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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 31, 1997
---------------
Data Documents Incorporated
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(Exact name of registrant as specified in charter)
Delaware 33-82700 47-0714942
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(State or other (Commission file (IRS employer identification no.)
jurisdiction of number)
incorporation)
4205 South 96th Street, Omaha, Nebraska 68127
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (402) 339-0900
-----------------------------
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Data Documents, Inc. ("DDI"), a Nebraska corporation and a wholly owned
subsidiary of Data Documents Incorporated (the "Company"), previously entered
into (i) a Stock Purchase Agreement dated as of July 11, 1997 (the "Stock
Purchase Agreement") by and among DDI, Christopher C. Moore ("Chris Moore"),
Melody J. Moore ("Melody Moore"), The Chris and Melody Moore Charitable
Remainder Unitrust (the "Trust" and, collectively, with Chris Moore and Melody
Moore, the "Shareholders") and Moore Labels, Inc., a Kansas corporation ("Moore
Labels"); and (ii) a LLC Interest Purchase Agreement dated July 11, 1997 (the
"LLC Interest Purchase Agreement") by and among DDI, Moore Labels, Chris Moore,
Melody Moore and Norman A. Moeder ("Norman Moeder" and, collectively, with Chris
Moore and Melody Moore, the "Interestholders"). Pursuant to the Stock Purchase
Agreement, DDI agreed to acquire all of the issued and outstanding capital stock
of Moore Labels from the Shareholders. Pursuant to the LLC Interest Purchase
Agreement, DDI agreed to acquire one percent (1%) and Moore Labels agreed to
acquire ninety-nine percent (99%) of the interests of Labelit Land Company, LLC,
a Kansas limited liability company (the "LLC"), from the Interestholders. On
July 31, 1997, each of the acquisitions was consummated. The description of the
Stock Purchase Agreement and the LLC Interest Purchase Agreement set forth
herein is qualified in its entirety by reference to the full text of the Stock
Purchase Agreement and LLC Interest Agreement, respectively, which are attached
hereto as Exhibits 2.1 and 2.2, respectively.
The aggregate consideration for the transfer of the capital stock of
Moore Labels and the interests of the LLC was approximately $13.6 million. The
consideration paid was a combination of: (a) $11.6 million in cash on the
Closing Date, and (b) $2.0 million in cash deposited in an escrow account to be
paid to the Shareholders over three years. The cash portion of the purchase was
supplied by excess cash and the use of approximately $5.0 million under DDI's
existing revolving credit facility with First Bank National Association.
In connection with the Stock Purchase Agreement and the LLC Interest
Purchase Agreement, Moore Labels entered into three-year employment and
non-competition agreements with each of Chris Moore, Melody Moore and Norman
Moeder.
Moore Labels produces pressure-sensitive labels primarily for the
pharmaceutical, food, plastics and miscellaneous manufacturing industries and
operates a manufacturing facility (the "Manufacturing Facility") located in
Wichita, Kansas, which it leases from the LLC.
The LLC's sole purpose is that of a holding company for the land (the
"Land") on which the Manufacturing Facility is located. The construction of the
Manufacturing Facility was financed through the issuance of Industrial Revenue
Bonds (the "Bonds") by Sedgwick County, Kansas ("Sedgwick County") in December,
1994. Moore Labels and the LLC have guaranteed the repayment of the Bonds. The
LLC leases the Manufacturing Facility from Sedgwick County, with the rental
payments going towards the repayment of the Bonds. The LLC has an option to
purchase the Manufacturing Facility upon the repayment of all of the Bonds for a
nominal purchase price.
Upon the consummation of the transaction, Moore Labels became a
wholly-owned subsidiary of DDI and the LLC became 99% owned by Moore Labels and
1% owned by DDI. The Company and DDI presently intend to conduct the business of
Moore Labels in a manner substantially unchanged from the conduct of such
business prior to its acquisition by DDI, except that it is proposed that the
LLC will be merged into Moore Labels with Moore Labels being the survivor. The
consolidation of the LLC and Moore Labels is subject to the consent of Union
National Bank of Wichita, the trustee with respect to the Bonds.
Prior to the transactions discussed herein, there were no material
relationships between the Shareholders or the Interestholders and DDI or the
Company, or any of their respective affiliates, any director or officer of DDI
or the Company, or any associate of any such director or officer. In addition,
prior to the transactions discussed herein, there were no material relationships
between Moore Labels or the LLC and DDI or the Company, or any of their
respective affiliates, any director or officer of DDI or the Company, or any
associate of any such director or officer.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired:
Not required.
(b) Pro Forma Financial Information:
Not required.
(c) Exhibits:
2.1 Stock Purchase Agreement dated as of July 11, 1997 by and
among Data Documents, Inc., Christopher C. Moore, Melody
J. Moore, The Chris and Melody Moore Charitable Remainder
Unitrust and Moore Labels, Inc.
2.2 LLC Interest Purchase Agreement dated July 11, 1997 by and
among Data Documents, Inc., Moore Labels, Inc.,
Christopher C. Moore, Melody J. Moore and Norman A.
Moeder.
99.1 Press Release dated July 14, 1997 issued by the Company
regarding the transactions.
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATA DOCUMENTS INCORPORATED
Date: August 14, 1997 By: /s/ A. Robert Thomas
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A. Robert Thomas,
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
----------- ----------- -------------
<S> <C> <C>
2.1 Stock Purchase Agreement dated as of July 11, 1997 by
and among DDI, Christopher C. Moore, Melody J. Moore,
The Chris and Melody Moore Charitable Remainder
Unitrust and Moore Labels, Inc.
2.2 LLC Interest Purchase Agreement dated July 11, 1997 by
and among DDI, Moore Labels, Christopher C. Moore,
Melody J. Moore and Norman A. Moeder.
99.1 Press Release dated July 14, 1997 issued by the
Company regarding the transactions.
</TABLE>
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
DATED
AS OF JULY 11, 1997
BY AND AMONG
CHRISTOPHER C. MOORE, MELODY J. MOORE,
AND THE CHRIS AND MELODY MOORE
CHARITABLE REMAINDER UNITRUST
(AS "SELLERS")
AND
DATA DOCUMENTS, INC.
(AS "BUYER")
AND
MOORE LABELS, INC.
(AS THE "COMPANY")
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TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C> <C>
ARTICLE 1 - TERMS OF PURCHASE AND SALE.......................................................2
1.1 Sale of the Shares............................................................2
1.2 Closing.......................................................................2
1.3 Purchase Price; Delivery......................................................4
1.4 Working Capital Adjustment....................................................4
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF THE PARTIES....................................6
2.1 Representations and Warranties of the Sellers.................................6
(a) Capitalization; Title to Shares.......................................6
(b) Subsidiaries...........................................................7
(c) Organization of the Company; Authorization.............................7
(d) No Conflict............................................................7
(e) Financial Statements...................................................7
(f) Long Term Debt; Absence of Undisclosed Liabilities.....................8
(g) Consents and Approvals of Governmental Authorities.....................8
(h) Real Property..........................................................8
(i) Personal Property......................................................9
(j) Contracts..............................................................9
(k) Intellectual Property.................................................10
(l) Litigation............................................................10
(m) Compliance with Laws..................................................11
(n) No Brokers and Finders................................................13
(o) Absence of Change.....................................................13
(p) Labor Matters.........................................................14
(q) Benefit Plan Matters..................................................15
(r) Inventory.............................................................16
(s) Accounts Receivable...................................................16
(t) Insurance.............................................................17
(u) Banking Relationships.................................................17
(v) Absence of Certain Commercial Practices...............................17
(w) Customers and Suppliers...............................................17
(x) Related Parties.......................................................18
(y) Returns...............................................................18
(z) Product Liability.....................................................18
(aa) No Competing Business.................................................18
(bb) No Misrepresentations.................................................19
(cc) Taxes.................................................................19
2.2 Representations and Warranties of Buyer......................................21
</TABLE>
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<TABLE>
<S> <C> <C>
(a) Organization of Buyer; Authorization..................................21
(b) No Conflict...........................................................21
(c) Litigation............................................................21
(d) No Brokers or Finders.................................................21
(e) Consents and Approvals................................................21
(f) Financial Statements of Buyer.........................................22
(g) No Misrepresentations.................................................22
ARTICLE 3 - COVENANTS AND OTHER AGREEMENTS OF THE PARTIES..................................22
3.1 Conduct of Business..........................................................22
3.2 Diligence in Pursuit of Conditions Precedent.................................24
3.3 Access to Information........................................................24
3.4 Transition...................................................................24
3.5 Monthly Financials...........................................................25
3.6 No Solicitation..............................................................25
3.7 Employment Agreement.........................................................25
3.8 Non-Competition Agreement....................................................25
3.9 Consent and Release Agreement................................................25
3.10 Note Escrow..................................................................25
3.11 Lien Release.................................................................26
3.12 Further Assurances...........................................................26
3.13 COBRA Compliance.............................................................26
3.14 Tax Elections................................................................26
3.15 Redemption of Redemption Shares..............................................26
3.16 Waiver of Right of First Refusal.............................................26
ARTICLE 4 - CONDITIONS TO CLOSING...........................................................26
4.l General Conditions...........................................................26
4.2 Conditions to the Sellers' Obligations.......................................27
(a) Buyer's Performance...................................................27
(b) Representations and Warranties True...................................27
(c) Payments..............................................................27
(d) Opinion of Counsel of Buyer...........................................27
(e) Escrow Agreements.....................................................27
4.3 Conditions to Buyer's Obligations............................................27
(a) The Sellers' Performance..............................................28
(b) Representations and Warranties True...................................28
(c) Absence of Material Adverse Changes...................................28
(d) Approvals and Consents................................................28
(e) Opinion of Counsel of the Sellers.....................................28
</TABLE>
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<TABLE>
<S> <C> <C>
(f) Due Diligence.........................................................28
(g) Employment Agreements.................................................29
(h) Non-Competition Agreement.............................................29
(i) Stock Certificates....................................................29
(j) Consent and Release Agreement.........................................29
(k) Lien Release..........................................................29
(l) Company Escrow Agreement..............................................29
(m) LLC Interest Purchase Agreement.......................................29
(n) Redemption of the Redemption Shares...................................29
ARTICLE 5 - TERMINATION.....................................................................29
5.1 Termination..................................................................29
5.2 Effect of Termination........................................................30
ARTICLE 6 - INDEMNIFICATION AND CLAIMS......................................................30
6.1 Survival of Representations and Warranties...................................30
6.2 Indemnification by the Sellers...............................................30
6.3 Indemnification by Buyer.....................................................32
6.4 Environmental Matters........................................................32
6.5 Limitation on Indemnification................................................34
6.6 Third Party Claims...........................................................34
ARTICLE 7 - TAXES...........................................................................35
7.1 Tax Indemnity................................................................35
7.2 Purchase Price Adjustment....................................................37
7.3 Survival.....................................................................37
ARTICLE 8 - GENERAL PROVISIONS..............................................................37
8.1 Notices......................................................................37
8.2 Entire Agreement; Incorporation; Subsequent Modifications....................38
8.3 Assignment; Binding Effect; Third Party Beneficiaries........................38
8.4 Expenses of Sale.............................................................39
8.5 Knowledge....................................................................39
8.6 Counterparts.................................................................39
8.7 Interpretation and Governing Law.............................................39
8.8 Severability.................................................................39
8.9 Reference to Days............................................................39
8.10 Press Release................................................................39
8.11 Dispute Resolution...........................................................40
</TABLE>
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EXHIBITS
<TABLE>
<S> <C>
Form of Employment Agreement with Christopher C. Moore...................Exhibit A-1
Form of Employment Agreement with Melody J. Moore........................Exhibit A-2
Form of Employment Agreement with Norman A. Moeder.......................Exhibit A-3
Form of Non-Competition Agreement........................................Exhibit B
Form of Certificate of the Sellers.......................................Exhibit C
Form of Opinion of Counsel to the Sellers................................Exhibit D
Form of Consent and Release Agreement....................................Exhibit E
Form of Certificate of the Buyer.........................................Exhibit F
Form of Company Escrow Agreement.........................................Exhibit G
Form of Note Escrow Agreement............................................Exhibit H
Financial Statements.....................................................Exhibit I
</TABLE>
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LIST OF SCHEDULES
<TABLE>
<S> <C>
Schedule 1.4(a) Working Capital Calculation
Schedule 2.1(e) Preparation of Financial Statements
Schedule 2.1(f)(ii) Undisclosed Liabilities
Schedule 2.1(g) Consents and Approvals
Schedule 2.1(h) Real Property
Schedule 2.1(i) Personal Property; Liens
Schedule 2.1(j)(i) Contracts
Schedule 2.1(j)(ii) Contract Defaults
Schedule 2.1(j)(iv) Executory Contracts with Indemnification Obligations
Schedule 2.1(j)(v) Outstanding Bids
Schedule 2.1(k) Intellectual Property (with geographic areas)
Schedule 2.1(l) Proceedings; Judgments
Schedule 2.1(m)(i) Non-Compliance with Laws
Schedule 2.1(m)(ii) Environmental Matters
Schedule 2.1(m)(iii)(A) Company Facilities
Schedule 2.1(m)(iii)(B) Environmental Contractors and Off-Site Locations
Schedule 2.1(m)(iv) Environmental Reports
Schedule 2.1(o) Absence of Change
Schedule 2.1(p)(i) Directors, Officers and Employees
Schedule 2.1(p)(ii) Labor Disputes
Schedule 2.1(q)(i) Benefit Plans
Schedule 2.1(q)(v) Compliance with Employee Benefit Laws
Schedule 2.1(s) Accounts Receivable
Schedule 2.1(t) Insurance
Schedule 2.1(u) Banking Relationships
Schedule 2.1(v) Certain Commercial Practices
Schedule 2.1(w) Customers and Suppliers
Schedule 2.1(x) Related Parties
Schedule 2.1(y) Returns of Merchandise
Schedule 2.1(z) Products Liability
Schedule 2.1(aa) Competing Businesses
Schedule 2.1(cc) Taxes
</TABLE>
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
this 11th day of July, 1997, by and among Christopher C. Moore, an individual
("Chris Moore"), Melody J. Moore, an individual ("Melody Moore"), the Chris and
Melody Moore Charitable Remainder Unitrust (the "Trust" and, collectively, with
Chris Moore and Melody Moore, the "Sellers"), Moore Labels, Inc., a Kansas
corporation (the "Company"), and Data Documents, Inc., a Nebraska corporation
("Buyer") (sometimes individually, a "Party" and collectively, the "Parties").
RECITALS
WHEREAS, the Company, among other things, currently owns and operates a
prime label business and manufacturing facility located in Wichita, Kansas (the
"Business");
WHEREAS, the Sellers own all of the issued and outstanding shares of
capital stock of the Company, consisting of 16,667 shares of common stock
(collectively, the "Outstanding Shares");
WHEREAS, on the Closing Date (as defined in Section 1.2), the Sellers
(pro rata) will sell to the Company, and the Company will redeem from the
Sellers (pro rata), 1,559 of the Outstanding Shares (collectively, the
"Redemption Shares"), to be held by the Company as treasury stock;
WHEREAS, after giving effect to the redemption by the Company of the
Redemption Shares, the Sellers will own 15,108 shares of common stock
(collectively, the "Shares"), representing all of the issued and outstanding
shares as of the Closing Date;
WHEREAS, Labelit Land Company, LLC, a Kansas limited liability company
(the "LLC"), among other things, currently leases certain improved real estate
(the "Land") located in Sedgwick County, Kansas (the "County"), from the County
for the life of an Industrial Revenue Bond (the "IRB") with the County and, in
turn, subleases the Land to the Company, which sublease arrangement will remain
in place following the transactions contemplated by this Agreement;
WHEREAS, Chris Moore, Melody Moore and Norman A. Moeder, an individual
("Norman Moeder" and, collectively, with Chris Moore and Melody Moore, the
"Interestholders") own all of the issued and outstanding interests in the LLC
(the "Interests");
WHEREAS, concurrent with this Agreement, the Interestholders, Buyer and
the Company have entered into an LLC Interest Purchase Agreement (the "LLC
Interest Purchase Agreement"), whereunder, immediately after the Closing (as
defined in Section 1.2) of the transactions contemplated in this Agreement,
Buyer and the Company will purchase all of the Interests in the LLC from the
Interestholders; and
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WHEREAS, the Sellers desire to sell to Buyer, and Buyer desires to
purchase from the Sellers the Shares, all upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
representations, warranties, covenants, agreements, terms and conditions set
forth below, the receipt and adequacy of which are hereby acknowledged, the
Parties agree as follows:
ARTICLE 1 - TERMS OF PURCHASE AND SALE
1.1 SALE OF THE SHARES. At the Closing (as defined in Section 1.2), upon
the terms and subject to the condition set forth herein, the Sellers shall sell
to Buyer, and Buyer shall purchase from the Sellers the Shares.
1.2 CLOSING. The closing of the transactions contemplated hereby (the
"Closing") shall be held at the offices of Gibson, Dunn & Crutcher LLP, 2029
Century Park East, Suite 4000, Los Angeles, California 90067, on July 31, 1997
or such other date as may be mutually agreed upon by the Parties (such date on
which the Closing actually occurs to be referred to hereinafter as the "Closing
Date"). At the Closing,
(a) the Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed in
blank for transfer accompanied by duly executed stock powers assigning
the Shares in blank which certificates shall not bear any legend
restricting the transfer of such Shares (the "Stock Certificates");
(ii) a long-form certificate of good standing for the
Company issued by the Secretary of State of the State of Kansas,
certifying that the Company is in good standing upon the records of its
offices, including tax good standing, and certificate(s) to transact
business as a foreign corporation in each state in which the Company is
so qualified, each as of a date no more than five business days prior to
the Closing Date;
(iii) copies of the Articles of Incorporation, certified
by the Secretary of State of the State of Kansas, and the bylaws of the
Company, certified by the secretary or an assistant secretary of the
Company, in each case as amended to date;
(iv) an Employment Agreement with each of Chris Moore,
Melody Moore and Norman Moeder, substantially in the forms of EXHIBITS
A-1, A-2, and A-3, respectively, attached hereto;
(v) a Non-Competition Agreement with each of Chris Moore
and Melody Moore, substantially in the form of EXHIBIT B attached
hereto;
(vi) the certificate, substantially in the form of EXHIBIT
C attached hereto, referred to in Section 4.3(b);
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(vii) the opinion of counsel to the Sellers, substantially
in the form of EXHIBIT D attached hereto, referred to in Section 4.3(e);
(viii) resignations, or removals by the Sellers, of the
directors of the Company;
(ix) the official stock register and minute books of the
Company, certified by the secretary or an assistant secretary of the
Company;
(x) originals of the Leases (as defined in Section 2.1(h))
relating to the Land or any other Real Property (as defined in Section
2.1(h)) (or, if the Company does not have an original, a copy certified
by the Sellers to be a true and complete copy of any such Lease),
specified material contracts, and such other documents as may be
reasonably requested by Buyer;
(xi) any consents, approvals or other authorizations
necessary to effect the transactions contemplated hereby;
(xii) a consent to this Agreement and release of the
Company by John P. Moore ("John Moore") and Catherine Moore ("Catherine
Moore" and, collectively, with John Moore, "John and Catherine Moore"),
substantially in the form of EXHIBIT E attached hereto (the "Consent and
Release Agreement"), relating to (A) that certain Redemption Agreement
dated January 1, 1989 by and between John Moore and the Company, (B)
that certain Promissory Note (the "Note") dated January 1, 1989 by the
Company in favor of John Moore, and (C) the Escrow Instructions (the
"Escrow Instructions") to First National Bank of Wichita, Kansas (now
know as Intrust Bank N.A., "Intrust") dated February 21, 1989;
(xiii) a release ("Lien Release") of the lien held by
Intrust pursuant to the Escrow Instructions; and
(ix) such other documents and instruments as Buyer or its
counsel reasonably deems necessary to effectuate the transactions
contemplated by this Agreement.
(b) Buyer will deliver to the Sellers:
(i) the Cash Payment referred to in Section 1.3;
(ii) the certificate, substantially in the form of EXHIBIT
F attached hereto, referred to in Section 4.2(b);
(iii) the opinion of counsel to Buyer referred to in
Section 4.2(d);
(iv) the escrow agreement relating to a portion of the
Purchase Price (as defined in Section 1.3), substantially in the form of
EXHIBIT G attached hereto (the "Company Escrow Agreement");
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(v) the escrow agreement relating to the Note,
substantially in the form of EXHIBIT H attached hereto (the "Note Escrow
Agreement"); and
(vi) such other documents and instruments as the Sellers
or their counsel reasonably deem necessary to effectuate the
transactions contemplated by this Agreement.
(c) On the business day immediately preceding the Closing Date,
the Parties shall conduct a pre-closing at the offices of Gibson, Dunn &
Crutcher, LLP commencing at 9:00 a.m., at which each Party shall present for
review by the other Party copies, in execution form, of all documents required
to be delivered by any Party at the Closing.
1.3 PURCHASE PRICE; DELIVERY. Except as otherwise provided below or in
Section 1.4 hereto, the aggregate purchase price to be paid by Buyer to the
Sellers for the Shares (the "Purchase Price") shall equal $13,500,000, reduced
by the amount by which the purchase price for the Interests (as set forth in
Section 1.3 of the LLC Interest Purchase Agreement) exceeds $125,000, and shall
consist of (i) $2,000,000, which will be paid into an escrow account on the
Closing Date pursuant to the Company Escrow Agreement and which, subject to any
offsets permitted pursuant to this Agreement, will be paid to the Sellers as
provided therein (the "Company Escrow"), and (ii) the balance, which will be
paid by wire transfer of immediately available funds on the Closing Date (the
"Cash Payment") 66.66875% to Chris and Melody Moore and 33.33125% to the Trust.
1.4 WORKING CAPITAL ADJUSTMENT.
(a) As soon as reasonably practicable following the Closing Date,
and in any event within ninety (90) calendar days thereof, Buyer shall cause the
Company to prepare and deliver to the Sellers (i) a consolidated balance sheet
of the Company as of the Closing Date (the "Closing Balance Sheet"), (ii) a
calculation of the Closing Date Working Capital (defined below) of the Company,
as set forth on the Closing Balance Sheet, and (iii) a physical inventory of the
Company and a statement (the "Inventory Statement") of the gross value of the
inventory, work-in-progress, stock in trade, finished goods and raw materials of
the Company (collectively, the "Inventory") as of the close of business on the
Closing Date. The Closing Balance Sheet and the Inventory Statement shall each
be prepared consistently with the prior practices of the Company. "Closing Date
Working Capital" as of any date shall mean (x) the current assets (including
cash (without taking into consideration the cash used to purchase the Interests
pursuant to the LLC Interest Purchase Agreement), accounts receivable and
inventory) of the Company as of the Closing Date, minus (y) the current
liabilities (including accounts payable, income taxes payable and other currant
liabilities other than the current portion of the Company's long term debt) of
the Company as of the Closing Date, calculated as set forth on Schedule 1.4(a)
hereto. The value of the Inventory reflected on the Inventory Statement shall be
based on the same costs used in determining the value of the Inventory on the
books and records of the Company. At Buyer's sole option and cost, Buyer's
accountant, Deloitte & Touche LLP, may participate in the preparation and/or
review of the Closing Balance Sheet, the calculation of the Closing Date Working
Capital and the Inventory Statement.
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(b) Notwithstanding Section 1.4(a), if it appears that there will
be a material difference between the Closing Balance Sheet and the Interim
Balance Sheet (as defined in Section 2.1(e)), then as soon as reasonably
practical after Buyer is made aware of such material difference, Buyer shall
notify the Sellers of such material difference and allow the Sellers to discuss
and attempt to resolve any such material difference; provided, however, that if
the Sellers and Buyer are unable to resolve such material difference within 30
days, then Buyer, without the Sellers, will complete the preparation of the
Closing Balance Sheet, the calculation of the Closing Date Working Capital and
the Inventory Statement in accordance with Section 1.4(a), subject to the
provisions of Section 1.4(c).
(c) Upon delivery of the Closing Balance Sheet, Buyer will
provide the Sellers full access to the Company's records, and will use its
reasonable best efforts to provide the Sellers access to Buyer's work papers, to
the extent reasonably related to the Sellers' evaluation of the Closing Balance
Sheet, the calculation of the Closing Date Working Capital and the Inventory
Statement. If the Sellers disagree with the calculation of Closing Date Working
Capital, the Sellers shall notify Buyer of such disagreement in writing, setting
forth in detail the particulars of such disagreement, within thirty (30) days
after the Sellers' receipt of the Closing Balance Sheet and the Inventory
Statement. In the event that the Sellers do not provide such a notice of
disagreement within such thirty (30) day period, the Sellers shall be deemed to
have accepted the Closing Balance Sheet, the calculation of the Closing Date
Working Capital and the Inventory Statement delivered by Buyer, which shall be
final, binding and conclusive for all purposes hereunder. In the event any such
notice or disagreement is timely provided, Buyer and the Sellers shall use their
reasonable best efforts for a period of thirty (30) days (or such longer period
as they may mutually agree) to resolve any disagreements with respect to the
calculation of Closing Date Working Capital. If, at the end of such period, they
are unable to resolve such disagreements, then KPMG Peat Marwick LLP (or such
other independent accounting firm of recognized national standing as may be
mutually selected by Buyer and the Sellers) (the "Auditor") shall resolve any
remaining disagreements. The Auditor shall determine as promptly as practicable,
but in any event within thirty (30) days of the date on which such dispute is
referred to the Auditor, whether the Closing Balance Sheet and the Inventory
Statement were prepared in accordance with the standards set forth in Section
1.4(a) and (only with respect to the remaining disagreements submitted to the
Auditor) whether and to what extent (if any) the Closing Date Working Capital
calculation requires adjustment. The fees and expenses of the Auditor shall be
paid one-half by Buyer and one-half by the Sellers. The Auditor shall have
exclusive jurisdiction over any disputes arising out of or relating to the
Closing Balance Sheet, the calculation of the Closing Date Working Capital or
the Inventory Statement, and resort to the Auditor, as provided in this Section
1.4(c), shall be the sole recourse and remedy of the Parties against one another
or any other person with respect to any such disputes. The determination of the
Auditor shall be final, conclusive and binding on the Parties and shall be
enforceable in any court of competent jurisdiction.
(d) The "Adjustment Amount," which may be positive or negative,
shall mean (i) the Closing Date Working Capital minus (ii) Two Million Dollars
($2,000,000). If the Adjustment Amount is a positive number, then the Purchase
Price will be increased by the Adjustment Amount, and if the Adjustment Amount
is a negative number, the Purchase Price will be decreased by the Adjustment
Amount. If any positive adjustment is necessary pursuant to this
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Section 1.4(d), Buyer shall, within five business days of the determination of
the positive Adjustment Amount, pay to the Sellers by wire transfer of
immediately available funds an amount equal to such Adjustment Amount. If any
negative adjustment is necessary pursuant to this Section 1.4(d), the Sellers
shall, within five business days of the determination of the negative Adjustment
Amount, pay to Buyer by wire transfer of immediately available funds an amount
equal to such Adjustment Amount.
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES
OF THE PARTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the Sellers,
jointly and severally, represents and warrants to Buyer, as of the date of this
Agreement, as set forth below:
(a) CAPITALIZATION; TITLE TO SHARES. The authorized capital stock
of the Company consists solely of 50,000 shares of common stock, of which (i)
16,667 shares are issued and outstanding and owned of record and beneficially by
the Sellers (i.e., the Outstanding Shares) and (ii) 33,333 shares are issued but
held by the Company as treasury shares (the "Treasury Stock" and, collectively,
with the Outstanding Shares, the "Issued Shares"). All of the Issued Shares have
been duly authorized and are validly issued, fully paid and non-assessable. The
Company holds the Treasury Stock free and clear of all liens, security
interests, pledges, mortgages, charges, limitations, claims, restrictions,
rights of first refusal, rights of first offer, rights of first negotiation or
other encumbrances of any kind or nature whatsoever (collectively,
"Encumbrances"), given the effect of the Consent and Release Agreement. On the
Closing Date, after giving effect to the redemption of the Redemption Shares by
the Company, (1) 15,108 shares will be issued and outstanding and owned of
record and beneficially by the Sellers (i.e., the Shares) and (2) 34,892 shares
will be issued but held by the Company as treasury shares, free and clear of all
Encumbrances. There are no securities outstanding convertible into, exchangeable
for or carrying the right to acquire equity securities of the Company, or
subscriptions, warrants, options, rights, calls, agreements, demands or other
arrangements or commitments of any character obligating the Company to issue or
dispose of any of its equity securities or any ownership interests therein or
otherwise relating to the capital stock of the Company. The sale and delivery of
the Shares to Buyer pursuant to Article 1 hereof will vest in Buyer legal and
valid title to the Shares, free and clear of any and all Encumbrances, other
than Encumbrances created by Buyer. The sale and delivery of the Redemption
Shares to the Company pursuant to Section 3.15 hereof will vest in the Company
legal and valid title to the Redemption Shares, free and clear of any and all
Encumbrances, other than Encumbrances created by the Company.
(b) SUBSIDIARIES. The Company does not hold a direct, indirect or
beneficial interest in any entity (corporation, partnership, joint venture,
association or other business enterprise).
(c) ORGANIZATION OF THE COMPANY; AUTHORIZATION. The Company is
duly incorporated, organized, validly existing and in good standing under the
laws of the State of Kansas and is qualified to transact business as a foreign
corporation in all states in which its operations, properties or assets require
such qualification. Each of the Company and the Sellers
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<PAGE> 13
has full power and authority (i) to execute and deliver this Agreement and (ii)
to perform his, her or its obligations hereunder. The Company has full corporate
power and authority to own, lease and operate its properties and to carry on the
Business or any of its other operations as now being conducted. The execution,
delivery and performance of this Agreement have been duly authorized by all
necessary action of the Company and the Sellers and this Agreement constitutes a
valid and binding obligation of the Company and the Sellers enforceable against
each of the Company and the Sellers in accordance with its terms.
(d) NO CONFLICT. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby by the
Company or the Sellers will (i) violate any provision of the charter or bylaws
of the Company; (ii) violate, or be in conflict with, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, any Contract (as defined in Section 2.1(j)); or (iii) violate any
material statute, law, rule or regulation including, without limitation, any
Environmental Law (as defined in Section 2.1(m)) or any judgment, decree or
order of any court or other governmental authority binding upon the Company or
the Sellers.
(e) FINANCIAL STATEMENTS. The Sellers have delivered to Buyer the
unaudited balance sheets of the Company for the four years ended December 31,
1996 (the "Unaudited Balance Sheets") and the related unaudited income
statements for the four-year period ended December 31, 1996 (the "Unaudited
Financial Statements"), and the unaudited balance sheet of the Company as of May
31, 1997 (the "Interim Balance Sheet") and related unaudited income statement
for the period then ended (the "Interim Financial Statement" and, collectively,
with the Unaudited Financial Statements, the "Financial Statements," copies of
which are attached hereto as EXHIBIT I). Except as listed on Schedule 2.1(e)
hereto, the Financial Statements, together with the notes thereto, (i) were
prepared in accordance with the books and records of the Company; (ii) fairly
present the financial position at, and the results of operations for the periods
covered thereby; (iii) were prepared on the income tax basis of accounting,
consistent with the prior practice of the Company; (iv) contain and reflect all
necessary adjustments and accruals for a fair presentation of the Company's
financial condition and the results of its operations for the periods covered by
said Financial Statements; (v) contain and reflect adequate provisions for all
reasonably anticipated liabilities, including liabilities for all taxes, whether
federal, state, local or foreign, with respect to the periods then ended and all
prior periods; and (vi) with respect to contracts and commitments for the sale
of products or other goods or services by the Company, contain and reflect
adequate reserves for all reasonably anticipated material losses and costs and
expenses in excess of expected receipts.
(f) LONG TERM DEBT; ABSENCE OF UNDISCLOSED LIABILITIES.
(i) The only long term debt of the Company consists of the
outstanding principal balance owed by the Company to John Moore under
the Note, with an original principal balance of $772,270 and a current
principal amount of approximately $464,625, to be adjusted to reflect
any payments or accrued but unpaid interest thereon during the period
from May 31, 1997 through the Closing Date.
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<PAGE> 14
(ii) Except (A) as listed in Schedule 2.1(f)(ii) hereto
and (B) for liabilities incurred in the ordinary course of business and
consistent with past practices, from the date of the Interim Balance
Sheet to the date of this Agreement, the Company has not incurred any
liability or obligation (whether accrued, absolute, contingent or
otherwise), and whether due or to become due (including, without
limitation, any liability for Taxes (as defined in Section 2.1(cc)) and
interest, penalties and other charges payable with respect to any such
liability or obligation) of a nature required by the Company's past
accounting practices to be reflected on a corporate balance sheet or
disclosed in the notes thereto. To the knowledge of the Sellers, there
are no currently existing conditions with respect to the Company which
might reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), business, net worth, results of
operations, earnings, properties or prospects, whether or not arising in
the ordinary course of business, of the Company or the Business.
(g) CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. Except as
set forth on Schedule 2.1(g) hereto, no consent, approval or authorization of,
or declaration, filing or registration by the Sellers or the Company with any
governmental authority is required in connection with the execution, delivery
and performance by the Company or the Sellers of this Agreement or the
consummation of the transactions contemplated hereby, other than state or local
laws and regulations with which the Company and/or the Sellers will have
complied on or before the Closing Date.
(h) REAL PROPERTY. Schedule 2.1(h) hereto sets forth the street
address of each parcel of real property, owned, leased, operated or otherwise
currently used by the Company (the "Real Property"), the name of the owner of
such Real Property, and lists each lease ("Lease") of Real Property under which
the Company is a lessee, sub-lessee, lessor or sub-lessor. Except as otherwise
set forth on such Schedule 2.1(h): (i) the Sellers have delivered to Buyer
complete and correct copies of all of the Leases and title reports relating to
the Real Property; (ii) the Company has good and marketable title to all of the
owned Real Property and, on the Closing Date, Buyer will obtain good and
marketable title to such owned Real Property, free and clear of all
Encumbrances, except for Encumbrances created by or arising through Buyer
(including any existing Encumbrances expressly assumed by Buyer); (iii) each
Lease is in full force and effect; (iv) the Company is not in default with
respect to any material term or condition of any Lease, and no event has
occurred which, either of itself or with the passage of time or the giving of
notice or both, would constitute a default thereunder or would cause the
acceleration of any obligation of any party thereto or the creation of a lien or
encumbrance upon any asset of the Company; (v) the buildings, fixtures and other
improvements located on the Real Property are in good operating condition and
repair, normal wear and tear excepted; and (vi) the Company holds valid and
effective permits and licenses required by all applicable laws relating to its
operation and use of the Real Property in connection with the Business or
otherwise.
(i) PERSONAL PROPERTY. Except as set forth in Schedule 2.1(i)
hereto, the Company has good and marketable title to all of the personal
property used in the Business or otherwise material to the financial condition
of the Company and, on the Closing Date, Buyer will obtain good and marketable
title to such property, free and clear of any and all Encumbrances, except for
(i) Encumbrances created by or arising through Buyer (including, without
limitation, by
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<PAGE> 15
reason of any capitalized leases assumed by Buyer); and (ii) the Encumbrances
listed in such Schedule 2.1(i). All of the assets and properties (whether owned
or leased) of the Company have been well-maintained and are in good operating
condition, free from defects other than such minor defects as do not materially
interfere with the continued use thereof in normal operations. The Interim
Balance Sheet reflect all tangible assets and properties, real or personal, used
by the Company in the conduct of the Business or otherwise.
(j) CONTRACTS.
(i) Schedule 2.1(j)(i) hereto contains a true, correct and
complete list of each contract, license, lease, purchase and sale order
(other than purchase and sales orders entered into in the ordinary
course of business) and other agreement, whether written or oral
(including any and all amendments thereto), to which the Company is a
party (collectively, the "Contracts") under which the value of services
to be performed or goods to be provided by the Company or the cost of
services to be performed or goods to be provided to the Company is
expected to exceed $10,000.
(ii) Each Contract is in full force and effect, valid and
binding and enforceable against the Company and, to the Sellers'
knowledge, each other party thereto, in accordance with its terms.
Except as set forth on Schedule 2.1(j)(ii) hereto, neither the Company
nor, to the Sellers' knowledge, any other party to any of the Contracts,
is in breach or default with respect to any term or condition thereof,
and neither the Sellers nor the Company have received any notice that
any event has occurred that, with the passage of time or the giving of
notice, or both, would constitute such a breach or default thereunder.
(iii) The Company is not a party to any contract which,
under the circumstances which exist as of the Closing Date, could have a
material adverse effect on the Business or the Company if the
obligations of such parties thereunder are substantially performed and
no Contract obligates the Company (A) to purchase goods or services in
excess of reasonably anticipated needs after the Closing Date or on
terms which are materially less favorable than those obtainable from
other suppliers of similar goods or services; or (B) to sell goods or
services after the Closing Date which cannot be produced or delivered
pursuant to existing manufacturing or working conditions or at other
than normal profit margins consistent with the past practices of the
Company.
(iv) Schedule 2.1(j)(iv) hereto identifies each executory
Contract under which the Company is obligated to provide indemnification
or to pay consequential or incidental damages in excess of amounts which
would be covered by insurance.
(v) Schedule 2.1(j)(v) hereto lists each outstanding bid
or proposal for a contract under which the value of services to be
performed or goods to be provided by the Company or the cost of services
to be performed or goods to be provided to the Company is expected to
exceed $10,000.
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(k) INTELLECTUAL PROPERTY. Schedule 2.1(k) hereto sets forth a
true, complete and correct list of each patent, patent application, copyright,
copyright application, trademark, trademark registration (in any such case,
whether registered or to be registered in the United States of America or
elsewhere) and trade name (including the name "Moore Labels, Inc.")
(collectively, the "Intellectual Property Rights"). Except as indicated in
Schedule 2.1(l)(i) hereto, (i) there are not and have not been any Proceedings
(as defined in Section 2.1(l)) involving the Company concerning any of the
Intellectual Property Rights nor, to the best knowledge of the Sellers, is any
such action or proceeding threatened; (ii) the Company owns all right, title and
interest in and to the Intellectual Property and, on the Closing Date, Buyer
will obtain all of such right, title and interest to the Intellectual Property,
free and clear of any and all Encumbrances; (iii) the Company has the right and
authority to use all items of Intellectual Property Rights in connection with
the conduct of the Business in the manner presently conducted and to convey such
right and authority to Buyer and such use does not conflict with, infringe upon
or violate any Intellectual Property of any other person, firm or corporation;
and (iv) there are no outstanding nor, to the best knowledge of the Sellers,
threatened, disputes or disagreements with respect to any Intellectual Property.
(l) LITIGATION. Except as provided in Schedule 2.1(l) hereto,
there is no action, suit, arbitration, litigation, investigation, audit or other
proceeding (collectively, a "Proceeding") by or before any court, governmental
authority or other tribunal pending or, to the knowledge of the Sellers,
threatened, against the Company which questions or challenges the validity of
this Agreement or any action taken or to be taken pursuant to this Agreement or
in connection with the transactions contemplated hereby. Schedule 2.1(l)
attached hereto lists all pending Proceedings against the Company or initiated
by the Company against third parties, except for Proceedings which seek only
monetary relief in an amount not exceeding $2,500 in any one Proceeding or group
of Proceedings which arise out of the same facts, but not exceeding $5,000 in
the aggregate. Except as listed in Schedule 2.1(l) hereto, the Company is not
subject to any judgment, order or decree.
(m) COMPLIANCE WITH LAWS.
(i) The Company is in compliance with all federal, state
and local laws, ordinances, rules and regulations applicable to the
Business and any of the Company's other operations or properties
(including, without limitation, Environmental Laws (as defined in
Section 2.1(m)(v)(C)), building codes and zoning ordinances and similar
laws, and those relating to equal opportunity employment practices)
currently in effect. Except as set forth on Schedule 2.1(m)(i) hereto,
neither the Sellers nor the Company have received any notification of
any asserted present or past failure by the Company to comply with any
law, ordinance, rule or regulation which has not been completely
complied with or corrected prior to the date hereof without any material
adverse effect, past or present, on the Company or the Business. The
Company has at all times possessed, has been, and is in compliance in
all material respects with, all governmental permits, licenses and
authorizations (including all Environmental Permits (as defined in
Section 2.1(m)(v)(E)) necessary for the conduct of the Business and any
of its other operations on and prior to the Closing Date. The present
conduct of the Business is not dependent upon any so-
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<PAGE> 17
called "non-conforming use" exception or any other exception that would
terminate or otherwise be impaired by the transactions contemplated
hereby.
(ii) Neither the Sellers nor the Company have received any
notification of any proposed special assessment or any proposed material
change in property tax, land use or zoning laws affecting the Business
or the Real Property. The Company is in compliance in all material
respects with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in (A) the Environmental Laws; (B) any regulation, code, plan,
order, decree, judgment, notice or demand issued, entered, promulgated
or approved thereunder; or (C) to the best of the Sellers' knowledge,
any proposed law, rule or regulation which is not in effect as of the
date hereof but would have applicability to the Business or the Company
upon its effectiveness. Except as set forth on Schedule 2.1(m)(ii)
hereto, no Hazardous Material (as defined in Section 2.1(m)(v)(F)) has
been generated, used, treated, stored, released, disposed of, or
discharged into the environment, on or from any Company Facility (as
defined in Section 2.1(m)(iii)), nor have the Sellers been notified that
any Hazardous Material has been released on or from any locations at
which the Company arranged, by contract, agreement or otherwise for use,
disposal, storage, treatment, transport for disposal or treatment, of
any Hazardous Material. Except as set forth on Schedule 2.1(m)(ii)
hereto, there is no (X) Environmental Condition (as defined in Section
2.1(m)(v)(B)); (Y) asbestos-containing material installed at any Company
Facility; or (Z) polychlorinated biphenyls (PCBs) deposited or contained
in any existing equipment or otherwise located at any Company Facility.
The Company is not and, to the best of the Sellers' knowledge, will not
be subject to any liability to any third party for any Personal Injury
(as defined in Section 2.1(m)(v)(G)) of any person, including, without
limitation, any employee or former employee of the Company (1) in any
way arising out of any exposure prior to the Closing Date to any
Hazardous Material present at or generated by any Company Facility or
elsewhere on or prior to the Closing Date; or (2) in any way arising out
of any exposure after the Closing Date to any Hazardous Material that
was present at or generated by any Company Facility or elsewhere at or
prior to the Closing Date.
(iii) Schedule 2.1(m)(iii)(A) hereto sets forth a full and
complete list of any real property or any other facility currently or in
the past owned, operated or leased by the Company (collectively, a
"Company Facility"). The Company, or any agent of the Company, including
any employee or former employee of the Company, has not generated, used
or stored any Hazardous Material at any off-site location. Schedule
2.1(m)(iii)(B) hereto sets forth a full and complete list of each third
party to which or with which the Company, or any agent of the Company,
including any employee or former employee of the Company, has arranged,
by contract, agreement or otherwise for the disposal, storage,
treatment, transport for disposal, storage or treatment of any Hazardous
Material, and each off-site location such Hazardous Material was
disposed, stored or treated, subsequent to December 31, 1984, and, to
the Sellers' best knowledge, prior to January 1, 1985.
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(iv) True, correct and complete copies of all
environmental reports relating to each Company Facility, whether
currently or previously owned, leased, used or operated by the Company,
are attached hereto as Schedule 2.1(m)(iv).
(v) As used in this Agreement, the following terms shall
have the following meanings:
(A) "CERCLA" means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Section 9601 et seq.).
(B) "Environmental Condition" means (1) any
condition arising out of any release or threatened release of
Hazardous Materials from or on any Company Facility, (2) any
condition at any location arising out of any release or
threatened release of Hazardous Materials which the Company
generated, (3) any violation by the Company of any Environmental
Permit or of any Environmental Law or (4) any condition at any
Company Facility requiring investigation or remediation under any
Environmental Law.
(C) "Environmental Laws" means, in each case as in
effect on the applicable date prior to the Closing Date, 42
U.S.C. Section 9607 and 9613(f) of CERCLA (42 U.S.C. Section9601
et. seq.), the Hazardous Material Transportation Act (49 U.S.C.
Section 1801 et seq.), the Clean Water Act (33 U.S.C. Section
1251 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act, as
amended (15 U.S.C. Section 2601 et seq.) the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.),
the Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.), and any other federal, state, local or foreign law
relating to Environmental Matters, the rules and regulations
promulgated under any thereof, and any provisions of common law
providing for any remedy or right of recovery with respect to
Environmental Matters.
(D) "Environmental Matters" means any matter
arising out of or relating to the production, storage, handling,
use, emission, disposal, discharge, transportation, or release of
any contaminant, waste, or hazardous or toxic material, or other
substance or material regulated by law, or otherwise arising out
of or relating to safety, health, sanitation or the environment,
and shall include, without limitation, the costs of investigating
and remediating the same, any fines and penalties arising in
connection therewith, and any claim in respect thereof for
damages, declaratory relief or injunctive relief for alleged
Personal Injury, property damage or damage to natural resources
under common law or other Environmental Law.
(E) "Environmental Permit" means each permit,
license, order, variance, registration or other authorization of
any Federal, state or local
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governmental agency issued, approved or required to be obtained
under any Environmental Law.
(F) "Hazardous Material" means (1) any pollutant,
contaminant, petroleum, crude oil or any fraction thereof or
hazardous waste or hazardous substance, within the meaning of
such terms under CERCLA or any other Environmental Law and (2)
any other hazardous or toxic substance or material, or any
material requiring investigation or remediation, or which are
regulated, within the meaning of any Environmental Law applicable
to the Company or to which its properties or other assets are
subject.
(G) "Personal Injury" means any illness,
disability, injury or death.
(n) NO BROKERS AND FINDERS. Neither the Sellers, the Company nor
any of their respective affiliates, officers, directors, employees or agents has
incurred any liability for any brokerage or finders' fees or commissions or
similar payments in connection with any of the transactions contemplated hereby.
(o) ABSENCE OF CHANGE. Since the date of the Interim Balance
Sheet, except as listed in Schedule 2.1(o) hereto or as otherwise contemplated
by this Agreement, there has not been any:
(i) transaction by the Company not in the ordinary course
of its business;
(ii) material adverse change in the operations, condition
(financial or otherwise), prospects, assets or liabilities (whether
absolute, accrued or contingent or otherwise) of the Business or the
Company;
(iii) damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the Business or the
Company;
(iv) sale or transfer of any asset of the Company, except
sales in the ordinary course of its business;
(v) mortgage, pledge or subjection to lien, charge or
encumbrance of any kind, of any asset of the Company, except for (A)
liens for Taxes (as defined in Section 2.1(cc)) not due, (B) purchase
money security interests and (C) mechanics' liens being disputed by the
Company in good faith and by appropriate proceedings;
(vi) increase in, or commitment to increase, the
compensation payable or to become payable to any employee of the
Company, or any bonus payment or similar arrangement made to or with any
of such employees, other than salary increases resulting from promotions
and routine pay raises, in each case in the ordinary course of business
and in accordance with past practice;
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<PAGE> 20
(vii) adoption of a plan or agreement or amendment to any
plan or agreement providing any new or additional employment benefits
for any employee;
(viii) payment or declaration of any distribution of cash
or any other asset, in the nature of a dividend, in redemption or as the
purchase price of any of the Company's capital stock or in discharge or
cancellation, in whole or in part, of any indebtedness owing to its
shareholders, or any purchase, redemption, retirement, sale, issuance or
other acquisition of any stock, notes or other securities; or
(ix) alteration in the manner of keeping the Company's
books, accounts or records, or in the accounting practices therein
reflected.
(p) LABOR MATTERS. Schedule 2.1(p)(i) hereto contains a true and
correct list of the names and current salaries of all directors and elected and
appointed officers of the Company and each of the Company's employees with a
salary in excess of $25,000. The Company is not a party to, or otherwise bound
by, any collective bargaining agreement. Except as set forth on Schedule
2.1(p)(ii) hereto, (i) there are no claims for unfair labor practices or any
other disputes pending or, to the Sellers' knowledge, threatened, against the
Company by any of its employees or any third party; (ii) the Company is in
compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and is not engaged in any unfair labor practice; (iii) no
charges, audits, investigations or complaint proceedings are pending before the
Equal Employment Opportunity Commission or any state or local agency responsible
for the prevention of unlawful employment practices with respect to the Company;
and (iv) there is no labor strike, dispute, slowdown or stoppage actually
pending or, to the knowledge of the Sellers, threatened against the Company and
the Company has not experienced any work stoppage or other labor difficulty.
(q) BENEFIT PLAN MATTERS.
(i) EMPLOYEE BENEFIT PLANS AND BENEFIT ARRANGEMENTS.
Schedule 2.1(q)(i) hereto sets forth all Employee Benefit Plans (as
defined in Section 2.1(q)(vi)(E)) and Benefit Arrangements (as defined
in Section 2.1(q)(vi)(A)) that are sponsored or contributed to by the
Company or any of its ERISA Affiliates (as defined in Section
2.1(q)(vi)(H)) covering the Company's employees or former employees.
True and complete copies of all such Employee Benefit Plans and Benefit
Arrangements and related trust agreements, insurance contracts and
investment management agreements, including all amendments thereto have
been delivered to Buyer. The Company is not currently providing, nor is
it obligated to provide, any health or other benefits to John Moore.
(ii) EMPLOYEE PENSION BENEFIT PLANS. Neither the Company
nor any of its ERISA Affiliates sponsors, maintains or contributes to or
has an obligation to contribute to any Employee Pension Benefit Plan (as
defined in Section 2.1(q)(vi)(F)).
(iii) GROUP HEALTH PLANS. With respect to all Group Health
Plans (as defined in Section 2.1(q)(vi)(I)) maintained by the Company or
any of its ERISA Affiliates for the benefit of the employees, former
employees and beneficiaries of such employees
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<PAGE> 21
and former employees, of any of them, the Company and its ERISA
Affiliates have complied in all material respects with the provisions of
COBRA.
(iv) ADDITIONAL BENEFITS. No individual shall accrue or
receive additional benefits, service or accelerated rights to payments
of benefits under any Benefit Plan (as defined in Section
2.1(q)(vi)(B)), including the right to receive any parachute payment as
defined Section 280G of the Code or become entitled to severance,
termination allowance or similar benefits as a direct result of the
transactions contemplated by this Agreement.
(v) COMPLIANCE WITH LAWS. Except as set forth on Schedule
2.1(q)(v) hereto, each Benefit Plan has at all times prior hereto been
maintained in all material respects, by its terms and in operation, in
accordance with all applicable laws. The Company and its ERISA
Affiliates have made full and timely payment of all amounts required to
be contributed under the terms of each Benefit Plan and applicable law
or required to be paid as expenses under such Benefit Plan, and the
Company and its ERISA Affiliates shall continue to do so through the
Closing Date.
(vi) DEFINITIONS.
(A) "Benefit Arrangement" means any material
benefit arrangement that is not an Employee Benefit Plan,
including (1) any employment or consulting agreement, (2) any
arrangement providing for insurance coverage or workers'
compensation benefits, (3) any incentive or deferred bonus
arrangement, (4) any arrangement providing termination allowance,
severance or similar benefits, (5) any equity compensation plan,
(6) any deferred compensation plan and (7) any compensation
policy or practice.
(B) "Benefit Plan" means any Employee Benefit Plan
or Benefit Arrangement that is sponsored or contributed to by the
Company or any of its ERISA Affiliates covering the Company's
employees or former employees.
(C) "COBRA" means the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, as set forth in Section
4980B of the Code and Part 6 of Title I of ERISA.
(D) "Code" means the Internal Revenue Code of 1986,
as amended.
(E) "Employee Benefit Plan" means any employee
benefit plan, as defined in Section 3(3) of ERISA.
(F) "Employee Pension Benefit Plan" means any
employee pension benefit plan as defined in Section 3(2) of ERISA
that is subject to Title IV of ERISA, other than a Multiemployer
Plan.
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(G) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
(H) "ERISA Affiliate" of the Company means any
other person that, together with the Company as of the relevant
measuring date under ERISA, was or is required to be treated as
single employer under Section 414 of the Code.
(I) "Group Health Plan" means any group health plan
as defined in Section 5000(b)(1) of the Code.
(r) INVENTORY. The quantities of inventory maintained by the
Company are reasonable in the present circumstances of the business of the
Company. The values reflected on the Company's Interim Balance Sheet of obsolete
or substandard items of inventory have been written down to realizable market
values or written off, or adequate reserves therefor have been established on,
or are not material to, the Company's Interim Balance Sheet. All inventories not
written off have been priced at the lower of cost (on a first-in, first-out
basis) or market. From the date of the Company's Interim Balance Sheet to the
Closing Date, the level of write-downs experienced by the Company is consistent
on a pro rata basis with the write-downs for the period reflected in the
Company's Interim Income Statement. The quantities of each type of inventory
(whether raw materials, work-in-process, or finished goods) are not excessive,
but are reasonable and warranted in the present circumstances of the Company.
(s) ACCOUNTS RECEIVABLE. The accounts receivable of the Company
shown on the Interim Balance Sheet and all accounts receivable which have arisen
subsequent to May 31, 1997, have been collected or are collectible in the
ordinary course of business, net of the reserves identified on the Interim
Balance Sheet or the notes thereto. Schedule 2.1(s) hereto includes a complete
and accurate aging schedule of all of the Company's outstanding accounts
receivable as of July 1, 1997.
(t) INSURANCE. Schedule 2.1(t) hereto lists all insurance
policies presently covering the Company, including policies held by the Company
and policies held by third parties under which the Company is a named insured.
All such policies are in full force and effect, all premiums with respect
thereto covering all periods up to and including the Closing Date have been
paid, and no notice of cancellation or termination has been received with
respect to any such policy. Neither the Sellers nor the Company have received
any notification that material changes are required in the conduct of the
Business or the Company's other operations as a condition to the continuation of
coverage or renewal of any such policy. The Sellers have heretofore made
available to Buyer true and complete copies of all such policies.
(u) BANKING RELATIONSHIPS. Schedule 2.1(u) hereto sets forth the
names and locations of all banks, trust companies, savings and loan associations
and other financial institutions at which the Company maintains safe deposit
boxes or accounts of any nature and the names of all persons authorized to have
access thereto, draw thereon or make withdrawals therefrom. At the Closing,
copies of all records, including all signatures or authorization cards,
pertaining to such safe deposit boxes and bank accounts will be in the
possession of the Company.
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(v) ABSENCE OF CERTAIN COMMERCIAL PRACTICES. Except as set forth
on Schedule 2.1(v), the Company has not, and no shareholder, director, officer,
agent, employee or other person acting on behalf of the Company has, (i) given
or agreed to give any gift or similar benefit of more than nominal value to any
customer, supplier, or governmental employee or official or any other person who
is in a position to help or hinder the Company or assist the Company in
connection with any proposed transaction, which gift or similar benefit, if not
continued in the future, might materially and adversely affect the Business or
the Company; or (ii) used any corporate or other funds for unlawful
contributions, payments, gifts, or entertainment, or made any unlawful
expenditures relating to political activity to governmental officials or others
or established or maintained any unlawful or unrecorded funds in violation of
Section 30A of the Securities Exchange Act of 1934, as amended. The Company has
not, and no shareholder, director or officer or, to the best of the Sellers'
knowledge, no agent, employee or other person acting on behalf of the Company
has, accepted or received any unlawful contributions, payments, gifts, or
expenditures.
(w) CUSTOMERS AND SUPPLIERS. Schedule 2.1(w) hereto sets forth
(i) a true and correct list of the ten largest customers of the Company in terms
of sales during the fiscal year ended December 31, 1996, showing the approximate
total sales by the Company to each such customer during such fiscal year; and
(ii) a true and correct list of the ten largest suppliers of the Company in
terms of purchases during the fiscal year ended December 31, 1996, showing the
approximate total purchases by the Company from each such supplier during such
fiscal year. Except for the customers named in Schedule 2.1(w), the Company had
no customer who accounted for more than 5% of the Company's sales in any
12-month period ended December 31, 1996 or May 31, 1997. Except for the
suppliers named in Schedule 2.1(w), there is no supplier from whom the Company
purchased more than 5% of the goods or services in any 12-month period which it
purchased during the period ended December 31, 1996 or May 31, 1997. No
significant customer of the Company has notified the Sellers or the Company of
any intention to change its current business relationship with the Company.
(x) RELATED PARTIES. Except as set forth in Schedule 2.1(x)
hereto, there is not currently, nor in the last five years has there been, any
transactions in excess of an aggregate of $10,000 between the Company and any
officer, director or shareholder of the Company, or any of their respective
relatives or affiliates, or any payment (however characterized) by the Company
to any such related party or by any such related party to the Company.
(y) RETURNS. Except as set forth on Schedule 2.1(y) hereto, there
are no claims against the Company to return in excess of an aggregate of $10,000
of merchandise by reason of alleged over-shipments, defective merchandise or
otherwise, or of merchandise in the hands of customers under an understanding
that such merchandise would be returnable.
(z) PRODUCT LIABILITY. Except as set forth on Schedule 2.1(z)
hereto, there is no action, suit, inquiry, proceeding or investigation by or
before any court or governmental authority pending or, to the knowledge of the
Sellers, threatened against or involving the Company relating to any product
alleged to have been manufactured or sold by the Company and alleged to have
been defective, or improperly designed or manufactured, nor, to the
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knowledge of the Sellers, is there any valid basis for any such action,
proceeding or investigation. The representations and warranties in this Section
2.1(z) have been made by the Sellers without qualification in reliance on their
protection against liability by product liability coverage under the Company's
existing insurance policy or policies.
(aa) NO COMPETING BUSINESS. Except as set forth on
Schedule 2.1(aa), neither the Sellers nor any entity (if any) in which any of
the Sellers has any direct or indirect equity interest, competes with or
conducts any business similar to the Business or the Company.
(bb) NO MISREPRESENTATIONS. No representation, warranty or
statement made, or information provided, by the Company or the Sellers in this
Agreement or in any other document or instrument furnished or to be furnished by
or on behalf of the Company or the Sellers pursuant hereto or as contemplated
hereby contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the statements or facts
contained herein or therein not misleading.
(cc) TAXES. The Company has filed all tax returns required to
have been filed by the Company as of the date hereof and has paid all federal,
state, local, foreign or other tax assessments or other governmental charges,
including, without limitation, any income, estimated income, gross income, gross
receipts, business, occupation, franchise, property, ad valorem, sale or use,
employment or withholding, social security or unemployment, backup withholding,
excise, severance, value added, premiums, intangibles, unitary, capital gain,
prohibited transactions, excess profits, transfer and all other taxes, including
interest, penalties and additions thereon (collectively, "Taxes") due to any
taxing authority with respect to all periods prior to the date hereof, except as
contested in good faith and for which the Company has made adequate reserves on
the Interim Balance Sheet. All such returns were true and correct in all
material respects as of the date on which they were filed. Except as set forth
on Schedule 2.1(cc) hereto:
(i) No such return contains, or will contain a disclosure
statement under Section 6662 of the Code or any similar provision of
state, local or foreign law;
(ii) The Company has not received written notice that the
Internal Revenue Service ("IRS") or any other taxing authority has
asserted against the Company any deficiency or claim for additional
Taxes in connection therewith;
(iii) All Tax deficiencies asserted or assessed against
the Company have been paid or finally settled;
(iv) There is no pending or threatened action, audit,
proceeding, or investigation with respect to (A) the assessment or
collection of Taxes; or (B) a claim for refund made by the Company with
respect to Taxes previously paid;
(v) All amounts that are required to be collected or
withheld by the Company with respect to Taxes of the Company have been
duly collected or withheld. All
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such amounts that are required to be remitted to any taxing authority
have been duly remitted;
(vi) All federal, state, local and foreign income tax
returns of the Company have been examined by the IRS or the relevant
state, local or foreign taxing authority or closed by applicable
statutes of limitation, and all liabilities for income taxes asserted by
the IRS (or the relevant taxing authority) have been satisfied, for all
taxable years ending on or before December 31, 1992. Returns of the
Company for taxable years beginning subsequent to December 31, 1992
remain subject to examination, but additional Taxes, if any, resulting
from such examinations will not have a material adverse effect on the
Business or the Company taken as a whole;
(vii) The Company has not granted any waiver of any
statute of limitations with respect to, or any extension of a period for
the assessment filing of, any Tax;
(viii) The provisions for Taxes currently payable on the
Interim Balance Sheet are at least equal, as of the date thereof, to all
unpaid Taxes of the Company, whether or not disputed.
(ix) Since the date of the Interim Balance Sheet, the
Company has not taken any action not in accordance with past practice
that would have the effect of deferring any Tax liability of the Company
from any taxable period ending on or before the Closing Date to any
taxable period ending after such date;
(x) None of the income recognized, for federal, state,
local or foreign income tax purposes, by the Company during the period
commencing on the date hereof and ending on the Closing Date will (A) be
derived other than in the ordinary course of business or (B) arise from
transactions of a type not reflected on the relevant return for the
taxable period ending on the day immediately preceding the Closing Date;
(xi) No consent has been filed under Section 341(f) of the
Code with respect to the Company;
(xii) The Company was acquired in a "qualified stock
purchase" under Section 338(d)(3) of the Code and no elections under
Section 338(g) of the Code, protective carryover basis elections, or
offset prohibition elections are applicable to the Company;
(xiii) The Company has not participated in, or cooperated
with, an international boycott within the meaning of Section 999 of the
Code;
(xiv) The Company is not required to include in income any
adjustment pursuant to Section 481(a) of the Code (or similar provisions
of other law or regulations) by reason of a change in accounting method
nor does the Company have any knowledge that the IRS (or other taxing
authority) has proposed, or is considering, any such change in
accounting method that would be applicable to the Company;
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(xv) None of the assets of the Company constitutes
property which is required to be treated as owned by any other person
pursuant to the "safe harbor lease" provisions of former Section
168(f)(8) of the Code;
(xvi) None of the assets of the Company secure any debt,
the interest on which is tax exempt under Section 103 of the Code;
(xvii) None of the assets of the Company are "tax exempt
used property" within the meaning of Section 168(h) of the Code; or
(xviii)The Company is not a party to, is bound by, or has
any obligation under, any tax sharing or similar agreement or
arrangement.
2.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to the Sellers, as of the date of this Agreement, as follows:
(a) ORGANIZATION OF BUYER; AUTHORIZATION. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nebraska, with full corporate power and authority to execute and
deliver this agreement and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement have been duly authorized by all
necessary corporate action (including, but not limited to, approval by the Board
of Directors) of Buyer and this Agreement constitutes a valid and binding
obligation of Buyer, enforceable against it in accordance with its terms.
(b) NO CONFLICT. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby by Buyer
will (i) violate any provision of the charter or bylaws of Buyer, (ii) violate,
or be in conflict with, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under any material
agreement or commitment to which Buyer is party or (iii) violate any material
statute, law, regulation or rule or any judgment, decree or order of any court
or other governmental authority applicable to Buyer.
(c) LITIGATION. There is no action, suit or proceeding by or
before any court or governmental authority pending or, to the knowledge of
Buyer, threatened against Buyer which challenges the validity of this Agreement
or any action taken or to be taken by Buyer pursuant to this Agreement or in
connection with the transactions contemplated hereby.
(d) NO BROKERS OR FINDERS. Neither Buyer nor any of its
affiliates, officers, directors, employees or agents has employed any broker or
finder or incurred any liability for any brokerage or finder's fees or
commissions or similar payments in connection with any of the transactions
contemplated hereby.
(e) CONSENTS AND APPROVALS. No consent, approval or authorization
of, or declaration, filing or registration by Buyer with, any governmental
authority or other third party is required in connection with the execution,
delivery and performance by Buyer of this Agreement or the consummation of the
transactions contemplated hereby, other than (i) state or local laws and
regulations, with which the Buyer will have complied with on or prior to the
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Closing Date; and (ii) under Buyer's indenture and senior bank agreements, which
consent, approval or authorization Buyer will use its reasonable efforts to
obtain or prior to the Closing Date.
(f) FINANCIAL STATEMENTS OF BUYER. Buyer has delivered to the
Sellers a copy of its Annual Report on Form 10-K for the year ended December 31,
1996 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 1997
(the "1934 Act Reports"). The balance sheets, related statements of operations
and changes of financial position, together with notes thereto ("Buyer's
Financial Statements") included in the 1934 Act Reports have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis and fairly present the financial condition of Buyer as of the dates
presented.
(g) NO MISREPRESENTATIONS. No representation, warranty or
statement made, or information provided, by Buyer in this Agreement or in any
other document or instrument furnished or to be furnished by or on behalf of
Buyer pursuant hereto or as contemplated hereby contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements or facts contained herein or therein not
misleading.
ARTICLE 3 - COVENANTS AND OTHER
AGREEMENTS OF THE PARTIES
3.1 CONDUCT OF BUSINESS. Except as may be otherwise expressly permitted
by this Agreement or with the prior written consent of Buyer, from the date
hereof through the Closing, the Sellers will cause the Company to: (a) operate
the Business and its other operations only in the ordinary course, consistent
with past practice; (b) use its best efforts to preserve intact its business
organizations; (c) continue in full force and effect all existing insurance
policies (or comparable insurance) of or relating to the Business or the
Company; and (d) use its best efforts to maintain its relationships with its
lenders, suppliers, customers, licensors and licensees and others having
business dealings with the Business. Except as may be otherwise expressly
permitted by this Agreement or with the prior written consent of Buyer, from the
date hereof through the Closing, the Sellers will not permit the Company to:
(i) borrow any funds or otherwise become subject to,
whether directly or by way of guaranty or otherwise, any indebtedness
for borrowed money;
(ii) sell, lease, license or otherwise dispose of any of
the assets of the Company, except for sales of finished inventory in the
ordinary course of business and consistent with past practice;
(iii) create, or permit to be created, any Encumbrance
upon any of the assets of the Company, except (A) liens for Taxes not
due; (B) purchase money security interests; and (C) mechanics' liens
being disputed by the Company in good faith;
(iv) grant any severance, continuation or termination pay
to any director, officer or employee of the Company;
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(v) enter into any employment, deferred compensation or
other similar agreement (or any amendment to any such existing
agreement) with any director, officer or employee of the Company;
(vi) increase benefits payable or potentially payable
under any severance, continuation or termination pay policies or
employment agreements with any director, officer or employee of the
Company;
(vii) increase compensation, bonus or other benefits
payable or potentially payable to directors, officers or employees of
the Company;
(viii) change the terms of any bonus, pension, insurance,
health or other Benefit Plan of the Company;
(ix) represent to any employee or former employee of the
Company that Buyer would assume or continue to maintain any Benefit Plan
after the Closing Date;
(x) alter the manner of keeping its books, accounts or
records or the accounting practices therein reflected;
(xi) create or modify any bonus, deferred compensation,
pension, profit sharing, retirement, insurance, stock purchase, stock
option or other fringe benefit plan, arrangement or practice or any
other employee benefit plan (as defined in Section 3(3) of ERISA),
whether formal or informal;
(xii) post or provide any additional bid or performance
bonds or letters of credit;
(xiii) enter into or modify any employment agreement or
similar commitment;
(xiv) enter into or modify, or engage in any negotiations
with respect to, any collective bargaining, union agreement or similar
commitment;
(xv) make any capital expenditure or acquire any property
or assets (other than raw materials and supplies and dies purchased in
the ordinary course of business consistent with the Company's past
practices) for a cost in excess of $25,000 or, together with all other
such capital expenditures and such acquisitions in excess of $25,000;
(xvi) enter into any agreement or commitment having a term
in excess of one year;
(xvii) enter into any agreement or commitment that
restricts the Company from carrying on its business anywhere in the
world;
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(xviii) cancel any debts or waive any claims or rights of
substantial value; or
(xix) agree or otherwise commit, whether in writing or
otherwise, to do any of the foregoing.
3.2 DILIGENCE IN PURSUIT OF CONDITIONS PRECEDENT. Buyer and the Sellers
shall each exercise all reasonable diligence to fulfill their respective
obligations hereunder and shall cooperate fully with the other Party in regard
to same to accomplish the Closing. The Sellers shall use their best efforts to
obtain all necessary third-party consents to the consummation of the
transactions contemplated hereby, including, without limitation, any consents
required under or in connection with any of the Contracts, required permits or
licenses, or any other documents by reason of the change in control of the
Company affected by the sale of the Shares to Buyer, by operation of law, or
otherwise. In the event that the Sellers are unable to obtain any such consent,
the Sellers shall attempt on or prior to Closing to make alternative
arrangements reasonably acceptable to Buyer to afford Buyer the benefit of any
such Contract, permit or license or the equivalent thereof; provided, however,
that Buyer shall not be obligated to assume the Company's obligations under any
Contract unless and until the consent to its assignment has been obtained.
3.3 ACCESS TO INFORMATION. Prior to the Closing Date, upon reasonable
prior notice and during normal working hours, the Sellers shall cause the
Company to, subject to such limitations or procedures as may be necessary to
protect or preserve the attorney-client privilege or the work product doctrine,
(a) give Buyer and its authorized representatives reasonable access to the
Company Facilities and to the books and records of the Company; (b) permit Buyer
and all such persons to make such inspections as they may reasonably request;
(c) cause its officers to furnish Buyer and all such persons with such financial
and operating data and other information with respect to the Business or the
Company as Buyer may from time to time reasonably request; and (d) permit Buyer
to discuss the business of the Company with the Company's officers, its
employees, customers, suppliers and distributors. Buyer's actions under this
Section 3.3 shall be conducted with the consent of the Sellers (which shall not
be unreasonably withheld) and in such a manner as not to interfere unreasonably
with the operations or commercial relationships of the Company.
3.4 TRANSITION. Prior to the Closing, Buyer and the Sellers shall use
their best efforts to identify and make appropriate arrangements for dealing
with any transition problems which may be involved in the transfer of the Shares
to Buyer and Buyer's commencement of operations of the business of the Company.
3.5 MONTHLY FINANCIALS. From the date of this Agreement through the
Closing Date, the Sellers shall cause the Company to prepare monthly earnings
statements, balance sheet and statements of cash flows for the Company, and to
deliver such monthly statements to Buyer as promptly as practicable, but in no
event later than five days after their normal completion date. Such monthly
financial statements shall fully and fairly set forth the financial condition
of, and results of operations for, the Company at each such month-end and for
each such period and shall be prepared in accordance with past practices.
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3.6 NO SOLICITATION. Between the date hereof and the earlier to occur of
the Closing Date or the termination of this Agreement, neither the Company, the
Sellers nor any of their affiliates, directors, officers, employees,
representatives or agents shall solicit, encourage (including by way of
furnishing any non-public information concerning all or a portion of the
Business or the Company) or consider any other acquisition proposal. As used in
this Section 3.6, the phrase "acquisition proposal" shall mean a proposal for
the acquisition of the Company, all or a portion of the Business, all or a
portion of the Shares, or all or a substantial portion of the assets of the
Company.
3.7 EMPLOYMENT AGREEMENT. Chris Moore and Melody Moore will each execute
and deliver, and the Sellers will use their best efforts to cause Norman Moeder
to execute and deliver to the Company, an Employment Agreement, substantially in
the forms of EXHIBITS A-1, A-2 and A-3, respectively, attached hereto.
3.8 NON-COMPETITION AGREEMENT. Chris Moore and Melody Moore will each
execute and deliver to the Company a Non-Competition Agreement, substantially in
the form of EXHIBIT B attached hereto.
3.9 CONSENT AND RELEASE AGREEMENT. The Sellers will use their best
efforts to cause John and Catherine Moore to execute and deliver to the Company
the Consent and Release Agreement, substantially in the form of EXHIBIT E
attached hereto.
3.10 NOTE ESCROW. On the Closing Date, Buyer shall pay or cause to be
paid into an escrow account, pursuant to the Note Escrow Agreement,
substantially in the form of EXHIBIT H attached hereto, an amount equal to the
outstanding principal balance as of the Closing Date under the Note.
3.11 LIEN RELEASE. The Sellers will use their best efforts to cause
Intrust to execute and deliver to Buyer the Lien Release.
3.12 FURTHER ASSURANCES. At any time or from time to time after the
Closing, the Sellers shall, at the request of Buyer or Buyer's counsel, execute
and deliver any further instruments or documents and take all such further
action as Buyer or Buyer's counsel may reasonably request in order to evidence
or otherwise facilitate the consummation of the transactions contemplated
hereby.
3.13 COBRA COMPLIANCE. The Company and its ERISA Affiliates shall comply
with the provisions of COBRA with respect to any Group Health Plan maintained by
the Company and any of its ERISA Affiliates as of the Closing Date for the
benefit of the employees, former employees or beneficiaries of such employees or
former employees of any them.
3.14 TAX ELECTIONS. Each Party agrees that it will not make any election
pursuant to the Code which would have the effect of increasing the amount of tax
owed by the other Party as a result of the transactions contemplated herein,
unless such Party shall make provision to pay such additional amount of tax, and
any tax thereon, which may be applicable.
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3.15 REDEMPTION OF REDEMPTION SHARES. Immediately prior to the Closing
on the Closing Date, the Sellers (pro rata) shall sell to the Company, and the
Company shall redeem from the Sellers (pro rata), the Redemption Shares for the
aggregate purchase price of $1,250,000, which will be paid by a Company check on
the Closing Date, 66.66875% to Chris and Melody Moore and 33.33125% to the
Trust.
3.16 WAIVER OF RIGHT OF FIRST REFUSAL. Each of the Sellers
unconditionally, on their own behalf as holders of the common stock of the
Company and on behalf of the Company, hereby waives any right to notice and
first purchase contained in Section 3A of the Bylaws of the Company, and such
waiver shall be deemed to satisfy the written consent and filing requirements
contained in Section 3A of the Bylaws of the Company.
ARTICLE 4 - CONDITIONS TO CLOSING
4.1 GENERAL CONDITIONS. The obligations of each Party to effect the
transactions contemplated by this Agreement shall be subject to (i) termination
of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of
1976, if applicable; (ii) there being no order, statute, rule, regulation,
executive order, injunction, stay, decree or restraining order having been
enacted, entered, promulgated or enforced by any court of competent jurisdiction
or governmental or regulatory authority or instrumentality that prohibits the
consummation of the transactions contemplated hereby, and (iii) no litigation or
governmental proceeding seeking such an order shall be pending or threatened.
4.2 CONDITIONS TO THE SELLERS' OBLIGATIONS. The Sellers' obligations to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment of the following conditions, any of which may be waived by the
Sellers in their sole discretion:
(a) BUYER'S PERFORMANCE. Buyer shall have performed, in all
material respects, the obligations required under this Agreement to be performed
by it on or prior to the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Buyer contained herein shall be true and correct, in all material
respects, at and as of the Closing Date, as if made at and as of such time
except to the extent that a different time is specifically stated in such
representations and warranties and except as otherwise contemplated by this
Agreement, and a certificate of Buyer to such effect, substantially in the form
of EXHIBIT F attached hereto, shall be delivered at Closing.
(c) PAYMENTS. The Sellers shall have received from Buyer the Cash
Payment as provided in Section 1.3.
(d) OPINION OF COUNSEL OF BUYER. The Sellers shall have received
an opinion of Gibson, Dunn & Crutcher LLP dated as of the Closing Date, which
opinion shall cover matters customarily addressed in similar transactions and
shall be in form and substance reasonably satisfactory to counsel for the
Sellers.
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(e) ESCROW AGREEMENTS. Buyer shall have executed and delivered to
the Sellers the Company Escrow Agreement and the Note Escrow Agreement,
substantially in the forms of EXHIBITS G and H, respectively, and shall have or
shall have caused to have been deposited into the Company Escrow and the Note
Escrow the appropriate amounts as set forth in Sections 1.3 and 3.10,
respectively.
4.3 CONDITIONS TO BUYER'S OBLIGATIONS. Buyer's obligations to consummate
the transactions contemplated by this Agreement shall be subject to the
fulfillment of the following conditions, any of which may be waived by Buyer in
its sole discretion:
(a) THE SELLERS' PERFORMANCE. The Seller shall have performed, in
all material respects, the obligations required under this Agreement to be
performed by them on or prior to the Closing.
(b) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Sellers contained herein shall be true and correct, in all
material respects, at and as of the Closing Date as if made at and as of such
time except to the extent that a different time is specifically stated in such
representations and warranties and except as otherwise contemplated by this
Agreement, and a certificate of the Sellers to such effect, substantially in the
form of EXHIBIT C attached hereto, shall be delivered at Closing.
(c) ABSENCE OF MATERIAL ADVERSE CHANGES. There shall not have
occurred between the date hereof and the Closing Date any material adverse
change in the operations, condition (financial or otherwise), prospects or
affairs of the Business or the Company's other operations or any portion
thereof.
(d) APPROVALS AND CONSENTS. The Sellers shall have received all
necessary consents, approvals and authorizations, and achieved satisfaction of
any third party requirements, as are necessary to consummate the transactions
contemplated hereby. In addition, Buyer shall have received any consents or
approvals necessary in order to consummate the transactions contemplated hereby
pursuant to any indenture, credit agreement or other material agreement pursuant
to which Buyer is bound.
(e) OPINION OF COUNSEL OF THE SELLERS. Buyer shall have received
an opinion of Stinson, Lasswell & Wilson, L.C., or such other counsel as may be
acceptable to Buyer, dated as of the Closing Date, substantially in the form of
EXHIBIT D attached hereto, which opinion shall cover matters customarily
addressed in similar transactions and shall be in form and substance reasonably
satisfactory to counsel for Buyer and shall expressly permit parties providing
financing to Buyer to rely upon its contents to the same extent as if such
opinion were addressed and delivered separately to such financing sources.
(f) DUE DILIGENCE. Buyer shall have completed its business,
financial, legal and other due diligence (including, without limitation, any
environmental inspections and review of agreements and/or other documents or
circumstances referred to in the Schedules hereto) to its reasonable
satisfaction on or before the Closing Date.
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(g) EMPLOYMENT AGREEMENTS. The Company shall have received from
Chris Moore, Melody Moore and Norman Moeder executed Employment Agreements,
substantially in the forms of EXHIBITS A-1, A-2 and A-3, respectively, attached
hereto.
(h) NON-COMPETITION AGREEMENT. The Company shall have received
from Chris Moore and Melody Moore executed Non-Competition Agreements,
substantially in the form of EXHIBIT B, attached hereto.
(i) STOCK CERTIFICATES. Buyer shall have received from the
Sellers the Stock Certificates.
(j) CONSENT AND RELEASE AGREEMENT. Buyer shall have received the
Consent and Release Agreement, substantially in the form of EXHIBIT E hereto,
executed by John and Catherine Moore.
(k) LIEN RELEASE. Buyer will have received the Lien Release
executed by Intrust.
(l) COMPANY ESCROW AGREEMENT. The Sellers shall have executed and
delivered to Buyer the Company Escrow Agreement, substantially in the form of
EXHIBIT G attached hereto.
(m) LLC INTEREST PURCHASE AGREEMENT. Buyer and the Company shall
have received from the Interestholders an executed LLC Interest Purchase
Agreement.
(n) REDEMPTION OF THE REDEMPTION SHARES. The Sellers shall have
transferred to the Company, and the Company shall have redeemed, the Redemption
Shares.
ARTICLE 5 - TERMINATION
5.1 TERMINATION. This Agreement may be terminated prior to Closing as
follows:
(a) at the election of the Sellers, if any one or more of the
conditions precedent to their obligation to close contained in Section 4.1 or
4.2 above have not been fulfilled, through no fault of the Sellers, on or before
August 31, 1997, which date may in all events be extended by mutual written
agreement of the Sellers and Buyer;
(b) at the election of Buyer, if any one or more of the
conditions precedent to its obligation to close contained in Section 4.1 or 4.3
have not been fulfilled, through no fault of Buyer, on or before August 31, 1997
which date may in all events be extended by mutual written agreement of the
Sellers and Buyer; or
(c) at any time on or prior to the Closing Date by mutual written
consent of the Sellers and Buyer.
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5.2 EFFECT OF TERMINATION. In the event that this Agreement is
terminated pursuant to Section 5.1, this Agreement shall terminate without any
liability or further obligation of either Party to the other, except for
Sections 8.4 and 8.7 which shall survive such termination. Notwithstanding the
foregoing, any termination pursuant to Section 5.1 shall not relieve either
Party of liability for any failure to perform or comply with any covenant or
other agreement contained in this Agreement prior to the date of termination or
any misrepresentation or breach of warranty, or constitute a waiver of any claim
with respect thereto.
ARTICLE 6 - INDEMNIFICATION AND CLAIMS
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made in this Agreement or in any ancillary document shall survive the
Closing Date for a period of three years following the Closing Date (except for
(a) the representations and warranties set forth in Sections 2.1(a), 2.1(b),
2.1(c) and 2.1(d), which representations and warranties shall survive
indefinitely without limitation; (b) the representations and warranties set
forth in Section 2.1(m), which shall survive for a period of five years
following the Closing Date; and (c) the representations and warranties with
respect to Taxes, which shall survive until all applicable statutes of
limitation (including any extensions thereof) have expired) and shall thereupon
expire together with any right to indemnification for breach thereof. The
limitations set forth above regarding the survival of claims for breach of
representations and warranties shall not apply to any claims arising out of
fraud, willful misconduct or gross negligence in the making of the
representations and warranties set forth herein.
6.2 INDEMNIFICATION BY THE SELLERS. Subject to the limitations contained
in Section 6.5 below, from and after the Closing Date, each of the Sellers,
jointly and severally, and their respective successors and assigns (such
entities being collectively hereinafter referred to for purposes of this Article
6 as "the Sellers") shall defend, indemnify and hold Buyer, the Company and
their respective successors and assigns harmless to the extent provided in this
Article 6 from and against any and all losses, damages, liabilities, claims,
demands, judgments, settlements, costs and expenses contingent or otherwise,
matured or unmatured, of any nature whatsoever (including reasonable attorneys'
fees) ("Losses"), together with interest on cash disbursements in respect
thereof at an annual rate of interest equal to 10% per annum based on actual
days elapsed from the date such cash disbursements are made until the date Buyer
or the Company is indemnified therefor, resulting from or arising out of the
following:
(a) any Losses (irrespective of whether such liabilities arise
out of a breach of any representation or warranty contained herein) arising,
directly or indirectly, from:
(i) Any liability or obligation (absolute, matured,
unmatured, contingent or otherwise) of the Sellers or the Company
arising out of (A) any pending or threatened Proceeding that is pending
or threatened as of the Closing Date; or (B) any negligent, reckless or
unlawful action or inaction of the Sellers or the Company prior to the
Closing Date (whether based on contract, tort, common law or otherwise)
except to the extent such liability or obligation is reflected on the
Interim Balance Sheet and arose in the ordinary course of business (it
being understood that to the extent any liability of Buyer results from
the combined effect or duration of actions or inactions on the part of
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each of the Company, the Sellers and Buyer, the apportionment of such
liability shall be determined pursuant to equitable principles of
contribution);
(ii) Any liabilities or obligations arising out of defects
in, or damages to persons or property arising out of defects in products
manufactured or sold by the Company on or prior to the Closing Date
which are not specifically reflected on the Interim Balance Sheet;
(iii) Any liabilities or obligations of the Company
existing on the Closing Date which should have been accrued on the
Interim Balance Sheet in accordance with the Company's past accounting
practices but which were not so accrued;
(iv) Any liabilities or obligations (whether absolute,
matured, unmatured, contingent or otherwise) of the Company or any of
its ERISA Affiliates, except to the extent such liability or obligation
is reflected on the Interim Balance Sheet, arising under any Benefit
Plan whether or not listed on Schedule 2.1(q)(i), including, but not
limited to, (A) any liability or obligation to any person or
governmental authority arising from the failure of any Benefit Plan
intended to be qualified under Section 401(a) of the Code to meet such
qualification requirement for any period prior to the Closing Date,
whether in form or operation; and (B) any accrued or other liability for
contributions or payments to be made in respect of service prior to the
Closing Date under any of the Benefit Plans;
(v) Any liabilities or obligations (whether absolute,
matured, unmatured, contingent or otherwise), except to the extent such
liability or obligation is reflected on the Interim Balance Sheet, not
fully covered by insurance relating to workers' compensation claims made
by any employee of the Company (whether filed or presented before or
after the Closing Date) in connection with claims arising on or before
the Closing Date; and
(vi) Any liabilities or obligations of the Company arising
out of the Complaint filed against the Company by Isiah White with the
Kansas Human Rights Commission on or about October 12, 1996, except to
the extent such liability or obligation is reflected on the Interim
Balance Sheet;
(b) any breach of any representation or warranty of the Sellers
contained in this Agreement; or
(c) any non-performance, partial or total, of any covenant or
agreement of the Sellers contained in this Agreement.
Other than a claim by a third party, which shall be subject to the
procedures in Section 6.6, if Buyer incurs any Loss, liability or deficiency
which it believes is subject to indemnity under this section, Buyer shall give
the Sellers (and the escrow agent under the Company Escrow Agreement, if
applicable) written notice of its claim for indemnity, and the Sellers shall
have thirty (30) days to respond in writing objecting to such claim. If the
Sellers do not object to the claim,
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the Sellers shall, subject to Section 6.5, pay the liability or deficiency
claimed by Buyer within thirty (30) days from the date of Buyer's written
notice. If the Sellers object to the claim, the dispute shall be resolved in the
manner contemplated by Section 8.11 below.
6.3 INDEMNIFICATION BY BUYER. From and after the Closing Date, Buyer
shall indemnify and hold the Sellers harmless to the extent provided in this
Article 6 from and against any and all Losses, together with interest on cash
disbursements in respect thereof at an annual rate of interest equal to 10% per
annum based on actual days elapsed from the date such cash disbursements are
made until the date the Sellers are indemnified therefor, resulting from or
arising out of the following:
(a) any breach of any representation or warranty of Buyer
contained in this Agreement; or
(b) any non-performance, partial or total, of any covenant,
obligation or agreement of Buyer contained herein.
Any such liability, deficiency or indemnity shall be paid by Buyer and
its successors or assigns within thirty (30) days from the date the Sellers
notify Buyer or its successors or assigns that they have incurred or has become
subject to the referenced liability or deficiency and provides Buyer with
documentation demonstrating that the Sellers have incurred such liability or
deficiency; provided, however, that any dispute arising in connection with the
foregoing shall be resolved in the manner contemplated by Section 8.11 below.
6.4 ENVIRONMENTAL MATTERS.
(a) In addition to the provisions of Section 6.2, each of the
Sellers, jointly and severally, shall defend, indemnify and hold harmless Buyer,
and shall reimburse Buyer for, any Losses (including, but not limited to, costs
of investigation, Cleanup (as defined in Section 6.4(a)(i)) or other remediation
and reasonable attorney fees) arising from or in connection with:
(i) (A) any cleanup, removal, containment, monitoring or
other remediation (collectively, "Cleanup") required by applicable
Environmental Law or (B) or any bodily injury (including, but not
limited to, sickness, disease or death), personal injury, property
damage (including, but not limited to, trespass, nuisance, wrongful
eviction or deprivation of the use of real property) or other damage
("Non-Cleanup Injury") arising from, any Environmental Condition
existing on or prior to the Closing Date or any Hazardous Material that
was (1) generated, used, stored, treated, released, discharged, disposed
of, transported or arranged by contract, agreement or otherwise to be
stored, treated, released, discharged, disposed of, or transported
(collectively, "Generated") by the Company on or prior to the Closing
Date; (2) present on any Company Facility if such Hazardous Material
emanated from any Company Facility or other property on or before the
Closing Date; (3) present on any other property if such Hazardous
Material was Generated by the Company on or prior to the Closing Date
and emanated from any Company Facility; or (4) present on any other
property if such Hazardous Material was
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Generated by the Company on or prior to the Closing Date and emanated
from any other property; and
(ii) any failure by the Company or its agents,
representatives, employees, officers, directors, shareholders,
controlling persons or affiliates to comply at any time prior to the
Closing Date with any Environmental Law.
(b) In addition to the provisions of Section 6.3, Buyer shall
defend, indemnify and hold harmless the Sellers, and shall reimburse the Sellers
for, any Losses (including, but not limited to, costs of investigation, Cleanup
or other remediation and reasonable attorney fees) arising from or in connection
with:
(i) (A) any Cleanup required by applicable Environmental
Law or (B) or any Non-Cleanup Injury arising from, any Hazardous
Material that was (1) Generated by the Company after the Closing Date;
(2) present on any Company Facility if such Hazardous Material was
Generated by the Company after the Closing Date and emanated from any
Company Facility or other property after the Closing Date ; (3) present
on any other property if such Hazardous Material was Generated by the
Company after the Closing Date and emanated from any Company Facility
after the Closing Date; or (4) present on any other property after the
Closing Date if such Hazardous Material was Generated by the Company
after the Closing Date and emanated from any other property after the
Closing Date; and
(ii) any failure by Buyer or its agents, representatives,
employees, officers, directors, shareholders, controlling persons or
affiliates to comply at any time after the Closing Date with any
Environmental Law relating to the Company.
(c) The indemnified Party shall give the indemnifying Party
written notice within 30 days of the indemnified Party's knowledge of any
investigation, proceeding, liability or deficiency which the indemnified Party
believes will be subject to indemnity under this section. The indemnifying Party
shall have the right to participate in any Cleanup and related proceedings. Any
dispute shall be resolved in the manner contemplated by Section 8.11 below.
6.5 LIMITATION ON INDEMNIFICATION.
(a) Neither the Sellers, Buyer nor any of their respective
affiliates, directors, officers, employees or agents shall be entitled to make
any claim for indemnification under this Article 6 with respect to any breach of
any particular representation or warranty contained herein, after the date on
which such representation and warranty ceases to survive pursuant to Section
6.1; provided, however, that, if prior to the close of business on the date any
representation or warranty ceases to survive, the indemnifying Party shall have
received written notification of a claim for indemnity hereunder specifying in
reasonable detail the basis of any such claim, and such claim shall not have
been finally resolved or disposed of at such date, such claim shall continue as
a basis for indemnity until it is finally resolved or disposed of, subject to
applicable statutes of limitation. Any recovery by the Sellers or Buyer pursuant
to this Article 6 shall be limited to the extent that neither Party shall be
entitled to any indemnification hereunder
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unless or until the Losses which the indemnified party is entitled to recover
hereunder exceed, in the aggregate, $25,000 (the "Threshold"), in which event
the indemnified party shall be entitled to recover the total amount of such
Losses. Notwithstanding the foregoing, however, the Threshold shall not apply to
any Losses resulting from, or arising out of, Section 6.2(a)(i), (iv) or (vi),
Section 6.4 or by reason of a breach of the representations set forth in
Sections 2.1(a), (b), (c) or (d) (collectively, the "Excluded Items").
(b) Other than Losses resulting from, or arising out of, the
Excluded Items, the Sellers' responsibility for Losses resulting from, or
arising out of, facts or circumstances not disclosed to Buyer in this Agreement
(including the Schedules attached hereto) shall be limited to a dollar amount
equal to the Purchase Price (the "Cap"), provided, further, that the Cap shall
not apply to any Losses which Buyer may suffer or incur by reason of fraud or
willful misconduct on the part of the Sellers. In the event of any Losses, Buyer
shall first seek to satisfy such Losses by way of set-off against amounts held
in the Company Escrow. Buyer shall have direct recourse against the Sellers
solely in the event the amount of Losses for which the Sellers are responsible
pursuant to this Article 6 shall exceed the amount then held pursuant to the
Company Escrow Agreement.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the limitations set forth in this Section 6.5 shall not apply to
Article 7.
6.6 THIRD PARTY CLAIMS. If a claim by a third party is made against an
indemnified Party, and if such indemnified Party intends to seek indemnity with
respect thereto hereunder, the indemnified Party shall promptly (and in any case
within 30 days of such claim being made and within the period provided in
Section 6.5, if applicable) notify the indemnifying Party of such claim. The
indemnifying Party shall have 60 days after receipt of such notice to, without
reserving any rights, undertake, conduct and control, through counsel of its own
choosing and at its own expense, the settlement or defense thereof, and the
indemnified Party shall cooperate with it in connection therewith; provided that
(a) the indemnified Party may take any action necessary to preserve any rights
or defenses in connection with a claim prior to the indemnifying Party
undertaking the defense thereof; (b) after undertaking the settlement or defense
of a claim, the indemnifying Party shall permit the indemnified Party to
participate in such settlement or defense through counsel chosen by the
indemnified Party, provided the fees and expenses of such counsel shall be borne
by the indemnified Party; (c) the indemnifying Party shall promptly reimburse
the indemnified Party for the full amount of any Loss resulting from such claim
and all related expenses incurred by the indemnified Party within the limits of
this Article 6, including any expenses and attorney fees relating to the defense
of the claim prior to the indemnifying Party undertaking the settlement or
defense thereof (except for expenses contemplated by clause (b) preceding); and
(d) that any such settlement or defense by the Sellers shall be subject to
approval by Buyer, which approval shall not be unreasonably withheld. So long as
the indemnifying Party is reasonably contesting any such claim in good faith,
the indemnified Party shall not pay or settle any such claim. Notwithstanding
any of the foregoing, the indemnified Party shall have the right to pay or
settle any such claim, provided that in such event it shall waive any right to
indemnity therefor by the indemnifying Party. Subject to the limitations set
forth in Section 6.5, if the indemnifying Party does not notify the indemnified
Party within 60 days after the receipt of the indemnified Party's notice of
claim of indemnity hereunder
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that it elects to undertake the settlement or defense thereof, the indemnified
Party shall have the right to contest, settle or compromise the claim in the
exercise of its reasonable judgment (but with due regard for obtaining the most
favorable outcome reasonably likely under the circumstances, taking account of
costs and expenditures) at the expense of the indemnifying Party.
ARTICLE 7 - TAXES
7.1 TAX INDEMNITY.
(a) For purposes of this Article 7, the term "Tax Indemnitee"
shall mean and include Buyer and any corporation or other entity which is,
directly or indirectly, controlled by Buyer, or any successor in interest to, or
transferee of, Buyer, as the case may be, as determined from time to time,
including, without limitation, the Company and any successor in interest to, or
transferee of, the Company.
(b) Notwithstanding Article 6, each of the Sellers shall, jointly
and severally, indemnify and hold harmless each Tax Indemnitee on an after-tax
basis from and against the payment of all Taxes and any Losses (including,
without limitation, reasonable expenses of investigation and attorneys' fees and
expenses) arising out of or incident to the imposition of any Tax:
(i) for which liability is or shall be incurred by an
affiliated group (as defined in Section 1504(a) of the Code as in effect
during the relevant period) of which the Company or any predecessor in
interest has been a member at any time prior to the Closing Date;
(ii) for which liability is or shall be incurred by the
Company or any predecessor in interest with respect to any taxable year
or period beginning prior to the Closing Date;
(iii) resulting from the breach of any representation or
warranty of the Sellers contained in Section 2.1(cc) hereof; or
(iii) triggered or resulting from the transactions
contemplated by this Agreement, except any tax triggered by or resulting
from any election made by Buyer or the Company after the Closing Date;
provided, however, that for purposes of computing the amount of the Tax
liability subject to indemnification pursuant to paragraph (ii) of this
subsection (b), any such taxable year or other period that ends after the
Closing Date shall be deemed to end at the close of business on the Closing
Date.
(c) The Company shall cause to be prepared all returns which are
in respect of the Taxes of the Company or any predecessor in interest for
taxable years or periods ending on or prior to the Closing Date but which are
due to be filed (taking into account any applicable extensions of time for
filing) after the Closing Date. In preparing such returns, the Company shall
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exercise its judgment relating to the determination of the timing of items of
income and deduction in good faith and in a means consistent with prior
practice. In the case of any such return, (i) the Sellers, upon proper
notification and satisfactory documentation of the amount of Tax due with
respect to the return in question, shall pay to the Company, within three (3)
days of demand by the Company, the amount of Tax due to the extent that the Tax
due exceeds the amount of any accrual on the Closing Balance Sheet for such Tax
due; or (ii) Buyer, upon proper notification and satisfactory documentation of
the amount of Tax due with respect to the return in question, shall pay to the
Sellers, within three (3) days of demand by the Sellers, the amount of Tax due
to the extent that the Tax due is less than the amount of any accrual on the
Closing Balance Sheet for such Tax due.
(d) The Tax Indemnitee and the Sellers shall cooperate with
each other in the conduct of any audit or other proceedings involving the
Company or any entity with which it is consolidated or combined for any Tax
purposes. In the event a written claim shall be made by any governmental
authority which, if successful, would result in an obligation on the part of any
of the Sellers to indemnify any Tax Indemnitee pursuant to this section, the Tax
Indemnitee shall within ten (10) days of receipt of such claim give notice to
the Sellers of the same in writing specifying in reasonable detail the basis of
such claim, action or suit and the facts pertaining thereto, and shall not make
payment of the Tax claimed for at least thirty (30) days after the giving of
such notice. If any of the Sellers wishes to contest such claim, the Sellers
shall have the right to control and make all decisions regarding such audit or
contest, including selection of a forum for contest, and the Tax Indemnitee
agrees that in such event it shall execute, deliver and file a power of attorney
naming the Sellers and its counsel or appropriate agent as attorneys-in-fact for
such audit or contest and such other instruments or documents as may be
reasonably requested by any the Sellers to carry out the provisions of this
paragraph; provided, however, that without the consent of Buyer, the Sellers
shall not settle or otherwise compromise any such audit or contest if it would
have the effect of materially increasing the Company's liability for Taxes for
any taxable period after the Closing Date.
7.2 PURCHASE PRICE ADJUSTMENT. Any indemnification payments made
pursuant to this Article 7 shall be treated by the Parties as a Purchase Price
adjustment unless determined otherwise in a final determination as defined in
Section 1313 of the Code.
7.3 SURVIVAL. All indemnifications, covenants, agreements,
representations and warranties relating to Taxes contained in this Agreement
shall survive until all applicable statutes of limitations (including extensions
thereof) have expired with respect to each taxable period or item that is the
subject of such indemnification, covenant, agreement, representation or
warranty.
ARTICLE 8 - GENERAL PROVISIONS
8.1 NOTICES. Any notice, request or other communication required or
allowed under this Agreement shall be in writing and shall be deemed given (a)
upon personal delivery, (b) on the first business day after receipted delivery
to a courier service which guarantees next-business-day delivery, under
circumstances in which such guaranty is applicable, or (c) on the earlier of
delivery or three business days after mailing by United States certified mail,
postage and fees prepaid, to the appropriate Party at the address set forth
below or to such other address as
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the Party so notifies the other in writing. Any notice may also be sent by
telecopier, but shall be deemed to have been given when delivered by one of the
methods listed above.
<TABLE>
<S> <C>
As to Buyer:
By Personal Delivery, Courier Data Documents, Inc.
or Certified Mail to: 4205 South 96th Street
Omaha, Nebraska 68127
Attention: Mr. Walter J. Kearns
By Telecopier Transmission: (402) 339-0485 accompanied by telephonic
confirmation of transmission to (402) 339-0900
With a Copy to: Gibson, Dunn & Crutcher LLP
By Personal Delivery, Courier 2029 Century Park East
or Certified Mail to: Suite 4000
Los Angeles, CA 90067
Attention: Kenneth M. Doran, Esq.
By Telecopier Transmission: (310) 551-8741 accompanied by telephonic
confirmation of transmission to (310) 557-8127
As to the Sellers:
If to Chris Moore or Melody Moore, by Christopher C. and Melody J. Moore
Personal Delivery, Courier or Certified 2534 North Lake Ridge Court
Mail to: Wichita, Kansas 67205
By Telecopier Transmission: (316) 721-3486 accompanied by telephonic
confirmation of transmission to (316) 721-3486
If to the Trust, by Personal Delivery, Richard J. Koll, CPA
Courier or Certified Mail to 8100 E. 22nd Street North
Wichita, Kansas 67226
By Telecopier Transmission: (316) 683-6868 accompanied by telephonic
confirmation of transmission to (316) 683-1040
With a copy to: Stinson, Lasswell & Wilson, L.C.
By Personal Delivery, Courier or Certified 300 West Douglas, Suite 430
Mail to: Wichita, Kansas 67202
Attention: David K. Holmes, Esq.
By Telecopier Transmission: (316) 264-3791 accompanied by telephonic
confirmation of transmission to (316) 264-9137
</TABLE>
8.2 ENTIRE AGREEMENT; INCORPORATION; SUBSEQUENT MODIFICATIONS. This
Agreement, together with all Exhibits and Schedules attached hereto or pursuant
to Section 1.4, to be attached hereto, contain the entire agreement between the
Parties and supersede all prior oral or written agreements between the Parties
with respect to the subject matter hereof, and no Party shall be liable or bound
to the other in any manner by any warranties, representations,
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covenants or agreements except as specifically set forth herein or expressly
required to be made pursuant hereto. No modification of this Agreement shall be
effective unless set forth in writing and signed by all of the Parties hereto.
8.3 ASSIGNMENT; BINDING EFFECT; THIRD PARTY BENEFICIARIES. This
Agreement shall not be assignable by any of the Parties hereto; provided,
however, that (a) Buyer may assign this Agreement to any direct or indirect
wholly owned subsidiary, (b) Buyer may assign to its lenders all or any portion
of its rights under this Agreement (including, without limitation, its rights to
indemnification pursuant to Articles 6 or 7 hereof) and (c) should Buyer sell,
transfer, convey, pledge or encumber all or any portion of the assets or
securities purchased hereunder, Buyer may assign rights under this Agreement
(including all or part of its rights to indemnification pursuant to Articles 6
or 7 hereof) appurtenant to such assets or securities without the prior consent
of the Sellers. This Agreement shall be binding upon, and inure to the benefit
of, the Parties and their respective successors and assigns. This Agreement
shall not benefit or create any right or cause of action in or on behalf of any
person other than the Parties.
8.4 EXPENSES OF SALE. Each Party shall bear its own direct and indirect
costs and expenses incurred in connection with the negotiation and preparation
of this Agreement, including the execution, delivery and performance of that
certain Letter of Intent dated May 22, 1997, and the consummation and
performance of the transactions contemplated hereby; provided, however, that in
the event the transactions contemplated hereby are consummated, the expenses
incurred by the Company will be paid by the Company and the Purchase Price will
be adjusted pursuant to Section 1.4.
8.5 KNOWLEDGE. Certain of the representations and warranties are made
"to the best knowledge" or "to the knowledge." The Parties hereto agree that the
meaning of such expression shall in all cases be understood as comprising actual
knowledge and belief of the Party making such representations and warranties or
any officer, director or employee of such Party after inquiry of such Party's
employees and representatives and review of such Party's files, books and
records.
8.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and such fully executed copies shall be considered an original
which together shall constitute one Agreement.
8.7 INTERPRETATION AND GOVERNING LAW. This Agreement shall be construed
as though prepared by both Parties hereto. Captions at the beginning of each
section and each subsection are solely for the convenience of the Parties and
shall not modify the text of this Agreement. This Agreement shall be construed
and governed by the laws of the State of Delaware without giving effect to the
principles of conflicts of laws thereof.
8.8 SEVERABILITY. If any portion of this Agreement is declared by a
court of competent jurisdiction to be invalid or unenforceable after all appeals
have either been exhausted or the time for any appeals to be taken has expired,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
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8.9 REFERENCE TO DAYS. All references to days shall be calendar days
unless otherwise expressly stated. When the last day prescribed for performing
an act falls on Saturday, Sunday or a legal holiday, the performance of such act
shall be considered timely if it is performed on the next succeeding day which
is not a Saturday, Sunday or legal holiday.
8.10 PRESS RELEASE. Except as provided below, prior to the Closing, the
Parties will consult with each other before issuing any press releases or
otherwise making any public statements with respect to this Agreement and the
transactions contemplated hereby, and neither Party shall issue any such press
release nor make any such public statement without the prior written consent of
the other Party, except as may be required by law.
8.11 DISPUTE RESOLUTION. To the fullest extent permitted by applicable
law, any controversy, dispute or claim arising out of, in connection with, or in
relation to the interpretation, performance or breach of this Agreement or
otherwise arising out of the execution of this Agreement, including any claim
based on contract, tort or statute, shall be determined, at the request of any
Party, by arbitration conducted in such location as the Parties may agree, or if
the Parties cannot reach such an agreement, then in Kansas City, Missouri, in
accordance with and to the extent permitted by the Rules for Commercial
Arbitration of the American Arbitration Association (the "AAA"), as amended and
in effect on the date the demand for such arbitration is filed with the AAA. The
arbitrator shall set forth his determination in writing (which shall be sent to
each party to such arbitration) and shall enumerate in reasonable detail the
basis of his determination. To the fullest extent permitted by applicable law,
any judgment or award rendered by the arbitrator will be final, conclusive and
binding. Judgment may be entered on any final arbitration award by any federal
or state court or any other court having jurisdiction thereof. The pendency of
any arbitration under this Section 8.11 shall not relieve any Party of its
obligations under this Agreement. To the fullest extent permitted by applicable
law, any controversy concerning whether a dispute is an arbitrable dispute or as
to the interpretation or enforceability of this Section 8.11 shall be determined
by the arbitrator. To the fullest extent permitted by applicable law, if any
Party hereto shall resort to legal proceedings for injunctive or any other
similar relief pending the outcome of any such arbitration proceeding or prior
to the initiation thereof, such Party shall not be deemed to have waived its
rights to cause such matter or any other matter to be referred to arbitration
pursuant to this Section 8.11. The arbitrator shall be a retired or former judge
of any appellate court or Superior Court of the States of Kansas, Nebraska or
Missouri, any United States appellate court or the United States District Court
for any Kansas, Nebraska or Missouri district, provided such individual has
substantial professional experience with regard to corporate and transactional
legal matters. It is intended that this agreement to arbitrate be valid,
enforceable and irrevocable. The arbitrator shall have authority in his
discretion to grant injunctive relief, award specific performance and impose
sanctions upon any party to any such arbitration. In his award, the arbitrator
shall allocate among the Parties to the arbitration all costs of arbitration,
including the fees and expenses of the arbitrator and reasonable attorneys'
fees, costs and expert witness expenses of the Parties.
37
<PAGE> 44
IN WITNESS WHEREOF, each of the Parties have caused this Agreement to be
executed in their respective names individually and by their respective
corporate officers, duly authorized, as of the day and year first above written.
SELLERS:
/s/ Christopher C. Moore
-----------------------------------------------
CHRISTOPHER C. MOORE, an individual
/s/ Melody J. Moore
-----------------------------------------------
MELODY J. MOORE, an individual
CHRIS AND MELODY MOORE
CHARITABLE REMAINDER UNITRUST
By:/s/ Richard J. Koll
--------------------------------------------
Richard J. Koll
Trustee
BUYER: DATA DOCUMENTS, INC.,
a Nebraska corporation
By: /s/ Walter J. Kearns
--------------------------------------------
Walter J. Kearns, President and
Chief Executive Officer
With respect only to
Section 3.15 of
this Agreement:
THE COMPANY: MOORE LABELS, INC.,
a Kansas corporation
By: /s/ Christopher C. Moore
--------------------------------------------
Christopher C. Moore, Chief
Executive Officer
38
<PAGE> 1
EXHIBIT 2.2
LLC INTEREST PURCHASE AGREEMENT
DATED
AS OF JULY 11, 1997
BY AND AMONG
CHRISTOPHER C. MOORE, MELODY J. MOORE,
AND NORMAN A. MOEDER
(AS "SELLERS")
AND
DATA DOCUMENTS, INC. AND
MOORE LABELS, INC.
(AS "BUYER")
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 - TERMS OF PURCHASE AND SALE.......................................................2
1.1 Sale of the Interests.........................................................2
1.2 Closing.......................................................................2
1.3 Purchase Price; Delivery......................................................3
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF THE PARTIES....................................3
2.1 Representations and Warranties of the Sellers.................................3
(a) Capitalization; Title to Interests....................................3
(b) Subsidiaries...........................................................4
(c) Organization of the Company; Authorization.............................4
(d) No Conflict............................................................4
(e) Financial Statements...................................................4
(f) Long Term Debt; Absence of Undisclosed Liabilities.....................5
(g) Consents and Approvals or Governmental Authorities.....................5
(h) Real Property..........................................................5
(i) Personal Property......................................................6
(j) Contracts..............................................................6
(k) Litigation.............................................................7
(l) Compliance with Laws...................................................7
(m) No Brokers and Finders.................................................9
(n) Absence of Change.....................................................10
(o) Labor Matters; Benefit Plans..........................................10
(p) Insurance.............................................................10
(q) Banking Relationships.................................................11
(r) Absence of Certain Commercial Practices...............................11
(s) Related Parties.......................................................11
(t) No Misrepresentations.................................................11
(u) Taxes.................................................................11
2.2 Representations and Warranties of Buyer.........................................13
(a) Organization of Buyer; Authorization..................................13
(b) No Conflict...........................................................13
(c) Litigation............................................................14
(d) No Brokers or Finders.................................................14
(e) Consents and Approvals................................................14
(f) No Misrepresentations.................................................14
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 3 - COVENANTS AND OTHER AGREEMENTS OF THE PARTIES..................................14
3.1 Conduct of Business..........................................................14
3.2 Diligence in Pursuit of Conditions Precedent.................................15
3.3 Access to Information........................................................15
3.4 No Solicitation..............................................................15
3.5 Non-Competition Agreement....................................................16
3.6 Further Assurances...........................................................16
3.7 Tax Elections................................................................16
3.8 Waiver of Right of First Refusal.............................................16
ARTICLE 4 - CONDITIONS TO CLOSING...........................................................16
4.l General Conditions ..........................................................16
4.2 Conditions to the Sellers' Obligations.......................................16
(a) Buyer's Performance...................................................16
(b) Representations and Warranties True...................................16
(c) Payments..............................................................17
(d) Opinion of Counsel of DDI.............................................17
4.3 Conditions to Buyer's Obligations...............................................17
(a) The Sellers' Performance..............................................17
(b) Representations and Warranties True...................................17
(c) Absence of Material Adverse Changes...................................17
(d) Approvals and Consents................................................17
(e) Opinion of Counsel of the Sellers.....................................17
(f) Due Diligence.........................................................18
(g) Non-Competition Agreement.............................................18
(h) Assignments...........................................................18
(i) Consummation of the Stock Purchase Agreement..........................18
ARTICLE 5 - TERMINATION.....................................................................18
5.1 Termination..................................................................18
5.2 Effect of Termination........................................................18
ARTICLE 6 - INDEMNIFICATION AND CLAIMS......................................................18
6.1 Survival of Representations and Warranties...................................18
6.2 Indemnification by the Sellers...............................................19
6.3 Indemnification by Buyer.....................................................20
6.4 Environmental Matters........................................................20
6.5 Limitation on Indemnification................................................21
6.6 Third Party Claims...........................................................22
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 7 - TAXES...........................................................................23
7.1 Tax Indemnity................................................................23
7.2 Purchase Price Adjustment....................................................24
7.3 Survival.....................................................................24
ARTICLE 8 - GENERAL PROVISIONS..............................................................24
8.1 Notices......................................................................24
8.2 Entire Agreement; Incorporation; Subsequent Modifications....................25
8.3 Assignment; Binding Effect; Third Party Beneficiaries........................26
8.4 Expenses of Sale.............................................................26
8.5 Knowledge....................................................................26
8.6 Counterparts.................................................................26
8.7 Interpretation and Governing Law.............................................26
8.8 Severability.................................................................26
8.9 Reference to Days............................................................27
8.10 Press Release................................................................27
8.11 Dispute Resolution...........................................................27
</TABLE>
iii
<PAGE> 5
EXHIBITS
<TABLE>
<S> <C>
Form of Non-Competition Agreement.......................................Exhibit A
Form of Certificate of the Sellers......................................Exhibit B
Form of Opinion of Counsel to Sellers...................................Exhibit C
Form of Certificate of the Buyer........................................Exhibit D
Financial Statements....................................................Exhibit E
</TABLE>
LIST OF SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
Schedule 2.1(e) Financial Statements
Schedule 2.1(g) Consents and Approvals
Schedule 2.1(h) Real Property
Schedule 2.1(j)(i) Contracts
Schedule 2.1(l)(ii) Environmental Matters
Schedule 2.1(l)(iii)(A) Company Facilities
Schedule 2.1(l)(iii)(B) Off-Site Locations and Environmental Contractors
Schedule 2.1(l)(iv) Environmental Reports
Schedule 2.1(o) Managers
Schedule 2.1(p) Insurance
Schedule 2.1(q) Banking Relationships
Schedule 2.1(s) Related Parties
Schedule 2.1(u) Taxes
</TABLE>
iv
<PAGE> 6
LLC INTEREST PURCHASE AGREEMENT
This LLC Interest Purchase Agreement (the "Agreement") is entered into
as of this 11th day of July, 1997, by and among Christopher C. Moore, an
individual ("Chris Moore"), Melody J. Moore, an individual ("Melody Moore"),
Norman A. Moeder, an individual ("Norman Moeder" and, collectively, with Chris
Moore and Melody Moore, the "Sellers") and Moore Labels, Inc., a Kansas
corporation ("Moore Labels") and Data Documents, Inc., a Nebraska corporation
("DDI" and, collectively, with Moore Labels, "Buyer") (sometimes individually, a
"Party" and collectively, the "Parties").
RECITALS
WHEREAS, Labelit Land Company, LLC, a Kansas limited liability company
(the "Company"), among other things, currently leases certain improved real
estate (the "Land") located in Sedgwick County, Kansas (the "County"), from the
County for the life of an Industrial Revenue Bond (the "IRB") issued by the
County and, in turn, subleases the Land to Moore Labels (the "Business");
WHEREAS, other than the Business, the Company has no operations or
assets;
WHEREAS, the Sellers own all of the issued and outstanding interests of
the Company (the "Interests");
WHEREAS, Moore Labels, among other things, currently owns and operates a
prime label business and manufacturing facility located in Wichita, Kansas;
WHEREAS, Chris Moore, Melody Moore and the Chris and Melody Moore
Charitable Remainder Unitrust (the "Trust" and, collectively, with Chris Moore
and Melody Moore, the "Stockholders") own all of the issued and outstanding
shares of capital stock of Moore Labels (the "Shares");
WHEREAS, concurrent with this Agreement, the Stockholders, Moore Labels,
and DDI, have entered into a Stock Purchase Agreement (the "Stock Purchase
Agreement"), whereunder, immediately prior to the Closing (as defined in Section
1.2) of the transactions contemplated in this Agreement, DDI and Moore Labels
will purchase or redeem, respectively, all of the Shares from the Stockholders;
and
WHEREAS, the Sellers desire to sell to DDI and Moore Labels,
collectively, all of the Interests and DDI desires to purchase from the Sellers
one percent (1%) of the Interests and Moore Labels desires to purchase from the
Sellers ninety-nine percent (99%) of the Interests, all upon the terms and
conditions set forth herein.
<PAGE> 7
NOW, THEREFORE, in consideration of the foregoing and of the mutual
representations, warranties, covenants, agreements, terms and conditions set
forth below, the receipt and adequacy of which are hereby acknowledged, the
Parties agree as follows:
ARTICLE 1 - TERMS OF PURCHASE AND SALE
1.1 SALE OF THE INTERESTS. At the Closing (as defined in Section 1.2),
upon the terms and subject to the condition set forth herein, the Sellers shall
sell to DDI and Moore Labels, collectively, all of the Interests, and DDI shall
purchase from the Sellers one percent (1%) of the Interests and Moore Labels
shall purchase from the Sellers ninety-nine percent (99%) of the Interests.
1.2 CLOSING. The closing of the transactions contemplated hereby (the
"Closing") shall be held at the offices of Gibson, Dunn & Crutcher LLP, 2029
Century Park East, Suite 4000, Los Angeles, California 90067, on July 31, 1997
or such other date as may be mutually agreed upon by the Parties (such date on
which the Closing actually occurs to be referred to hereinafter as the "Closing
Date"). At the Closing,
(a) the Sellers will deliver to Buyer:
(i) duly executed assignments of the Interests to Buyer
(the "Assignments");
(ii) a long-form certificate of good standing for the
Company issued by the Secretary of State of the State of Kansas,
certifying that the Company is in good standing upon the records of its
offices, including tax good standing, and certificate(s) to transact
business as a foreign company in each state in which the Company is so
qualified, each as of a date no more than five business days prior to
the Closing Date;
(iii) copies of the Articles of Organization, certified by
the Secretary of State of the State of Kansas, and the operating
agreement of the Company, certified by a manager of the Company, in each
case as amended to date;
(iv) a Non-Competition Agreement with each of the Sellers,
substantially in the form of EXHIBIT A attached hereto;
(v) the certificate, substantially in the form of EXHIBIT
B, attached hereto, referred to in Section 4.3(b);
(vi) the opinion of counsel to the Sellers, substantially
in the form of EXHIBIT C, attached hereto, referred to in Section
4.3(e);
(vii) resignations, or removals by the Sellers, of the
managers, if any, of the Company;
(viii) the official company books of the Company,
certified by a manager of the Company;
2
<PAGE> 8
(ix) originals of the Leases (as defined in Section
2.1(h)) relating to the Land or any other owned or leased Real Property
(as defined in Section 2.1(h)) (or, if the Company does not have an
original, a copy certified by the Sellers to be a true and complete copy
of any such Lease), specified material contracts, and such other
documents as may be reasonably requested by Buyer;
(x) any consents, approvals or other authorizations
necessary to effect the transactions contemplated hereby; and
(xi) such other documents and instruments as Buyer or its
counsel reasonably deems necessary to effectuate the transactions
contemplated by this Agreement.
(b) Buyer will deliver to the Sellers:
(i) the Purchase Price referred to in Section 1.3;
(ii) the certificate, substantially in the form of EXHIBIT
D, attached hereto, referred to in Section 4.2(b);
(iii) the opinion of counsel to DDI referred to in Section
4.2(d); and
(vi) such other documents and instruments as the Sellers
or their counsel reasonably deem necessary to effectuate the
transactions contemplated by this Agreement.
(c) On the business day immediately preceding the Closing Date,
the Parties shall conduct a pre-closing at the offices of Gibson, Dunn &
Crutcher, LLP commencing at 9:00 a.m., at which each Party shall present for
review by the other Party copies, in execution form, of all documents required
to be delivered by any Party at the Closing.
1.3 PURCHASE PRICE; DELIVERY. Except as otherwise provided in this
Agreement, the aggregate purchase price to be paid by Buyer to the Sellers for
the Interests (the "Purchase Price") shall equal to the sum of (i) $200,000 and
(ii) the aggregate amount of any prepayments of principal which is to be paid in
1997 in respect of the IRB up to and including the Closing Date. The Purchase
Price shall be paid by wire transfer of immediately available funds on the
Closing Date 79% to Chris and Melody Moore and 21% to Norman Moeder.
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES
OF THE PARTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the Sellers,
jointly and severally, represents and warrants to Buyer, as of the date of this
Agreement, as set forth below:
(a) CAPITALIZATION; TITLE TO INTERESTS. All of the issued and
outstanding Interests are owned of record and beneficially by the Sellers. All
of the Interests have
3
<PAGE> 9
been duly authorized and are validly issued, fully paid and non-assessable.
There are no securities outstanding convertible into, exchangeable for or
carrying the right to acquire equity securities of the Company, or
subscriptions, warrants, options, rights, calls, agreements, demands or other
arrangements or commitments of any character obligating the Company to issue or
dispose of any of its equity securities or any ownership interests therein or
otherwise relating to the Interests in the Company. The sale and delivery of the
Interests to Buyer pursuant to Article 1 hereof will vest in Buyer legal and
valid title to the Interests, free and clear of any and all liens, security
interests, pledges, mortgages, charges, limitations, claims, restrictions,
rights of first refusal, rights of first offer, rights of first negotiation or
other encumbrances of any kind or nature whatsoever (collectively,
"Encumbrances"), other than Encumbrances created by Buyer.
(b) SUBSIDIARIES. The Company does not hold a direct, indirect or
beneficial interest in any entity (corporation, partnership, joint venture,
association or other business enterprise).
(c) ORGANIZATION OF THE COMPANY; AUTHORIZATION. The Company is
duly organized, validly existing and in good standing under the laws of the
State of Kansas and is qualified to transact business as a foreign company in
all states in which its operations, properties or assets require such
qualification. Each of the Sellers has full individual power and authority (i)
to execute and deliver this Agreement and (ii) to perform his or her obligations
hereunder. The Company has full power and authority to own, lease and operate
its properties and to carry on the Business as now being conducted. The
execution, delivery and performance of this Agreement have been duly authorized
by all necessary action of the Sellers and this Agreement constitutes a valid
and binding obligation of the Sellers enforceable against each of the Sellers in
accordance with its terms. Other than the Business, the Company conducts no
other operations.
(d) NO CONFLICT. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby by the
Sellers will (i) violate any provision of the charter or operating agreement of
the Company; (ii) violate, or be in conflict with, or constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, any Contract (as defined in Section 2.1(j)); or (iii) violate any
material statute, law, rule or regulation including, without limitation, any
Environmental Law (as defined in Section 2.1(l)) or any judgment, decree or
order of any court or other governmental authority binding upon the Company or
the Sellers.
(e) FINANCIAL STATEMENTS. The Sellers have delivered to Buyer an
unaudited balance sheets of the Company as of June 30, 1997 (the "Interim
Balance Sheet") and the related unaudited income statement for the period then
ended (collectively, the "Financial Statements," copies of which are attached
hereto as EXHIBIT E). Except as listed on Schedule 2.1(e) hereto, the Financial
Statements, together with the notes thereto, (i) were prepared in accordance
with the books and records of the Company; (ii) fairly present the financial
position at, and the results of operations for the periods covered thereby;
(iii) were prepared on the income tax basis of accounting consistent with the
prior practices of the Company; (iv) contain and reflect all necessary
adjustments and accruals for a fair presentation of the Company's financial
condition and the results of its operations for the periods covered by said
4
<PAGE> 10
Financial Statements; (v) contain and reflect adequate provisions for all
reasonably anticipated liabilities, including liabilities for all taxes, whether
federal, state, local or foreign, with respect to the periods then ended and all
prior periods; and (vi) with respect to contracts and commitments for the sale
of products or other goods or services by the Company, contain and reflect
adequate reserves for all reasonably anticipated material losses and costs and
expenses in excess of expected receipts.
(f) LONG TERM DEBT; ABSENCE OF UNDISCLOSED LIABILITIES.
(i) The only long term debt of the Company consists solely
of the outstanding principal balance owed under the IRB to Sedgwick
County, Kansas with an original principal balance of $2,075,000 and a
current principal amount of approximately $1,900,000, as adjusted to
reflect any accrued but unpaid principal thereon during the period from
December 1, 1996 through the Closing Date.
(ii) Except for liabilities incurred in the ordinary
course of business and consistent with past practices, from the date of
the Interim Balance Sheet to the date of this Agreement, the Company has
not incurred any liability or obligation (whether accrued, absolute,
contingent or otherwise), and whether due or to become due (including,
without limitation, any liability for Taxes (as defined in Section
2.1(u)) and interest, penalties and other charges payable with respect
to any such liability or obligation) of a nature required by the
Company's past accounting practices to be reflected on a company balance
sheet or disclosed in the notes thereto. To the knowledge of the
Sellers, there are no currently existing conditions with respect to the
Company which might reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), business, net worth,
results of operations, earnings, properties or prospects, whether or not
arising in the ordinary course of business, of the Company or the
Business.
(g) CONSENTS AND APPROVALS OR GOVERNMENTAL AUTHORITIES. Except as
set forth on Schedule 2.1(g) hereto, no consent, approval or authorization of,
or declaration, filing or registration by the Sellers or the Company with any
governmental authority is required in connection with the execution, delivery
and performance by the Sellers of this Agreement or the consummation of the
transactions contemplated hereby, other than state or local laws and regulations
with which the Company and/or the Sellers will have complied on or before the
Closing Date.
(h) REAL PROPERTY. Schedule 2.1(h) hereto sets forth the street
address of each parcel of real property, owned, leased, operated or otherwise
currently used by the Company (the "Real Property"), the name of the owner of
such Real Property, and lists each lease ("Lease") of Real Property under which
the Company is a lessee, sub-lessee, lessor or sub-lessor. Except as otherwise
set forth on such Schedule 2.1(h): (i) the Sellers have delivered to Buyer
complete and correct copies of all of the Leases and title reports relating to
the Real Property; (ii) the Company has good and marketable title to all of the
owned Real Property and, on the Closing Date, Buyer will obtain good and
marketable title to such owned Real Property, free and clear of all
Encumbrances, except for Encumbrances created by or arising through Buyer
(including any existing Encumbrances expressly assumed by Buyer); (iii) each
Lease is in full force
5
<PAGE> 11
and effect; (iv) the Company is not in default with respect to any material term
or condition of any Lease, and no event has occurred which, either of itself or
with the passage of time or the giving of notice or both, would constitute a
default thereunder or would cause the acceleration of any obligation of any
party thereto or the creation of a lien or encumbrance upon any asset of the
Company; (v) the buildings, fixtures and other improvements located on the Real
Property are in good operating condition and repair, normal wear and tear
excepted; and (vi) the Company holds valid and effective permits and licenses
required by all applicable laws relating to its operation and use of the Real
Property in connection with the Business or otherwise.
(i) PERSONAL PROPERTY. The Company has good and marketable title
to all of the personal property used in the Business or otherwise material to
the financial condition of the Company and, on the Closing Date, Buyer will
obtain good and marketable title to such property, free and clear of any and all
Encumbrances, except for (i) Encumbrances created by or arising through Buyer
(including, without limitation, by reason of any capitalized leases assumed by
Buyer). All of the assets and properties (whether owned or leased) of the
Company have been well-maintained and are in good operating condition, free from
defects other than such minor defects as do not materially interfere with the
continued use thereof in normal operations. The Interim Balance Sheet reflect
all tangible assets and properties, real or personal, used by the Company in the
conduct of the Business or otherwise.
(j) CONTRACTS.
(i) Schedule 2.1(j)(i) hereto contains a true, correct and
complete list of each contract, license, lease, purchase and sale order
(other than purchase and sales orders entered into in the ordinary
course of business) and other agreement, whether written or oral
(including any and all amendments thereto), to which the Company is a
party (collectively, the "Contracts") under which the value of services
to be performed or goods to be provided by the Company or the cost of
services to be performed or goods to be provided to the Company is
expected to exceed $10,000.
(ii) Each Contract is in full force and effect, valid and
binding and enforceable against the Company and, to the Sellers'
knowledge, each other party thereto, in accordance with its terms.
Neither the Company nor, to the Sellers' knowledge, any other party to
any of the Contracts, is in breach or default with respect to any term
or condition thereof, and neither the Sellers nor the Company have
received any notice that any event has occurred that, with the passage
of time or the giving of notice, or both, would constitute such a breach
or default thereunder.
(iii) The Company is not a party to any contract which,
under the circumstances which exist as of the Closing Date, could have a
material adverse effect on the Business or the Company if the
obligations of such parties thereunder are substantially performed and
no Contract obligates the Company to purchase good or services in excess
of reasonably anticipated needs after the Closing Date or on terms which
are materially less favorable than those obtainable from other suppliers
of similar goods or services.
6
<PAGE> 12
(iv) There are no executory Contract under which the
Company is obligated to provide indemnification or to pay consequential
or incidental damages in excess of amounts which would be covered by
insurance.
(v) There are no outstanding bids or proposals for a
contract under which the value of services to be performed or goods to
be provided by the Company or the cost of services to be performed or
goods to be provided to the Company is expected to exceed $10,000.
(k) LITIGATION. There is no action, suit, arbitration,
litigation, investigation, audit or other proceeding (collectively, a
"Proceeding") by or before any court, governmental authority or other tribunal
pending or, to the knowledge of the Sellers, threatened, against the Company,
and no Proceeding pending or threatened against any third party which was or
will be initiated by the Company. The Company is not subject to any judgment,
order or decree.
(l) COMPLIANCE WITH LAWS.
(i) The Company is in compliance with all federal, state
and local laws, ordinances, rules and regulations applicable to the
Business (including, without limitation, Environmental Laws (as defined
in Section 2.1(l)(v)(C)), building codes and zoning ordinances and
similar laws, and those relating to equal opportunity employment
practices) currently in effect. Neither the Sellers nor the Company have
received any notification of any asserted present or past failure by the
Company to comply with any law, ordinance, rule or regulation which has
not been completely complied with or corrected prior to the date hereof
without any material adverse effect, past or present, on the Company or
the Business. The Company has at all times possessed, has been, and is
in compliance in all material respects with, all governmental permits,
licenses and authorizations (including all Environmental Permits (as
defined in Section 2.1(l)(v)(E)) necessary for the conduct of the
Business on and prior to the Closing Date. The present conduct of the
Business is not dependent upon any so-called "non-conforming use"
exception or any other exception that would terminate or otherwise be
impaired by the transactions contemplated hereby.
(ii) Neither the Sellers nor the Company have received any
notification of any proposed special assessment or any proposed material
change in property tax, land use or zoning laws affecting the Business
or the Real Property. The Company is in compliance in all material
respects with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in (A) the Environmental Laws; (B) any regulation, code, plan,
order, decree, judgment, notice or demand issued, entered, promulgated
or approved thereunder; or (C) to the best of the Sellers' knowledge,
any proposed law, rule or regulation which is not in effect as of the
date hereof but would have applicability to the Business or the Company
upon its effectiveness. Except as set forth on Schedule 2.1(l)(ii)
hereto, no Hazardous Material (as
7
<PAGE> 13
defined in Section 2.1(l)(v)(F)) has been generated, used, treated,
stored, released, disposed of, or discharged into the environment, on or
from any Company Facility (as defined in Section 2.1(m)(iii), nor have
the Sellers been notified that any Hazardous Material has been released
on or from any locations at which the Company arranged, by contract,
agreement or otherwise for use, disposal, storage, treatment, transport
for disposal or treatment, of any Hazardous Material. Except as set
forth on Schedule 2.1(l)(ii) hereto, there is no (X) Environmental
Condition (as defined in Section 2.1(l)(v)(B)); (Y) asbestos-containing
material installed at any Company Facility or (Z) polychlorinated
biphenyls (PCBs) deposited or contained in any existing equipment or
otherwise located at any Company Facility. The Company is not and, to
the best of the Sellers' knowledge, will not be subject to any liability
to any third party for any Personal Injury (as defined in Section
2.1(l)(v)(G)) of any person (1) in any way arising out of any exposure
prior to the Closing Date to any Hazardous Material present at or
generated by any Company Facility or elsewhere on or prior to the
Closing Date; or (2) in any way arising out of any exposure after the
Closing Date to any Hazardous Material that was present at or generated
by any Company Facility or elsewhere at or prior to the Closing Date.
(iii) Schedule 2.1(l)(iii)(A) hereto sets forth a full and
complete list of any real property or any other facility currently or in
the past owned, operated or leased by the Company (collectively, a
"Company Facility"). The Company, or any agent of the Company has not
generated, used or stored any Hazardous Material at any off-site
location. Schedule 2.1(l)(iii)(B) hereto sets forth a full and complete
list of each third party to which or with which the Company, or any
agent of the Company, has arranged, by contract, agreement or otherwise
for the disposal, storage, treatment, transport for disposal, storage or
treatment of any Hazardous Material, and each off-site location such
Hazardous Material was disposed, stored, treated, subsequent to October
17, 1994, and, to the Sellers' best knowledge, prior to October 17,
1994.
(iv) True, correct and complete copies of all
environmental reports relating to each Company Facility, whether
currently or previously owned, leased, used or operated by the Company,
are attached hereto as Schedule 2.1(l)(iv).
(v) As used in this Agreement, the following terms shall
have the following meanings:
(A) "CERCLA" means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Section 9601 et seq.).
(B) "Environmental Condition" means (1) any
condition arising out of any release or threatened release of
Hazardous Materials from or on any Company Facility, (2) any
condition at any location arising out of any release or
threatened release of Hazardous Materials which the Company
generated, (3) any violation by the Company of any Environmental
Permit or of any Environmental Law or (4) any condition at any
Company Facility requiring investigation or remediation under any
Environmental Law.
8
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(C) "Environmental Laws" means, in each case as in
effect on the applicable date prior to the Closing Date, 42
U.S.C. Section 9607 and 9613(f) of CERCLA (42 U.S.C. Section 9601
et. seq.), the Hazardous Material Transportation Act (49 U.S.C.
Section 1801 et seq.), the Clean Water Act (33 U.S.C. Section
1251 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act, as
amended (15 U.S.C. Section 2601 et seq.) the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.),
the Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.), and any other federal, state, local or foreign law
relating to Environmental Matters, the rules and regulations
promulgated under any thereof, and any provisions of common law
providing for any remedy or right of recovery with respect to
Environmental Matters.
(D) "Environmental Matters" means any matter
arising out of or relating to the production, storage, handling,
use, emission, disposal, discharge, transportation, or release of
any contaminant, waste, or hazardous or toxic material, or other
substance or material regulated by law, or otherwise arising out
of or relating to safety, health, sanitation or the environment,
and shall include, without limitation, the costs of investigating
and remediating the same, any fines and penalties arising in
connection therewith, and any claim in respect thereof for
damages, declaratory relief or injunctive relief for alleged
Personal Injury, property damage or damage to natural resources
under common law or other Environmental Law.
(E) "Environmental Permit" means each permit,
license, order, variance, registration or other authorization of
any Federal, state or local governmental agency issued, approved
or required to be obtained under any Environmental Law.
(F) "Hazardous Material" means (1) any pollutant,
contaminant, petroleum, crude oil or any fraction thereof or
hazardous waste or hazardous substance, within the meaning of
such terms under CERCLA or any other Environmental Law and (2)
any other hazardous or toxic substance or material, or any
material requiring investigation or remediation, or which are
regulated, within the meaning of any Environmental Law applicable
to the Company or the Business.
(G) "Personal Injury" means any illness,
disability, injury or death.
(m) NO BROKERS AND FINDERS. Neither the Sellers, the Company nor
any of their respective affiliates, managers, members or agents has incurred any
liability for any brokerage or finders' fees or commissions or similar payments
in connection with any of the transactions contemplated hereby.
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(n) ABSENCE OF CHANGE. Since the date of the Interim Balance
Sheet, there has not been any:
(i) transaction by the Company not in the ordinary course
of its business;
(ii) material adverse change in the operations, condition
(financial or otherwise), prospects, assets or liabilities (whether
absolute, accrued or contingent or otherwise) of the Business or the
Company;
(iii) damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the Business or the
Company;
(iv) sale or transfer of any asset of the Company, except
sales in the ordinary course of its business;
(v) mortgage, pledge or subjection to lien, charge or
encumbrance of any kind, of any asset of the Company, except for (A)
liens for Taxes (as defined in Section 2.1(u)) not due; (B) purchase
money security interests; and (C) mechanics' liens being disputed by the
Company in good faith and by appropriate proceedings;
(vi) payment or declaration of any distribution of cash or
any other asset, in the nature of a dividend, in redemption or as the
purchase price of any of the Company's securities or in discharge or
cancellation, in whole or in part, of any indebtedness owing to its
interestholders, or any purchase, redemption, retirement, sale, issuance
or other acquisition of any interest, notes or other securities; or
(vii) alteration in the manner of keeping the Company's
books, accounts or records, or in the accounting practices therein
reflected.
(o) LABOR MATTERS; BENEFIT PLANS. Schedule 2.1(o) hereto contains
a true and correct list of the names of all managers of the Company. The Company
does not now have, nor has the Company had at any time, (i) any employees, (ii)
any Employee Benefit Plan, as that term is defined in Section 3(3) of ERISA;
(iii) any Employee Pension Benefit Plan, as that term is defined in Section 3(2)
of ERISA; or (iv) any other health or benefit plan for employees of any kind.
(p) INSURANCE. Schedule 2.1(p) hereto lists all insurance
policies presently covering the Company, including policies held by the Company
and policies held by third parties under which the Company is a named insured.
All such policies are in full force and effect, all premiums with respect
thereto covering all periods up to and including the Closing Date have been
paid, and no notice of cancellation or termination has been received with
respect to any such policy. Neither the Sellers nor the Company have received
any notification that material changes are required in the conduct of the
Business as a condition to the continuation of coverage or renewal of any such
policy. The Sellers have heretofore made available to Buyer true and complete
copies of all such policies.
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(q) BANKING RELATIONSHIPS. Schedule 2.1(q) hereto sets forth the
names and locations of all banks, trust companies, savings and loan associations
and other financial institutions at which the Company maintains safe deposit
boxes or accounts of any nature and the names of all persons authorized to have
access thereto, draw thereon or make withdrawals therefrom. At the Closing,
copies of all records, including all signatures or authorization cards,
pertaining to such safe deposit boxes and bank accounts will be in the
possession of the Company.
(r) ABSENCE OF CERTAIN COMMERCIAL PRACTICES. The Company has not,
and no interestholder, manager, member, agent or other person acting on behalf
of the Company has, (i) given or agreed to give any gift or similar benefit of
more than nominal value to any customer, supplier, or governmental employee or
official or any other person who is in a position to help or hinder the Company
or assist the Company in connection with any proposed transaction, which gift or
similar benefit, if not continued in the future, might materially and adversely
affect the Business or the Company; or (ii) used any funds for unlawful
contributions, payments, gifts, or entertainment, or made any unlawful
expenditures relating to political activity to governmental officials or others
or established or maintained any unlawful or unrecorded funds in violation of
Section 30A of the Securities Exchange Act of 1934, as amended. The Company has
not, and no interestholder, manager, member or, to the best of the Sellers'
knowledge, no agent, or other person acting on behalf of the Company has,
accepted or received any unlawful contributions, payments, gifts, or
expenditures.
(s) RELATED PARTIES. Except as set forth in Schedule 2.1(s)
hereto, there is not currently, nor in the last five years has there been, any
transactions in excess of an aggregate of $10,000 between the Company and any
manager, member or interestholder of the Company, or any of their respective
relatives or affiliates, or any payment (however characterized) by the Company
to any such related party or by any such related party to the Company.
(t) NO MISREPRESENTATIONS. No representation, warranty or
statement made, or information provided, by the Company or the Sellers in this
Agreement or in any other document or instrument furnished or to be furnished by
or on behalf of the Company or the Sellers pursuant hereto or as contemplated
hereby contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the statements or facts
contained herein or therein not misleading.
(u) TAXES. The Company has filed all tax returns required to have
been filed by the Company as of the date hereof and has paid all federal, state,
local, foreign or other tax assessments or other governmental charges,
including, without limitation, any income, estimated income, gross income, gross
receipts, business, occupation, franchise, property, ad valorem, sale or use,
employment or withholding, social security or unemployment, backup withholding,
excise, severance, value added, premiums, intangibles, unitary, capital gain,
prohibited transactions, excess profits, transfer and all other taxes, including
interest, penalties and additions thereon (collectively, "Taxes") due to any
taxing authority with respect to all periods prior to the date hereof, except as
contested in good faith and for which the Company has made adequate reserves on
the Interim Balance Sheet. All such returns were true and correct in all
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material respects as of the date on which they were filed. Except as set forth
on Schedule 2.1(u) hereto:
(i) No such return contains, or will contain a disclosure
statement under Section 6662 of the Code or any similar provision of
state, local or foreign law;
(ii) The Company has not received written notice that the
Internal Revenue Service ("IRS") or any other taxing authority has
asserted against the Company any deficiency or claim for additional
Taxes in connection therewith;
(iii) All Tax deficiencies asserted or assessed against
the Company have been paid or finally settled;
(iv) There is no pending or threatened action, audit,
proceeding, or investigation with respect to (A) the assessment or
collection of Taxes; or (B) a claim for refund made by the Company with
respect to Taxes previously paid;
(v) All amounts that are required to be collected or
withheld by the Company with respect to Taxes of the Company have been
duly collected or withheld. All such amounts that are required to be
remitted to any taxing authority have been duly remitted;
(vi) All federal, state, local and foreign income tax
returns of the Company since the date of its organization, but
additional Taxes, if any, resulting from such examinations will not have
a material adverse effect on the Business or the Company taken as a
whole;
(vii) The Company has not granted any waiver of any
statute of limitations with respect to, or any extension of a period for
the assessment filing of, any Tax;
(viii) The provisions for Taxes currently payable on the
Interim Balance Sheet are at least equal, as of the date thereof, to all
unpaid Taxes of the Company , whether or not disputed.
(ix) Since the date of the Interim Balance Sheet, the
Company has not taken any action not in accordance with past practice
that would have the effect of deferring any Tax liability of the Company
from any taxable period ending on or before the Closing Date to any
taxable period ending after such date;
(x) None of the income recognized, for federal, state,
local or foreign income tax purposes, by the Company during the period
commencing on the date hereof and ending on the Closing Date will (A) be
derived other than in the ordinary course of business or (B) arise from
transactions of a type not reflected on the relevant return for the
taxable period ending on the day immediately preceding the Closing Date;
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(xi) No consent has been filed under Section 341(f) of the
Code with respect to the Company;
(xii) The Company has not participated in, or cooperated
with, an international boycott within the meaning of Section 999 of the
Code;
(xiii) The Company is not required to include in income
any adjustment pursuant to Section 481(a) of the Code (or similar
provisions of other law or regulations) by reason of a change in
accounting method nor does the Company have any knowledge that the IRS
(or other taxing authority) has proposed, or is considering, any such
change in accounting method that would be applicable to the Company;
(xiv) None of the assets of the Company constitutes
property which is required to be treated as owned by any other person
pursuant to the "safe harbor lease" provisions of former Section
168(f)(8) of the Code;
(xv) None of the assets of the Company secure any debt,
the interest on which is tax exempt under Section 103 of the Code;
(xvi) None of the assets of the Company are "tax exempt
used property" within the meaning of Section 168(h) of the Code;
(xvii) The Company is not a party to, is bound by, or has
any obligation under, any tax sharing or similar agreement or
arrangement; or
(xviii)The Company is and has been treated as a
partnership for income tax purposes since the date of its organization.
2.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to the Sellers, as of the date of this Agreement, as follows:
(a) ORGANIZATION OF BUYER; AUTHORIZATION. DDI is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nebraska, with full corporate power and authority to execute and
deliver this agreement and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement have been duly authorized by all
necessary corporate action (including, but not limited to, approval by the Board
of Directors) of DDI and this Agreement constitutes a valid and binding
obligation of DDI, enforceable against it in accordance with its terms.
(b) NO CONFLICT. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby by DDI
will (i) violate any provision of the charter or bylaws of DDI, (ii) violate, or
be in conflict with, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under any material agreement
or commitment to which DDI is party or (iii) violate any material statute, law,
regulation or rule or any judgment, decree or order of any court or other
governmental authority applicable to DDI.
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(c) LITIGATION. There is no action, suit or proceeding by or
before any court or governmental authority pending or, to the knowledge of DDI,
threatened against DDI which challenges the validity of this Agreement or any
action taken or to be taken by DDI pursuant to this Agreement or in connection
with the transactions contemplated hereby.
(d) NO BROKERS OR FINDERS. Neither DDI nor any of its affiliates,
officers, directors, employees or agents has employed any broker or finder or
incurred any liability for any brokerage or finder's fees or commissions or
similar payments in connection with any of the transactions contemplated hereby.
(e) CONSENTS AND APPROVALS. No consent, approval or authorization
of, or declaration, filing or registration by DDI with, any governmental
authority or other third party is required in connection with the execution,
delivery and performance by DDI of this Agreement or the consummation of the
transactions contemplated hereby, other than state or local laws and
regulations, with which the DDI will have complied with on or prior to the
Closing Date.
(f) NO MISREPRESENTATIONS. No representation, warranty or
statement made, or information provided, by DDI in this Agreement or in any
other document or instrument furnished or to be furnished by or on behalf of DDI
pursuant hereto or as contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements or facts contained herein or therein not
misleading.
ARTICLE 3 - COVENANTS AND OTHER
AGREEMENTS OF THE PARTIES
3.1 CONDUCT OF BUSINESS. Except as may be otherwise expressly permitted
by this Agreement or with the prior written consent of DDI, from the date hereof
through the Closing, the Sellers will cause the Company to: (a) operate the
Business only in the ordinary course, consistent with past practice; (b) use its
best efforts to preserve intact its business organizations; (c) continue in full
force and effect all existing insurance policies (or comparable insurance) of or
relating to the Business or the Company; and (d) use its best efforts to
maintain its relationships with its lenders, suppliers, customers, licensors and
licensees and others having business dealings with the Business. Except as may
be otherwise expressly permitted by this Agreement or with the prior written
consent of DDI, from the date hereof through the Closing, the Sellers will not
permit the Company to:
(i) borrow any funds or otherwise become subject to,
whether directly or by way of guaranty or otherwise, any indebtedness
for borrowed money;
(ii) sell, lease, license or otherwise dispose of any of
the assets of the Company, except in the ordinary course of business and
consistent with past practice;
(iii) create, or permit to be created, any Encumbrance
upon any of the assets of the Company, except (A) liens for Taxes not
due; (B) purchase money security interests; and (C) mechanics' liens
being disputed by the Company in good faith;
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(iv) alter the manner of keeping its books, accounts or
records or the accounting practices therein reflected;
(v) enter into any agreement or commitment having a term
in excess of one year;
(vi) cancel any debts or waive any claims or rights of
substantial value; or
(vii) agree or otherwise commit, whether in writing or
otherwise, to do any of the foregoing.
3.2 DILIGENCE IN PURSUIT OF CONDITIONS PRECEDENT. Buyer and the Sellers
shall each exercise all reasonable diligence to fulfill their respective
obligations hereunder and shall cooperate fully with the other Party in regard
to same to accomplish the Closing. The Sellers shall use their best efforts to
obtain all necessary third-party consents to the consummation of the
transactions contemplated hereby, including, without limitation, any consents
required under or in connection with any of the Contracts, required permits or
licenses or any other documents by reason of the change in control of the
Company affected by the sale of the Interests to Buyer, by operation of law, or
otherwise. In the event that the Sellers are unable to obtain any such consent,
the Sellers shall attempt on or prior to Closing to make alternative
arrangements reasonably acceptable to Buyer to afford Buyer the benefit of any
such Contract, permit or license or the equivalent thereof; provided, however,
that Buyer shall not be obligated to assume the Company's obligations under any
Contract unless and until the consent to its assignment has been obtained.
3.3 ACCESS TO INFORMATION. Prior to the Closing Date, upon reasonable
prior notice and during normal working hours, the Sellers shall cause the
Company to, subject to such limitations or procedures as may be necessary to
protect or preserve the attorney-client privilege or the work product doctrine,
(a) give Buyer and its authorized representatives reasonable access to the
Company Facilities and to the books and records of the Company; (b) permit Buyer
and all such persons to make such inspections as they may reasonably request;
and (c) cause its managers to furnish Buyer and all such persons with such
financial and operating data and other information with respect to the Business
or the Company as Buyer may from time to time reasonably request. Buyer's
actions under this Section 3.3 shall be conducted with the consent of the
Sellers (which shall not be unreasonably withheld) and in such a manner as not
to interfere unreasonably with the operations or commercial relationships of the
Company.
3.4 NO SOLICITATION. Between the date hereof and the earlier to occur of
the Closing Date or the termination of this Agreement, neither the Company, the
Sellers nor any of their affiliates, managers, members, representatives or
agents shall solicit, encourage (including by way of furnishing any non-public
information concerning all or a portion of Business or the Company) or consider
any other acquisition proposal. As used in this Section 3.4, the phrase
"acquisition proposal" shall mean a proposal for the acquisition of the Company,
all or a portion of the Business, all or a portion of the Interests, or all or a
substantial portion of the assets of the Company.
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3.5 NON-COMPETITION AGREEMENT. Chris Moore, Melody Moore and Norman
Moeder will each execute and deliver to Buyer a Non-Competition Agreement,
substantially in the form of EXHIBIT A attached hereto.
3.6 FURTHER ASSURANCES. At any time or from time to time after the
Closing, the Sellers shall, at the request of Buyer or Buyer's counsel, execute
and deliver any further instruments or documents and take all such further
action as Buyer or Buyer's counsel may reasonably request in order to evidence
or otherwise facilitate the consummation of the transactions contemplated
hereby.
3.7 TAX ELECTIONS. Each Party agrees that it will not make any election
pursuant to the Code which would have the effect of increasing the amount of tax
owed by the other Party as a result of the transactions contemplated herein,
unless such Party shall make provision to pay such additional amount of tax, and
any tax thereon, which may be applicable.
3.8 WAIVER OF RIGHT OF FIRST REFUSAL. Each of the Sellers
unconditionally, on their own behalf as holders of Interests in the Company and
on behalf of the Company, hereby waives any right to notice and first purchase
contained in Section 4.3 of the Operating Agreement of the Company, and such
waiver shall be deemed to satisfy the written consent and filing requirements
contained in Section 4.3 of the Operating Agreement of the Company.
ARTICLE 4 - CONDITIONS TO CLOSING
4.1 GENERAL CONDITIONS. The obligations of each Party to effect the
transactions contemplated by this Agreement shall be subject to (i) termination
of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of
1976, if applicable; (ii) there being no order, statute, rule, regulation,
executive order, injunction, stay, decree or restraining order having been
enacted, entered, promulgated or enforced by any court of competent jurisdiction
or governmental or regulatory authority or instrumentality that prohibits the
consummation of the transactions contemplated hereby, and (iii) no litigation or
governmental proceeding seeking such an order shall be pending or threatened.
4.2 CONDITIONS TO THE SELLERS' OBLIGATIONS. The Sellers' obligations to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment of the following conditions, any of which may be waived by the
Sellers in their sole discretion:
(a) BUYER'S PERFORMANCE. Buyer shall have performed, in all
material respects, the obligations required under this Agreement to be performed
by it on or prior to the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Buyer contained herein shall be true and correct, in all material
respects, at and as of the Closing Date, as if made at and as of such time
except to the extent that a different time is specifically stated in such
representations and warranties and except as otherwise contemplated by
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this Agreement, and a certificate of Buyer to such effect, substantially in the
form attached hereto as EXHIBIT D, shall be delivered at Closing.
(c) PAYMENTS. The Sellers shall have received from Buyer the
Purchase Price as provided in Section 1.3.
(d) OPINION OF COUNSEL OF DDI. The Sellers shall have received an
opinion of Gibson, Dunn & Crutcher LLP dated as of the Closing Date, which
opinion shall cover matters customarily addressed in similar transactions and
shall be in form and substance reasonably satisfactory to counsel for the
Sellers.
4.3 CONDITIONS TO BUYER'S OBLIGATIONS. Buyer's obligations to consummate
the transactions contemplated by this Agreement shall be subject to the
fulfillment of the following conditions, any of which may be waived by Buyer in
its sole discretion:
(a) THE SELLERS' PERFORMANCE. The Seller shall have performed, in
all material respects, the obligations required under this Agreement to be
performed by them on or prior to the Closing.
(b) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Sellers contained herein shall be true and correct, in all
material respects, at and as of the Closing Date as if made at and as of such
time except to the extent that a different time is specifically stated in such
representations and warranties and except as otherwise contemplated by
this Agreement, and a certificate of the Sellers to such effect, substantially
in the form of EXHIBIT B, attached hereto, shall be delivered at Closing.
(c) ABSENCE OF MATERIAL ADVERSE CHANGES. There shall not have
occurred between the date hereof and the Closing Date any material adverse
change in the operations, condition (financial or otherwise), prospects or
affairs of the Company, the Business or any portion thereof.
(d) APPROVALS AND CONSENTS. The Sellers shall have received all
necessary consents, approvals and authorizations, and achieved satisfaction of
any third party requirements, as are necessary to consummate the transactions
contemplated hereby. In addition, Buyer shall have received any consents or
approvals necessary in order to consummate the transactions contemplated hereby
pursuant to any indenture, credit agreement or other material agreement pursuant
to which Buyer is bound.
(e) OPINION OF COUNSEL OF THE SELLERS. Buyer shall have received
an opinion of Stinson, Lasswell & Wilson, L.C., or such other counsel as may be
acceptable to Buyer, dated as of the Closing Date, substantially in the form of
EXHIBIT C, attached hereto, which opinion shall cover matters customarily
addressed in similar transactions and shall be in form and substance reasonably
satisfactory to counsel for Buyer and shall expressly permit parties providing
financing to Buyer to rely upon its contents to the same extent as if such
opinion were addressed and delivered separately to such financing sources.
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(f) DUE DILIGENCE. Buyer shall have completed its business,
financial, legal and other due diligence (including, without limitation, any
environmental inspections and review of agreements and/or other documents or
circumstances referred to in the Schedules hereto) to its reasonable
satisfaction on or before the Closing Date.
(g) NON-COMPETITION AGREEMENT. Moore Labels shall have received
from Chris Moore, Melody Moore and Norman Moeder executed Non-Competition
Agreements, substantially in the form of EXHIBIT A attached hereto.
(h) ASSIGNMENTS. Buyer shall have received from the Sellers the
Assignments.
(i) CONSUMMATION OF THE STOCK PURCHASE AGREEMENT. Buyer shall
have received from the Stockholders an executed Stock Purchase Agreement and the
transactions contemplated thereunder shall have been consummated.
ARTICLE 5 - TERMINATION
5.1 TERMINATION. This Agreement may be terminated prior to Closing as
follows:
(a) at the election of the Sellers, if any one or more of the
conditions precedent to their obligation to close contained in Section 4.1 or
4.2 above have not been fulfilled, through no fault of the Sellers, on or before
August 31, 1997, which date may in all events be extended by mutual written
agreement of the Sellers and Buyer;
(b) at the election of Buyer, if any one or more of the
conditions precedent to its obligation to close contained in Section 4.1 or 4.3
have not been fulfilled, through no fault of Buyer, on or before August 31, 1997
which date may in all events be extended by mutual written agreement of the
Sellers and Buyer; or
(c) at any time on or prior to the Closing Date by mutual written
consent of the Sellers and Buyer.
5.2 EFFECT OF TERMINATION. In the event that this Agreement is
terminated pursuant to Section 5.1, this Agreement shall terminate without any
liability or further obligation of either Party to the other, except for
Sections 8.4 and 8.7 which shall survive such termination. Notwithstanding the
foregoing, any termination pursuant to Section 5.1 shall not relieve either
Party of liability for any failure to perform or comply with any covenant or
other agreement contained in this Agreement prior to the date of termination or
any misrepresentation or breach of warranty, or constitute a waiver of any claim
with respect thereto.
ARTICLE 6 - INDEMNIFICATION AND CLAIMS
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made in this Agreement or in any ancillary document shall survive the
Closing Date for a period of three years following the Closing Date (except for
(a) the representations and
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warranties set forth in Sections 2.1(a), 2.1(b), 2.1(c) and 2.1(d), which
representations and warranties shall survive indefinitely without limitation;
(b) the representations and warranties set forth in Section 2.1(l), which shall
survive for a period of five years following the Closing Date; and (c) the
representations and warranties with respect to Taxes, which shall survive until
all applicable statutes of limitation (including any extensions thereof) have
expired) and shall thereupon expire together with any right to indemnification
for breach thereof. The limitations set forth above regarding the survival of
claims for breach of representations and warranties shall not apply to any
claims arising out of fraud, willful misconduct or gross negligence in the
making of the representations and warranties set forth herein.
6.2 INDEMNIFICATION BY THE SELLERS. Subject to the limitations contained
in Section 6.5 below, from and after the Closing Date, each of the Sellers,
jointly and severally, and their respective successors and assigns (such
entities being collectively hereinafter referred to for purposes of this Article
6 as "the Sellers") shall defend, indemnify and hold Buyer, the Company and
their respective successors and assigns harmless to the extent provided in this
Article 6 from and against any and all losses, damages, liabilities, claims,
demands, judgments, settlements, costs and expenses contingent or otherwise,
matured or unmatured, of any nature whatsoever (including reasonable attorneys'
fees) ("Losses"), together with interest on cash disbursements in respect
thereof at an annual rate of interest equal to 10% per annum based on actual
days elapsed from the date such cash disbursements are made until the date Buyer
or the Company is indemnified therefor, resulting from or arising out of the
following:
(a) any Losses (irrespective of whether such liabilities arise
out of a breach of any representation or warranty contained herein) arising,
directly or indirectly, from:
(i) Any liability or obligation (absolute, matured,
unmatured, contingent or otherwise) of the Sellers or the Company
arising out of (A) any pending or threatened Proceeding that is pending
or threatened as of the Closing Date; or (B) any negligent, reckless or
unlawful action or inaction of the Sellers or the Company prior to the
Closing Date (whether based on contract, tort, common law or otherwise)
except to the extent such liability or obligation is reflected on the
Interim Balance Sheet and arose in the ordinary course of business (it
being understood that to the extent any liability of Buyer results from
the combined effect or duration of actions or inactions on the part of
each of the Company, the Sellers and Buyer, the apportionment of such
liability shall be determined pursuant to equitable principles of
contribution);
(ii) Any liabilities or obligations arising out of defects
in, or damages to persons or property arising out of defects in products
manufactured or sold by the Company on or prior to the Closing Date
which are not specifically reflected on the Interim Balance Sheet; and
(iii) Any liabilities or obligations of the Company
existing on the Closing Date which should have been accrued on the
Interim Balance Sheet in accordance with the Company's past accounting
practices but which were not so accrued;
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(b) any breach of any representation or warranty of the Sellers
contained in this Agreement; or
(c) any non-performance, partial or total, of any covenant or
agreement of the Sellers contained in this Agreement.
Other than a claim by a third party, which shall be subject to the
procedures in Section 6.6, if Buyer incurs any Loss, liability or deficiency
which it believes is subject to indemnity under this section, Buyer shall give
the Sellers written notice of its claim for indemnity, and the Sellers shall
have thirty (30) days to respond in writing objecting to such claim. If the
Sellers do not object to the claim, the Sellers shall pay the liability or
deficiency claimed by Buyer within thirty (30) days from the date of Buyer's
written notice. If the Sellers object to the claim, the dispute shall be
resolved in the manner contemplated by Section 8.11 below.
6.3 INDEMNIFICATION BY BUYER. From and after the Closing Date, Buyer
shall indemnify and hold the Sellers harmless to the extent provided in this
Article 6 from and against any and all Losses, together with interest on cash
disbursements in respect thereof at an annual rate of interest equal to 10% per
annum based on actual days elapsed from the date such cash disbursements are
made until the date the Sellers are indemnified therefor, resulting from or
arising out of the following:
(a) any breach of any representation or warranty of Buyer
contained in this Agreement; or
(b) any non-performance, partial or total, of any covenant,
obligation or agreement of Buyer contained herein.
Any such liability, deficiency or indemnity shall be paid by Buyer and
its successors or assigns within thirty (30) days from the date the Sellers
notify Buyer or its successors or assigns that they have incurred or has become
subject to the referenced liability or deficiency and provides Buyer with
documentation demonstrating that the Sellers have incurred such liability or
deficiency; provided, however, that any dispute arising in connection with the
foregoing shall be resolved in the manner contemplated by Section 8.11 below.
6.4 ENVIRONMENTAL MATTERS.
(a) In addition to the provisions of Section 6.2, each of the
Sellers, jointly and severally, shall defend, indemnify and hold harmless Buyer,
and shall reimburse Buyer for, any Losses (including, but not limited to, costs
of investigation, Cleanup (as defined in Section 6.4(a)(i)) or other remediation
and reasonable attorney fees) arising from or in connection with:
(i) (A) any cleanup, removal, containment, monitoring or
other remediation (collectively, "Cleanup") required by applicable
Environmental Law or (B) or any bodily injury (including, but not
limited to, sickness, disease or death), personal injury, property
damage (including, but not limited to, trespass, nuisance, wrongful
eviction or deprivation of the use of real property) or other damage
("Non-Cleanup Injury") arising from, any Environmental Condition
existing on or prior to the Closing Date or any
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<PAGE> 26
Hazardous Material that was (1) generated, used, stored, treated,
released, discharged, disposed of, transported or arranged by contract,
agreement or otherwise to be stored, treated, released, discharged,
disposed of, or transported (collectively, "Generated") by the Company
on or prior to the Closing Date; (2) present on any Company Facility if
such Hazardous Material emanated from any Company Facility or other
property on or before the Closing Date; (3) present on any other
property if such Hazardous Material was Generated by the Company on or
prior to the Closing Date and emanated from any Company Facility; or (4)
present on any other property if such Hazardous Material was Generated
by the Company on or prior to the Closing Date and emanated from any
other property; and
(ii) any failure by the Company or its agents,
representatives, managers, members, interestholders, controlling persons
or affiliates to comply at any time prior to the Closing Date with any
Environmental Law.
(b) In addition to the provisions of Section 6.3, Buyer shall
defend, indemnify and hold harmless the Sellers, and shall reimburse the Sellers
for, any Losses (including, but not limited to, costs of investigation, Cleanup
or other remediation and reasonable attorney fees) arising from or in connection
with:
(i) (A) any Cleanup required by applicable Environmental
Law or (B) or any Non-Cleanup Injury arising from, any Hazardous
Material that was (1) Generated by the Company after the Closing Date;
(2) present on any Company Facility if such Hazardous Material was
Generated by the Company after the Closing Date and emanated from any
Company Facility or other property after the Closing Date ; (3) present
on any other property if such Hazardous Material was Generated by the
Company after the Closing Date and emanated from any Company Facility
after the Closing Date; or (4) present on any other property after the
Closing Date if such Hazardous Material was Generated by the Company
after the Closing Date and emanated from any other property after the
Closing Date; and
(ii) any failure by Buyer or its agents, representatives,
employees, officers, directors, shareholders, controlling persons or
affiliates to comply at any time after the Closing Date with any
Environmental Law relating to the Company.
(c) The indemnified Party shall give the indemnifying Party
written notice within 30 days of the indemnified Party's knowledge of any
investigation, proceeding, liability or deficiency which the indemnified Party
believes will be subject to indemnity under this section. The indemnifying Party
shall have the right to participate in any Cleanup and related proceedings. Any
dispute shall be resolved in the manner contemplated by Section 8.11 below.
6.5 LIMITATION ON INDEMNIFICATION. (a) Neither the Sellers, Buyer nor
any of their respective affiliates, directors, officers, managers, members,
employees or agents shall be entitled to make any claim for indemnification
under this Article 6 with respect to any breach of any particular representation
or warranty contained herein, after the date on which such representation and
warranty ceases to survive pursuant to Section 6.1; provided, however, that, if
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<PAGE> 27
prior to the close of business on the date any representation or warranty ceases
to survive, the indemnifying party shall have received written notification of a
claim for indemnity hereunder specifying in reasonable detail the basis of any
such claim, and such claim shall not have been finally resolved or disposed of
at such date, such claim shall continue as a basis for indemnity until it is
finally resolved or disposed of, subject to applicable statutes of limitation.
(b) Other than Losses resulting from, or arising out of,
Section 6.2(a)(i), Section 6.4 or by reason of a breach of the representations
set forth in Sections 2.1(a), (b), (c) or (d) (collectively, the "Excluded
Items"), the Excluded Items, the Sellers' responsibility for Losses resulting
from, or arising out of, facts or circumstances not disclosed to Buyer in this
Agreement (including the Schedules attached hereto) shall be limited to a dollar
amount equal to the Purchase Price (the "Cap"), provided, further, that the Cap
shall not apply to any Losses which Buyer may suffer or incur by reason of fraud
or willful misconduct on the part of the Sellers.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the limitations set forth in this Section 6.5 shall not apply to
Article 7.
6.6 THIRD PARTY CLAIMS. If a claim by a third party is made against an
indemnified Party, and if such indemnified Party intends to seek indemnity with
respect thereto hereunder, the indemnified Party shall promptly (and in any case
within 30 days of such claim being made and within the period provided in
Section 6.5, if applicable) notify the indemnifying Party of such claim. The
indemnifying Party shall have 60 days after receipt of such notice to, without
reserving any rights, undertake, conduct and control, through counsel of its own
choosing and at its own expense, the settlement or defense thereof, and the
indemnified Party shall cooperate with it in connection therewith; provided that
(a) the indemnified Party may take any action necessary to preserve any rights
or defenses in connection with a claim prior to the indemnifying Party
undertaking the defense thereof; (b) after undertaking the settlement or defense
of a claim, the indemnifying Party shall permit the indemnified Party to
participate in such settlement or defense through counsel chosen by the
indemnified Party, provided the fees and expenses of such counsel shall be borne
by the indemnified Party and (c) the indemnifying Party shall promptly reimburse
the indemnified Party for the full amount of any Loss resulting from such claim
and all related expenses incurred by the indemnified Party within the limits of
this Article 6, including any expenses and attorney fees relating to the defense
of the claim prior to the indemnifying Party undertaking the settlement or
defense thereof (except for expenses contemplated by clause (b) preceding); and
(d) that any such settlement or defense by the Sellers shall be subject to
approval by Buyer, which approval shall not be unreasonably withheld. So long as
the indemnifying Party is reasonably contesting any such claim in good faith,
the indemnified Party shall not pay or settle any such claim. Notwithstanding
any of the foregoing, the indemnified Party shall have the right to pay or
settle any such claim, provided that in such event it shall waive any right to
indemnity therefor by the indemnifying Party. Subject to the limitations set
forth in Section 6.5, if the indemnifying Party does not notify the indemnified
Party within 60 days after the receipt of the indemnified Party's notice of
claim of indemnity hereunder that it elects to undertake the settlement or
defense thereof, the indemnified Party shall have the right to contest, settle
or compromise the claim in the exercise of its reasonable judgment (but with due
regard for obtaining the most favorable outcome reasonably likely under the
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<PAGE> 28
circumstances, taking account of costs and expenditures) at the expense of the
indemnifying Party.
ARTICLE 7 - TAXES
7.1 TAX INDEMNITY.
(a) For purposes of this Article 7, the term "Tax Indemnitee"
shall mean and include Buyer and any corporation or other entity which is,
directly or indirectly, controlled by Buyer, or any successor in interest to, or
transferee of, Buyer, as the case may be, as determined from time to time,
including, without limitation, the Company and any successor in interest to, or
transferee of, the Company.
(b) Notwithstanding Article 6, each of the Sellers shall,
jointly and severally, indemnify and hold harmless each Tax Indemnitee on an
after-tax basis from and against the payment of all Taxes and any Losses
(including, without limitation, reasonable expenses of investigation and
attorneys' fees and expenses) arising out of or incident to the imposition of
any Tax:
(i) for which liability is or shall be incurred by an
affiliated group (as defined in Section 1504(a) of the Code as in effect
during the relevant period) of which the Company or any predecessor in
interest has been a member at any time prior to the Closing Date;
(ii) for which liability is or shall be incurred by the
Company or any predecessor in interest with respect to any taxable year
or period beginning prior to the Closing Date;
(iii) resulting from the breach of any representation or
warranty of the Sellers contained in Section 2.1(u) hereof; or
(iv) triggered or resulting from the transactions
contemplated by this Agreement;
provided, however, that for purposes of computing the amount of the Tax
liability subject to indemnification pursuant to paragraph (ii) of this
subsection (b), any such taxable year or other period that ends after the
Closing Date shall be deemed to end at the close of business on the Closing
Date.
(c) The Company shall cause to be prepared all returns which
are in respect of the Taxes of the Company or any predecessor in interest for
taxable years or periods ending on or prior to the Closing Date but which are
due to be filed (taking into account any applicable extensions of time for
filing) after the Closing Date. In preparing such returns, the Company shall
exercise its judgment relating to the determination of the timing of items of
income and deduction in good faith and in a means consistent with prior
practice. In the case of any such return, (i) the Sellers, upon proper
notification and satisfactory documentation of the amount of Tax due with
respect to the return in question, shall pay to the Company within three (3)
days of demand by the
23
<PAGE> 29
Company the amount of Tax due to the extent that the Tax due exceeds the amount
of any accrual on the Closing Balance Sheet for such Tax due; or (ii) Buyer,
upon proper notification and satisfactory documentation of the amount of Tax due
with respect to the return in question, shall pay to the Sellers, within three
(3) days of demand by the Sellers, the amount of Tax due to the extent that the
Tax due is less than the amount of any accrual on the Closing Balance Sheet for
such Tax due.
(d) The Tax Indemnitee and the Sellers shall cooperate with
each other in the conduct of any audit or other proceedings involving the
Company or any entity with which it is consolidated or combined for any Tax
purposes. In the event a written claim shall be made by any governmental
authority which, if successful, would result in an obligation on the part of any
of the Sellers to indemnify any Tax Indemnitee pursuant to this section, the Tax
Indemnitee shall within ten (10) days of receipt of such claim give notice to
the Sellers of the same in writing specifying in reasonable detail the basis of
such claim, action or suit and the facts pertaining thereto, and shall not make
payment of the Tax claimed for at least thirty (30) days after the giving of
such notice. If any of the Sellers wishes to contest such claim, the Sellers
shall have the right to control and make all decisions regarding such audit or
contest, including selection of a forum for contest, and the Tax Indemnitee
agrees that in such event it shall execute, deliver and file a power of attorney
naming the Sellers and its counsel or appropriate agent as attorneys-in-fact for
such audit or contest and such other instruments or documents as may be
reasonably requested by any the Sellers to carry out the provisions of this
paragraph; provided, however, that without the consent of Buyer, the Sellers
shall not settle or otherwise compromise any such audit or contest if it would
have the effect of materially increasing the Company's liability for Taxes for
any taxable period after the Closing Date.
7.2 PURCHASE PRICE ADJUSTMENT. Any indemnification payments made
pursuant to this Article 7 shall be treated by the Parties as a Purchase Price
adjustment unless determined otherwise in a final determination as defined in
Section 1313 of the Code.
7.3 SURVIVAL. All indemnifications, covenants, agreements,
representations and warranties relating to Taxes contained in this Agreement
shall survive until all applicable statutes of limitations (including extensions
thereof) have expired with respect to each taxable period or item that is the
subject of such indemnification, covenant, agreement, representation or
warranty.
ARTICLE 8 - GENERAL PROVISIONS
8.1 NOTICES. Any notice, request or other communication required or
allowed under this Agreement shall be in writing and shall be deemed given (a)
upon personal delivery, (b) on the first business day after receipted delivery
to a courier service which guarantees next-business-day delivery, under
circumstances in which such guaranty is applicable, or (c) on the earlier of
delivery or three business days after mailing by United States certified mail,
postage and fees prepaid, to the appropriate Party at the address set forth
below or to such other address as the Party so notifies the other in writing.
Any notice may also be sent by telecopier, but shall be deemed to have been
given when delivered by one of the methods listed above.
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<PAGE> 30
<TABLE>
<S> <C>
As to Buyer:
By Personal Delivery, Courier Moore Labels, Inc.
or Certified Mail to: c/o Data Documents, Inc.
4205 South 96th Street
Omaha, Nebraska 68127
Attention: Mr. Walter J. Kearns
By Telecopier Transmission: (402) 339-0485 accompanied by telephonic
confirmation of transmission to (402) 339-0900
With a Copy to: Gibson, Dunn & Crutcher LLP
By Personal Delivery, Courier 2029 Century Park East
or Certified Mail to: Suite 4000
Los Angeles, CA 90067
Attention: Kenneth M. Doran, Esq.
By Telecopier Transmission: (310) 551-8741 accompanied by telephonic
confirmation of transmission to (310) 557-8127
As to the Sellers:
If to Chris Moore or Melody Moore, by Christopher C. and Melody J. Moore
Personal Delivery, Courier or Certified 2534 North Lake Ridge Court
Mail to: Wichita, Kansas 67205
By Telecopier Transmission: (316) 721-3486 accompanied by telephonic
confirmation of transmission to (316) 721-3486
If to Norman Moeder, by Personal Delivery, Mr. Norman A. Moeder
Courier or Certified Mail to: 11224 Lydia
Wichita, Kansas 67209
By Telecopier Transmission: (316) 729-0859 accompanied by telephonic
confirmation of transmission to (316) 729-0859
With a copy to: Stinson, Lasswell & Wilson, L.C.
By Personal Delivery, Courier or Certified 300 West Douglas, Suite 430
Mail to: Wichita, Kansas 67202
Attention: David K. Holmes, Esq.
By Telecopier Transmission: (316) 264-3791 accompanied by telephonic
confirmation of transmission to (316) 264-9137
</TABLE>
8.2 ENTIRE AGREEMENT; INCORPORATION; SUBSEQUENT MODIFICATIONS. This
Agreement, together with all Exhibits and Schedules attached hereto, contain the
entire agreement between the Parties and supersede all prior oral or written
agreements between the Parties with respect to the subject matter hereof, and no
Party shall be liable or bound to the other in any manner by any warranties,
representations, covenants or agreements except as specifically set
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<PAGE> 31
forth herein or expressly required to be made pursuant hereto. No modification
of this Agreement shall be effective unless set forth in writing and signed by
all of the Parties hereto.
8.3 ASSIGNMENT; BINDING EFFECT; THIRD PARTY BENEFICIARIES. This
Agreement shall not be assignable by any of the Parties hereto; provided,
however, that (a) DDI may assign this Agreement to any direct or indirect wholly
owned subsidiary, (b) DDI may assign to its lenders all or any portion of its
rights under this Agreement (including, without limitation, its rights to
indemnification pursuant to Articles 6 or 7 hereof) and (c) should DDI sell,
transfer, convey, pledge or encumber all or any portion of the assets or
securities purchased hereunder, DDI may assign rights under this Agreement
(including all or part of its rights to indemnification pursuant to Articles 6
or 7 hereof) appurtenant to such assets or securities without the prior consent
of the Sellers. This Agreement shall be binding upon, and inure to the benefit
of, the Parties and their respective successors and assigns. This Agreement
shall not benefit or create any right or cause of action in or on behalf of any
person other than the Parties.
8.4 EXPENSES OF SALE. Each Party shall bear its own direct and indirect
costs and expenses incurred in connection with the negotiation and preparation
of this Agreement, including the execution, delivery and performance of that
certain Letter of Intent dated May 22, 1997, and the consummation and
performance of the transactions contemplated hereby; provided, however, that in
the event the transactions contemplated hereby are consummated, the expenses
incurred by the Company will be paid by the Company and the Purchase Price will
be reduced on a corresponding dollar for dollar basis.
8.5 KNOWLEDGE. Certain of the representations and warranties are made
"to the best knowledge" or "to the knowledge." The Parties hereto agree that the
meaning of such expression shall in all cases be understood as comprising actual
knowledge and belief of the Party making such representations and warranties or
any officer, director, manager or employee of such Party after inquiry of such
Party's employees and representatives and review of such Party's files, books
and records.
8.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and such fully executed copies shall be considered an original
which together shall constitute one Agreement.
8.7 INTERPRETATION AND GOVERNING LAW. This Agreement shall be construed
as though prepared by both Parties hereto. Captions at the beginning of each
section and each subsection are solely for the convenience of the Parties and
shall not modify the text of this Agreement. This Agreement shall be construed
and governed by the laws of the State of Delaware without giving effect to the
principles of conflicts of laws thereof.
8.8 SEVERABILITY. If any portion of this Agreement is declared by a
court of competent jurisdiction to be invalid or unenforceable after all appeals
have either been exhausted or the time for any appeals to be taken has expired,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
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<PAGE> 32
8.9 REFERENCE TO DAYS. All references to days shall be calendar days
unless otherwise expressly stated. When the last day prescribed for performing
an act falls on Saturday, Sunday or a legal holiday, the performance of such act
shall be considered timely if it is performed on the next succeeding day which
is not a Saturday, Sunday or legal holiday.
8.10 PRESS RELEASE. Except as provided below, prior to the Closing, the
Parties will consult with each other before issuing any press releases or
otherwise making any public statements with respect to this Agreement and the
transactions contemplated hereby, and neither Party shall issue any such press
release nor make any such public statement without the prior written consent of
the other Party, except as may be required by law.
8.11 DISPUTE RESOLUTION. To the fullest extent permitted by applicable
law, any controversy, dispute or claim arising out of, in connection with, or in
relation to the interpretation, performance or breach of this Agreement or
otherwise arising out of the execution of this Agreement, including any claim
based on contract, tort or statute, shall be determined, at the request of any
Party, by arbitration conducted in Omaha, Nebraska in accordance with and to the
extent permitted by the Rules for Commercial Arbitration of the American
Arbitration Association (the "AAA"), as amended and in effect on the date the
demand for such arbitration is filed with the AAA. The arbitrator shall set
forth his determination in writing (which shall be sent to each party to such
arbitration) and shall enumerate in reasonable detail the basis of his
determination. To the fullest extent permitted by applicable law, any judgment
or award rendered by the arbitrator will be final, conclusive and binding.
Judgment may be entered on any final arbitration award by any federal or state
court or any other court having jurisdiction thereof. The pendency of any
arbitration under this Section 8.11 shall not relieve any Party of its
obligations under this Agreement. To the fullest extent permitted by applicable
law, any controversy concerning whether a dispute is an arbitrable dispute or as
to the interpretation or enforceability of this Section 8.11 shall be determined
by the arbitrator. To the fullest extent permitted by applicable law, if any
Party hereto shall resort to legal proceedings for injunctive or any other
similar relief pending the outcome of any such arbitration proceeding or prior
to the initiation thereof, such Party shall not be deemed to have waived its
rights to cause such matter or any other matter to be referred to arbitration
pursuant to this Section 8.11. The arbitrator shall be a retired or former judge
of any appellate court or Superior Court of the States of Nebraska, Kansas or
Missouri, any United States appellate court or the United States District Court
for any Nebraska, Kansas or Missouri district, provided such individual has
substantial professional experience with regard to corporate and transactional
legal matters. It is intended that this agreement to arbitrate be valid,
enforceable and irrevocable. The arbitrator shall have authority in his
discretion to grant injunctive relief, award specific performance and impose
sanctions upon any party to any such arbitration. In his award, the arbitrator
shall allocate, among the Parties to the arbitration all costs of arbitration,
including the fees and expenses of the arbitrator and reasonable attorneys'
fees, costs and expert witness expenses of the Parties.
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<PAGE> 33
IN WITNESS WHEREOF, each of the Parties have caused this Agreement to be
executed in their respective names individually and by their respective
corporate officers or representatives, duly authorized, as of the day and year
first above written.
SELLERS:
/s/
-----------------------------------------------
CHRISTOPHER C. MOORE, an individual
/s/
-----------------------------------------------
MELODY J. MOORE, an individual
/s/
-----------------------------------------------
NORMAN A. MOEDER, an individual
BUYER: MOORE LABELS, INC.,
a Kansas corporation
By: /s/
--------------------------------------------
Christopher C. Moore, Chief Executive
Officer
DATA DOCUMENTS, INC.
a Nebraska corporation
By: /s/
--------------------------------------------
Walter J. Kearns, President and
Chief Executive Officer
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<PAGE> 34
IN WITNESS WHEREOF, each of the Parties have caused this Agreement to be
executed in their respective names individually and by their respective
corporate officers or representatives, duly authorized, as of the day and year
first above written.
SELLERS:
/s/ Christopher C. Moore
-----------------------------------------------
CHRISTOPHER C. MOORE, an individual
/s/ Melody J. Moore
-----------------------------------------------
MELODY J. MOORE, an individual
/s/ Norman A. Moeder
-----------------------------------------------
NORMAN A. MOEDER, an individual
BUYER: MOORE LABELS, INC.,
a Kansas corporation
By: /s/ Christopher C. Moore
--------------------------------------------
Christopher C. Moore, Chief Executive
Officer
DATA DOCUMENTS, INC.
a Nebraska corporation
By: /s/ Walter J. Kearns
Walter J. Kearns, President and
--------------------------------------------
Chief Executive Officer
28
<PAGE> 1
EXHIBIT 99.1
[LOGO]
DATA DOCUMENTS
FOR IMMEDIATE RELEASE:
DATA DOCUMENTS INCORPORATED SIGNS AGREEMENT
TO ACQUIRE MOORE LABELS, INC.
OMAHA, NE--JULY 14, 1997--Data Documents Incorporated (Nasdaq:DDII) today
announced it has entered into a definitive agreement to acquire Moore Labels,
Inc. of Wichita, Kansas, a privately held supplier of pressure-sensitive labels
used in the pharmaceutical, food, plastics and miscellaneous manufacturing
industries. Moore Labels had revenues of $13.5 million in 1996.
Upon completion of the acquisition, Moore Labels will become a wholly
owned subsidiary of Date Documents. Terms of the transaction were not disclosed.
The acquisition is subject to completion of due diligence.
"This is an important move for Data Documents," said Walter J, Kearns,
Data Documents chairman, president and chief executive officer. "The acquisition
reflects our strategy to further penetrate high-growth segments of the
pressure-sensitive label market."
"Moore Labels will be a strong complement to our existing prime label
offerings "Kearns continued. "Data Documents entered the prime label market in
1995 with the acquisition of Cal Emblem. For many years, we have been a leader
in information systems labels, This latest acquisition will further enhance our
position in the pressure-sensitive label market."
In business since 1970, Moore Labels customers include major
corporations located nationwide. "The company has established a reputation for
unusually fast service and excellent quality products," Kearns said.
Data Documents, with sales of $246.5 million in 1996, is a leading
designer and provider of custom business forms, pressure-sensitive label
products, and forms management services and systems. These products and services
enable customers to enhance productivity and reduce costs associated with
managing information. Additionally, the company's InteliMail(R) division
provides specialized direct mail products and services to its corporate
customers nationwide.
Data Documents' label group has major operations in Dallas, Fresno,
Denver and Kansas City and sales offices nationwide.
For more information about Data Documents, visit the company's web site:
www.datadocuments.com.
-30-
For more Information contact Anita Meints, Data Documents Director of Corporate
Communications, (402) 593-6272.
