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) SEPTEMBER 17, 1997
PACKAGING PLUS SERVICES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 0-18094 11-2781803
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(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.)
FORMATION)
20 SOUTH TERMINAL DRIVE, PLAINVIEW, NEW YORK 11803
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (516) 349-1300
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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Item 2. ACQUISITION AND DISPOSITION OF ASSETS.
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On September 17, 1997 (the "Closing Date"), the Registrant
consummated a purchase of all of the outstanding capital stock of
each of Leone, Inc. ("Leone"), a California corporation, and Etc.
Etc. Color and Copy Centers, Inc. ("Color Copy"), a California
corporation (Leone and Color Copy are herein collectively referred
to as the "Companies"), pursuant to that certain Stock Purchase
Agreement (the "Stock Purchase Agreement") dated as of September 1,
1997, by and between the Registrant and Nick DeLeone (the sole
shareholder of each of Leone and Color Copy). In consideration for
all of the outstanding capital stock of the Companies, the
Registrant (i) issued to Mr. DeLeone 330,000 unregistered shares
(the "Shares") of the Registrant's common stock at a price of $1.00
per share, resulting in gross proceeds to the Registrant of
$330,000, (ii) $24,000 in cash, and (iii) agreed to make available
to Mr. DeLeone up to $75,000 to be used exclusively for the
operations of the Companies, $50,000 of which was paid to Mr.
DeLeone on the Closing Date, and $25,000 of which shall be made
available to Mr. DeLeone at the Registrant's discretion. In
addition, in connection with the acquisition of the Companies, the
Registrant assumed $147,000 of debt of the Companies, $50,000 of
which was paid off by the Registrant on the Closing Date. The
Shares, which are "restricted" securities, as that term is defined
by Rule 144 of the Securities Act of 1933, as amended (the "Act"),
are to be issued to Mr. DeLeone in four (4) equal installments
commencing with the first payment on the Closing Date, and the
remaining three equal payments to be made four, eight and twelve
months after the Closing Date, respectively.
The purchase price for the Companies is subject to adjustment
subsequent to the Closing Date. In the event that the combined gross
revenues generated by the Companies for the first twelve (12) months
after the Closing Date (the "Period") are less than $800,000, for
each $50,000 increment less than $800,000 in gross revenues, Mr.
DeLeone will immediately return ten percent (10%) of the Shares to
the Registrant. Furthermore, in the event that the combined gross
sales of the Companies equal at least $900,000 for the Period, and
the Companies have combined pre-tax earnings of $150,000 or more for
the Period, Mr. DeLeone shall receive a bonus of $60,000, payable in
shares of the Registrant's common stock, based on the average
closing bid price of the Registrant's common stock for the last five
(5) trading days of the Period.
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Mr. DeLeone will continue to serve as President and Chief
Executive Officer of the Companies for at least five (5) years,
unless terminated for cause, and will be paid a salary of $50,000
per annum. In addition, Mr. DeLeone shall serve as the President and
Chief Executive Officer of the Association of Packaging and
Carriers, Inc. ("APAC"), a subsidiary of the Registrant, for at
least five (5) years, unless terminated for cause, and will be paid
a salary of $75,000 per annum, plus the lesser of (i) 2% of the
gross revenues of APAC, or (ii) 15% of the pre-tax income of APAC.
In the event that Mr. DeLeone terminates his employment with either
the Companies or APAC for cause attributable to the Registrant's
material breach of the Stock Purchase Agreement or the Registrant's
gross misconduct, and such breach or misconduct is not cured within
thirty (30) days, then Mr. DeLeone, in addition to his salary that
is accrued up to the date of such termination, shall be entitled to
a cash severance payment of $62,500.
The Registrant has the right during the twelve (12) month
period from the Closing Date to repurchase 50% of the Shares at a
price per share equal to 110% of the original purchase price per
share.
The Companies are single source retailers specializing in
business services, including without limitation, providing office
supplies, business imaging, document output and copy services.
The disclosure contained herein is qualified in its entirety by
reference to the Stock Purchase Agreement, a copy of which is
annexed hereto as Exhibit A.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(a) Financial Statements.
As of the date of filing of this Current Report on Form 8-K, it
is impracticable for the Registrant to provide the financial
statements required by this Item 7(a). In accordance with Item
7(a)(4) of Form 8-K, such financial statements shall be filed by
amendment to this Form 8-K no later than 60 days after the date
hereof.
(b) Pro Forma Financial Information.
As of the date of this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the pro forma financial
information required by this Item
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7(b). In accordance with Item 7(b) of Form 8-K, such financial
information shall be filed by amendment to this Form 8-K no later
than 60 days after the date hereof.
(c) Exhibits EXHIBIT
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Stock Purchase Agreement Exhibit A
Press Release dated April 30, 1997 Exhibit B
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly authorized and caused the undersigned to sign this
Report on the Registrant's behalf.
PACKAGING PLUS SERVICES, INC.
By: /S/ RICHARD ALTOMARE
Richard Altomare, Chief
Executive Officer
Dated: October 2, 1997
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EXHIBIT A
STOCK PURCHASE AGREEMENT
FOR THE SALE OF THE CAPITAL STOCK OF
LEONE, INC.
AND
ETC. ETC. COLOR AND COPY CENTERS, INC.
FROM MR. NICK DELEONE
DATED AS OF SEPTEMBER 1, 1997
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A G R E E M E N T
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STOCK PURCHASE AGREEMENT, DATED AS OF SEPTEMBER 1, 1997, BY AND BETWEEN
MR. NICK DELEONE ("MR. DELEONE") AND PACKAGING PLUS SERVICES, INC., A NEVADA
CORPORATION ("PKGP").
W I T N E S S E T H:
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WHEREAS, PKGP DESIRES TO PURCHASE ALL OF THE ISSUED AND OUTSTANDING
SHARES OF CAPITAL STOCK OF LEONE, INC. AND ETC. ETC. COLOR AND COPY CENTERS,
INC., BOTH CALIFORNIA CORPORATIONS, HAVING THEIR PRINCIPAL OFFICES LOCATED IN
DANA POINT, CALIFORNIA; AND
WHEREAS, MR. DELEONE IS THE OWNER OF 40,000 SHARES OF COMMON STOCK OF
LEONE, INC. ("LEONE SHARES"), REPRESENTING 100% OF THE ISSUED AND OUTSTANDING
CAPITAL STOCK OF LEONE, INC. AND HE IS OWNER OF 100 SHARES OF COMMON STOCK OF
ETC. ETC. COLOR AND COPY CENTERS, INC., REPRESENTING 100% OF THE ISSUED AND
OUTSTANDING CAPITAL STOCK OF ETC. ETC. COLOR AND COPY CENTERS, INC. ("ETC.
SHARES") (COLLECTIVELY, THE FOREGOING COMPANIES SHALL BE REFERRED TO AS "OFFICE
QUICK" AND THE FOREGOING LEONE SHARES AND ETC. SHARES SHALL BE REFERRED TO AS
"OFFICE QUICK SHARES"), AND HE IS WILLING TO SELL ALL OF THE ISSUED AND
OUTSTANDING SHARES OF CAPITAL STOCK OF OFFICE QUICK SHARES TO PKGP; NOW,
THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL AGREEMENTS
HEREINAFTER SET FORTH, THE PARTIES HERETO AGREE AS FOLLOWS:
1. SALE AND PURCHASE OF CAPITAL STOCK OF OFFICE QUICK.
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1.1 SALE OF STOCK AND DELIVERY. Mr. DeLeone hereby agrees to sell,
transfer and deliver to PKGP, free of all liens and encumbrances, and PKGP
agrees to purchase from Mr. DeLeone, on
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the date fixed in accordance with Section 3 for the closing hereunder (the
"Closing Date"), the Office Quick Shares. Certificates for the Office Quick
Shares, endorsed in blank, shall be delivered by Mr. DeLeone to PKGP at the
Closing.
1.2 PURCHASE. The purchase price to be paid by PKGP to Mr. DeLeone for
Office Quick Shares shall be as follows:
(a) 330,000 PKGP's common shares, "restricted" (the "PKGP Shares"). PKGP
Shares shall be legended as of the Closing Date and delivered to Mr.
DeLeone in four equal installments, one-fourth at the Closing Date and
the remaining amount of Shares in three equal installments at four,
eight and twelve month intervals respectively, from the Closing Date;
(b) $24,000 cash; and
(c) $75,000, for use exclusively for the future operations of Office
Quick, to be made available to Mr. DeLeone as follows:
(i) $25,000 cash at Closing, to be deposited in the current "Office
Quick" bank account in California; and
(ii) $25,000 cash at Closing, to be deposited in a new "Office Quick"
account to be opened in the State of New York, with Richard
Altomare as the sole signatory on that account; and
(iii) the remainder at the discretion of the Chairman of PKGP.
1.3 ADJUSTMENT OF PURCHASE PRICE AND FIRST YEAR'S RESULTS. PKGP and Mr.
DeLeone agree that the purchase price for Office Quick Shares, will be adjusted
after the first year from the Closing Date, if gross revenue generated by Office
Quick fall below combined revenues for the first year of $800,000. Accordingly,
for every $50,000 less in revenues, Office Quick will
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immediately return to PKGP 10% of the number of PKGP Shares transferred to Mr.
DeLeone on the Closing Date. In addition, the following provision shall apply
for the first year's results:
If gross sales of Office Quick reach $900,000 and pretax earnings equal or
exceed $150,000 for the year following the Closing Date, then a bonus of $60,000
worth of PKGP Shares will be paid to Mr. DeLeone, valued at the average bid
price for the 5 days proceeding the end of the year following the Closing Date.
1.4 REPURCHASE OF SHARES OF PKGP. PKGP has the right for 12 months from
the Closing Date to repurchase fifty percent (50%) of the PKGP Shares for the
value of $1 (one dollar) per share set forth in subsection 1.2 (a) above, plus
10% per share.
1.5 COMPENSATION FOR MR. DELEONE. Mr. DeLeone will be paid an annual
salary of $75,000 as President and CEO of the Association of Packaging and
Carriers, Inc. ("APAC") and an annual salary of $50,000 as President and CEO of
Office Quick (collectively the "Salaries"), and he agrees to serve in those
positions, for at least five (5) years, unless such employment is terminated by
Mr. DeLeone's death, terminated by PKGP for cause attributed to his gross
misconduct, or terminated by Mr. DeLeone for cause attributed to PKGP's material
breach of this Agreement or its gross misconduct. In the event Mr. DeLeone
terminates such employment for cause attributed to PKGP's material breach of
this Agreement or PKGP's gross misconduct, and such breach or misconduct is not
cured within 30 days, then Mr. DeLeone, in addition to any salary, bonuses or
other compensation accrued up to the date of such termination, shall be entitled
to a cash severance payment of $62,500 payable in equal monthly installments
for the six consecutive months following such termination. The Salaries shall be
payable to Mr. DeLeone
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in equal installments once every two weeks beginning September 1, 1997. Also, in
addition to his salaries, as President and CEO of APAC, Mr. DeLeone will also
receive the lesser of: (i) two percent 2% of the gross revenues; or (ii) 15% of
pretax income; of APAC.
2. OTHER DELIVERIES AND ASSURANCE.
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2.1 OTHER DELIVERIES. At the Closing, in addition to the delivery of the
stock certificates for Office Quick Shares, in accordance with Section 1.1
hereof, Mr. DeLeone shall deliver to PKGP the minute books, certificates of
incorporation, by-laws, stock transfer books and corporate seals of Office Quick
and any of its subsidiaries.
2.2 ASSURANCES. Each party hereto shall take such other action from time
to time as the other party may reasonably request in order to more effectively
carry out the sale and the deliveries provided for in this Agreement.
3. CLOSING.
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Subject to the terms and conditions of this Agreement, the closing of the
transactions provided for herein (the "Closing") shall take place at the
officers of PKGP, 20 South Terminal Drive, Plainview, New York as of September
1, 1997 at 10:30 a.m., or at such other, place, date and time as may be mutually
agreed upon by Mr. DeLeone and PKGP.
4. MR. DELEONE'S REPRESENTATION AND WARRANTIES.
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Mr. DeLeone hereby represents and warrants to PKGP as follows:
4.1 ORGANIZATION AND GOOD STANDING. Office Quick and their subsidiaries,
if any, are corporations duly organized, validly existing and in good standing
under the laws of the State of California. Office Quick has authority to own,
operate and lease their properties and to carry on
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their businesses as now being conducted. Copies of the charter and By-Laws, and
all amendments thereto, of Office Quick and their subsidiaries have been
delivered to PKGP and are complete and correct as of the date hereof. Office
Quick is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of their properties owned or
leased or the nature of their activities makes such qualification necessary,
except where the failure so to qualify or to be in good standing would not have
a materially adverse effect on the business, operations, assets or financial
condition of Office Quick.
4.2 CAPITALIZATION. Office Quick has the authorized, issued and
outstanding capital stock set forth in Schedule A hereto. All of such issued and
outstanding shares are validly issued, fully paid and nonassessable. Office
Quick does not have authorized, issued or outstanding any other shares of
capital stock or any subscription or other rights to the issuance or receipt of
shares of its stock.
4.3 AUTHORIZATION. Mr. DeLeone has all requisite corporate power and
authority to enter into this Agreement and to carry out his obligations
hereunder. The execution and delivery of this Agreement by Mr. DeLeone and the
consummation by Mr. DeLeone of the transactions contemplated hereby have been
duly authorized by Office Quick's Boards of Directors and no other corporate
action or proceeding on the part of Mr. DeLeone or Office Quick is necessary for
the execution or delivery of this Agreement by Mr. DeLeone or for the
consummation by Mr. DeLeone of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Mr. DeLeone and (assuming this
Agreement has been duly executed and delivered
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by PKGP) is a legally valid and binding obligation of Mr. DeLeone and Office
Quick, enforceable against Mr. DeLeone and Office Quick in accordance with its
terms.
4.4 NON CONFLICT: NO CONSENTS OR APPROVALS REQUIRED. Except as set forth
in the letter attached hereto as Schedule B ("Disclosure Letter"), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby by Mr. DeLeone will, with or without notice or
passage of time, or both, (i) violate any provision of the charter documents or
by-laws of Office Quick, (ii) violate any provision of the charter documents or
by-laws of Office Quick, (ii) violate any law, rule, regulation, ordinance,
order, writ, injunction, judgment or decree applicable to Mr. DeLeone or Office
Quick by which Office Quick's properties or assets are bound or affected, or
(iii) conflict with or result in any breach of or constitute a default under the
terms, conditions or provisions of any note, bond, mortgage, indenture, permit,
license, franchise agreement, lease or other contract, instrument or obligation
to which Mr. DeLeone or Office Quick is a party or by which Mr. DeLeone or
Office Quick or any of their respective properties or assets are bound or
affected, except, in the case of clauses (ii) and (iii) above, for any such
violation, conflict, breach or default which individually or in the aggregate
will not have a material adverse effect on the business, operations, assets or
financial condition of Office Quick.
4.5 LITIGATION. Except as set forth in the Disclosure Letter, to the best
knowledge of Mr. DeLeone, there is no action, proceeding or investigation
pending or threatened against or involving Office Quick, which, if determined
adversely, would materially adversely affect the financial condition, business
or operations of Office Quick, nor is there any judgment, decree,
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injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or arbitrator outstanding against Office Quick having,
or which, insofar as can be foreseen, in the future would be likely to have, any
such effect.
4.6 CONTRACTS. To the best knowledge of Mr. DeLeone, Office Quick is not
in material default under any contract made or obligation owed by Office Quick,
which contract or obligation, individually or in the aggregate, is material to
Office Quick.
4.7 TRADEMARKS AND TRADE NAMES. Set forth in Schedule C hereto is a list
of the trademarks and trade names owned or applied for by Office Quick. Office
Quick owns, or has applied for, or is licensed or otherwise has the full right
to use, all trademarks, trade names, copyrights, technology, know-how and
processes currently used and conducted which are material to the financial
conditions, results of operations or business of Office Quick. Except as set
forth in the Disclosure Letter, to the best knowledge of Mr. DeLeone, no claim
has been asserted by any persons with respect to the use of any such trademark,
trade name, copyright, technology, know-how or process or challenging or
questioning the validity or effectiveness of any such license.
4.8 TAX MATTERS. Except as set forth in the Disclosure Letter, Office
Quick has filed, or on behalf of Office Quick there have been filed, all United
States federal income tax returns, declarations and information returns, state
and local income and franchise tax returns, declarations and information returns
which are required to be filed including, but not limited to, Federal and
California, and any applicable local, taxes. Except as set forth in the
Disclosure Letter, all taxes as shown on said returns and all assessments
received have been paid to the
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extent that such taxes have become due. All income and franchise tax returns
filed on behalf of Office Quick, with respect to periods ending on or prior to
the Closing Date, shall be filed based on normal and consistent tax accounting
practices and in accordance with applicable law.
4.9 LISTS OF CERTAIN ITEMS. The following lists, setting forth summary
descriptions, as of the date hereof, shall be true as of the Closing Date.
(i) INSURANCE POLICIES, SCHEDULE D. Mr. DeLeone shall deliver
simultaneously with the execution of this Agreement a summary
description of all present policies of insurance with respect to
Office Quick and covering its properties, buildings, equipment,
furniture, fixtures or operations, all of which are presently in
force;
(ii) REAL PROPERTY, SCHEDULE E. All real property owned of record or
beneficially or leased by Office Quick;
(iii) AUTOMOBILES AND TRUCKS, SCHEDULE F. All automobiles and trucks
owned or leased by Office Quick;
(iv) LEASES, SCHEDULE G. Each presently existing lease of personal
property to which Office Quick is a party;
(v) SALES CONTRACTS AND CUSTOMERS PURCHASE ORDERS, SCHEDULE H.
Schedule G lists each sales contract and customers purchase order
for the delivery of products or performance of services by Office
quick, which would result in the right to receive revenues of at
least $1,000 and a list of specific contracts or commitments each
involving purchases of inventories or supplies in excess of
$1,000;
(vi) BANKS, SCHEDULE I. The name of each bank in which Office Quick
has an account or safe deposit box, and the names of all persons
authorized to draw thereon or have access thereto;
(vii) LOAN AND CREDIT AGREEMENT, ETC. SCHEDULE J. All mortgages,
pledges, deeds of trust, loan or credit agreements, notes and
similar instruments to which Office Quick is a party, and all
amendments or modifications of any thereof.
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4.10 BROKERS. Mr. DeLeone represents that neither he nor Office Quick has
not incurred any obligation to pay a finder's fee or similar acquisition
services compensation in connection with the proposed acquisition, or if he has,
he will pay such obligation.
4.11 FINANCIAL MATTER. Except as set forth in the Disclosure Letter, Mr.
DeLeone represents that Office Quick will be substantially debt free at the
Closing, except for the two loans referred to in Section 4.12 and debts in the
ordinary course of business. All accounts receivable and assets, tangible and
intangible, including all cash in bank accounts of Office Quick, will be
delivered to PKGP as well as all of the inventory associated with Office Quick.
4.12 LOANS. PKGP agrees to assume, without recourse to Mr. DeLeone, the
payment of two loan obligations incurred in connection with Office Quick's
business for $50,000 ("$50,000 Loan") and $72,000 ("$72,000 Loan"), appearing on
Office Quick's balance sheets, and will, with respect to the $72,000 Loan,
exercise its best efforts to substitute itself for the present guarantors or
eliminate the guaranties. PKGP agrees to pay off the $50,000 Loan on the Closing
Date.
4.13 TRANSFER OF SHARES. Mr. DeLeone will transfer title to the Office
Quick Shares to PKGP on the Closing Date, free and clear of all debt, liens,
pledges, encumbrances, voting trusts and voting agreements. There is no existing
option, warrant or other agreement (other than this Agreement) to which Mr.
DeLeone or Office Quick is a party requiring, and there are no convertible or
exchangeable securities of Mr. DeLeone or Office Quick, which upon conversion or
exchange would require, the issuance or sale of any shares of the capital stock
of Office Quick.
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5. PKGP'S REPRESENTATIONS AND WARRANTIES.
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PKGP hereby represents and warrants to Mr. DeLeone as follows:
5.1 ORGANIZATION AND GOOD STANDING. PKGP is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada,
with full corporate power and authority to carry on its business as it is now
being conducted and as proposed to be conducted.
5.2 AUTHORIZATION. PKGP has all requisite corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement by PKGP and the consummation by PKGP of
the transactions contemplated hereby have been duly authorized by PKGP's Board
of Directors and no other corporate action or proceeding on the part of PKGP is
necessary for the execution or delivery of this Agreement by PKGP or for the
consummation by PKGP of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by PKGP and (assuming this Agreement has been
duly executed and delivered by Mr. DeLeone) is a legally valid and binding
obligation of PKGP enforceable against PKGP in accordance with its terms.
5.3. NOT A REGISTERED. OFFERING. It is understood that the Office Quick
Shares have not been registered with the U.S. Securities and Exchange Commission
or any state agency and are being offered and sold in accordance with limited
exemptions set forth in the Securities Act of 1933, as amended ("Act"), AND THAT
NO GOVERNMENTAL AGENCY HAS RECOMMENDED OR ENDORSED THE OFFICE
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QUICK SHARES OR MADE ANY FINDING OR DETERMINATION RELATING TO THE FAIRNESS FOR
INVESTMENT OF THE OFFICE QUICK SHARES.
5.4 INVESTMENT. PKGP is acquiring Office Quick Shares for its own account
for investment, and not with view to, or for sale in connection with any
distribution or subdivision thereof, nor with any present intention of
transferring, distributing or selling the Office Quick Shares; and, except as
contemplated by this Agreement, PKGP has no present or contemplated agreement,
undertaking arrangement, obligation, indebtedness or commitment providing for
the disposition of the Office Quick Shares.
5.5 SUITABILITY. PKGP has (i) made a careful review of the representatives
concerning Office Quick contained in this Agreement; (ii) read all documents of
Office Quick disclosed pursuant to this Agreement including all the schedules to
this Agreement; (iii) made a detailed investigation concerning Office Quick, its
business and its personnel to its satisfaction; and (iv) the knowledge and
experience required to evaluate properly the merits and risks of the investment
and has done so. PKGP is relying on its own review and investigation in deciding
to purchase Office Quick Shares.
5.6 RESTRICTIONS ON TRANSFER It is understood that since the offer and
sale of the Office Quick Shares have not been registered under any federal or
state securities laws, none of the Office Quick Shares may at anytime be sold or
otherwise disposed of by PKGP, except (i) pursuant to a registration statement
with respect to such securities which is effective under the Act or (ii)
pursuant to an available exemption from registration under the Act relating to
the
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disposition of securities and (iii) in accordance with applicable state
securities and blue sky laws. It is recognized that the public market for the
shares is limited.
5.7 RISKS OF INVESTMENT. PKGP Recognizes that Office Quick Shares are
speculative investments that involve a high degree of risk. PKGP is able to bear
the economic risks associated with an investment in the Office Quick Shares.
6. TAX LIABILITIES.
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6.1 Mr. DeLeone agrees that he shall be responsible for and shall pay: (i)
the federal income tax liabilities of Office Quick for all taxable periods
ending with and prior to the Closing Date; and (ii) the state and local income
and franchise tax liabilities of Office Quick for all taxable periods ending
with and prior to the Closing Date; except for taxes and estimates thereof
disclosed to PKGP in the Disclosure Letter.
6.2 Mr. DeLeone's liability hereunder for federal, state and local income
and franchise taxes for Office Quick for periods prior to the Closing Date shall
survive the Closing for a period coterminous with the applicable statute of
limitations.
7. LITIGATION, CLAIMS AND LIABILITIES.
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7.1 LIABILITY CLAIMS. Except as set forth in the Disclosure Letter, Mr.
DeLeone has no knowledge of any material liability claim against Office Quick.
7.2 MR. DELEONE'S INDEMNITY. Except for obligations and liabilities
expressly assumed by PKGP hereunder, Mr. DeLeone hereby agrees to indemnify,
hold harmless and defend PKGP and its shareholders, directors, officers and
employees from all obligations and liabilities, due or
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maturing prior to the Closing Date , incurred by Office Quick or arising from
Office Quick business PRIOR TO THE CLOSING, including the payment of all
expenses and attorneys' fees arising therefrom.
7.3 PKGP'S INDEMNITY. PKGP hereby agrees to indemnify, hold harmless and
defend Mr. DeLeone, his heirs, administrators, executors, agents, successors and
assigns from all such obligations and liabilities incurred by Office Quick or
arising from Office Quick business AFTER the Closing Date, including the payment
of all expenses and attorneys' fees arising therefrom.
7.4 INDEMNIFICATION PROCEDURE. All claims for indemnification by a party
under this Section 7 (the party claiming indemnification and the party against
whom such claims are asserted being hereinafter called the "Indemnified Party"
and the "Indemnifying Party," respectively) shall be asserted and resolved as
follows:
(i) In the event that any claim or demand for which an Indemnifying
Party would be liable to an Indemnified Party hereunder is
asserted against or sought to be collected from such Indemnified
Party by a third party, such Indemnified Party shall immediately
notify the Indemnifying Party of the commencement thereof and
the Indemnifying Party shall be entitled to direct the defense
thereof at its own expense. However, the Indemnified Party shall
be entitled to participate in the defense thereof at its own
expense. The settlement of any claim hereunder by either party
may only be made upon the prior approval by the other party of
the terms of the settlement, which approval shall not be
unreasonably withheld.
(ii) If requested by the Indemnifying Party, the Indemnified Party
agrees, at the Indemnifying party's expense, to cooperate with
the Indemnifying Party and its counsel in contesting any claim
or demand that the Indemnifying Party elects to contest, or, if
appropriate and related to the claim in question, in making any
counterclaim against the persons asserting the third party claim
or demand, or any cross-complaint against any person other than
an affiliate of the Indemnified Party.
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7.5 LIMITATIONS OF LIABILITY. IN NO EVENT SHALL EITHER PKGP OR MR. DELEONE
BE LIABLE TO THE OTHER FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, INCLUDING THE LOSS
OF ACTUAL OR ANTICIPATED REVENUE, EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES, OR FOR ANY CLAIM THAT AROSE MORE THAN FOUR YEARS PRIOR TO THE
INSTITUTION OF SUIT THEREON. IN NO EVENT SHALL EITHER PKGP'S OR MR. DELEONE 'S
LIABILITY TO THE OTHER FOR ANY DAMAGES IN ANY ACTION BASED ON OR ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT EXCEED THE TOTAL AMOUNT PAID TO MR. DELEONE
PURSUANT TO THIS AGREEMENT.
8. SURVIVAL OF REPRESENTATIONS AND COVENANTS.
-----------------------------------------
The representations, warranties and covenants of Mr. DeLeone and PKGP in
this Agreement shall survive the Closing for a period of five years.
9. BEST EFFORTS TO OBTAIN SATISFACTION OF CONDITIONS AND TRANSITION.
----------------------------------------------------------------
Mr. DeLeone agrees to use his best efforts to perform and fulfill all
conditions required to be performed by him and Office Quick under this
Agreement, and PKGP agrees to use its best efforts to perform and fulfill all
conditions required to be performed by it under this Agreement.
10. DUE DILIGENCE
-------------
PKGP and its employees and agents shall have free access to the books,
records and facilities of Office Quick, during normal business hours in order to
inspect Office Quick's
- 15 -
<PAGE>
business. Office Quick and Mr. DeLeone will cooperate fully and in good faith
with PKGP in its "due diligence". All information obtained in such inspections
shall be held in strictest confidence and, if the acquisition of Office Quick by
PKGP should not be consummated, such information will not thereafter be used by
PKGP. Current balance sheets and income and loss statements for Office Quick
shall be provided for review by PKGP.
11. LEGEND ON OFFICE QUICK SHARES. PKGP acknowledges and agrees that the
following legend shall be typed on each certificate evidencing any of the
Office Quick Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES OR
BLUE SKY LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR
OTHERWISE ASSIGNED EXCEPT (1) PURSUANT TO A REGISTRATION STATEMENT WITH
RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER THE ACT OR (2) PURSUANT
TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT RELATING TO THE
DISPOSITION OF SECURITIES AND (3) IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES AND BLUE SKY LAWS.
12. ACCESS TO CORPORATE RECORDS. FOR A PERIOD OF FIVE YEARS AFTER THE CLOSING
DATE, OR SUCH LONGER PERIOD AS MAY BE REQUIRED BY AUDIT OR EXAMINATION OF OR
LITIGATION OR CONTROVERSY IN CONNECTION WITH A TAX RETURN, PKGP SHALL AFFORD
TO MR. DELEONE AND HIS ATTORNEYS AND ACCOUNTANTS ACCESS, DURING NORMAL
BUSINESS HOURS AND UPON PRIOR WRITTEN REQUEST, TO SUCH BOOKS AND RECORDS
RELATING TO OFFICE QUICK AS MAY BE REASONABLY REQUIRED IN CONNECTION WITH
(I) THE PREPARATION OF FINANCIAL STATEMENTS AND TAX RETURNS, (II) AUDITS OR
EXAMINATIONS OF TAX RETURNS, AND (III) CLAIMS AND LITIGATION RELATING TO
OFFICE QUICK ASSERTED BY THIRD PARTIES. PKGP SHALL RETAIN ALL SUCH BOOKS AND
RECORDS FOR A PERIOD OF AT LEAST SEVEN YEARS AFTER THE CLOSING DATE.
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<PAGE>
13. WAIVER.
------
The parties may mutually agree to waive any and all of the conditions or
requirements herein contained or defer them until after the Closing.
14. AMENDMENTS.
----------
PKGP and Mr. DeLeone, by mutual consent, may amend or modify this
Agreement, in such manner as may be agreed upon, by a written instrument,
executed by both PKGP and Mr. DeLeone.
15. SECTION AND PARAGRAPH HEADINGS.
------------------------------
The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16. NOTICES.
-------
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered or mailed
first claims postage prepaid:
(a) TO MR. DELEONE. If to Mr. DeLeone, 24843 Del Prado, Dana Point, CA 92629
with a copy to David Farber, Patton Boggs, L.L.P., 2550 M Street, N.W.,
Washington, D.C. 20037.
(b) TO OFFICE QUICK. If to Office Quick, to Mr. DeLeone, President, 24843
Del Prado, Dana Point, CA 92629.
(c) TO PKGP. If to PKGP, to Richard A. Altomare, President and CEO,
Packaging Plus Services, Inc., 20 South Terminal Drive, Plainview, New
York 11803.
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<PAGE>
17. COUNTERPARTS.
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
18. ENTIRE AGREEMENT.
-----------------
This Agreement contains the entire agreement between the parties hereto
with respect to the transactions contemplated herein.
19. GOVERNING LAW.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the principles of conflicts
of laws thereunder.
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed
this Agreement as of the date first above written.
- ----------------------------------------
Nick DeLeone
PACKAGING PLUS SERVICES, INC.
By: /s/ Richard A. Altomare
Richard A. Altomare
President & CEO
LEONE, INC.
By: ____________________________________
Nick DeLeone -- President
ETC. ETC. COLOR AND COPY CENTERS, INC.
By: ____________________________________
Nick DeLeone -- President
- 18 -
EXHIBIT B
PACKAGING PLUS ANOUNCES NEW PRESIDENT OF APAC
AND ACQUISITION OF OFFICE QUICK
September 17, 1997, Plainview, NY .....Packaging Plus Services, Inc.
(OTC BB:PKGP) which owns the Association of Packagers and Carriers, Inc.(APAC)
and provides integrated packaging, shipping and other related business services,
announced today that it has acquired Office Quick, a leading edge single source
retailer, specializing in business services, in exchange for $330,000 worth of
PKGP stock and other considerations. Mr. Nick DeLeone, President of Office Quick
has accepted the position of President of APAC in this acquisition.
Mr. Nick DeLeone was formerly Mail Boxes Etc.'s number one franchisee
in sale for seven of ten years from 1984-1993. In 1988 He was awarded the
Individual Franchisee of the Year" commendation from the highly respected
International Franchisee Association. Upon leaving the Mail Boxes Etc. franchise
network, Mr. DeLeone changed the name of his store to Office Quick to better
illustrate the services the retailer provides to his loyal customer base.
Offering the products and services most needed by the growing Small Office/Home
Office marketplace has continued the remarkable success of the past. By
identifying and testing the exact mix of products and services most in demand by
this marketplace - a business address to receive mail, copy/duplicating , office
supplies, business imaging and document output, all supported by a select,
trained staff, Office Quick, under Mr. DeLeone's guidance has created the
prototypical business services retailer for the 21st Century.
By accepting the presidency of APAC, Mr. DeLeone is looking forward to
providing the members of APAC with his successful leadership and proven vision
of the future of independent postal centers.
Mr. DeLeone has taken the presidency of APAC and with his wealth of
experience and insight with regard to the operations and needs of postal center
will bring APAC to the forefront of the industry," stated Mr. Richard Altomare,
PKGP Chairman.
<PAGE>
According to Mr. DeLeone, APAC has the ability to provide the
independent postal center owner with all of the benefits of franchising without
the royalty battles that tend to erode the store owner/franchisor relationship.
Through our association the independent postal center owner can receive the core
advantages of a franchise network. These benefits include national recognition,
increased purchasing power, lower cost healthcare, logistics support, trucking
and international shipping services. APAC through its enhanced communications
channels, will support the independent owner in business education and
retailing/advertising skills. These services are extremely valuable to APAC
members."
Packaging Plus Services, Inc. owns and operates APAC. Packaging Plus'
other subsidiaries are engaged in advertising, logistical and trucking services,
internet marketing and concierge services. The company is traded on the OTC
bulletin board under the symbol PKGP.
For further information, contact
Barbara Halpern, Shareholder Relations
at 516-349-1300
