EXHIBIT 2.1
SHARE EXCHANGE AGREEMENT
DATED AS OF
SEPTEMBER 11, 2002
BETWEEN
COLOR IMAGING, INC.,
LOGICAL IMAGING SOLUTIONS, INC.,
DIGITAL COLOR PRINT, INC.,
AND
THE SHAREHOLDERS OF DIGITAL COLOR PRINT, INC.
TABLE OF CONTENTS
PAGE(S)
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ARTICLE I DEFINITIONS...........................................1
Section 1.1. Definitions...........................................1
ARTICLE II EXCHANGE OF THE SHARES................................4
Section 2.1. The Share Exchange....................................4
Section 2.2. Closing...............................................4
Section 2.3. Directors and Officers................................4
Section 2.4. Assumption of Liabilities.............................4
Section 2.5. Post Closing Offering.................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COLOR...............5
Section 3.1. Corporate Existence and Power.........................5
Section 3.2. Corporate Authorization...............................5
Section 3.3. Governmental Authorization............................6
Section 3.4. Non-Contravention.....................................6
Section 3.5. Capitalization........................................6
Section 3.6. Ownership of Shares...................................6
Section 3.7. No Brokers............................................7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF DCP.................7
Section 4.1. Authorization.........................................7
Section 4.2. Governmental Authorization............................7
Section 4.3. Non-Contravention.....................................7
Section 4.4. Investment Intent; Registration; No Transfer..........8
Section 4.5. Endorsement...........................................8
Section 4.6. No Market for Shares..................................8
Section 4.7. No Solicitation.......................................8
Section 4.8. Information...........................................8
Section 4.9. Opportunity to Consult................................8
Section 4.10. Speculative Investment................................8
Section 4.11. No Commission.........................................8
Section 4.12. Status................................................9
Section 4.13. No Material Misstatement..............................9
Section 4.14. No Brokers............................................9
Section 4.15. Logical Financial Statements..........................9
ARTICLE V CONDUCT PENDING CLOSING...............................9
Section 5.1. Conduct Pending Closing...............................9
Section 5.2. Access to Information................................11
Section 5.3. Notices of Certain Events............................12
Section 5.4. Fairness Opinion.....................................12
ARTICLE VI OTHER AGREEMENTS.....................................12
Section 6.1. Warrants.............................................12
Section 6.2. Financial Statements.................................12
Section 6.3. Leases...............................................13
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Section 6.4. Sale of Toner Products...............................13
Section 6.5. Tax Periods Ending on or before Closing..............13
Section 6.6. Cooperation on Tax Matters...........................13
Section 6.7. Books and Records....................................14
ARTICLE VII MUTUAL COVENANTS OF COLOR, DCP, AND THE DCP
SHAREHOLDERS........................................14
Section 7.1. Reasonable Efforts...................................14
Section 7.2. Public Announcements.................................14
Section 7.3. Supplemental Disclosure..............................14
Section 7.4. Confidentiality......................................15
ARTICLE VIII CONDITIONS TO CLOSING................................16
Section 8.1. Conditions to Obligations............................16
Section 8.2. Conditions to Obligations of DCP.....................16
Section 8.3. Conditions to Obligations of Color...................17
ARTICLE IX SURVIVAL.............................................17
ARTICLE X INDEMNIFICATION......................................17
Section 10.1. Indemnification by Color.............................17
Section 10.2. Indemnification by DCP and the DCP Shareholders......18
Section 10.3. Notice of Circumstances..............................18
Section 10.4. Survival of Indemnification Obligations..............18
ARTICLE XI TERMINATION..........................................19
Section 11.1. Grounds for Termination..............................19
Section 11.2. Effect of Termination................................19
ARTICLE XII MISCELLANEOUS........................................19
Section 12.1. Notices..............................................19
Section 12.2. Amendments and Waivers...............................20
Section 12.3. Successors and Assigns...............................21
Section 12.4. Governing Law........................................21
Section 12.5. Jurisdiction.........................................21
Section 12.6. Counterparts; No Third Party Beneficiaries...........21
Section 12.7. Entire Agreement.....................................21
Section 12.8. Construction.........................................22
Section 12.9. Most Favorable Tax Treatment.........................22
Section 12.10. Expenses.............................................22
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SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT is entered into this 11th day of September,
2002 (together with the Schedules and Exhibits attached hereto, the "Agreement")
between Color Imaging, Inc., a Delaware corporation ("Color"), Logical Imaging
Solutions, Inc., a California corporation and wholly-owned subsidiary of Color
("Logical"), Digital Color Print, Inc., a Nevada corporation ("DCP"), and those
individuals executing this Agreement below who constitute all of the
shareholders of DCP (each a "DCP Shareholder" and collectively, the "DCP
Shareholders").
W I T N E S S E T H:
WHEREAS, Color desires to exchange all of the outstanding stock of its
wholly-owned subsidiary, Logical, for 1,600,000 shares of the common stock of
Color held by DCP and a warrant to purchase shares of the common stock of
Logical or DCP as set forth therein;
WHEREAS, DCP desires to exchange 1,600,000 shares of the common stock of
Color held by DCP and a warrant to purchase shares of the common stock of
Logical for all of the outstanding capital stock of Logical;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. The following terms, as used herein, have the
following meanings:
"AGREEMENT" shall have the meaning ascribed to it in the Preamble.
"ANCILLARY COLOR DOCUMENTS" shall have the meaning ascribed to it in
Section 3.2.
"ANCILLARY DCP DOCUMENTS" shall have the meaning ascribed to it in Section
4.1.
"▇▇▇▇▇▇▇" shall have the meaning ascribed to it in Section 2.1.
"▇▇▇▇▇▇▇ EMPLOYMENT AGREEMENT" shall have the meaning ascribed to it in
Section 2.4.
"CIRCUMSTANCE" shall have the meaning ascribed to it in Section 10.3.
"CLOSING" shall have the meaning ascribed to it in Section 2.2.
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"CLOSING DATE" shall have the meaning ascribed to it in Section 2.2.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLOR" shall have the meaning ascribed to it in the Preamble.
"COLOR SHARE(S)" shall have the meaning ascribed to it in Section 2.1.
"COMMITTEE" shall have the meaning ascribed to it in Section 5.4.
"CONFIDENTIAL INFORMATION" shall have the meaning ascribed to it in Section
7.4(a).
"DAMAGES" shall have the meaning ascribed to it in Section 10.1.
"DCP" shall have the meaning ascribed to it in the Preamble.
"DCP SHAREHOLDER" or "DCP SHAREHOLDERS" shall have the meanings ascribed to
them in the Preamble.
"ESCROW AGENT" shall mean SouthTrust Bank who will hold the Color Shares in
escrow pending the Exchange as set forth in Section 2.1.
"EXCHANGE" shall mean the share exchange contemplated by Article II and
described in Section 2.1.
"EXCHANGE ESCROW AGREEMENT" shall have the meaning ascribed to it in
Section 2.1.
"FAIRNESS OPINION" shall have the meaning ascribed to it in Section 5.4.
"FINANCIAL ADVISOR" shall have the meaning ascribed to it in Section 5.4.
"FORM SB-2" shall have the meaning ascribed to it in Section 8.3(c).
"GAAP" means U.S. generally accepted accounting principles.
"INSTRUMENT" shall have the meaning ascribed to it in Section 10.5(c).
"LEASE AGREEMENT" shall have the meaning ascribed to it in Section 6.3.
"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset.
"LOAN" shall have the meaning ascribed to it in Section 2.4.
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"LOGICAL" shall have the meaning ascribed to it in the Preamble.
"LOGICAL EMPLOYEE" shall have the meaning ascribed to it in Section 2.4.
"LOGICAL AGREEMENTS" shall have the meaning ascribed to it in Section 6.3.
"LOGICAL SHARES" shall have the meaning ascribed to it in Section 2.1.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on the
business, financial condition, or results of operations of Logical or on the
ability of Color, Logical, DCP or the DCP Shareholders to perform its
obligations under this Agreement.
"PARTY" OR "PARTIES" shall have the meaning ascribed to it in Section
7.4(a).
"PERSON" means an individual, corporation, partnership, association, trust,
limited liability company or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"REPRESENTATIVES" shall have the meaning ascribed to it in Section 7.4(b).
"RETIREMENT PLAN" shall have the meaning ascribed to it in Section 2.4.
"SCHEDULED SHARES" shall have the meaning ascribed to it in Section 2.1.
"SEC" means the United States Securities and Exchange Commission.
"SUBSIDIARY" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect
50% or more of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"TAX" or "TAXES" means any and all foreign, federal, state or local taxes,
charges, fees, levies or other assessments of any kind or character, including,
without limitation, any net income tax or franchise tax based on net income, any
alternative or add-on minimum taxes, any gross income, gross receipts, premium
or other taxes imposed on insurance companies, sales, use, real or personal
property tax or other ad valorem tax, value added, transfer, profits, license,
social security, Medicare, payroll, employment, excise, severance, stamp,
occupation, intangibles tax, environmental or windfall profit tax, custom duty
or other tax, governmental fee or other like assessment, together with any
interest, penalty, addition to tax or additional amount imposed by any
governmental authority (domestic or foreign) responsible for the imposition of
any such tax (a "Taxing Authority").
"TERMINATION AGREEMENT" shall have the meaning ascribed to it in Section
2.4.
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"WARRANT" shall have the meaning ascribed to it in Section 6.1.
ARTICLE II
EXCHANGE OF THE SHARES
SECTION 2.1. THE SHARE EXCHANGE. Upon the terms of this Agreement and
subject to the conditions set forth in Article VIII, at the Closing, Color shall
convey to DCP, free and clear of any Liens, all of the issued and outstanding
shares of the capital stock of Logical (each, a "Logical Share", and
collectively, the "Logical Shares") in exchange for (a) 1,600,000 shares of the
common stock, $.01 par value, of Color (each a "Color Share", and collectively,
the "Color Shares") held by DCP, which shall be conveyed by DCP to Color, free
and clear of any Liens, and (b) the Warrant described in Section 6.1. Within ten
days after the execution of this Agreement, (x) DCP shall deposit with the
Escrow Agent stock certificates evidencing not less than 1,100,000 Color Shares,
and (y) Color shall deposit with the Escrow Agent stock certificates evidencing
the Logical Shares, in each case to be held by such Escrow Agent pursuant to the
Escrow Agreement attached as Exhibit 2.1 (the "Exchange Escrow Agreement"). On
or prior to the date of this Agreement, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") shall
deliver to Color stock powers signed by ▇▇▇▇▇▇▇ and endorsed in blank with the
signature of ▇▇▇▇▇▇▇ guaranteed by a medallion level national bank or member of
the New York Stock Exchange which satisfies the policies of Color's transfer
agent and effectuates the transfer of the stock certificates identified on
Schedule 2.1 to DCP (the "Scheduled Shares"). Color shall submit the Scheduled
Shares to its transfer agent for reissuance in the name of DCP, and upon receipt
of such reissued stock certificates, Color shall deposit such certificates with
the Escrow Agent to be held pursuant to the Exchange Escrow Agreement.
SECTION 2.2. CLOSING. As promptly as practicable after the satisfaction or,
if permissible, waiver of the conditions set forth in Article VIII, a closing
(the "Closing") shall be held at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, 2800 ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or such
other place as the parties shall agree. The date of such Closing shall be the
"Closing Date".
SECTION 2.3. DIRECTORS AND OFFICERS. Within ten days following the
execution of this Agreement, (a) Color will deliver to the Escrow Agent the
resignations of the directors and officers of Logical listed on Exhibit 2.3A
with such resignations being effective as of the consummation of the Closing,
and (b) DCP shall deliver to the Escrow Agent the resignations of the directors
and officers of Color listed on Exhibit 2.3B, with such resignations effective
upon the consummation of the Closing. All such resignations shall be in the form
of Exhibit 2.3C and shall be held by the Escrow Agent pursuant to the terms of
the Exchange Escrow Agreement.
SECTION 2.4. ASSUMPTION OF LIABILITIES. Upon the Closing, Logical shall not
only be responsible for its existing contractual and other obligations, but
shall also assume from Color all of Color's obligations with respect to the
employees and contractors who currently work for Logical (each a "Logical
Employee"), including, but not limited to, vacation, termination, severance, and
similar employment-related obligations and employee benefits. Logical
acknowledges that upon Closing, the Logical Employees shall no longer be covered
by the health, life insurance, and similar benefit plans currently offered by
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Color. Each Logical Employee who, as of the Closing, is a participant in the
Color Imaging Inc. 401(k) Program (the "Retirement Plan") shall be entitled,
effective as of the Closing, to receive a direct transfer or distribution of the
vested portion of his Retirement Plan account pursuant to the provisions of
applicable law and at the participant's direction. Notwithstanding the foregoing
provisions of this Section 2.4, Logical shall not be liable for the cost of that
certain Employment Agreement dated June 28, 2000 between Color and ▇▇▇▇▇▇▇, as
amended, which shall remain an obligation of Color (the "▇▇▇▇▇▇▇ Employment
Agreement"); provided, however, that simultaneously herewith, ▇▇▇▇▇▇▇ and Color
shall execute a Termination Agreement in the form attached as Exhibit 2.4 (the
"Termination Agreement"), relating to the ▇▇▇▇▇▇▇ Employment Agreement. Color
agrees to reimburse Logical for its premium cost of including ▇▇▇▇▇▇▇, for the
period following the Closing through the Compensation Termination Date (as
defined in the Termination Agreement), in any health or life insurance plan
which is established by Logical for the benefit of its executives generally,
provided (a) such Logical plan is comparable to the health and life insurance
plans in which ▇▇▇▇▇▇▇ participated as an employee of Color, and (b) ▇▇▇▇▇▇▇
participates in such Logical plans under coverage options (e.g. single, family,
etc.) and/or benefit levels comparable to those in which ▇▇▇▇▇▇▇ participated as
an employee of Color. Effective upon the Closing, Color agrees to convert all
inter-company advances made by Color to Logical into a contribution to the
capital of Logical.
SECTION 2.5. POST CLOSING OFFERING. The parties acknowledge that after the
Closing DCP intends to offer to exchange shares of the Common Stock of DCP for
shares of the Common Stock of Color held by the shareholders of Color as
described on Schedule 2.5 (the "Offering"). The parties acknowledge and agree
that Color is not sponsoring, encouraging, or responsible for the Offering.
Logical and DCP shall be solely responsible for such Offering, including
compliance with all applicable laws. DCP shall not accept the tender of more
than an aggregate of 2,600,000 shares of Color Common Stock in connection with
the Offering. Neither Logical nor DCP shall take any action in connection with
the Offering that could have the effect of reducing the number of shareholders
of Color below 325.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COLOR
Color represents and warrants to DCP as of the date hereof and as of the
Closing Date that:
SECTION 3.1. CORPORATE EXISTENCE AND POWER. Color (i) has been duly
incorporated and is validly existing and in good standing under the laws of
Delaware, (ii) has all corporate power required to carry on its business as now
conducted.
SECTION 3.2. CORPORATE AUTHORIZATION. The execution, delivery and (subject
to the approval of the Exchange as contemplated in Section 8.3(c) and the
receipt of the approvals referred to in Section 3.3) performance by Color of
this Agreement and the other documents, agreements or instruments to be executed
and delivered by Color in connection herewith (the "Ancillary Color Documents")
are within Color's respective corporate power and have been duly authorized by
all necessary corporate action on the part of Color. This Agreement and each
Ancillary Color Document constitutes, or will constitute when executed, a valid
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and legally binding agreement of Color, enforceable against Color in accordance
with its terms, subject to (i) bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether considered in a proceeding at law or
in equity).
SECTION 3.3. GOVERNMENTAL AUTHORIZATION. Except as set forth on Schedule
3.3, the execution, delivery and performance by Color of this Agreement and the
Ancillary Color Documents requires no action by or in respect of, or filing
with, any governmental body, agency, or official on the part of Color other than
(i) filings and notices not required to be made or given until after the Closing
Date, (ii) filings, at any time, of tax returns, tax reports and tax information
statements, and (iii) any such action or filing as to which the failure to make
or obtain would not, individually or in the aggregate, have a Material Adverse
Effect on Color.
SECTION 3.4. NON-CONTRAVENTION. Except as set forth in Schedule 3.4, and as
contemplated in Sections 3.2 and 3.3, the execution, delivery and performance by
Color of this Agreement and the Ancillary Color Documents does not and will not
(i) violate the certificate of incorporation or bylaws of Color, (ii) assuming
compliance with the matters referred to in Section 3.3, violate any applicable
law, rule, regulation, judgment, injunction, order or decree applicable to
Color, (iii) require any consent or other action by any Person under or
constitute a default under any material agreement or other material instrument
binding upon Color, or (iv) result in the creation or imposition of any material
Lien on the Logical Shares.
SECTION 3.5. CAPITALIZATION. The authorized capital stock of Logical is as
follows:
(a) The authorized capital stock of Logical consists of 10,000,000 shares
of Common Stock and 1,000,000 shares of Preferred Stock. As of the date hereof,
there are 1,623,000 shares of Common Stock outstanding, all of which are held by
Color. There are no shares of Preferred Stock of Logical outstanding.
(b) There are no outstanding (i) securities of Logical convertible into or
exchangeable for shares of capital stock or voting securities of any other
entity, or (ii) options or other rights to acquire shares of the capital stock
of Logical, or other obligation of Logical to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of Logical.
SECTION 3.6. OWNERSHIP OF SHARES. Color is the record and beneficial owner
of all the outstanding capital stock of Logical, free and clear of any Lien and
any other limitation or restriction (including any restriction on the right to
vote, sell or otherwise dispose thereof other than pursuant to generally
applicable regulatory requirements). As a result of the Exchange, DCP will
acquire valid title to all the outstanding capital stock of Logical, free and
clear of any Lien and any such limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose thereof other than
pursuant to generally applicable regulatory requirements).
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SECTION 3.7. NO BROKERS. No broker or finder has been involved in this
transaction on behalf of Color, and Color shall not be obligated to pay any
brokers or finders' fees in connection with this transaction.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DCP
DCP and the DCP Shareholders, jointly and severally, represent and warrant
to Color as of the date hereof and as of the Closing Date that:
SECTION 4.1. AUTHORIZATION. DCP and the DCP Shareholders have full legal
power and authority to execute, deliver, and perform his or its obligations
under this Agreement and the other documents, agreements, or instruments to be
executed and delivered by DCP or the DCP Shareholders in connection herewith
(the "Ancillary DCP Documents"). This Agreement and each Ancillary DCP Document
constitutes, or will constitute when executed, a valid and legally binding
agreement of DCP and/or the DCP Shareholder, respectively, enforceable against
DCP and/or the DCP Shareholder in accordance with its terms, subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, and (ii) general principles of equity (regardless
of whether considered in a proceeding at law or in equity). The DCP Shareholders
constitute all of the holders of issued and outstanding capital stock of DCP.
The issuance by DCP of its shares to each DCP Shareholder or other holders of
capital stock of DCP has been and shall be in compliance with applicable
securities laws. There are no outstanding (i) securities of DCP convertible into
or exchangeable for shares of capital stock or voting securities of any other
entity, or (ii) options or other rights to acquire shares of the capital stock
of DCP, or other obligation of DCP to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of DCP.
SECTION 4.2. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by DCP and the DCP Shareholders of this Agreement and the Ancillary
DCP Documents require no action by or in respect of, or filing with, any
governmental body, agency or official on the part of DCP or the DCP Shareholders
other than (i) filings and notices not required to be made or given until after
the Closing Date, (ii) filings, at any time, of tax returns, tax reports and tax
information statements and (iii) any such action or filing as to which the
failure to make or obtain would not individually or in the aggregate have a
Material Adverse Effect on Color, Logical, DCP, or the DCP Shareholders.
SECTION 4.3. NON-CONTRAVENTION. Except as set forth in Schedule 4.3, the
execution, delivery and performance by DCP and each DCP Shareholder of this
Agreement and the Ancillary DCP Documents do not and will not (i) assuming
compliance with the matters referred to in Section 4.2, violate any applicable
law, rule, regulation, judgment, injunction, order or decree applicable to such
member, (ii) require any consent or other action by any Person under or
constitute a default under any material agreement or other instrument binding
upon DCP or the DCP Shareholders, or (iii) result in the creation or imposition
of any material Lien on the Color Shares.
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SECTION 4.4. INVESTMENT INTENT; REGISTRATION; NO TRANSFER. DCP represents
that it is acquiring the Logical Shares in exchange for the Color Shares for its
own account, for investment, and not with a view to a further distribution. DCP
acknowledges that all the Logical Shares have not been registered and are being
transferred to DCP in reliance upon certain exemptions from registration
requirements under the Securities Act of 1933, as amended, and under applicable
state securities laws. DCP will make no transfer or assignment of any of the
Logical Shares except in compliance with the Securities Act of 1933, as amended,
The Securities Exchange Act of 1934, and applicable state securities laws. DCP
consents, agrees and acknowledges that the certificate or certificates
representing the Shares will be inscribed with a legend regarding the foregoing.
SECTION 4.5. ENDORSEMENT. DCP and the DCP Shareholders are aware that no
federal or state agency has made any recommendation or endorsement of the
Logical Shares.
SECTION 4.6. NO MARKET FOR SHARES. DCP and the DCP Shareholders acknowledge
that no public or secondary market exists or may ever exist for the Logical
Shares and, accordingly, the Logical Shares may not be readily liquidated.
SECTION 4.7. NO SOLICITATION. Neither Color nor any person acting on its
behalf has offered the Logical Shares to DCP by means of general or public
solicitation or general or public advertising, such as by newspaper or magazine
advertisements, by broadcast media, or at any seminar or meeting whose attendees
were solicited by such means.
SECTION 4.8. INFORMATION. DCP and the DCP Shareholders acknowledge that
Color has made available the opportunity to ask questions and to receive
answers, and to obtain information necessary to evaluate the merits and risks of
this Exchange. DCP and the DCP Shareholders acknowledge that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ has
been involved in the day-to-day management of Logical, and that each DCP
Shareholder has received information about Logical in their capacities as
directors of Color, and, as such, has sufficient information regarding Logical
to evaluate the merits and risks of this Exchange. DCP and the DCP Shareholders
have sufficient knowledge and experience in financial and business matters so as
to be capable of evaluating the merits and risks of the investment in the
Logical Shares.
SECTION 4.9. OPPORTUNITY TO CONSULT. DCP and the DCP Shareholders have had
an opportunity to consult with their own legal counsel and tax and financial
advisors regarding the Exchange and the tax treatment thereof.
SECTION 4.10. SPECULATIVE INVESTMENT. DCP and the DCP Shareholders
acknowledge that the Logical Shares are a speculative investment. DCP and the
DCP Shareholders represent that they can bear the economic risk of such an
investment for an indefinite period of time.
SECTION 4.11. NO COMMISSION. DCP and the DCP Shareholders acknowledge and
represent that no commission or other remuneration has been paid or given
directly or indirectly in connection with this Agreement.
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SECTION 4.12. STATUS. Each DCP Shareholder is an "accredited investor," as
such term is defined in the rules and regulations promulgated pursuant to
Regulation D.
SECTION 4.13. NO MATERIAL MISSTATEMENT. No representation or warranty of
DCP or the DCP Shareholders or, to the knowledge of DCP and the DCP
Shareholders, Color, contained in this Agreement contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein not misleading.
SECTION 4.14. NO BROKERS. No broker or finder has been involved in this
transaction on behalf of DCP or the DCP Shareholders, and neither DCP nor the
DCP Shareholders shall be obligated to pay any brokers' or finders' fees in
connection with this transaction.
SECTION 4.15. LOGICAL FINANCIAL STATEMENTS. The balance sheets of Logical
as of December 31, 2000 and December 31, 2001 and as of June 30, 2002 and the
related statements of income of Logical for each of the years ended December 31,
2000 and December 31, 2001 and the six-month period ended June 30, 2002, as
reflected in the audited and unaudited financial statements of Color of the same
dates and previously delivered by Color to DCP and the DCP Shareholders, present
fairly, in all material respects, the financial position of Logical as of the
dates thereof and the results of operations of Logical for the periods then
ended, in accordance with GAAP consistently applied.
ARTICLE V
CONDUCT PENDING CLOSING
SECTION 5.1. CONDUCT PENDING CLOSING. Except as otherwise expressly
provided in this Agreement, during the period from the date hereof to the
Closing, Color, DCP, and the DCP Shareholders will cause Logical to (a) conduct
its operations according to its ordinary course of business consistent with past
practices, including maintenance of books and records consistent with past
practices, (b) use its reasonable best efforts to preserve intact its respective
business organizations, (c) generally keep available the services of its
officers and employees and generally maintain existing relationships with
agents, licensors, licensees, suppliers, contractors, distributors, customers
and others having business relationships with it, and (d) to the extent
permitted by applicable law, confer with each other on significant operational
matters and material decisions affecting the business of Logical. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided by this Agreement, Color, DCP, and the DCP Shareholders will cause
Logical not to, without the prior written consent of Color:
(a) amend its charter documents or by-laws;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities or equity equivalents (including, without
limitation, stock appreciation rights);
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(c) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock, or
property or any combination thereof) in respect of its capital stock, or redeem,
repurchase or otherwise acquire any of its securities;
(d) (i) incur any indebtedness for borrowed money or issue any debt
securities or, assume, guarantee or endorse the obligations of any other Person;
(ii) make any loans, advances or capital contributions to, or investments in,
any other Person; (iii) pledge or otherwise encumber shares of its capital
stock; or (iv) mortgage or pledge any of its assets, tangible or intangible, or
create or suffer to exist any Lien thereupon;
(e) enter into, adopt or (except as may be required by law or the terms of
any such arrangement, or this Agreement) terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock purchase agreement,
pension, retirement, deferred compensation, employment, severance or other
employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer or employee, amend any such
arrangement as it relates to such directors, officers or employees or (except
for increases in base compensation in the ordinary course of business consistent
with past practice), increase in any manner the compensation or benefits of any
director, officer or employee or, with respect to any director or officer, pay
any benefit not required by any plan or arrangement as in effect as of the date
hereof or, with respect to any employee who is not an officer or director, pay
any benefit other than in the ordinary course of business consistent with past
practice in accordance with plans or arrangements in effect as of the date
hereof (including, without limitation, with respect to any such director,
officer or employee, the granting of stock options, restricted stock, stock
appreciation rights or performance units);
(f) acquire, sell, lease or dispose of any assets outside the ordinary
course of business or, whether or not in the ordinary course of business, any
assets which in the aggregate exceed $2,500 or are material to Logical, or enter
into any contract, agreement, commitment or transaction with respect thereto;
(g) change any of the accounting principles, practices, methods or policies
(including, without limitation, any reserving methods, practices or policies)
used by it, except as may be required as a result of a change in law or GAAP;
(h) (i) acquire (by merger, consolidation, or acquisition of stock or
assets, but excluding foreclosure) any corporation, partnership or other
business organization or division thereof, (ii) authorize any new capital
expenditure or expenditures which, individually, is in excess of $2,500 or, in
the aggregate, are in excess of $10,000; (iii) settle any litigation; or (iv)
enter into or amend any contract, agreement, commitment or arrangement with
respect to any of the foregoing;
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(i) make any Tax election or settle or compromise any Tax liability, other
than in the ordinary course of business or enter into any tax sharing agreements
or arrangements with any party;
(j) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
reflected or reserved against in the financial statements (or the notes thereto)
of Logical or incurred in the ordinary course of business consistent with past
practice;
(k) terminate, or in any manner material thereto modify, amend or waive
compliance with, any provision of any of the material agreement;
(l) incur any operating expenses, research and development expenses,
capital expenditures, or other commitment in connection with any technology
development activity with Delphax Technologies Inc.; or
(m) take, or agree in writing or otherwise to take, any of the actions
described above in this Section 5.1.
SECTION 5.2. ACCESS TO INFORMATION. From the date hereof until the Closing
Date, subject to any applicable contractual restrictions and applicable legal
privileges, and to the extent applicable law would not thereby be violated,
Logical will (i) give Color, DCP, and their respective counsel, financial
advisors, auditors, and other authorized representatives full access, upon
reasonable prior notice and during normal business hours, to the offices,
properties, books and records of Logical and to the books and records of
Logical, (ii) furnish to Color, DCP, and their respective counsel, financial
advisors, auditors, and other authorized representatives such financial and
operating data and other information relating to Logical as such Persons may
reasonably request, and (iii) instruct the employees, counsel, auditors, and
financial advisors of Logical to cooperate with Color and DCP in their
investigation of Logical; provided that this Section 5.2 shall not obligate
Logical to provide or make available to Color or DCP any employee medical
records; provided, further, that to the extent contractual restrictions limit
Logical's ability to take any of the actions set forth in this Section 5.2,
Logical shall use its best efforts to obtain any necessary contractual consent
or accommodate any reasonable request by Color or DCP with respect to such
action by alternative means and provided, further, that to the extent applicable
legal privileges or applicable laws limit Logical's ability to take any of the
actions set forth in this Section 5.2, Logical shall use its best efforts to
accommodate any reasonable request by Color or DCP with respect to such action
by alternative means.
11
SECTION 5.3. NOTICES OF CERTAIN EVENTS. Logical, Color and DCP shall
promptly notify the other parties of:
(a) any notice or other communication received from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication received relating to the transactions
contemplated by this Agreement and any other significant notices or other
communications from any governmental or regulatory agency or authority other
than reports or communications regarding consumer complaints received in the
ordinary course of business; and
(c) any actions, suits, claims, investigations or proceedings commenced or,
to the knowledge of such party, threatened against, relating to or involving or
otherwise affecting Logical or that relate to the consummation of the
transactions contemplated by this Agreement.
SECTION 5.4. FAIRNESS OPINION. As soon as practicable after the execution
of this Agreement, Color anticipates that, at the discretion of a committee of
disinterested members of the Board of Directors of Color comprised of ▇▇▇▇▇▇ ▇.
▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Committee"), Color shall engage a
qualified, independent financial advisor (the "Financial Advisor"), satisfactory
to the Committee, to review the terms of the Exchange and to confirm, prior to
Closing, that such terms are fair from a financial point of view to Color and
Color's stockholders, other than DCP (the "Fairness Opinion"). The conclusion of
the Financial Advisor, if any, shall be shared with all members of the Board of
Directors of Color, accompanied by the Committee's recommendation to the Board
of Directors of Color.
ARTICLE VI
OTHER AGREEMENTS
SECTION 6.1. WARRANTS. At the Closing, Logical and DCP shall issue to Color
a warrant in the form attached hereto as Exhibit 6.1 (the "Warrant").
SECTION 6.2. FINANCIAL STATEMENTS.
(a) Within 30 days following the Closing, Logical shall engage a certified
public accounting firm to prepare audited financial statements of Logical for
the year ended and as of December 31, 2000 and December 31, 2001, consistent
with Color's accounting policies and procedures consistently applied by Color
with respect to Logical. Color shall give Logical access to the books, records
and personnel of Color, and shall cooperate with Logical, as reasonably
necessary to permit the accountants to prepare the financial statements
contemplated herein. Logical shall bear all costs related to the preparation of
the financial statements contemplated by this Section 6.2(a).
(b) Following the Closing, Color shall prepare interim financial statements
for the period ended as of the end of the month for the month in which the
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Closing Date occurs, consistent with Color's accounting policies and procedures
consistently applied by Color with respect to Logical. Logical shall give Color
access to the books, records and personnel of Logical, and shall cooperate with
Color, as reasonably necessary to permit Color to prepare the financial
statements contemplated herein.
SECTION 6.3. LEASES. Color is currently a party to that certain Lease
Agreement dated December 14, 2001 among Color, Logical, and Balboa Capital (the
"Lease Agreement") which Lease Agreement relates to personal property utilized
by Logical. Within ten days following the execution of this Agreement, DCP shall
deposit 50,000 shares of the Common Stock of Color with the Escrow Agent under
an escrow agreement in the form attached as Exhibit 6.3. The shares deposited in
escrow pursuant to this Section 6.3 shall remain in escrow unless and until
Logical obtains the release of Color from all obligations under agreements
executed prior to the date hereof to which Color is a party for the benefit of
Logical, including, without limitation, the Lease Agreement (collectively, the
"Logical Agreements"), which shares shall be held as collateral to secure the
performance of Logical under such Logical Agreements. If Logical breaches the
terms of one or more Logical Agreements and as a result Color becomes obligated
under such Logical Agreement, the 50,000 shares deposited in escrow pursuant to
this Section 6.3 shall be released to Color. The parties acknowledge that the
damages in such event would be difficult to ascertain and the transfer of the
shares as contemplated herein shall be liquidated damages and not a penalty. The
remedy set forth in this Section 6.3 shall be Color's sole and exclusive remedy
in respect of any breach of the Logical Agreements by Logical.
SECTION 6.4. SALE OF TONER PRODUCTS. Following the Exchange and at the
option of Color and Logical, Color shall continue to sell toner products to
Logical on terms consistent with past practice for Color's similarly situated
clients, and Logical shall purchase toner products from Color as desired.
SECTION 6.5. TAX PERIODS ENDING ON OR BEFORE CLOSING. Color shall prepare
or cause to be prepared, and file or cause to be filed all tax returns for
Logical for all periods ending on or prior to the Closing Date which are filed
after the Closing Date.
SECTION 6.6. COOPERATION ON TAX MATTERS.
(a) Color and Logical shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of tax
returns and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information reasonably relevant to any
such audit, litigation, or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Color and Logical agree (i) to retain all books
and records with respect to Tax matters pertinent to Logical relating to any
taxable period beginning before the Closing Date until expiration of the statute
of limitations (and, to the extent notified by Color or Logical, any extensions
thereof) of the respective taxable periods, and to abide by all record retention
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agreements entered into with any taxing authority, and (ii) to give the other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other party so requests, Color or
Logical, as the case may be, shall allow the other party to take possession of
such books and records.
(b) Color and Logical further agree, upon request, to use reasonable
efforts to obtain any certificate or other document from any governmental
authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including with respect to the
transactions contemplated hereby).
SECTION 6.7. BOOKS AND RECORDS. Within ten business days following the
Closing, Color shall deliver to DCP the minute book, stock transfer ledger, and
related books and corporate records of Logical. Following the Closing, Logical
shall give Color access to such books and records as necessary for Color to
prepare tax returns and financial statements, respond to any audit, litigation,
or other proceeding, or any similar business purpose and shall allow Color to
make copies thereof as reasonably requested by Color and at Color's expense.
ARTICLE VII
MUTUAL COVENANTS OF COLOR, DCP,
AND THE DCP SHAREHOLDERS
Color, DCP and the DCP Shareholders agree that:
SECTION 7.1. REASONABLE EFFORTS. Subject to the terms and conditions of
this Agreement, Color, DCP and the DCP Shareholders will use their reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things reasonably necessary or desirable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement. Color
and DCP will promptly, and in any event within 30 days of the date hereof,
prepare and file all applications, notices, consents and other documents
necessary or advisable to obtain the regulatory approvals specified in Schedule
3.3, promptly file all supplements or amendments thereto and use reasonable
efforts to obtain the regulatory approvals specified in Schedule 3.3 as promptly
as practicable. Color and DCP will provide each other and their counsel the
opportunity to review in advance and comment on all such filings. Color and DCP
will keep each other informed of the status of matters relating to obtaining the
regulatory approvals specified in Schedule 3.3. Color and DCP agree to execute
and deliver such other documents, certificates, agreements and other writings
and to take such other actions as may be necessary or desirable in order to
consummate or implement expeditiously the transactions contemplated by this
Agreement.
SECTION 7.2. PUBLIC ANNOUNCEMENTS. The parties agree that prior to Closing,
no party will issue any press release or make any public statement with respect
to this Agreement or the transactions contemplated hereby without the prior
written consent of the other parties, except as may be required by applicable
law.
SECTION 7.3. SUPPLEMENTAL DISCLOSURE. Prior to Closing, Color and DCP shall
have the continuing obligation promptly to advise each other with respect to (i)
any material matter hereafter arising and (ii) any material matter hereafter
discovered which, in the case of a matter being disclosed pursuant to clause (i)
hereof if existing at the date hereof or, in the case of a matter being
14
disclosed pursuant to clause (ii) hereof, if known at the date hereof would have
been required to be set forth or described in the respective Schedules provided
by them provided, however, that for the purpose of the rights and obligations of
the parties hereunder, any such supplemental or amended disclosure by any party
shall not be deemed to have been disclosed as of the date hereof, to constitute
part of, or an amendment or supplement to, such party's Schedules or cure any
breach or inaccuracy of a representation or warranty unless so agreed to in
writing by the other party. If, prior to the Closing, Color or DCP becomes aware
of a breach or inaccuracy of a representation or warranty made by it herein,
such party shall use best efforts to cure such breach or inaccuracy as promptly
as practicable; provided, however, that no such cure will relieve such party of
any liability for such breach or inaccuracy.
SECTION 7.4. CONFIDENTIALITY.
(a) Definitions. As used herein, "Confidential Information" means any
private, confidential, trade secret or other proprietary information (whether or
not embodied or contained in some tangible form) relating to any actual or
anticipated business of Color, Logical, or DCP, this Agreement, the Ancillary
Color Documents, the Ancillary DCP Documents, and all personal information
relating to DCP Shareholders. Color, Logical, DCP, and each DCP Shareholder
shall each be a "Party" and collectively, the "Parties".
(b) Confidentiality and Use Restrictions. Each Party agrees, on such
Party's own behalf and on behalf of any of such Party's officers, directors,
agents, representatives, accountants and attorneys (collectively,
"Representatives"), that such Party and its Representatives shall hold the
Confidential Information of the other Party in the strictest confidence and
shall use the same care and discretion to protect the other Party's Confidential
Information as such Party uses to protect its own confidential information, but
not less than a reasonable standard of care. Except as required by law or stock
exchange regulation, unless otherwise agreed to in writing by the Parties, no
Party shall disclose any Confidential Information to any third party or use such
Confidential Information for such Party's own benefit or the benefit of a third
party.
(c) Injunction and Other Remedies. The Parties hereby acknowledge and agree
that the terms of this Section 7.4 are reasonable and necessary to protect the
respective business interests of the Parties, and that the disclosing Party
would be irreparably damaged in the event receiving Party violates any of the
terms of this Agreement. Accordingly, the provisions of this Section 7.4 shall
be enforceable through issuance of an injunction restraining the unauthorized
use or disclosure of any of the Confidential Information furnished to or
acquired by the receiving Party, or through any other equitable or legal
remedies, which remedies shall be cumulative with and not exclusive of any other
remedy available at law or otherwise, including, without limitation, damages as
determined by a court of competent jurisdiction. The prevailing Party in any
dispute arising under this Agreement shall recover reasonable and actual
attorney's fees and related costs and expenses from the other Party, whether
incurred for negotiations, trial, preparation, appellate or other related
matters.
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(d) Obligations as Directors of Color. Nothing in this Section 7.4 shall be
construed to limit, or in any other way affect, the obligations and duties of
each DCP Shareholder as a director of Color.
(e) Survival. This Section 7.4 shall survive the Closing and any
termination of this Agreement.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.1. CONDITIONS TO OBLIGATIONS. The obligations of Color and DCP to
consummate the Exchange are subject to the satisfaction of the following
conditions:
(a) Any regulatory consents, approvals or clearances necessary for the
consummation of the Exchange shall have been obtained, and no provision of any
applicable law or regulation shall prohibit the consummation of the Exchange.
(b) All material consents, approvals or waivers of all non-governmental
Persons necessary for the consummation of the Exchange (including without
limitation the approval of the Exchange by the Committee and by the Board of
Directors of Color) shall have been obtained.
(c) There shall not be in effect any temporary restraining order,
preliminary injunction or permanent injunction or other order issued by any
court of competent jurisdiction preventing the consummation of the transactions
contemplated hereby; provided that the party invoking this condition shall have
used its reasonable best efforts to have such order or injunction vacated.
SECTION 8.2. CONDITIONS TO OBLIGATIONS OF DCP. The obligations of DCP to
consummate the Exchange are subject to the satisfaction of the following further
conditions:
(a) Representations, Warranties and Covenants.
(i) Color shall have performed in all material respects all of its
obligations hereunder required to be performed by it on or prior to the Closing
Date,
(ii) the representations and warranties of Color contained in this
Agreement shall be true at and as of the Closing Date, as if made at and as of
such date, and
(iii) DCP shall have received a certificate signed by the President of
Color to the effect that the foregoing conditions have been satisfied.
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SECTION 8.3. CONDITIONS TO OBLIGATIONS OF COLOR. The obligation of Color to
consummate the Exchange is subject to the satisfaction of the following further
conditions:
(a) Representations, Warranties and Covenants.
(i) DCP and each DCP Shareholder shall have performed in all material
respects all of his or its obligations hereunder required to be performed by it
at or prior to the Closing Date,
(ii) the representations and warranties of the members of DCP and the DCP
Shareholders contained in this Agreement shall be true at and as of the Closing
Date, as if made at and as of such date, and
(iii) Color shall have received a certificate signed by the Chief Executive
Officer of DCP to the effect that the foregoing conditions have been satisfied.
(b) The Committee and Board of Directors of Color shall have approved the
Exchange. Color and its accountants, counsel, and other experts shall have
completed a satisfactory due diligence review with respect to the business and
affairs of Logical and all issues raised as a result of such investigation shall
have been resolved to Color's satisfaction.
(c) Color shall have received a solvency certificate relating to Logical in
the form attached as Exhibit 8.3(c) executed by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and the
President of Logical (if different than ▇▇. ▇▇▇▇▇▇▇).
(d) Color shall have obtained the consent of SouthTrust Bank to the
Exchange and the release by SouthTrust Bank of its security interest in the
assets of Logical.
ARTICLE IX
SURVIVAL
The covenants, agreements, representations and warranties of the parties
hereto contained in this Agreement shall survive the Closing Date for a period
of one year; provided that the covenants and agreements which, by their terms,
are to have effect or be performed after the Closing shall survive and remain in
full force and effect for the applicable periods specified in the respective
covenant or agreement or, if no such period is specified, indefinitely.
ARTICLE X
INDEMNIFICATION
SECTION 10.1. INDEMNIFICATION BY COLOR. Color agrees to indemnify, defend
and hold DCP and the DCP Shareholders harmless from and against any and all
losses, expenses, claims, charges, liabilities, or damages, including, without
limitation, attorneys fees and court costs (collectively, "Damages"), actually
incurred by DCP, based upon or arising out of (a) any breach of any covenant or
agreement of Color contained in this Agreement or any Ancillary Color Document,
or (b) the breach by Color of any representations and warranties contained in
this Agreement.
17
SECTION 10.2. INDEMNIFICATION BY DCP AND THE DCP SHAREHOLDERS. DCP and the
DCP Shareholders hereby, jointly and severally, agree to indemnify, defend and
hold Color harmless from and against any and all Damages actually incurred by
Color, based upon or arising out of (a) any breach of any covenant or agreement
by DCP or any DCP Shareholder contained in this Agreement or any Ancillary DCP
Document, or (b) the breach by DCP or any DCP Shareholder of any representations
and warranties contained in this Agreement or any Ancillary DCP Document.
SECTION 10.3. NOTICE OF CIRCUMSTANCES. Promptly after receipt by Color or
DCP of notice of any action, proceeding, claim or potential claim (any of which
is hereinafter individually referred to as a "Circumstance") which could give
rise to a right to indemnification pursuant to any provision of this Agreement,
such party shall give the party who may be obligated to provide indemnification
hereunder (the "Indemnifying Party") written notice describing the Circumstance
in reasonable detail. If notice of a Circumstance is not given to the
Indemnifying Party within a sufficient period of time or in sufficient detail to
apprise the Indemnifying Party of the nature of the Circumstance (in each
instance taking into account the facts and circumstances known by the
indemnified party with respect to such Circumstance), the Indemnifying Party
shall not be liable to the party seeking indemnification to the extent that the
Indemnifying Party's position is actually prejudiced as a result thereof. The
Indemnifying Party shall have the right, at its option, to compromise or defend,
at its own expense and by its own counsel, any Circumstance involving the
asserted liability of the party seeking indemnification. If any Indemnifying
Party shall undertake to compromise or defend any such asserted liability, it
shall promptly notify the party seeking indemnification of its intention to do
so, and the party seeking indemnification agrees to cooperate fully with the
Indemnifying Party and its counsel in the compromise of, or defense against, any
such asserted liability. All costs and expenses incurred in connection with such
cooperation shall be borne by the Indemnifying Party. In any event, the
indemnified party shall have the right, at its own expense, to participate in
the defense of such asserted liability. Under no circumstance shall the party
seeking indemnification compromise any such asserted liability without the
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.
SECTION 10.4. SURVIVAL OF INDEMNIFICATION OBLIGATIONS. The indemnification
obligations for all claims relating to breaches of representations, warranties
and covenants shall survive the Closing and shall be enforceable with respect to
damages for which a notice of Circumstance has been delivered prior to the
expiration, if any, of the representation, warranty or covenant on which the
indemnified party's claim is based.
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ARTICLE XI
TERMINATION
SECTION 11.1. GROUNDS FOR TERMINATION. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual written agreement of Color and DCP;
(b) by Color if any of the conditions set forth in Sections 8.1 or 8.3
shall have become incapable of fulfillment, and shall not have been waived by
Color;
(c) by DCP if any of the conditions set forth in Sections 8.1 or 8.2 shall
have become incapable of fulfillment, and shall not have been waived by DCP;
(d) by Color for any reason on or after October 10, 2002 if the Closing
shall not have been consummated on or before October 10, 2002; or
(e) by Color, if the Fairness Opinion to be received pursuant to Section
5.4, does not indicate that the terms of this Agreement are fair to Color and
the Color shareholders.
The party desiring to terminate this Agreement shall give notice of such
termination to the other party.
SECTION 11.2. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 11.1, Color shall be entitled to receive from the Escrow
Agent the 500,000 Scheduled Shares described on Schedule 2.1, originally issued
to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and reissued in the name of DCP as contemplated by Section
2.1. The parties acknowledge that in such event the damages would be difficult
to ascertain and the transfer of such shares shall be as liquidated damages and
not as a penalty. The provisions of Section 7.4, this Section 11.2, and of
Article XII shall survive any termination hereof pursuant to Section 11.1.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing and sent by (a) certified or registered
U.S. mail, return receipt requested, (b) personal delivery, including delivery
by Federal Express or similar guaranteed express courier, (c) facsimile,
provided written confirmation of receipt is received and a copy is sent by the
method described in (a) or (b), addressed as follows:
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if to Color or Logical, Color Imaging, Inc.
(prior to Closing) to: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: T. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ III
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to DCP or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
the DCP Shareholders: c/o Global Capital Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Logical, Logical Imaging Solutions, Inc.
(after the Closing) to: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇-▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as the Party may designate by written notice to the
other party hereto. All such notices, requests and other communications shall be
deemed received on the date of receipt by the recipient thereof if received
prior to 5 p.m. in the place of receipt and such day is a business day in the
place of receipt. Otherwise, any such notice, request or communication shall be
deemed not to have been received until the next succeeding business day, in the
place of receipt.
SECTION 12.2. AMENDMENTS AND WAIVERS.
(a) Any provision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by Color and DCP (with DCP being the authority to act on behalf of
the DCP Shareholders), or in the case of a waiver, by the party against whom the
waiver is to be effective.
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(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. Other than as provided herein,
the rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
SECTION 12.3. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto.
SECTION 12.4. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of Georgia without regard to
the conflict of laws rules of such state.
SECTION 12.5. JURISDICTION. Except as otherwise expressly provided in this
Agreement, any suit, action or proceeding seeking to enforce any provision of,
or based on any matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby shall be brought only in the federal or
state court located in Georgia each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing, each
party agrees that service of process on such party as provided in this Section
12.5 shall be deemed effective service of process on such party.
SECTION 12.6. COUNTERPARTS; NO THIRD PARTY BENEFICIARIES. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. No provision of this Agreement is intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.
SECTION 12.7. ENTIRE AGREEMENT. This Agreement, together with the Ancillary
DCP Documents and Ancillary Color Documents, constitute the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter of this Agreement,
provided the foregoing shall not be construed as terminating or superceding the
Confidentiality Agreement. No representation, inducement, promise,
understanding, condition or warranty not set forth herein or in the Ancillary
DCP Documents or Ancillary Color Documents has been made or relied upon by
either party hereto.
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SECTION 12.8. CONSTRUCTION. This Agreement is the result of arms-length
negotiations between the parties hereto and has been prepared jointly by the
parties. In applying and interpreting the provisions of this Agreement, there
shall be no presumption that the Agreement was prepared by any one party or that
the Agreement shall be construed in favor of or against any one party.
SECTION 12.9. MOST FAVORABLE TAX TREATMENT. Notwithstanding anything
contained herein to the contrary, the parties agree that they shall cooperate
with each other in order to structure and consummate the Exchange in such a way
as to obtain the most favorable possible tax treatment for the parties, but no
change shall be made which is incompatible with "treasury stock and surplus"
accounting treatment for the transaction by Color.
SECTION 12.10. EXPENSES. Each party shall bear its own expenses in
connection with the Exchange, including brokers, finders, or similar fees,
except that: (i) Color and DCP shall share equally all costs payable to the
Escrow Agent; provided, if this Agreement fails to close as a result of a
termination of this Agreement by Color, Color shall bear all costs payable to
the Escrow Agent; (ii) Color shall bear all expenses associated with retaining
the Financial Advisor to prepare the Fairness Opinion, (iii) Color shall bear
all fees charged by the transfer agent and all sales and transfer taxes incurred
in connection with the transfer of the Logical Shares to DCP, and (iv) DCP shall
bear all sales and transfer taxes incurred in connection with the transfer of
the Color Shares to Color. Notwithstanding the foregoing, Color shall not be
responsible for any fees payable to the Escrow Agent resulting from the
maintenance of the escrow account established pursuant to Section 2.1 past the
Closing Date.
[Signatures begin on next page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
"COLOR":
COLOR IMAGING, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------
Title: EXECUTIVE VICE PRESIDENT
---------------------------------------------
"LOGICAL":
LOGICAL IMAGING SOLUTIONS, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Title: CHIEF EXECUTIVE OFFICER
---------------------------------------------
"DCP":
DIGITAL COLOR PRINT, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Title: CHIEF EXECUTIVE OFFICER
---------------------------------------------
"DCP SHAREHOLDERS":
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇ ▇. ST. AMOUR
------------------------------------------------
▇▇▇▇▇ ▇. St. Amour
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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LIST OF SCHEDULES AND EXHIBITS
Schedules
---------
Schedule 2.1 Scheduled Shares
Schedule 2.5 Description of Offering
Schedule 3.3 Governmental Authorization-Color
Schedule 3.4 Non-Contravention-Color
Schedule 4.3 Non-Contravention-DCP and DCP Shareholders
Exhibits
--------
Exhibit 2.1 Form of Exchange Escrow Agreement
Exhibit 2.3A Resignations of Directors/Officers to be Delivered by Color
Exhibit 2.3B Resignations of Directors/Officers to be Delivered by DCP
Exhibit 2.3C Form of Resignation
Exhibit 2.4 Form of Termination Agreement
Exhibit 6.1 Form of Warrant
Exhibit 6.3 Form of Escrow Agreement
Exhibit 8.3(c) Form of Solvency Certificate
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