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EXHIBIT 10.1
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ASSET PURCHASE AGREEMENT
by and among
ACCESS CORPORATION
as Seller
and
UNIVERSAL DOCUMENT MANAGEMENT SYSTEMS, INC.
as Purchaser
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TABLE OF CONTENTS
ARTICLE I
Definitions............................................................ 1
Section 1.1 Certain General Definitions.......................... 1
ARTICLE II
Terms of Sale and Payment.............................................. 4
Section 2.1 Sale of Assets....................................... 4
2.1.1 The Assets.................................. 4
2.1.2 Excluded Assets............................. 5
2.1.3 Assumed Liabilities......................... 5
Section 2.2 Purchase Price....................................... 6
Section 2.4 The Closing.......................................... 6
ARTICLE III
Representations and Warranties of the Company and the Stockholders..... 6
Section 3.1 Organization and Good Standing; Qualification........ 6
Section 3.2 Corporate Records.................................... 7
Section 3.3 Authorization and Validity........................... 7
Section 3.4 No Violation......................................... 7
Section 3.5 Consents............................................. 7
Section 3.6 Financial Statements................................. 8
Section 3.7 Liabilities and Obligations.......................... 8
Section 3.8 Employee Matters..................................... 8
3.8.1 Cash Compensation........................... 8
3.8.2 Compensation Plans.......................... 8
3.8.3 Employment Agreements....................... 9
3.8.4 Employee Policies and Procedures............ 9
3.8.5 Unwritten Amendments........................ 9
3.8.6 Labor Compliance............................ 9
3.8.7 Unions...................................... 9
3.8.8 Aliens...................................... 9
Section 3.9 Employee Benefit Plans............................... 10
3.9.1 Identification.............................. 10
3.9.2 Administration.............................. 10
3.9.3 Examinations................................ 10
3.9.4 Prohibited Transactions..................... 10
3.9.5 Claims and Litigation....................... 10
3.9.6 Qualification............................... 10
3.9.7 Funding Status.............................. 11
3.9.8 Excise Taxes................................ 11
3.9.9 Multiemployer Plans......................... 11
3.9.10 PBGC........................................ 11
3.9.11 Retirees.................................... 11
Section 3.10 Absence of Certain Changes........................... 11
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Section 3.11 Title; Leased Assets.......................................................... 13
3.11.1 Real Property........................................................ 13
3.11.2 Personal Property.................................................... 13
3.11.3 Leases............................................................... 13
Section 3.12 Commitments................................................................... 13
3.12.1 Commitments; Defaults................................................ 13
3.12.2 No Cancellation or Termination of Commitment......................... 15
Section 3.13 Insurance..................................................................... 15
Section 3.14 Proprietary Rights and Information............................................ 15
Section 3.15 Taxes......................................................................... 15
3.15.1 Filing of Tax Returns................................................ 15
3.15.2 Payment of Taxes..................................................... 16
3.15.3 No Pending Deficiencies, Delinquencies, Assessments or Audits........ 16
3.15.4 No Extension of Limitation Period.................................... 16
3.15.5 Withholding Requirements Satisfied................................... 16
3.15.6 Foreign Person....................................................... 16
3.15.7 Safe Harbor Lease.................................................... 16
3.15.8 Tax Exempt Entity.................................................... 16
3.15.9 Collapsible Corporation.............................................. 17
3.15.10 Boycotts............................................................. 17
3.15.11 Parachute Payments................................................... 17
3.15.12 S Corporation........................................................ 17
3.15.13 Personal Service Corporation......................................... 17
3.15.14 Personal Holding Company............................................. 17
Section 3.16 Compliance with Laws.......................................................... 17
Section 3.17 Finder's Fee.................................................................. 17
Section 3.18 Litigation.................................................................... 17
Section 3.19 Condition of Fixed Assets..................................................... 18
Section 3.20 Distributions and Repurchases................................................. 18
Section 3.21 Banking Relations............................................................. 18
Section 3.22 Ownership Interests of Interested Persons; Affiliations....................... 18
Section 3.23 Environmental Matters......................................................... 18
Section 3.24 Certain Payments.............................................................. 18
ARTICLE IV
Representations and Warranties of Purchaser..................................................... 19
Section 4.1 Organization and Good Standing................................................ 19
Section 4.2 Authorization and Validity.................................................... 19
Section 4.3 Finder's Fee.................................................................. 19
Section 4.4 Reserved...................................................................... 19
Section 4.5 Filings....................................................................... 19
ARTICLE V
Covenants of the Company........................................................................ 20
Section 5.1 Consummation of Agreement..................................................... 20
Section 5.2 Business Operations........................................................... 20
Section 5.3 Access........................................................................ 20
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Section 5.4 Notification of Certain Matters.................................. 20
Section 5.5 Approvals of Third Parties....................................... 21
Section 5.6 Employee Matters................................................. 21
Section 5.7 Contracts........................................................ 21
Section 5.8 Capital Assets; Payments of Liabilities.......................... 22
Section 5.9 Mortgages, Liens and Guaranties.................................. 22
Section 5.10 Acquisition Proposals............................................ 22
5.10.1 Solicited Proposals..................................... 22
5.10.2 Other Potential Bidders................................. 22
Section 5.11 Distributions and Repurchases.................................... 23
ARTICLE VI
Covenants of Purchaser............................................................. 23
Section 6.1 Consummation of Agreement........................................ 23
Section 6.2 Requirements to Effect Acquisition............................... 23
Section 6.3 Access........................................................... 23
Section 6.4 Notification of Certain Matters.................................. 24
Section 6.5 Approvals of Third Parties....................................... 24
ARTICLE VII
Covenants of all Parties........................................................... 24
Section 7.1 Filings; Other Action............................................ 24
Section 7.2 Amendment of Schedules........................................... 25
Section 7.3 Executive Retention Agreements................................... 25
ARTICLE VIII
Conditions Precedent of Purchaser.................................................. 26
Section 8.1 Due Diligence.................................................... 26
Section 8.2 Representations and Warranties................................... 26
Section 8.3 Covenants........................................................ 26
Section 8.4 Legal Opinion.................................................... 26
Section 8.5 Proceedings...................................................... 26
Section 8.6 No Material Adverse Change....................................... 26
Section 8.7 Securities Approvals............................................. 26
Section 8.8 Simultaneous Closings............................................ 26
Section 8.9 Closing Deliveries............................................... 27
ARTICLE IX
Conditions Precedent of the Company................................................ 27
Section 9.1 Representations and Warranties................................... 27
Section 9.2 Covenants........................................................ 27
Section 9.3 Legal Opinions................................................... 27
Section 9.4 Proceedings...................................................... 27
Section 9.5 Government Approvals and Required Consents....................... 27
Section 9.6 Securities Approvals............................................. 27
Section 9.7 Closing Deliveries............................................... 28
Section 9.8 Stockholder Approval............................................. 28
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Section 9.9 Oce Transaction.................................................. 28
ARTICLE X
Closing Deliveries................................................................. 28
Section 10.1 Deliveries of the Company........................................ 28
Section 10.2 Deliveries of Purchaser.......................................... 29
ARTICLE XI
Post Closing Matters............................................................... 30
Section 11.1 Further Instruments of Transfer.................................. 30
ARTICLE XIV
Termination........................................................................ 30
Section 12.1 Termination...................................................... 30
Section 12.2 Effect of Termination............................................ 31
ARTICLE XIII
Nondisclosure of Confidential Information.......................................... 31
Section 13.1 Nondisclosure.................................................... 31
Section 13.2 Damages.......................................................... 32
Section 13.3 Survival......................................................... 32
ARTICLE XIV
Miscellaneous...................................................................... 32
Section 14.1 Amendment; Waivers............................................... 32
Section 14.2 Assignment....................................................... 32
Section 14.3 Parties In Interest; No Third Party Beneficiaries................ 32
Section 14.4 Entire Agreement................................................. 32
Section 14.5 Severability..................................................... 33
Section 14.6 Survival of Representations, Warranties and Covenants............ 33
Section 14.7 Governing Law.................................................... 33
Section 14.8 Captions......................................................... 33
Section 14.9 Gender and Number................................................ 33
Section 14.10 Reference to Agreement........................................... 33
Section 14.11 Confidentiality; Publicity and Disclosures....................... 33
Section 14.12 Notice........................................................... 34
Section 14.13 Choice of Forum.................................................. 35
Section 14.14 No Waiver; Remedies.............................................. 35
Section 14.15 Counterparts..................................................... 35
Section 14.16 Costs, Expenses and Legal Fees................................... 35
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), dated as of August
19, 1997, is by and between ACCESS Corporation, an Ohio corporation (including
any trust successor thereto as contemplated by Section 14.2, the "Company"), and
Universal Document Management Systems, Inc., an Ohio corporation ("Purchaser").
WITNESSETH:
WHEREAS, the Company is engaged in the business of servicing hardware
and software for its installed base of customers and third parties, and
marketing software for the electronic storage, control and processing of
technical documentation, and
WHEREAS, the Company desires to sell to Purchaser and Purchaser desires
to purchase from the Company substantially all of the Company's assets (except
the Excluded Assets as defined below) and assume all of the Company's
liabilities as of the Closing Date (as defined herein) upon the terms and
conditions hereinafter set forth,
NOW, THEREFORE, and in consideration of the mutual representations,
warranties and covenants herein contained, and on the terms and subject to the
conditions herein set forth, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN GENERAL DEFINITIONS. As used in this Agreement, the
following terms shall have the meanings set forth below:
1.1.1 "actual knowledge", "have no actual knowledge of, "do
not actually know of" and similar phrases shall mean (i) in the case of a
natural person, the actual conscious awareness, or not, as the context requires,
of the particular fact by such person, and (ii) in the case of an entity, the
actual conscious awareness, or not, as the context requires, of the particular
fact by any director or executive officer of such entity.
1.1.2 "Affiliate" with respect to any person shall mean a
person that directly or indirectly through one or more intermediaries, controls,
or is controlled by or is under common control with, such person.
1.1.3 "best knowledge", "have no knowledge of", "do not know
of" or "to the knowledge of" and similar phrases shall mean (i) in the case of a
natural person, the particular fact was known, or not known, as the context
requires, to such person after reasonable investigation and inquiry by such
person, and (ii) in the case of an entity, the particular fact was known, or not
known,
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as the context requires, to any stockholder, director or executive officer of
such entity after reasonable investigation and inquiry.
1.1.4 "Company Capital Stock" shall mean the shares of capital
stock of the Company, as set forth in the Company Disclosure Schedules, which
are authorized, issued and outstanding at any time on or after the date of this
Agreement to and including the Closing Date.
1.1.5 "Company Disclosure Schedules" shall mean the schedules
of exceptions and other disclosures attached hereto as of the date hereof or
otherwise delivered by the Company to Purchaser, as such may be amended or
supplemented from time to time pursuant to the provisions hereof. The
information contained in the Company Disclosure Schedules is labeled to
correspond with the principal Section numbers of this Agreement to which the
disclosure relates.
1.1.6 "Confidential Information" shall mean all trade secrets
and other confidential and/or proprietary information of the particular person,
including information derived from reports, investigations, research, work in
progress, codes, marketing and sales programs, financial projections, cost
summaries, pricing formulae, contract analyses, financial information,
projections, confidential filings with any state or federal agency, and all
other confidential concepts, methods of doing business, ideas, materials or
information prepared or performed for, by or on behalf of such person by its
employees, officers, directors, agents, representatives, or consultants.
1.1.7 "Environmental Laws" shall mean any laws or regulations
pertaining to the environment, as in effect on the date hereof and the Closing
Date, including without limitation (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. SectionSection9601 et seq.),
as amended (including without limitation as amended pursuant to the Superfund
Amendments and Reauthorization Act of 1986), and regulations promulgated
thereunder, (ii) the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
SectionSection6901 et seq., as amended), and regulations promulgated thereunder,
(iii) statutes, rules or regulations, whether federal, state or local,
applicable to the Company's assets or operations that relate to asbestos or
polychlorinated biphenyls, and (iv) the provisions contained in any similar
state statutes or regulations relating to environmental matters applicable to
the Company's assets or operations.
1.1.8 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
1.1.9 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
1.1.10 "Initial Public Offering" shall mean the initial
underwritten public offering of Purchaser Common Stock contemplated by the
Registration Statement (as hereinafter defined).
1.1.11 [Reserved]
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1.1.12 "Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended.
1.1.13 "IRS" shall mean the Internal Revenue Service of the
United States Department of the Treasury.
1.1.14 "Material Adverse Effect" shall mean a material adverse
effect on the Company's business, operations, condition (financial or otherwise)
or results of operations, taken as a whole, in consideration of all relevant
facts and circumstances.
1.1.15 "ordinary course of business" shall mean the usual and
customary way in which the Company has conducted its business in the past.
1.1.16 "person" shall mean any natural person, corporation,
partnership, joint venture, limited liability company, association, group,
organization or other entity.
1.1.17 "Related Acquisitions" shall mean, collectively, the
transactions contemplated hereby, and the mergers and acquisitions of entities
and assets contemplated by the definitive acquisition agreements between
Purchaser and the other Target Companies.
1.1.18 "Schedules" shall mean the Company Disclosure Schedules
and the Purchaser Disclosure Schedules.
1.1.19 "SEC" shall mean the United States Securities and
Exchange Commission.
1.1.20 "Securities Act" shall mean the Securities Act of 1933,
as amended.
1.1.21 "Target Companies" shall mean the companies listed on
Exhibit 1.1.21 which Purchaser intends to acquire simultaneously with its
acquisition of the Company.
1.1.22 "Tax Returns" shall include all federal, state, local
or foreign income, excise, corporate, franchise, property, sales, use, payroll,
withholding, provider, environmental, duties, value added and other tax returns
(including information returns).
1.1.23 "Underwriter Representative" shall mean any underwriter
in the Initial Public Offering who acts as a managing underwriter in the Initial
Public Offering.
1.1.24 "Purchaser Common Stock" shall mean the Common Stock,
par value $0.01 per share, of Purchaser.
1.1.25 "Purchaser Disclosure Schedules" shall mean the
schedules of exceptions and other disclosures attached hereto or otherwise
delivered by Purchaser to the Company, as such may be amended or supplemented
from time to time pursuant to the provisions hereof. The information
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contained in the Purchaser Disclosure Schedules is labeled to correspond with
the Section numbers of this Agreement to which the disclosure relates, if
applicable.
1.1.26 "Accountable Earnings" shall mean with respect to the
12-month period ending April 30, 1998 for which Accountable Earnings are to be
determined for the purposes hereof, the amount of the gross profit attributable
to the Company's hardware services business (and specifically excluding the
Company's EDMS software and professional services business), as an independent
company prior to the Closing and as a separate unit of the Purchaser after the
Closing on a combined basis (the "Hardware Services Business"), for such year,
with all expenses classified consistently between measurement periods, as
reported in the Company's and Purchaser's consolidated statements of income for
such 12-month period, determined in accordance with generally accepted
accounting principles, consistently applied and as reviewed by KPMG Peat Marwick
LLP.
1.1.27 "Stockholders(s)" shall mean the holder(s) of any
Company Capital Stock.
1.1.28 "Option Proceeds" shall mean any proceeds received by
the Company as a result of the exercise of stock options and/or stock
appreciation rights ("SARs") with respect to Company Capital Stock after the
Company Balance Sheet Date.
1.1.29 "Oce Agreement" shall mean the Agreement of even date
herewith between the Company and Oce N.V. providing, inter alia, for the payment
of $1,500,000 (plus accrued dividends if any) in cash to Oce upon the
liquidation of the Company.
1.1.30 "Oce Reserve Fund" shall mean $1,500,000 in cash to be
paid to Oce N.V. pursuant to the Oce Agreement.
1.1.31 "Oce Transaction" shall mean the payment of $1,500,000
(plus accrued dividends if any) to Oce pursuant to the Company's Plan of
Complete Liquidation and Dissolution in full satisfaction of Oce's equity
interest in the Company, all as contemplated by the Oce Agreement.
ARTICLE II
TERMS OF SALE AND PAYMENT
SECTION 2.1 SALE OF ASSETS.
2.1.1 THE ASSETS. The Company shall sell, assign, convey,
transfer and deliver to Purchaser and Purchaser shall purchase and pay for, on
the Closing Date, free and clear of all liens and encumbrances, all of the
assets, rights, properties, claims, contracts and business of the Company at the
Closing Date of every kind, nature, character and description, tangible and
intangible, real,
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personal or mixed, wherever located (excluding the Excluded Assets, the
"Assets"), including but not limited to, the following:
(i) Inventory. The Company's entire inventory of
finished goods, purchased parts, operating supplies, work-in-progress and
unshipped finished goods of the Company, including products or supplies on hand
or in transit ("Inventory");
(ii) Equipment. All vehicles, equipment, furniture,
fixtures, supplies, computers and computer equipment and other tangible personal
property, all material items of which are listed on Schedule 2.1.1(ii)
("Equipment");
(iii) Records. All pertinent records, financial and
non-financial, relating to the present and past operating history of the
Company's business;
(iv) Contracts. All outstanding contracts, leases,
licenses, obligations, commitments, agreements, customer orders, contracts for
goods, supplies, materials, equipment, machinery, for other items used in the
operation of the Company's business that are disclosed in writing to Purchaser
and are in existence on the Closing Date (the "Contracts");
(v) Leases of Real Property. The leasehold interests
in all of the real property leased by the Company, all of which are listed on
Schedule 2.1.1(v) hereto;
(vi) Intangible Assets. All intangible assets of the
Company relating to past, current and presently contemplated future products
including trademarks, trademark registrations, patents, patent registrations,
copyrights, copyright registrations, tradenames, other trade designations,
trademark applications, patent applications, copyright applications, inventions,
service marks, trade secrets, permits, licenses, royalties (including any rights
to xxx for breach or past infringement) relating to such business, and
agreements relating to technology, know-how or processes the Company is licensed
or authorized to use by others, or which it licenses or authorizes others to
use, all of which, to the extent material to the business of the Company, are
listed on Schedule 2.1.1(vi) (the "Proprietary Rights") hereto;
(vii) Accounts Receivable. All accounts receivable of
the Company in existence on the Closing Date, including all notes, bonds and
other evidences of such receivables;
(viii) Cash/Prepaid Expenses. All cash on hand, cash
equivalents, deposits in transit and prepaid expenses as of the Closing Date,
excluding any Option Proceeds and the Class II Preferred Stock Reserve Fund; and
(ix) Permits and Licenses. All permits, licenses,
consents and any other forms of government approval as will be required for the
operation of the Company's business as of the Closing Date.
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2.1.2 EXCLUDED ASSETS. The Excluded Assets shall consist of:
(i) The Option Proceeds;
(ii) The Oce Reserve Fund; and
(iii) The personal property, including office
furniture, owned by Company employees and listed on Schedule 2.1.2(iii) of the
Company Disclosure Schedules.
2.1.3 ASSUMED LIABILITIES. On the Closing Date, Purchaser will
assume and agree to pay and discharge all of the obligations and liabilities of
the Company in existence as of the Closing Date, whether or not accrued,
absolute, contingent, unasserted, unassessed or otherwise, including but not
limited to liabilities arising under any Environmental Laws with respect to any
of the Assets.
SECTION 2.2 PURCHASE PRICE. Purchaser shall pay the Company a purchase
price for the Assets as follows:
(i) At the Closing, $3 million in cash,
(ii) Any amounts payable pursuant to Section 2.4
(ii)(c); and
(iii) Additional consideration of up to $1 million
which shall be payable in cash. The additional consideration shall be based upon
Accountable Earnings as follows:
If Accountable Earnings are: Additional Consideration will be:
$2,000,000 or greater $1,000,000
$1,950,000 to $1,999,999.99 $800,000
$1,900,000 to $1,949,999.99 $600,000
$1,850,000 to $1,899,999.99 $400,000
$1,800,000 to $1,849,999.99 $200,000
Less than $1,800,000 -0-
(iv) Within 90 days after April 30, 1998, Purchaser
shall deliver to the Company its calculation of the additional consideration
determined pursuant to Section 2.2(ii), showing in reasonable detail the
calculation thereof. The Company shall be entitled to access to the books,
records and personnel of Purchaser to review such calculation. If the Company
notifies Purchaser of its agreement with such calculation or does not object to
Purchaser's calculation of such additional consideration within 45 days after
the receipt thereof, such calculation shall be final, binding and conclusive for
all purposes. If the Company objects to such calculation, it shall notify
Purchaser within such 45-day period, setting forth in reasonable detail the
basis for its objection and its proposed adjustments to the calculation of such
additional consideration. Purchaser and the
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Company shall seek in good faith to resolve any such dispute within 30 days
following receipt of notice of the Company's objection. If they are unable to
reach agreement within such 30-day period, then such accounting firm as shall be
agreed upon by the parties shall be engaged to review the calculations of
additional consideration prepared by Purchaser and the Company and shall make a
final, binding and conclusive determination of any matters in dispute. The fees
and expenses of such accounting firm shall be paid jointly by Purchaser and the
Company.
(v) Purchaser shall pay the additional consideration
calculated pursuant to Section 2.2.(ii) to the Company in cash within 30 days
after the final calculation thereof pursuant to Section 2.2(iii).
(vi) From the Closing until April 30, 1998, Purchaser
shall operate the Hardware Services Business in the ordinary course, consistent
with the Company's prior practice.
SECTION 2.3 ALLOCATION. Exhibit 2.3, to be agreed upon prior the
Closing and attached hereto, shall set forth an allocation of the Purchase
Price.
SECTION 2.4 ADJUSTMENT.
(a) If as of the Closing Date,
(i) the Company has at least $1,500,000 in cash, then the
Company shall consummate the Oce Transaction and pay to Oce all amounts payable
to it pursuant thereto out of the Company's cash on hand as of the Closing Date;
(ii) the Company has less than $1,500,000 in cash and the sum
of the Company's cash and accounts receivable equals or exceeds $3,200,000, then
(a) the Company will calculate its accounts receivable as of the Closing Date,
provided that at Purchaser's request, such calculation shall be subject to
review by and approval of Purchaser's accountants within five business days of
the Closing Date; (b) the Company shall consummate the Oce Transaction and pay
to Oce all amounts payable to it pursuant thereto first out of the Company's
cash on hand as of the Closing Date, with any remaining amount to be paid out of
the purchase price paid to the Company pursuant to Section 2.2(i); and (c)
Purchaser shall pay the Company (or its shareholders), as soon as practicable
after receipt by Purchaser, 50% of any payments actually received by Purchaser
thereafter with respect to the Company's accounts receivable identified in
clause (a) above until the total amount paid to the Company (or its
shareholders) from such accounts receivable equals the amount which the Company
deducted from the purchase price in connection with payment to Oce pursuant to
clause (b) above; or
(iii) the Company has less than $1,500,00 and the sum of the
Company's cash and accounts receivable is less than $3,200,000, then Purchaser
may, at its sole discretion, terminate this Agreement, which termination shall
have the effect described in Section 12.2.
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(b) If Section 2.4(a)(ii) above is applicable, Purchaser shall attempt
to collect such accounts receivable in the ordinary course, using efforts
consistent with Purchaser's collection of other accounts receivable of
Purchaser, and within 15 days of Purchaser's receipt of a request from the
Company, shall provide the Company with a report on Purchaser's collection of
such accounts receivable.
SECTION 2.5 THE CLOSING. The Closing shall take place at 10:00 a.m.,
Cincinnati time, at the offices of Xxxxxxxx & Shohl LLP simultaneously with the
closings of the Initial Public Offering and Purchaser's acquisitions of the
Target Companies. The date on which the Closing occurs is hereinafter referred
to as the "Closing Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser that, except as may be
set forth in the Company Disclosure Schedules, the following are true and
correct as of the date hereof:
SECTION 3.1 ORGANIZATION AND GOOD STANDING; QUALIFICATION. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of its state of organization, with all requisite corporate power and
authority to carry on the business in which it is engaged, to own the properties
it owns, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Company is qualified and licensed to do
business in every jurisdiction in which such qualification and licensing is
required, except where the failure to be so licensed or qualified would not have
a Material Adverse Effect. Except for an office in Irvine, California and
warehouse facilities in Hebron, Kentucky, each of which is leased, the Company
does not have any offices in any state other than the state of its organization.
SECTION 3.2 CORPORATE RECORDS. The copies of the Articles of
Incorporation and Code of Regulations, and all amendments thereto, of the
Company that have been delivered or made available to Purchaser are true,
correct and complete copies thereof, as in effect on the date hereof. The minute
books of the Company, which have been made available to Purchaser, contain
accurate minutes of all meetings of, and accurate consents to all actions taken
without meetings by, the Board of Directors (and any committees thereof) and the
Stockholders since April 30, 1994.
SECTION 3.3 AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by the Company of this Agreement, and the consummation of the
transactions contemplated hereby, have been or will be as of the Closing Date
duly authorized by the Board of Directors of the Company, but such consummation
is subject to the approval of the Stockholders. This Agreement has been duly
executed and delivered by the Company and constitutes and will as of the Closing
Date constitute the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as may be
limited by applicable bankruptcy,
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insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies.
SECTION 3.4 NO VIOLATION. Neither the execution, delivery or
performance of this Agreement nor the consummation of the transactions
contemplated hereby will (a) conflict with, or result in a violation or breach
of the terms, conditions or provisions of, or constitute a default under, the
Articles of Incorporation or Code of Regulations of the Company, (b) except as
would not, individually or in the aggregate, result in a Material Adverse
Effect, conflict with, or result in a violation or breach of the terms,
conditions or provisions of, or constitute a default under, any agreement,
indenture or other instrument under which the Company is bound or to which any
of the assets of the Company are subject, or result in the creation or
imposition of any security interest, lien, charge or encumbrance upon any of the
assets of the Company or (c) except as would not, individually or in the
aggregate, result in a Material Adverse Effect, violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body.
SECTION 3.5 CONSENTS. Except as may have been obtained or as may be
required under the Exchange Act, the Securities Act, the Ohio General
Corporation Law and state securities laws, no consent, authorization, approval,
permit or license of, or filing with, any governmental or public body or
authority, any lender or lessor or any other person or entity is required to be
obtained by the Company to authorize, or is required to be obtained by the
Company in connection with, the execution, delivery and performance of this
Agreement or the agreements contemplated hereby on the part of the Company,
other than the approval of the Stockholders and such consents as to which the
failure to obtain would not, individually or in the aggregate, result in a
Material Adverse Effect.
SECTION 3.6 FINANCIAL STATEMENTS. The Company has furnished to
Purchaser its audited balance sheet dated as of April 30, 1997 (the "Company
Balance Sheet" and the date thereof shall be referred to as the "Company Balance
Sheet Date") and audited related statements of income, retained earnings and
cash flows for the two full fiscal years then ended (collectively, with the
related notes thereto, the "Financial Statements"), copies of which are included
in the Company Disclosure Schedules. The Financial Statements fairly present the
financial condition and results of operations of the Company as of the dates and
for the periods indicated and have been prepared in conformity with generally
accepted accounting principles (subject to normal year-end adjustments and the
absence of notes for any unaudited interim financial statement for any interim
periods presented) applied on a consistent basis with prior periods, except as
otherwise indicated in the Financial Statements.
SECTION 3.7 LIABILITIES AND OBLIGATIONS. The Financial Statements
reflect all material liabilities of the Company, accrued, contingent or
otherwise that would be required to be reflected on a balance sheet, or in the
notes thereto, prepared in accordance with generally accepted accounting
principles, except for liabilities and obligations incurred in the ordinary
course of business since the Company Balance Sheet Date. Except as set forth in
the Financial Statements, the Company is not liable upon or with respect to, or
obligated in any other way to provide funds
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in respect of or to guarantee or assume in any manner, any debt, obligation or
dividend of any person, corporation, association, partnership, joint venture,
trust or other entity, and the Company does not know of any valid basis for the
assertion of any other material claims or liabilities.
SECTION 3.8 EMPLOYEE MATTERS.
3.8.1 CASH COMPENSATION. The Company Disclosure Schedules
contain a complete and accurate list of the names, titles and annual cash
compensation as of the Company Balance Sheet Date, including without limitation
wages, salaries, bonuses (discretionary and formula) and other cash compensation
(the "Cash Compensation") of all employees of the Company. In addition, the
Company Disclosure Schedules contain a complete and accurate description of (i)
all increases in Cash Compensation of employees of the Company during the
current fiscal year and the immediately preceding fiscal year and (ii) any
promised increases in Cash Compensation of employees of the Company that have
not yet been effected.
3.8.2 COMPENSATION PLANS. The Company Disclosure Schedules
contain a complete and accurate list of all compensation plans, arrangements or
practices (the "Compensation Plans") sponsored by the Company or to which the
Company contributes on behalf of its employees. The Compensation Plans include
without limitation plans, arrangements or practices that provide for severance
pay, deferred compensation, incentive, bonus or performance awards, and stock
ownership or stock options. The Company has provided or made available to
Purchaser a copy of each written Compensation Plan and a written description of
each unwritten Compensation Plan. Each of the Compensation Plans can be
terminated or amended at will by the Company.
3.8.3 EMPLOYMENT AGREEMENTS. The Company is not a party to any
employment agreement ("Employment Agreements") with respect to any of its
employees. Employment Agreements include without limitation employee leasing
agreements, employee services agreements and noncompetition agreements.
3.8.4 EMPLOYEE POLICIES AND PROCEDURES. The Company has
provided to Purchaser a complete and accurate list of all employee manuals and
all material policies, procedures and work-related rules (the "Employee
Policies and Procedures") that apply to employees of the Company. The Company
has maintained and shall continue to maintain, and has given and shall continue
to give Purchaser reasonable access to, a copy of all written Employee Policies
and Procedures and a written description of all material unwritten Employee
Policies and Procedures.
3.8.5 UNWRITTEN AMENDMENTS. No material unwritten amendments
have been made, whether by oral communication, pattern of conduct or otherwise,
with respect to any Compensation Plans or Employee Policies and Procedures.
3.8.6 LABOR COMPLIANCE. The Company has been and is in
compliance with all applicable laws, rules, regulations and ordinances
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except for any such failures to be in
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compliance that, individually or in the aggregate, would not result in a
Material Adverse Effect, and the Company is not liable for any arrears of wages
or penalties for failure to comply with any of the foregoing. The Company has
not engaged in any unfair labor practice or discriminated on the basis of race,
color, religion, sex, national origin, age, disability or handicap in its
employment conditions or practices that would, individually or in the aggregate,
result in a Material Adverse Effect. There are no (i) unfair labor practice
charges or complaints or racial, color, religious, sex, national origin, age,
disability or handicap discrimination charges or complaints pending or, to the
actual knowledge of the Company, threatened against the Company before any
federal, state or local court, board, department, commission or agency (nor, to
the knowledge of the Company, does any valid basis therefor exist) or (ii)
existing or, to the actual knowledge of the Company, threatened labor strikes,
disputes, grievances, controversies or other labor troubles affecting the
Company (nor, to the knowledge of the Company, does any valid basis therefor
exist).
3.8.7 UNIONS. The Company has never been a party to any
agreement with any union, labor organization or collective bargaining unit. No
employees of the Company are represented by any union, labor organization or
collective bargaining unit. To the actual knowledge of the Company, none of the
employees of the Company has threatened to organize or join a union, labor
organization or collective bargaining unit.
3.8.8 ALIENS. To the best knowledge of the Company, all
employees of the Company are citizens of, or are authorized in accordance with
federal immigration laws to be employed in, the United States.
SECTION 3.9 EMPLOYEE BENEFIT PLANS.
3.9.1 IDENTIFICATION. The Company Disclosure Schedules contain
a complete and accurate list of all employee benefit plans (within the meaning
of Section 3(3) of ERISA) sponsored by the Company, or to which the Company has
contributed on behalf of its employees, within the three years preceding the
date hereof (the "Employee Benefit Plans"). The Company has provided or made
available to Purchaser copies of all plan documents, determination letters,
pending determination letter applications, trust instruments, insurance
contracts, administrative services contracts, annual reports, actuarial
valuations, summary plan descriptions, summaries of material modifications and
administrative forms that constitute a part of or are incident to the
administration of the Employee Benefit Plans. In addition, the Company has
provided or made available to Purchaser a written description of any other
existing practice engaged in by the Company that constitutes an Employee Benefit
Plan. Subject to the requirements of the Internal Revenue Code and ERISA, each
of the Employee Benefit Plans can be terminated or amended at will by the
Company. No unwritten amendment exists with respect to any Employee Benefit
Plan.
3.9.2 ADMINISTRATION. Each Employee Benefit Plan has been
administered and maintained in compliance with all applicable laws, rules and
regulations, except where the failure to be in compliance would not,
individually or in the aggregate, result in a Material Adverse Effect. The
Company and the Stockholders have made all necessary filings, reports and
disclosures pursuant
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to and have complied with all requirements of the IRS Voluntary Compliance
Resolution Program with respect to all applicable Employee Benefit Plans.
3.9.3 EXAMINATIONS. The Company has not received any notice
that any Employee Benefit Plan is currently the subject of an audit,
investigation, enforcement action or other similar proceeding conducted by any
state or federal agency.
3.9.4 PROHIBITED TRANSACTIONS. No prohibited transactions
(within the meaning of Section 4975 of the Internal Revenue Code or Sections 406
and 407 of ERISA) have occurred with respect to any Employee Benefit Plan.
3.9.5 CLAIMS AND LITIGATION. No pending or, to the actual
knowledge of the Company, threatened, claims, suits or other proceedings exist
with respect to any Employee Benefit Plan other than normal benefit claims filed
by participants or beneficiaries.
3.9.6 QUALIFICATION. The Company has received a favorable
determination letter or ruling from the IRS for each of the Employee Benefit
Plans intended to be qualified within the meaning of Section 401(a) of the
Internal Revenue Code (and for which the related trust is intended to be
tax-exempt within the meaning of Section 501 (a) of the Internal Revenue Code).
No proceedings exist or, to the actual knowledge of the Company, have been
threatened that could result in the revocation of any such favorable
determination letter or ruling.
3.9.7 FUNDING STATUS. No accumulated funding deficiency
(within the meaning of Section 412 of the Internal Revenue Code), whether or not
waived, exists with respect to any Employee Benefit Plan or any plan sponsored
by any member of a controlled group (within the meaning of Section 412(n)(6)(B)
of the Internal Revenue Code) in which the Company is a member (a "Controlled
Group"). With respect to each Employee Benefit Plan subject to Title IV of
ERISA, the assets of each such plan are at least equal in value to the present
value of accrued benefits determined on an ongoing basis as of the date hereof.
The Company does not sponsor any Employee Benefit Plan described in Section
501(c)(9) of the Internal Revenue Code. None of the Employee Benefit Plans are
subject to actuarial assumptions.
3.9.8 EXCISE TAXES. Neither the Company nor any member of a
Controlled Group has any liability to pay excise taxes with respect to any
Employee Benefit Plan under applicable provisions of the Code or ERISA.
3.9.9 MULTIEMPLOYER PLANS. Neither the Company nor any member
of a Controlled Group is or ever has been obligated to contribute to a
multiemployer plan within the meaning of Section 3(37) of ERISA.
3.9.10 PBGC. None of the Employee Benefit Plans is subject to
the requirements of Title IV of ERISA.
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3.9.11 RETIREES. The Company has no obligation or commitment
to provide medical, dental or life insurance benefits to or on behalf of any of
its employees after they retire or any of its former employees who have retired
except as may be required pursuant to the continuation of coverage provisions of
Section 4980B of the Internal Revenue Code and Sections 601 through 608 of
ERISA.
SECTION 3.10 ABSENCE OF CERTAIN CHANGES. Since the Company Balance
Sheet Date, the Company has not
3.10.1 suffered a Material Adverse Effect, whether or not
caused by any deliberate act or omission of the Company or a Stockholder;
3.10.2 contracted for the purchase of any capital asset having
a cost in excess of $35,000 or made any single capital expenditure in excess of
$35,000;
3.10.3 incurred any indebtedness for borrowed money (other
than short-term borrowing in the ordinary course of business), or issued or sold
any debt securities;
3.10.4 incurred or discharged any material liabilities or
obligations except in the ordinary course of business;
3.10.5 paid any amount on any indebtedness prior to the due
date, forgiven or cancelled any claims or any debt in excess of $35,000, or
released or waived any rights or claims except in the ordinary course of
business;
3.10.6 mortgaged, pledged or subjected to any security
interest, lien, lease or other charge or encumbrance any of its properties or
assets (other than statutory liens arising in the ordinary course of business or
other liens that do not materially detract from the value or interfere with the
use of such properties or assets);
3.10.7 suffered any damage or destruction to or loss of any
assets (whether or not covered by insurance) that has, individually or in the
aggregate, resulted in a Material Adverse Effect;
3.10.8 acquired or disposed of any assets having an aggregate
value in excess of $35,000, except in the ordinary course of business;
3.10.9 written up or written down the carrying value of any
material assets, other than accounts receivable in the ordinary course of
business;
3.10.10 changed the costing system or depreciation methods of
accounting for its assets in any material respect;
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3.10.11 lost or terminated any employee, customer or supplier
that has, individually or in the aggregate, resulted in a Material Adverse
Effect;
3.10.12 increased the compensation of any director, officer or
consultant;
3.10.13 increased the compensation of any employee (except for
increases in the ordinary course of business consistent with past practice) or
hired any new employee who is expected to receive annualized compensation of at
least $60,000;
3.10.14 made any payments (other than compensation) to or
loaned any money to any employee, officer, director or Stockholder, except as
contemplated by the Oce Transaction;
3.10.15 formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
3.10.16 redeemed, purchased or otherwise acquired, or sold,
granted or otherwise disposed of, directly or indirectly, any Company Capital
Stock or securities or any rights to acquire such Company Capital Stock or
securities, or agreed to change the terms and conditions of any such Company
Capital Stock, securities or rights except in connection with the exercise of
stock options or SARs granted prior to the date hereof;
3.10.17 entered into any agreement providing for total
payments by the Company in excess of $35,000 in any 12 month period with any
person or group, or modified or amended in any material respect the terms of any
such existing agreement, except in the ordinary course of business and except
for the Oce Transaction;
3.10.18 entered into, adopted or amended any Employee Benefit
Plan, except as contemplated hereby or as required by law; or
3.10.19 entered into any other commitment or transaction or
experienced any other event that would materially interfere with its performance
under this Agreement, or otherwise has, individually or in the aggregate,
resulted in a Material Adverse Effect.
SECTION 3.11 TITLE; LEASED ASSETS.
3.11.1 REAL PROPERTY. The Company does not own any interest
(other than leasehold interests described in the Company Disclosure Schedules)
in real property. The leased real property described in the Company Disclosure
Schedules constitutes the only real property necessary for the conduct of the
Company's business as currently conducted.
3.11.2 PERSONAL PROPERTY. The Company has good, valid and
marketable title to all the personal property owned by the Company, all of which
is reflected in the Financial Statements (collectively, the "Personal
Property"). The Personal Property and the leased personal property
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referred to in Section 3.11.3 constitute the only tangible personal property
necessary for the conduct of the Company's business as currently conducted. Upon
consummation of the transactions contemplated hereby, such interest in the
Personal Property shall be free and clear of all security interests, liens,
claims and encumbrances, other than statutory liens arising in the ordinary
course of business or other liens that do not materially detract from the value
or interfere with the use of such properties or assets.
3.11.3 LEASES. All of the Company's leases which are listed
and described in the Company Disclosure Schedules are valid and, to the best
knowledge of the Company, enforceable in accordance with their respective terms
except as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable remedies.
SECTION 3.12 COMMITMENTS.
3.12.1 COMMITMENTS; DEFAULTS. Any of the following as to which
the Company is a party or is bound by, or which the assets or the business of
the Company are bound by, whether or not in writing, are listed in the Company
Disclosure Schedules (collectively "Commitments"):
3.12.1.1 any partnership or joint venture agreement;
3.12.1.2 any guaranty or suretyship, indemnification
or contribution agreement or performance bond;
3.12.1.3 any debt instrument, loan agreement or other
obligation relating to indebtedness for borrowed money or money lent or to be
lent to another;
3.12.1.4 any contract to purchase real property;
3.12.1.5 any agreement with dealers or sales or
commission agents, public relations or advertising agencies, accountants or
attorneys (other than in connection with this Agreement and the transactions
contemplated hereby) involving total payments by the Company within any 12 month
period in excess of $35,000 and which is not terminable on 30 days' notice or
without penalty;
3.12.1.6 any agreement relating to any material
matter or transaction in which an interest is held by a person or entity that is
an Affiliate of the Company or, to the best knowledge of the Company, any
Stockholder;
3.12.1.7 any agreement for the acquisition of
services, supplies, equipment, inventory (other than in the ordinary course),
fixtures or other property involving more than $35,000 in the aggregate;
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3.12.1.8 any powers of attorney;
3.12.1.9 any contracts containing noncompetition
covenants material to the business of the Company;
3.12.1.10 any agreement providing for the purchase
from a supplier of all or substantially all of the requirements of the Company
of a particular product or service; or
3.12.1.11 any other agreement or commitment not made
in the ordinary course of business or that is material to the business,
operations, condition (financial or otherwise) or results of operations of the
Company.
True, correct and complete copies of the written Commitments, and true, correct
and complete written descriptions of the oral Commitments, have heretofore been
delivered or made available to Purchaser. There are no existing or asserted
defaults, events of default or events, occurrences, acts or omissions that would
have a Material Adverse Effect and, with the giving of notice or lapse of time
or both, would constitute defaults by the Company or, to the best knowledge of
the Company, any other party to a material Commitment, and no penalties have
been incurred nor are amendments pending, with respect to the material
Commitments. The Commitments are in full force and effect and are valid and
enforceable obligations of the Company and, to the best knowledge of the
Company, the other parties thereto in accordance with their respective terms,
and no defenses, offsets or counterclaims have been asserted or, to the best
knowledge of the Company, may be made by any party thereto (other than the
Company), nor has the Company waived any rights thereunder.
3.12.2 NO CANCELLATION OR TERMINATION OF COMMITMENT. The
Company has not received notice of any plan or intention of any other party to
any Commitment to exercise any right to cancel or terminate any Commitment, and
the Company does not have actual knowledge of any fact that would justify the
exercise of such a right; and the Company does not currently contemplate, or
have reason to believe any other person currently contemplates, any amendment or
change to any Commitment.
SECTION 3.13 INSURANCE. The Company carries property, liability,
workers' compensation and other types of insurance pursuant to the insurance
policies listed and briefly described in the Company Disclosure Schedules (the
"Insurance Policies"). The Insurance Policies are all insurance polices relating
to the business of the Company. All of the Insurance Policies are, to the best
knowledge of the Company, valid and enforceable policies, except as may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies. All
Insurance Policies, or comparable replacement policies, shall be maintained in
force without interruption up to and including the Closing Date. True, complete
and correct copies of all Insurance Policies have been provided or made
available to Purchaser. The Company has not received any notice or other
communication from any issuer of any Insurance Policy canceling such policy,
materially increasing any deductibles or retained amounts thereunder, or
materially increasing the annual or other premiums payable thereunder, and to
the actual knowledge
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of the Company, no such cancellation or increase of deductibles, retainages or
premiums is threatened. There are no outstanding claims, settlements or premiums
owed against any Insurance Policy, or the Company has given all notices or has
presented all potential or actual claims under any Insurance Policy in due and
timely fashion. The Company Disclosure Schedules also set forth a list of all
claims under any Insurance Policy in excess of $25,000 per occurrence filed by
the Company during the immediately preceding one-year period.
SECTION 3.14 PROPRIETARY RIGHTS AND INFORMATION. The Company owns or
has the legal right to use the Proprietary Rights, to the actual knowledge of
the Company, without conflicting, infringing or violating the rights of any
other person. No consent of any person will be required for the use thereof by
Purchaser upon consummation of the transactions contemplated hereby and the
Proprietary Rights are freely transferable. No claim has been asserted by any
person to the ownership of or for infringement by the Company of the proprietary
right of any other person, and the Company does not have actual knowledge of any
valid basis for any such claim. The Company has the right to use, to the actual
knowledge of the Company, free and clear of any adverse claims or rights of
others all trade secrets, customer lists and proprietary information required
for the marketing of all merchandise and services formerly or presently sold or
marketed by it.
SECTION 3.15 TAXES.
3.15.1 FILING OF TAX RETURNS. The Company has duly and timely
filed (in accordance with any extensions duly granted by the appropriate
governmental agency, if applicable) with the appropriate governmental agencies
all Tax Returns and reports required to be filed by the United States or any
state or any political subdivision thereof or any foreign jurisdiction, except
for any such subdivision or jurisdiction with respect to which the failure to so
file would not have a Material Adverse Effect. All such Tax Returns or reports
are complete and accurate in all material respects and properly reflect the
taxes of the Company for the periods covered thereby. True and correct copies of
such Tax Returns for the past five taxable years have heretofore been delivered
to Purchaser.
3.15.2 PAYMENT OF TAXES. Except for such items as the Company
may be disputing in good faith by proceedings in compliance with applicable law,
which are described in the Company Disclosure Schedules, or which will not have
a Material Adverse Effect, (i) the Company has paid all taxes, penalties,
assessments and interest that have become due with respect to any Tax Returns
that it has filed and has properly accrued on its books and records for all of
the same that have not yet become due and (ii) to its best knowledge, the
Company is not delinquent in the payment of any tax, assessment or governmental
charge.
3.15.3 NO PENDING DEFICIENCIES, DELINQUENCIES, ASSESSMENTS OR
AUDITS. The Company has not received any notice that any tax deficiency or
delinquency has been asserted against the Company. To the best knowledge of the
Company, there is no unpaid assessment, proposal for additional taxes,
deficiency or delinquency in the payment of any of the taxes of the Company that
could be asserted by any taxing authority. There is no taxing authority audit of
the
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Company pending, or to the actual knowledge of the Company, threatened, and the
results of any completed audits are properly reflected in the Financial
Statements. The Company has not violated any federal, state, local or foreign
tax law.
3.15.4 NO EXTENSION OF LIMITATION PERIOD. The Company has not
granted an extension to any taxing authority of the limitation period during
which any tax liability may be assessed or collected.
3.15.5 WITHHOLDING REQUIREMENTS SATISFIED. All monies required
to be withheld by the Company and paid to governmental agencies for all income,
social security, unemployment insurance, sales, excise, use, and other taxes
have been collected or withheld and paid to the respective governmental
agencies.
3.15.6 FOREIGN PERSON. The Company is not a foreign person, as
such term is referred to in Section 1445(f)(3) of the Internal Revenue Code.
3.15.7 SAFE HARBOR LEASE. To the best knowledge of the
Company, none of the assets of the Company constitutes property that the
Company, Purchaser, or any Affiliate of Purchaser, will be required to treat as
being owned by another person pursuant to the "Safe Harbor Lease" provisions of
Section 168(f)(8) of the Internal Revenue Code prior to repeal by the Tax Equity
and Fiscal Responsibility Act of 1982.
3.15.8 TAX EXEMPT ENTITY. None of the assets of the Company
and none of the Assets are subject to a lease to a "tax exempt entity" as such
term is defined in Section 168(h)(2) of the Internal Revenue Code.
3.15.9 COLLAPSIBLE CORPORATION. The Company has not at any
time consented to have the provisions of Section 341(f)(2) of the Internal
Revenue Code apply to it.
3.15.10 BOYCOTTS. The Company has not at any time participated
in or cooperated with any international boycott as defined in Section 999 of the
Internal Revenue Code.
3.15.11 PARACHUTE PAYMENTS. No payment required or
contemplated to be made by the Company will be characterized as an "excess
parachute payment" within the meaning of Section 28OG(b)(1) of the Internal
Revenue Code.
3.15.12 S CORPORATION. The Company has not made an election to
be taxed as an "S" corporation under Section 1362(a) of the Internal Revenue
Code.
3.15.13 PERSONAL SERVICE CORPORATION. The Company is not a
personal service corporation subject to the provisions of Section 269A of the
Internal Revenue Code.
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3.15.14 PERSONAL HOLDING COMPANY. The Company is not or has
not been a personal holding company within the meaning of Section 542 of the
Internal Revenue Code.
SECTION 3.16 COMPLIANCE WITH LAWS. The Company has complied with all
applicable laws, and regulations and has filed with the proper authorities all
necessary statements and reports except where the failure to so comply or file
would not, individually or in the aggregate, result in a Material Adverse
Effect. There are no existing violations by the Company of any federal, state or
local law or regulation that is reasonably likely, individually or in the
aggregate, to result in a Material Adverse Effect. The Company possesses all
necessary licenses, franchises, permits and governmental authorizations for the
conduct of the Company's business as now conducted, all of which are listed
(with expiration dates, if applicable) in the Company Disclosure Schedules. The
transactions contemplated by this Agreement will not result in a default under
or a breach or violation of, or adversely affect the rights and benefits
afforded by any such licenses, franchises, permits or government authorizations,
except for any such default, breach or violation that would not, individually or
in the aggregate, have a Material Adverse Effect. Since April 30, 1994, the
Company has not received any notice from any federal, state or other
governmental authority or agency having jurisdiction over its properties or
activities, or any insurance or inspection body, that its operations or any of
its properties, facilities, equipment, or business practices fail to comply with
any applicable law, ordinance, regulation, building or zoning law, or
requirement of any public or quasi-public authority or body, except where
failure to so comply would not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 3.17 FINDER'S FEE. The Company has not incurred any obligation
for any finder's, broker's or agent's fee in connection with the transactions
contemplated hereby.
SECTION 3.18 LITIGATION. There are no legal actions or administrative
proceedings or investigations instituted, or to the actual knowledge of the
Company threatened, against the Company which (i) if successful are reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect or
(ii) could adversely affect the ability of the Company to effect the
transactions contemplated hereby. The Company is not (a) subject to any
continuing court or administrative order, judgment, writ, injunction or decree
applicable specifically to the Company or to its business, assets, operations or
employees or (b) in default with respect to any such order, judgment, writ,
injunction or decree. The Company has no actual knowledge of any valid basis for
any such action, proceeding or investigation. All claims made or threatened
against the Company in excess of its deductible are covered under its Insurance
Policies.
SECTION 3.19 CONDITION OF FIXED ASSETS. All of the material structures
and equipment reflected in the Financial Statements and used by the Company in
its business are in good condition and repair, subject to normal wear and tear,
and conform in all material respects with all applicable ordinances, regulations
and other laws, and the Company has no actual knowledge of any latent defects
therein.
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SECTION 3.20 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any Company
Capital Stock since the Company Balance Sheet Date. No repurchase of any Company
Capital Stock has been approved, effected or is pending, or is contemplated by
the Board of Directors of the Company.
SECTION 3.21 BANKING RELATIONS. Set forth in the Company Disclosure
Schedules is a complete and accurate list of all borrowing and investing
arrangements that the Company has with any bank or other financial institution,
indicating with respect to each relationship the type of arrangement maintained
(such as checking account, borrowing arrangements, safe deposit box, etc.) and
the person or persons authorized in respect thereof.
SECTION 3.22 OWNERSHIP INTERESTS OF INTERESTED PERSONS; AFFILIATIONS.
To the best knowledge of the Company, no officer, supervisory employee or
director of the Company, or their respective spouses, children or Affiliates,
owns directly or indirectly, on an individual or joint basis, any interest in,
has a compensation or other financial arrangement with, or serves as an officer
or director of, any customer or supplier of the Company or any organization that
has a material contract or arrangement with the Company, except for ownership of
less than 5% of the stock of any public corporation.
SECTION 3.23 ENVIRONMENTAL MATTERS. To the best knowledge of the
Company, the Company is not currently in violation of, or subject to any
existing, pending or, to the actual knowledge of the Company, threatened
investigation or inquiry by any governmental authority or to any remedial
obligations under, any Environmental Laws, except for any such violations,
investigations or inquiries that would not, individually or in the aggregate,
result in a Material Adverse Effect.
SECTION 3.24 CERTAIN PAYMENTS. Neither the Company nor any director,
officer or employee of the Company acting for or on behalf of the Company, has
paid or caused to be paid, directly or indirectly, in connection with the
business of the Company:
3.24.1 to any government or agency thereof or any agent of any
supplier or customer any bribe, kick-back or other similar payment; or
3.24.2 any contribution to any political party or candidate
(other than from personal funds of directors, officers or employees not
reimbursed by their respective employers or as otherwise permitted by applicable
law).
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company that, except as set
forth in the Purchaser Disclosure Schedules, the following are true and correct
as of the date hereof:
SECTION 4.1 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Ohio, with all requisite corporate power and authority to carry on the
business in which it is engaged, to own the properties it owns, to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
SECTION 4.2 AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by Purchaser of this Agreement and the other agreements contemplated
hereby, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by Purchaser. This Agreement and each other
agreement contemplated hereby to be executed by Purchaser have been or will be
as of the Closing Date duly executed and delivered by Purchaser and constitute
or will constitute legal, valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
SECTION 4.3 FINDER'S FEE. Purchaser has not incurred any obligation for
any finder's, broker's or agent's fee in connection with the transactions
contemplated hereby.
SECTION 4.4 RESERVED.
SECTION 4.5 FILINGS. To the best knowledge of Purchaser, the
information or documents to be included in the Registration Statement, by
exhibit or otherwise, except for such portions thereof as are based on the
information or documents supplied by the Company, shall not, at the time the
Registration Statement and each amendment and supplement thereto, if any,
becomes effective under the Securities Act, to the best knowledge of Purchaser,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
ARTICLE V
COVENANTS OF THE COMPANY
The Company agrees that between the date hereof and the Closing:
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SECTION 5.1 CONSUMMATION OF AGREEMENT. The Company shall use its best
efforts to cause the consummation of the transactions contemplated hereby in
accordance with their terms and conditions; provided, however, that this
covenant shall not require the Company to make any expenditures that are not
expressly set forth in this Agreement or otherwise contemplated herein.
Accordingly, the Company shall call a meeting of the Stockholders, to be held
prior to the anticipated Closing Date, to consider the transactions contemplated
hereby and, subject to the limitations of fiduciary duty, shall make reasonable
efforts to solicit Stockholder approval of such transactions in accordance with
applicable law and the Company's Articles of Incorporation and Code of
Regulations.
SECTION 5.2 BUSINESS OPERATIONS. The Company shall operate its business
in the ordinary course. The Company shall use reasonable efforts to preserve the
business of the Company intact. The Company shall use reasonable efforts to
preserve intact its relationships with customers, suppliers, employees and
others having significant business relations with it, unless doing so would
impair its goodwill or result, individually or in the aggregate, in a Material
Adverse Effect. The Company shall collect its receivables and pay its trade
payables in the ordinary course of business consistent with past practice.
SECTION 5.3 ACCESS. The Company shall, at reasonable times during
normal business hours and on reasonable notice, permit Purchaser and its
authorized representatives reasonable access to, and make available for
inspection, all of the assets and business of the Company, including its
employees, customers and suppliers, and permit Purchaser and its authorized
representatives to inspect and, at Purchaser's sole cost and expense, make
copies of all documents, records and information with respect to the affairs of
the Company as Purchaser and its representatives may request, all for the sole
purpose of permitting Purchaser to become familiar with the business and assets
and liabilities of the Company. In the event this Agreement is terminated prior
to the Closing Date, Purchaser shall promptly return any such documents, records
and information or copies thereof in its possession and thereafter shall not use
such documents, records, information or copies for any purpose whatsoever.
SECTION 5.4 NOTIFICATION OF CERTAIN MATTERS. The Company shall promptly
inform Purchaser in writing of (a) any notice of or other communication relating
to, a default or event that, with notice or lapse of time or both, would become
a default, received by the Company subsequent to the date of this Agreement and
prior to the Closing Date under any Commitment material to the Company's
condition (financial or otherwise), operations, assets, liabilities or business
and to which it is subject; or (b) any material adverse change in the Company's
condition (financial or otherwise), operations, assets, liabilities or business.
SECTION 5.5 APPROVALS OF THIRD PARTIES. The Company shall use its best
efforts to secure, as soon as practicable after the date hereof, all necessary
approvals and consents of third parties to the consummation of the transactions
contemplated hereby, including, without limitation, all necessary approvals and
consents required under any real property and personal property leases;
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provided, however, that this covenant shall not require the Company to make any
material expenditures that are not expressly set forth in this Agreement or
otherwise contemplated herein.
SECTION 5.6 EMPLOYEE MATTERS. The Company shall not, without the prior
written approval of Purchaser, except in the ordinary course of business, or as
required by law or as would not have a Material Adverse Effect:
5.6.1 increase the Cash Compensation of any Stockholder or
other employee of the Company (other than in the ordinary course of business and
consistent with past practice);
5.6.2 adopt, amend or terminate any Compensation Plan;
5.6.3 adopt, amend or terminate any Employment Agreement;
5.6.4 adopt, amend or terminate any Employee Policies and
Procedures;
5.6.5 adopt, amend or terminate any Employee Benefit Plan;
5.6.6 take any action that could deplete the assets of any
Employee Benefit Plan, other than payment of benefits in the ordinary course to
participants and beneficiaries;
5.6.7 fail to pay any premium or contribution due or with
respect to any Employee Benefit Plan;
5.6.8 fail to file any return or report with respect to any
Employee Benefit Plan;
5.6.9 institute, settle or dismiss any employment litigation
except as could not, individually or in the aggregate, result in a Material
Adverse Effect;
5.6.10 enter into, modify, amend or terminate any agreement
with any union, labor organization or collective bargaining unit; or
5.6.11 take or fail to take any action with respect to any
past or present employee of the Company that would, individually or in the
aggregate, result in a Material Adverse Effect.
SECTION 5.7 CONTRACTS. Except with Purchaser's prior written consent
(not to be withheld unreasonably) or in the ordinary course of business, the
Company shall not assume or enter into any contract, lease, license, obligation,
indebtedness, commitment, purchase or sale that is material to the Company's
business, nor will it waive any material right or cancel any material contract,
debt or claim.
SECTION 5.8 CAPITAL ASSETS; PAYMENTS OF LIABILITIES. The Company shall
not, without the prior written approval of Purchaser (not to be withheld
unreasonably) (a) acquire or dispose of
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any capital asset having a fair market value of $35,000 or more, or acquire or
dispose of any capital asset outside of the ordinary course of business or (b)
discharge or satisfy any lien or encumbrance or pay or perform any obligation or
liability other than (i) liabilities and obligations reflected in the Financial
Statements or (ii) current liabilities and obligations incurred in the usual and
ordinary course of business since the Company Balance Sheet Date and, in either
case (i) or (ii) above, only as required by the express terms of the agreement
or other instrument pursuant to which the liability or obligation was incurred.
SECTION 5.9 MORTGAGES, LIENS AND GUARANTIES. The Company shall not,
without the prior written approval of Purchaser (not to be withheld
unreasonably), enter into or assume any mortgage, pledge, conditional sale or
other title retention agreement, permit any security interest, lien, encumbrance
or claim of any kind to attach to any of its assets (other than statutory liens
arising in the ordinary course of business and other liens that do not
materially detract from the value or interfere with the use of such assets),
whether now owned or hereafter acquired, or guarantee or otherwise become
contingently liable for any obligation of another, except obligations arising by
reason of endorsement for collection and other similar transactions in the
ordinary course of business, or make any capital contribution or investment in
any person.
SECTION 5.10 ACQUISITION PROPOSALS.
5.10.1 SOLICITED PROPOSALS. The Company agrees that from and
after the date of this Agreement (a) neither the Company nor any of its officers
and directors shall, and the Company shall direct and use its best efforts to
cause the Company's employees, agents and representatives not to, initiate,
solicit or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its Stockholders) with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, the Company (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") or engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; (b) that the Company will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing and
each will take the necessary steps to inform the individuals or entities
referred to in the first sentence hereof of the obligations undertaken in this
Section 6.10; and (c) that the Company will notify Purchaser immediately if any
material inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, the Company.
5.10.2 OTHER POTENTIAL BIDDERS. Notwithstanding anything to
the contrary in Section 5.10.1 above, the Company may, directly or indirectly,
furnish information and access, in each case in response to requests therefor
which are not solicited by the Company nor any of its officers or directors or,
to the actual knowledge of the Company, the Company's employees, agents or
representatives (collectively for purposes of this Section 5.10.2, "Company
Contacts") after the date
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hereof (including any such request from any corporation, partnership, person, or
other entity or group contacted by the Company Contacts prior to the date
hereof), to any corporation, partnership, person, or other entity or group
pursuant to appropriate confidentiality agreements, and may participate in
discussions and negotiate with such entity or group concerning any merger, sale
of assets, sale of shares of Company Capital Stock or similar transaction, if
the Company's Board of Directors determines in its good faith judgment that such
action is appropriate in furtherance of the best interests of the Stockholders.
In addition, the Company shall direct its officers and other appropriate
personnel to cooperate with and be reasonably available to consult with any such
entity or group.
SECTION 5.11 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by the Company in respect of
Company Capital Stock, nor will any repurchase of any Company Capital Stock be
approved or effected.
ARTICLE VI
COVENANTS OF PURCHASER
Purchaser agrees that between the date hereof and the Closing:
SECTION 6.1 CONSUMMATION OF AGREEMENT. Purchaser shall use its best
efforts to cause the consummation of the transactions contemplated hereby in
accordance with their terms and conditions and take all corporate and other
action necessary to approve the transactions contemplated hereby, including,
without limitation, the consummation of the Initial Public Offering and the
acquisition of all of the Target Companies; provided, however, that this
covenant shall not require Purchaser to make any expenditures that are not
expressly set forth in this Agreement or otherwise contemplated herein.
Purchaser will provide the Company copies of all documents filed with the SEC in
connection with the Initial Public Offering when filed and copies of all
comments and other correspondence received from the SEC with respect thereto.
SECTION 6.2 REQUIREMENTS TO EFFECT ACQUISITION. Purchaser will use its
best efforts to take, or cause to be taken, all actions necessary to effect the
transactions contemplated hereby under applicable law, including, without
limitation, the consummation of the Initial Public Offering, the acquisition of
all of the Target Companies, the filing with the appropriate government
officials of the Registration Statement and responses to SEC comments thereon,
and all other documents necessary in connection with any of the foregoing in the
form approved by counsel for the parties to this Agreement.
SECTION 6.3 ACCESS. Purchaser shall, at reasonable times during normal
business hours and on reasonable notice, permit the Company, and its authorized
representatives reasonable access to, and make available for inspection, all of
the assets and business of Purchaser, including its employees, and permit the
Company, and its authorized representatives to inspect and, at the Company's
sole expense, make copies of all documents, records and information with respect
to the
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affairs of Purchaser as the Company and its representatives may request
(including documents, records and information pertaining to or generated in
connection with any Target Company, except as may be prohibited by
confidentiality agreements to which Purchaser is a party), all for the sole
purpose of permitting the Company to become familiar with the business and
assets and liabilities of Purchaser.
SECTION 6.4 NOTIFICATION OF CERTAIN MATTERS. Purchaser shall promptly
inform the Company in writing of (a) any notice of, or other communication
relating to, a default or event that, with notice or lapse of time or both,
would become a default, received by Purchaser subsequent to the date of this
Agreement and prior to the Closing Date under any Purchaser Commitment material
to Purchaser's condition (financial or otherwise), operations, assets,
liabilities or business and to which it is subject; or (b) any material adverse
change in Purchaser's condition (financial or otherwise), operations, assets,
liabilities or business.
SECTION 6.5 APPROVALS OF THIRD PARTIES. Purchaser shall use its best
efforts to secure, as soon as practicable after the date hereof, all necessary
approvals and consents of third parties to the consummation of the transactions
contemplated hereby.
SECTION 6.6 OFFERS OF EMPLOYMENT. The Purchaser shall make offers of
employment to all or substantially all of the employees on the Company's payroll
as of the Closing Date on terms and conditions substantially similar to the then
current terms and conditions of their employment with the Company, provided
however, that nothing herein shall be construed so as to provide any employee of
the Company any guaranty of continued employment or to impose any additional
obligation on the Purchaser with respect thereto.
SECTION 6.7 EXECUTIVE RETENTION AGREEMENTS. The Company has entered
into separate Executive Retention Agreements, each dated August 24, 1994 (the
"Company Retention Agreements"), with Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxxx (each
a "Designated Employee"), which Company Retention Agreements are appended hereto
as Exhibit 7.3. At Closing, Purchaser shall assume all obligations of the
Company under the Company Retention Agreements, except as otherwise set forth in
those certain Employment Agreements between Purchaser and each of the Designated
Employees, and delivered pursuant to Section 10.1.10 hereof.
ARTICLE VII
COVENANTS OF ALL PARTIES
Purchaser and the Company agree as follows:
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SECTION 7.1 FILINGS; OTHER ACTION.
7.1.1 The Company shall cooperate with Purchaser by promptly
providing information reasonably requested and required by Purchaser in
connection with the preparation and filing by Purchaser with the SEC of the
Registration Statement on Form S-1 (or other appropriate Form) in connection
with its Initial Public Offering (including the prospectus constituting a part
thereof, the "Registration Statement"). Purchaser shall obtain all necessary
state securities law or "Blue Sky" permits and approvals required to carry out
the transactions contemplated by this Agreement, and the Company shall furnish
all information concerning the Company as may be reasonably requested in
connection with any such action.
7.1.2 None of the information or documents supplied or to be
supplied by each of the Company and Purchaser specifically for inclusion in the
Registration Statement, by exhibit or otherwise, will, at the time the
Registration Statement and each amendment and supplement thereto, if any,
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Company and Purchaser shall
agree as to the information and documents supplied by the Company for inclusion
in the Registration Statement and shall indicate such information and documents
in a letter to be delivered at Closing (the "Information Letter"). The Company
shall be entitled to review the Registration Statement and each amendment
thereto, if any, and any SEC comments thereon and Purchaser's responses thereto
prior to the time each becomes effective under the Securities Act.
7.1.3 The Company shall, upon request, furnish Purchaser with
all information concerning the Company, its subsidiaries, directors, officers,
partners and Stockholders and such other matters as may be reasonably requested
by Purchaser in connection with the preparation of the Registration Statement
and each amendment or supplement thereto, or any other statement, filing, notice
or application made by or on behalf of each such party or any of its
subsidiaries to any governmental entity in connection with the transactions
contemplated by this Agreement.
7.1.4 Purchaser hereby releases the Company from, agrees that
the Company shall not be liable for, and agrees to hold the Company harmless
against, any damages, costs, liability, expenses and claims that may be
occasioned by any cause whatsoever pertaining to and arising out of the
information or documents included in the Registration Statement, by exhibit or
otherwise, except for such portions thereof as are based on information or
documents supplied by the Company.
SECTION 7.2 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until the Closing to
supplement or amend promptly (i) in the case of Purchaser, the Purchaser
Disclosure Schedules and (ii) in the case of the Company, the Company Disclosure
Schedules with respect to any matter that would have been or would be required
to be set forth or described in the Schedules in order to not materially breach
any representation, warranty or covenant of such party contained herein;
provided that, no amendment or supplement to a Schedule that
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constitutes or reflects a material adverse change to the Company may be made
unless Purchaser consents to such amendment or supplement, and no amendment or
supplement to a Schedule that constitutes or reflects a material adverse change
to Purchaser may be made unless the Company consents to such amendment or
supplement. For all purposes of this Agreement, the Schedules hereto shall be
deemed to be the Schedules as amended or supplemented pursuant to this Section
7.2. In the event that the Company seeks to amend or supplement a Schedule
pursuant to this Section 7.2 and Purchaser does not consent to such amendment or
supplement, or Purchaser seeks to amend or supplement a Schedule pursuant to
this Section 7.2 and the Company and the Stockholder do not consent, this
Agreement shall be deemed terminated by mutual consent as set forth in Section
12.1.1 hereof.
ARTICLE VIII
CONDITIONS PRECEDENT OF PURCHASER
Except as may be waived in writing by Purchaser, the obligations of
Purchaser hereunder are subject to the fulfillment at or prior to the Closing
Date of each of the following conditions:
SECTION 8.1 DUE DILIGENCE. Purchaser shall have completed its due
diligence review of the Company and shall be satisfied with the results thereof.
SECTION 8.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained herein shall have been true and correct in
all respects when initially made and shall be true and correct in all material
respects as of the Closing Date (except for changes arising in the ordinary
course of business which are not prohibited by this Agreement and which do not
have a Material Adverse Effect.
SECTION 8.3 COVENANTS. The Company shall have performed and complied in
all material respects with all covenants required by this Agreement to be
performed and complied with by the Company or the Stockholders prior to the
Closing Date.
SECTION 8.4 LEGAL OPINION. Counsel to the Company shall have delivered
to Purchaser its opinion, dated as of the Closing Date, in form and substance
reasonably satisfactory to Purchaser, to the effect set forth in Exhibit 8.4.
SECTION 8.5 PROCEEDINGS. No action, proceeding or order by any court or
governmental body or agency shall have been threatened orally or in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
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SECTION 8.6 NO MATERIAL ADVERSE CHANGE. No change with a Material
Adverse Effect shall have occurred since the Company Balance Sheet Date, whether
or not such change shall have been caused by the deliberate act or omission of
the Company.
SECTION 8.7 SECURITIES APPROVALS. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
At or prior to the Closing Date, Purchaser shall have received all state
securities and "Blue Sky" permits necessary to consummate the transactions
contemplated hereby. The Purchaser Common Stock shall have been approved for
listing on the Nasdaq National Market, subject only to official notification of
issuance.
SECTION 8.8 SIMULTANEOUS CLOSINGS. The Initial Public Offering and
Purchaser's acquisition of all of the Target Companies (or such Target Companies
if less than all of them as Purchaser and the Underwriter Representative shall
agree will be sufficient for purposes of the Initial Public Offering) shall all
be closed and consummated simultaneously with the Closing.
SECTION 8.9 CLOSING DELIVERIES. Purchaser shall have received all
documents and agreements, duly executed and delivered in form satisfactory to
Purchaser, referred to in Section 10.1.
ARTICLE IX
CONDITIONS PRECEDENT OF THE COMPANY
Except as may be waived in writing by the Company, the obligations of
the Company hereunder are subject to fulfillment at or prior to the Closing Date
of each of the following conditions:
SECTION 9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser contained herein shall be true and correct in all
respects when initially made and shall be true and correct in all respects as of
the Closing Date.
SECTION 9.2 COVENANTS. Purchaser shall have performed and complied in
all material respects with all covenants and conditions required by this
Agreement to be performed and complied with by it prior to the Closing Date.
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SECTION 9.3 LEGAL OPINION.
9.3.1 Counsel to Purchaser shall have delivered to the Company
its opinion, dated as of the Closing Date, in form and substance reasonably
satisfactory to the Company, to the effect set forth in Exhibit 9.3.1.
SECTION 9.4 PROCEEDINGS. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
SECTION 9.5 GOVERNMENT APPROVALS AND REQUIRED CONSENTS. The Company and
Purchaser shall have obtained all necessary government and other third party
approvals and consents.
SECTION 9.6 SECURITIES APPROVALS. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
At or prior to the Closing Date, Purchaser shall have received all state
securities and "Blue Sky" permits necessary to consummate the transactions
contemplated hereby. At or prior to the Closing Date, the Purchaser Common Stock
shall have been approved for listing on The Nasdaq National Market, subject only
to official notification of issuance.
SECTION 9.7 CLOSING DELIVERIES. The Company shall have received all
documents and agreements, duly executed and delivered in form satisfactory to
the Company, referred to in Section 10.2.
SECTION 9.8 STOCKHOLDER APPROVAL. The Stockholders shall have approved
all transactions contemplated under this Agreement to be carried out by the
Company.
SECTION 9.9 OCE TRANSACTION. The Oce Agreement shall be in full force
and effect and all actions shall have been taken so that the Oce Transaction can
be consummated promptly after the Closing.
ARTICLE X
CLOSING DELIVERIES
SECTION 10.1 DELIVERIES OF THE COMPANY. At or prior to the Closing
Date, the Company shall deliver to Purchaser c/o Dinsmore & Shohl LLP, counsel
to Purchaser, the following, all of which shall be in form and substance
satisfactory to Purchaser:
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10.1.1 a copy of resolutions of the Board of Directors and the
Stockholders of the Company authorizing the execution, delivery and performance
of this Agreement and all related documents and agreements and consummation of
the transactions contemplated hereby, each certified by the Secretary of the
Company as being true and correct copies of the originals thereof subject to no
modifications or amendments;
10.1.2 a certificate of the President of the Company, dated
the Closing Date, as to the truth and correctness in all material respects of
the representations and warranties of the Company contained herein on and as of
the Closing Date;
10.1.3 a certificate of the President of the Company, dated
the Closing Date, (i) as to the performance of and compliance in all material
respects by the Company with all covenants contained herein on and as of the
Closing Date and (ii) certifying that all conditions precedent of the Company to
the Closing have been satisfied;
10.1.4 a certificate of the Secretary of the Company
certifying as to the incumbency of the directors and officers of such
corporation and as to the signatures of such directors and officers who have
executed documents delivered at the Closing on behalf of that corporation;
10.1.5 The Company shall execute, acknowledge and deliver the
following documents relating to title of the Assets:
(i) deeds, bills of sale and assignments sufficient
to convey to Purchaser good, valid and marketable fee simple to all Assets free
and clear of all liens, mortgages, pledges, encumbrances, security interests,
covenants, easements, right of way, equities, options, rights of first refusal
restrictions, special tax or governmental assessments, defects in title and
other burdens, except for exceptions permitted by Purchaser; and
(ii) an assignment and assumption agreement whereby
the Company shall convey and Purchaser shall assume and covenant to fully
perform and comply with the Assumed Liabilities, including but not limited to,
the assumption of the Retention Agreements.
10.1.6 an opinion of Xxxx, Stettinius & Hollister, counsel to
the Company, dated as of the Closing Date, pursuant to Section 8.4;
10.1.7 all necessary authorizations, consents, approvals,
permits and licenses, including without limitation, those necessary for the
assignment of the Company's real property leases and the Contracts;
10.1.8 the Information Letter required by Section 7.1.2;
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10.1.9 such other instrument or instruments of transfer
prepared by Purchaser as shall be necessary or appropriate, as Purchaser or its
counsel shall reasonably request, to carry out and effect the purpose and intent
of this Agreement; and
10.1.10 Employment Agreements between the Designated Employees
and Purchaser in substantially the form attached hereto as Exhibit 10.1.10.
SECTION 10.2 DELIVERIES OF PURCHASER. At or prior to the Closing Date,
Purchaser shall deliver to the Company c/o Dinsmore & Shohl LLP, counsel to
Purchaser, the following, all of which shall be in a form satisfactory to the
Company;
10.2.1 a copy of the resolutions of the Board of Directors of
Purchaser authorizing the execution, delivery and performance of this Agreement,
and all related documents and agreements, certified by Purchaser's Secretary as
being true and correct copies of the originals thereof subject to no
modifications or amendments;
10.2.2 a certificate of an officer of Purchaser dated the
Closing Date as to the truth and correctness of the representations and
warranties of Purchaser contained herein on and as of the Closing Date;
10.2.3 a certificate of an officer of Purchaser dated the
Closing Date, (i) as to the performance and compliance by Purchaser with all
covenants contained herein on and as of the Closing Date and (ii) certifying
that all conditions precedent of Purchaser to the Closing have been satisfied;
10.2.4 a certificate of the Secretary of Purchaser certifying
as to the incumbency of the officers of Purchaser who have executed documents
delivered at the Closing on behalf of Purchaser;
10.2.5 an assignment and assumption agreement whereby
Purchaser shall assume and covenant to fully perform and comply with the Assumed
Liabilities, including but not limited to, the assumption of the Retention
Agreements;
10.2.6 an opinion of Xxxxxxxx & Shohl LLP, counsel to
Purchaser, dated as of the Closing Date, pursuant to Section 9.3.1:
10.2.7 the Purchase Price payable at Closing; and
10.2.8 such other instrument or instruments of transfer,
prepared by the Company as shall be necessary or appropriate, as the Company or
their counsel shall reasonably request, to carry out and effect the purpose and
intent of this Agreement.
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ARTICLE XI
POST CLOSING MATTERS
SECTION 11.1 FURTHER INSTRUMENTS OF TRANSFER. Following the Closing, at
the reasonable request of Purchaser or of the Company, and in each case at
Purchaser's sole cost and expense, the Company or Purchaser, as the case may be,
shall deliver any further instruments of transfer and take all reasonable action
as may be necessary or appropriate to carry out the purpose and intent of this
Agreement.
ARTICLE XIV
TERMINATION
SECTION 12.1 TERMINATION. This Agreement may be terminated and the
transaction contemplated by this Agreement may be abandoned:
12.1.1 at any time prior to the Closing Date by mutual
agreement of all parties;
12.1.2 at any time prior to the Closing Date by Purchaser if
any representation or warranty of the Company contained in this Agreement or in
any certificate or other document executed and delivered by the Company pursuant
to this Agreement is or becomes untrue or breached in any material respect or if
the Company fails to comply in any material respect with any covenant or
agreement contained herein, and any such misrepresentation, noncompliance or
breach is not cured, waived or eliminated within 20 days after receipt of
written notice thereof;
12.1.3 at any time prior to the Closing Date by the Company if
any representation or warranty of Purchaser contained in this Agreement or in
any certificate or other document executed and delivered by Purchaser pursuant
to this Agreement is or becomes untrue in any material respect or if Purchaser
fails to comply in any material respect with any covenant or agreement contained
herein, and any such misrepresentation, noncompliance or breach is not cured,
waived or eliminated within 20 days after receipt of written notice thereof; and
12.1.4 by the Company if (i) its Board of Directors determines
in the exercise of its fiduciary duty that such action is appropriate in
furtherance of the best interests of the Stockholders in order to accept an
alternative proposal permitted by Section 5.10.2, and (ii) the Company pays
Purchaser a cash "break-up" fee of $250,000; and
12.1.5 by Purchaser or the Company if the Closing shall not
have been consummated by December 31, 1997.
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SECTION 12.2 EFFECT OF TERMINATION. In the event this Agreement is
terminated pursuant to Section 2.4 by Purchaser at its election or due to the
intentional non-compliance with Sections 12.1.2 or 12.1.3 above, Purchaser or
the Company, as applicable, shall be entitled to pursue, exercise and enforce
any and all remedies, rights, powers and privileges available at law or in
equity against the non-complying party. In the event of a termination of this
Agreement under the provisions of this Article or Section 2.4, a party not then
in material breach of this Agreement shall stand fully released and discharged
of any and all obligations under this Agreement; provided, however, that if a
termination of this Agreement occurs pursuant to the last sentence of Section
7.2, the parties hereto shall stand fully released and discharged of any and all
obligations under this Agreement.
ARTICLE XIII
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 13.1 NONDISCLOSURE. The Company recognizes and acknowledges
that it had in the past, currently has, and in the future may possibly have,
access to certain Confidential Information of Purchaser that is valuable,
special and unique assets of Purchaser's business. Purchaser acknowledges that
it has had in the past, currently has, and in the future may possible have,
access to certain Confidential Information of the Company that is valuable,
special and unique assets of the Company's business. The Company and Purchaser
agree that they will not disclose such Confidential Information to any person,
firm, corporation, association or other entity for any purpose or reason
whatsoever, except (a) to authorized representatives of Purchaser and (b) to
counsel and other advisers to Purchaser, respectively, provided that such
advisers (other than counsel) agree to the confidentiality provisions of this
Section 13.1, unless (i) such information becomes available to or known by the
public generally through no fault of the Company, or Purchaser, as the case may
be, (ii) disclosure is required by law or the order of any governmental
authority under color of law, provided, that prior to disclosing any information
pursuant to this clause (ii), the Company or Purchaser, as the case may be,
shall, if possible, give prior written notice thereof to the Company and
Purchaser and provide the Company or Purchaser with the opportunity to contest
such disclosure, (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, or (iv) the disclosing party is the sole and exclusive owner
of such Confidential Information as a result of the transaction or otherwise.
SECTION 13.2 DAMAGES. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which they would have
no other adequate remedy, the parties agree that, in the event of a breach by
either of them of the foregoing covenant, the covenant may be enforced against
either of them by injunctions and restraining orders.
SECTION 13.3 SURVIVAL. The obligations of the parties under this
Article XIII shall survive the termination of this Agreement.
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 AMENDMENT; WAIVERS. This Agreement may be amended,
modified or supplemented only by an instrument in writing executed by all the
parties hereto. Any waiver of any terms and conditions hereof must be in
writing, and signed by the parties hereto. The waiver of any of the terms and
conditions of this Agreement shall not be construed as a waiver of any other
terms and conditions hereof.
SECTION 14.2 ASSIGNMENT. Neither this Agreement nor any right created
hereby or in any agreement entered into in connection with the transactions
contemplated hereby shall be assignable by any party hereto, except by Purchaser
to a wholly owned subsidiary of Purchaser (provided that any such assignment
shall not relieve Purchaser of its obligations hereunder) and except that after
the Closing the Company may assign its rights hereunder to its shareholders or a
trust for their benefit pursuant to the Company's Plan of Complete Liquidation
and Dissolution.
SECTION 14.3 PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES. Except
as otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. Neither this
Agreement nor any other agreement contemplated hereby shall be deemed to confer
upon any person not a party hereto or thereto any rights or remedies hereunder
or thereunder.
SECTION 14.4 ENTIRE AGREEMENT. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding the
subject matter hereof, and supersede all prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
SECTION 14.5 SEVERABILITY. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
SECTION 14.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties and covenants of the Company contained herein shall
not survive the Closing.
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SECTION 14.7 GOVERNING LAW. This agreement and the rights and
obligations of the parties hereto shall be governed by and construed and
enforced in accordance with the substantive laws (but not the rules governing
conflicts of laws) of the State of Ohio.
SECTION 14.8 CAPTIONS. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of the
terms or provisions hereof.
SECTION 14.9 GENDER AND NUMBER. When the context requires, the gender
of all words used herein shall include the masculine, feminine and neuter and
the number of all words shall include the singular and plural.
SECTION 14.10 REFERENCE TO AGREEMENT. Use of the words "herein",
"hereof", "hereto" and the like in this Agreement shall be construed as
references to this Agreement as a whole and not to any particular Article,
Section or provision of this Agreement, unless otherwise noted.
SECTION 14.11 CONFIDENTIALITY; PUBLICITY AND DISCLOSURES. Each party
shall keep this Agreement and its terms confidential, and shall make no press
release or public disclosure, either written or oral, regarding the transactions
contemplated by this Agreement without the prior knowledge and consent of the
other parties hereto; provided that the foregoing shall not prohibit any
disclosure (a) by press release, filing or otherwise that Purchaser or the
Company has determined in its good faith judgment to be required by federal
securities laws or the rules of the National Association of Securities Dealers,
(b) to attorneys, accountants, investment bankers or other agents of the parties
assisting the parties in connection with the transactions contemplated by this
Agreement and (c) by Purchaser in connection with the conduct of its Initial
Public Offering and conducting an examination of the operations and assets of
the Company; provided that Purchaser or the Company shall reasonably promptly
provide notice to the other of any release made under this Section 14.11. In the
event that the transactions contemplated hereby are not consummated for any
reason whatsoever, the parties hereto agree not to disclose or use any
Confidential Information they may have concerning the affairs of the other
parties, except for information that is required by law to be disclosed;
provided that should the transactions contemplated hereby not be consummated,
nothing contained in this Section shall be construed to prohibit the parties
hereto from operating businesses in competition with each other.
SECTION 14.12 NOTICE. Whenever this Agreement requires or permits any
notice, request, or demand from one party to another, the notice, request, or
demand must be in writing to be effective and shall be deemed to be delivered
and received (i) if personally delivered or if delivered by telex, telegram,
facsimile or courier service, when actually received by the party to whom notice
is sent or (ii) if delivered by mail (whether actually received or not), at the
close of business on the third business day next following the day when placed
in the mail, postage prepaid, certified or registered, addressed to the
appropriate party or parties, at the address of such party set forth below (or
at such other address as such party may designate by written notice to all other
parties in accordance herewith):
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If to Purchaser: Universal Document Management Systems, Inc.
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxx 00000
Attn.: Xxxxx X. Xxxxx
with a copy to: Xxxxxxxx & Shohl LLP
1900 Chemed Center
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Fax No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx, Xx.
If to the Company: ACCESS Corporation
0000 Xxxxxxxx-Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Fax No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxxx
with a copy to: Xxxx, Stettinius & Hollister
1800 Star Bank Center
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Fax No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
SECTION 14.13 CHOICE OF FORUM. Each of the parties hereto shall be
subject to the in personam jurisdiction of any state or federal court located in
Xxxxxxxx County, State of Ohio.
SECTION 14.14 NO WAIVER; REMEDIES. No party hereto shall by any act
(except by written instrument pursuant to Section 14.1 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default in or breach of any of the terms
and conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of any party hereto, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. No remedy set forth in this
Agreement or otherwise conferred upon or reserved to any party shall be
considered exclusive of any other remedy available to any party, but the same
shall be distinct, separate and cumulative and may be exercised from time to
time as often as occasion may arise or as may be deemed expedient.
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SECTION 14.15 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
SECTION 14.16 COSTS, EXPENSES AND LEGAL FEES. If the transactions
contemplated hereby are not consummated, each party hereto shall bear its own
costs and expenses (including attorneys' fees) incurred in connection with the
transactions contemplated herein. Provided that the transactions contemplated
hereby are consummated, the Purchaser shall bear the Company's attorneys' fees,
not to exceed $50,000.
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[THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
PURCHASER:
UNIVERSAL DOCUMENT
MANAGEMENT SYSTEMS, INC.
By: _________________________________
Xxxxx X. Xxxxx, President
COMPANY:
ACCESS CORPORATION
By: _________________________________
Xxxxx X. Xxxxxxx, President
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ATTACHMENTS
Exhibit 1.1.21 List of Target Companies
Exhibit 2.3 Allocation of the Purchase Price
Exhibit 7.3 Company Retention Agreements
Exhibit 8.4 Form of Opinion of Company Counsel
Exhibit 9.3.1 Form of Opinion of Purchaser Counsel
Exhibit 10.1.10 Form of Employment Agreements
***
Company Disclosure Schedules:
Schedule 2.1.1(v) Real Property and Leases
Schedule 2.1.1(vi) Intangible Assets
Schedule 3.1 Organization and Good Standing
Schedule 3.2 Corporate Records
Schedule 3.3 Authorization and Validity
Schedule 3.4 No Violation
Schedule 3.5 Consents
Schedule 3.6 Financial Statements
Schedule 3.7 Liabilities and Obligations
Schedule 3.8 Employee Matters
Schedule 3.9 Employee Benefit Plans
Schedule 3.10 Absence of Certain Changes
Schedule 3.11 Title; Leased Assets
Schedule 3.12 Commitments
Schedule 3.13 Insurance
Schedule 3.14 Proprietary Rights and Information
Schedule 3.15 Taxes
Schedule 3.16 Compliance with Laws
Schedule 3.17 Finder's Fee
Schedule 3.18 Litigation
Schedule 3.19 Condition of Fixed Assets
Schedule 3.20 Distributions and Repurchases
Schedule 3.21 Banking Relations
Schedule 3.22 Ownership Interests of Interested Persons;
Affiliations
Schedule 3.23 Environmental Matters
Schedule 3.24 Certain Payments
Purchaser Disclosure Schedules:
Schedule 4.1 Organization and Good Standing
Schedule 4.2 Authorization and Validity
Schedule 4.3 Finder's Fee
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