EXHIBIT 2.1
PURCHASE AGREEMENT
AMONG
XXXXX XxXXXXX, INC.,
a Colorado corporation and
general partner of XXXXX XxXXXXX X.X.,
a Texas limited partnership ,
NAF, INC.,
a Colorado corporation and
limited partner of XXXXX XxXXXXX X.X.,
a Texas limited partnership,
XXXXX BUSINESS FORMS, INC.,
a Texas corporation,
and
XXXXX ACQUISITIONS, INC.,
a Nevada corporation
______________________________________
November 4, 1999
______________________________________
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE OF GENERAL PARTNERSHIP INTEREST...............1
1.01 Interest Purchased..............................................1
1.02 Consideration...................................................1
1.03 Earn-out........................................................2
1.04 Adjustments.....................................................3
1.05 Change of Corporate Name........................................3
ARTICLE II PURCHASE AND SALE OF LIMITED PARTNERSHIP INTEREST..............3
2.01 Interest Purchased..............................................3
2.02 Consideration...................................................3
ARTICLE III PARTNERSHIP ASSETS............................................3
3.01 Partnership Assets..............................................3
3.02 Limitation on Assets............................................4
ARTICLE IV CLOSING........................................................4
4.01 Place and Time..................................................4
4.02 Delivery of Documents...........................................4
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER AND NAF................4
5.01 Organization....................................................5
5.02 Authorization...................................................5
5.03 Financial Statements............................................5
5.04 Undisclosed Liabilities.........................................5
5.05 Absence of Changes..............................................5
5.06 Tax Matters.....................................................6
5.07 Assignment of and Title to the Interests........................6
5.08 Condition and Title to the Assets...............................6
5.09 Leases..........................................................7
5.10 Real Property...................................................7
5.11 Compliance with Laws............................................7
5.12 Litigation and Claims...........................................8
5.13 Contracts and Consents..........................................8
5.14 Pension Matters.................................................8
5.15 Labor Relations.................................................9
5.16 Employees.......................................................9
5.17 Intangible Assets...............................................9
5.18 Environmental Protection........................................9
5.19 Major Suppliers and Customers..................................10
5.20 Receivables....................................................10
5.21 Inventory......................................................10
5.22 No Conflict....................................................10
5.23 Disclosure.....................................................10
5.24 Year 2000......................................................11
5.25 Investment Intent..............................................11
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF XXXXX AND XXXXX ACQ.........12
6.01 Organization and Authorization.................................12
6.02 Capitalization.................................................12
6.03 SEC Filings....................................................13
6.04 No Conflict....................................................13
ARTICLE VII COVENANTS....................................................13
7.01 Conduct of Business............................................13
7.02 Confidential Information.......................................14
7.03 Non-Competition and Non-Solicitation...........................15
7.04 Brokerage Fees.................................................15
7.05 Exclusivity....................................................15
7.06 Access and Information.........................................15
7.07 Receivables....................................................16
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF XXXXX AND XXXXX ACQ............16
8.01 Obligations of Xxxxx and Xxxxx ACQ.............................16
ARTICLE IX CONDITIONS TO SELLER'S OBLIGATIONS............................17
9.01 Obligations of Seller..........................................17
ARTICLE X TERMINATION PRIOR TO CLOSING...................................17
10.01 Termination of Agreement......................................17
10.02 Termination of Obligations....................................18
ARTICLE XI SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION18
11.01 Survival of Representations and Warranties....................18
11.02 Obligations of Seller.........................................19
11.03 Obligations of Ennis..........................................19
11.04 Notice of Loss or Asserted Liability..........................19
11.05 Opportunity to Contest........................................19
11.06 Disputes with Customers or Suppliers..........................20
ARTICLE XII MISCELLANEOUS................................................20
12.01 Entire Agreement..............................................20
12.02 Parties Bound by Agreement; Successors and Assigns............20
12.03 Counterparts..................................................20
12.04 Headings......................................................20
12.05 Knowledge.....................................................20
12.06 Notices.......................................................21
12.07 Expenses......................................................22
12.08 Arbitration...................................................22
12.09 Public Disclosure.............................................22
12.10 Governing Law.................................................22
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement"), dated as of November 4, 1999,
among XXXXX XxXXXXX, INC. ("Seller"), a Colorado corporation and general
partner of Xxxxx XxXxxxx X.X., a Texas limited partnership (the
"Partnership"), NAF, INC. ("NAF"), a Colorado corporation and limited
partner of the Partnership, XXXXX BUSINESS FORMS, INC., a Texas corporation
("Ennis"), and XXXXX ACQUISITIONS, INC., a Nevada corporation ("Ennis
ACQ").
WHEREAS, the Partnership is engaged in the design, production and
fulfillment of temporary point-of-purchase advertising materials in
Colorado and Texas; and
WHEREAS, Seller holds a 1% general partnership interest (the "General
Partnership Interest") in the Partnership; and
WHEREAS, NAF holds a 99% limited partnership interest (the "Limited
Partnership Interest," and together with the General Partnership Interest,
the "Interests") in the Partnership; and
WHEREAS, Ennis desires to acquire the General Partnership Interest and
Ennis ACQ desires to acquire the Limited Partnership Interest on the terms
and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, and other good and valuable consideration, the receipt
and sufficiency of which are acknowledged, the parties hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE
-----------------
OF GENERAL PARTNERSHIP INTEREST
-------------------------------
1.01 Interest Purchased. Subject to the terms and conditions set
forth below, Ennis shall purchase from Seller at Closing (a) the General
Partnership Interest and (b) all rights to the name "Xxxxx XxXxxxx."
1.02 Consideration. Except as adjusted pursuant to Section 1.04
below, the consideration for the General Partnership Interest and all
rights to the name "Xxxxx XxXxxxx" (the "Consideration") shall consist of :
(a) $2,500,000.00 payable by wire transfer at Closing; provided that
Ennis may elect to pay at Closing up to 50% of such sum in shares of
Xxxxx'x common stock, par value $2.50 per share ("Common Stock"), valued at
the average closing sale price for the twenty (20) consecutive trading days
preceding the fifth day prior to Closing,
(b) the assumption by Ennis or payment by Ennis at Closing of the
following liabilities (the "Liabilities"):
(i) the bank debt (the "Bank Debt") set forth on Schedule
1.02(b)(i) hereto and the liens, claims, security interests
or other encumbrances related thereto(the "Encumbrances")
set forth on Schedule 5.07 hereto;
(ii) the accrued wages and other compensation payable to Seller's
employees set forth on Schedule 1.02(b)(ii) hereto;
(iii) the business and use taxes relating to inventory
and equipment set forth on Schedule 1.02(b)(iii)
hereto;
(iv) the promissory note dated March 13, 1998 from Seller to
Xxxxxx X. Xxxxxxxxx in the amount at November 4, 1999 of
$463,442.73, including all interest through such date;
(v) the loan to Seller by Graphic Packaging of $34,310.31 at
October 31, 1999, plus interest of 9% per annum; and
(vi) trade payables and any other liabilities of Seller incurred
in the ordinary course of business and set forth on Schedule
1.02(b)(vi) hereto; and
(c) assumption of duties and liabilities of the general partner
under the Agreement of Limited Partnership of Xxxxx XxXxxxx, X.X., dated as
November 1, 1999 (the "Partnership Agreement).
Seller shall be responsible for all other taxes, and all rental,
utilities and insurance liabilities incurred by it through Closing. Ennis
shall not assume, or shall be liable for, any obligations or liabilities of
Seller, except the Liabilities expressly set forth on Schedules 1.02(b)(i)-
(vi).
1.03 Earn-out. As additional consideration, Seller shall receive an
earn-out for a period of five years, commencing with the Partnership's
fiscal year ending February 28, 2001, calculated on the basis of 100% of
each annual increase in the EBITDA of the Partnership over the prior year,
excluding earnings from post-Closing mergers and acquisitions and utilizing
for purposes of this calculation the Partnership's pre-Closing interest
rates and amortization schedule (the "Partnership's EBITDA"), using an
assumed EBITDA of $3,000,000 as the base for the first year's calculation.
In the event of a decrease in the Partnership's EBITDA from the prior year,
the difference shall be added to the Partnership's EBITDA of the prior year
for purposes of the calculation of the earn-out for the next year in which
an increase in the EBITDA occurs. The earn-out shall be paid to Seller for
each year in which it is earned within 120 days of the end of the fiscal
year of the Partnership. The earn-out shall be payable two-thirds (2/3's)
in cash and one-third (1/3) in shares (together with the shares referenced
in Section 1.02, the "Shares") of Common Stock, valued at the average
closing sale price for the twenty (20) business days preceding the fifth
day prior to each payment date. Notwithstanding the foregoing, Seller
shall not be entitled to any earn-out payment for any year in which the
revenues of the Partnership do not exceed $30,000,000. The determination of
the Partnership's EBITDA shall be made by the Partnership's independent
auditors and shall be final and conclusive.
1.04 Adjustments. The amounts payable pursuant to Section 1.02 or
Section 1.03 shall be reduced on a dollar-for-dollar basis to adjust for
any penalties (other than prepayment penalties) and charges assessed in
respect of actions or conditions that existed prior to Closing in
connection with the Bank Debt, excluding any such penalties or charges
assessed with respect to any Leases, whether assessed prior or subsequent
to Closing.
1.05 Change of Corporate Name. Prior to Closing of this Agreement,
Seller shall take all action necessary to effect the change of its
corporate name.
ARTICLE II
PURCHASE AND SALE
-----------------
OF LIMITED PARTNERSHIP INTEREST
-------------------------------
2.01 Interest Purchased. Subject to the terms and conditions set
forth below, Ennis ACQ shall purchase from NAF the Limited Partnership
Interest.
2.02 Consideration. The consideration for the Limited Partnership
Interest shall consist of 99% of the consideration delivered pursuant to
Sections 1.02 and 1.03, which consideration shall be paid by Ennis on
behalf of Ennis ACQ, and assumption of duties and liabilities of the
limited partner under the Partnership Agreement. NAF hereby directs that
such consideration be paid directly to Seller, NAF's sole shareholder, on
behalf of NAF.
ARTICLE III
PARTNERSHIP ASSETS
------------------
3.01 Partnership Assets. At Closing, the Partnership shall have good
and marketable title to all of the assets conveyed to the Partnership
pursuant to that certain Conveyance Agreement, dated as of November 1,
1999, among Seller, NAF and the Partnership (the "Assets"), free and clear
of all liens, claims, security interests or other encumbrances, except for
the Encumbrances set forth on Schedule 5.07(b) hereto, which Assets shall
consist of the following assets:
(a) All products, supplies, inventory, contracts, accounts and
notes receivable, except those receivables due from (i) Xxxxx Xxxxxxx and
AM Xxxx Graphics, (ii) Xxxxxx X'Xxxx and O'Xxxx XxXxxxx, Inc., and (iii)
Magicolor Graphics 2000, Inc., a Colorado corporation ("Magicolor"), and,
deposits, cash and prepaid expenses;
(b) All customer lists, computer software, licenses, patents,
trademarks and trade names, all rights to the names U.S.A. Displays,
Advertising Display, Apex Die & Box, and National Repack Distribution
Services, and all inventions, trade secrets, confidential information and
proprietary technology used in Seller's business;
(c) The trademark and trade name "Magicolor Graphics 2000, Inc."
and all rights thereto;
(d) The Exclusive Operating and Supply Agreement, dated as of
November 1, 1999 (the "Supply Agreement"), substantially in the form
attached hereto as Exhibit A, between Seller and Magicolor;
(e) The leases of Seller of its facilities located in Denver,
Colorado and Dallas, Texas set forth on Schedule 3.01(e) hereto (the
"Leases");
(f) The capital and equipment leases set forth on Schedule
3.01(f) hereto; and
(g) All furniture, fixtures, machinery and equipment, leasehold
interests and improvements and other personal property used in Seller's
business.
3.02 Limitation on Assets.. At Closing, the Partnership shall have no
assets other than the Assets set forth in Section 3.01.
ARTICLE IV
CLOSING
-------
4.01 Place and Time. The closing ("Closing") shall take place at 2:00
p.m., Dallas, Texas time or such other time as the parties may mutually
agree, at the offices of Xxxxx, Xxxxxx & Xxxxxx LLP, 0000 Xxxx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxx, on November 4, 1999, which Closing shall be
deemed effective as of November 4, 1999. At Closing, Seller shall assign
to Ennis the General Partnership Interest and all rights to the name "Xxxxx
XxXxxxx," NAF shall assign to Ennis ACQ the Limited Partnership Interest,
and Xxxxx and Xxxxx ACQ shall assume their respective duties and
liabilities under the Partnership Agreement.
4.02 Delivery of Documents. At Closing, (a) Ennis shall deliver to
Seller the cash portion of the Consideration and the certificates
representing the Shares and assumptions of the Liabilities, (b) Ennis shall
deliver on to Seller on behalf of Ennis ACQ the amount due under Section
2.02 hereof, (c) Seller shall execute and deliver to Ennis the assignment
of the general partnership interest and assignment of the name "Xxxxx
XxXxxxx, (d) NAF shall execute and deliver to Ennis ACQ the assignment of
the limited partnership interest.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
OF SELLER AND NAF
-----------------
Seller and NAF represent and warrant to Xxxxx and Xxxxx ACQ as
follows:
5.01 Organization. Each of Seller and NAF is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Colorado and has all requisite power and authority to carry on and
conduct its business as it is now being conducted and to own the Interests.
At Closing, the Subsidiary Mergers (as defined in the Conveyance Agreement)
will have been conducted according to all applicable laws, all requisite
documentation thereof will have been filed with the appropriate
governmental departments, and no action taken with respect thereto will
have adversely affected Seller's corporate standing. Schedule 5.01 sets
forth a true and correct list of the shareholders of Seller, and amount of
all equity of Seller held by each, as of Closing. The Partnership is a
limited partnership duly organized, validly existing and in good standing
under the laws of the State of Texas and has all requisite authority to
carry on and conduct its business as it is now being conducted and to own
or lease its properties and assets, and is duly qualified and in good
standing in the State of Colorado and every other state (if any) in which
the conduct of its businesses or the ownership of its properties and assets
requires it to be so qualified.
5.02 Authorization. Each of Seller and NAF has the right, power and
capacity to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Seller and NAF and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Seller and NAF and duly authorized by their
shareholders. This Agreement has been duly and validly executed and
delivered by Seller and NAF and constitutes the legal, valid and binding
obligation of Seller and NAF, enforceable in accordance with its terms.
5.03 Financial Statements. Seller has provided Ennis with true and
correct copies of (a) Seller's financial statements for the year ended
December 31, 1998, audited by KPMG LLP, and (b) Seller's unaudited
financial statements for the nine months ended September 30, 1999
(collectively, the "Financial Statements"). The Financial Statements have
been prepared from the books and records of Seller, are correct in all
material respects and present fairly Seller's financial position and
results of operations as of their respective date and for the respective
period.
5.04 Undisclosed Liabilities. Except as disclosed in the Financial
Statements or on Schedule 3.05 hereto, to Seller's knowledge, the
Partnership has no obligations or liabilities (whether absolute, accrued,
contingent or otherwise) of any nature whatsoever, other than obligations
incurred in the ordinary course of business and not material to its
business.
5.05 Absence of Changes. Since December 31, 1998, none of the
following has occurred:
(a) Any change in the financial condition, assets, liabilities,
business, prospects, or operations, other than changes in the ordinary
course of business or changes affecting the economy or industry as a
whole, which in the aggregate would have a material adverse effect on
Seller or the Partnership;
(b) Any material damage, destruction, or loss, whether or not
covered by insurance, of Seller;
(c) Any event or condition that, to the knowledge of Seller,
could materially and adversely affect the Partnership or its business
prospects; or
(d) Any receipt of notice (formal or informal), that any
supplier or customer has taken or contemplates taking any steps that
could disrupt the Partnership's business relationship with the
supplier or customer.
5.06 Tax Matters.
(a) Seller has furnished to Ennis true, correct, and complete
copies of all annual federal, state, and local tax returns that Seller
has filed during the past three (3) years and all quarterly and
monthly sales and use tax returns filed for Seller during the past six
(6) months. None of Seller's tax returns have been audited by any
taxing authority during the past five (5) years, and Seller has not
received any notice of deficiency or other adjustment from any taxing
authority that is unresolved as of Closing. No audit or examination,
claim or proposed assessment by any taxing authority is pending or, to
the knowledge of Seller, threatened against Seller or any portion of
its business.
(b) Seller has withheld or collected from each payment made to
each of its employees the amount of all taxes (including federal
income taxes, Federal Insurance Contributions Act ("FICA") taxes, and
state and local income, payroll, and wage taxes, among others)
required to be withheld or collected. Seller has paid or made
provision for the same to the proper tax depositories or collecting
authorities, except as disclosed on Schedule 5.06(b). All ad valorem
and other property taxes imposed on Seller, or that may become a lien
on the Partnership, and that are due and payable have been paid in
full, and all ad valorem taxes paid with respect to Seller for 1996,
1997 and 1998 are listed on Schedule 5.06(b).
5.07 Assignment of and Title to the Interests. The assignment of the
Interests as contemplated by this Agreement meets all requirements for
assignment under the Partnership Agreement and all requisite action with
respect thereto has been duly taken. At Closing, Xxxxx and Xxxxx ACQ will
have good and marketable title to the General Partnership Interest and
Limited Partnership Interest, respectively, and will assume all rights
under the Partnership Agreement.
5.08 Condition and Title to the Assets.
(a) The Assets are in good condition and repair, ordinary wear
and tear excepted, to the knowledge of Seller, the present use and
location of the Assets conform with all applicable laws, ordinances,
and regulations of all federal, state, and local governmental
agencies, and Seller has not received notice of any breach or
violation of any such laws, ordinances, or regulations.
(b) At Closing, the Partnership will have good and marketable
title to the Assets, free and clear of all liens, claims, security
interests and other encumbrances, except for the Encumbrances set
forth on Schedule 5.08(b). All UCC filings in respect of Xxxxx
XxXxxxx or its merged subsidiaries which are not connected to the
Encumbrances will be terminated as of Closing, except as specifically
agreed otherwise by Ennis.
(c) The Partnership has no assets other than those conveyed to
the Partnership by Seller as specified in Sections 3.01 hereto.
5.09 Leases. Schedule 3.01(e) lists all leases to which the
Partnership is a party, and all Leases are in full force and effect and
constitute legal, valid, and binding obligations of the Partnership and the
lessors and are enforceable in accordance with their terms. Attached to
Schedule 3.01(e) are true and correct copies of all Leases, and except as
set forth on Schedule 3.01(e), the Leases have not been modified or amended
since their execution, and Seller has not received any notice of any
proposed modification or amendment. Neither Seller nor the Partnership is
in default or breach of a covenant under the Leases, and no condition,
event or act exists or has occurred that with notice, lapse of time or both
would constitute a default or give the lessor the right to terminate or
cancel the Leases. To the best knowledge of Seller, the lessors are not in
default under the Leases.
5.10 Real Property. The Partnership owns no real property.
5.11 Compliance with Laws.
(a) To the knowledge of Seller: (i) Seller and the Partnership
have complied and are in compliance with all laws, regulations, and
orders applicable to Seller or the Partnership, and have obtained all
permits, licenses, orders, and approvals of federal, state, and local
governmental and regulatory bodies that are required for them to own,
maintain, and operate their business; (ii) no threat of cancellation,
modification, or non-renewal of any such permits, licenses, orders, or
approvals is pending, nor to the knowledge of Seller, does any basis
exist for cancellation, modification, or non-renewal; (iii) except as
otherwise set forth on Schedule 5.11(a), neither Seller nor the
Partnership is currently in violation or default of any such permit,
license, order, or approval and the present uses of Seller and the
Partnership do not violate any law, regulation, or order; and
(iv) except as disclosed in Schedule 5.11(a), neither Seller nor the
Partnership has or needs governmental permits or licenses to transact
its business as currently conducted and, except as listed on
Schedule 5.11(a), none of the permits or licenses that Seller or the
Partnership holds will be adversely affected in any way by reason of
this Agreement or the consummation of the transactions contemplated
hereby, including assignment of the permits and licenses to the
Partnership. No governmental authority has issued or threatened any
notice or warning with respect to any failure or alleged failure of
Seller or the Partnership to comply with any law, regulation or order.
(b) No consent or approval of, prior filing with, notice to, or
other action by, any governmental body or agency is required for
Seller or NAF to execute and deliver this Agreement or any assignment,
agreement, or other instrument to be executed and delivered pursuant
to this Agreement by or to consummate the transactions provided for
hereby.
5.12 Litigation and Claims. No judgments, orders, writs, decrees,
injunctions, or quasi judicial or administrative decisions are outstanding
to which Seller or the Assets are subject. Except as disclosed on
Schedule 5.12, no litigation, claim, action, suit, investigation, or
proceeding is pending or has been filed at any time since January 1, 1999,
or to the knowledge of Seller, threatened against or relating to Seller or
the Assets. Except as disclosed on Schedule 5.12, to Seller's knowledge,
Seller has no "loss contingencies" (as defined in Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 5
("FASB 5")), that FASB 5 would require to be disclosed or accrued in
Seller's financial statements if they were prepared when this
representation and warranty is made or deemed made.
5.13 Contracts and Consents. Schedule 5.13 lists each material
written or oral agreement related to or affecting Seller, all of which will
have been assigned prior to Closing to the Partnership (the "Contracts").
Copies of all Contracts have been made available to Ennis. To the
knowledge of Seller, no party is in breach or default of any Contract, nor
does any basis for any claim of breach or default, whether upon the passage
of time, giving notice, or otherwise with regard to the foregoing exist
with respect to any party to any Contract. Except as set forth on
Schedule 5.13, no Contract has been modified or amended, and Seller has not
received any notice of any proposed modification or amendment. Except as
disclosed in Schedule 5.13, the Partnership, as Seller's assignee, will
have all of Seller's rights under all Contracts on and after Closing, and
Seller shall have obtained all required consents and approvals and made all
required payments to other parties. Each Contract is a valid, legal, and
binding agreement of its parties, enforceable in accordance with its terms.
5.14 Pension Matters. Schedule 5.14 identifies all Seller retirement
plans benefitting any past or future employee of Seller (the "Plans").
Each Plan and its related trust is qualified under 401(a) and 501 of the
Internal Revenue Code of 1986, is the subject of a favorable determination
letter, and has been administered and operated in accordance with its terms
and to preserve its qualification. To the knowledge of Seller, neither
Seller nor the Plan fiduciaries has participated in a transaction that
could subject them to civil penalty pursuant to ERISA 502, tax imposed by
Code 4975, or liability for breach of fiduciary responsibility under
ERISA. No liability to the Pension Benefit Guaranty Corporation ("Pension
Agency") has been incurred with respect to the Plans. All premiums due and
payable to the Pension Agency with respect to the Plans have been paid.
Actions taken in connection with the Subsidiary Mergers which have affected
the Plans have complied with ERISA and Code requirements. The Pension
Agency has not instituted or threatened to institute proceedings to
terminate any Plan. To the knowledge of Seller no event has occurred, and
no condition or circumstance exists, that presents a risk that any past or
future termination of any Plan could result in Seller liability to the
Pension Agency. To the knowledge of Seller no Plan administrator has filed
notice of a reportable event (within the meaning of ERISA 4043(b)) with
the Pension Agency, nor has any reportable event occurred. The Plans,
their respective operations, and all reports filed with respect to them
comply with all applicable federal laws, including ERISA, and to the
knowledge of Seller, no Plan participant claims are pending or threatened
and no basis for any such claim or claims exists, except for benefits to
participants or beneficiaries in accordance with the Plans' terms. Neither
Seller or any predecessor in interest, nor any trade or business under
common control with Seller or any predecessor in interest (within the
meaning of Code 414(c)) has contributed to any pension plan that is a
multi employer plan (as defined in ERISA 3(37)(A)) since 1980. Prior to
Closing, Seller has taken and will take no action, the effect of which
would subject it to withdrawal liability as defined in ERISA 4201 over
$1,000. Except as described in Schedule 5.14, no Plan has been terminated
or partially terminated nor have the contributions to any Plan been
discontinued, within the meaning of Code 411, nor have any events with
regard to the Plans or their related funding instruments occurred that
might constitute grounds for such a termination, partial termination, or
discontinuance of contributions. To the knowledge of Seller except as
described in Schedule 5.14, compliance with ERISA's or the Code's
requirements as in effect at Closing, or with any agreement, arrangement,
commitment, or understanding of any kind, will not result in any increase
in the rate of benefit accrual or contribution requirement under any Plan.
Except as described in Schedule 5.14, no agreements, arrangements,
commitments, or understandings of any kind exist that would in any way
restrict Seller's right to terminate any Plan.
5.15 Labor Relations. To the knowledge of Seller, neither Seller nor
the Partnership is subject to any collective bargaining agreements
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and occupational safety and health, or is
engaged in any unfair labor practice within the meaning of National Labor
Relations Act 8.
5.16 Employees. Schedule 5.16 discloses all compensation (including
wages, salaries, severance, commissions and actual or anticipated bonuses)
and describes other benefits paid or provided to each of Seller's
employees, agents, representatives or independent contractors for 1997,
1998 and 1999. Except as disclosed on Schedule 1.02(b)(ii) hereto, (a) no
unpaid compensation, other than salary for the immediately preceding pay
period and other than pursuant to Seller's existing bonus, commissions,
incentive compensation, or profit-sharing arrangements or deferred
compensation plans or severance compensation is now, or will be on or after
Closing, payable to any officers, directors, or employees, and (b) no
vacation or sick leave is accrued or payable for any employee. No employee
is subject to any non-competition or non-solicitation agreement which would
prevent the Partnership from hiring such employee.
5.17 Intangible Assets. Schedule 5.17 lists all inventions, licenses,
trademarks, service marks, trade names, service names, copyrights,
know-how, patents, and related registrations and applications owned by,
registered in the name of, or used in connection with Seller's business
since 1996, or for which application has been made, all of which will have
been assigned to the Partnership prior to Closing. There are no pending
or, to the knowledge of Seller, threatened infringement claims against
Seller by any person with respect to any of the items listed on
Schedule 5.17, nor has any such item been declared invalid or been limited
by any court or agreement. The intangible assets will afford the
Partnership at all times after Closing the rights to use all technology,
proprietary information, know-how or patented ideas, designs, inventions,
trademarks, copyrights, trade names and service marks owned by Seller or
others necessary for the conduct of Seller as conducted prior to the
conveyances to the Partnership. To the knowledge of Seller, the use of
these intangible assets will not and, the conduct of Seller prior to the
conveyances does not, infringe on the intellectual property rights of any
other person.
5.18 Environmental Protection. Seller has obtained all permits,
licenses, and other authorizations and filed all notices that it is
required to obtain or file to operate its business under federal, state,
and local environmental protection laws. Permits, licenses, and
authorizations for 1997, 1998 and 1999 are listed on Schedule 5.18. Seller
is in material compliance with all terms and conditions of its permits,
licenses, and authorizations. Seller is in compliance with all other
applicable limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables contained in those
laws or in any law, regulation, code, plan, order, decree, judgment,
notice, or demand letter issued, entered, promulgated, or approved under
those laws. To the knowledge of Seller except as disclosed on
Schedule 5.18, no past or present events, conditions, circumstances,
activities, practices, incidents, actions, or plans could interfere with or
prevent continued compliance, or could give rise to any common law or
statutory liability, or otherwise form the basis of any claim, action,
suit, proceeding, hearing, or investigation, based on or related to
Seller's manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge, runoff,
release, or threatened release into the environment, of any pollutant,
contaminant, hazardous or toxic material, waste, water, effluent, or other
substance.
5.19 Major Suppliers and Customers. Schedule 5.19 lists each supplier
of goods or services and each customer to whom Seller paid or billed more
than $5,000 during 1999 and the total amount paid or billed during 1999.
Except as set forth on Schedule 5.19, since January 1, 1999, Seller has had
no dispute with any supplier or customer and has received no notice (formal
or informal) that any supplier or customer has taken or contemplates taking
any steps that could disrupt Seller's business relationship with a supplier
or customer.
5.20 Receivables. All of Seller's receivables subject to the
Conveyances represent sales actually made in the ordinary course of
business, and, to Seller's knowledge, are valid and enforceable, and are
not in dispute or subject to any defense or offset, and, to Seller's
knowledge, except as set forth on Schedule 5.20, the receivables are fully
collectible or are appropriately reserved in the Financial Statements.
5.21 Inventory. The inventory of the Partnership is usable and
saleable by the Partnership in the ordinary course of its business.
5.22 No Conflict. Except as set forth on Schedule 5.22, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein except for the contracts and lease for
which consents or approvals to the assignment are to be delivered at
Closing, will (a) result in the breach, violation or contravention of, or
constitute a default under, or conflict with, or give rise to a right of
termination of, or accelerate any obligation under any of the provisions of
(i) any agreement, including but not limited to the Partnership Agreement,
lease, note, bond, debenture or other evidence of indebtedness or any
mortgage, deed of trust, indenture or other instrument to which Seller, NAF
or the Partnership is a party or by which any of them is bound or to which
any of the Assets are subject, (ii) any judgment, decree, order or award of
any court, regulatory agency or other governmental body or arbitrator to
which Seller, NAF, the Partnership or any of the Assets are subject or by
which Seller, NAF or the Partnership is bound or (iii) any statute, rule or
regulation or other law applicable to Seller, NAF or the Partnership,
(b) result in the creation of any pledge, lien, encumbrance or security
interest upon any of the Assets, or (c) require the authorization,
approval, consent or order of, or filing with, or other action by any
court, regulatory agency or other governmental body.
5.23 Disclosure. No representations, warranties, assurances, or
statements of Seller or NAF in this Agreement and no statement in any
document (including the Financial Statements and the Schedules),
certificate, or other writing furnished or to be furnished by Seller or NAF
(or caused to be furnished by Seller or NAF) to Xxxxx or Xxxxx ACQ or any
of their representatives pursuant to this Agreement, contains or will
contain any untrue statement of material fact or omits or will omit to
state any material fact necessary, in light of the circumstances under
which it was made, to make the statements made not misleading.
5.24 Year 2000. None of the computer software, computer firmware,
computer hardware (whether general or special purpose) or other similar or
related items of automated, computerized or software systems assigned to
the Partnership, and none of the products and services sold, licensed,
rendered, or otherwise provided by Seller or the Partnership in the conduct
of its business, will malfunction, cease to function, generate incorrect
data or produce incorrect results when processing, providing or receiving
(i) date-related data from, into and between the twentieth and twenty-first
centuries or (ii) date-related data in connection with any valid date in
the twentieth and twenty-first centuries. Seller has not made any
representations or warranties to third parties regarding the ability of any
product or service sold, licensed, rendered, or otherwise provided by
Seller in the conduct of its business to operate without malfunction, to
operate without ceasing to function, to generate correct data or to produce
correct results when processing, providing or receiving (i) data-related
data from, into and between the twentieth and twenty-first centuries and
(ii) date-related data in connection with any valid date in the twentieth
and twenty-first centuries.
5.25 Investment Intent.
(a) Seller and the undersigned recipients of proceeds herefrom
(the "Recipients") have received and reviewed the SEC Filings (as
defined below). Seller and the Recipients acknowledge that Xxxxx has
made available to them the opportunity to obtain additional
information to verify and update the accuracy of information contained
in the SEC Filings and to evaluate the merits and risks of acquiring
the Shares under this Agreement (this "Investment"). Seller and the
Recipients have had an opportunity to ask questions and receive
satisfactory answers from the officers and directors of Xxxxx
concerning the terms and conditions of this Investment, and all such
questions have been answered to the satisfaction of Seller and the
Recipients. Seller and each Recipient is a sophisticated investor
with knowledge and experience in business and financial matters and/or
is an accredited investor, within the meaning of the Securities Act of
1933, as amended (the "Act").
(b) The Shares will be acquired by Seller and the Recipients for
their own accounts for investment and not with a view to, or for
resale in connection with any distribution of such securities, within
the meaning of the Act. Seller and the Recipients hereby acknowledges
that in connection with the purchase and sale contemplated herein, the
Shares will not be registered under the Act.
(c) Seller and the Recipients are aware that there are
substantial restrictions on the transferability of the Shares. Seller
and the Recipients agree that the Shares shall not be sold, pledged,
hypothecated or otherwise transferred except in compliance with the
registration provisions of the Act and applicable state securities
laws, unless in the opinion of counsel satisfactory to Xxxxx, any such
transaction is exempt from registration.
(d) Seller and the Recipients consent to the following
restrictive legend on the certificates representing the Shares:
"THE SHARES OF COMMON STOCK EVIDENCED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED AND ARE
"RESTRICTED SECURITIES," UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES ACT, AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF ABSENT
SUCH REGISTRATION, UNLESS, IN THE OPINION OF
COUNSEL SATISFACTORY TO SELLER, SUCH
REGISTRATION IS NOT REQUIRED."
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
OF XXXXX AND XXXXX ACQ
----------------------
Xxxxx and Xxxxx ACQ represent and warrant to Seller and NAF as
follows:
6.01 Organization and Authorization. Each of Xxxxx and Xxxxx ACQ is a
corporation duly organized, validly existing and in good standing under the
laws of the States of Texas and Nevada, respectively, and has all requisite
power and authority to carry on and conduct its business as it is now being
conducted and to own or lease its properties and assets, and is duly
qualified and in good standing in every state in which the conduct of its
businesses or the ownership of its properties and assets requires it to be
so qualified. Each of Xxxxx and Xxxxx ACQ has the right, power and
capacity to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Xxxxx and Xxxxx ACQ and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of each of them. This Agreement has
been duly and validly executed and delivered by Xxxxx and Xxxxx ACQ and
constitutes the legal, valid and binding obligation of each of them,
enforceable in accordance with its terms.
6.02 Capitalization. The authorized capital stock of Xxxxx consists
of 40,000,000 shares of Common Stock, of which 21,249,860 shares have been
issued, 16,253, 463 are outstanding, 4,996,397 shares are held in treasury
and 1,122,712 shares are reserved for issuance upon exercise of options
granted under Xxxxx'x stock option plans as of the date hereof, and
1,000,000 shares of preferred stock, $10.00 par value, none of which has
been issued. There are no outstanding options (other than employee stock
options), warrants, calls, subscriptions, rights, agreements or commitments
of any character obligating Seller to issue any shares of its capital stock
or securities convertible into or exchangeable for or evidencing the right
to purchase or subscribe for any shares of capital stock of Xxxxx. All
issued and outstanding shares of Common Stock are, and the Shares to be
issued pursuant to this Agreement will be, duly authorized, validly issued,
fully paid and nonassessable, and free of preemptive rights.
6.03 SEC Filings. Xxxxx has filed all reports, statements, forms and
documents with the SEC that it has been required to file since January 1,
1997 (the "SEC Filings"), all of which have complied in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended.
6.04 No Conflict. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated herein
except for the contracts and lease for which consents or approvals to the
assignment are to be delivered at Closing, will (a) result in the breach,
violation or contravention of, or constitute a default under, or conflict
with, or give rise to a right of termination of, or accelerate any
obligation under any of the provisions of (i) any agreement, lease, note,
bond, debenture or other evidence of indebtedness or any mortgage, deed of
trust, indenture or other instrument to which Xxxxx or Xxxxx ACQ is a party
or by which either of them is bound or to which any of their assets is
subject, (ii) any judgment, decree, order or award of any court, regulatory
agency or other governmental body or arbitrator to which Xxxxx or Xxxxx ACQ
or any of their assets is subject or by which either of them is bound or
(iii) any statute, rule or regulation or other law applicable to Xxxxx or
Xxxxx ACQ, (b) result in the creation of any pledge, lien, encumbrance or
security interest upon any of its assets, or (c) require the authorization,
approval, consent or order of, or filing with, or other action by any
court, regulatory agency or other governmental body.
ARTICLE VII
COVENANTS
---------
7.01 Conduct of Business. Except for necessary actions taken in
respect of the corporate reorganization contemplated by this Agreement,
until the earlier of Closing or the termination of this Agreement, Seller
shall not, directly or indirectly, without the prior written consent of
Xxxxx, enter into any material contractual obligations or any other
material transactions, or make any material commitments regarding the
business, other than in the ordinary course of business. Seller shall
carry on its business diligently and substantially in the manner as
heretofore conducted. By way of illustration and not in limitation of the
foregoing:
(a) The Assets shall be maintained in their present state or
repair, ordinary wear and tear excepted, and Seller shall use its best
efforts to keep available the services of its employees and preserve
for the Partnership the goodwill of its business and its relationships
with its customers, suppliers and others with whom it has business
relations.
(b) Without the prior written consent of Xxxxx, prior to
Closing, Seller shall not hereafter take any of the following actions:
(i) Dispose of any assets other than in the ordinary course
of business consistent with past practice;
(ii) Mortgage, pledge or subject to liens, security shares,
or other encumbrances any assets;
(iii) Purchase or commit to purchase any capital asset
for a price exceeding $5,000;
(iv) Change (or announce any change of) any salaries, wages
or employee benefits or hire, commit to hire or terminate any
employee whose annual compensation would exceed $15,000;
(v) Amend or terminate any contract or other material
agreement, including any plan or any insurance policy, in force
on the date hereof; or
(vi) Do any act, omit to do any act or permit any act within
their control which will cause a breach of any representation,
warranty or obligation contained in this Agreement or any
obligations contained in any contract.
7.02 Confidential Information.
(a) Xxxxx and Xxxxx ACQ will hold in strict confidence and not
disclose to third parties any data and information, including any
confidential, important and/or proprietary information of
("Confidential Information"), obtained from Seller and NAF, except to
their sources of financing, lawyers and accountants and except as may
be required by law. For a period of five (5) years commencing upon
Closing, Seller, any affiliate of Seller, and each of Xxxxxx X.
Xxxxxx, Xx., Xxxxxx X. Xxxxx, Xxxxxxx X. XxXxxxx, Xxxxxx X. Xxxxxx,
Xx., Xxxxxxx Xxxxxxxx, Xxxxxx X. Xxxxxx, and Xxxxxx X. Xxxxxxxxx (the
"Key Employees"), will hold in strict confidence and not disclose to
third parties any data and information, including any Confidential
Information, obtained from Xxxxx, except to its sources of financing,
lawyers and accountants and except as may be required by law.
(b) For purposes of this Agreement, Confidential Information
shall include all information that has or could have commercial value
or other utility in the business or prospective business of Seller, or
the Partnership or Xxxxx or their subsidiaries or affiliates, as the
case may be, and all information of which unauthorized disclosure
could be detrimental to the interests of Seller, or the Partnership or
Xxxxx or their subsidiaries or affiliates, as the case may be, whether
or not such information is identified as confidential information. By
example and without limitation, Confidential Information includes but
is not limited to any and all information of the following or similar
nature, whether transmitted verbally, electronically or in writing:
copyright, service xxxx and trademark registrations and applications,
patents and patent applications, licenses, agreements, unique and
special methods, techniques, procedures, processes, routines,
formulas, know-how, trade secrets, innovations, inventions,
discoveries, improvements, research or development and test results,
research papers, specifications, technical data and/or information,
software, quality control and manufacturing procedures, formats,
plans, sketches, drawings, models, customer lists, customer and
supplier identities and characteristics, sales figures, pricing
information, marketing plans, strategies, forecasts, financial
information and projections, budgets, business plans and objectives,
concepts, ideas and any other information or procedures that are
treated as or designated secret or confidential, which Confidential
Information has been used by Seller, or the Partnership or Xxxxx or
their subsidiaries or affiliates, as the case may be, to date or
during the term of this Agreement.
7.03 Non-Competition and Non-Solicitation. For a period of five (5)
years commencing upon Closing, Seller and each of the Key Employees shall
not, directly or indirectly, on either his own behalf or on behalf of or in
conjunction with any other person or entity (i) solicit, divert or attempt
to divert any person or entity that is a customer or supplier or a
prospective customer or supplier of Seller from becoming a customer or
supplier of the Partnership or Xxxxx; (ii) manage, operate, control,
participate in, invest in or be involved or connected with, in any way, as
an officer, director, shareholder, employee, consultant, agent,
representative, independent contractor, partner, creditor, or guarantor of
any person or entity that directly or indirectly competes with the
Partnership or Xxxxx in the design, production and fulfillment of temporary
point-of-purchase advertising materials or in the wholesale manufacturing
of business forms in any metropolitan market in which Seller, the
Partnership or Xxxxx are then doing business or have customer
relationships; or (iii) solicit or induce, or in any manner attempt to
solicit or induce any employee, consultant, independent contractor, agent,
representative or distributor of Seller to terminate his relationship with
the Partnership or Xxxxx. Notwithstanding the foregoing, Xxxxx
acknowledges that Seller owns an interest in and Xxxxxx X. Xxxxxx, Xx.
serves as a director of Magicolor. Magicolor may be in competition with
the Partnership and/or Xxxxx to the extent that it is engaged in the
business of manufacturing and selling pre-press graphic design,
interlacing, CD Rom design and website design. It is agreed that the
activities of Seller and Xxxxxx in connection with their roles as
shareholder and director of Magicolor be excluded from this section,
subject to the terms and conditions of the supply agreement referenced in
Section 3.03(d) hereof.
7.04 Brokerage Fees. Seller shall indemnify the Partnership and
Xxxxx, and their officers, directors and shareholders against any other fee
or commission payable to any broker, agent or finder retained by Seller in
connection with the transactions contemplated hereunder. Xxxxx shall
indemnify Seller against any fee or commission payable to any broker, agent
or finder retained by Xxxxx in connection with the transactions
contemplated hereunder.
7.05 Exclusivity. Seller agrees that until December 31, 1999, neither
it nor its officers, directors, shareholders, agents or representatives
shall enter into any agreement, understanding, negotiation or discussion
with any third party relating to the sale or other disposition of the
capital stock or assets of Seller.
7.06 Access and Information. Subsequent to the execution of this
Agreement, Seller shall cooperate fully with Xxxxx and the Partnership,
shall supply such information and data as Xxxxx or the Partnership may
request and shall permit the Partnership's auditors, legal counsel and
other authorized representatives reasonable opportunity and access at its
offices during normal business hours to inspect and investigate the Assets
and Seller's business, operations and properties. Xxxxx acknowledges that
it has been furnished by Seller all financial and tax information which it
has requested as of the date hereof and that it has no material objection
at the present time to the information which it has received. Seller also
agrees to make available to the Xxxxx and the Partnership all of its books
and records, and the tax returns and filings of Seller for all periods
subsequent to December 31, 1994.
7.07 Receivables. Seller agrees that it will cooperate with the
Partnership in notifying all customers with respect to outstanding
receivables that all payments made by such customers after Closing shall be
paid to the Partnership, and Seller further agrees to remit to the
Partnership, promptly following Seller's receipt thereof after Closing, any
such amounts received by Seller.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF XXXXX AND XXXXX ACQ
------------------------------------------------
8.01 Obligations of Xxxxx and Xxxxx ACQ. The obligations of Xxxxx and
Xxxxx ACQ are subject to the satisfaction or waiver at Closing of each of
the following conditions:
(a) Compliance with Covenants and Agreements. The
representations and warranties of Seller and NAF contained in this
Agreement shall be true in all material respects, and Seller and NAF
shall have complied in all material respects with their covenants and
agreements in this Agreement on or before Closing.
(b) Litigation. No suit, investigation, action or other
proceeding shall be overtly threatened or pending against Seller or
the Partnership before any court or governmental agency which
(i) could result in the restraint or prohibition of Seller or the
Partnership, or the obtaining of damages or other relief from any such
party, in connection with this Agreement or the consummation of the
transactions contemplated here or (ii) an order restricting Seller or
the Partnership from conducting its business as now being conducted.
(c) No Material Adverse Changes. Neither Seller nor the
Partnership shall have suffered any material adverse change in its
businesses, prospects, financial condition, working capital, assets,
liabilities (absolute, accrued, contingent, or otherwise) or
operations.
(d) Documents and Schedules Satisfactory. All schedules, bills
of sale, assignments, certificates, and other documents delivered by
Seller to Xxxxx at Closing will be in form and substance satisfactory
to Xxxxx and its counsel.
(e) Required Governmental Approvals. All governmental
authorizations, consents, and approvals necessary to consummate the
transactions contemplated herein shall have been obtained by Seller
and shall be in full force and effect.
(f) Other Necessary Consents. Seller shall have obtained all
other consents and approvals necessary to consummate the transactions
contemplated herein.
(g) Release of Liens. At Closing, the Assets shall not be
subject to any lien or security interests, except for the Encumbrances
set forth on Schedule 5.08(b).
(h) Bulk Sales Compliance. Seller shall have complied with all
applicable bulk sales laws.
(i) Employment Agreements. The Partnership shall have entered
into employment agreements with the Key Employees all on terms and
conditions satisfactory to Xxxxx and such employees.
(j) Magicolor Agreements. The following agreements shall have
been executed, effective as of Closing: (i) rights of first refusal,
substantially in the forms attached hereto as Exhibit B(i) and Exhibit
B(ii), between each of Xxxxxx Xxxxxxxxx and Xxxxxx X. Xxxxx and Xxxxx
in respect of their ownership interest in Magicolor; and (ii) an
option agreement, substantially in the form attached hereto as Exhibit
C, between Seller and Xxxxx granting Xxxxx an option to purchase
Seller's interest in Magicolor.
(k) Opinions. Xxxxx shall have received a satisfactory legal
opinion from Seller's counsel and a fairness opinion on the
transaction.
ARTICLE IX
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
9.01 Obligations of Seller. The obligations of Seller are subject to
the satisfaction or waiver at Closing of each of the following conditions:
(a) Compliance with Covenants and Agreements. The
representations and warranties of Xxxxx and Xxxxx ACQ contained in
this Agreement shall be true in all material respects, and Xxxxx and
Xxxxx ACQ shall have complied in all material respects with their
covenants and agreements in this Agreement on or before Closing.
(b) Litigation. No suit, investigation, action or other
proceeding shall be overtly threatened or pending against Xxxxx before
any court or governmental agency which (i) could result in the
restraint or prohibition of Xxxxx, or the obtaining of damages or
other relief from any such party, in connection with this Agreement or
the consummation of the transactions contemplated here or (ii) an
order restricting Xxxxx from conducting its business as now being
conducted.
(c) Documents Satisfactory. All schedules, assumptions,
certificates, and other documents delivered by Xxxxx or Xxxxx ACQ to
Seller at Closing shall be in form and substance satisfactory to
Seller and its counsel.
ARTICLE X
TERMINATION PRIOR TO CLOSING
----------------------------
10.01 Termination of Agreement. This Agreement may be terminated
at any time prior to Closing:
(a) By the mutual written consent of the parties;
(b) By Seller in writing, without liability, if Xxxxx or Xxxxx
ACQ (i) fails to perform in any material respect any act required at
Closing, or (ii) materially breaches any covenant in this Agreement;
(c) By Xxxxx in writing, without liability, if Seller or NAF
(i) fails to perform in any material respect any act required on or
prior to Closing, or (ii) materially breaches any of their
representation, warranty, or covenant in this Agreement; or
(d) By any party in writing, without liability, if any court or
governmental or regulatory agency order, writ, injunction, or decree
prohibits or restrains any party from consummating the transactions
contemplated here.
10.02 Termination of Obligations. Termination of this Agreement
pursuant to this article will terminate all of the parties' obligations,
except for the obligations under Sections 7.02 (a) and (b) and 12.08
hereof. However, termination pursuant to Sections 10.01(b) or (c) hereof
will not relieve a defaulting or breaching party from any liability to any
other party. Within fifteen (15) days after this Agreement is terminated,
each party will, upon written request from any other party, return all
documents and copies previously delivered to it or made in connection with
this Agreement.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS
---------------------------
AND WARRANTIES AND INDEMNIFICATION
----------------------------------
11.01 Survival of Representations and Warranties. All
representations, warranties, covenants, and agreements made or to be
performed by Seller or Xxxxx pursuant to this Agreement will survive the
execution and delivery hereof and Closing hereunder, and will thereafter
terminate and expire (a) on the date which is eighteen (18) months after
Closing, with respect to any "General Claim" (as herein defined) which has
not occurred or arisen on or before such date, and (b) with respect to any
"Tax Claim" (as herein defined), on the later of (i) ninety (90) days after
the date upon which the liability to which any such Tax Claim may relate is
barred by all applicable statutes of limitation, and (ii) ninety (90) days
after the date upon which any claim for refund or credit related to such
Tax Claim is barred by all applicable statutes of limitation. With respect
to any "Environmental Claim," such representations, warranties, covenants
and agreements will survive until ninety (90) days after the date upon
which the liability to which such Environmental Claims is barred by
applicable statute of limitations. As used in this Agreement, the
following terms have the following meanings:
(a) "General Claim" means any claim based upon, arising out of
or otherwise related to any material inaccuracy in any representation
or warranty or any breach of any covenant or agreement made by Seller
in or pursuant to this Agreement, other than a Tax Claim or an
Environmental Claim.
(b) "Tax Claim" means any claim based upon, arising out of or
otherwise related to any material inaccuracy in any representation or
warranty or any breach of any covenant or agreement made or to be
performed by Seller pursuant to this Agreement and related to any
federal, state, or local taxes of any kind or description; or any
claim related to of any taxes (including interest and penalties
relating thereto) now or hereafter due and relating to the business of
Seller or the Assets prior to Closing.
(c) "Environmental Claim" means any claim based on, arising out
of or otherwise related to any matters disclosed by Seller on
Schedule 5.18 or any material inaccuracy in any representation or
warranty of Seller related to environmental matters contained herein.
11.02 Obligations of Seller. Seller agrees to indemnify, defend
and hold the Partnership and Xxxxx (and each of their shareholders,
directors, officers, employees, affiliates and assigns) harmless from and
against all losses, costs, deficiencies, damages, consequential damages
(including, but not limited to, interruptions of business and costs of
remedial actions), fines, penalties and liabilities incurred, and all
expenses (including, but not limited to reasonable attorneys' fees) arising
out of or otherwise related to any General Claim, Tax Claim, or any
Environmental Claim (collectively, "Losses," and individually, a "Loss"),
net of any insurance recovery actually received relating to such Loss. To
the extent that any portion of the Consideration has been distributed by
Seller to its shareholders, the undersigned shareholders of Seller shall
jointly and severally participate in the indemnification provided by Seller
herein, but only to the extent of the funds or property distributed to them
related to the sale contemplated herein.
11.03 Obligations of Xxxxx. Xxxxx agrees to indemnify, defend and
hold Seller (and its shareholders, directors, officers, employees,
affiliates and assigns) harmless from and against all losses, costs,
deficiencies, damages, consequential damages (including, but not limited
to, interruptions of business and costs of remedial actions), fines,
penalties and liabilities incurred, and all expenses (including, but not
limited to reasonable attorneys' fees) arising out of or otherwise related
to any General Claim (collectively, "Losses," and individually, a "Loss"),
net of any insurance recovery actually received relating to such Loss.
11.04 Notice of Loss or Asserted Liability. Promptly after
(a) becoming aware of circumstances that have resulted in a Loss for which
any party hereto (the "Indemnitee") intends to seek indemnification under
Sections 11.02 and 11.03 hereof or (b) receipt by the Indemnitee of written
notice of any demand, claim or circumstances which, with or without the
lapse of time, the giving of notice or both, would give rise to a claim or
the commencement (or threatened commencement) of any action, proceeding or
investigation (an "Asserted Liability") that may result in a Loss, the
Indemnitee will give notice thereof to any other party (or parties)
obligated to provide indemnification pursuant to Sections 11.02 and 11.03
hereof (the "Indemnifying Party").
11.05 Opportunity to Contest. Subject to the provisions of
Section 11.06 hereof, the Indemnifying Party may elect to compromise or
contest, at its own expense and by its own counsel, any Asserted Liability.
If the Indemnifying Party elects to compromise or contest such Asserted
Liability, it will within thirty (30) days after receiving notice of the
claim from Indemnitee (or sooner, if the nature of the Asserted Liability
so requires) notify the Indemnitee in writing of its intent to do so, and
the Indemnitee will cooperate, at the expense of the Indemnifying Party, in
the compromise or contest of such Asserted Liability. If the Indemnifying
Party elects not to compromise or contest the Asserted Liability, fails to
so notify the Indemnitee of its election as herein provided or contests its
obligation to indemnify under this Agreement, the Indemnitee (upon further
notice to the Indemnifying Party) will hereafter have the right to pay,
compromise or contest such Asserted Liability on behalf of and for the
account and risk of the Indemnifying Party, subject to the right of the
Indemnifying Party to assume the compromise or contest of such Asserted
Liability at any time before final settlement or determination thereof. In
any event, the Indemnitee and the Indemnifying Party may participate, at
their own expense, in the contest of such Asserted Liability. If the
Indemnifying Party chooses to contest any Asserted Liability, the
Indemnitee will make available to the Indemnifying Party any books, records
or other documents within its control that are necessary or appropriate
for, will make its officers and employees available, on a basis reasonably
consistent with their other duties, in connection with, and will otherwise
cooperate with, such defense.
11.06 Disputes with Customers or Suppliers. Notwithstanding any
other provision to the contrary, in the case of any Asserted Liability by
any supplier or customer of Seller in connection with which the Partnership
or Xxxxx makes a claim for indemnification hereunder, the Partnership or
Xxxxx shall give a claims notice with respect thereto and shall have the
exclusive right, at its option, to defend any such matter at Seller's
expense; provided, however, no settlement or compromise for which Seller is
liable shall be made without its prior written consent.
ARTICLE XII
MISCELLANEOUS
-------------
12.01 Entire Agreement. This Agreement constitutes the sole
understanding of the parties with respect to the subject matter hereof. No
amendment, modification or alteration of the terms or provisions of this
Agreement shall be binding unless the same shall be in writing and duly
executed by the parties hereto. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof. No waiver of any of the provisions of
this Agreement shall be deemed to or shall constitute a waiver of any other
provision hereof (whether or not similar).
12.02 Parties Bound by Agreement; Successors and Assigns. The
terms, conditions and obligations of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and the respective
successors and assigns thereof. Without the prior written consent of the
other party, neither party may assign its rights, duties, or obligations
hereunder or any part hereof to any other person or entity.
12.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will for all purposes be deemed to be an
original and all of which will constitute the same instrument.
12.04 Headings. The headings of the Articles, Sections and
Schedules of this Agreement are inserted for convenience only and shall not
be deemed to constitute part of this Agreement or to affect the
construction hereof.
12.05 Knowledge. As used in this Agreement, "knowledge" and "to
the knowledge of" means actual knowledge of a party or any executive
officer or general manager of the party.
12.06 Notices. Any notice, request, instruction, or other
document to be given must be in writing and delivered personally or sent by
certified mail or by United States Express Mail, postage or fees prepaid,
or by Federal Express as follows:
If to Seller to: Xxxxx XxXxxxx, Inc
0000 X. Xxxx Xx.
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Xx., President
Facsimile (000) 000-0000
with copies to: Xxxxx X. Xxxxxxx
Attorney at Law
00000 X. 0xx Xxxxxx, #000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxx
Facsimile (000) 000-0000
and X. X. Xxxxxxxx
P. O. Xxx 00
Xxxxxxx, Xxxxxxx 00000
Attn: X. X. Xxxxxxxx
Facsimile (000) 000-0000
If to Ennis to: Ennis Business Form, Inc.
0000 X. Xxxxxxx, Xxxxx 000
XxXxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Chairman, President and CEO
Facsimile (000) 000-0000
with a copy to: Xxxxx, Xxxxxx & Xxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Facsimile (000) 000-0000
Any notice delivered personally in the manner provided here will be deemed
given to the party to whom it is directed upon the party's (or its agent's)
actual receipt. Any notice addressed and mailed in the manner provided
here will be deemed given to the party to whom it is addressed at the close
of business, local time of the recipient, on the fourth (4th) business day
after the day it is placed in the mail or, if earlier, the time of actual
receipt.
12.07 Expenses. Xxxxx and Seller agree that they will each bear
and pay all costs and expenses incurred by them respecting the transactions
contemplated herein and all investigations and proceedings in connection
therewith, including, without limitation, fees and expenses of their
respective counsel, accountants and advisors; provided that if the
acquisition contemplated hereby does not close for any reason which is not
the fault of Xxxxx, then Seller shall reimburse Xxxxx for its share of the
expense of KPMG LLP's audit of Seller's Financial Statements.
12.08 Arbitration. If any of the Parties disagree with respect to
whether any of the other Parties have breached any of the terms or
conditions of this Agreement, or if the Parties have a controversy, claim
or dispute arising out of or related to the terms and conditions of this
Agreement, the disagreement shall be settled by binding arbitration in
accordance with the Federal Arbitration Act ("FAA"). The Party who demands
arbitration will give written notice to the other Party of the claim,
controversy, monetary demand, and requested relief at the time of its
written notice to the other Party of its intention to invoke arbitration.
The Party receiving notice of intention to invoke arbitration will respond
in writing to the claim or controversy within thirty (30) days and assert
its counterclaims, if any. Upon receipt of the notice of intention to
invoke arbitration, the Parties shall work together to agree upon an
arbitrator. If within forty-five (45) days of notice of arbitration, the
Parties are unable to reach an agreement as to an arbitrator, then the
American Arbitration Association ("AAA") shall have the sole authority to
appoint an arbitrator. However, the arbitrator shall be an attorney
licensed in Texas. The Parties agree that arbitration will take place in
Dallas, Texas. The arbitrator so selected shall then diligently conduct an
arbitration proceeding in accordance with the FAA and AAA. The decision of
the arbitrator shall be final and conclusive upon the Parties, and a
judgment upon the award may be entered in any court having jurisdiction.
Each Party expressly acknowledges that the other Party has the right to
undertake reasonable, but limited, discovery procedures in connection with
the arbitration proceeding in the manner provided by the Texas Rules of
Civil Procedure, and that each Party has the right to be represented by
legal counsel throughout the arbitration proceeding. All issues regarding
discovery procedures and requests shall be decided by the arbitrator. All
documents in connection with any arbitration conducted shall be
confidential, and shall not be disclosed to any third party, except as may
be necessary for enforcement of the arbitration decision or for a proper
appeal or except as otherwise required by law. The arbitrator shall
determine the rights and obligations of the Parties according to the
procedural and substantive law of the State of Texas. The arbitrator shall
have the authority to award any remedy or relief that a Texas state court
or federal court could order or grant.
12.09 Public Disclosure. Seller shall not issue any press release
or make other public statement or disclosure concerning the transaction
contemplated hereby, without the consent of Xxxxx as to the content and the
manner of presentation and publication thereof.
12.10 Governing Law. This Agreement will be construed in
accordance with and governed by the laws of the State of Texas.
[The remainder of this page is intentionally left blank; signature pages
follow.]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date hereof.
SELLER:
XXXXX XxXXXXX, INC.,
a Colorado corporation
By: /s/Xxxxxx X. Xxxxxx, Xx.
---------------------------------------------
Xxxxxx X. Xxxxxx, Xx., President
NAF:
NAF, INC., a Colorado corporation
By: /s/Xxxxxx X. Xxxxxx, Xx.
---------------------------------------------
Xxxxxx X. Xxxxxx, Xx., President
ENNIS:
XXXXX BUSINESS FORMS, INC.,
a Texas corporation
By: /s/Xxxxx X. Xxxxxxx
---------------------------------------------
Xxxxx X. Xxxxxxx, Chairman, President and CEO
ENNIS ACQ:
XXXXX ACQUISITIONS, INC.,
a Nevada corporation
By: /s/Xxxxx X. Xxxxxxx
---------------------------------------------
Xxxxx X. Xxxxxxx, Chairman, President and CEO
FOR PURPOSES OF SECTIONS 5.25, 7.02, 7.03 AND 11.02 HEREOF:
/s/Xxxxxx X. Xxxxxx, Xx.
------------------------------------
Xxxxxx X. Xxxxxx, Xx.
/s/Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx
/s/Xxxxxxx X. XxXxxxx
------------------------------------
Xxxxxxx X. XxXxxxx
/s/Xxxxxx X. Xxxxxx, Xx.
------------------------------------
Xxxxxx X. Xxxxxx, Xx.
/s/Xxxxxxx Xxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxx
/s/Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
FOR PURPOSES OF SECTIONS 5.25, 7.02 AND 7.03 HEREOF:
/s/Xxxxxx X. Xxxxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxxxx
FOR PURPOSES OF SECTIONS 5.25 and 11.02 HEREOF:
/s/Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx
