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EXHIBIT 2.11
AGREEMENT FOR THE PURCHASE AND SALE OF STOCK
THIS AGREEMENT is made and entered into on the 12TH day of
FEBRUARY 1998, between and among LASON, INC., a Delaware corporation, the
address of which is 0000 Xxxxxxxxxx Xxxxxxx, Xxxx, Xxxxxxxx 00000 ("BUYER"),
SOUTHERN MICROFILM ASSOCIATES, INC., a Louisiana corporation, whose address is
0000 X & X Xxxx, Xxxxxxxx, Xxxxxxxxx 00000 ("CORPORATION"), XXXXXX XXXXX, XX.,
whose address is 00000 Xxxxxxx 0000, Xxxxxxxxx, Xxxxxxxxx 00000 ("X. XXXXX"),
XXXXXX XXXXX, whose address is 00 Xxxxxxxxx Xxxxx, Xxx Xxxxxxxxx, Xxxxx 00000
("X. XXXXX"), and XXXXX XXXXX, whose address is 0000 Xxxxxxx Xxxxx, Xxxxxx,
Xxxxx 00000 ("X. XXXXX"). For the purposes hereof, X. Xxxxx, X. Xxxxx and X.
Xxxxx are sometimes hereinafter collectively referred to as "SHAREHOLDERS".
R E C I T A L S:
Through various first and second tier operating subsidiaries,
Corporation is in the business of selling document microfilming services,
supplies, service contracting, computer software, microfilm equipment, and
document imaging services (i.e., scanning, conversion, storage and retrieval to
and from various media).
Those subsidiaries are: RACOM Corporation, a Louisiana
corporation ("RACOM"); RACOM Southwest Corporation, a Louisiana corporation
("SOUTHWEST"); Government Systems Inc., a Texas corporation ("GSI") and Business
Micrographics Corporation, a Texas corporation ("BMC"). For the purposes hereof,
RACOM, Southwest, GSI and BMC are sometimes collectively referred to as the
"SUBSIDIARIES".
Shareholders have heretofore represented that they either own
or have the right to acquire free and clear of all liens and encumbrances
whatsoever all of the issued and outstanding capital stock of Corporation (the
"SHARES").
Shareholders and Corporation have further represented that the
acquisition of all currently outstanding minority interests in the Subsidiaries
can be accomplished so that the operations of Corporation and the Subsidiaries
can be reorganized by liquidating the Subsidiaries in order to increase
operating efficiency (the "REORGANIZATION").
Immediately following the Reorganization, Buyer desires to
purchase all of the Shares owned by Shareholders so that the Shares to be
purchased by Buyer will give Buyer 100% ownership interest in Corporation.
Buyer desires to purchase the Shares from Shareholders, and
Shareholders desire to sell the Shares to Buyer, and Corporation desires that
this transaction be consummated.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained in this Agreement, the
parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
SECTION 1.1 SALE AND TRANSFER OF SHARES. Subject to the
terms and conditions set forth in this Agreement, on the Closing Date (as
defined below in Section 8.1), Shareholders will transfer and convey the Shares
to Buyer, and Buyer will acquire the Shares from Shareholders, free and clear of
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all liens, encumbrances, security agreements, equities, options, claims, charges
and restrictions. On the Closing Date, the certificates representing the Shares
shall be duly endorsed in blank for transfer, or accompanied by separate written
instruments of assignment and shall be accompanied by such other or further
supporting documents as Buyer or its counsel may reasonably require.
SECTION 1.2 PURCHASE PRICE.
Subject to possible adjustment as set forth in Sections 1.3
and 1.4 below, the purchase price for the Shares is $26,000,000.00 (the
"PURCHASE PRICE") predicated upon Corporation having a net worth, as of the
Closing Date, of at least $10,500,000.00 plus or minus five (5%) percent
including net working capital, as of the Closing Date, of at least $6,000,000.00
plus or minus five (5%) percent (collectively and inclusive of the possible five
(5%) percent adjustment contemplated herein, the "BASELINE AMOUNTS") as shown on
the unaudited consolidated financial statement of Corporation and the
Subsidiaries prepared by Xxxxxx & Associates and Corporation as of and for the
period ending January 31, 1998 (the "JANUARY BALANCE SHEET"). The Purchase Price
will be paid at Closing (as defined below in Section 8.1) in cash and in shares
of Buyer's common stock, $0.01 par value per share (the "LASON SHARES"), as
follows: (a) Lason Shares worth $5,200,000.00 and (b) cash in an amount equal to
$20,800,000.00 minus Corporation Debt (defined below) (the "CASH
CONSIDERATION"). The Cash Consideration shall be subject to further adjustment
as provided in Sections 1.3 and 1.4 of this Agreement and shall be paid at the
Closing via electronic wire transfer of same day funds.
As used herein, the term "Corporation Debt" shall mean the
amount of all debt ("DEBT") on the books of Corporation on the Closing Date
(including all loans to Shareholders and all debt of the Subsidiaries and
capital lease obligations but excluding ordinary trade payables). Such
Corporation Debt as of the date of this Agreement is set forth on EXHIBIT
1.2(A), and Corporation shall deliver to Buyer at the Closing such documentation
as may be reasonably requested by Buyer to verify the amount of Corporation Debt
existing as of Closing.
The Lason Shares will be valued for this purpose at the
average closing price of the Lason Shares for the preceding 20 trading days
prior to February 11, 1998 as reported in XXXXXX.xxx (appropriately adjusted for
any stock split, reverse stock split or common stock dividend effected or
declared by Buyer), with no fractional shares being issued hereunder. In lieu
thereof, Buyer will pay cash for any such fractional shares, the value of which
are to be determined by multiplying the fractional portion of a share of the
Lason Shares by the per share price determined in accordance with the
methodology described above. Shareholders will not be entitled to dividends,
voting rights or any other right as shareholder in respect of any fractional
share of the Lason Shares. In connection with the foregoing issuance of the
Lason Shares, on the Closing Date, Shareholders will deliver to Buyer a Lock-Up
Agreement in the form attached hereto as EXHIBIT 1.2(B) (the "LOCK-UP
AGREEMENT") pursuant to which Shareholders will agree not to sell any of the
Lason Shares delivered to them in accordance with this Agreement for a period of
24 months from and after the Closing Date . Additionally, for a period of 12
months following the Closing Date, the Lason Shares are to be held in escrow
pursuant to the terms and conditions of that certain escrow agreement (the
"ESCROW AGREEMENT") attached hereto as EXHIBIT 1.2(C), together with executed
assignments separate from certificate executed in blank, in order to enable a
possible reassignment of all or a portion of the Lason Shares to Lason.
The Purchase Price shall be payable to the Shareholders on a
pro rata basis in accordance with their respective share ownership or otherwise
paid at their direction to extinguish debt or to facilitate acquisition of
minority interests in the Subsidiaries, as set forth on Exhibit 2.3 hereto.
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SECTION 1.3 POSSIBLE POST-CLOSING ADJUSTMENT TO PURCHASE
PRICE .
A. Within 60 days of the Closing Date, Buyer will
cause an audited, consolidated financial statement of Corporation and the
Subsidiaries to be prepared by Coopers & Xxxxxxx L.L.P. for the period of July
1, 1997 to January 31, 1998 (the "INTERIM PERIOD"), showing Corporation's
consolidated net worth and net working capital at January 31, 1998 (the "INTERIM
STATEMENT"). When completed, the Interim Statement will be delivered to
Shareholders and Buyer. The Interim Statement will be prepared (i) in accordance
with generally accepted accounting principles applied in a manner consistent
with the preparation of those certain financial statements of Corporation which
were, in fact, audited as set forth in Section 2.7 hereof and (ii) without
giving effect to any of the transactions contemplated hereby (such transactions
including, without limitation, the purchase and sale of the Shares and the
amortization of goodwill associated with said purchase and sale). In the event
that Shareholders dispute any aspect of the Interim Statement, Shareholders
shall so notify Buyer within 10 days following their receipt thereof. In such
event, the parties, together with their independent public accountants, shall
meet and discuss such dispute in a good faith effort to resolve such dispute. If
no resolution is reached within 30 days of Shareholders' notice, then, and in
that event, the dispute will be submitted to and resolved by arbitration
pursuant to Section 11.14 hereof. The Interim Statement will be adjusted to the
extent required to reflect the resolution of any such dispute, either by
agreement of the parties or by arbitration. Shareholders and their accountants
shall have full access to Corporation's books and records in connection with
their review of the Interim Statement delivered by Buyer and the resolution of
any dispute relating thereto.
B. If the Interim Statement shows a net worth
and/or net working capital equal to the Baseline Amounts, then there will be no
adjustment to the Purchase Price. If the Interim Statement shows a net worth
and/or net working capital of less than the Baseline Amounts, then the Cash
Consideration will be adjusted on a dollar for dollar basis in relationship to
the deficiency from the Baseline Amounts and Shareholders will pay Buyer the
amount necessary to put Buyer and Shareholders in the positions they would have
been in had Buyer paid the correct amount to Shareholders on the Closing Date
(but without any accrual of interest or otherwise giving effect to the time
value of money). If the Interim Statement shows a net worth and/or net working
capital of greater than the Baseline Amounts, then the Cash Consideration will
similarly be adjusted on a dollar for dollar basis in relationship to the
overage from the Baseline Amounts and Buyer will pay Shareholders the amount
necessary to put Buyer and Shareholders in the positions they would have been in
had Buyer paid the correct amount to Shareholders on the Closing Date (but
without any accrual of interest or otherwise giving effect to the time value of
money). If required, such payment shall be made (i) within 15 days following the
delivery of the Interim Statement to Shareholders pursuant to Section 1.2(A)
above, or (ii) if Shareholders dispute any aspect of the Interim Statement, then
within 15 days following the resolution of such dispute.
In the event that payment is due from Shareholders to Buyer and such payment is
not made when and as due, Buyer may effectuate such payment through a
re-assignment of some or all of the Lason Shares being held in escrow pursuant
to the Escrow Agreement at a price per share equal to the closing sales price
for Lason Shares on the date which is the first trading day 15 days following
delivery of the Interim Statement to Shareholders. In the event that Buyer fails
to make payment to Shareholders when and as due, the unpaid amount shall bear
interest at the prime rate of interest charged by First Union National Bank plus
4% per annum until paid. Concurrently with the making of such payment, Buyer and
Shareholders will execute a memorandum setting forth the adjustment to the
Purchase Price, if any.
SECTION 1.4 ADDITIONAL PURCHASE PRICE. In addition to the
Purchase Price, as additional consideration for the Shares, Shareholders may be
entitled to receive up to three additional
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payments (collectively, the "ADDITIONAL PURCHASE PAYMENTS" and, individually, an
"ADDITIONAL PURCHASE PAYMENT") if and only if such Additional Purchase Payments
are earned in accordance with the following:
A. For the period commencing as of the Closing
Date and ending on February 28, 1999 (the "1998 PERIOD"), Corporation
will have a minimum EBITDA (defined in subsection G below) target of
$4,666,000 (the "1998 TARGET EARNINGS"). No later than May 1, 1999,
Buyer will calculate Corporation's EBITDA for the 1998 Period (the
"1998 ACTUAL EBITDA"). If 1998 Actual EBITDA is less than the 1998
Target Earnings, the shareholders shall not be entitled to receive any
Additional Purchase Payments whatsoever for the 1998 Period. If 1998
Actual EBITDA is equal to or greater than the 1998 Target Earnings,
each of the Shareholders shall be entitled to receive his or its pro
rata share of an Additional Purchase Payment in the aggregate amount of
$2,000,000 (such $2,000,000 payment being referred to as the "DEFERRED
INITIAL PAYMENT"). Further, in the event that 1998 Actual EBITDA is
greater than 1998 Target Earnings, in addition to the Deferred Initial
Payment, each of the Shareholders will be entitled to receive his or
its pro rata share of an Additional Purchase Payment in an aggregate
amount equal to that amount which is 6 times the difference between the
1998 Target Earnings and 1998 Actual EBITDA (the "1998 ADDITIONAL
PURCHASE PAYMENT").
Notwithstanding anything to the contrary set forth
herein, in no event will the 1998 Additional Purchase Payment exceed
$6,000,000, not including the Deferred Initial Payment. In the event
that an amount over $6,000,000 is indicated pursuant to the formula set
forth above, payment of the balance is to be deferred until the
calculation and payment of the 1999 Additional Purchase Payment (as
defined below), if any, is made, subject to the overall limitation(s)
on the Additional Purchase Payments discussed in Section 1.4(C) below.
B. Similarly, for the period commencing as of
March 1, 1999 and ending on February 28, 2000 (the "1999" PERIOD"),
Corporation will have target earnings calculated as follows: In the
event 1998 Actual EBITDA does not exceed 1998 Target Earnings, the
target earnings for the 1999 Period will be $4,666,000. In the event
1998 Actual EBITDA exceeds 1998 Target Earnings, the target earnings
for the 1999 Period will be equal to the total amount of consideration
paid by Buyer to the Shareholders for the 1998 Period divided by six
(6) (i.e. $26,000,000 + the Deferred Initial Payment of $2,000,000 +
the 1998 Additional Purchase Payment + 6).
Example: If 1998 Actual EBITDA is $5,200,000 then, and in that
event, Shareholders' 1998 Additional Purchase Payment would be
$3,204,000. Accordingly, the total amount paid to Shareholders
for the 1998 Period would be $31,204,000. Therefore, the
target earnings for the 1999 Period would be $5,200,666.00).
In all events, the target earnings for 1999 will hereinafter be
referred to as the "1999 TARGET EARNINGS".
No later than May 1, 2000, Buyer will calculate
Corporation's EBITDA for the 1999 Period (the "1999 ACTUAL EBITDA"). If the 1999
Actual EBITDA is equal to or less than the 1999 Target Earnings, the
Shareholders shall not be entitled to receive any Additional Purchase Payments
for 1999 whatsoever. If the 1999 Actual EBITDA is greater than the 1999 Target
Earnings, the Shareholders shall be entitled to receive his or its pro rata
share of an Additional Purchase Payment for 1999 in an aggregate amount equal to
6 times the difference between the 1999 Target Earnings and the 1999 Actual
EBITDA, subject to the overall limitations on Additional Purchase Payments set
forth in Section 1.4(C) below. Additionally, each of the Shareholders shall be
entitled to receive his or its pro rata share of any portion of the 1998
Additional Purchase Payment previously earned but not paid (i.e. any amount
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$6,000,000) with such amount, however, subject to the overall limitations on
Additional Purchase Payments set forth in Section 1.4(C) below.
Notwithstanding anything to the contrary set forth
above, in the event that 1998 Actual EBITDA is either less than
$4,666,000 or greater than $5,666,000, EBITDA for the 1999 Period will
be determined by averaging 1998 Actual EBITDA with 1999 Actual EBITDA
in order to determine the EBITDA figure for the 1999 Period which will
be utilized for the purpose of determining the Additional Purchase
Payment for 1999, if any. In the event that 1998 Actual EBITDA is a
number between $4,666,000 and $5,666,000, no averaging will be utilized
as aforesaid and 1999 Actual EBITDA will be utilized.
C. Notwithstanding anything to the contrary set
forth herein, Shareholders' right to Additional Purchase Payments is
conditioned upon and subject to the following limitations (in addition
to any set forth in Section 1.4(B) above): (i) in no event will the
aggregate amount of the Additional Purchase Payments payable to the
Shareholders for the 1998 Period exceed $6,000,000; (ii) in no event
will the sum of all Additional Purchase Payments for the 1998 Period
and the 1999 Period (exclusive of the Deferred Initial Payment) exceed
$12,000,000; and (iii) in no event will the sum of the Purchase Price
(as same may be adjusted pursuant to the terms and conditions hereof),
the Deferred Initial Payment and the two possible Additional Purchase
Payments (other than the Deferred Initial Payment) exceed $40,000,000.
D. All of the Additional Purchase Payments
(including the Deferred Initial Payment) are to be paid 80% in cash, in
same day funds via electronic wire transfer, and 20% in shares of the
Common Stock of Buyer (the "ADDITIONAL PURCHASE SHARES"). The
Additional Purchase Shares will be valued for this purpose at the
average closing price of Lason Shares for the preceding 10 trading days
prior to the date of each of the Additional Purchase Payment Dates (as
defined below) as reported in XXXXXX.xxx or any other exchange or
market upon which such shares are traded (appropriately adjusted for
any stock split, reverse stock split or common stock dividend effected
or declared by Buyer). No fractional share will be issued by Lason
hereunder. In lieu thereof, Buyer will pay cash for such fractional
share, the value of which shall be determined by multiplying the
fractional part of a share of Lason Common Stock by the closing value
set forth above. Shareholders will not be entitled to dividends, voting
rights or any other right as a shareholder in respect of any fractional
share of Lason. If the Lason Shares are not then traded on NASDAQ, the
New York Stock Exchange, the American Stock Exchange then, and in that
event, one hundred percent (100%) of the Additional Purchase Payments
will be paid in cash via electronic wire transfer of same day funds. In
connection with the foregoing issuance of the Lason Shares, on each
Additional Purchase Payment Date (as defined below), Shareholders will
execute a Lock-Up Agreement in a mutually acceptable form pursuant to
which Shareholders will agree not to sell any of the Lason Shares
delivered to them in accordance with this Agreement for a period of 12
months from each Additional Purchase Payment Date.
E. As set forth above, Buyer will calculate
Corporation's EBITDA no later than May 1 in each of 1999 and 2000. If
an Additional Purchase Payment is earned, Buyer shall make such
Additional Purchase Payment to Shareholders by May 15, 1999 and May 15,
2000 (the "ADDITIONAL PURCHASE PAYMENT DATE"), as the case may be,
subject to the existence of a dispute requiring resolution pursuant to
Section 1.4(F) below.
F. Buyer shall provide to Shareholders, on or
before May 1, 1999 and 2000, a statement of its Chief Financial Officer
setting forth the basis for the calculation of the Additional Purchase
Payment. Such statement shall provide such computations and set forth
such detail as is reasonably necessary to substantiate the calculation
of EBITDA and the amount of the Additional Purchase Payment payable, if
any. Shareholders and their accountants shall have full
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access to Buyer's books and records with respect to Corporation in
connection with their review of such statements and the resolution of
any dispute relating thereto. No later than 10 business days after
Shareholders' receipt of such statement, Shareholders may, by notice
given to Buyer, contest the calculations and shall, within a reasonable
period of time necessary for Shareholders' representatives to review
the calculations, books and records of Corporation (but in no event
more than 60 days) give notice to Buyer of the amount calculated by
Shareholders. In such event, Buyer shall pay to Shareholders the amount
that it acknowledges is due and the parties, together with their
independent public accountants, shall meet and discuss such dispute in
a good faith effort to resolve such dispute. If no resolution is
reached within 30 days of Shareholders' notice, then Buyer and
Shareholders shall choose a mutually acceptable independent certified
public accountant (the "DESIGNATED AUDITOR") to review the calculation.
The Designated Auditor shall, after reviewing all relevant matters and
interviewing such parties as he or she deems appropriate, deliver to
Buyer and Shareholders a statement setting forth his or her
calculations, which shall be final and binding upon each party. If the
final calculation is equal to or less than the dollar amount of the
calculation set forth in the Chief Financial Officer's statement, then
Shareholders shall bear the cost of engaging the Designated Auditor.
Otherwise, the cost of engaging the Designated Auditor shall be borne
by Buyer. If the statement of the Designated Auditor indicates that an
additional payment is due to Shareholders in respect of the Additional
Purchase Payment, Buyer shall pay such amount to Shareholders in cash
within five days following receipt of such statement. Similarly, if the
statement of the Designated Auditor indicates that a rebate is due to
Buyer, Shareholders shall pay such amount to Buyer in cash within five
days following receipt of such statement.
G. EBITDA shall mean, for each of the two years
referenced above, the pre-tax net income of Corporation before interest
expense, depreciation and amortization for such year determined on a
stand-alone basis in accordance with generally accepted accounting
principles consistently applied with relationship to the Interim
Statement, (A) plus, to the extent deducted in determining net income
and without duplication, the sum of: (i) any extraordinary losses; (ii)
any Additional Purchase Payments); and (iii) any of Buyer's corporate
overhead, except that which is directly attributable to Corporation;
and (B) minus, to the extent included in determining net income and
without duplication, any extraordinary gains.
H. Notwithstanding anything to the contrary
contained herein, Buyer shall have the right, by notice to Shareholders
specifying in reasonable detail the basis therefor, to withhold the
payment of the Additional Purchase Payment otherwise provided for
herein and to set off and apply against any such Additional Purchase
Payment the amount of any then outstanding indemnification payments
finally determined to be due from Shareholders to Buyer pursuant to
this Agreement.
I. Shareholders acknowledge and agree that Buyer,
as the sole shareholder of Corporation, after the Closing Date, will
have substantial power to control the amount of the Additional Purchase
Payment(s) provided for herein and that, in fact, Buyer intends to
merge Corporation with one or more of its subsidiaries following the
Closing Date in order to, among other things, best unify operations and
maximize profitability. With a similar commitment to maximizing
profitability, Buyer agrees that it will, in good faith, use reasonable
efforts to maximize Shareholders' ability to achieve the maximum
Additional Purchase Payment(s) available hereunder. Notwithstanding the
foregoing, in the event that the Board of Directors of Buyer (or any of
its subsidiaries), in their sole discretion, materially changes or
proposes to change the business, accounting policies or methods, or
operations (other than changes relative to Corporation's employee
benefit structure or changes necessary to bring Corporation into
compliance with applicable law) of Corporation from those in effect
immediately prior to the Closing Date (any such material change or
proposed change, a "CHANGE") it shall notify Shareholders in
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writing and if Shareholders believe that any such Change is reasonably
likely to materially decrease the amount of the Additional Purchase
Payment(s) they would have earned absent such Change, Shareholders may
give notice (the "NOTICE") to Buyer of such belief. In such event,
Shareholders and Buyer's President shall meet: (i) to discuss in good
faith whether the Change is reasonably likely to have a material
adverse effect or result in a material decrease; and (ii) if they agree
that such a material adverse effect or material decrease is reasonably
likely to occur, then to discuss in good faith an amendment to the
Additional Purchase Payment formula set forth in this Section 1.4 in
order to restore to Shareholders the ability to earn a comparable
Additional Purchase Payment to that originally contemplated by the
parties. In the event that no such mutual agreement is reached to
either parties' satisfaction, it shall have the right to submit such
issue to arbitration pursuant to Section 11.14 of this Agreement.
J. For all purposes of this Section 1.4, the
term "Corporation" shall be understood to refer to the "RACOM Division"
of one of Buyer's subsidiaries plus the earnings of any acquired
companies identified to Buyer by Shareholders or other members of
Corporation's management team with Shareholders' concurrence.
Notwithstanding the foregoing, the total amount to be included in
Corporation's EBITDA for the 1998 Period and the 1999 Period from
acquisitions is not to exceed $1,000,000 per year net of all
acquisition costs including, but not limited to, attorney and other
professional fees, interest and amortization of goodwill. Further, in
no event, is the EBITDA from acquisitions to be included in
Corporation's EBITDA in the event that Corporation's Target Earnings
are not made in either year from the RACOM Division on a stand alone
basis, as those "Target Earnings" are to be calculated pursuant to the
terms and conditions hereof.
K. In the event that any Shareholder voluntarily
terminates his employment with Corporation, (other than for death,
disability or "Good Reason" as that term is defined in the Employment
Agreements contemplated in Section 6.11 hereof), then and in that
event, such individual Shareholder's pro rata share of the Additional
Purchase Payments shall not be paid to such Shareholder, but such fact
will not affect the Additional Purchase Payments to the other
Shareholders or for the year of such event. In the event that any
Shaerholders' employment with Corporation is terminated for "Cause" (as
such term is defined in the Employment Agreements contemplated in
Section 6.11 hereof) and the action which precipitated such termination
for Cause has a negative financial impact on Buyer or Corporation then
such individual Shareholder's pro rata share of the Additional Purchase
Price Payments shall not be paid to such Shareholder, but such fact
will not affect the Additional Purchase Price Payments to the other
Shareholders or for the year of such event. Alternatively, in the event
that any Shareholders' employment with Corporation is terminated for
"Cause" (as such term is defined in the Employment Agreements
contemplated in 6.11 hereof) and the action which precipitated such
termination for cause has no negative financial impact on Buyer or
Corporation then such Shareholder's right to receive his share of any
Additional Purchase Price Payments shall not be diminshed in any way
whatsoever.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
AND CORPORATION
Shareholders and Corporation represent and warrant to Buyer
that, as of the date, hereof:
SECTION 2.1 ORGANIZATION, STANDING AND POWER. Corporation
and each of the Subsidiaries is duly incorporated, validly existing and in good
standing under the laws of the State of Louisiana, have all necessary corporate
power to own its properties and to carry on its business as now owned and
operated by it, and is duly qualified to do business and is in good standing in
each jurisdiction
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in which the nature of its business or its properties makes such qualification
necessary. Each jurisdiction in which Corporation and the Subsidiaries are so
qualified to do business is listed on EXHIBIT 2.1.
SECTION 2.2 CAPITALIZATION OF CORPORATION. The authorized
capital stock of Corporation consists of one hundred million (100,000,000)
shares of common stock having no par value per share, of which one hundred
million (100,000,000) shares are issued and outstanding (the "COMMON STOCK").
The Common Stock constitutes all of the shares of Corporation and all of such
shares are owned beneficially and of record by the Shareholders and are referred
to herein as the "SHARES". All of the Shares are validly issued, fully paid,
nonassessable, and have been so issued in full compliance with all applicable
federal and state securities laws. There are no outstanding subscriptions,
options, rights, warrants, convertible securities or other agreements or
commitments obligating Corporation to issue or to transfer from treasury any
additional shares of its capital stock of any class.
SECTION 2.3 TITLE TO SHARES. Each Shareholder is the sole
owner, beneficially and of record, of the number of Shares set forth opposite
such Shareholder's name on EXHIBIT 2.3, free and clear of all liens,
encumbrances, security agreements, equities, options, claims, charges and
restrictions except as set forth in Exhibit 2.3, all of which will be satisfied
or discharged at or prior to Closing.
SECTION 2.4 SUBSIDIARIES.
A. Except for the Subsidiaries, Corporation does not own,
directly or indirectly, any interest or investment (whether equity or debt) in
any corporation, partnership, joint venture, business, trust or other entity.
Corporation has the right to acquire the minority interests in all of the
Subsidiaries and will do so immediately prior to Closing and will merge the
Subsidiaries into Corporation in accordance with applicable law.
B. The authorized capital stock of RACOM consists of three
hundred thousand (300,000) shares of Common Stock having no par value per share
of which two hundred thirty seven thousand five hundred (237,500) shares are
issued and outstanding (the "RACOM COMMON STOCK"). The RACOM Common Stock
constitutes all of the shares of RACOM and such shares are owned beneficially
and of record by the shareholders listed on EXHIBIT 2.4(B) in the amounts set
forth opposite such shareholder's name, free and clear of all liens,
encumbrances, security agreements, equities, options, claims, charges and
restrictions. All of the shares of capital stock of RACOM are validly issued,
fully paid, nonassessable, and have been so issued in full compliance with all
applicable federal and state securities laws. There are no outstanding
subscriptions, options, rights, warrants, convertible securities or other
agreements or commitments obligating RACOM to issue or to transfer from treasury
any additional shares of its capital stock of any class.
C. The authorized capital stock of Southwest consists of
one million (1,000,000) shares of Common Stock having no par value, per share of
which nine hundred eighty five thousand five hundred sixty (985,560) shares are
issued and outstanding (the "SOUTHWEST COMMON STOCK"). The Southwest Common
Stock constitutes all of the shares of Southwest and such shares are owned
beneficially and of record by the shareholders listed on EXHIBIT 2.4(C) in the
amounts set forth opposite such shareholder's name, free and clear of all liens,
encumbrances, security agreements, equities, options, claims, charges and
restrictions. All of the shares of capital stock of Southwest are validly
issued, fully paid, nonassessable, and have been so issued in full compliance
with all applicable federal and state securities laws. There are no outstanding
subscriptions, options, rights, warrants, convertible securities or other
agreements or commitments obligating Southwest to issue or to transfer from
treasury any additional shares of its capital stock of any class.
D. The authorized capital stock of GSI consists of ten
million (10,000,000) shares of Common Stock having no par value, per share of
which eight hundred thousand (788,000) shares are
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issued and outstanding (the "GSI COMMON STOCK"). The GSI Common Stock
constitutes all of the shares of GSI and such shares are owned beneficially and
of record by the shareholders listed on EXHIBIT 2.4(D) in the amounts set forth
opposite such shareholder's name, free and clear of all liens, encumbrances,
security agreements, equities, options, claims, charges and restrictions. All of
the shares of capital stock of GSI are validly issued, fully paid,
nonassessable, and have been so issued in full compliance with all applicable
federal and state securities laws. There are no outstanding subscriptions,
options, rights, warrants, convertible securities or other agreements or
commitments obligating GSI to issue or to transfer from treasury any additional
shares of its capital stock of any class.
E. The authorized capital stock of BMC consists of three
thousand (3,000) shares of Common Stock in two classes ("A" and "B") having no
par value, per share of which ___________ (____) shares are issued and
outstanding (the "BMC COMMON STOCK"). The BMC Common Stock constitutes all of
the shares of BMC and such shares are owned beneficially and of record by the
shareholders listed on EXHIBIT 2.4(E) in the amounts set forth opposite such
shareholder's name, free and clear of all liens, encumbrances, security
agreements, equities, options, claims, charges and restrictions. All of the
shares of capital stock of BMC are validly issued, fully paid, nonassessable,
and have been so issued in full compliance with all applicable federal and state
securities laws. There are no outstanding subscriptions, options, rights,
warrants, convertible securities or other agreements or commitments obligating
BMC to issue or to transfer from treasury any additional shares of its capital
stock of any class.
SECTION 2.5 AUTHORITIES AND CONSENTS. The execution,
delivery and performance of this Agreement by Corporation, and the consummation
of the transactions contemplated hereby, have been duly and validly authorized
by the Board of Directors of Corporation. The Shareholders and Corporation
represent and warrant that they have the right, power, legal capacity and
authority to enter into and perform their respective obligations under this
Agreement and that no consent or approval of, notice to or filing with any
governmental authority having jurisdiction over any aspect of the business or
assets of Corporation, and no consent or approval of or notice to any other
person or is required in connection with the execution and delivery by each of
them of this Agreement or the consummation by them of the transactions
contemplated hereby, other than consents that will be obtained prior to Closing
or as set forth in EXHIBIT 2.5.
SECTION 2.6 NO BREACH OR VIOLATION. The execution, delivery
and performance of this Agreement by Corporation, and the consummation of the
transactions contemplated hereby, does not and will not result in or constitute
any of the following: (i) a breach of any term or provision of this Agreement;
(ii) a default, breach or violation, or an event that, with notice or lapse of
time or both, would be a default, breach or violation of any of the terms,
conditions or provisions of the Articles of Incorporation or Bylaws of
Corporation or any of its Subsidiaries, or any lease, license, promissory note,
security agreement, commitment, indenture, mortgage, deed of trust or other
agreement, instrument or arrangement to which Corporation or any of its
Subsidiaries is a party or by which the Corporation or any of its Subsidiaries
or any of their respective properties are bound; (iii) an event that would
permit any party to terminate or rescind any agreement or to accelerate the
maturity of any indebtedness or other obligation of Corporation or any of its
Subsidiaries; or (iv) the creation or imposition of any lien, charge or
encumbrance on any of the properties of Corporation or any of the Subsidiaries
or the Shares.
SECTION 2.7 FINANCIAL STATEMENTS. There have heretofore been
delivered to Buyer: (i) audited, consolidated financial statements, including
balance sheets and statements of income of Corporation as of and for the years
ended June 30, 1995, 1996 and 1997, all audited by Xxxxxx & Associates, whose
reports with respect to said statements are included therein and (ii) an
unaudited financial statement, including a balance sheet and statement of income
of Corporation and for the 7 month period ended January 31, 1998, prepared by
Xxxxxx & Associates and Corporation. Such statement has previously been referred
to as the "January Balance Sheet".
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All of the financial statements referred to above (the
"FINANCIAL STATEMENTS") have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied throughout the periods
involved for the type of report (audited or unaudited) involved. Except as set
forth in EXHIBIT 2.7, the Financial Statements present fairly the financial
positions of Corporation or any of the Subsidiaries to which they relate as at
the respective dates thereof, and the related results of operations of
Corporation or any of the Subsidiaries for the periods therein referred to.
SECTION 2.8 BOOKS AND RECORDS. The stock record books of
Corporation and the Subsidiaries are complete and correct. The other books of
account and other records (other than minute books) of Corporation and the
Subsidiaries are complete and correct in all material respects and all such
records have been maintained in accordance with sound business practices in
Shareholders' reasonable judgment. Except for omissions which would not result
in a material adverse effect on Corporation, the minute books of Corporation and
the Subsidiaries contain materially accurate and complete records of all
meetings held and corporate action taken by, the Shareholders, the Board of
Directors, and committees of the Board of Directors of Corporation and the
Subsidiaries, and no meeting of the shareholders, Board of Directors, or
committee has been held with respect to material matters for which minutes have
not been prepared and are not contained in such minute books.
SECTION 2.9 UNDISCLOSED LIABILITIES. Except as set forth in
EXHIBIT 2.9, neither Corporation nor any of the Subsidiaries has any material
debts, liabilities or obligation of any kind, whether accrued, absolute,
contingent or otherwise, which are required under GAAP to be, but are not,
reflected or reserved against or disclosed in the January Balance Sheet,
included in the Financial Statements, except for those that may have been
incurred subsequent to that balance sheet. All debts, liabilities and
obligations incurred after June 30, 1997, were incurred in the ordinary course
of business and are usual and normal in amount both individually and in the
aggregate.
SECTION 2.10 ABSENCE OF CERTAIN CHANGES. Except as set forth
in EXHIBIT 2.10, since July 1, 1997, the business of Corporation and the
Subsidiaries have been operated only in the ordinary course and, without
limiting the generality of the foregoing, Corporation and the Subsidiaries have
not:
A. Declared, set aside or paid any dividend or
other distribution in respect of its capital stock or otherwise
(including bonus distributions to Shareholders) or redeemed, purchased
or otherwise acquired, directly or indirectly, any of their capital
stock;
B. Sustained any material damage, destruction or
loss, by reason of fire, explosion, earthquake, casualty, labor
trouble, requisition or taking of property by any government or agency
thereof, windstorm, embargo, riot, act of God or public enemy, flood,
accident, revocation of license or right to do business, total or
partial termination, suspension, default or modification of contracts,
governmental restriction or regulation, other calamity or other similar
or dissimilar event (whether or not covered by insurance), materially
and adversely affecting its condition (financial or otherwise),
earnings, business, assets, liabilities, properties, operations or
prospects;
C. Had any material adverse change in any of
their condition (financial or otherwise), earnings, business, assets,
properties, liabilities, operations or prospects;
D. Issued, authorized for issuance, or sold any
equity security, bond, note or other security, or granted, or entered
into, any commitment or obligation to issue or sell any such equity
security, bond, note or other security, whether pursuant to offers,
stock option agreements, stock bonus agreements, stock purchase plans,
incentive compensation plans, warrants, calls, conversion rights or
otherwise;
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E. Incurred additional debt for borrowed money, or
incurred any obligation or liability (fixed, contingent or otherwise)
except in the ordinary and usual course of their business;
F. Paid any obligation or liability (fixed,
contingent or otherwise), or discharged or satisfied any lien or
encumbrance, or settled any liability, claim, dispute, proceeding, suit
or appeal, pending or threatened against any of them or any of their
assets or properties, except in each case in the ordinary and usual
course of its business;
G. Mortgaged, pledged, otherwise encumbered or
subjected to lien any of their assets or properties, tangible or
intangible, except for liens for current taxes which are not yet due
and payable and purchase-money liens arising out of the purchase or
sale of products or services made in the ordinary and usual course of
its business;
H. Sold, transferred, leased, licensed or otherwise
disposed of any asset or property, tangible or intangible, except in
the ordinary and usual course of their business, or discontinued any
product line or the manufacture, sale or other disposition of any of
their products or services;
I. Purchased or otherwise acquired any debt or
equity securities of any corporation, partnership, joint venture, firm
or other entity;
J. Made any expenditure for the purchase,
acquisition, construction or improvement of a capital asset, except in
the ordinary and usual course of its business;
K. Entered into any transaction or contract, or
made any commitment to do the same, except in the ordinary and usual
course of business and not involving an amount in any case in excess of
$25,000.00;
L. Waived any right or claim or canceled any debts
or claims or voluntarily suffered any extraordinary losses except other
than in the ordinary course of business;
M. Sold, assigned, transferred or conveyed any
property rights, except in the ordinary and usual course of business;
N. Effected any amendment or supplement to any
employee profit sharing, stock option, stock purchase, pension, bonus,
incentive, retirement, medical reimbursement, life insurance deferred
compensation or any other employee benefit plan or arrangement;
O. Paid to or for the benefit of any of its
directors, officers, employees or Shareholders any compensation of any
kind other than base wages, salaries, bonuses and benefits in effect
prior to June 30, 1997;
P. Effected any change in its directors or
executive management;
Q. Effected any amendment or modification in their
Articles of Incorporation or Bylaws;
R. Had any labor trouble that has or might
materially and adversely affect their condition (financial or
otherwise), earnings, business, assets, liabilities, properties,
operations or prospects;
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S. Changed their accounting methods or practices
(including, without limitation, any change in depreciation or
amortization policies or rates);
T. Revalued any of their assets;
U. Increased the salary or other compensation
payable or to become payable to any of their officers, directors or
employees, or declared, paid or committed to pay a bonus or other
additional salary or compensation to any such person, other than
consistent with past practice or reflected in the Financial Statements;
V. Made any loan to any person or entity, or
guaranteed any loan other than in the ordinary course of business;
W. To the best of Shareholders and Corporation's
knowledge, had any other event or condition of any character that has
or might reasonably have a material and adverse effect on their
condition (financial or otherwise), earnings, business, assets,
liabilities, properties, operations or prospects; or
X. Agreed, committed or entered into any other
understanding to do any of the things described in the preceding
Subsections A through W.
SECTION 2.11 TAXES. Except as set forth in EXHIBIT 2.11
within the times and in the manner prescribed by law, Corporation and the
Subsidiaries have filed all tax returns required to be filed and has properly
accrued for, paid or made adequate provision for payment of all taxes upon it,
its properties, income or franchises, due and payable on or before the date
hereof. Except as set forth in Exhibit 2.11, there are no claims pending against
either Corporation or the Subsidiaries for past-due taxes, nor have any of
Corporation and the Subsidiaries been notified of any claims. There are no
present disputes or discussions with federal, state, local, foreign,
commonwealth or other authorities with respect to any taxes of any nature
payable by Corporation or any of the Subsidiaries. Except as set forth in
Exhibit 2.11, there are no outstanding waivers or agreements by Corporation or
any of the Subsidiaries for the extension of the time for the assessment of any
tax. The tax returns of Corporation and the Subsidiaries, if audited, have been
finally determined by the Internal Revenue Service or other taxing authority, or
otherwise closed, and any penalties, deficiencies, assessments, additions to tax
and interest proposed as a result of such audits have been paid or settled. The
charges, accruals and reserves for taxes reflected in the Financial Statements
are adequate for any and all taxes for the periods covered by such Financial
Statements and for all prior periods, whether or not disputed. As used in this
Section 2.11, the terms "tax" and "taxes" refer to any tax, franchise fee or
qualification fee, assessment, additions to tax fee, penalty, interest or other
governmental charge imposed by any federal, state, county, local, foreign,
commonwealth or other governmental entity. Neither Corporation nor any of the
Subsidiaries have filed, nor will any of them file, any consent under Section
341(f) of the Internal Revenue Code of 1986, as amended, on or before the
Closing Date. Shareholders will have prepared and Shareholders will be
responsible for the applicable taxes, not previously paid, and the cost of
preparation and filing of all requisite federal, state and local tax returns of
Corporation and the Shareholders for the period ending on the Closing Date. Such
tax returns shall be given to Buyer ten (10) days prior to filing and Buyer
and/or a designated representative will have the right to approve same prior to
filing, which approval shall not be unreasonably withheld or delayed.
SECTION 2.12 RECEIVABLES. Except as set forth in EXHIBIT
2.12, all receivables of Corporation and the Subsidiaries shown on the balance
sheets included in the Financial Statements are carried at values determined in
accordance with generally accepted accounting principles consistently applied,
reflect all pertinent facts known to Corporation and the Subsidiaries as of the
date hereof, and represent valid and binding obligations of the debtors
requiring no further performance by Corporation and
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the Subsidiaries and are collectible in full without any set-off whatsoever
within 180 days of the date on which such receivable was created. Except as set
forth in Exhibit 2.12, reserves for doubtful accounts have been established on
the books of Corporation in accordance with generally accepted accounting
principles consistently applied and are reflected on the statement of assets and
liabilities included in the Financial Statements.
SECTION 2.13 INVESTMENTS AND INVESTMENT SECURITIES. Neither
Corporation nor any of the Subsidiaries have any interest, of record or
beneficial, direct or indirect, in any governmental bonds or notes, other
investment securities and assets held for investment except as set forth in
EXHIBIT 2.13.
SECTION 2.14 REAL PROPERTY.
A. EXHIBIT 2.14 sets forth a complete and accurate
address of each parcel of real property, together with all buildings,
fixtures and other improvements located thereon (collectively, the
"REAL PROPERTY") which is either owned by or leased to Corporation or
any of the Subsidiaries.
B. To the best of the Shareholders' and
Corporation's knowledge, the Real Property and the current and
currently planned use thereof is and will be in compliance with all
applicable use restrictions and/or lease covenants.
C. No notice of violation of any applicable
federal, state or local statute, law, ordinance, rule, regulation,
order or requirement, or of any covenant, condition, restriction or
easement affecting the Real Property or with respect to the use or
occupancy of the Real Property, has been given to Corporation or any of
the Subsidiaries by any governmental authority having jurisdiction over
the Real Property or by any other person entitled to enforce the same.
D. To the best of the Shareholders' and
Corporation's knowledge, there is not: (i) any intended public
improvement which may involve any charge being levied or assessed or
which may result in the creation of any lien upon the Real Property;
(ii) any intended or proposed federal, state or local statute,
ordinance, order, requirement, law or regulation (including, but not
limited to, zoning changes) which may adversely affect the current or
planned use of the Real Property; or (iii) any suit, action, claim or
legal, administrative, arbitration or other proceeding or governmental
investigation pending or threatened or contemplated against or
affecting the Real Property.
E. Neither Corporation nor any of the Subsidiaries
have subjected, and will not subject or suffer to be subjected
hereafter the Real Property or any portion thereof to any lease (except
a lease by Corporation or any of the Subsidiaries), sublease, tenancy,
concession, license, occupancy agreement or similar right, mortgage,
deed of trust, lien, encumbrance, claim, charge, equity, covenant,
condition, restriction, easement, right of way or other matter
affecting the Real Property or any portion thereof except as set forth
in Exhibit 2.14.
F. There are no unpaid taxes, assessments (special,
general or otherwise) or bonds of any nature affecting the Real
Property or any portion thereof due and payable by Corporation or any
of the Subsidiaries.
SECTION 2.15 LEASES. EXHIBIT 2.15 lists all leases, rental
agreements, conditional sales contracts and other similar agreements
(collectively, "LEASES"), as amended, which cannot be terminated by Corporation
or any of the Subsidiaries without liability at any time upon less than thirty
(30) days' notice or which involve payment by it in the future of more than
$25,000.00, under which Corporation or any of the Subsidiaries holds or uses any
real or personal property or leases any of the same to others.
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Corporation and all of the Subsidiaries have complied with the material
provisions of all Leases, and all such Leases are valid, in good standing and
enforceable by Corporation and the Subsidiaries in accordance with their terms,
except as limited by bankruptcy, insolvency or other similar laws affecting the
rights of creditors generally and by limitations on enforceability applicable to
contracts generally. Notwithstanding anything contained in the Leases,
Corporation and the Subsidiaries have such title to or interests thereunder as
are necessary to continue to conduct its business as presently conducted or as
presently proposed to be conducted, and, to the best of their knowledge, there
is no title defect to which any of the Leases is subject which might be expected
at any time to have a material adverse effect on Corporation and the
Subsidiaries or their condition (financial or other), earnings, assets,
liabilities, business, operations or prospects. Exhibit 2.15 sets out any and
all advances, deposits and prepayments made by Corporation and the Subsidiaries
under the Leases.
SECTION 2.16 ENVIRONMENTAL MATTERS.
A. None of the operations or property of
Corporation or the Subsidiaries is or has been subject to any judicial
or administrative proceeding, order, judgment, decree or settlement
alleging or addressing a violation of or liability under any
requirements of law derived from or relating to all federal, state and
local laws relating to or addressing the environment, health or safety
(including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. xx.xx. 9601 et
seq., Occupational Safety and Health Act, 29 U.S.C. xx.xx. 651 et seq.,
Resource Conservation and Recovery Act, 42 U.S.C. xx.xx. 6901 et seq.,
Clean Air Act, 42 U.S.C. xx.xx. 7401 et seq., Federal Water Pollution
Control Act, 33 U.S.C. xx.xx. 1251 et seq., and any similar federal or
state acts or statutes now in effect), which requirements are sometimes
herein collectively referred to as the "Environmental Laws".
B. Neither Corporation nor any of the Subsidiaries
have any knowledge of a "Release" nor has it filed any notice under any
applicable Environmental Laws reporting such "Release" (defined as any
spill, emission, leaking, deposit, discharge, dispersal or other
release) into the indoor or outdoor environment or into or out of any
of the Real Property (including movement in or through the air, soil,
surface water, groundwater or property) of a "Contaminant" (defined as
any hazardous substance, toxic substance, hazardous waste, special
waste, petroleum or petroleum-derived substance or waste, asbestos,
polychlorinated biphenyls, or any constituent of any of the foregoing,
including such items as are defined under any federal, state or local
law or regulation), or indicating past or present treatment, storage
(other than for less than ninety (90) days) or disposal of a "hazardous
waste" (as that term is defined under 40 Code of Federal Regulations
("CFR") Part 261 or any state equivalent) or reporting a material
violation of any applicable Environmental Laws.
C. Neither Corporation nor any of the Subsidiaries
have received any written notice, claim or report from any governmental
authority or third party to the effect that Corporation is or may be
liable to any other person or entity as a result of the Release or
threatened Release of a Contaminant into the environment.
SECTION 2.17 PROPRIETARY RIGHTS. EXHIBIT 2.17 contains a list
and brief description of all trade names, trademarks, trademark registrations
and applications for registration, service marks, patent rights, patent
applications, copyrights and applications therefor (herein collectively referred
to as "PROPRIETARY RIGHTS") owned by Corporation and all of the Subsidiaries,
useful or necessary to the conduct of their business, or in which any
Corporation or the Subsidiaries have any rights, licenses or immunities and of
all patent licensing and similar arrangements to which Corporation or any of the
Subsidiaries is a party. To the best of Shareholders' and Corporation's
knowledge, all Proprietary Rights are owned by Corporation and the Subsidiaries,
and are, valid and in full force and effect.
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SECTION 2.18 NON-INFRINGEMENT; AGREEMENTS. Except as set
forth in EXHIBIT 2.18, no Proprietary Right is the subject of litigation or
other adversary proceedings. Neither Corporation nor any of the Subsidiaries
have been informed that any present or presently proposed operation or activity
of Corporation or any of the Subsidiaries infringes the rights of any other
person or entity, and no person or entity is infringing the Proprietary Rights
of Corporation or any of the Subsidiaries. Corporation and the Subsidiaries have
the right and authority, including without limitation, adequate licenses, to use
such Proprietary Rights as are necessary to enable Corporation and the
Subsidiaries to conduct and continue to conduct all phases of its business in
the manner presently conducted by them. Neither Corporation nor any of the
Subsidiaries are a party to or bound by any license or agreement requiring the
payment by any of them of any royalty, override or similar payment in connection
with any activity conducted or to be conducted by any of them. Except as
provided for by the terms of contracts with governmental authorities, neither
Corporation nor any of the Subsidiaries are a party to any agreement: (i)
prohibiting or restricting their use or sale of any special device, item,
customer list, secret process or the like; or (ii) limiting its business to any
territory, pricing policy or customers; or (iii) requiring exclusive dealing or
otherwise in restraint of its business.
SECTION 2.19 INSURANCE. All policies of liability, theft,
life, fire, title and other forms of insurance and surety bonds (including,
without limitation, any standby letters of credit), insuring Corporation and its
Subsidiaries, their directors, officers, employees, properties, assets and
business are listed and briefly described on EXHIBIT 2.19. To the best of
Shareholders' and Corporation's knowledge, all of said policies are valid and in
good standing. Neither Corporation nor any of the Subsidiaries have experienced
losses or made claims under any of such policies which are extraordinary for a
company of its size except as are set forth on Exhibit 2.19.
SECTION 2.20 INTERESTED TRANSACTIONS. Neither Corporation nor
any of the Subsidiaries have a contract or agreement (oral or written) with, any
outstanding loans to or from, or any outstanding liabilities (except for no more
than one (1) months' salary at no more than the current annual rate) to any
officer, director, employee or stockholder of Corporation or any of the
Subsidiaries or any relative of any such person or any corporation or other
entity in which any of such persons has a material financial interest, direct or
indirect, or of which any such person is an officer, director or partner, except
as set forth in EXHIBIT 2.20.
SECTION 2.21 CUSTOMERS AND SALES. A correct and current list
of all customers of Corporation and its Subsidiaries whose annual purchases
exceed $100,000.00, is set forth on EXHIBIT 2.21. There are no facts or
circumstances known to Shareholders or Corporation or any of them indicating
that any customer who has ordered products or services from Corporation or any
of the Subsidiaries which have not yet been delivered intends to cancel such
order. Neither Shareholders nor Corporation has knowledge that any of the listed
customers of Corporation or any of the Subsidiaries intend to cease doing
business with Corporation or any of the Subsidiaries, or materially alter the
amount of the business that they are presently doing with Corporation or any of
the Subsidiaries.
SECTION 2.22 EXISTING EMPLOYMENT CONTRACTS AND/OR
REMUNERATION AGREEMENTS. EXHIBIT 2.22 sets forth a complete and accurate list of
all employment contracts or other agreements or arrangements providing for
employee remuneration or benefits to which Corporation or any of the
Subsidiaries is a party or by which Corporation or any of the Subsidiaries is
bound, copies of the originals of which have been provided to Buyer. All such
contracts and arrangements are in full force and effect, and neither Corporation
nor any of the Subsidiaries nor any other party is in default under any such
contract or arrangement, nor are there any amendments, modifications, changes or
releases thereto, written or oral. There have been no claims of defaults and
there are no facts or conditions which if continued, or upon notice, will result
in a default under such contracts or arrangements. There is no pending or, to
the best of their knowledge, threatened labor dispute, strike or work stoppage
affecting the business of Corporation or any of the Subsidiaries.
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SECTION 2.23 EMPLOYEE BENEFITS PLANS. EXHIBIT 2.23 sets forth
a complete and accurate list of all collective bargaining agreements and all
pension, bonus, profit-sharing, stock option or other plan or arrangement
providing for employee benefits (including any plan within the meaning of
Section 3(3) of the Employment Retirement Income Security Act, "ERISA"), to
which Corporation or any of the Subsidiaries is a party or by which Corporation
or any of the Subsidiaries is bound, copies of the originals of which are
attached hereto as Exhibit 2.23. There are no unfunded liabilities or other
obligations of Corporation or any of the Subsidiaries with respect to any such
collective bargaining agreements, or pensions, bonus, profit-sharing, stock
option or other plans or arrangements providing for employee benefits except as
set forth on Exhibit 2.23 hereto. To the best of Shareholders and Corporation's
knowledge, all of such pension, bonus, profit sharing, stock option or other
plans or arrangements including, but not limited to, the Southern Microfilm
Corporation Stock Bonus Trust (the "ESOP") are in compliance with ERISA and any
and all other laws applicable to their formation and ongoing operation.
SECTION 2.24 WORKERS COMPENSATION; EMPLOYMENT DISCRIMINATION;
LABOR RELATIONS. Corporation and the Subsidiaries have complied in all material
respects with all applicable federal, state and local laws, rules, regulations
and executive orders relating to employment, all applicable laws, rules and
regulations governing payment of minimum wages and overtime rates, and the
withholding and payment of taxes from compensation of employees and the payment
of premiums and benefits under applicable worker compensation laws. There are no
employment discrimination proceedings by any employee or former employees
against Corporation or any of the Subsidiaries currently threatened or pending
before any state or federal court or state or federal administrative agency,
tribunal, commission or board and, to the best of Shareholders' and
Corporation's knowledge, no facts or circumstances exist which may result in the
filing or commencement of any such proceeding. All currently pending or
outstanding worker's compensation claims are listed on EXHIBIT 2.24 attached
hereto and all such claims are fully insured against. To the best of
Shareholders' and Corporation's knowledge, there is no effort being made to
organize the employees of Corporation or any of the Subsidiaries into any
collective bargaining unit or to solicit them to join any labor organization and
the Shareholders and Corporation have no knowledge of any intention on the part
of any labor organization to organize such employees or to solicit them to join
any labor organization. Neither Corporation nor any of the Subsidiaries are
bound by any prior court, administrative agency, tribunal, commission or board,
decree, judgment, decision, arbitration agreement or settlement relating to
collective bargaining agreements, conditions of employment or, to the best of
Shareholders' and Corporation's knowledge, attempts to organize a collective
bargaining unit which may adversely affect the business and affairs of
Corporation or the transactions contemplated hereby. Except as set forth on
Exhibit 2.24, there is no unfair labor practice complaint against Corporation
pending before the National Labor Relations Board.
SECTION 2.25 OTHER CONTRACTS. EXHIBIT 2.25 lists and briefly
describes all contracts, agreements, commitments, guarantees, letters of intent,
understandings or other arrangements of a contractual nature, written or oral
(including, but not limited to, franchise, patent, trademark and royalty
agreements), other than outstanding purchase orders made in the ordinary course
of business and other than as listed in any other schedule hereto, to which
Corporation or any of the Subsidiaries is a party and which: (i) involve payment
by Corporation or any of the Subsidiaries of more than $25,000.00; or (ii)
materially affect the condition (financial or other), earnings, assets,
liabilities, business, operations or prospects of Corporation or any of the
Subsidiaries. Corporation and the Subsidiaries have, to the best of
Shareholders' and Corporation's knowledge, complied in all material respects
with the provisions of all contracts under which it is bound, and has not been
in material default or claimed default under any thereof.
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SECTION 2.26 OFFICERS AND DIRECTORS, ETC. EXHIBIT 2.26 is a
true and complete list of:
A. The names of all present officers and directors
of Corporation and the Subsidiaries, their current annual salaries or
other compensation (such as, but not limited to, consultants' fees) and
including all bonuses, whether deferred, accrued or otherwise, which
were paid or accrued during 1996 and 1997, and all employment and
consultant agreements (copies of which are hereby provided);
B. The names, titles and annual compensation of all
salaried employees of Corporation and the Subsidiaries whose
compensation (in whatever form) from Corporation or the Subsidiaries as
of the date hereof which will equal or exceed or which will be likely
to exceed an annual rate of $50,000.00, in 1997 or equaled such amount
in the year ended December 31, 1996;
C. The name of each bank or other financial
institution in which Corporation and the Subsidiaries has an account,
deposit or safe deposit box, and the names of all persons authorized to
draw thereon or who have access thereto;
D. The names of all persons holding tax or other
powers of attorney from Corporation and the Subsidiaries and a summary
of the terms of each; and
E. The names of all persons authorized (by the
Bylaws or by resolution of the Board of Directors or otherwise) to
write checks or borrow funds on behalf of Corporation and the
Subsidiaries.
SECTION 2.27 LITIGATION AND CLAIMS. Except as set forth on
EXHIBIT 2.27, there is: (i) no action, suit, proceeding, claim or investigation
pending or, to the best of Shareholder's and Corporation's knowledge,
threatened, in any court or before any arbitrator or before or by any federal,
state or other governmental department, commission, bureau, agency or
instrumentality, domestic or foreign; and (ii) no other unresolved claim made
against Corporation or any of the Subsidiaries or affecting any of them or their
properties or business, or the transactions contemplated by this Agreement. All
correspondence, memoranda and other written notifications (collectively,
"COMPLAINTS") which they have received within the twelve (12) months preceding
the date hereof concerning, or relating to, complaints or expressions of
dissatisfaction with the products, services or personnel of Corporation or any
of the Subsidiaries, which Complaints, either individually, or in the aggregate,
could result in a material adverse change to the condition (financial or other),
earnings, business, assets, operations or prospects of Corporation or any of the
Subsidiaries are listed on Exhibit 2.27 and Buyer has been provided with
accurate and complete copies of same. The matters set forth in Exhibit 2.27, if
decided adversely to Corporation and the Subsidiaries will not result in a
material adverse change in the earnings, business, assets or condition
(financial or other), operations or prospects of Corporation and the
Subsidiaries. Except as set forth on Exhibit 2.27, Corporation and the
Subsidiaries are not presently engaged in any legal action to recover monies due
to them or damages sustained by them.
SECTION 2.28 GENERAL LIABILITY. Other than matters disclosed
to or known by Buyer, neither Shareholders nor Corporation have knowledge of any
statement of facts or the occurrence of any event forming the basis for any
present tort claim against Corporation or any of the Subsidiaries and not
covered by insurance.
SECTION 2.29 OTHER TANGIBLE PERSONAL PROPERTY. EXHIBIT 2.29
contains a complete and accurate list and brief description of all machinery,
tools, dies, appliances, vehicles, furniture, equipment (including essential
replacement parts) and other tangible personal property of any kind and
description, other than inventories, owned or leased by Corporation and the
Subsidiaries (the "TANGIBLE PERSONAL PROPERTY") and with an original purchase
price in excess of $25,000.00. The Tangible Personal
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Property constitutes all tangible personal property necessary for the conduct by
Corporation and the Subsidiaries of their business as now conducted. All motor
vehicles listed on Exhibit 2.29 have passed emission standards examinations
required by applicable law. Except as stated in Exhibit 2.29, no Tangible
Personal Property used by Corporation or any of the Subsidiaries in connection
with its business is held under any lease, security agreement, conditional sales
contract or other title retention or security arrangement, or is located other
than in the possession of Corporation or any of the Subsidiaries.
SECTION 2.30 TITLE TO ASSETS. Except for property leased by
Corporation and the Subsidiaries, Corporation and the Subsidiaries have good and
marketable title to all of their assets and interests in assets, whether real,
personal, mixed, tangible and intangible, which constitute all the assets and
interests in assets that are used in its business. All such assets are free and
clear of mortgages, liens, pledges, charges, encumbrances, equities, claims,
easements, rights of way, covenants, conditions or restrictions, except for: (i)
those disclosed in the January Balance Sheet, included in the Financial
Statements; (ii) the lien of current taxes not yet due and payable; and (iii)
possible minor matters that, in the aggregate, are not substantial in amount and
do not materially detract from or interfere with the present or intended use of
any of these assets, nor materially impair business operations. All real
property and material tangible personal property of Corporation and the
Subsidiaries is in good operating condition and repair, ordinary wear and tear
excepted. Corporation and the Subsidiaries are in possession of all premises
leased to them from others. Except as provided in Exhibit 2.20, no officer, nor
any director or employee of Corporation nor any of the Subsidiaries, nor any
spouse, child or relative of any of these persons, owns or has any interest,
directly or indirectly, in any of the real or personal property owned by or
leased to or any copyrights, patents, trademarks, trade names or trade secrets
licensed by Corporation or any of the Subsidiaries.
SECTION 2.31 NAMES. EXHIBIT 2.31 sets forth every name under
which Corporation and the Subsidiaries have conducted business during the term
of their existence. To the extent that Corporation or the Subsidiaries have
conducted business under assumed names, Exhibit 2.31 also sets forth the name of
every state or local jurisdiction in which Corporation and the Subsidiaries have
filed or applied for authority to conduct business under an assumed name
together with the assumed name so registered. Shareholders and Corporation
hereby represent that all assets and rights relating to the business are held
by, and all agreements, obligations, expenses, liabilities of and transactions
relating to the business have been entered into, incurred or conducted by
Corporation.
SECTION 2.32 BEST KNOWLEDGE. The term "to the best of
Shareholders' or Corporation's knowledge," or equivalent terms, as used to
qualify any of the foregoing representations and warranties, means actual
knowledge of a Shareholder.
SECTION 2.33 ACCURACY AND COMPLETENESS OF REPRESENTATIONS AND
WARRANTIES. To the best of Shareholders' knowledge, no representation or
warranty made by Shareholders or Corporation in this Agreement and no statement
contained in any document or instrument delivered or to be delivered to Buyer
pursuant hereto or in connection with the transactions contemplated hereby
contain or will contain any untrue statement of a known material fact, or omits
or will omit to state a known material fact necessary to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
SECTION 2.34 INVESTMENT REPRESENTATIONS. In connection with
the acquisition of the Lason Shares by the Shareholders:
A. Shareholders were given the prospectus of Buyer,
dated August 22, 1997, the quarterly report on Form 10-Q of Buyer for
the quarter ending September 30, 1997, filed with the Securities and
Exchange Commission (the "SEC"), and the opportunity to ask questions
and receive answers concerning Buyer and the terms and conditions of
the offer and sale and to obtain
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any additional information possessed by Buyer or which Buyer could
acquire without unreasonable effort or expense necessary to verify the
accuracy of the information provided to Shareholder about Buyer;
B. Shareholders are acquiring the Lason Shares
solely for their own account for investment and not with the view to
sale or distribution of the Lason Shares acquired hereunder or any
portion thereof and not with any present intention of selling, offering
to sell, or otherwise disposing of or distributing the Lason Shares
acquired hereunder or any portion thereof;
C. Shareholders have received all information they
deemed necessary and appropriate to enable them to evaluate the
financial risk inherent in making an investment in the Lason Shares;
D. Shareholders are an accredited investor as such
term is defined in Regulation D, Rule 501 under the Securities Act of
1933, as amended (the "ACT") or is sophisticated in financial matters
and able to evaluate the risks and benefits of an investment in Buyer;
E. Shareholders are aware that the Lason Shares
which will be delivered to them have not been registered under the Act,
and, therefore, cannot be resold unless such stock is registered under
the Act or unless an exemption from registration under the Act is
available (such as that provided by Rule 144 under the Act) and that
each certificate of the Lason Shares will contain a legend noting the
restrictions on resale under the Act and under the Lock-Up Agreements;
and
F. Shareholders will not sell, assign or transfer
any of the shares of the Lason Shares received pursuant to this
Agreement except following expiration of the restrictions imposed by
the Lock-Up Agreement and except (i) pursuant to an effective
registration statement under the Act; or (ii) in a transaction which is
not required to be registered under the Act.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Shareholders and
Corporation as follows:
SECTION 3.1 ORGANIZATION. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the corporate power and is duly authorized to carry on its
businesses where and as now conducted and to own, lease and operate properties
as it now does.
SECTION 3.2 AUTHORIZATION. The execution, delivery and
performance of this Agreement by Buyer and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by the
Board of Directors of Buyer and Buyer represents and warrants that it has the
right, power, legal capacity and authority to enter into and perform its
obligations under this Agreement and that no consent or approval of, notice to
or filing with any governmental authority having jurisdiction over any aspect of
the business or assets of Buyer, and no consent or approval of or notice to any
other person or entity is required in connection with the execution and delivery
by Buyer of this Agreement or the consummation by Buyer of the transactions
contemplated hereby.
SECTION 3.3 NO BREACH. The execution, delivery and
performance of this Agreement by Buyer and the consummation of the transactions
contemplated hereby and thereby, do not and will not
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result in or constitute any of the following: (i) a breach of any term or
provision of this Agreement; (ii) a default, breach or violation, or an event
that, with notice or lapse of time or both, would be a default, breach or
violation of any of the terms, conditions or provisions of the Certificate of
Incorporation or Bylaws of Buyer; (iii) a default, breach or violation, or an
event that, with notice or lapse of time or both, would be a default, breach or
violation of any of the terms, conditions or provisions of, or any lease,
license, promissory note, security agreement, commitment, indenture, mortgage,
deed of trust or other agreement, instrument or arrangement to which Buyer is a
party or by which it or its property is bound; (iv) an event that would permit
any party to terminate or rescind any agreement to accelerate the maturity of
any indebtedness or other obligations of Buyer; or (v) the creation or
imposition of any lien, charge or encumbrance on any of the properties of Buyer.
SECTION 3.4 VALIDLY ISSUED. The total authorized number of
shares of capital stock which Buyer has authority to issue is 20,000,000 shares
of Common Stock, par value of $0.01 per share, of which as of December 31, 1997,
637,640 shares are issued and outstanding, and 5,000,000 shares of preferred
stock, par value $0.01 per share, of which as of December 31, 1997, no shares
are issued and outstanding. Additionally, as of December 31, 1997, certain
persons hold options to acquire approximately 868,828 shares of Buyer's Common
Stock. When issued in accordance with the terms of this Agreement, the Lason
Shares being issued to Shareholders will be validly issued, fully paid and
non-assessable. Except with respect to the foregoing and future acquisitions by
Buyer, at December 31, 1997, there are no other outstanding subscriptions,
options, rights, warrants, convertible securities or other agreements or
commitments obligating Buyer to issue any additional shares of its capital stock
of any class. Notwithstanding the above, Buyer intends to issue additional
securities in connection with, among others, future acquisitions and employee
compensation.
SECTION 3.5 TRADING ON THE NASDAQ NATIONAL MARKET. The
shares of Buyer's Common Stock are currently registered for trading on the
NASDAQ National Market under the symbol "LASON". As soon as practicable, and in
any event within 60 days following the Closing Date, Buyer will prepare and file
the applicable listing application with respect to the Lason Shares with the
NASDAQ National Market and will use commercially reasonable efforts to cause
such Lason Shares to be so listed as promptly as practicable following such
filing.
SECTION 3.6 BUYER'S SECURITIES FILINGS. Buyer's Prospectus
dated August 22, 1997 and all reports to be filed with the SEC since the date
thereof do not contain any untrue statements of material fact or omit to state
any material fact necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading. There have been
not material adverse changes in the condition (financial or otherwise),
earnings, business, assets, liabilities, properties, or operations or prospects
of Buyer since August 22, 1997.
ARTICLE 4
FURTHER AGREEMENTS OF THE PARTIES
SECTION 4.1 ACCESS TO INFORMATION. Buyer and its
representatives may make such investigation of the properties, assets and
business of Corporation and the Subsidiaries as Buyer may reasonably request,
and Corporation shall give to Buyer and to its counsel, accountants and other
representatives, full access during normal business hours to all of the
properties, books, contracts, commitments, records and files of Corporation and
the Subsidiaries, and shall furnish to Buyer all such documents and copies of
documents (certified as true and complete if requested) and such information
concerning the business and affairs of Corporation as and the Subsidiaries Buyer
may reasonably request. Such investigation shall not be deemed in any way to
diminish the liability of Shareholders or Corporation in respect of the
representations, warranties, schedules, certificates or agreements given
hereunder.
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SECTION 4.2 CONDUCT OF BUSINESS BY CORPORATION. From the
date of this Agreement until the Closing Date, except as Buyer may previously
consent in writing, Corporation and the Subsidiaries shall:
A. Carry on their business and activities in the
ordinary course as previously carried on, and shall not make or
institute any methods of management, accounting or operation that will
vary materially from those methods used by Corporation and the
Subsidiaries as of the date of this Agreement. Without limitation of
the generality of the foregoing, Corporation and the Subsidiaries shall
not enter into any agreement or arrangement involving sale or lease of
a material portion of its assets or the granting of any preferential
right to purchase such assets, properties or rights, except in
connection with the sale or lease of inventory to customers in the
ordinary course of business;
B. Maintain in full force and effect the insurance
policies listed in Exhibit 2.19 to this Agreement;
C. Make no change in their Articles of
Incorporation or Bylaws except as may be contemplated herein;
D. Make no change in their authorized or issued
capital stock and issue or grant no options, warrants or rights to
purchase shares of or convert other securities into their capital
stock;
E. Declare or pay no dividend or other distribution
in respect of any shares of their capital;
F. Purchase, redeem or otherwise acquire, directly
or indirectly, no shares of their capital stock;
G. Except as contemplated herein, use their best
efforts to preserve their business organization intact, to keep
available the services of its present officers and employees, except in
the case of unsatisfactory performance, and to preserve the good will
of all those having business relations with it (including, but not
limited to, its customers);
H. Enter into no contract or commitment, except
contracts or commitments entered into in the ordinary course of
business, none of which (other than inventory purchases customary in
nature and amount) shall involve payment by Corporation or any of the
Subsidiaries of more than $25,000.00;
I. Terminate none of the contracts or agreements
listed in Exhibit 2.25 or modify any of said contracts or agreements
except in accordance with their terms;
J. Except pursuant to existing arrangements
disclosed in Exhibit 2.26: (i) grant no increase in salaries or
compensation payable or to become payable by it, to any officer,
employee, sales agent or representative, other than increases in
customary amounts pursuant to normally scheduled salary reviews; or
(ii) increase no benefits payable under any employee plan or otherwise
to any officer, employee, sales agent or representative;
K. Duly comply with all laws, regulations,
ordinances, orders, injunctions and decrees applicable to it and to the
conduct of their business;
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L. Encumber or mortgage none of their property or
incur no liability for borrowed money, other than in the ordinary
course of business, make no loans or advances to or assume, guarantee,
endorse or otherwise become liable with respect to, the obligations of
any other person, firm or corporation except in the ordinary course of
business;
M. Acquire or agree to acquire none of the assets
or capital stock of any other person, firm or corporation, except for
purchases from suppliers in the ordinary course of business;
N. Make or agree to make no capital expenditures in
excess of $50,000.00 for any single item, or $100,000,00 in the
aggregate, or enter into any leases of capital equipment or property
under which the annual lease charge is in excess of $25,000.00;
O. Maintain and keep their properties and
facilities in as good condition and working order as at present, except
for depreciation through ordinary wear and tear;
P. Perform all of its obligations under contracts
relating to or affecting its assets, properties and rights, except for
non-material failures;
Q. Not do, or agree to do, except in the ordinary
course of business, any of the following acts: (i) pay any obligation
or liability, fixed or contingent, other than current liabilities; (ii)
waive or compromise any right or claim; or (iii) cancel, without full
payment, any note, loan or other obligation owing to Corporation or any
of the Subsidiaries;
R. Enter into no negotiations or agreements with
any governmental authority (other than negotiations or agreements for
the purchase of goods or services from Corporation) which would affect
the future operation of their business;
S. Write off none of the receivables on their books
other than consistent with past practice; and
T. Enter into a lease for real property with the
Shareholders or any persons or entities affiliated with them.
SECTION 4.3 CONSENTS. Shareholders and Corporation shall
obtain the consent of all persons whose consent is required to the consummation
of the transactions contemplated hereby, in form and substance satisfactory to
Buyer, as detailed in Article 6 hereof.
SECTION 4.4 COMMUNICATIONS. Buyer, Shareholders and
Corporation agree to consult with each other and obtain the approval of each
other (which approval shall not be unreasonably withheld or delayed), on
reasonable notice, as to the content of any press releases or any written
statements for general circulation regarding the subject matter of this
Agreement.
SECTION 4.5 UPDATING OF SCHEDULES. From the date hereof
until the Closing Date, Corporation shall keep up to date all of the schedules,
exhibits and certificates furnished (or to be furnished) under this Agreement,
and shall promptly notify Buyer of any changes, additions or events which may,
after the lapse of time, cause any change or addition thereto.
SECTION 4.6 RULE 144 REPORTS/POSSIBLE REGISTRATION OF LASON,
INC. COMMON STOCK. Buyer agrees to timely file any and all reports required of
it under the Rules of the SEC to enable Shareholders to sell the Lason Shares
which they acquire pursuant to the terms and conditions hereof upon the
expiration of the Lock-Up Agreement(s) contemplated hereunder.
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In the event that after the expiration of the Lock Up
Agreement Shareholders receive an opinion of counsel acceptable to Buyer that
Shareholders cannot dispose of their Lason Shares without registration under
state and federal securities law on a schedule at least as fast as that in
effect today and subject only to the proviso set forth in the last sentence of
this Section 4.6, Buyer will at its own cost and expense: (i) prepare and file
with the SEC a registration statement on Form S-3, or other applicable form (the
"REGISTRATION STATEMENT") under the Act covering the maximum number of shares of
Buyer that may be issued to Shareholders pursuant to the terms and conditions
hereof and naming Shareholders as "Selling Shareholders" in the Registration
Statement and make all applicable state filings; (ii) have the Registration
Statement declared effective by the SEC; (iii) maintain the Registration
Statement in effect until the earlier of: (x) the sale of all of the Lason
Shares issued to Shareholders pursuant to the terms and conditions hereof; or
(y) the date Shareholders may sell such shares without restriction pursuant to
Rule 144(k) under the Act hereunder. Shareholders agree to cooperate and provide
Buyer with all information and consents necessary to permit inclusion of
Shareholders as "Selling Shareholders" in the Registration Statement. Buyer
shall not be obligated to file such Registration Statement unless it receives,
in writing, all customary indemnifications from Shareholders. In the event that
a registration statement on Form S-3 cannot be filed due to a change in
government regulations, Buyer will use its best efforts to accomplish
registration through an alternative means.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS OF
SHAREHOLDERS AND CORPORATION
The obligation of Shareholders and Corporation to consummate
the transactions contemplated by this Agreement shall be subject to the
following conditions, except as Shareholders or Corporation may waive in writing
in accordance with Section 11.5 below:
SECTION 5.1 PERFORMANCE. Buyer shall have performed and
complied with all agreements and covenants required by this Agreement to be
performed or satisfied by it on or prior to the Closing Date.
SECTION 5.2 REPRESENTATIONS AND WARRANTIES. The
representations, warranties and covenants of Buyer set forth in Article 3
hereof, shall be true and correct in all material aspects on the date hereof,
and on the Closing Date, as if made again at and as of such time, subject to any
transactions which are contemplated or permitted by this Agreement.
SECTION 5.3 CERTIFICATE OF OFFICER. Shareholders and
Corporation shall have been furnished with a certificate executed by an officer
of Buyer in form and substance satisfactory to Shareholders and Corporation,
certifying the fulfillment of the condition set forth in Section 5.2 above.
SECTION 5.4 LEGAL OPINION. Seyburn, Kahn, Ginn, Bess, Xxxxxx
and Xxxxxx, P.C., counsel for Buyer, shall have delivered to Shareholders its
opinions to the effect set forth in EXHIBIT 5.4.
SECTION 5.5 EMPLOYMENT AGREEMENTS. X. Xxxxx, X. Xxxxx, X.
Xxxxx and Xxxxxx X. Marmonde, Jr. ("Marmonde") shall have entered into the
Employment Agreements contemplated in Section 6.11 hereof.
SECTION 5.6 ESCROW AGREEMENT. Shareholders, Corporation and
Buyer shall have executed and delivered the Escrow Agreement contemplated in
Section 1.2 hereof.
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SECTION 5.7 HSR ACT. All of the legal requirements required
under the HSR Act shall have been fulfilled and neither the Federal Trade
Commission nor the Department of Justice shall have instituted an action to
restrain or enjoin the consummation of the transaction.
SECTION 5.8 UNTRUE STATEMENTS. This Agreement, shall not
contain any untrue statement of a known material fact or omit to state a known
material fact required to be stated therein as necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
SECTION 5.9 MATERIAL ADVERSE CHANGE. There shall have been
no material adverse change in the condition (financial or otherwise) earnings,
business, assets, liabilities, properties, operations or prospects of
Corporation of the Subsidiaries and there shall not have been any occurrences,
circumstances or combination thereof (whether arising heretofore or hereafter)
including litigation, pending or threatened, which would likely result in any
such material adverse change before or after the Closing Date.
SECTION 5.10 LITIGATION. Immediately prior to the Closing
Date, there shall be no litigation or proceeding: (i) pending or threatened
against Buyer or Corporation or the Subsidiaries or any of their respective
directors, officers or shareholders, or involving the assets or properties of
any of them, for the purpose of enjoining or preventing the consummation of this
Agreement or otherwise claiming that such consummation is improper; or (ii)
pending against Buyer or Corporation or the Subsidiaries which, if decided
adversely, would adversely affect the right of Buyer to retain the stock,
property and other assets or the operations of the property, assets and business
of Corporation or the Subsidiaries (or of Buyer or any of its subsidiaries)
after the Closing Date, and which, in the judgement of the Board of Directors of
Corporation would make the consummation of this Agreement unadvisable.
Immediately prior to the Closing Date, there shall be no governmental
investigation pending or threatened which, in the judgment of the Board of
Directors of Corporation, might lead to or result in any litigation or
proceeding of the nature referred to in the foregoing sentence.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions
contemplated by this Agreement shall be subject to the following conditions,
except as Buyer may waive in writing in accordance with Section 11 below:
SECTION 6.1 AUTHORIZATION OF TRANSACTION. All action
necessary to authorize the execution, delivery and performance of this Agreement
by Shareholders and Corporation and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the Board of
Directors of Corporation and by Shareholders.
SECTION 6.2 SUBSIDIARIES. All action necessary to vest in
Corporation 100% ownership of the Subsidiaries free and clear of any claims of
others shall have been taken and the Subsidiaries shall have been merged into
Corporation (the "MERGER"). All of such actions shall have been taken pursuant
to documents satisfactory in all respects to Buyer in the exercise of its sole
discretion.
SECTION 6.3 UNTRUE STATEMENTS. This Agreement, together with
the Exhibits attached hereto or subsequently provided to Buyer at the time of
Closing, shall not contain any untrue statement of a known material fact or omit
to state a known material fact required to be stated therein or necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading.
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SECTION 6.4 MATERIAL ADVERSE CHANGE. Except for the Merger,
there shall have been no material adverse change in the condition (financial or
otherwise), earnings, business, assets, liabilities, properties, operations or
prospects of Corporation or the Subsidiaries, and there shall not have been any
occurrence, circumstance or combination thereof (whether arising heretofore or
hereafter), including litigation pending or threatened, which might result in
any such material adverse change before or after the Closing Date.
SECTION 6.5 REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Shareholders and Corporation contained in this
Agreement (as applicable to both Corporation and the Subsidiaries), shall be
true at and as of the Closing Date with the same effect as though such
representations and warranties had been made at and as of such time, and
Shareholders and Corporation shall have performed or complied with all
obligations, covenants and conditions required by this Agreement to be performed
or complied with by them prior to or at the Closing Date.
SECTION 6.6 CERTIFICATE OF SHAREHOLDERS AND CORPORATION.
Buyer shall have been furnished with a certificate executed by an officer of
Corporation and certificates executed by Shareholders, in form and substance
satisfactory to Buyer, certifying to the fulfillment of the condition set forth
in Section 6.5 above.
SECTION 6.7 LEGAL OPINION. Xxxxxx Xxxxxx, L.L.P., counsel
for Shareholders and Corporation, shall have delivered to Buyer its opinions to
the effect set forth in EXHIBIT 6.7.
SECTION 6.8 LITIGATION. Immediately prior to the Closing
Date, there shall be no litigation or proceeding: (i) pending or threatened
against Buyer or Corporation or the Subsidiaries or any of their respective
directors, officers or shareholders, or involving the assets or properties of
any of them, for the purpose of enjoining or preventing the consummation of this
Agreement or otherwise claiming that such consummation is improper; or (ii)
pending against Buyer or Corporation or the Subsidiaries which, if decided
adversely, would adversely affect the right of Buyer to retain the stock,
property and other assets or to continue the operations of the property, assets
and business of Corporation and the Subsidiaries (or of Buyer or any of its
subsidiaries) after the Closing Date, and which, in the judgment of the Board of
Directors of Buyer, would make the consummation of this Agreement inadvisable.
Immediately prior to the Closing Date, there shall be no governmental
investigation pending or threatened which, in the judgment of the Board of
Directors of Buyer, might lead to or result in any litigation or proceeding of
the nature referred to in the foregoing sentence.
SECTION 6.9 THIRD PARTY CONSENTS. Prior to the Closing,
Corporation shall have obtained the written consent, waiver or approval of each
person: (i) who is a party to a contract or agreement with Corporation or the
Subsidiaries or a contract or agreement by which Corporation or the Subsidiaries
or their property is bound; (ii) whose consent, waiver or approval is required
under such contract or agreement as a result of consummation of the transactions
contemplated by this Agreement; and (iii) whose failure to provide such consent,
waiver or approval would have or might reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), earnings, business,
assets, liabilities, operations or prospects of Corporation. Such consents shall
include but not necessarily be limited to: (i) the verbal consent of Minolta
Information Systems Inc. to the transfer of the dealerships held by the
Corporation; (ii) the consent of Southland Corporation to the transfer of its
agreement with Corporation; and (iii) the consent of the landlords to the
transaction contemplated hereby in connection with the following locations:
Phoenix, Arizona; Tucson, Arizona; Denver, Colorado; Tampa, Florida; Xxxxxx
DPC/New Orleans, Louisiana; Metairie, Louisiana; Las Vegas, Nevada; Dallas,
Texas; Houston, Texas; and Salt Lake City, Utah, to the extent required under
the leases for such locations. Additionally, post closing, Corporation will use
its best efforts to obtain the consent of the Texas Education Agency to the
assignment of its agreement with Corporation.
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SECTION 6.10 CORPORATE ACTION. Immediately prior to the
Closing, Buyer shall have received, in form and substance reasonably
satisfactory to Buyer, the resignations of such officers and directors of
Corporation, effective as of the Closing Date, as Buyer may have stipulated to
Corporation in writing prior to the Closing Date.
SECTION 6.11 EMPLOYMENT AGREEMENTS. X. Xxxxx, X. Xxxxx, X.
Xxxxx and Marmonde shall have executed and delivered to Buyer employment
agreements on mutually acceptable terms and conditions.
SECTION 6.12 LOCK-UP AGREEMENTS. Shareholders and
Corporation shall have executed and delivered to Buyer Lock-Up Agreements in the
form of Exhibit 1.2(B).
SECTION 6.13 LEASE TERMINATION. Corporation's lease with
Xxxxxx Xxxxx Xx. for use of his Xxxxxx Avenue property in New Orleans, Louisiana
shall have been canceled pursuant to an instrument in form and content
satisfactory to Buyer.
SECTION 6.14 PARKING AGREEMENT. Corporation currently owns a
vacant lot (the "LOT") behind its New Orleans area headquarters at 1820 L & A
Road, Metairie, Louisiana (the "HEADQUARTERS"). Buyer agrees that the Lot may be
transferred to Shareholders at Closing for one dollar subject to the following:
(i) all debt in connection with the Lot shall be extinguished by Shareholders at
or prior to Closing; (ii) Shareholders and Buyer shall enter into a written
agreement pursuant to which Buyer (and its successors and assigns) may use the
Lot for vehicular parking and other similar uses for a term of years
co-extensive with Buyer's use of the L & A Road facility either as a tenant or
as an owner. In the event that Shareholders elect to transfer the Lot to the
owner of the Headquarters (Xxxxxx Xxxxx Senior), then and in that event,
Corporation's lease for the Headquarters shall be amended to allow Corporation
to use the Lot for vehicular parking for a term co-extensive with the term of
the Lease.
SECTION 6.15 EL PASO PROPERTY. Buyer shall have received and
approved a current update of Xxxxxxx Title Guaranty Company Policy Number
0-0000-00000 (which may be issued for nominal consideration) showing good and
marketable title to Southwest's property at 0000 Xxxx Xxxxxxx Xxxxxx, Xx Xxxx,
Xxxxx (the "EL PASO PROPERTY") in Southwest free and clear of any liens or
encumbrances whatsoever other than those shown on the existing policy described
above. Buyer shall also have received and approved the most recent Phase I
Environmental Inspection Report of the El Paso Property prepared for its lender,
Norwest Bank.
SECTION 6.16 ESCROW AGREEMENT. Shareholders and Buyer shall
have executed and delivered the Escrow Agreement contemplated in Section 1.2
hereof.
SECTION 6.17 AGREEMENT WITH XXXXX XXXXX. Xxxxx Xxxxx shall
have: (i) executed a non competition and non solicitation agreement in form and
content satisfactory to Buyer; (ii) executed full and unconditional releases
acquitting Corporation, Buyer, its officers, directors, shareholders; agents,
affiliates, successors and assigns from any liability whatsoever relative to the
transactions contemplated hereby or otherwise; (iii) one or more of the
Shareholders shall have acquired or shall have caused the acquisition of all of
Xxxxx Xxxxx'x shares in Corporation and RACOM; and (iv) Xxxxx Xxxxx'x right to
receive severance pay and any other similar payments pursuant to the terms and
conditions of a certain Agreement dated December 4, 1995 shall have been
extinguished.
SECTION 6.18 AGREEMENTS WITH XXXXXX XXXXX, XX., ET AL. (i)
All obligations to Xxxxxx X. Xxxxx, Xx., Xxxxxxx Xxxxx, Xxx Xxxxx, Xxxxx Xxxxxx
and Xxxxx Xxxxx (the "NON PARTICIPATING FAMILY") pursuant to that certain Stock
Purchase Agreement dated January 26, 1995 shall have been fulfilled; (ii) all of
the Shares of Corporation owned by Shareholders and pledged to the Non
Participating Family as security for a certain loan shall have been released
from said pledge; (iii) Corporation or another party
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acceptable to Buyer shall have obtained Xxxxxx Xxxxx Xx.'s shares in GSI; and
(iv) Xxxxxx X. Xxxxx, Xx. for himself and as agent and attorney in fact for the
rest of the Non Participating Family shall have executed a full and
unconditional release acquitting Corporation, Buyer, its officers, directors,
shareholders, affiliates, successors and assigns from any liability whatsoever
relative to the transactions contemplated herein or otherwise.
SECTION 6.19 STOCK ACQUISITIONS. Southwest shall have
redeemed all of the outstanding shares of stock in it held pursuant to those
certain Restricted Stock Agreements between Southwest and the various persons
listed on EXHIBIT 6.19 and such persons shall have executed full and
unconditional releases acquitting Corporation, Buyer, its officers, directors,
shareholders, agents, affiliates, successors and assigns from any liability
whatsoever relative to the transactions contemplated hereby or otherwise.
SECTION 6.20 HSR ACT. All of the legal requirements required
under the HSR Act shall have been fulfilled and neither the Federal Trade
Commission nor the Department of Justice shall have instituted an action to
restrain or enjoin the consummation of the transaction.
SECTION 6.21 FAIRNESS OPINION. Shareholders shall have
produced a fairness opinion from an investment banking concern acceptable to
Buyer in the exercise of its reasonable discretion attesting to the fairness of
the transaction to the participants in the ESOP.
SECTION 6.22 NAME PROTECTION. Shareholders and/or
Corporation shall have reserved use of the names: RACOM, RACOM Information
Technologies Corporation, RACOM Southwest, Government Services, Inc. and
Business Micrographics Corporation in form and content satisfactory to Buyer.
ARTICLE 7
TERMINATION
SECTION 7.1 TERMINATION OF AGREEMENT. This Agreement and
the transactions contemplated hereby may be terminated at any time prior to the
Closing Date, as follows:
A. MUTUAL CONSENT. By mutual consent of all of the
parties hereto.
B. BREACH. By Buyer on the one hand or by the
Shareholders or Corporation on the other hand by reason of the breach
by the other in any material respect of any of its or their
representations, warranties, covenants or agreements contained in this
Agreement which breach is not cured within 30 days of written notice
thereof.
C. RESPECTIVE CONDITIONS. By Buyer on the one hand
or by the Shareholders or Corporation on the other hand if the
conditions precedent to their respective obligations contained in
Articles 5 or 6 hereof have not been met in all material respects
through no fault of the terminating party by April 1, 1998.
SECTION 7.2 NO WAIVER. Termination as provided herein shall
not waive any rights of any party against another for default or breach of any
provision of this Agreement.
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ARTICLE 8
THE CLOSING
SECTION 8.1 TIME AND PLACE. The transfer of the Shares by
Shareholders to Buyer (the "CLOSING") shall take place at the offices of
Seller's counsel, Xxxxxx Xxxxxx, L.L.P. at 10:00 a.m., local time, within 2
business days of the passage of the applicable HSR waiting period or at such
other time and place as the parties may agree to in writing (the "CLOSING
DATE").
SECTION 8.2 SHAREHOLDERS' AND CORPORATION'S OBLIGATIONS AT
CLOSING. At the Closing, Shareholders and Corporation shall deliver to Buyer the
following instruments, in form and substance satisfactory to Buyer and its
counsel, against delivery of the items specified in Section 8.3:
A. Certificates representing the Shares, registered
in the name of the Shareholders, duly endorsed by the Shareholders for
transfer as specified in Section 1.1 above or accompanied by separate
written instruments of assignment. On submission of such certificates
to Corporation for transfer, Corporation shall issue to Buyer a new
certificate representing the Shares, registered in the name of Buyer;
B. A complete stock book, stock ledger, update of
minute book and corporate seal of Corporation;
C. The opinions of counsel as provided in Section
6.7;
D. Except as otherwise specified by Buyer or
contemplated herein, the written resignations of all the officers and
directors of Corporation;
E. The certificates executed by Corporation's
officer and Shareholders, dated the Closing Date, as provided in
Section 6.6;
F. The Employment Agreements contemplated in
Section 6.11;
G. The Escrow Agreement contemplated in Sections
5.6 and 6.14, and, in connection therewith, Shareholders are to deliver
the Escrow Shares to the Escrow Agent (as defined in the Escrow
Agreement);
H. The Lock-Up Agreement contemplated in Section
6.12;.
I. Certified resolutions of Corporation's Board of
Directors authorizing the execution, delivery and performance of this
Agreement and all actions to be taken by Corporation under this
Agreement;
J. A Certificate of Good Standing issued by the
Secretary of State of Louisiana;
K. Payoff letters and UCC termination statements
paying off all outstanding indebtedness of Corporation and releasing
all liens on its assets;
L. Evidence of the discharge of the Vendor's lien
and a Deed of Trust on the El Paso Property;
M. A Parking Agreement for the Lot;
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N. Evidence satisfactory to Buyer that Corporation
obtained 100% ownership of all Subsidiaries including Certificates of
Merger certified by the Louisiana Secretary of State to evidence that
all Subsidiaries have been properly merged into Corporation and
Certificates of Merger for each domestic state to evidence that all
Subsidiaries have been properly merged out of existence;
O. Evidence that the lease for the Xxxxxx Avenue
property in New Orleans, Louisiana has been canceled;
P. The agreements and releases to be executed by
all of the Non Participating Family and Xxxxx Xxxxx;
Q. All third party consents;
R. Evidence that all of the shares of stock in
Southwest have been redeemed; and
S. Such other and further instruments as counsel
for Corporation and Buyer shall mutually agree are necessary to consummate the
transactions contemplated herein.
SECTION 8.3 BUYER'S OBLIGATIONS AT CLOSING. At the Closing,
Buyer shall deliver to Shareholders the following instruments and documents
against delivery of the items specified in Section 8.2:
A. The Cash Consideration;
B. The Lason Shares;
C. The certificate executed by an officer of Buyer
dated the Closing Date, as provided in Section 5.3;
D. The opinion of counsel as provided in Section
5.4;
E. The Escrow Agreement contemplated in Sections
5.6 and 6.14;
F. Certified resolutions of Buyer's Board of
Directors authorizing the execution, delivery and performance of this Agreement
and all actions to be taken by them under this Agreement; and
G. Such other and further instruments as counsel
for Corporation and Buyer shall mutually agree are necessary to consummate the
transactions contemplated herein.
ARTICLE 9
OBLIGATIONS AFTER CLOSING
SECTION 9.1 AGREEMENT TO REFRAIN FROM COMPETITION. X.
Xxxxx, X. Xxxxx and X. Xxxxx hereby acknowledge that the Employment Agreements
contemplated in Section 6.11 hereof are executed by them as a part of the
inducement to Buyer to enter into this Agreement and to consummate the
transactions contemplated herein. In connection therewith, X. Xxxxx, X. Xxxxx
and X. Xxxxx agree to refrain from competition and maintain confidential
information concerning Corporation, Buyer and its
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affiliates during the term of the Employment Agreements and for a 3 year period
thereafter, all as set forth in the Employment Agreements, the terms and
conditions of which are incorporated herein by reference. X. Xxxxx, X. Xxxxx and
X. Xxxxx further acknowledge that the Purchase Price given in consideration of
the Shares is part of the consideration for them entering into said Employment
Agreements and that they are receiving full and adequate consideration for their
covenants and agreements provided therein.
SECTION 9.2 FURTHER ASSURANCES. From time to time, at
Buyer's request and without further consideration and at the expense of Buyer,
Shareholders and Corporation will execute and deliver to Buyer such other
documents, and take such other action, as Buyer may reasonably request in order
to consummate more effectively the transactions contemplated by this Agreement,
and to vest in Buyer good, valid and marketable title to the Shares.
ARTICLE 10
INDEMNIFICATION
SECTION 10.1 BUYER'S INDEMNITY. Buyer agrees to indemnify and
hold harmless Shareholders from and against, and in respect to, any and all
losses, expenses, costs, obligations, liabilities and damages, including
interest, penalties and reasonable attorneys' fees and expenses (collectively,
"LOSSES") they may incur by reason of: (i) Buyer's breach of or failure to
perform any of its representations, warranties, commitments, covenants or
agreements in this Agreement, or in any instrument, agreement or exhibit
furnished or to be furnished by or on behalf of Buyer under this Agreement; or
(ii) any act or omission of Buyer or Corporation, or any of their respective
successors or assigns, after the Closing Date, that constitutes a breach or
default under, or a failure to perform any obligation, duty or liability of
Buyer or Corporation, respectively, under any loan agreement, lease, contract,
order or other agreement (relating to the business of Corporation) to which
Buyer or Corporation, respectively, is a party or by which any of them is bound.
SECTION 10.2 SHAREHOLDERS' INDEMNITY. Shareholders hereby
indemnify, defend and holds harmless Buyer from and against, and in respect to,
any and all losses, expenses, costs, obligations, liabilities and damages
including interest, penalties and reasonable attorneys' fees and expenses
(collectively, "LOSSES"), that Buyer may incur by reason of Shareholders' or
Corporation's breach of or failure by Shareholders or Corporation to perform,
any of their representations, warranties, commitments, covenants or agreements
in this Agreement, including any exhibit hereto. Shareholders further indemnify
and hold Buyer and Corporation harmless from any and all cost or expense related
to federal, state, local taxes, foreign, commonwealth of whatsoever type or kind
payable by Corporation for periods of time prior to the Effective Date and that
are not reflected or accrued in the Financial Statements. The foregoing
indemnity is subject to the terms and conditions of a certain Limitation of
Indemnification Agreement of even date herewith.
SECTION 10.3 METHOD OF ASSERTING CLAIMS. The party seeking
indemnification (the "INDEMNITEE") will give prompt written notice to the other
party or parties (the "INDEMNITOR") of any claim ("CLAIM") which it discovers or
of which it receives notice after the Closing and which might give rise to a
Claim by it against Indemnitor under either Section 10.1 or 10.2 hereof as the
case may be, stating the nature, basis and (to the extent known) amount thereof;
provided that failure to give prompt notice shall not jeopardize Indemnitee's
right to indemnification unless such failure shall have materially prejudiced
the ability of Indemnitor to defend such Claim.
SECTION 10.4 THIRD PARTY CLAIMS. In case of any Claim, suit
or proceeding by a third party or by any government body, or any legal,
administrative or arbitration proceedings with respect to which Indemnitor may
have liability under the indemnity agreement contained in either Section 10.1.
or 10.2 as the case may be, Indemnitor shall be entitled to participate therein,
and, to the extent desired by
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Indemnitor, to assume the defense thereof at its own expense and through counsel
of its own choosing, and after notice from Indemnitor to Indemnitee of the
election so to assume the defense thereof, Indemnitor will not be liable to
Indemnitee for any legal or other expenses subsequently incurred by Indemnitee
in connection with the defense thereof, other than reasonable costs of
investigation, unless Indemnitor does not actually assume the defense thereof
following notice of such election. The parties will render each other such
assistance as may reasonably be required of each other in order to insure proper
and adequate defense of any such suit, Claim or proceeding. Indemnitee will not
make any settlement of any suit, Claim or proceeding which might give rise to
liability of Indemnitor under the indemnity agreements contained in either
Section 10.1 or 10.2 hereof as the case may be without the written consent of
Indemnitor, which consent shall not be unreasonably withheld or delayed. If
Indemnitor shall desire and be able to effect, a bona fide compromise or
settlement of any such suit, Claim, or proceeding and Indemnitee shall
unreasonably refuse or delay to consent to such compromise or settlement, then
Indemnitor's liability under either Section 10.1 or 10.2 as the case may be with
respect to such suit, Claim or proceeding shall be limited to the amount so
offered in compromise or settlement together with all legal and other expenses
which may have been incurred prior to the date on which Indemnitee has refused
to consent to such compromise or settlement.
SECTION 10.5 SURVIVAL OF SHAREHOLDERS' INDEMNITY OBLIGATIONS.
Shareholders' liability for a breach of the representations, warranties and
covenants made by Shareholder or Corporation in this Agreement, or in any
schedule, exhibit, certificate or other document delivered in connection with
this Agreement, shall not be deemed to be waived or otherwise affected by any
investigation made by Buyer and shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, subject
to the limitations set forth in Section 10.7 below.
SECTION 10.6 SURVIVAL OF BUYER'S INDEMNITY OBLIGATIONS.
Buyer's liability for a breach of the representations, warranties and covenants
made by Buyer in this Agreement, or in any schedule, exhibit, certificate or
other document delivered in connection with this Agreement shall not be deemed
to be waived or otherwise affected by any investigation made by Shareholder and
shall survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby.
ARTICLE 11
MISCELLANEOUS PROVISIONS
SECTION 11.1 FINDER'S OR BROKER'S FEES. Each of the parties
represents and warrants that he or it has dealt with no broker or finder in
connection with any of the transactions contemplated by this Agreement, and,
insofar as he or it knows, no broker or other person is entitled to any
commission or finder's fee in connection with any of these transactions.
Shareholders, Corporation and Buyer each agree to indemnify and hold harmless
one another against any loss, liability, damage, cost, claim or expense incurred
by reason of any brokerage, commission or finder's fee alleged to be payable by
reason of any act, omission or statement of the indemnifying party.
SECTION 11.2 EXPENSES. Buyer and Corporation shall,
individually, pay all costs and expenses incurred or to be incurred by any of
them in negotiating and preparing this Agreement and in closing and carrying out
the transactions contemplated hereby.
SECTION 11.3 EFFECT OF HEADINGS. The subject headings of the
Articles and Sections of this Agreement are included for purposes of convenience
only, and shall not affect the construction or interpretation of any of the
provisions hereof.
SECTION 11.4 ENTIRE AGREEMENT; MODIFICATION. This Agreement,
together with all of the schedules and exhibits furnished hereunder and the
other agreements contemplated hereby, constitute
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the sole and entire agreement between the parties pertaining to the subject
matter contained herein, and supersedes all prior and contemporaneous
agreements, representations and understandings of the parties. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by all the parties.
SECTION 11.5 WAIVER. Any party hereto may waive, in writing,
compliance by the other party of any of the covenants or conditions contained in
this Agreement, except those conditions imposed by law. No act, failure to act,
practice or custom shall constitute an implied waiver of full compliance with
any of the provisions hereof. The granting of a written waiver pursuant to this
Section 11.5 shall apply, unless expressly set forth therein to the contrary,
only to the specific incident of noncompliance with the specific provisions of
this Agreement set forth therein.
SECTION 11.6 COUNTERPARTS. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. A party may execute this Agreement by facsimile, which signature
shall be fully binding, and the party so executing will deliver an originally
executed agreement as soon as practicable.
SECTION 11.7 PARTIES IN INTEREST. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the parties to this
Agreement and their respective successors and assigns, or is intended to relieve
or discharge the obligation or liability of any third persons to any party to
this Agreement. None of the provisions hereof shall be deemed to give any third
persons any right of subrogation or action over or against any party to this
Agreement.
SECTION 11.8 BINDING EFFECT. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto and their respective
heirs, legal representatives, successors and permitted assigns.
SECTION 11.9 RECOVERY OF LITIGATION COSTS. Except as
otherwise provided elsewhere in this Agreement, if any legal action or any
arbitration or other proceeding is brought for the enforcement of this
Agreement or by reason of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be
entitled.
SECTION 11.10 SUCCESSORS AND ASSIGNS. Neither Shareholders'
nor Buyer's rights or obligations under this Agreement may be assigned, except
that Buyer may assign its rights and obligations hereunder to an affiliate
provided that such affiliate shall execute and deliver such documentation
necessary to be bound by the terms of this Agreement and the assignor will
continue to be liable for any breach hereof. Any assignment in violation of the
foregoing shall be null and void.
SECTION 11.11 NOTICES. Any notices, consent, approval or other
communications given pursuant to the provisions of this Agreement shall be in
writing and shall be (a) mailed by certified mail or registered mail, return
receipt requested, postage prepaid, or (b) delivered by a nationally recognized
overnight courier, U.S. Post Office Express Mail, or similar overnight courier
which delivers only upon signed receipt of the addressee, and addressed as
follows:
If to a Shareholder or SOUTHERN MICROFILM ASSOCIATES, INC.
Corporation at: 0000 X & X Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx Xxxxx, Xx.
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With a copy (which XXXXXX XXXXXX, L.L.P.
shall not constitute Texaco Center
notice) to: 000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
If to Buyer at: LASON, INC.
0000 Xxxxxxxxxx Xxxxxxx
Xxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx, President
and Chief Executive Officer
With a copy (which SEYBURN, KAHN, XXXX, XXXX
shall not constitute XXXXXX AND XXXXXX, P.C.
notice) to: 0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxxxx X. Xxxxxx, Esq.
The time of giving of any notice shall be the time of receipt thereof by the
addressee or any agent of the addressee, except that in the event the addressee
or such agent of the addressee shall refuse to receive any notice given by
registered mail or certified mail as above provided or there shall be no person
available at the time of the delivery thereof to receive such notice, the time
of the giving of such notice shall be the time of such refusal or the time of
such delivery, as the case may be. Any party hereto may, by giving five (5) days
written notice to the other party hereto, designate any other address in
substitution of the foregoing address to which notice shall be given.
SECTION 11.12 DEFINITIONS. All terms defined in this Agreement
shall have such defined meanings when used in any exhibit, schedule, or any
certificate or other document made or delivered pursuant thereto or thereto,
unless otherwise defined therein.
SECTION 11.13 CHOICE OF LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of Michigan, without
giving effect to any choice of law or conflict provision or rule, whether of the
State of Michigan (or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of Michigan to be applied. In furtherance of
the foregoing, the internal law of the State of Michigan will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law or analysis, the substantive law
of some other jurisdiction would ordinarily apply.
SECTION 11.14 ARBITRATION. In the event of a dispute between
the parties hereto concerning any of the provisions of this Agreement, the
parties shall promptly meet and discuss such dispute in a good faith effort to
resolve such dispute. If no resolution is reached within 30 days following the
date on which one party first notifies the other (the "RESPONDING PARTY") of his
or its request that such a meeting be held, then, and in that event, the dispute
shall be resolved by final and binding arbitration in either the Detroit,
Michigan area (if Buyer is the Responding Party) or the New Orleans, Louisiana
area (if Shareholders are the Responding Party) pursuant to the commercial
arbitration rules then prevailing of the American Arbitration Association.
Pursuant to this Section 11.14, the arbitrators shall have the power to
determine the exact amount available for indemnification by verifying the number
of Lason Shares owned by Shareholders on the date when a claim for arbitration
is submitted and calculating the proceeds realized by Shareholders from the sale
of Lason Shares from time to time in case of a claim for indemnification with
regard to an unrestricted claim. Notwithstanding the foregoing, each party
specifically reserves the right (a) to seek equitable remedies in a Federal or
state court of competent jurisdiction sitting in the State of Michigan; and (b)
to bring a third party action against any other party in any proceeding to
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which the party initiating such third party action (the "INITIATING PARTY") is a
party under circumstances in which the basis of the claim of the initiating
party against the other party is that the other party is liable, in whole or in
part, for any claim or counterclaim being asserted against the initiating party
in such proceeding. The decision of the arbitrators when rendered shall be final
and binding on the parties hereto. Judgment upon the award of the arbitrators
may be entered by any court of competent jurisdiction. The cost of the
arbitration proceeding (exclusive of counsel fees) shall be borne equally by the
parties.
SECTION 11.15 HSR ACT. Buyer and Shareholders shall cooperate
in good faith in complying with the HSR Act and in attempting to secure early
termination of the applicable HSR Act waiting period. In connection therewith,
Buyer acknowledges that it shall pay and is solely responsible for all expenses
related to complying with HSR Act, including the initial HSR Act filing fee in
the amount of $45,000 and the fees of counsel to Shareholders and Corporation in
complying with the HSR Act. As a pre-condition to the obligations of Buyer to
consummate the transaction contemplated by this Agreement, Shareholders shall
have fully complied with the applicable provisions of the HSR Act, and any and
all applicable waiting periods thereunder shall have expired, or an opinion
reasonably acceptable to Buyer state that no such filing is required shall have
been delivered to Buyer. As a pre-condition to the obligations of Shareholders
to consummate the transaction contemplated by this Agreement, Buyer shall have
fully complied with the applicable provisions of the HSR Act, and any and all
applicable waiting periods thereunder shall have expired or an opinion
reasonably acceptable to Shareholders stating that no such filing is required
shall have been delivered to Shareholders.
[Signatures continued on next page]
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IN WITNESS WHEREOF, each of the parties hereto has signed this
Agreement for the Purchase and Sale of Stock or has caused the same to be signed
by its duly authorized officer as of the date first above written.
BUYER:
LASON, INC., a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx
Its: President and Chief Executive
Officer
SHAREHOLDERS:
/s/ XXXXXX XXXXX, XX.
-------------------------------------------
XXXXXX XXXXX, XX.
/s/ XXXXXX XXXXX
-------------------------------------------
XXXXXX XXXXX
/s/ XXXXX XXXXX
-------------------------------------------
XXXXX XXXXX
CORPORATION:
SOUTHERN MICROFILM ASSOCIATES, INC., a
Louisiana corporation
By: /s/ Xxxxxx X. Xxxxx, Xx.
----------------------------------------
Xxxxxx X. Xxxxx, Xx.
Its: President
