- --------------------------------------------------------------------------------
EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
- --------------------------------------------------------------------------------
Dated as of
April 25, 2001
Between
DRBG, LLC
the Buyer,
and
Day Runner, Inc.
the Seller.
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and is not intended
to define, limit or describe the scope or intent of any provision of this
Agreement.)
Page
Parties; Recitals ..............................................................................1
ARTICLE ONE TERMS OF THE TRANSACTION...............................................................1
SECTION 1.1. Sale and Purchase.............................................................1
SECTION 1.2. Purchase Price and Adjustment.................................................1
SECTION 1.3. Certain Expenses..............................................................1
SECTION 1.4. The Closing...................................................................2
SECTION 1.5. Further Assurances............................................................2
ARTICLE TWO REPRESENTATIONS AND WARRANTIES OF THE SELLER...........................................2
SECTION 2.1. Power and Capacity............................................................2
SECTION 2.2. The Shares....................................................................2
SECTION 2.3. Conflicting Instruments; Consents.............................................2
SECTION 2.4. Transfer of the Shares........................................................3
SECTION 2.5. Organization and Authority....................................................3
SECTION 2.6. Capitalization................................................................3
SECTION 2.7. Compliance with Law...........................................................4
ARTICLE THREE REPRESENTATIONS AND WARRANTIES OF THE BUYER..........................................4
SECTION 3.1. Power and Capacity............................................................4
SECTION 3.2. Conflicting Instruments; Consents.............................................4
ARTICLE FOUR COVENANTS OF SELLER AND THE COMPANY...................................................4
SECTION 4.1. Access........................................................................4
SECTION 4.2. Transfer of the Shares........................................................4
SECTION 4.3. Conduct of the Business of the Company........................................4
SECTION 4.4. Third Party Consents..........................................................6
SECTION 4.5. Notice of Default.............................................................6
ARTICLE FIVE INDEMNIFICATION.......................................................................7
SECTION 5.1. Indemnification Obligation....................................................7
SECTION 5.2. Claims........................................................................7
SECTION 5.3. Defense by the Indemnifying Party.............................................7
SECTION 5.4. Notice........................................................................8
ARTICLE SIX CONDITIONS TO THE BUYER'S OBLIGATIONS...................................................8
SECTION 6.1. Representations and Warranties................................................8
SECTION 6.2. Legal Matters.................................................................8
SECTION 6.3. Delivery of the Shares........................................................8
SECTION 6.4. Legal Proceedings.............................................................8
SECTION 6.5. Third Party Consents..........................................................9
ARTICLE SEVEN CONDITIONS TO THE SELLER'S OBLIGATIONS...............................................9
SECTION 7.1. Delivery of Satisfaction Agreement............................................9
SECTION 7.2. Representations and Warranties................................................9
ARTICLE EIGHT MISCELLANEOUS........................................................................9
SECTION 8.1. Survival of Representations, Warranties and Covenants.........................9
SECTION 8.2. Expenses......................................................................9
SECTION 8.3. Governing Law.................................................................9
SECTION 8.4. Notices......................................................................10
SECTION 8.5. Jurisdiction; Agent for Service..............................................10
SECTION 8.6. Entire Agreement.............................................................11
SECTION 8.7. Binding Effect...............................................................11
SECTION 8.8. Amendments; Waivers..........................................................11
SECTION 8.9. Counterparts.................................................................11
SECTION 8.10 Severability.................................................................11
SECTION 8.11. Specific Performance.........................................................11
SCHEDULES
Schedule 2.3 Subsidiaries
EXHIBITS
EXHIBIT A Satisfaction Agreement
DEFINED TERMS
Term Defined in:
- ---- -----------
Agreement Opening Paragraph
Buyer Opening Paragraph
Closing Section 1.4
Closing Date Section 1.4
Common Stock Recitals
Company Recitals
ERISA Section 3.3
GAAP Section 3.3
Indemnified Parties Section 4.1
Indemnifying Party Section 4.1
Loan Agreement Section 1.2
Purchase Price Section 1.2
Purchase Price Adjustment Section 1.2
Subsidiaries Section 2.3
Seller Opening Paragraph
Shares Recitals
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of April 25, 2001
between DRBG, LLC, a Delaware limited liability company (the "Buyer") on the one
hand and Day Runner Inc., a Delaware corporation (the "Seller") on the other
hand.
R E C I T A L S
A. The Seller own directly, beneficially and of record, 100% of the issued
and outstanding shares of capital stock (the "Shares") of Filofax, Inc., a
Connecticut corporation (the "Company").
B. The Shares consist of 2,501 shares of the common stock, no par value per
share, of the Company (the "Common Stock").
C. The Buyer desires to acquire the Shares from the Seller, and the Seller
desires to sell the Shares to the Buyer, all upon the terms and subject to the
conditions set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained in this Agreement and for other valuable consideration the Buyer and
the Seller agrees as follows:
ARTICLE ONE
TERMS OF THE TRANSACTION
SECTION 1.1. Sale and Purchase.
The Seller, on the Closing Date, agrees to sell the Shares to the Buyer by
delivering certificates for the Shares to the Buyer in proper form for transfer
by delivery or with duly executed stock powers attached thereto.
SECTION 1.2. Purchase Price and Adjustment.
Subject to reduction pursuant to Section 1.3(b) or increase pursuant to the last
paragraph of this Section 1.2, the Buyer shall pay to the Seller on the Closing
Date, as purchase price for the Shares, $401.72 per Share, for an aggregate
amount of $1,004,702, (the "Purchase Price"). Such payment will be in the form
of the release of certain debt owed to Buyer by Seller under that certain Second
Amended and Restated Loan Agreement (the "Loan Agreement") dated as of November
1, 2000 by and among Seller, Day Runner UK plc, a company incorporated with
limited liability under the laws of England and Wales and a wholly-owned
indirect subsidiary of Day Runner, Filofax Limited, a company incorporated with
limited liability under the laws of England and Wales and a wholly-owned
indirect subsidiary of Day Runner UK plc, each lender whose name is set forth on
the signature pages of Loan Agreement and each lender which may have become a
party to Loan Agreement pursuant to Section 12.8 thereof, and Wells Fargo Bank,
National Association, as Administrative Agent pursuant to a Satisfaction
Agreement in the form attached hereto as Exhibit A. In the event that the
Company is sold by the Buyer to a third party within a period of four months
from the Closing Date for an amount greater than the Purchase Price, the
Purchase Price shall be increased by an amount (the "Purchase Price Adjustment")
equal to the sale price to such third party minus the Purchase Price. Any
Purchase Price Adjustment shall be payable in the same manner as the Purchase
Price.
SECTION 1.3. Certain Expenses.
(a) Neither the Buyer nor the Company shall pay or be liable for any of the
following fees, expenses, taxes or liabilities incurred by the Seller or the
Company, all of which shall be borne and paid by the Seller:
(i) the fees and expenses, if any, of any person retained
by the Seller or the Company for brokerage, financial advisory or
investment banking services or services as a finder rendered to the
Seller or the Company in connection with the proposed sale of the
Shares including, without limitation, the transactions contemplated by
this Agreement;
(ii) any fees and expenses of legal counsel, auditors and
accountants retained or employed by the Seller or the Company for
services rendered to the Seller or the Company in connection with the
proposed sale of the Shares including, without limitation, the
transactions contemplated by this Agreement;
(iii) any income, capital gains or other tax incurred by the
Seller as a result of the consummation of the transactions contemplated
hereby.
(b) If the Company shall pay or be liable for any fee, expense, tax or liability
described in Section 1.3(a), the sum of all such payments or liabilities shall
be paid by the Seller to the Buyer upon demand or Buyer may reduce the Purchase
Price accordingly.
SECTION 1.4. The Closing.
The closing of the purchase and sale of the Shares (the "Closing") shall be held
at the offices of the Buyer or at such other place as the parties may agree
upon, at 9:00 A.M., local time, on April 25, 2001 (the "Closing Date"), or on
such other date as the parties may agree upon.
SECTION 1.5. Further Assurances.
The Seller, at its sole cost and expense and without expense to the Buyer, will
do such further acts and execute and deliver such further documents regarding
its obligations hereunder as may be required solely for the purpose of (i)
accomplishing the purposes of this Agreement or (ii) assuring and confirming
unto the Buyer the validity of any documents of conveyance to be delivered at
Closing.
ARTICLE TWO
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer, as of the date hereof and as of
the Closing Date, as follows: SECTION 2.1. Power and Capacity. Seller has all
requisite power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by
Seller, constitutes the valid and binding agreement of Seller and is enforceable
against Seller in accordance with its terms.
SECTION 2.2. The Shares.
Seller is the beneficial and record owner of the Shares. The Shares are held by
the Seller as record owner thereof, free and clear of all liens, charges,
encumbrances, equities and claims whatsoever (other than encumbrances created by
this Agreement or the Loan Agreement or other agreements entered into in
connection therewith (collectively, the "Loan Documents")) and are not subject
to any restriction with respect to their transferability (other than
restrictions on transfer under applicable federal and state securities laws or
under the Loan Documents). No third party, including any former owner of the
Shares or any capital stock of the Company has the basis for any claims against
the Shares, the Company, the Seller or the Buyer with respect to the
transactions contemplated hereby other than claims under this Agreement or the
Loan Documents.
SECTION 2.3. Conflicting Instruments; Consents.
(a) The execution and delivery by Seller of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of the articles of incorporation or the by-laws (or the equivalent
thereof) of the Company or any of the entities listed on Schedule 2.3 (the
"Subsidiaries"), or, except with respect to the Loan Documents, result in the
creation of any material lien, security interest, charge or encumbrance upon the
Shares or any of the properties or assets of the Company or any of the
Subsidiaries under, materially conflict with or result in a material breach of,
create an event of default (or event that, with the giving of notice or lapse of
time or both, would constitute an event of default) under, or give any third
party the right to accelerate any obligation under, any material agreement,
mortgage, license, lease, indenture, instrument, order, arbitration award,
judgment or decree to which Seller, the Company or any of the Subsidiaries is a
party or by which Seller, the Shares, the Company or any of the Subsidiaries, or
any material assets or properties of the Company or any of the Subsidiaries, are
bound or affected.
(b) The execution and delivery by the Seller of this Agreement do not, and the
consummation of the transactions contemplated hereby will not, result in a
material violation of, or require any authorization, approval, consent or other
action by, or registration, declaration or filing with or notice to, any court
or administrative or governmental body pursuant to, any statute, law, rule,
regulation or ordinance applicable to Seller, the Company or any of the
Subsidiaries, where the failure to obtain such authorization, approval consent
or action or make such registration, declaration, filing or notice would have a
material adverse effect on the Company. There is no pending or, to the knowledge
of Seller, threatened action, suit, proceeding or investigation before or by any
court or governmental body or agency, to restrain or prevent the consummation of
the transactions contemplated by this Agreement or that might materially affect
the right of the Buyer to own and vote the Shares or the right of the Company to
operate the business of the Company or any of the Subsidiaries.
SECTION 2.4. Transfer of the Shares.
Upon the delivery of the certificates for the Shares by the Seller and payment
for the Shares as provided for in Sections 1.1 and 1.2, the Buyer will acquire
good and marketable title to all of the outstanding shares of capital stock of
the Company, free and clear of all liens, charges, encumbrances, equities and
claims whatsoever, other than liens, charges, encumbrances, equities and claims
created by Buyer or any affiliate of Buyer, under any Loan Documents or by law,
rule or regulation.
SECTION 2.5. Organization and Authority.
(a) The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Connecticut. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
every jurisdiction in which the nature of the business conducted by it or the
character or location of the properties owned or leased by it makes such
qualification necessary, other than jurisdictions where the failure to so
qualify or be in good standing would not have a material adverse effect on the
Company. The Company has all requisite corporate power and authority to own or
lease and operate its properties and assets and to carry on its business as now
conducted.
(b) The articles of incorporation and the by-laws and all amendments thereto,
and the minute books, stock ledgers and stock transfer records of the Company
furnished to the Buyer for review are accurate and complete in all material
respects. Such minute books contain the minutes of all meetings of the
shareholders and the board of directors, and all committees thereof, of the
Company. All such meetings were duly called and held, and a quorum was present
and acting throughout each such meeting. Such stock ledgers and stock transfer
records reflect all issuances and registrations of transfer of all shares of
capital stock of the Company and the certificates representing all canceled
shares of capital stock have been returned to the stock ledger.
SECTION 2.6. Capitalization.
The Company has an authorized capital consisting of 20,000 shares of Common
Stock, of which 2,501 shares of Common Stock are issued and outstanding. All
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and non-assessable and were issued by the Company in compliance
with all applicable federal and state securities laws, rules and regulations.
There is no outstanding or authorized option, subscription, warrant, call,
right, commitment or other agreement of any character obligating the Company to
sell or transfer any additional shares of its capital stock or any other
securities convertible into or exercisable for or evidencing the right to
subscribe for any shares of its capital stock.
SECTION 2.7. Compliance with Law.
The Seller, the Company and the Subsidiaries have complied in all material
respects with all applicable statutes, regulations, orders and restrictions of
the United States of America, all states and other subdivisions thereof, all
applicable foreign jurisdictions, all agencies and instrumentalities of the
foregoing and all national and international self-regulatory bodies and
authorities in respect of the conduct of the Company's business and ownership of
its properties.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller, as of the date hereof and as of
the Closing Date, as follows:
SECTION 3.1. Power and Capacity. Buyer has all
requisite power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by
Buyer, constitutes the valid and binding agreement of Buyer and is enforceable
against Buyer in accordance with its terms.
SECTION 3.2. Conflicting
Instruments; Consents.
The execution and delivery by Buyer of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of the limited liability agreement of the Buyer.
SECTION 3.3. Organization and Authority.
Buyer is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware.
ARTICLE FOUR
COVENANTS OF SELLER AND THE COMPANY
SECTION 4.1. Access.
(a) From the date hereof through the Closing Date, the Seller will cause the
Company to give to the Buyer and its respective financial advisors, legal
counsel, independent accountants and other representatives full access during
normal business hours to all properties, documents, contracts, employees and
records of the Company and will furnish the Buyer with copies of such documents
(certified if so requested) and with such information with respect to the
Company as the Buyer from time to time reasonably may request.
(b) From the date hereof through the Closing Date, the Seller will cause the
Company to permit representatives of the Buyer to be present at each facility of
the Company and to observe the conduct of the business of the Company at any
time during normal business hours.
SECTION 4.2. Transfer of the Shares.
From the date hereof through the Closing Date, Seller will not (i) sell or
otherwise transfer or agree to sell or otherwise transfer, any of the Shares
owned by Seller or (ii) incur or permit to exist any liens, charges,
encumbrances, equities or claims on the Shares whatsoever, except for liens,
charges, encumbrances, equities or claims under this Agreement or under the Loan
Documents.
SECTION 4.3. Conduct of the Business of the Company.
(a) From the date hereof through the Closing Date, the Seller will cause the
Company to use commercially reasonable efforts to preserve the business of the
Company, keep available to the Company the services of all current officers and
substantially all key employees and preserve for the Buyer the goodwill of the
suppliers, customers, employees and others having business relations with the
Company.
(b) From the date hereof through the Closing Date, the Seller, except as
otherwise permitted by this Agreement or consented to in writing by the Buyer,
will cause the Company to continue the operation of the business of the Company
in the ordinary course, and will maintain the assets, properties and rights of
the Company in at least as good order and condition as exists on the date
hereof, subject to ordinary wear and tear. Without limiting the generality of
the foregoing, except as otherwise permitted by this Agreement or consented to
in writing by the Buyer, the Seller will not permit the Company to:
(i) incur, discharge or satisfy any obligation or
liability or any liens, charges, encumbrances, equities or claims,
except in the ordinary course of business or in connection with the
performance of this Agreement;
(ii) increase or establish any reserve for taxes or other
liabilities on its books or otherwise provide therefor, except for
taxes or other liabilities relating to the ordinary course operations
of the Company since the Closing Date; write up or down the value of
inventory or determine as collectible any notes or accounts receivable
that were previously considered to be uncollectible, except for
write-ups or write-downs in accordance with generally accepted
accounting principles ("GAAP") in the ordinary course of business
consistent with past practice; or voluntarily make any change in any of
its methods of accounting or in any of its accounting principles or
practices;
(iii) purchase, lease, sell, assign or transfer any asset,
property or business or waive or permit to lapse any right, except in
the ordinary course of business; or make or authorize any capital
expenditure for additions to plant and equipment in excess of $20,000
in the aggregate;
(iv) make any loan to any shareholder or any relative or
affiliate of any shareholder, or declare, set aside or pay to any
shareholder any dividend or other distribution in respect of its
capital stock, transfer any asset or pay any money to any shareholder
or any relative or affiliate of any shareholder other than the payment
of wages or salaries to shareholders who are also employees of the
Company in the ordinary course of business; or enter into or agree to
enter into any transaction with or for the benefit of any shareholder
of the Company or any relative or affiliate of any shareholder other
than the transactions contemplated pursuant to this Agreement;
(v) reclassify or change in any manner the outstanding
shares of capital stock of the Company or issue or agree to issue,
sell, transfer, pledge, encumber or deliver any stock, bond, debenture
or other security of the Company;
(vi) grant any increase in the compensation payable to any
officer, director, consultant, employee or agent of the Company, except
for increases in the compensation payable in the ordinary course of
business to employees (other than key employees) in amounts and at
times consistent with past practice; enter into or amend any contract
for the employment of any officer, employee or other person that is not
terminable upon 30 days notice or less, except for accrued vacation pay
for past services; enter into any contract or collective bargaining
agreement with any labor union; enter into or agree to enter into any
bonus, pension, profit-sharing, retirement, stock purchase, stock
option, deferred compensation, incentive compensation, hospitalization,
insurance or similar plan, contract or understanding providing for
employee benefits; or make any payment or a contribution under any
employee pension benefit plan as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974 ("ERISA") and each
employee welfare benefit plan or non-ERISA plan or incur any obligation
to make any such payment or contribution that is not in accordance with
the usual past practice of the Company;
(vii) enter into any contract, except in the ordinary course
of business, for the sale of goods or the performance of services for
or by the Company that is not terminable upon 30 days notice or less;
enter into any contract continuing for a period of more than three
months from its date that is not terminable upon 30 days notice or
less; enter into any agreement or instrument relating to the borrowing
or lending of money or extension of credit; guarantee or indemnify any
person or entity with respect to any obligation for borrowed money or
otherwise, excluding endorsements made for collection; or make or
permit to be made any amendment, modification, cancellation or
termination of any material contract, agreement, lease, license,
finance agreement or written evidence of indebtedness;
(viii) extend credit in excess of $20,000 to any customer who
was not a customer before the date of this Agreement or depart from the
normal and customary trade, discount and credit policies of the
Company;
(ix) settle any administrative or judicial proceedings;
(x) amend the certificate of incorporation or the
by-laws of the Company. (c) From the date hereof through the Closing
Date, the Seller shall cause the Company to comply in all material
respects with all applicable statutes, regulations, orders and
restrictions of the United States of America, all states and other
subdivisions thereof, all applicable foreign jurisdictions, all
agencies and instrumentalities of the foregoing and all
national and international self-regulatory bodies and authorities.
SECTION 4.4. Third Party Consents.
The Seller will use its commercially reasonable efforts, and after Closing will
cooperate with the Company and Buyer, to obtain or cause to be obtained all
consents, waivers, approvals, amendments and authorizations that are necessary
under applicable law, agreement, or otherwise to be obtained by the Company or
the Seller in connection with the sale of the Shares to the Buyer and the
consummation of the transactions contemplated hereunder, or to enable the
Company to conduct its business after the Closing in all material respects in
the same manner as such business is being conducted on the date hereof.
SECTION 4.5. Notice of Default.
(a) The Seller will use its commercially reasonable efforts, and after Closing
will cooperate with the Company and Buyer, to give notice promptly to the Buyer
of the occurrence of any event or the failure of any event to occur, which
occurrence or failure to occur is known to the Company or the Seller, that
results in a breach of any representation or warranty by the Seller or a failure
by the Company or the Seller to comply with any covenant, condition or agreement
contained herein. (b) The Seller will and will cause the Company to use
commercially reasonable efforts to (i) take all actions necessary to render
accurate as of the Closing Date its representations and warranties contained
herein, (ii) refrain from taking any action that would render any such
representation or warranty inaccurate as of such time and (iii) perform or cause
to be satisfied each covenant or condition to be performed or satisfied as
contemplated by this Agreement.
ARTICLE FIVE
INDEMNIFICATION
SECTION 5.1. Indemnification Obligation.
The Seller shall indemnify and hold harmless the Company, each of its
Subsidiaries, the Buyer and their affiliates (collectively, the "Indemnified
Parties") in respect of any and all claims, actions, causes of action,
arbitrations, proceedings, losses, damages, liabilities and expenses (including,
without limitation, settlement costs, attorneys' fees at such attorneys'
customary hourly rates and any other expenses of investigating or defending any
actions or threatened actions), whether or not due and payable, incurred by the
Indemnified Parties in connection with each and all of the following:
(a) Any breach (whether as of the Closing Date or as of some other date set
forth in any such representation or warranty) of any representation or warranty
contained herein of the Seller, or in any instrument delivered at the Closing by
the Seller, the Company or any Subsidiary;
(b) The breach of any covenant, agreement or obligation of the Seller,
contained in this Agreement or any other instrument contemplated by this
Agreement; and
(c) any and all liabilities and obligations of every nature and description
of any of the Seller, the Company or any Subsidiary, known or unknown, arising
from or as a result of the Company's or any Subsidiary's operations prior to the
Closing Date, or are based upon events, acts or omissions of Seller, the Company
or any Subsidiary which occurred prior to such date.
Notwithstanding anything else contained herein, the Seller shall have no
liability under this Section 5, unless and until the aggregate of all Losses
relating thereto exceeds $50,000 (the "Minimum Amount"), in which event the
Seller shall be liable for all Losses in excess of the Minimum Amount up to an
aggregate maximum amount for all claims made hereunder against Seller and all
its affiliates, equal to the Purchase Price.
SECTION 5.2. Claims.
Whenever any claim shall arise for indemnification, the Indemnified Parties
shall notify the party from whom it is seeking indemnification (the
"Indemnifying Party") of the claim pursuant to Section 5.4 hereunder and, when
known, the facts constituting the basis for such claim and the amount or
estimate of the amount of the liability arising from such claim.
SECTION 5.3. Defense by the Indemnifying Party.
In connection with any claim giving rise to indemnity hereunder resulting from
or arising out of any claim or legal proceeding by a person other than the
Indemnified Parties, the Indemnifying Party at its sole cost and expense, may,
upon written notice to the Indemnified Parties received by the Indemnified
Parties within 10 calendar days of the Indemnifying Party' receipt of such
claim, assume the defense of any such claim or legal proceeding provided that
the Indemnifying Party acknowledges their obligation to indemnify the
Indemnified Parties in respect of the entire amount of all of the claims
asserted therein. If the Indemnifying Party assumes the defense of any such
claim or legal proceeding, the Indemnifying Party shall select counsel
reasonably acceptable to the Indemnified Parties to conduct the defense of such
claims or legal proceedings at their sole cost and expense. The Indemnifying
Party shall not consent to a settlement of, or the entry of any judgment arising
from, any such claim or legal proceeding, without the prior written consent of
the Indemnified Parties, provided that the Indemnifying Party may, without the
Indemnified Party's prior written consent, settle or compromise any such action,
claim or proceeding or consent to entry of any judgment with respect to any such
action or claim that requires solely the payment of money damages by the
Indemnifying Party and that includes as an unconditional term thereof the
release by the claimant or the plaintiff of the Indemnified Party from all
liability with respect to such action, claim or proceeding. The Indemnified
Parties shall be entitled to participate in (but not control) the defense of any
such action, with their own counsel and at their own expense and shall be
entitled to any and all information or documentation relating thereto. If the
Indemnifying Party does not assume (or continue to diligently and competently
prosecute) the defense of any such claim or litigation resulting therefrom in
accordance with the terms hereof, the Indemnified Parties may defend against
such claim or litigation in such manner as they may deem appropriate, including,
but not limited to, settling such claim or litigation, after giving notice of
the same to the Indemnifying Party on such terms as the Indemnified Parties may
deem appropriate. The Indemnifying Party shall be entitled to participate in the
defense of any action by the Indemnified Parties, which participation shall be
limited to contributing information to the defense and being advised of its
status.
SECTION 5.4. Notice.
The Indemnified Parties agree that in the event of any occurrence which may give
rise to a claim by the Indemnified Parties against the Indemnifying Party
hereunder, the Indemnified Parties will give notice thereof to the Indemnifying
Party; provided, however, that failure of the Indemnified Parties to timely give
the notice provided in this Section shall relieve the Indemnifying Person of its
obligations hereunder only to the extent, if at all, that it is prejudiced by
reason of such delay or failure.
ARTICLE SIX
CONDITIONS TO THE BUYER'S OBLIGATIONS
The obligations of the Buyer hereunder shall be subject to the satisfaction, as
of the Closing Date, of the following conditions (any of wh
ich may be waived, in
whole or in part, by the Buyer):
SECTION 6.1. Representations and Warranties.
------------------------------
The representations and warranties of the Seller contained in this Agreement
(including the Schedules and Exhibits) or any certificate, instrument or other
document delivered to the Buyer in connection herewith shall be true and correct
in all material respects as of the Closing Date or as of such other date as is
set forth in any such representation or warranty. The Seller shall have duly
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed by the Seller at or prior
to the Closing Date. The Buyer shall have been furnished with certificates of
the Seller, dated the Closing Date, certifying in such detail as the Buyer
reasonably may request to the fulfillment of the foregoing conditions.
SECTION 6.2. Legal Matters.
All legal matters, and the form and substance of all documents to be delivered
by the Seller or the Company to the Buyer at the Closing, shall be satisfactory
to counsel for the Buyer.
SECTION 6.3. Delivery of the Shares.
The Seller shall have delivered to the Buyer certificates for all of the Shares
in proper form for transfer by delivery or with duly executed stock powers
attached thereto, together with evidence of the Company's possession of the
shares of capital stock or other securities owned beneficially or of record,
directly or indirectly, by the Company in each of the Subsidiaries. The Buyer is
not obligated to close or purchase any Shares if less than all of the Shares are
tendered at the Closing in accordance with the terms hereof.
SECTION 6.4. Legal Proceedings.
No action, suit, proceeding or investigation shall be pending or threatened
before or by any court or governmental body or agency (i) challenging the
transactions contemplated by this Agreement or otherwise seeking damages or (ii)
seeking to restrain or prevent the carrying out of the transactions contemplated
by this Agreement or to prohibit or limit the ability of the Buyer to exercise
full rights of ownership of the Shares or to operate or control the assets,
property and business of the Company and the Subsidiaries after the Closing
Date.
SECTION 6.5. Third Party Consents.
The Seller shall have obtained and shall have caused the Company to obtain all
consents, waivers, approvals, amendments and authorizations that are necessary
under applicable law, agreement, or otherwise to be obtained by the Company or
the Seller in connection with the sale of the Shares to the Buyer and the
consummation of the transactions contemplated hereunder, or to enable the
Company to conduct its business after the Closing in all material respects in
the same manner as such business is being conducted on the date hereof.
ARTICLE SEVEN
CONDITIONS TO THE SELLER'S OBLIGATIONS
The obligation of the Seller hereunder shall be subject to the satisfaction, as
of the Closing Date, of the following conditions (any of which may be waived, in
whole or in part, by the Seller):
SECTION 7.1. Delivery of Satisfaction Agreement.
----------------------------------
Buyer shall have duly executed and delivered to the Seller the Satisfaction
Agreement in the form attached hereto as Exhibit A
SECTION 7.2. Representations and Warranties.
The representations and warranties of the Buyer contained in this Agreement
(including the Schedules and Exhibits) or any certificate, instrument or other
document delivered to the Seller in connection herewith shall be true and
correct in all material respects as of the Closing Date or as of such other date
as is set forth in any such representation or warranty. The Buyer shall have
duly performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed by the Buyer at or prior
to the Closing Date. The Seller shall have been furnished with certificates of
the Buyer, dated the Closing Date, certifying in such detail as the Seller
reasonably may request to the fulfillment of the foregoing
conditions.
ARTICLE EIGHT
MISCELLANEOUS
SECTION 8.1. Survival of Representations, Warranties and Covenants.
The covenants, agreements, representations and warranties entered into or made
pursuant to this Agreement shall be continuing and survive the Closing Date for
a period of eighteen months.
SECTION 8.2. Expenses.
--------
Except as otherwise provided in this Agreement, each party shall pay its own
expenses in connection with the preparation and performance of this Agreement
and the consummation of the transactions contemplated hereby, including without
limitation all fees and expenses of investment bankers, financial advisors,
legal counsel, independent accountants and actuaries.
SECTION 8.3. Governing Law.
--------------
This Agreement shall be governed by and construed and enforced in accordance
with the internal, substantive laws of the State of California, without giving
effect to the conflict of laws rules thereof.
SECTION 8.4. Notices.
-------
All notices, consents, requests, instructions, approvals and other
communications provided for herein shall be deemed validly given, made or served
if in writing and delivered personally or sent by certified mail, postage
prepaid, or by overnight courier, or by telex, telecopier or telegraph, charges
prepaid:
(a) if to the Buyer, addressed to:
DRBG, LLC
Care of Wells Fargo Bank, National Association
Loan Adjustment Group
333 South Grand Avenue, 9th Floor
Los Angeles, CA 90071
Attention: Art Brokx
Ernie Pinder
Christine Kenmore, Esq.
Fax: (213) 253-5913
Additional copies of Notices to:
Gibson, Dunn & Crutcher LLP
One Montgomery Street, 31st Floor
Telesis Tower
San Francisco, CA 94104
Attention: Kathryn A. Coleman, Esq.
---------
Fax: (415) 986-5309
(b) if to the Seller, addressed to:
Day Runner, Inc
2750 West Moore Ave
Fullerton, CA 92633-2565
Attention: John Ausura
Catherine Ratcliffe
Fax: (714) 441-4848
or such other address as shall be furnished in writing by any party to the
others.
SECTION 8.5. Jurisdiction; Agent for Service.
Legal proceedings commenced by the Seller or the Buyer arising out of any of the
transactions or obligations contemplated by this Agreement shall be brought
exclusively in the federal courts, or in the absence of federal jurisdiction in
state courts, in either case in the State of California. The Buyer and the
Seller irrevocably and unconditionally submit to the jurisdiction of such courts
and agree to take any and all future action necessary to submit to the
jurisdiction of such courts. The Buyer and the Seller irrevocably waive any
objection that they now have or hereafter may have to the laying of venue of any
suit, action or proceeding brought in any such court and further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Final judgment against the
Seller or the Buyer in any such suit shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment, a certified or true copy of which
shall be conclusive evidence of the fact and the amount of any indebtedness or
liability of the Seller or the Buyer therein described, or by appropriate
proceedings under any applicable treaty or otherwise.
SECTION 8.6. Entire Agreement.
This Agreement represents the entire agreement between the parties and
supersedes and cancels any prior oral or written agreement, letter of intent or
understanding related to the subject matter hereof.
SECTION 8.7. Binding Effect.
--------------
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. The Seller
may not assign or transfer any right hereunder without the prior written consent
of the Buyer. The Buyer may freely assign or transfer its rights hereunder.
SECTION 8.8. Amendments; Waivers.
-------------------
No provision of this Agreement may be terminated, amended, supplemented, waived
or modified other than by an instrument in writing signed by the party against
whom the enforcement of the termination, amendment, supplement, waiver or
modification is sought.
SECTION 8.9. Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original and all of which together shall be deemed to be one
and the same instrument, and shall become effective when one or more
counterparts have been signed by each of the parties.
SECTION 8.10 Severability.
------------
In the event any provision, or portion thereof, of this Agreement is held by a
court having proper jurisdiction to be unenforceable in any jurisdiction, then
such portion or provision shall be deemed to be severable as to such
jurisdiction (but, to the extent permitted by law, not elsewhere) and shall not
affect the remainder of this Agreement, which shall continue in full force and
effect. If any provision of this Agreement is held to be so broad as to be
unenforceable, such provision shall be interpreted to be only so broad as is
necessary for it to be enforceable.
SECTION 8.11. Specific Performance.
--------------------
The Seller acknowledges that the Company and its business are unique and that
the Buyer will have no adequate remedy at law and may suffer irreparable damage
if the Seller breaches any covenant contained herein or fail to perform any of
its obligations under this Agreement. Accordingly, the Seller agrees that the
Buyer shall have the right, in addition to any other rights which it may have,
to specific performance and equitable injunctive relief if the Seller shall fail
or threaten to fail to perform any of its obligations under this Agreement.
(The remainder of this page has been left blank intentionally.)
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as of the day and year first above written.
DRBG, LLC
By:
-------------------------------------
Name:
Title:
Day Runner, Inc.
By:
-------------------------------------
Name:
Title:
Exhibit A
to the
Stock Purchase Agreement
Satisfaction Agreement
Schedule 2.3
Subsidiaries
Filofax Via Mail, Inc.
Filofax Retail, Inc.