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EXHIBIT 2
Asset Purchase Agreement dated as of December 23, 1996, by and among Vanier
Graphics Corporation and The Xxxxxxxx and Xxxxxxxx Company.
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EXHIBIT 2
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into this 23rd day of December 1996, to be effective as of the 31th day of
December 1996, by and among VANIER GRAPHICS CORPORATION, a California
corporation ("Company"), and THE XXXXXXXX AND XXXXXXXX COMPANY, an Ohio
corporation ("Purchaser).
STATEMENT OF BACKGROUND:
WHEREAS, Purchaser desires to purchase from Company, and Company
desires to sell to Purchaser, all of the assets of Company (except for specific
excluded assets) upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, for and in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and upon and subject to the terms and conditions hereinafter set
forth, the parties hereto do hereby mutually agree as follows:
ARTICLE I
CERTAIN TERMS
1.01 DEFINITIONS. For purposes of this Agreement, the following terms
when capitalized shall have the meanings set forth below:
"9/30/96 BALANCE SHEET" means the balance sheet of Company as
of the close of business on September 30, 1996.
"ACQUIRED NET BOOK VALUE" means the difference of the Assets
(net of all applicable reserves and allowances) less the Assumed
Liabilities (exclusive of Assumed Severance) as shown on the Closing
Balance Sheet or the Adjusted 9/30/96 Balance Sheet, as applicable.
"ADJUSTED 9/30/96 BALANCE SHEET" means the 9/30/96 Balance
Sheet as adjusted to eliminate the Excluded Assets and Excluded
Liabilities. A copy of the Adjusted 9/30/96 Balance Sheet is attached
as Schedule 1.01(a).
"APPLICABLE LAWS" means all laws, rules, regulations, Orders,
decrees, judgments, awards, covenants, restrictions and ordinances
applicable to Company, the Assets, the Business, or any of the Products
and Services including those related to Taxes, occupational health and
safety, zoning and land use regulations and restrictions, the
Governmental Authorizations held by the Company, and the Environmental
Laws.
"ASSETS" shall mean the properties, assets and rights to be
transferred by Company to Purchaser pursuant to this Agreement, which
shall include all assets, properties, rights, and privileges, tangible
and intangible, of Company, including, but not limited to: the name
"Vanier Graphics"; Real Property; equipment and machinery; inventories;
accounts receivable; Corporate Agreements; Software; customer orders
and lists of customers; product trade names, product trademarks,
patents and licenses, including all registrations therefor;
manufacturing specifications and procedures;
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marketing materials, sales training materials and research and
development projects; the use of any and all trademarks or tradenames
of Company in connection with the Business or the sale of the Products
and Services; all prepayments and deferred charges attributable to the
Assets or the Business; any written information pertaining to the
Assets or the Business in Company's possession or control; the good
will of Company associated with any Asset (other than Excluded Assets),
the Business or the manufacturing and selling of the Products and
Services, including, without limitation, good will in connection with
Company's customers and its reputation in the trade, as well as with
reference to banking, insurance, credit and other institutions; trade
secrets of Company including, but not limited to, all customer
information relating to Company's customers, cost and supply data, and
secret and other formulae and knowhow for the manufacture, preparation,
or processing thereof; and all other intangible property connected with
the business of Company and related, in any way, to the Assets, the
Business, or the Products and Services; provided, however, that the
Assets shall not include the assets identified as "Excluded Assets" on
Schedule 1.01(b).
"BANK" means Bank One Trust Company, the escrow agent under
the Purchase Price Escrow Agreement.
"BUSINESS" shall mean the business of producing business forms
and providing printing services, as currently carried on and conducted
by Company (including the Company's electronic forms segment).
"CLOSING BALANCE SHEET" means a balance sheet reflecting the
Assets and Assumed Liabilities (exclusive of Assumed Severance) as of
the Effective Time which shall be prepared by Company with the prompt
assistance of former employees of the Company who are subsequently
employed by the Purchaser. The Closing Balance Sheet will be prepared
in accordance with generally accepted accounting principles and
otherwise in a manner consistent with the Adjusted 9/30/96 Balance
Sheet including the policies and practices of Company attached hereto
as Schedule 1.01(c). For purposes of determining the account of the
inventory included in the Assets, the parties will jointly conduct a
physical inventory at the Effective Time.
"CLOSING DELIVERIES ESCROW AGREEMENT" means an agreement in the
form of the attached Exhibit 1.01(a).
"COBRA" means the continuation health care coverage
requirements of Section 4980B of the Internal Revenue Code of 1986, as
amended and Sections 601-608 of ERISA and the regulations promulgated
thereunder.
"EFFECTIVE TIME" means 1159 p.m. on December 31, 1996 (unless
extended by agreement of the parties or extended automatically as
expressly provided in this Agreement).
"ENVIRONMENTAL LAWS" means all federal, state and local
statutory laws, regulations or orders relating to pollution, protection
of the environment or workplace health and safety, including those
relating to the manufacture, production, distribution, use, treatment,
storage, disposal, transport or handling, emission, discharge or
release of pollutants, contaminants, chemicals, industrial or toxic
materials or wastes, Hazardous Materials or nuisance.
"ESCROW AGREEMENTS" means the Closing Deliveries Escrow
Agreement and the Purchase Price Escrow Agreement.
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"FACILITIES" means any real property, leaseholds or other
interests currently or formerly owned and operated by Company and any
buildings, plants, structures or equipment currently or formerly owned
or operated by Company.
"GAAP" means generally accepted accounting principles,
consistently applied.
"GENERAL TAXES" shall mean (i) all annual or periodic ad
valorem fees and other taxes and assessments, both general and special,
and payments made in lieu thereof, on real or personal property and
(ii) all other annual or periodic fees, taxes and similar charges
imposed by any governmental unit, upon or with respect to the Assets,
including, but not limited to, taxes, fees or similar charges (e.g.
licenses) for the privilege of doing business. "General Taxes" shall
not include motor fuel taxes, sales and use taxes, corporate franchise
taxes, transfer taxes, income taxes, taxes based on gross income and
other taxes described in Section 7.01(a).
"GOVERNMENTAL AUTHORIZATION" means any approval, consent,
license, permit, waiver, or other authorization issued, granted, given,
or otherwise made available by or under the authority of any
governmental or administrative body or pursuant to any Applicable Law.
"HAZARDOUS MATERIALS" means any waste or other substance that
is listed, defined, designated or classified as, or otherwise
determined to be, hazardous, radioactive or toxic or a pollutant or
contaminant under or pursuant to any Environmental Law, including any
admixture or solution thereof, and specifically including petroleum and
all derivatives thereof or substitutes therefor, and asbestos and
asbestos-containing materials.
"INTELLECTUAL PROPERTY INTANGIBLES" means (a) fictional
business names, trading names, registered and unregistered trademarks,
service marks, and applications; (b) patents, patent applications, and
inventions and discoveries that may be patentable; (c) copyrights in
both published works and unpublished works; (d) rights in mask works;
and (e) know-how, trade secrets, confidential information, customer
lists, software, technical information, data, process technology,
plans, drawings, and blue prints, whether owned, used, or licensed.
"KNOWLEDGE" where it refers to "knowledge" of Company means
only the actual knowledge of X.X. Xxxxx, X.X. Xxxxxxx, X.X. Xxxxx, X.
Xxxxxxx, X. Xxxxxxxx, X. Xxxxxxx, X. Xxxxxxx, X. Xxxxxxxx, X. Xxxxxxx,
X. Xxxxxx, X. Xxxxxxxx, X. Xxxxx, X. Xxxxxxxxx, X. Xxxxxxx, X. Xxxx and
X. Xxxxxxxxxxxx, and shall not refer to the knowledge of any other
person in any way associated with Company.
"LIEN" means any mortgage, pledge, hypothecation, claim,
security interest, encumbrance, right or interest of others, lease,
license, easement, encroachment, covenant, title defect, lien, option
or right of first refusal.
"ORDER" means any award, decision, injunction, decree,
judgment, order, ruling subpoena or verdict issued, made or rendered by
any court, administrative authority or agency or arbitrator.
"ORDINARY COURSE OF BUSINESS" means consistent with past custom
and practice (including with respect to nature, quantity and frequency)
in the normal day-to-day business operations of the applicable person.
Without limiting the scope of actions which are not in the Ordinary
Course of Business, actions requiring approval of a person's board of
directors or any parent company shall not be in the Ordinary Course of
Business.
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"PERMITTED ENCUMBRANCES" means those Liens identified in
Schedule 1.01(d), 3.05, and 3.06(b).
"PERSON" means any person, corporation, partnership,
unincorporated association, limited liability company, or entity of any
kind or nature whatsoever.
"PRODUCTS AND SERVICES" shall mean the products manufactured
and the services provided by Company, which consist primarily of
business forms (in both paper and electronic form) and printing
services.
"PURCHASE PRICE ESCROW AGREEMENT" means an agreement in the
form of the attached Exhibit 1.01(b).
"REAL PROPERTY" shall mean the parcels of land set forth on
Schedule 3.06(a) together with all of Company's right, title and
interest in and to the improvements, structures and buildings (other
than temporary structures owned by contractors and
Subsidiary-contractors) located thereon (including any railroad siding
available thereto), construction in progress, all fixtures of every
kind and nature whatsoever forming part of said improvements,
structures and buildings and all easements, rights and appurtenances to
any of the foregoing.
"TAXES" means all Federal, state, local, foreign, and other net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use, withholding,
payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties, or other taxes, fees,
assessments, or charges of any kind whatever, and any related
penalties, interest or additions to tax.
"WARN ACT" means the Workers Adjustment and Retraining
Notification Act, 29 U.S.C. 2101 et. seq., and the regulations
promulgated thereunder.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.01 TRANSFER OF ASSETS. Subject to the terms and conditions set forth
in this Agreement, Company agrees to sell, convey, assign, transfer, deliver,
abandon and set over to Purchaser at Effective Time, and Purchaser agrees to
purchase, accept and take from Company and acknowledge delivery and possession
at the Effective Time of, the Assets free and clear of all Liens except the
Permitted Encumbrances.
2.02 AGGREGATE PURCHASE PRICE OF ASSETS. The aggregate purchase price
for the Assets (hereinafter referred to as the "Purchase Price") shall be
Forty-Seven Million Two Hundred Eleven Thousand and No/100 Dollars
($47,211,000), which shall be deposited in escrow to be held pursuant to the
Escrow Agreement at Closing by Purchaser by wire transfer.
2.03 ALLOCATION. The Purchase Price for the Assets shall be allocated
as set forth in Schedule 2.03. Purchaser and Company agree to file their federal
and state income tax returns (and Form 8594, if applicable) on the basis of the
allocation set forth on Schedule 2.03, and neither shall thereafter take a tax
return position inconsistent with such allocation unless such inconsistent
position shall arise out of or through an audit or other inquiry or examination
by the Internal Revenue Service or other taxing authority. The allocation shall
be subject to adjustment as set forth in Section 2.07 below.
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2.04 MANNER OF EFFECTING SALE. The sale, conveyance, transfer,
assignment and delivery of the Assets by Company to Purchaser shall be effected
by such deeds, bills of sale, endorsements, assignments, transfers and other
instruments of transfer and conveyance in such form as shall be reasonably
requested by Purchaser or Purchaser's attorney.
2.05 ASSUMPTION OF CERTAIN LIABILITIES BY PURCHASER. Effective upon the
Effective Time, Purchaser shall, by written instrument in the form of Exhibit
2.05 attached hereto, assume and agree to pay, perform and discharge, and to
indemnify Company against and hold it harmless from, all obligations and
liabilities of Company identified as "Assumed Liabilities" on Schedule 2.05(a).
Purchaser shall not assume, and Company agrees to pay, perform, and discharge,
and to indemnify Purchaser against and hold it harmless from, all Excluded
Liabilities (as defined in Schedule 2.05(b)). The parties' respective
indemnification obligations under this Section shall be subject to the
provisions of Article IX of this Agreement.
2.06 CLOSING. Subject to the conditions set forth herein, the closing
of the purchase and sale contemplated hereunder (hereinafter referred to as the
"Closing", with the date of the Closing being referred to as the "Closing Date")
shall take place at the offices of Long, Xxxxxxxx & Xxxxxx, Atlanta, Georgia, at
a date and time mutually agreed to by Purchaser and Company but in no event
later than December 23, 1996, unless the parties hereto have otherwise agreed to
an extension. The Closing shall be effective as of the Effective Time. At the
Closing, the parties shall make the respective deliveries identified in Schedule
2.06 to be held in escrow by the respective outside counsel to the parties
pursuant to the Closing Deliveries Escrow Agreement and the Purchase Price
Escrow Agreement. If the Closing cannot be effected on or before December 31,
1996 (or any extension thereof), this Agreement shall terminate on said date;
provided, however, that in the event the expiration of all applicable waiting
periods, or receipt of any relevant approvals, under H-S-R (as defined in
Section 5.01(d)) have not incurred on or before December 31, 1996 (collectively,
the "H-S-R Approvals"), the Closing Date shall automatically be extended to a
date no later than three (3) days immediately following the receipt of all H-S-R
Approvals; further provided, however, that if all H-S-R Approvals are not
received as necessary to enable the Closing to occur on or before January 31,
1997, then this Agreement shall terminate effective 1159 p.m. on January 31,
1997 (if the Closing Date is extended as provided in this sentence, the
Effective Time shall automatically be extended until 1159 p.m. on the day of the
Closing Date). Company shall deliver possession of the Assets to Purchaser at
the Effective Time. Provided the transactions herein contemplated are
consummated and become effective in accordance with the terms hereof, Company
shall reimburse Purchaser for the amount (the "Interest Differential") by which
the aggregate interest paid by Purchaser to borrow the Purchase Price (at a per
annum rate of 7.069%), for the period beginning upon the deposit of the Purchase
Price into the Escrow Account (as defined in the Purchase Price Escrow
Agreement) until the Effective Time, exceeds the amount of the Purchaser Accrued
Income (as defined in the Purchase Price Escrow Agreement). Company shall
reimburse Purchaser for the Interest Differential by wire transfer of
immediately available funds within fifteen (15) days of receipt by Company of
Purchaser's calculation of the Interest Differential (the "Differential
Calculation"). The Differential Calculation shall be set forth with sufficient
detail, and shall include all supporting documentation, as is necessary for
Company to confirm the accuracy of the Differential Calculation.
2.07 ADJUSTMENT. The Purchase Price will be adjusted as follows (the
"Purchase Price Adjustment"):
(a) Within ninety (90) days after the Effective Time, Company
will deliver to Purchaser the Closing Balance Sheet (accompanied by
Company's determination of the Purchase Price Adjustment). Purchaser
agrees to make its employees promptly available to Company, and such
employees shall provide prompt assistance to Company, to assist Company
in the preparation of the Closing Balance Sheet. Purchaser will have
thirty (30) days from receipt of the Closing Balance Sheet to object to
the
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Closing Balance Sheet by written notice to Company. If Company does not
receive notice of an objection within such time, the Closing Balance
Sheet prepared by Company will be final and binding on the parties. If
Purchaser timely notifies Company of an objection, the parties will
have thirty (30) days from the date of Purchaser's notice to resolve
the objection. If the parties do not resolve the objection within such
time, either Company or Purchaser may submit the dispute to an
accounting firm selected by Company from the list of Ernst & Young,
LLP, Coopers & Xxxxxxx, LLP, KPMG Peat Marwick, LLP, and Price
Waterhouse, LLP (the "Independent Auditors") for resolution, and such
resolution will be final and binding on the parties. The fees and
expenses of the Independent Auditors will be borne by Company and
Purchaser in proportion to the respective differences between their
positions submitted to the Independent Auditors and the final
determination of the Independent Auditors.
(b) The Purchase Price will be reduced dollar-for-dollar by the
amount the Acquired Net Book Value on the Closing Balance Sheet is less
than the Acquired Net Book Value on the Adjusted 9/30/96 Balance Sheet.
The Purchase Price will be increased dollar-for-dollar by the amount
the Acquired Net Book Value on the Closing Balance Sheet is greater
than the Acquired Net Book Value on the Adjusted 9/30/96 Balance Sheet.
(c) If there is a Purchase Price Adjustment pursuant to this
Section, within ten (10) days after final determination of the
adjustment (whether by Purchaser's failure to object, agreement of the
parties or determination by the Independent Auditors), Company or
Purchaser, as applicable, will pay the applicable amount by wire
transfer of immediately available funds.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Purchaser as of the date hereof, as
follows:
3.01 ORGANIZATION AND RECORDS.
(a) Company is a corporation duly organized, validly existing,
and in good standing under the laws of the State of California and has
all requisite corporate power and authority to own, lease and operate
its properties, including the Assets, and conduct the Business as now
conducted. Company has qualified to do business and is in good standing
in the States of California and the States listed on Schedule 3.01.
(b) The copies of the Articles of Incorporation, Bylaws, Minute
Books of all directors' and shareholders' meetings, and stock records
and transfer books previously delivered to Purchaser were complete and
correct in all material respects as of the date of such delivery and as
of the date hereof.
(c) Company does not own any equity interest, directly or
indirectly, in any other entity.
3.02 AUTHORITY AND CONFLICTS.
(a) Company has all requisite power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by Company of this
Agreement and the performance by Company of the obligations undertaken
by Company herein have been duly authorized by all necessary actions of
Company. This Agreement is a binding, valid and enforceable agreement
and obligation of Company.
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(b) Except as set forth on Schedule 3.02, the execution and
delivery of this Agreement and consummation of the transactions
contemplated hereby will not result in any violation of or default
under (with or without notice, lapse of time or both), nor is any
consent or approval required to avoid the default under or violation of
(with or without notice, lapse of time or both), any term or provision
of Company's Articles of Incorporation or Bylaws, or any Existing
Agreement, or any judicial or administrative decree, judgment or order
to which Company is a party or by which Company or the Assets are
bound, nor will such execution, delivery or consummation give any
governmental or administrative body or other person the right to
challenge any of the transactions contemplated by this Agreement under
any Applicable Law, or violate, contravene or conflict with or give any
governmental or administrative body the right to revoke, withdraw,
suspend, cancel, terminate or modify any Governmental Authorization.
3.03 FINANCIAL STATEMENTS. Company has furnished to Purchaser prior to
the execution of this Agreement unaudited financial statements, consisting of a
balance sheet as of September 30, 1996 and a statement of income for the nine
(9) months then ended, and a balance sheet and a statement of income and
retained earnings for Company's fiscal year ended December 31, 1995, all of said
statements and related documents attached thereto having been prepared by
Company. (All of the aforementioned financial statements are hereinafter
referred to as the "Financial Statements"). The Financial Statements have been
prepared from Company's books and records in accordance with GAAP, and fairly
present the financial position of Company or results of operation of Company, as
of the respective dates or periods, as applicable. Except for (a) the
liabilities of Company disclosed or reserved against in the 9/30/96 Balance
Sheet, (b) liabilities incurred by Company in the Ordinary Course of Business
since September 30, 1996, and (c) executory obligations under agreements,
Company does not have any liability or obligation, accrued, absolute, contingent
or otherwise that GAAP would require be disclosed or reserved against.
3.04 ABSENCE OF CERTAIN CHANGES. Since September 30, 1996, there have
not occurred any changes or events which, alone or in the aggregate, have had or
may reasonably be expected to have a material and adverse effect on the
Company's financial position, the Assets or the Business. Except as set forth on
Schedule 3.04, to Company's knowledge since September 30, 1996 none of Company's
top fifty (50) customers (based on sales for the prior calendar year) have
indicated an intention to discontinue or otherwise materially reduce their total
volume of purchases from Company.
3.05 MACHINERY, EQUIPMENT, FURNITURE, TANGIBLE PERSONAL PROPERTY.
Company has good and marketable title to the machinery, equipment, furniture and
tangible personal property included in the Assets, free and clear of any Liens,
except for (i) the matters, if any, set forth in Schedule 3.05 or Schedule
1.01(d), or (ii) Liens, if any, which do not materially detract from the value
of the Assets subject thereto.
3.06 REAL PROPERTY. The list of Real Property and interests in Real
Property included on Schedule 3.06(a) is a correct and complete list of all Real
Property owned by Company or in which Company has an interest, except for Real
Property included as part of the Excluded Assets. Company has good and
marketable title in fee simple to the Real Property free and clear of any Liens,
except as set forth on Schedule 3.06(b) or Schedule 1.01(d).
3.07 MATERIAL LEASES, CONTRACTS, PERMITS AND AGREEMENTS. The leases,
contracts and agreements listed on Schedule 3.07(a) (hereinafter referred to
collectively as the "Existing Agreements") include, as of the date hereof, all
of the leases, contracts, and agreements of Company that are material to any of
the Products and Services or the Business of the Company ("material", solely for
the purposes of this Section 3.07, is defined as (a) related to any of the
Products and Services or the Business and (b) both not cancelable without
penalty on 30 days or less notice and involving the future expenditure of at
least $5,000 or, if a
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contract with a customer of Company, involving any of the top 200 customers by
volume of sales in calendar year 1995. True and correct copies of the Existing
Agreements have been made available by Company to Purchaser; and true and
correct copies of all instruments entered into after the date hereof which
would, had they been in effect on the date hereof, be Existing Agreements, will
be made available by Company to Purchaser promptly upon the execution thereof
(such future instruments are hereinafter referred to as the "Future Agreements",
and Existing Agreements and Future Agreements are herein referred to
collectively as "Corporate Agreements"). Except as set forth on Schedule
3.07(b), the Existing Agreements are all valid and existing agreements and have
not been modified or amended. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will terminate, vary or
constitute (with or without notice, lapse of time or both) a breach of any of
the Corporate Agreements, other than as set forth on Schedule 3.07(b), which
Schedule also identifies those Corporate Agreements that shall require a consent
to assignment hereunder (collectively, the "Consent Required Agreements"). There
has not occurred any default by Company under any of the Corporate Agreements
and there has not occurred any event which with or without notice, lapse of time
or both would constitute a default by Company under any Corporate Agreement.
3.08 INTANGIBLE PERSONAL PROPERTY.
(a) Company has received no notice of infringement (and, to
Company's Knowledge, no such infringement has occurred) or other
complaint that its Business, Products and Services, or operations
infringe the rights of others under patents, trademarks, trade names,
copyrights, trade secrets, licenses or otherwise. Except as set forth
on Schedule 3.08(a), Company owns all right, title and interest, free
and clear of all Liens, in and to each of the Intellectual Property
Intangibles included in the Assets that is material to the Business
(except for the "Software", as defined in Section 3.08(b) below), and
Company has the right to use without payment to a third party all
Intellectual Property Intangibles used in the Business and not included
in the Assets (except for commonly available software programs with a
value or license fee of less than $500).
(b) With respect to all software that is included in the Assets
and that was used by the Company in the Business (collectively, the
"Software"), and that was used at any time by Company prior to the
Effective Time, either (a) the Company owned all right title and
interest in and to such Software or (b) Company had all necessary
rights to use the Software in the manner so used. Company has, and,
upon consummation of the transactions contemplated by this Agreement,
Purchaser will have, all right, title and interest, free and clear of
all Liens (subject, however, to the terms, conditions and provisions of
those licenses identified in Schedule 3.08(b)), to all Software,
provided the Software is used consistent with its "Current Use" (as
defined below). For the purposes of this Section 3.08(b), "Current Use"
shall mean use of the Software in a manner consistent with, and
substantially similar to, the manner of use in which the Software is
currently employed or utilized by Company in connection with the
Business (the representation set forth in this Section 3.08(b) is
referred to herein as the "Software Representation.")
3.09 LEGAL PROCEEDINGS. Except as set forth on Schedule 3.09, there are
no claims, actions, suits, proceedings or investigations pending or currently
threatened before any Federal, state, municipal, or other court, governmental
body, or arbitration tribunal, against Company, which, if adversely determined,
would materially adversely affect the Business or any of the Products and
Services or financial condition of Company. There is no order, decree or
judgment of any kind in existence enjoining or restraining Company, its
directors, officers, or employees or requiring any of them to take any action of
any kind.
3.10 EMPLOYMENT AGREEMENTS AND LABOR DISPUTES; EMPLOYEES. Except as set
forth on Schedule 3.10(a), there are no collective bargaining agreements
covering any employees of Company nor are there any written contracts of
employment between any employee and Company. To the Company's knowledge, no
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unfair labor practice complaint against Company is pending before the National
Labor Relations Board. Schedule 3.10(b) sets forth a complete list of all
employees of the Company, including each employee's date of hire and current
compensation. Schedule 3.10(c) sets forth the severance policies for all persons
subject to Assumed Severance, as defined in Schedule 2.05(a).
3.11 NO VIOLATION OF LAW. To the knowledge of the Company, and except
as set forth on Schedule 3.11, Company is not, has not been, and will not be in
violation of any Applicable Law, where such violation may have a material
adverse effect on any of the Products and Services, the financial condition of
the Company, or the Business currently conducted by Company or prohibit Company
from consummating the transactions contemplated hereby.
3.12 INSURANCE POLICIES. Schedule 3.12 sets forth a complete and
accurate list and description of all insurance policies and self insurance
arrangements related to the Business that are in force or for which Company has
paid or is obligated to pay all or part of the premiums (other than policies or
arrangements related to employee benefit plans). Company has made available to
Purchaser true, correct and complete copies of each of the policies listed on
Schedule 3.12. To Company's Knowledge, no claims are pending under any of such
policies or arrangements and, to Company's knowledge, no events have occurred
which would give rise to a right to pursue a claim under any such policy or
arrangement. To the Company's knowledge, there are no outstanding requirements
or recommendations by any current insurer or underwriter with respect to the
Assets or the Business or any of the Products and Services which requires or
recommends changes in the conduct of the Business or the manufacture or
rendering of any of the Products and Services or requires any repairs or other
work to be done with respect to any of the Assets.
3.13 AGREEMENTS IN FULL FORCE AND EFFECT. Except as expressly set forth
in Schedule 3.13, all material contracts and agreements referred to, or required
to be referred to, herein or in any Schedule delivered hereunder are valid and
binding, and are in full force and effect and are enforceable in accordance with
their terms, except to the extent that the validity or enforceability thereof
may be limited by bankruptcy, insolvency, reorganization and other similar laws
affecting creditors' rights generally and general principles of equity.
3.14 SURVIVAL. All representations and warranties made by Company shall
survive the Effective Time for a period of one (1) year only; provided, however,
that (i) the Software Representation shall survive the Effective Time for a
period of three (3) years, and (ii) if notice of a claim for indemnification
under Article IX with respect to the breach of any representation or warranty is
provided to the Company prior to the end of the applicable period, the
applicable representation or warranty shall survive until the related claim for
indemnification has been finally resolved.
3.15 GOVERNMENTAL AUTHORIZATIONS. Except as set forth on Schedule 3.15,
Company has obtained all Governmental Authorizations required in connection with
the Business or the ownership or operation of any of the Assets.
3.16 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 3.16 or
with respect to Excluded Assets, and to Company's knowledge, (i) Company has no
Environmental Liability, nor (ii) has it caused, taken, suffered or failed to
take any action that has resulted in or is likely to result in any Environmental
Liability. Company has made available to Purchaser all material studies,
analyses, and test results in Company's possession relating to the environmental
condition of, on or under any Facility.
3.17 OTHER ASSETS. Except as set forth on Schedule 3.17, the Company
does not use any assets which are material, alone or in the aggregate, to the
conduct of the Business and which are not included in the Assets.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Company as follows:
4.01 ORGANIZATION. Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of Ohio and is qualified to do
business and is in good standing within the State of Ohio.
4.02 AUTHORITY AND CONFLICTS.
(a) Purchaser has all requisite corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery by
Purchaser of this Agreement and the performance by Purchaser of the
obligations undertaken by Purchaser herein have been duly authorized by
all necessary action of Purchaser. This Agreement is a binding, valid
and enforceable agreement and obligation of Purchaser.
(b) The execution and delivery of this Agreement and
consummation of the transactions contemplated hereby will not result in
any violation of or default under (with or without notice, lapse of
time or both), nor is any consent or approval required to avoid the
default under or violation of (with or without notice, lapse of time or
both), any term or provision of Purchaser's Articles of Incorporation
or Bylaws, or any indenture, mortgage, deed to secure debt, security
agreement, loan agreement or other agreement to which Purchaser is
party or by which Purchaser is bound, or any judicial or administrative
decree, judgment or order to which Purchaser is a party or by which
Purchaser is bound, nor will such execution, delivery or consummation
give any governmental or administrative body or other person the right
to challenge any of the transactions contemplated by this Agreement
under any Applicable Law.
4.03 PURCHASER'S INDUCEMENT. In entering into this Agreement, Purchaser
represents and warrants that it has not been induced nor has Purchaser relied
upon any representations, warranties or statements of Company, or any of the
officers, directors, agents or representatives of Company (including, without
limitation, any representations, warranties or statements made in the
Descriptive Memorandum supplied to Purchaser), not set forth in this Agreement,
whether or not such representations, warranties or statements have actually been
made in writing or orally, relating to (a) the earnings, the Assets, net worth,
properties, prospects, business, profits or condition of the Company, (b) the
status of the relationships of the Company with its customers and suppliers, or
(c) any other matter.
4.04 FINANCING. Purchaser has available to it on the date of execution
of this Agreement, and will have at the Closing, sufficient immediately
available funds in cash or pursuant to credit agreements, to enable Purchaser to
pay the Purchase Price and to effect the consummation of the transactions
described herein.
4.05 SURVIVAL. All representations and warranties made by Purchaser
shall survive the Effective Time for a period of one (1) year only; provided,
however, that if notice of a claim for indemnification under Article IX with
respect to the breach of any representation or warranty is provided to Purchaser
prior to the end of such period, the applicable representation or warranty shall
survive until the related claim for indemnification has been finally resolved.
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ARTICLE V
CLOSING CONDITIONS
5.01 CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION. The obligation of
Purchaser to purchase the Assets, and to assume the Assumed Liabilities, is
subject to the satisfaction on and as of the Closing Date of each of the
following conditions:
(a) Purchaser shall have received from Company all materially
required consents by all parties in interest to assignments of (i) the
Consent Required Agreements identified on Schedule 3.07(b) and (ii) all
Future Agreements with respect to which a consent to assignment as
contemplated herein is required and that are designated by Purchaser as
being subject to this Section 5.01(a) by notice from Purchaser to
Company within five (5) business days after receipt of copies of such
Future Agreements by Purchaser, except, in either case, where the
failure to obtain any such consent would not alone, or in the
aggregate, have a material and adverse effect on the Business, the
Products and Services, or use of the Assets after the Closing Date.
(b) There shall not exist any inaccuracies in the
representations and warranties of Company contained herein that, in the
aggregate, has or is reasonably likely to have a material adverse
effect on Purchaser; Company shall have complied with all material
obligations, covenants and conditions required to be complied with by
it pursuant hereto on or prior to the Closing Date; and Purchaser shall
have received a certificate of the President of Company, dated the
Closing Date, to such effect;
(c) No action, suit, proceeding or investigation by or before
any court, administrative agency or other governmental authority shall
have been instituted to restrain, prohibit or invalidate any of the
transactions contemplated by this Agreement;
(d) All governmental authorizations, consents and approvals
necessary for the valid consummation of the transactions contemplated
hereby shall have been obtained and shall be in full force and effect.
All applicable governmental pre-acquisition filing, information
furnishing and waiting period requirements, including expiration of all
applicable waiting periods pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended ("H-S-R"), shall have been met or
such compliance shall have been waived by the governmental authority
having authority to grant such waivers;
(e) Company shall not have made any assignment for the benefit
of creditors nor shall a receiver, liquidator, or trustee of Company or
any of its property have been appointed, nor shall any voluntary or
involuntary petition for bankruptcy, reorganization, or arrangement of
Company pursuant to the Federal Bankruptcy Act, or any similar statute,
have been filed;
(f) Company shall have delivered opinions of counsel in form
and substance reasonably satisfactory to Purchaser and its counsel and
containing the opinions identified in Exhibit 5.01(f);
(g) Xxxxxx 1000, Inc. will have executed a supply agreement
with Purchaser in substantially the form of Exhibit 5.01(g);
(h) Company shall have delivered a certificate of incumbency
executed by the president and secretary of the Company;
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(i) Company shall have delivered to Purchaser a certificate
executed by a duly authorized officer of Company containing copies of
the resolutions duly adopted by the board of directors and shareholder
of Company approving and authorizing this Agreement and its
consummation (such officer will also certify that such resolutions have
not been revoked or modified and remain in full force and effect); and
(j) Company and American Business Products, Inc. ("ABP") shall
have executed a covenant not to compete with Purchaser in substantially
the form of Exhibit 5.01(j);
(k) Company and its counsel shall have executed the Closing
Deliveries Escrow Agreement; and
(l) Company and Bank shall have executed the Purchase Price
Escrow Agreement.
In case any of the foregoing conditions shall not be fulfilled
at or before the Closing Date, Purchaser may rescind this Agreement by notice to
Company, and in such event Purchaser shall be released from all obligations
hereunder; provided, however, that any of the said conditions may be waived in
whole or in part by Purchaser without prejudice to its rights of rescission in
the event of the non-fulfillment of any other condition or conditions, any such
waiver to be binding on Purchaser only if such waiver is in writing.
5.02 CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS. The obligations of
Company to sell and convey the Assets and to transfer the rights to be
transferred pursuant to this Agreement, are subject to the satisfaction on and
as of the Closing Date of each of the following conditions:
(a) There shall not exist any inaccuracies in the
representations and warranties of Purchaser contained herein that, in
the aggregate, has or is reasonably likely to have a material adverse
effect on Company; Purchaser shall have complied with all material
obligations, covenants and conditions required to be complied with by
it pursuant hereto on or prior to the Closing Date; and Company shall
have received a certificate of the President of the Purchaser, dated
the Closing Date, to such effect; and
(b) The conditions precedent contained in Sections 5.01(c),
(d) and (e) hereof shall have been satisfied;
(c) Purchaser shall have delivered an opinion of counsel in
form and substance reasonably satisfactory to Company and its counsel
and containing the opinions identified in Exhibit 5.02(c);
(d) Purchaser shall have delivered a certificate of incumbency
executed by the president or an authorized vice president and secretary
or an authorized assistant secretary of Purchaser;
(e) Purchaser shall have delivered to Company a certificate
executed by a duly authorized officer of Purchaser containing copies of
the resolutions duly adopted by the board of directors of Purchaser
approving and authorizing this Agreement and its consummation. Such
officer will also certify that such resolutions have not been revoked
or modified and remain in full force and effect;
(f) Purchaser and Bank shall have executed the Purchase Price
Escrow Agreement; and
(g) Purchaser and its counsel shall have executed the Closing
Deliveries Escrow Agreement.
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In case any of the foregoing conditions shall not be fulfilled
at or before the Closing Date, Company may rescind this Agreement by notice to
Purchaser, and in such event Company shall be released from all obligations
hereunder; provided, however, that any of the said conditions may be waived in
whole or in part by Company without prejudice to its rights of rescission in the
event of the non-fulfillment of any other condition or conditions, any such
waiver to be binding on Company only if such waiver is in writing.
5.03 BEST EFFORTS. Each of the parties hereto covenants and agrees to
use its best efforts to effect the transactions contemplated in this Agreement
including, without limitation, using its best efforts to cause the satisfaction
of all conditions precedent in this Article V.
ARTICLE VI
ADDITIONAL COVENANTS
6.01 COMPANY'S RESPONSIBILITIES DURING EXECUTORY PERIOD. From the date
hereof and at all times pending the earlier of (i) the actual Effective Time, or
(ii) the termination of this Agreement, Company covenants and agrees that:
(a) Company will operate Company's business in the Ordinary
Course of Business, consistent with the exercise of reasonable business
judgment and will not enter into any Future Agreement, other than in
the Ordinary Course of Business, without the prior written consent of
Purchaser;
(b) Company will endeavor, consistent with the exercise of
reasonable business judgment, to continue the employment of all key
employees of Company in their present positions upon the same terms and
conditions, and to maintain all present relationships with suppliers,
customers, and others having business relations with Company;
(c) At all times prior to the Closing, Purchaser and its
attorneys, accountants, inspectors, representatives, and agents shall
be given full access, including the right to copy all relevant
documents during normal business hours, to the Assets, all other
properties, books, accounts and records pertaining to the Assets or the
Business and all data, information and documents concerning the
business, finances, properties, organization and ownership of Company
that they may request, provided that (i) Purchaser shall not disrupt
the normal business routine of Company and (ii) Purchaser shall keep
all information obtained from such investigation strictly confidential
as provided herein; provided, however, that Purchaser may disclose such
information as may be required by its lenders, and by any relevant
governmental agency or body. Company shall use reasonable efforts to
assist Purchaser and such representatives in such investigation and in
obtaining for Purchaser full access to third parties with whom Company
has agreements or business dealings relevant hereto and access to
documents and records in connection with such dealings; and
(d) Company will furnish to Purchaser (i) all financial
statements of Company, including internal monthly and quarterly data,
for all periods subsequent to the date of this Agreement, promptly upon
the final preparation of such statements, and (ii) revised Schedules if
any matter subsequently arises or is discovered which, if existing or
known at the date of this Agreement, would have been required to be set
forth or listed in a Schedule. Any such supplemental disclosure will be
deemed to have been disclosed as of the date of this Agreement if
Purchaser proceeds with the Closing following receipt of such
supplemental disclosure.
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6.02 CONFIDENTIALITY. In connection with this Agreement the parties may
have access to information which is nonpublic, confidential or proprietary in
nature. All of such information, in whole or in part, together with any
analyses, compilations, studies or other documents prepared by any party, which
contain or otherwise reflect any such information is hereinafter referred to as
the "Information." Each party hereby agrees that the Information will be kept
confidential and shall not, without the prior mutual written consent of the
parties, be disclosed, in any manner whatsoever, in whole or in part, and shall
not be used by any party following the termination of this Agreement. Each party
agrees to transmit the Information only to its respective employees and
representatives who need to know the Information and who shall agree to be bound
by the terms and conditions of this Agreement. In any event, each party shall be
responsible for any breach of this Agreement by its respective employees or
representatives, and each party agrees to keep a record of the location of the
Information. If the transactions contemplated hereunder are not consummated, the
Information, except for that portion of the Information which consists of
analyses, compilations, studies or other documents prepared by each party's
respective employees and representatives, will be returned to the other promptly
upon request and no party shall retain any copies (except that the returning
party may retain a list of those items so returned). That portion of the
Information, and all copies thereof, which consists of analyses, compilations,
studies or other documents prepared by each party's respective employees and
representatives will be subject to the terms of this Agreement and promptly
destroyed. In the event any party becomes legally compelled to disclose any of
the Information, such party will provide to the other parties prompt notice so
that each other party may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this Agreement. In the event that
such protective order or other remedy is not obtained, or compliance with the
provisions of this Agreement is waived, a party will furnish only that portion
of the Information which is legally required, and to the extent requested by the
other party, will exercise its best efforts to obtain a protective order or
other reliable assurance that confidential treatment will be accorded the
Information. The term "Information" does not include information which (i) was
known to any party about another party prior to its disclosure, provided that
such information, to the knowledge of the receiving party, was lawfully obtained
or developed, (ii) becomes generally available to the public other than as a
result of a disclosure by a party in violation of this Agreement, or (iii)
becomes available from a source other than a party to this Agreement, if to the
knowledge of the receiving party, the source is not bound by a confidentiality
agreement and such source lawfully obtained such information. Notwithstanding
the foregoing, Company shall, on a post-Closing basis, continue to have access
to the Information that was supplied to Purchaser by Company or at Company's
direction or request, as reasonably necessary to Company, and Company may
maintain copies of all current or historical records of Company.
6.03 XXXX-XXXXX-XXXXXX NOTIFICATION. Company and Purchaser shall each
promptly prepare and file a notification with the United States Justice
Department (the "Justice Department") and the Federal Trade Commission (the
"FTC"), as required by H-S-R. Company and Purchaser shall cooperate with each
other in connection with the preparation of such notifications, including
sharing information concerning sales and ownership and such other information as
may be needed to complete such notification, and providing a copy of such
notification to the other prior to filing. Each of Company and Purchaser shall
keep all information about the other obtained in connection with the preparation
of such notification confidential pursuant to Section 6.02 above. Company and
Purchaser shall evenly divide between them the filing fees required under the
regulations promulgated pursuant to H-S-R. In the event Company and Purchaser
shall receive a request for additional information or documentary material from
the Justice Department or the FTC, (i) Company shall be primarily responsible
for responding to such request, and (ii) Purchaser shall not respond to such
request or furnish any additional information or documentary material without
first notifying Company in writing.
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ARTICLE VII
POST-CLOSING COVENANTS
7.01 TAXES AND ASSESSMENTS.
(a) Company shall be responsible for the payment of the
following:
(i) all federal, state and other Taxes imposed
upon Company's net income from the
transactions contemplated hereunder
(including but not limited to federal Taxes
based upon depreciation recapture and
federal Taxes based upon the recapture of
investment tax credit);
(ii) Taxes payable by Company on gross income
from the sale of the Assets to the Purchaser
hereunder;
(iii) any penalties, interest, or similar charges
with respect to the Taxes enumerated in this
Section; and
(iv) any other Taxes due or to become due from or
with respect to the Company, its assets or
its operations, except those Taxes described
in Section 7.01(b).
(b) Purchaser shall be responsible for the payment of the
following:
(i) all sales and use Taxes imposed on the
purchase, sale, use or transfer of property
by Company as a result of the Closing;
(ii) realty transfer Taxes imposed on the
conveyance of the Real Property, as well as
any filing or recording fees or mortgage
taxes applicable to such transfer; and
(iii) all General Taxes assessed or incurred with
respect to the period after the Effective
Time. In the event any such Taxes are
assessed or incurred for a period both
before and after the Effective Time, the
liability for the applicable Taxes will be
pro rated between Purchaser and the Company.
(c) In the event any deficiencies are assessed or refunds made
with respect to any of the Taxes provided for in this Section 7.01,
deficiencies shall be the responsibility of, or refunds shall be paid
to, the party having the responsibility for the payment of the Tax
pursuant to this Section 7.01.
7.02 DAMAGE TO CERTAIN FACILITIES. Company covenants and agrees that it
shall reimburse Purchaser for all expenses actually incurred by Purchaser to
repair damage existing on the date hereof to the Company's facilities located in
Livermore, California and Ontario, California to the extent Purchaser repairs
the physical structure of the such facilities. Purchaser shall provide Company
with access to its engineers and any engineering reports generated in support of
the necessity of the foregoing repairs, if any. To facilitate such repairs, the
parties have agreed to follow the following steps:
(a) On or before February 28, 1997, Purchaser will submit to
Company for its approval (which will not be unreasonably withheld) a
proposal identifying the scope of the repairs. Company will indicate
its approval or rejection of the proposal within ten (10) days after
receipt. If Company rightfully rejects the proposal, the parties will
promptly repeat this process until approval of a proposal
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has been obtained. The proposal so approved is referred to in this
Agreement as the "Approved Proposal."
(b) Once the Approved Proposal has been identified, Purchaser
will submit to Company for approval (which will not be unreasonably
withheld) a contract to perform the repairs pursuant to the Approved
Proposal. Company will indicate its approval or rejection of the
proposal within ten (10) days after receipt. If Company rightfully
rejects the contract, the parties will promptly repeat this process
until approval of a contract has been obtained. The contract so
approved is referred to in this Agreement as the "Approved Contract."
(c) Company shall promptly reimburse Purchaser from time to
time upon request for amounts actually expended by Purchaser pursuant
to the Approved Contract.
ARTICLE VIII
CASUALTY AND CONDEMNATION
8.01 CASUALTY. The risk of any loss, or damage or destruction to any of
the Assets from fire or other casualty or cause shall be borne by Company at all
times prior to the Effective Time. Upon the occurrence of any material loss or
damage to any of the material Assets as a result of fire, casualty or other
causes prior to the Effective Time ("Affected Assets"), Company shall
immediately notify Purchaser of the same in writing, stating with particularity
the extent of loss or damage incurred, the cause thereof, if known, and the
extent to which restoration, replacement and repair of the Affected Assets lost
or destroyed will be reimbursed under any insurance policy with respect thereto.
Purchaser shall have the option, exercisable within ten (10) days after receipt
of such notice from Company to take one of the following courses of action (and
the Closing Date and the Effective Time will be extended if necessary to provide
such a ten (10) day period):
(a) Postpone the Effective Time (and the Closing if it has not
occurred) until such time as such Affected Assets have been completely
repaired, replaced or restored by Company (provided, however, that in
the event the loss or damage incurred with respect to the Affected
Assets less the insurance proceeds with respect to such Affected Assets
exceeds $5,000,000.00, Purchaser may not elect this option without the
agreement of Company failing which Purchaser may exercise its rights
under clause (c) of this Section 8.01); or
(b) Elect to maintain the Effective Time then in effect (and to
consummate the Closing if it has not already occurred) and accept the
Affected Assets in their "then" condition, in which event Company shall
assign to Purchaser all rights under any insurance claim covering the
loss and pay over to Purchaser any proceeds under any such insurance
policy theretofore received by Company with respect thereto; or
(c) Decline to close, or, if the Closing has occurred, to
rescind the Closing, but only if loss or damage exceeds twenty percent
(20%) of the Purchase Price. If Purchaser so elects, this Agreement
shall be terminated and the parties hereto shall have no further
rights, duties or obligations hereunder.
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8.02 CONDEMNATION. If prior to the Effective Time any of Company's Real
Property shall have been taken by condemnation in any proceeding by a public
authority or other body vested with the power of eminent domain or shall have
been acquired by a public or quasi-public body for public purposes, or if
condemnation proceedings therefor shall have been instituted, Company shall give
Purchaser prompt notice of such occurrence. If such condemnation takes, or
proposes to take, all of Company's Real Property, Purchaser may cancel this
Agreement by giving Company notice to such effect within ten (10) days after
Company's notice to Purchaser of such occurrence, with the date of the Closing
(and/or the Effective time, as applicable) to be extended, if necessary, to
provide such a ten (10) day period. If Purchaser shall so elect to cancel this
Agreement, the parties hereto shall have no further rights, duties, or
obligations hereunder. If the taking or proposed taking does not include all of
Company's Real Property, but includes such portion of Company's Real Property as
shall, in Purchaser's reasonable judgment, materially and substantially
interfere with Purchaser's intended uses of the Assets, then Purchaser may
cancel this Agreement by giving the Company written notice to such effect within
ten (10) days after receipt of the Company's notice of such occurrence, with the
date of the Closing to be extended, if necessary, to provide such ten (10) day
period. If Purchaser shall so elect, this Agreement shall be terminated and the
parties hereto shall have no further rights, duties, or obligations hereunder.
If this Agreement is not terminated as provided above, this Agreement shall
remain in full force and effect and the purchase contemplated herein, less any
portion of the Company's Real Property taken by eminent domain or condemnation,
or sold in lieu thereof, shall be consummated without reduction of the Purchase
Price. In such event, the Company shall, at the Closing, assign, transfer, and
set over unto Purchaser all of the Company's right, title and interest in and to
any awards or proceeds paid or payable for such taking or sale in lieu thereof.
ARTICLE IX
INDEMNIFICATION
9.01 AGREEMENT TO INDEMNIFY.
(a) Subject to the terms and conditions set forth herein, from
and after the Effective Time, Company shall indemnify and hold harmless
Purchaser from and against all liability, assessments, losses, charges,
costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) (collectively "Damages") incurred by the
Purchaser as a result of or arising out of (i) a breach of any
representation or warranty made by Company in this Agreement when made
or at and as of the Effective Time as though such representation and
warranty were made at and as of the Effective Time, and (ii) any breach
of or noncompliance by Company of any covenant or agreement made by
Company and contained in this Agreement which are not waived by the
Purchaser prior to Closing.
(b) Subject to the terms and conditions hereof, from and after
the Effective Time, Purchaser shall indemnify and hold harmless Company
from and against all Damages incurred by Company as a result of or
arising out of (i) a breach of any representation or warranty made by
Purchaser in this Agreement when made or at and as of the Effective
Time as though such representation or warranty were made at and as of
the Effective Time, or (ii) any breach or noncompliance by Purchaser
with any covenant or agreement made by Purchaser and contained in this
Agreement which are not waived by the Company prior to Closing.
(c) The parties agree that a Purchase Price Adjustment will
not be subject to this Article IX.
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9.02 LIMITATIONS OR INDEMNIFICATION. Each party's obligation to
indemnify the other pursuant to this Article IX hereof is subject to the
following limitations:
(a) Except as provided in the sentence immediately following
this sentence, no indemnification shall be made unless the aggregate
amount of Damages incurred by the party seeking indemnification exceeds
$500,000 and, in such event, indemnification shall be made only for the
aggregate amount of Damages incurred by the party seeking
indemnification in excess of $250,000 (collectively, the "Claim
Limitations"). Notwithstanding the preceding sentence: (i) Company's
indemnification obligations for the Specific Excluded Liabilities (as
defined in Schedule 2.05(b)) shall not be subject to the Claim
Limitations and indemnification shall be made for all related Damages
from the first dollar; (ii) Company's indemnification obligations for
the Environmental Liabilities other than the Specific Excluded
Liabilities and Off-Site Liabilities shall not be subject to the Claim
Limitations and indemnification shall be made for fifty percent (50%)
of all related Damages from the first dollar; (iii) Purchaser's and
Company's indemnification obligations for their respective obligations
under the "employee matters" letter among ABP, Company and Purchaser
dated as of the date of Closing and the form of which is attached
hereto as Exhibit 9.02 shall not be subject to the Claim Limitations
and indemnification shall be made for all related Damages from the
first dollar; (iv) Purchaser's indemnification obligations for the
Assumed Liabilities shall not be subject to the Claim Limitations and
indemnification shall be made for all related Damages from the first
dollar; and (v) Company's indemnification obligations for any breach or
inaccuracy of the Software Representation shall not be subject to the
Claim Limitations and indemnification shall be made for all related
Damages from the first dollar.
(b) In no event shall Company's aggregate obligation to
indemnify Purchaser or Purchaser's aggregate obligation to indemnify
Company exceed the Purchase Price;
(c) The amount of any Damages shall be reduced by any amount
actually received by the party seeking indemnification with respect
thereto under any insurance coverage or from any other party alleged to
be responsible therefor, less all related costs and expenses, including
reasonable attorneys' fees and expenses (the "Net Third Party
Recovery"). The party seeking indemnification shall use reasonable
efforts (at the expense of the indemnifying party, which expenses shall
be reimbursed as incurred if requested by the party seeking
indemnification) to collect any amounts available under such insurance
coverage and from such other party alleged to have responsibility;
provided, that the party seeking indemnification shall not have any
obligation to exhaust any of its remedies under any such insurance
coverage or against any such other party or to collect any amounts from
either source as a condition to the indemnifying party's obligation to
pay any Damages under this Article IX. Accordingly, if the party
seeking indemnification receives an amount under insurance coverage or
from such other party with respect to a matter for which the
indemnifying party has previously paid all Damages which it was
obligated to pay under this Article IX (assuming no such subsequent Net
Third Party Recovery), then the party seeking indemnification shall
reimburse the indemnifying party from such subsequent Net Third Party
Recovery in an amount equal to the lesser of the Net Third Party
Recovery or the Damages actually paid by the indemnifying party
(exclusive of amounts paid as reimbursement of expenses incurred by the
party seeking indemnification in connection with obtaining the Net
Third Party Recovery).
(d) Each party shall be obligated to indemnify the other party
only for those Damages as to which the party seeking indemnification
has given the party from whom indemnification is sought written notice
thereof within the time requirements set forth in Section 9.03 hereof.
Any claim which is not timely asserted in the manner specified herein
shall be void to the extent of any resulting prejudice to the
indemnifying party from such delay. Any written notice delivered by
either party
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hereto to the other with respect to Damages shall set forth with as
much specificity as is reasonably practicable the basis of the claim
for Damages and, to the extent reasonably practicable, a reasonable
estimate of the amount thereof. In addition, the party seeking
indemnification shall provide such information and documentation as may
be reasonably requested by the party from whom indemnification is
sought to support and verify the claim asserted; and
(e) Neither party hereto shall in any case be obligated to
indemnify the other party hereto with respect to any Damages incurred
as a result of any breach of any representation or warranty or
noncompliance with any covenant of any party contained in this
Agreement if the party from whom indemnification is sought can prove by
clear and convincing evidence that the party seeking indemnification
had knowledge of such breach, inaccuracy or noncompliance prior to the
Closing.
9.03 THIRD PARTY INDEMNIFICATION. The obligations of either party
hereto to indemnify the other party under this Article IX with respect to
Damages resulting from the assertion of liability by third parties (each, as the
case may be, a "Claim"), will be subject to the following terms and conditions:
(a) The party seeking indemnification will give the party from
whom indemnification is sought written notice of any such Claim within
a reasonable time (i.e., such time as will not prejudice the contest,
defense, litigation, or settlement of the Claim) after learning of such
Claim, and the party from whom indemnification is sought may at its
option undertake the defense thereof by representatives of its own
choosing (the party seeking indemnification will have the right to be
represented by counsel of its own choice and at its own expense to
participate in any defense conducted by the other party; provided that
the party seeking indemnification will be entitled to reimbursement
therefor if the other party loses its right to defend, compromise and
settle the Claim as provided below). If the party from whom
indemnification is sought fails to assume the defense of any such Claim
within 30 days after receiving notice of such Claim, the party seeking
indemnification will have the right to undertake the defense,
compromise or settlement of such claim on behalf of and for the account
and risk, and at the expense (which shall be promptly reimbursed by the
other party upon request) of the party from whom indemnification is
sought; provided, however, that as long as the party from whom
indemnification is sought is reasonably contesting any claim in good
faith and in a timely fashion the party seeking indemnification shall
not pay or settle any such claim.
(b) Anything in this Article IX to the contrary
notwithstanding, the party from whom indemnification is sought shall
not enter into any settlement or compromise of any action, suit or
proceeding or consent to the entry of any judgment (i) which does not
include as an unconditional term thereof the delivery by the claimant
or plaintiff to the party seeking indemnification of a written release
from all liability in respect of such action, suit or proceeding or
(ii) for other than monetary damages, without the prior written consent
of the party seeking indemnification, which consent shall not be
unreasonably withheld.
9.04 LIMITATION ON CLAIMS. The parties hereto intend to shorten the
statute of limitations and agree that no claims or causes of action may be
brought against either party hereto or any of their respective directors,
officers, employees, affiliates, controlling persons, agents or representatives,
based upon, directly or indirectly, any of the representations, warranties,
covenants or agreements contained herein after the first anniversary of the
Effective Time; provided, however, that such period shall be extended for claims
or causes of action related to (i) Excluded Liabilities as follows: (a)
Environmental Liabilities other than Off-site Environmental Liabilities, but
including the Excluded Liabilities identified by clause "(d)(1)" of Schedule
2.05(b) - fifth anniversary of the Effective Time; and (b) all other Excluded
Liabilities not described in the foregoing clause (a) - third anniversary of the
Effective Time, and (ii) any breach of Company's Software Representation - third
anniversary of the Effective Time.
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9.05 EXCLUSIVE REMEDY. The indemnification provided pursuant to this
Article IX shall be the sole and exclusive remedy of each party hereto for
Damages arising out of the breach of this Agreement, or any of the transactions
or other agreements or instruments contemplated or entered into in connection
herewith (including but not limited to all Exhibits attached or referenced
herein), by the other party hereto.
9.06 GUARANTY OF COMPANY'S INDEMNITY OBLIGATION. American Business
Products, Inc., a Georgia corporation and owner of all of the issued and
outstanding capital stock of Company, shall guaranty Company's indemnification
obligation under this Article IX pursuant to the Indemnification Guaranty
Agreement attached hereto as Exhibit 9.06.
ARTICLE X
MISCELLANEOUS
10.01 BULK SALES LAW. Purchaser hereby waives compliance by Company
with the provisions of the Bulk Sales Law of any state, and Company covenants
and agrees to pay and discharge when due all claims of creditors which could be
asserted against Purchaser by reason of such non-compliance to the extent that
such liabilities are not Assumed Liabilities.
10.02 RELEASE OF INFORMATION. The parties hereto agree, prior to
Closing, to cooperate in releasing information concerning this Agreement and the
transactions consummated herein. Each of the parties shall furnish to the other
drafts of all releases prior to publication, and no release of such information
shall be made other than upon the mutual agreement of the parties or as required
by law. Nothing contained herein shall prevent either party at any time from
furnishing any information to any governmental agency to the extent required by
law.
10.03 EXPENSES. Company and Purchaser shall each pay all costs and
expenses incurred by each of them, or on their behalf respectively, in
connection with this Agreement and the transactions contemplated hereby,
including fees and expenses of their own financial consultants, accountants and
counsel; provided however, that in the event of any dispute concerning this
Agreement or the transactions contemplated hereby, any court or arbiter of fact
rendering a judgment or decision with respect to such dispute hereby is
authorized and directed to award attorney's fees and all other costs or expenses
to the prevailing party.
10.04 BROKERAGE. Company hereby indemnifies and agrees to hold harmless
Purchaser, pursuant to Article IX hereof, from and against any and all Damages
arising, resulting, sustained or incurred by Purchaser by reason of any claim by
any broker, agent, finder or other person or entity based upon arrangement or
agreement made or alleged to have been made by Company in connection with the
transactions contemplated under this Agreement. Purchaser does hereby indemnify
and agree to hold harmless Company, pursuant to Article IX hereof, from and
against any and all Damages arising, resulting, sustained or incurred by Company
by reason of any claim by any broker, agent, finder, or other person or entity
based upon any arrangement or agreement made or alleged to have been made by
Purchaser in connection with the transaction contemplated under this Agreement.
10.05 ENTIRE AGREEMENT. This Agreement supersedes the Descriptive
Memorandum dated September 1996, the Confidentiality Agreement entered into
between Purchaser and Xxxx Xxxxxx Xxxxxxxx, Inc. on behalf of Vanier and that
certain letter of intent dated November 19, 1996 between Purchaser and Company.
No representation, promise, inducement, or statement of intention has been made
by Company or Purchaser which is not embodied in this Agreement or written
statements, deeds, certificates, schedules, or other documents delivered
pursuant hereto or in connection with the transactions contemplated hereby, and
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neither Company nor Purchaser shall be bound by or liable for any alleged
representation, promise, inducement, or statement of intention not so set forth.
10.06 SUCCESSORS AND ASSIGNS. Neither this Agreement nor any of the
rights or obligations of the parties hereunder may be assigned or delegated by
any of the parties hereto without the prior written consent of the other party;
provided, however, that (i) Purchaser may assign some or all of its rights and
obligations under this Agreement to a wholly owned subsidiary if Purchaser
unconditionally guarantees the performance of the subsidiary under this
Agreement as evidenced by an agreement in such form as Company may require, and
(ii) Company may assign its rights and obligations under this Agreement to ABP,
without the prior written consent of Purchaser, in the event of the liquidation
or dissolution of Company. This Agreement will be binding upon the parties
hereto and their respective successors and permitted assigns.
10.07 CAPTIONS; COUNTERPARTS. All captions and headings herein are
inserted for the convenience of the parties only. This Agreement may be executed
in several counterparts, each of which shall be deemed to be an original and
which together will constitute one and the same instrument.
10.08 SCHEDULES, EXHIBITS, ETC. Any and all schedules or exhibits
referenced or incorporated herein are deemed to be a part of this Agreement and
are binding and enforceable as to any terms contained therein.
10.09 NOTICES. Any notices, requests, instructions, or other documents
to be given hereunder by Company to Purchaser or by Purchaser to Company shall
be in writing and, except as otherwise specifically provided herein, shall be
delivered personally, sent by registered or certified mail, or delivered via
express courier or overnight service (e.g., FedEx) as set forth below or at such
other address as any party hereto may designate by prior written notice to the
other:
(a) If to Company, then to: Vanier Graphics Corporation
0000 XxxxxXxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer,
American Business Products, Inc.
with a copy to: American Business Products, Inc.
0000 XxxxxXxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
and
Long, Xxxxxxxx & Xxxxxx
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
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(b) If to Purchaser, then to: The Xxxxxxxx and Xxxxxxxx Company
Business Systems Division
0000 X. Xxxxxxxxx Xxxx.
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
with a copy to: The Xxxxxxxx and Xxxxxxxx Company
000 X. Xxxxxx Xx.
Xxxxxx, XX 00000
Attention: General Counsel
With respect to those notices which must be given within certain time periods as
set out herein, such notices will be deemed effective upon receipt.
10.10 WAIVER. Either party hereto may expressly waive in writing
compliance by the other with any of the covenants or conditions contained in
this Agreement, except conditions imposed by law, but no failure of any party
hereto to exercise any right or power given under this Agreement or to insist
upon strict compliance with any obligations specified in this Agreement, and no
custom or practice at variance with the terms of this Agreement, absent such an
express written waiver, shall constitute a waiver of any party's right to demand
exact compliance with the terms of this Agreement.
10.11 GOVERNING LAW. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Georgia.
10.12 RIGHTS OF THIRD PARTIES. All conditions of the obligations of the
parties hereto, and all undertakings herein, are solely and exclusively for the
benefit of the parties hereto and their respective permitted successors and
assigns, and no other person or entity shall have standing to require
satisfaction of such conditions or to enforce such undertakings in accordance
with their terms, or be entitled to assume that any party hereto will refuse to
consummate the purchase and sale contemplated hereby in the absence of strict
compliance with any or all thereof, and no other person or entity shall, under
any circumstances, be deemed a beneficiary of such conditions or undertakings,
any or all of which may be freely waived in whole or in part, by mutual consent
of the parties hereto at any time, if in their sole discretion they deem it
desirable to do so.
10.13 "BEST EFFORTS." The use of the term "best efforts" herein will in
no event require any party to (a) expend funds which are not commercially
reasonable in relation to the transactions contemplated hereby or (b) take, or
cause to be taken, any action which would have a material adverse effect with
respect to it.
10.14 "INCLUDING." Whenever the term "including" is used in this
Agreement, it will mean "including, without limitation," (whether or not such
language is specifically set forth) and will not be deemed to limit the range of
possibilities of those items specifically enumerated.
10.15 CERTAIN CONSENTS. Notwithstanding anything to the contrary
herein, in the event any of the Corporate Agreements requires consent to
assignment and such consent is not obtained prior to the Closing, then, if
Purchaser proceeds with the Closing, until such consent has been obtained or the
applicable Corporate Agreement terminates, the Corporate Agreement shall not be
deemed assigned to Purchaser, but Purchaser shall be deemed to be Company's
contractor or the parties shall make such other arrangements as necessary to
assure Purchaser the benefits of the underlying agreement. In such event,
Purchaser shall perform Company's obligations under the applicable agreement,
such obligations shall be Assumed Liabilities and the benefits to inure to
Purchaser shall be Assets for purposes of this Agreement.
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10.16 POST-CLOSING REIMBURSEMENT. If either party receives an asset or
pays a liability which, pursuant to this Agreement, is the property or
obligation of the other party hereto, the parties shall promptly make an
appropriate cash settlement.
(This space intentionally left blank)
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, under seal, as of the day and year first above written.
"COMPANY"
VANIER GRAPHICS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxx
---------------------------
Title: Treasurer
--------------------------
[SEAL]
"PURCHASER"
THE XXXXXXXX AND XXXXXXXX COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxx
---------------------------
Title: Senior Vice President,
--------------------------
Finance and Administration
[SEAL]
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Pursuant to Item 601(b)(2) of Regulation S-K, the following Schedules
and Exhibits to the Asset Purchase Agreement have been omitted from this
filing. American Business Products, Inc. will furnish supplementally a copy of
any omitted Schedule or Exhibit to the Commission upon request.
INDEX OF SCHEDULES
SCHEDULE DESCRIPTION
1.01(a) Adjusted 9/30/96 Balance Sheet
1.01(b) Excluded Assets
1.01(c) Agreed Procedures for Closing Balance Sheet
1.01(d) Permitted Encumbrances
2.03 Allocation
2.05(a) Assumed Liabilities
2.05(b) Excluded Liabilities
2.06 Closing Deliveries
3.01 Qualification to do Business
3.02 Required Consents
3.04 Customer Cancellations
3.05 Machinery, Equipment, Furniture, Tangible Personal Property
3.06(a) Real Property
3.06(b) Encumbrances to Real Property
3.07(a) Existing Agreements
3.07(b) Exceptions to Existing Agreements
3.08 Liens on Intangible Personal Property
3.09 Legal Proceedings
3.10(a) Employment Agreements
3.10(b) Employees
3.10(c) Severance Policies
3.11 Violations of Law
3.12 Insurance Policies
3.13 Exceptions to Agreements in Full Force and Effect
3.15 Governmental Authorizations
3.16 Environmental
3.17 Certain Assets Used in the Business
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INDEX OF EXHIBITS
EXHIBITS DESCRIPTION
1.01(a) Closing Deliveries Escrow Agreement
1.01(b) Purchase Price Escrow Agreement
2.05 Assumption Agreement
5.01(f) Opinions of Company's Counsel
5.01(g) Supply Agreement
5.01(j) Non-Competition Agreement
5.02(c) Opinion of Purchaser's Counsel
9.02 Form of Letter Agreement relative to "employee matters"
9.06 Indemnification Guaranty Agreement
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