense of and to settle, with the consent
of the Stockholders, which consent shall not be unreasonably withheld,
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such litigation, action, suit, demand, or claim, but the Stockholders shall be
entitled, at their own expense, to participate in such litigation, action,
suit, demand, or claim.
8.3 TAX AUDITS, ETC. In the event of an audit of a Tax Return of the
Company with respect to which an Indemnified Party might be entitled to
indemnification pursuant to this Article VIII, the Stockholders shall have the
right in proportion to their respective interest in the Company prior to the
consummation hereof, to control any and all such audits which may result in the
assessment of additional Taxes against the Company and any and all subsequent
proceedings in connection therewith, including appeals (subject to the prior
written consent of the Buyer, which shall not unreasonably be withheld). The
Company and the Stockholders shall each cooperate fully with the other in all
matters relating to any such audit or other Tax proceeding (including according
access to all records pertaining thereto), and will execute and file any and
all consents, powers of attorney, and other documents as shall be reasonably
necessary in connection therewith. If additional Taxes are payable by the
Company as a result of any such audit or other proceeding, the Stockholders
shall be responsible for and shall promptly pay their proportionate share of
all Taxes, interest, and penalties to which any of the Indemnified Parties
shall be entitled to indemnification.
8.4 INDEMNIFICATION OF THE STOCKHOLDERS AND THE COMPANY. After the
Closing and subject to the limits set forth in Section 8.5, the Buyer agrees to
indemnify and hold harmless the Stockholders and the Company and each officer,
director, stockholder or affiliate of the Company, from and against any
Indemnifiable Costs arising out of any misrepresentation, breach or default by
the Buyer of or under any of the covenants, agreements or other provisions of
this Agreement or any agreement or document executed in connection herewith and
conduct by the Buyer or the Company of the Company's business after the
Closing. In addition, the Company and the Buyer shall indemnify the
Stockholders for any payment by the Stockholders of the Company's obligations
occurring after the Closing Date.
8.5 LIMITS ON INDEMNIFICATION. Except for any claims for breach of the
representations and warranties of the Stockholders under Sections 3.1, 3.2,
3.3, 3.17 or 3.29 hereof (the indemnification for which shall expire on the
expiration of the applicable statute of limitations), the indemnification
provided under this Article VIII shall expire twelve (12) months from the
Closing Date. The Stockholders shall not be obligated to pay any amounts for
indemnification under this Article VIII until the aggregate indemnification
obligation hereunder exceeds $50,000, whereupon the Stockholders shall only be
liable for all amounts in excess of such $50,000 for which indemnification may
be sought. Notwithstanding the foregoing, in no event shall any Stockholder
have any liability to the Buyer in excess of their allocable portion of fifteen
percent (15%) of the Adjusted Purchase Price (except for claims made for any
breach of the representations and warranties of the Stockholders under Sections
3.1, 3.2, 3.3, 3.17 or 3.29 hereof, for which no such limitation on the
Stockholders' indemnification obligations shall apply). In addition, any
Stockholder shall only be
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liable for breaches of the representations and warranties contained in Sections
3.7 through 3.27 to the extent such Stockholder had actual knowledge of such
breach. However, nothing in this Article VIII shall limit the Buyer in any way
in exercising or securing any remedies provided by applicable common law with
respect to the conduct of the Stockholders in connection with this Agreement or
in the amount of damages that it can recover from the Stockholders in the event
that the Buyer successfully proves intentional fraud or intentional fraudulent
conduct in connection with this Agreement.
ARTICLE IX
TERMINATION
9.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) MUTUAL CONSENT. Upon the mutual written consent of all
parties hereto;
(b) LITIGATION. By any Stockholder or the Company or the Buyer if
an injunction or other order shall have been issued by a court or
administrative body of competent jurisdiction, or litigation or a governmental
proceeding shall be pending or threatened, which restrains or seeks to restrain
or otherwise would make unlawful the consummation of the transactions
contemplated by this Agreement;
(c) CONDITIONS TO THE BUYER'S OBLIGATIONS. By the Buyer if any of
the conditions provided in Section 7.1 hereof shall not have been satisfied,
complied with or performed in any material respect on or before the Closing
Date and the Buyer shall not have waived in writing such failure of
satisfaction, non-compliance or non-performance;
(d) CONDITIONS TO THE STOCKHOLDERS' AND THE COMPANY'S OBLIGATIONS.
By the Stockholders and the Company if any of the conditions provided in
Section 7.2 hereof shall not have been satisfied, complied with or performed in
any material respect on or before the Closing Date, and the Stockholders have
not waived in writing such failure of satisfaction, non-compliance or
non-performance;
9.2 EFFECT OF TERMINATION. Termination of this Agreement by a party
pursuant to this Article IX shall not of itself result in any liability on such
party or his or its respective representatives, directors, officers,
stockholders or agents. In the event of termination of this Agreement, nothing
contained in this Section 9.2 shall relieve any party from liability for any
breach of this Agreement.
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ARTICLE X
MISCELLANEOUS
10.1 MODIFICATIONS. Any amendment, change or modification of this
Agreement shall be void unless in writing and signed by all parties hereto. No
failure or delay by any party hereto in exercising any right, power or
privilege hereunder (and no course of dealing between or among any of the
parties) shall operate as a waiver of any such right, power or privilege. No
waiver of any default on any one occasion shall constitute a waiver of any
subsequent or other default. No single or partial exercise of any such right,
power or privilege shall preclude the further or full exercise thereof.
10.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when such notice is
personally delivered, or the next business day when sent by overnight delivery
service maintaining records of receipt, or upon confirmation of receipt by the
addressee when transmitted by facsimile addressed to the respective parties
hereto as follows:
The Buyer:
Global Imaging Systems, Inc.
13902 North ▇▇▇▇ ▇▇▇▇▇ Road, Suite 300
Box 273478
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
Columbia Square
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇. ▇▇▇▇▇ ▇▇▇▇
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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The Company:
Capitol Office Solutions, Inc.
f/k/a Capitol Copy Products, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Knight, Manzi, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
GTCR Parties:
GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇, L.L.C., for
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Fund IV, L.P.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ Floor
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇ ▇▇▇▇▇▇▇ Equity Partners, for
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Fund IV, ▇.▇.
▇▇▇▇▇ Tower, 44th Floor
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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▇▇▇▇▇▇▇▇▇:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as to any party hereto as such party shall designate
by like notice to the other parties hereto.
10.3 COUNTERPARTS; FACSIMILE TRANSMISSION. This Agreement may be
executed in several counterparts, each of which shall be deemed an original but
all of which counterparts collectively shall constitute one instrument, and in
making proof of this Agreement, it shall never be necessary to produce or
account for more than one such counterpart. Signatures sent to the other
parties by facsimile transmission shall be binding as evidence of acceptance of
the terms hereof by such signatory party.
10.4 EXPENSES. Each of the parties hereto will bear all costs,
charges and expenses incurred by such party in connection with this Agreement
and the consummation of the transactions contemplated herein, provided,
however, that (i) the Stockholders shall bear all costs and expenses of all
legal expenses of the Stockholders with respect to this Agreement and the
transactions contemplated hereby.
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10.5 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Buyer, the Company and the Stockholders,
their heirs, representatives, successors, and permitted assigns, in accordance
with the terms hereof. This Agreement shall not be assignable by the
Stockholders without the prior written consent of the Buyer. This Agreement
shall be assignable by the Buyer to a wholly-owned subsidiary of the Buyer
without the prior written consent of the Stockholders.
10.6 ENTIRE AND SOLE AGREEMENT. This Agreement and the other
schedules and agreements referred to herein, constitute the entire agreement
between the parties hereto and supersede all prior agreements, representations,
warranties, statements, promises, information, arrangements and understandings,
whether oral or written, express or implied, with respect to the subject matter
hereof.
10.7 GOVERNING LAW. This Agreement and its validity, construction,
enforcement, and interpretation shall be governed by the substantive laws of
the State of Delaware.
10.8 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
Regardless of any investigation at any time made by or on behalf of any party
hereto or of any information any party may have in respect thereof, all
covenants, agreements, representations, and warranties and the related
indemnities made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Closing for a period of one
(1) year, provided (a) the representations and warranties contained in Section
3.17 of this Agreement, and the related indemnities, shall survive the Closing
until the expiration of the applicable statutes of limitations for determining
or contesting Tax liabilities and (b) the representations and warranties
contained in Sections 3.1, 3.2, 3.3 and 3.28 of this Agreement, and the related
indemnities, shall survive the Closing until the expiration of the applicable
statute of limitations.
10.9 INVALID PROVISIONS. If any provision of this Agreement is
deemed or held to be illegal, invalid or unenforceable, this Agreement shall be
considered divisible and inoperative as to such provision to the extent it is
deemed to be illegal, invalid or unenforceable, and in all other respects this
Agreement shall remain in full force and effect; provided, however, that if any
provision of this Agreement is deemed or held to be illegal, invalid or
unenforceable there shall be added hereto automatically a provision as similar
as possible to such illegal, invalid or unenforceable provision and be legal,
valid and enforceable. Further, should any provision contained in this
Agreement ever be reformed or rewritten by any judicial body of competent
jurisdiction, such provision as so reformed or rewritten shall be binding upon
all parties hereto.
10.10 PUBLIC ANNOUNCEMENTS. Neither party shall make any public
announcement of the transactions contemplated hereby without the prior written
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45
consent of the other party, which consent shall not be unreasonably withheld,
unless such disclosure is required, on advice of counsel, in order to comply
with federal securities laws or the listing requirements of NASDAQ or another
national stock exchange.
10.11 REMEDIES CUMULATIVE. The remedies of the parties under this
Agreement are cumulative and shall not exclude any other remedies to which any
party may be lawfully entitled.
10.12 WAIVER. No failure or delay on the part of any party in
exercising any right, power, or privilege hereunder or under any of the
documents delivered in connection with this Agreement shall operate as a waiver
of such right, power, or privilege; nor shall any single or partial exercise of
any such right, power, or privilege preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege.
10.13 FURTHER ASSURANCES. From time to time after the Closing, at
the request of the Buyer but without further consideration, the Stockholders
will execute and deliver such other instruments of conveyance, assignment,
transfer, and delivery and take such other action as the Buyer reasonably may
request in order to consummate the transactions contemplated hereby.
10.14 HEADINGS. The descriptive section headings are for
convenience of reference only and shall not control or affect the meaning or
construction of any provision of this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date and year first above
written.
THE BUYER:
GLOBAL IMAGING SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name:
Title:
THE COMPANY:
CAPITOL OFFICE SOLUTIONS, INC.
(f/k/a Capitol Copy Products, Inc.)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
11/19/98
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STOCKHOLDERS:
▇▇▇▇▇▇▇▇▇: I ELECT TO RECEIVE MY PORTION
OF THE ADJUSTED PURCHASE PRICE AS:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ X
-------------------------------- --------- --------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ CASH ONLY CASH & BUYER SHARES
GTCR PARTIES:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
FUND IV, L.P.
By: GTCR IV, L.P.,
General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.,
General Partner
GTCR ELECTS TO RECEIVE ITS PORTION
OF THE ADJUSTED PURCHASE PRICE AS:
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ X
------------------------------------- --------- --------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇ CASH ONLY CASH & BUYER SHARES
Title: Principal
GREEN, ▇▇▇▇▇▇▇ & BUNCH
HOLDINGS, INC. GREEN, ▇▇▇▇▇▇▇ & BUNCH
HOLDINGS, INC. ELECTS TO RECEIVE ITS
PORTION OF THE ADJUSTED PURCHASE
PRICE AS:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ X
-------------------------------------- --------- --------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ CASH ONLY CASH & BUYER SHARES
Title: Vice President
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