1
EXHIBIT 2.13
AGREEMENT FOR THE PURCHASE AND SALE OF STOCK
THIS AGREEMENT is made and entered into on the 24th day of
JULY 1998, by and among LASON, INC., a Delaware corporation, the address of
which is 0000 Xxxxxxxxxx Xxxxxxx, Xxxx, Xxxxxxxx 00000 ("BUYER"), XXXXXX X.
XXXXXXX, whose address is 00 Xxxxxx, Xxxxxx Xxxxx Xxxxxxxxx, XX 00000
("XXXXXXX"), XXXXX X. XXXXXXXXXXX, individually and as Trustee of the
Xxxxxxxxxxx Family Trust U/D/T dated March 6, 1997 and Xxxxxx X. Xxxxxxxxxxx,
individually and as Trustee of the Xxxxxxxxxxx Family Trust U/D/T dated March 6,
1997, whose address is 000 Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, XX 00000
(collectively, "XXXXXXXXXXX"), XXXX X. XXXXX, whose address is 0000 Xxxxxxxx
Xxxxx, Xxxxxxxxx, XX 00000 ("XXXXX"), XXXXXXX X. XXXXXX, whose address is 00000
Xxxxxxxxxx Xxxxx, Xxxxxxx Xxxxxx, XX 00000 ("FRENCH"), XXXXXXX X. XXXXXX,
individually and as Co-Trustee of the Xxxxxxx X. Xxxxxx Family Trust established
November 22, 1982, whose address is 00000 Xxx Xxxxxxx, Xxx Xxxx Xxxxxxxxxx, XX
00000 and XXXXX X. XXXXXX, individually and as Co-Trustee of the Xxxxxxx X.
Xxxxxx Family Trust established November 22, 1982, whose address is 00000 Xxx
Xxxxxxx, Xxx Xxxx Xxxxxxxxxx, XX 00000 (collectively "XXXXXX"), XXXX XXXXXX,
whose address is 00000 Xxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000 ("HAZELL"), and
XXXXXXX X. XXXXXXXXXX, whose address is 00000 Xxx Xxxx, Xxxxxx Xxxxx, XX 00000
("LAUDERDALE"), and CONSOLIDATED REPROGRAPHICS, a California corporation, the
address of which is 00 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx, 00000-0000
("CORPORATION"). For the purposes hereof, Lundeen, Chamberlain, Sipes, French,
Xxxxxx, Hazell and Lauderdale are sometimes hereinafter collectively referred to
as "SHAREHOLDERS."
R E C I T A L S:
Corporation is in the business of providing industrial
photography, blueprint copy services (including hard copy and CAD/CAM copying),
document copying services (black and white analog and digital duplication, color
duplication and plotting), print on demand, facilities management services,
mounting/laminating services, microfilm and microfiche services, offset
printing, equipment supply and service, together with such services and
technologies arising out of, generated by or from, or developed as a result of,
or used in connection with or resulting from all or any of the foregoing
(collectively, the "BUSINESS").
Shareholders have represented that they own all of the issued
and outstanding common stock of Corporation as of the date of this Agreement
(the "SHARES") with the understanding that: (I) as of the date of this
Agreement, Xxxxxx owns preferred stock in Corporation which they will convert to
common stock prior to the Closing Date (as defined below in Section 8.1) and
(ii) Hazell, Lauderdale, Xxxxxxxxxxx and Xxxxx hold options to purchase some of
the Shares held by Xxxxxxx on the date hereof which they will exercise prior to
the Closing Date.
Buyer desires to purchase all of the Shares currently owned by
Shareholders, as well as the Shares which are to be owned by Siegel, Hazell,
Lauderdale, Xxxxxxxxxxx and Xxxxx on the Closing Date (as defined below in
Section 8.1) 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:
2
TABLE OF CONTENTS
PAGE
ARTICLE 1
PURCHASE AND SALE OF SHARES...................................... 2
SECTION 1.1 SALE AND TRANSFER OF SHARES.................... 2
SECTION 1.2 PURCHASE PRICE................................. 2
SECTION 1.3 ESCROW; POSSIBLE POST-CLOSING ADJUSTMENTS
TO PURCHASE PRICE ............................. 3
SECTION 1.4 EARNOUT PAYMENTS............................... 7
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
AND CORPORATION.................................................. 10
SECTION 2.1 ORGANIZATION, STANDING AND POWER............... 10
SECTION 2.2 CAPITALIZATION................................. 10
SECTION 2.3 TITLE TO SHARES................................ 11
SECTION 2.4 SUBSIDIARIES................................... 11
SECTION 2.5 AUTHORITIES AND CONSENTS....................... 11
SECTION 2.6 NO BREACH OR VIOLATION......................... 11
SECTION 2.7 FINANCIAL STATEMENTS........................... 11
SECTION 2.8 BOOKS AND RECORDS.............................. 12
SECTION 2.9 UNDISCLOSED LIABILITIES........................ 12
SECTION 2.10 ABSENCE OF CERTAIN CHANGES..................... 12
SECTION 2.11 TAXES.......................................... 14
SECTION 2.12 RECEIVABLES.................................... 14
SECTION 2.13 INVESTMENTS AND INVESTMENT SECURITIES.......... 14
SECTION 2.14 REAL PROPERTY.................................. 14
SECTION 2.15 LEASES......................................... 15
SECTION 2.16 ENVIRONMENTAL MATTERS.......................... 15
SECTION 2.17 PROPRIETARY RIGHTS............................. 16
SECTION 2.18 NON-INFRINGEMENT; AGREEMENTS................... 16
SECTION 2.19 INSURANCE...................................... 16
SECTION 2.20 INTERESTED TRANSACTIONS........................ 16
SECTION 2.21 CUSTOMERS AND SALES............................ 16
SECTION 2.22 EXISTING EMPLOYMENT CONTRACTS AND/OR
REMUNERATION AGREEMENTS........................ 16
SECTION 2.23 EMPLOYEE BENEFIT PLANS......................... 17
SECTION 2.24 WORKERS COMPENSATION; EMPLOYMENT
DISCRIMINATION; LABOR RELATIONS................ 17
SECTION 2.25 OTHER CONTRACTS................................ 18
SECTION 2.26 OFFICERS AND DIRECTORS, ETC.................... 18
SECTION 2.27 LITIGATION AND CLAIMS.......................... 18
SECTION 2.28 GENERAL LIABILITY.............................. 19
SECTION 2.29 OTHER TANGIBLE PERSONAL PROPERTY............... 19
SECTION 2.30 TITLE TO ASSETS................................ 19
SECTION 2.31 NAMES.......................................... 19
SECTION 2.32 SOFTWARE....................................... 19
SECTION 2.33 YEAR 2000 COMPLIANCE........................... 20
SECTION 2.34 BEST KNOWLEDGE................................. 20
SECTION 2.35 ACCURACY AND COMPLETENESS OF REPRESENTATIONS
AND WARRANTIES................................. 20
i
3
SECTION 2.36 INVESTMENT REPRESENTATIONS..................... 20
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER.......................... 21
SECTION 3.1 ORGANIZATION................................... 21
SECTION 3.2 AUTHORIZATION.................................. 21
SECTION 3.3 NO BREACH...................................... 21
SECTION 3.4 VALIDLY ISSUED................................. 21
SECTION 3.5 TRADING ON THE NASDAQ NATIONAL MARKET.......... 21
SECTION 3.6 BUYER'S SECURITIES FILINGS..................... 22
ARTICLE 4
FURTHER AGREEMENTS OF THE PARTIES................................ 22
SECTION 4.1 ACCESS TO INFORMATION.......................... 22
SECTION 4.2 CONDUCT OF BUSINESS BY CORPORATION............. 22
SECTION 4.3 EXCLUSIVITY.................................... 24
SECTION 4.4 CONSENTS....................................... 24
SECTION 4.5 COMMUNICATIONS................................. 24
SECTION 4.6 UPDATING OF SCHEDULES AND EXHIBITS............. 24
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS OF
SHAREHOLDERS AND CORPORATION..................................... 24
SECTION 5.1 PERFORMANCE.................................... 24
SECTION 5.2 REPRESENTATIONS AND WARRANTIES................. 24
SECTION 5.3 CERTIFICATE OF OFFICER......................... 24
SECTION 5.4 LEGAL OPINION.................................. 24
SECTION 5.5 EMPLOYMENT AGREEMENTS.......................... 24
SECTION 5.6 ESCROW AGREEMENT............................... 24
SECTION 5.7 HSR ACT........................................ 25
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER..................... 25
SECTION 6.1 AUTHORIZATION OF TRANSACTION................... 25
SECTION 6.2 SATISFACTORY INVESTIGATION..................... 25
SECTION 6.3 UNTRUE STATEMENTS.............................. 25
SECTION 6.4 NO MATERIAL ADVERSE CHANGE..................... 25
SECTION 6.5 REPRESENTATIONS AND WARRANTIES................. 25
SECTION 6.6 CERTIFICATE OF SHAREHOLDERS AND CORPORATION.... 25
SECTION 6.7 LEGAL OPINION.................................. 25
SECTION 6.8 LITIGATION..................................... 25
SECTION 6.9 THIRD PARTY CONSENTS........................... 26
SECTION 6.10 CORPORATE ACTION............................... 26
SECTION 6.11 EMPLOYMENT AGREEMENTS.......................... 26
SECTION 6.12 LOCK-UP AGREEMENT.............................. 26
SECTION 6.13 ESCROW AGREEMENT............................... 26
SECTION 6.14 XXXXXX TRANSACTIONS............................ 26
ii
4
SECTION 6.15 OPTIONS........................................ 26
SECTION 6.16 REPAYMENT OF NOTE.............................. 26
SECTION 6.17 EXTENSION OF LEASES............................ 26
SECTION 6.18 UNITED REPROGRAPHICS........................... 26
SECTION 6.19 HSR ACT........................................ 26
ARTICLE 7
TERMINATION...................................................... 27
SECTION 7.1 TERMINATION OF AGREEMENT....................... 27
SECTION 7.2 NO WAIVER...................................... 27
ARTICLE 8
THE CLOSING...................................................... 27
SECTION 8.1 TIME AND PLACE................................. 27
SECTION 8.2 SHAREHOLDERS' AND CORPORATION'S OBLIGATIONS
AT CLOSING..................................... 27
SECTION 8.3 BUYER'S OBLIGATIONS AT CLOSING................. 28
ARTICLE 9
OBLIGATIONS AFTER CLOSING........................................ 29
SECTION 9.1 AGREEMENT TO REFRAIN FROM COMPETITION.......... 29
SECTION 9.2 FURTHER ASSURANCES............................. 30
ARTICLE 10
INDEMNIFICATION.................................................. 30
SECTION 10.1 BUYER'S INDEMNITY.............................. 30
SECTION 10.2 SHAREHOLDERS' INDEMNITY........................ 30
SECTION 10.3 METHOD OF ASSERTING CLAIMS..................... 31
SECTION 10.4 THIRD PARTY CLAIMS............................. 31
SECTION 10.5 SURVIVAL OF SHAREHOLDERS' INDEMNITY
OBLIGATIONS.................................... 31
SECTION 10.6 SURVIVAL OF BUYER'S INDEMNITY OBLIGATIONS...... 00
XXXXXXX 00.0 XXXXXXXXXX XX INDEMNIFICATION.................. 32
SECTION 10.8 RECEIVABLES INDEMNITY.......................... 32
ARTICLE 11
MISCELLANEOUS PROVISIONS......................................... 32
SECTION 11.1 FINDER'S OR BROKER'S FEES...................... 32
SECTION 11.2 EXPENSES....................................... 32
SECTION 11.3 EFFECT OF HEADINGS............................. 32
SECTION 11.4 ENTIRE AGREEMENT; MODIFICATION................. 32
SECTION 11.5 WAIVER......................................... 33
SECTION 11.6 COUNTERPARTS................................... 33
SECTION 11.7 PARTIES IN INTEREST............................ 33
SECTION 11.8 BINDING EFFECT................................. 33
SECTION 11.9 RECOVERY OF LITIGATION COSTS................... 33
SECTION 11.10 SUCCESSORS AND ASSIGNS......................... 33
SECTION 11.11 NOTICES........................................ 33
iii
5
SECTION 11.12 DEFINITIONS.................................... 34
SECTION 11.13 CHOICE OF LAW.................................. 34
SECTION 11.14 ARBITRATION.................................... 34
SECTION 11.15 HSR ACT........................................ 34
SECTION 11.16 POWER OF ATTORNEY.............................. 35
iv
6
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
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.
A. Buyer agrees to pay and Shareholders agree to
accept for the Shares an amount to be determined by subtracting an
amount equal to the Corporation Debt (defined below) from $41,000,000
(the "Initial Purchase Price"). The Initial Purchase Price shall be
adjusted following the Closing for any increases or decreases in Net
Current Working Capital and reductions due to possible Buyer offsets
pursuant to Section 1.3, and for any increase resulting from Earnout
Payments due and payable to Shareholders pursuant to Section 1.4. The
Initial Purchase Price shall be paid at Closing as follows: (a) cash in
an amount equal to $34,100,000 minus Corporation Debt, payable via
electronic wire transfer of funds (the "Cash Portion"); and (b)
$6,150,000.00 in the form of shares of Buyer's Common Stock (the "LASON
SHARES") and $750,000.00 in cash, both to be held in escrow pursuant to
the terms and conditions of Section 1.3 below. The Lason Shares will be
valued for this purpose at the average closing price of the Lason
Shares for the preceding 10 trading days prior to the Closing Date 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 of EXHIBIT 1.2(A-1) (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 18
months from and after the Closing Date. The Initial Purchase Price (as
same may be adjusted in accordance with the terms and conditions
hereof) is to be allocated among the Shareholders in accordance with
EXHIBIT 1.2 (A- 2).
B. The Cash Portion shall be equal to $34,100,000
minus the following obligations of Corporation ("CORPORATION DEBT"):
(i) Xxxxx Fargo Debt;
(ii) Deferred tax liabilities;
(iii) Acquisition debt for United Reprographics;
(iv) Acquisition debt remaining on $4,182,265
note Xxxxxx;
(v) Azon vendor debt in the amount of $200,000;
and
(vi) Capital lease obligations in excess of
$1,500,000.
The Corporation Debt shall not include and the Cash Portion
shall not be reduced by any other obligations of Corporation, including, but not
limited to the obligations to United Reprographics and
2
7
Xxxxxx relating to their employment and noncompetition agreements. Corporation
Debt as of the date of this Agreement is set forth on SCHEDULE 1.2(B), 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. Corporation Debt shall be paid at Closing from funds provided by
Buyer to Corporation. The sum of the Cash Portion, the Lason Shares, the
Escrowed Funds (as defined in Section 1.3 below) and the amount paid by Buyer
for Corporation to retire Corporation Debt shall total $41,000,000. Payment of
Corporation Debt as aforesaid shall not reduce Closing Date Net Working Capital.
SECTION 1.3 ESCROW; POSSIBLE POST-CLOSING ADJUSTMENTS TO
PURCHASE PRICE . The aforesaid $750,000.00 in cash (the "ESCROWED FUNDS") and
the aforesaid $6,150,000 in the form of the Lason Shares (the "ESCROWED STOCK")
referenced in Section 1.2A above are to be paid into escrow with Seyburn, Kahn,
Ginn, Bess, Xxxxxx and Xxxxxx, P.C. ("BUYER'S COUNSEL") pursuant to the terms
and conditions of that certain Escrow Agreement in the form of EXHIBIT 1.3 (the
"ESCROW AGREEMENT") for purposes of addressing the following possible
post-Closing adjustments to the Initial Purchase Price:
A. With respect to the Escrowed Funds:
1. Within 90 days of the Closing Date, Buyer
shall cause an audited balance sheet of Corporation to be
prepared by PricewaterhouseCoopers as of the Closing Date (the
"CLOSING DATE BALANCE SHEET"), together with a computation by
PricewaterhouseCoopers of the Net Current Working Capital of
Corporation as that term is defined in subpart (4) below (the
"CLOSING DATE NET CURRENT WORKING CAPITAL"). The Closing Date
Balance Sheet shall be prepared in a manner consistent with
the preparation of the March 28, 1998 Balance Sheet and
without giving effect to any of the transactions contemplated
hereby. If the Closing Date Net Current Working Capital is
less than $1,881,070 (the "Target Capital Base"), the Initial
Purchase Price shall be reduced on a dollar-for-dollar basis,
and shall be paid out of the Escrowed Funds or out of the
Escrowed Stock to the extent that the Escrowed Funds are
insufficient, all as provided below.
2. If the Closing Date Net Current Working
Capital is greater than the Target Capital Base, then the
Initial Purchase Price shall be increased on a
dollar-for-dollar basis. If required, Buyer shall make such
payment (i) within 15 days following the delivery of the
Closing Date Balance Sheet to Shareholders, or (ii) if
Shareholders dispute any aspect of the Closing Date Balance
Sheet or Closing Date Net Current Working Capital, then within
15 days following the resolution of such dispute.
3. Within 5 days of PricewaterhouseCoopers'
completion of the Closing Date Balance Sheet and computation
of Corporation's Closing Date Net Current Working Capital,
Buyer shall deliver to Shareholders, Shareholders' Counsel and
Buyer's Counsel a statement setting forth
PricewaterhouseCoopers' computation of the Closing Date Net
Current Working Capital, the amount of any reduction or
increase to the Initial Purchase Price, and the proper
distribution of the Escrowed Funds. If Shareholders dispute
the accuracy of the Closing Date Net Current Working Capital
or the amount of the reduction or increase to the Initial
Purchase Price, Shareholders shall notify Buyer in writing
within 10 days of delivery of the statement, and Buyer and
Shareholders shall work in good faith to resolve the dispute.
If Buyer and Shareholders come to an agreement on the amount
of the reduction or increase to the Initial Purchase Price and
the proper distribution of the Escrowed Funds, they shall each
notify Buyer's Counsel within 120 days of the Closing Date,
and Buyer's Counsel will release the Escrowed Funds pursuant
to the terms of such agreement. If Buyer and Shareholders do
not notify Buyer's Counsel of their agreement on the amount of
the reduction and the proper distribution of the Escrowed
Funds on or before the 120th day
3
8
after the Closing Date, unless Shareholders have submitted the
dispute to arbitration pursuant to Section 11.14 hereof and so
notified Buyer's Counsel (together with proof of such
submission), Buyer's Counsel shall release the Escrowed Funds
to Buyer and/or Shareholders as set forth in Buyer's
statement. If Shareholders have submitted the dispute to
arbitration as provided herein, Buyer's Counsel will retain in
escrow 150% of the disputed amount and release the balance to
Shareholders. The amount retained in escrow shall ultimately
be released in accordance with the determination of the
arbitrators. In all events, the arbitrator for this particular
dispute is to be a certified public accountant familiar with
transactions of this type. The Closing Date Balance Sheet
shall be adjusted to the extent required to reflect the final
resolution of any such dispute, either by agreement of the
parties or through arbitration. In addition, Buyer and
Shareholders will execute a memorandum setting forth any
adjustment to the Initial Purchase Price. When released to
Shareholders, the Escrowed Funds are to be paid by electronic
wire transfer of funds.
4. For the purposes hereof, the term "Net
Current Working Capital" is hereby defined to consist of the
following accounts found in the books and records of
Corporation (the "Accounts"), determined in accordance with
generally accepted accounting principles consistently applied:
ACCOUNT #
00-000-000 Xxxxx Cash
00-000-000 Cash
00-000-000 Sweep Account
CASH
00-000-000 ACCOUNTS RECEIVABLE
00-000-000 Allow for Doubtful Accounts
00-000-000 Allow for Customer Discounts
LESS: ALLOW FOR DOUBTFUL
ACCOUNTS/DISCOUNTS
NET ACCOUNTS RECEIVABLE
00-000-000 Inventory - Warehouse
00-000-000 Inventory - Tustin
00-000-000 Inventory - Airport
00-000-000 Inventory - Anaheim
14-118-100 Inventory - Laguna Hills
00-000-000 Inventory - Las Vegas
00-000-000 Inventory - Inland Empire
00-000-000 Inventory - Supply
00-000-000 Inventory - PBS&J
00-000-000 Inventory - RBF Irvine
00-000-000 Inventory - RBF San Diego
00-000-000 Inventory - RBF Regional
00-000-000 Inventory - RBF Arizona
00-000-000 Inventory - Xxxxx & Green
00-000-000 Inventory - Xxxx
00-000-000 Inventory - Edaw
00-000-000 Inventory - Xxxx & Associates
00-000-000 Inventory - Teller Manok
4
9
00-000-000 Inventory - CVL
00-000-000 Inventory - WAT&G
00-000-000 Inventory - Xxxxxxxxx Xxxxxx
INVENTORY
00-000-000 LESS: RESERVE FOR SLOW
MOVING & OBSOLETE INV.
NET INVENTORY
00-000-000 Prepaid Deposits
00-000-000 Prepaid Income Tax - Fed
00-000-000 Prepaid Income Tax - State
00-000-000 Prepaid Insurance
00-000-000 Prepaid Property Tax
00-000-000 Prepaid Supplies
PREPAID EXPENSES & DEPOSITS
LESS: 00-000-000 Accounts Payable
00-000-000 A/P Purchase Clearing
00-000-000 A/P Other Accruals
ACCOUNTS PAYABLE
00-000-000 Taxes Payable - Corp Fed Inc
00-000-000 Taxes Payable - CA Corp State Inc
00-000-000 Taxes Payable - AZ State Inc
00-000-000 Taxes Payable - Sales Tax
OTHER PAYABLES
00-000-000 Other Accruals
00-000-000 Accrual - Payroll Wages
00-000-000 Accrual - Payroll Vacation
00-000-000 Payable - Credit Union
00-000-000 Payable - Emp. Garnishment
00-000-000 Payable - Ins. Contract
00-000-000 Payable - Ins Group Med
00-000-000 Payable - Ins Work Comp
00-000-000 Payable - Interest
00-000-000 Payable - Profit Sharing
00-000-000 Payable Safety Program
00-000-000 Payable - 401(k) EE Liability
00-000-000 Taxes Payable - Payroll SIT
00-000-000 Taxes Payable - Payroll SDI
00-000-000 Taxes Payable - Payroll ETF
00-000-000 Taxes Payable - SUI
00-000-000 Taxes Payable - FIT
00-000-000 Taxes Payable - FICA
00-000-000 Taxes Payable - FUTA
00-000-000 Deferred Sales Revenue
ACCRUED EXPENSES
In connection with the determination of Closing Date Net
Current Working Capital, the following facts and protocols are
acknowledged by and agreed to by the parties hereto: (i)
5
10
the Target Capital Base was arrived at by starting with the
March 28, 1998 Net Current Working Capital of $3,081,080 and
making $1,200,000 of adjustments which were acceptable to
Buyer; (ii) the computation of Closing Date Net Working
Capital shall be determined by using the Accounts as of the
Closing Date; (iii) the Accounts constitute 100% of current
assets and current liabilities of Corporation except for:
00-000-000 (A/R Clearing); 10-100- 106 (A/R Misc.); 00-000-000
(A/R NSF Account); 00-000-000 (Visa/MC Suspense); 10-102- 102
(Amex Suspense); 00-000-000 (Amex Suspense - Supplies);
00-000-000 (A/R Employees); 00-000-000 (Cash Suspense -
Tustin); 00-000-000 (Cash Suspense - Airport); 00-000-000
(Cash Suspense - Anaheim); 14-102-100 (Cash Suspense - Laguna
Hills); 00- 000-000 (Cash Suspense - Las Vegas); 00-000-000
(Cash Suspense - Inland Empire); 00- 000-000 (Cash Suspense -
Supplies); 00-000-000 (Cash Suspense - RBF Arizona); and (iv)
the Accounts, and only the Accounts, were used to determine
the March 28, 1998 Net Working Capital amount of $3,081,080.
5. The Escrowed Funds are only being held in
escrow to facilitate a possible payment in connection with
Closing Date Net Working Capital. Accordingly, the Escrowed
Funds are subject to no other offsets or deductions
whatsoever.
6. Notwithstanding anything to the contrary
set forth herein, if there is a tax benefit arising out of the
pre-closing exercise of certain stock options granted by
Xxxxxxx, and such benefit results in an increase to Closing
Date Net Working Capital, Seller shall only receive one-half
of such increase.
B. With respect to the Escrowed Stock:
1. In order to facilitate the payment of any
indemnification owed to Buyer by Corporation and/or
Shareholders pursuant to Article 10 hereof, Corporation and
Shareholders agree to escrow the Escrowed Stock with Buyer's
Counsel and to execute and deposit with Buyer's Counsel
assignments separate from certificate in blank to enable a
reassignment of such Escrowed Stock.
2. If Buyer notifies Buyer's Counsel of a
claim(s) for indemnification, made pursuant to Article 10, at
any time during the 18 months following the Closing Date,
Buyer's Counsel will perform as follows:
a. If Buyer and Shareholders come to
an agreement on the amount of the claim(s), and on
how much of the Escrowed Stock should be released to
Buyer, they shall each notify Buyer's Counsel of
their agreement within 18 months of the Closing Date,
and Buyer's Counsel will release the Escrowed Stock
pursuant to the terms of such agreement. If the 18
month escrow period has not expired, Buyer's Counsel
shall continue to hold all non-released Escrowed
Stock in escrow.
b. If Buyer and Shareholders do not
notify Buyer's Counsel of their agreement on the
amount of the claim(s) and on how the Escrowed Stock
should be released between Shareholders and Buyer on
or before 18 months after the Closing Date, unless
Shareholders have submitted the dispute to
arbitration pursuant to Section 11.14 hereof and so
notified Buyer's Counsel (together with proof of such
submission), Buyer's Counsel shall release and/or
retain the Escrowed Stock consistent with Buyer's
notice. If Shareholders have submitted the dispute
into arbitration as provided herein, Buyer's Counsel
will release the Escrowed Stock in accordance with
the determination of the arbitrators. If a claim for
arbitration remains pending at the conclusion of the
18 month escrow period, Buyer's Counsel shall retain
Escrowed Stock equal to 150% of Buyer's then
outstanding claim(s) for indemnification and release
the balance to Shareholders.
6
11
c. For purposes of this Section 1.3,
the per share price of the Escrowed Stock shall be
valued at the price per share set forth in Section
1.2 hereof.
3. If Buyer's Counsel is not notified by
Buyer of any claim(s) for indemnification, made pursuant to
Article 10 hereof, during the 18 months following the Closing
Date, Buyer's Counsel shall release the Escrowed Stock to
Shareholders as soon as reasonably possible thereafter, but in
no event later than ten days following final determination of
the amount in dispute.
C. Notwithstanding the foregoing, after disbursement
of the Escrowed Funds and/or Escrowed Stock, Shareholders shall remain
liable for any reduction in the Initial Purchase Price in excess of the
Escrowed Funds and shall remain liable for any claim(s) of
indemnification in excess of the Escrowed Stock. Any such additional
liability is to be paid within 5 business days of when due (i.e. after
final determination pursuant to Section 11.14 hereof). Any such
additional liability not paid when due is to bear interest at the Prime
Rate of Interest charged by First Union National Bank plus 5% per annum
until paid but, in no event, greater than the maximum amount allowed
under applicable law. Further, any such additional liability may be set
off, dollar-for-dollar, against the Earnout Payments described in
Section 1.4 below.
SECTION 1.4 EARNOUT PAYMENTS. In addition to the Initial
Purchase Price, as additional consideration for the Shares, Shareholders shall
be entitled to receive up to 4 additional payments aggregating $28,700,000 (the
"EARNOUT PAYMENTS") if and only if such Earnout Payments are earned in
accordance with the following:
A. Buyer and Shareholders agree that there shall be
MINIMUM, TARGET and UPSIDE PERFORMANCE OBJECTIVES for Corporation's
EBITDA for two consecutive 12 month periods (the "FIRST 12 MONTH
PERIOD" and the "SECOND 12 MONTH PERIOD," respectively) following
Closing. The First 12 Month Period will commence on the first day of
the month in which the Closing Date occurs if the Closing Date occurs
on or before the fifteenth day of the month. If the Closing Date occurs
after the fifteenth day of the month, the First 12 Month Period will
commence on the first day of the month immediately following the month
in which the Closing Date occurred. The Second 12 Month Period will
commence immediately following the First 12 Month Period. Such
Performance Objectives are as follows: (1) First 12 Month Period -
Minimum Performance Objective - $7,300,000; Target Performance
Objective - $9,300,000; and Upside Performance Objective - $10,200,000
and (2) Second 12 Month Period - Minimum Performance Objective -
$8,000,000; Target Performance Objective - $11,500,000; and Upside
Performance Objective - $13,350,000.
B. To the extent that Corporation's First 12 Month
Period EBITDA satisfies the Target Performance Objective for such
period, Shareholders will be paid up to a maximum of $12,000,000 (the
"FIRST EARNOUT PAYMENT"). To the extent that Corporation's First 12
Month Period EBITDA satisfies the Upside Performance Objective for such
period, Shareholders will be paid an additional payment up to a maximum
of $3,200,000 (the "SECOND EARNOUT PAYMENT"). If Corporation's First 12
Month Period EBITDA exceeds the Minimum Performance Objective but does
not satisfy the Target Performance Objective for such period, or
exceeds the Target Performance Objective but does not satisfy the
Upside Performance Objective for such period, the Initial Purchase
Price shall be increased on a proportional basis.
C. To the extent that Corporation's Second 12 Month
Period EBITDA satisfies the Target Performance Objective for such
period, Shareholders will be paid up to a maximum of $10,000,000 (the
"THIRD EARNOUT PAYMENT"). To the extent that Corporation's Second 12
Month Period EBITDA satisfies the Upside Performance Objective for such
period, Shareholders will be paid
7
12
an additional payment up to a maximum of $3,500,000 (the "FOURTH
EARNOUT PAYMENT"). If Corporation's Second 12 Month Period EBITDA
exceeds the Minimum Performance Objective but does not satisfy the
Target Performance Objective for such period, or exceeds the Target
Performance Objective but does not satisfy the Upside Performance
Objective for such period, the Initial Purchase Price shall be
increased on a proportional basis.
D. In recognition of Corporation's possible
contributions and increased responsibilities in managing additional
acquisitions of Buyer or one of its affiliates, up to 20% of
Corporation's Target and Upside Performance Objectives may be achieved
through Designated Acquisitions (as defined below); provided, however,
that Corporation's EBITDA (exclusive of any additions through
acquisitions) must exceed the Minimum Performance Objectives for each
of the First and Second 12 Month Periods following the Closing in order
for Designated Acquisition EBITDA to be included in the determination
of whether Corporation has satisfied the Target and Upside Performance
Objectives. In each such period, all Designated Acquisition EBITDA,
less Buyer's interest expense for debt incurred to consummate the
acquisition, professional fees, goodwill amortization, and any and all
other costs and expenses arising from the acquisition, will be credited
to Corporation up to a maximum of 20% of Corporation's Target and
Upside Performance Objective. As used herein, the term "DESIGNATED
ACQUISITIONS" means one or more other businesses, the assets or stock
of which Buyer, or one of Buyer's affiliates may, acquire after the
Closing Date and, with the mutual agreement of Shareholders, assign to
Corporation for management, following either an asset or stock
acquisition of such business by either Buyer or one of Buyer's
affiliates. Notwithstanding anything to the contrary set forth herein,
in no event will Corporation's EBITDA be reduced by an amount in excess
of 20% of Corporation's Target and Upside Performance Objections in the
event that a Designated Acquisition or Designated Acquisitions performs
poorly.
E. The 4 Earnout Payments are to be paid 80% in cash
via electronic wire transfer, with the balance to be paid in cash or in
shares of the Common Stock of Buyer (the "EARNOUT SHARES") at Buyer's
election and sole discretion. Any Earnout 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 Earnout
Payment Dates (as defined below) as reported in XXXXXX.xxx
(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. In connection
with the foregoing issuance of the Earnout Shares, on each Earnout
Payment Date, Shareholders will execute a Lock-Up Agreement in a
mutually acceptable form pursuant to which Shareholders will agree not
to sell any of the Earnout Shares delivered to them in accordance with
this Agreement for a period of 12 months from each Earnout Payment
Date.
F. Buyer will calculate Corporation's EBITDA no later
than November 1 in each of 1999 and 2000. If an Earnout Payment is
earned, Buyer shall make such Earnout Payment to Shareholders by
November 15, 1999, in the case of the First and Second Earnout
Payments, and November 15, 2000, in the case of the Third and Fourth
Earnout Payments (the "EARNOUT PAYMENT DATES"), subject to the
existence of a dispute requiring resolution pursuant to Section 1.4(G)
below.
G. Buyer shall provide to Shareholders, concurrently
with each Earnout Payment, a statement of its Chief Financial Officer
regarding the calculation of the Earnout 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 Earnout Payment payable, if any. No later than 10 business days
after Shareholders' receipt of such statement, Shareholders may, by
8
13
notice given to Corporation, contest the calculations and give notice
to Buyer of the amount calculated by Shareholders. In such event, Buyer
shall provide Shareholders and/or their independent accountants with
reasonable access to Corporation's books and records as necessary to
evaluate the calculation of Earnout Payment. Within 60 business days
after such access is provided, 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 the parties initial meeting, then Corporation
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 Corporation and Shareholders a statement setting forth his
or her calculations, which shall be final and binding upon each party.
If the final calculation is within 5% 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 Corporation. If the
statement of the Designated Auditor indicates that an additional
payment is due to Shareholders in respect of the Earnout Payment,
Corporation shall pay such amount to Shareholders in cash within five
days following receipt of such statement. Similarly, if the decision of
the Designated Auditor is that a rebate is due to Buyer, Shareholders
shall pay such amount to Buyer in cash within 5 days following receipt
of such amount.
H. EBITDA shall mean, for each of the 2 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, (A) plus, to the extent deducted in
determining net income and without duplication, the sum of: (i) any
extraordinary losses;(ii) any management fees, salary or other charges
for personnel who work for Buyer or any entity that is directly or
indirectly affiliated with Buyer; (iii) any accounting fees in excess
of $29,191 unless a different amount is mutually agreed by the parties;
(iv) any allocated charges between Corporation and Buyer or any entity
that is directly or indirectly affiliated with Buyer; (v) any
pass-through of interest on debt incurred by Buyer in connection with
this transaction except those taken in the ordinary course of business
such as, by way of illustration and not limitation, write-offs for bad
debt; (vi) any extraordinary or non-recurring expenses; (vii) any
bonuses to employees or payments to deferred compensation plans or
other perks to employees in excess of Seller's past practices, other
than those paid to any of the Shareholders; and (B) minus, to the
extent included in determining net income and without duplication, any
extraordinary gains. In addition, for purposes of calculating EBITDA,
adjustments shall be made to: (i) gross receipts for sales made by
Corporation to Buyer and its affiliates to the extent that such sales
are for prices less than comparable sales to other third party
customers of Corporation; (ii) expenses for purchases made by
Corporation from Buyer and its affiliates, to the extent that such
expenses are greater than comparable expenses from other third party
vendors or providers of services to Corporation; and (iii) any other
charges by Buyer or any entity that is directly or indirectly
affiliated with Buyer to the extent that such charges are greater than
would have been paid by Corporation in an arm's length transaction
between Corporation and any other vendor or provider of services to
Corporation. Further, in no event will EBITDA be reduced by goodwill
amortization or other costs associated with Buyer's acquisition of the
Shares. For the purposes hereof, the term "affiliate" shall be
understood to include (but not be limited to) the various divisions of
Lason Systems, Inc.
I. 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 any Earnout Payment otherwise provided for herein and to set
off and apply against any such Earnout Payment the amount of any then
outstanding indemnification payments finally determined to be due from
Shareholders to Buyer pursuant to this Agreement.
9
14
J. 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 Earnout Payment(s)
provided for herein and that, in fact, Buyer intends to merge
Corporation with a subsidiary following the Closing Date in order to,
among other things, best unify operations and maximize profitability.
In order to create no material impediment to Seller's opportunity to
achieve the Earnout Payment(s), Buyer will operate Corporation as a
free-standing division within one of its subsidiaries and further shall
operate the Business in all material respects in a manner consistent
with the manner in which it was operated prior to the acquisition of
the Shares by Buyer except: (i) Corporation shall participate in
Buyer's centralized accounting, record keeping, cash management and
budgeting process in a fair and consistent manner as Buyer's other
divisions and subsidiaries; (ii) Corporation shall participate in
Buyer's centralized purchasing system as may be in place from time to
time in a fair and consistent manner as Buyer's other divisions and
subsidiaries; (iii) Corporation shall participate in other similar
centralized functions in a fair and consistent manner as Buyer's other
divisions and subsidiaries; (iv) Corporation will participate in
Buyer's benefit program; and (v) the work constituting the Business
shall continue to be done by Corporation, but if such work is diverted
to other divisions or subsidiaries of Buyer, Buyer shall fairly credit
such work to the operating income of Corporation. Further, in no event
shall any of the corporate overhead of Buyer or any of its affiliates,
including parent company charges, management fee charges or any similar
charges be allocated to Corporation, it being agreed that only direct
costs of the Business shall be so attributed. Notwithstanding the
foregoing, in the event that the Board of Directors of Buyer (or its
subsidiary), in its sole discretion, changes or proposes to change the
business, accounting policies or methods, or operations of Corporation
from those in effect immediately prior to the Closing Date (any such
change or proposed change, a "CHANGE") and Shareholders believe that
any such Change is reasonably likely to materially decrease the amount
of the Earnout 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 and/or their designated
representatives 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 Earnout Payment formula
set forth in this Section 1.4 in order to restore to Shareholders the
ability to earn a comparable Earnout Payment to that originally
contemplated by the parties. If Seller and Buyer's President do not
agree that such a material adverse effect or material decrease is
reasonably likely to occur, or, having agreed that such a material
adverse effect or material decrease is likely to occur, they do not
agree on an amendment to the Earnout Payment formula contemplated in
this Section 1.4, the dispute shall be submitted to and resolved by
arbitration pursuant to Section 11.14 hereof, and if the decision of
the arbitrator(s) is that such a material adverse effect or material
decrease is reasonably likely to occur, then the arbitrator(s) shall
also decide how the Earnout Payment formula set forth in this Section
1.4 shall be amended.
K. For all purposes of this Section 1.4, the term
"Corporation" shall be understood to refer to the "Consolidated
Reprographics Division" of one of Buyer's subsidiaries.
L. In the event that any of Lundeen, Chamberlain,
Xxxxx or French voluntarily quits his employment with Corporation
(except for "Good Reason" as such term is defined in the Employment
Agreements contemplated in Section 6.11 hereof) or has his employment
terminated by Corporation for "Cause" (as such term is defined in the
Employment Agreements contemplated in Section 6.11 hereof), any such
Shareholder's "unearned portion" of the Earnout Payments are not to be
paid. For the purposes hereof, the term "unearned portion" shall mean
such Shareholder's aliquot share of any Earnout Payment for either or
both of the First 12 Month Period or the Second 12 Month Period (as
applicable) multiplied by a fraction the numerator of which is the
number of months worked in that year and the denominator of which is
12. Example: If a Shareholder
10
15
voluntarily quits after 6 months in year 1, he would receive 1/2 of an
Earnout Payment for that year (if any) and nothing for the second year,
regardless of whether such Earnout Payment is earned or not.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
AND CORPORATION
Shareholders (other than Xxxxxx, Hazell and Lauderdale except
with regard to Sections 2.2, 2.3, 2.5 and 2.36) and Corporation, jointly and
severally, represent and warrant to Buyer that, as of the date, hereof:
SECTION 2.1 ORGANIZATION, STANDING AND POWER. Corporation is
duly incorporated, validly existing and in good standing under the laws of the
State of California, has 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 in which the nature
of its business or its properties makes such qualification necessary. Each
jurisdiction in which Corporation is so qualified to do business is listed on
SCHEDULE 2.1.
SECTION 2.2 CAPITALIZATION. The authorized capital stock of
Corporation consists of two hundred (200) shares of preferred stock of which two
hundred (200) shares are issued and outstanding as of the date hereof (the
"PREFERRED STOCK") and fifty thousand shares (50,000) of common stock of which
one thousand twenty five (1,025) shares are issued and outstanding (the "Common
Stock"). On the Closing Date, the Preferred Stock will have been converted to
Common Stock and, accordingly, there will be zero shares of Preferred Stock
issued and outstanding and one thousand eighty five (1,085) shares of Common
Stock issued and outstanding. The Preferred Stock and the Common Stock
constitute all of the shares of Corporation and all of such shares are owned
beneficially and of record by 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 of the Shareholders
(including Xxxxxx, Hazell and Lauderdale) is the owner, beneficially and of
record, of all of the Shares owned by them as set forth on Exhibit A-2, free and
clear of all liens, encumbrances, security agreements, equities, options,
claims, charges and restrictions except as set forth in SCHEDULE 2.3, all of
which will be satisfied or discharged prior to Closing. Xxxxxx became an owner
of shares by converting its Preferred Stock to Common Stock immediately prior to
Closing. Hazell and Lauderdale had an option to purchase Common Stock from
Xxxxxxx which they exercised prior to the Closing Date.
SECTION 2.4 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, except
as set forth on SCHEDULE 2.4.
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. Shareholders and Corporation represent and
warrant that each has 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
11
16
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 as set forth in SCHEDULE 2.5 and other than spousal consent,
all of which have been obtained.
SECTION 2.6 NO BREACH OR VIOLATION. Except as set forth on
SCHEDULE 2.6, 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 lease, license, promissory note,
security agreement, commitment, indenture, mortgage, deed of trust or other
agreement, instrument or arrangement to which Corporation is a party or by which
it or its property is 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 (iv) the creation or
imposition of any lien, charge or encumbrance on any of the properties of
Corporation or the Shares.
SECTION 2.7 FINANCIAL STATEMENTS. There have heretofore been
delivered to Buyer: (i) unaudited financial statements, including balance sheets
and statements of income of Corporation as of and for the years ended August 31,
1995, 1996 and 1997, prepared by Xxxxxxx, Xxxxxxxxx & Company (1995 statements)
and Xxxxxxxxxx, Xxxx and Schiffer LLP (1996 and 1997 statements), whose reports
with respect to said statements are included therein and (ii) unaudited
financial statements, including a balance sheet and statement of income of
Corporation as of and for the 10 month period ended June 30, 1998, prepared by
Corporation's Chief Financial Officer (the "June Balance Sheet").
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 SCHEDULE 2.7, the Financial Statements present fairly the financial
position of Corporation as at the respective dates thereof, and the related
results of operations of Corporation for the periods therein referred to.
SECTION 2.8 BOOKS AND RECORDS. The stock record books of
Corporation are complete and correct. The other books of account and other
records (other than minute books) of Corporation 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 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.
SECTION 2.9 UNDISCLOSED LIABILITIES. Except as set forth in
SCHEDULE 2.9, Corporation has no 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
Corporation's balance sheet dated August 31, 1997, 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 August 31,
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 SCHEDULE 2.10, since September 1, 1997 the business of Corporation has been
operated only in the ordinary course and, without limiting the generality of the
foregoing, Corporation has not:
12
17
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 its capital stock;
B. Sustained any 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 its 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;
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 its 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 it or any of its assets or
properties, except in the ordinary and usual course of its business;
G. Mortgaged, pledged, otherwise encumbered or
subjected to lien any of its 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 its business, or discontinued any
product line or the manufacture, sale or other disposition of any of
its 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, except any planned capital equipment expenditures and
inventory in the ordinary course of business;
13
18
L. Waived any right or claim or canceled any debts
or claims or voluntarily suffered any extraordinary losses;
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 and benefits in effect prior to
September 1, 1997;
P. Effected any change in its directors or executive
management;
Q. Effected any amendment or modification in its
Articles of Incorporation or Bylaws;
R. Had any labor trouble that has or might materially
and adversely affect its condition (financial or otherwise), earnings,
business, assets, liabilities, properties, operations or prospects;
S. Changed its accounting methods or practices
(including, without limitation, any change in depreciation or
amortization policies or rates);
T. Revalued any of its assets;
U. Increased the salary or other compensation payable
or to become payable to any of its officers, directors or employees, or
declared, paid or committed to pay a bonus or other additional salary
or compensation to any such person;
V. Made any loan to any person or entity, or
guaranteed any loan;
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 its 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 SCHEDULE 2.11
within the times and in the manner prescribed by law, Corporation has filed all
tax returns required to be filed and has 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 of Closing. Except as set forth in Schedule 2.11,
there are no claims pending against Corporation for past-due taxes, nor has
Corporation 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.
Except as set forth in Schedule 2.11, there are no outstanding waivers or
agreements by Corporation for the extension of the time for the assessment of
any tax. The tax returns of Corporation, if audited, have been finally
determined by the Internal Revenue Service or
14
19
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, assessment, additions to tax, fee, penalty, interest or other
governmental charge imposed by any federal, state, county, local, foreign,
commonwealth or other governmental entity. Corporation has never filed, nor will
it file, any consent under Section 341(f) of the Internal Revenue Code of 1986,
as amended, on or before the Closing Date.
SECTION 2.12 RECEIVABLES. Except as set forth in SCHEDULE
2.12, all receivables of Corporation 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 as of the date hereof, and represent valid
and binding obligations of the debtors requiring no further performance by
Corporation and are collectible in full without any set-off whatsoever, other
than the reserves for doubtful accounts described below, within 180 days of the
date on which such receivable was created. Except as set forth in Schedule 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.
Corporation has no 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 SCHEDULE 2.13.
SECTION 2.14 REAL PROPERTY.
A. SCHEDULE 2.14 sets forth a complete and accurate
address of each parcel of real property, (collectively, the "REAL
PROPERTY") which is either owned by or leased to Corporation.
B. To the best of 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 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 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 nor is there any basis for any such
matters.
E. Corporation has not 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),
15
20
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 Schedule 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.
SECTION 2.15 LEASES. SCHEDULE 2.15 lists all leases, rental
agreements, conditional sales contracts and other similar agreements
(collectively, "LEASES"), as amended, which cannot be terminated by Corporation
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, under which
Corporation holds or uses any real or personal property or leases any of the
same to others. Corporation has complied with the material provisions of all
Leases, and all such Leases are valid, in good standing and enforceable by
Corporation 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. Corporation
has 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.
SECTION 2.16 ENVIRONMENTAL MATTERS.
A. None of the operations or property of Corporation
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. Corporation has no 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. Corporation has not 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. SCHEDULE 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, trade secrets, copyrights and applications therefor (herein
collectively referred to
16
21
as "PROPRIETARY RIGHTS") owned by Corporation, useful or necessary to the
conduct of its business, or in which Corporation has any rights, licenses or
immunities and of all patent licensing and similar arrangements to which
Corporation is a party.
SECTION 2.18 NON-INFRINGEMENT; AGREEMENTS. Except as set forth
in SCHEDULE 2.18, no Proprietary Right is the subject of litigation or other
adversary proceedings. To the best of Shareholders' and Corporation's knowledge,
no present or presently proposed operation or activity of Corporation infringes
the rights of any other person or entity, and no person or entity is infringing
the Proprietary Rights of Corporation. Corporation has the right and authority,
including without limitation, adequate licenses, to use such Proprietary Rights
as are necessary to enable Corporation to conduct and continue to conduct all
phases of its business in the manner presently conducted by it. Corporation is
not a party to or bound by any license or agreement requiring the payment by it
of any royalty, override or similar payment in connection with any activity
conducted or to be conducted by it. Except as provided for by the terms of
contracts with governmental authorities, Corporation is not a party to any
agreement: (i) prohibiting or restricting its 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, its
directors, officers, employees, properties, assets and business are listed and
briefly described on SCHEDULE 2.19. All of said policies are valid and in good
standing. Corporation has experienced no losses or made claims under any of such
policies which are extraordinary for a company of its size except as are set
forth on Schedule 2.19.
SECTION 2.20 INTERESTED TRANSACTIONS. Corporation has no
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 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 SCHEDULE 2.20.
SECTION 2.21 CUSTOMERS AND SALES. A correct and current list
of all customers of Corporation whose annual purchases exceed $100,000.00, is
set forth on SCHEDULE 2.21. There are no facts or circumstances known to
Shareholders or Corporation or either of them indicating that any customer who
has ordered products or services from Corporation 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 intend to cease doing
business with Corporation, or materially alter the amount of the business that
they are presently doing with Corporation.
SECTION 2.22 EXISTING EMPLOYMENT CONTRACTS AND/OR REMUNERATION
AGREEMENTS. SCHEDULE 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 is a party or by which Corporation
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 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 default 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 threatened labor dispute,
strike or work stoppage affecting the business of Corporation.
SECTION 2.23 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.23 contains
an accurate and complete list of all Plans (defined below) contributed to,
maintained or sponsored by Corporation, to which it
17
22
is obligated to contribute or with respect to which Corporation has any
liability or potential liability, whether direct or indirect (the "Company
Plans"). For purposes of this Agreement, the term "Plans" shall mean: (i)
employee benefit plans as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), whether or not funded and
whether or not terminated; (ii) employment agreements; and (iii) personnel
policies or fringe benefit plans, policies, programs and arrangements, whether
or not subject to ERISA, whether or not funded, and whether or not terminated,
including without limitation, stock bonus, deferred compensation, pension,
severance, bonus vacation, travel, incentive, and health, disability and welfare
plans.
(b) Corporation does not contribute to, has no obligation to
contribute to and otherwise has no liability or potential liability with respect
to (i) any "Multiemployer Plan" (as such term is defined in Section 3(37) of
ERISA); (ii) any Plan of the type described in Sections 4063 and 4064 of ERISA
or in Section 413 of the Code (and regulations promulgated thereunder); or (iii)
any Plan which provides health, life insurance, accident or other "welfare-type"
benefits to current or future retirees or former employees, their spouses or
dependents, other than in accordance with Section 4980B of the Code or
applicable state continuation coverage law.
(c) None of the Company Plans obligates Corporation to pay
separation, severance, termination or similar-type benefits solely as a result
of any transaction contemplated by this Agreement or solely as a result of a
"change in control," as such term is used in Section 280G of the Code (and
regulations promulgated thereunder).
(d) All of the Company Plans and all related trusts, insurance
contracts, and funds have been maintained, funded and administered in compliance
in all material respects with all applicable laws and regulations, including but
not limited to ERISA and the Code. Corporation has not, and to Corporation's and
Shareholders' best knowledge, neither any trustee or administrator of any
Company Plan nor any other person has engaged in any transaction with respect to
any Company Plan which could subject Corporation, or any trustee or
administrator of any Company Plan, or any party dealing with any Company Plan,
or Buyer to any tax or penalty imposed by ERISA or the Code. No actions, suits,
claims, complaints, charges, proceedings, hearings, investigations, or demands
with respect to any Company Plan (other than routine claims for benefits) are
pending or, to the knowledge of Corporation, threatened and Corporation has no
knowledge of any facts which could give rise to or be expected to give rise to
any actions, suits, claims, complaints, charges, proceedings, hearings,
investigations, or demands. Corporation has not incurred, and to Corporation's
and Shareholders' best knowledge, no fact or event exists that could reasonably
be expected to cause Corporation to incur, any liability under Title IV of
ERISA.
(e) None of the Company Plans is a defined benefit pension
plan subject to Title IV of ERISA.
(f) With respect to each of the Company Plans, Corporation has
provided Buyer with true, complete and correct copies, to the extent applicable,
of (i) all documents pursuant to which the Company Plans are maintained, funded
and administered; (ii) the most recent annual report (Form 5500 series) filed
with Internal Revenue Service (with attachments); (iii) the most recent
financial statement; and (iv) all governmental rulings, determinations, and
opinions (and pending requests for governmental rulings, determinations, and
opinions).
SECTION 2.24 WORKERS COMPENSATION; EMPLOYMENT DISCRIMINATION;
LABOR RELATIONS. Corporation has 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
18
23
are no employment discrimination proceedings by any employee or former employees
against Corporation currently threatened or pending before any state or federal
court or state or federal administrative agency, tribunal, commission or board
and 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 SCHEDULE 2.24 attached hereto and all
such claims are fully insured against. There is no effort being made to organize
the employees of Corporation into any collective bargaining unit or to solicit
them to join any labor organization and Corporation has 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. To the best of Shareholders' and
Corporation's knowledge, Corporation is not 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 Schedule 2.24, to the best of
Shareholders' and Corporation's knowledge, there is no unfair labor practice
complaint against Corporation pending before the National Labor Relations Board.
SECTION 2.25 OTHER CONTRACTS. SCHEDULE 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 is a party and which: (i) involve payment by Corporation of more
than [$25,000.00]; or (ii) materially affect the condition (financial or other),
earnings, assets, liabilities, business, operations or prospects of Corporation.
Corporation has, to the best of Shareholder's 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.
SECTION 2.26 OFFICERS AND DIRECTORS, ETC. SCHEDULE 2.26 is a
true and complete list of:
A. The names of all present officers and directors
of Corporation, 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 fiscal years 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 whose compensation (in whatever form)
from Corporation as of the date of this Agreement which will equal or
exceed or which will be likely to exceed an annual rate of $50,000.00,
in 1998 or equaled such amount in the year ended December 31, 1997;
C. The name of each bank or other financial
institution in which Corporation 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 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.
19
24
SECTION 2.27 LITIGATION AND CLAIMS. Except as set forth on
SCHEDULE 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 affecting it or its properties or business, or the
transactions contemplated by this Agreement or any factual or legal basis for
any such action, suit, proceeding, claim or investigation which would materially
affect any of the same. All correspondence, memoranda and other written
notifications (collectively, "COMPLAINTS") which it has 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, 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
are listed on Schedule 2.27 and Buyer has been provided with accurate and
complete copies of same. The matters set forth in Schedule 2.27, if decided
adversely to Corporation will not result in a material adverse change in the
earnings, business, assets or condition (financial or other), operations or
prospects of Corporation. Except as set forth on Schedule 2.27, Corporation is
not presently engaged in any legal action to recover monies due to it or damages
sustained by it.
SECTION 2.28 GENERAL LIABILITY. 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 not
covered by insurance.
SECTION 2.29 OTHER TANGIBLE PERSONAL PROPERTY. SCHEDULE 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 (the
"TANGIBLE PERSONAL PROPERTY"). The Tangible Personal Property constitutes all
tangible personal property necessary for the conduct by Corporation of its
business as now conducted. All motor vehicles listed on Schedule 2.29 have
passed emission standards examinations required by applicable law.
SECTION 2.30 TITLE TO ASSETS. Except for property leased by
Corporation, Corporation has good and marketable title to all its 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 these 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 Corporation's
balance sheet at December 31, 1997, 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
Tangible Personal Property of Corporation is being acquired "as is" but has been
repaired and maintained in the ordinary and normal course of business in a good
and xxxxxxx-like manner consistent with industry standards. Corporation is in
possession of all premises leased to it from others. Except as provided in
Schedule 2.20, no officer, nor any director or employee of Corporation, 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.
SECTION 2.31 NAMES. SCHEDULE 2.31 sets forth every name under
which Corporation has conducted business during the term of its existence. To
the extent that corporation has conducted business under an assumed name,
Schedule 2.31 also sets forth the name of every state or local jurisdiction in
which Corporation has 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
20
25
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 SOFTWARE. SCHEDULE 2.32 contains a true and
complete list of all computer software owned by or licensed to Corporation (the
"SOFTWARE"). Except as specified on Schedule 2.32, Corporation owns all right,
title and interest in and to the Software, free and clear of any liens, claims
or encumbrances of any kind or nature, or, in the case of Software identified on
Schedule 2.32 as owned by third parties and licensed to Corporation, Corporation
has all rights under licenses with respect to the third party Software required
in connection with the conduct of its business. Except as specified on Schedule
2.32, all Software identified on Schedule 2.32 as owned by Corporation was
developed by Corporation entirely through its own efforts and for its own
account. The use of Software licensed to Corporation from third parties does not
violate the terms of the respective license agreements with respect to such
licensed Software.
SECTION 2.33 YEAR 2000 COMPLIANCE. Except as disclosed in
SCHEDULE 2.33, to the best of Shareholders' and Corporation's knowledge,
Corporation is taking the required steps to cause Corporation's computer
hardware, software, embedded microchips, application systems and other
processing capabilities utilized by or in connection with the Business
(including, but not limited to, any third party software and applications) to be
able to interpret and manipulate data on and involving all calendar dates
correctly and without causing any abnormal ending scenario, including in
relation to dates in and after the year 2000. Schedule 2.33 sets forth the time
table and estimated cost of remedying any non-compliant hardware, software,
embedded microchips, application systems and other processing capabilities
utilized by or in connection with Corporation's business.
SECTION 2.34 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 knowledge of
a Shareholder after an investigation which a reasonable and prudent person would
conduct as to the subject matter of such representations and warranties.
SECTION 2.35 ACCURACY AND COMPLETENESS OF REPRESENTATIONS AND
WARRANTIES. 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 2.36 INVESTMENT REPRESENTATIONS. In connection with
the acquisition of the Lason Shares by Shareholders:
A. Shareholders were given the Annual Report on Form
10-K of Buyer, as amended, for the year ended December 31, 1997 and the
quarterly report on Form 10-Q of Buyer for the quarter ending March 31,
1998, as 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
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 Shareholders 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;
21
26
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. Each of the Shareholders is 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 Agreement;
and
F. Shareholders will not sell, assign or transfer any
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, except for compliance with the HSR Act.
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 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 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.
22
27
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 March 31, 1998,
12,039,039 shares were issued and outstanding, and 5,000,000 shares of preferred
stock, par value $0.01 per share, of which as of March 31, 1998, no shares were
issued and outstanding. Additionally, as of March 31, 1998, certain persons hold
options to acquire approximately 1,335,070 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.
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 "LSON". 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. For the
purposes of this Section 3.5, the term "Lason Shares" shall be understood to
mean the Escrowed Shares as defined elsewhere herein.
SECTION 3.6 BUYER'S SECURITIES FILINGS. Buyer's Annual Report
on Form 10-K for the year ended December 31, 1997, as amended, and Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998 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 March 31,
1998.
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 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 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 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.
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 shall:
A. Carry on its 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 as of the date
of this Agreement. Without limitation of the generality of the
foregoing, Corporation shall not enter into any agreement or
arrangement involving sale or lease of assets with a value in excess of
$25,000 or the granting of any preferential right to purchase such
assets, properties or rights, except in connection with the sale or
lease of assets to customers in the ordinary course of business;
B. Maintain in full force and effect the insurance
policies listed in Schedule 2.19 to this Agreement;
23
28
C. Make no change in its Articles of Incorporation
or Bylaws;
D. Make no change in its authorized or issued
capital stock and issue or grant no options, warrants or rights to
purchase shares of or convert other securities into its capital
stock, except for the conversion of Preferred Stock to Common Stock by
Xxxxxx and the exercise of options by Chamberlain, Sipes, Hazell and
Lauderdale;
E. Declare or pay no dividend or other distribution
in respect of any shares of its capital;
F. Purchase, redeem or otherwise acquire, directly
or indirectly, no shares of its capital stock;
G. Use its best efforts to preserve its 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 of more than
$25,000.00;
I. Terminate none of the contracts or agreements
listed in Schedule 2.25 or modify any of said contracts or agreements
except in accordance with their terms;
J Except for the payment of employee PIB of
$235,000 for fiscal 1998, the payment of Management Incentives paid
through June 16, 1998, and the payment pursuant to existing
arrangements disclosed on Schedule 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 its business;
L. Encumber or mortgage none of its 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;
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 $25,000 for any single item, or $50,000 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 its properties and facilities
in as good condition and working order as at present, except for
depreciation through ordinary wear and tear;
24
29
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;
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 its business;
S. Write off none of the receivables on its books,
except in the ordinary course of business consistent with past
practices; and
T. Enter into a lease for real property with
Shareholders or any persons or entities affiliated with them.
SECTION 4.3 EXCLUSIVITY. Corporation will not (and
Shareholders will not cause or permit Corporation to) solicit, initiate or
encourage the submission of any proposal or offer from any person relating to
the acquisition of any capital stock or any other voting securities, or any
substantial parties of the assets of, Corporation (including any acquisition
structured as a merger, consolidation or share exchange). Shareholders and
Corporation will notify Buyer immediately if any person makes any proposal,
offer, inquiry or contact with respect to any of the foregoing and inform Buyer
of the terms, conditions and/or substance of such proposal, offer, inquiry or
contact.
SECTION 4.4 CONSENTS. Buyer, 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, except to the extent receipt of a consent is waived by
Buyer.
SECTION 4.5 COMMUNICATIONS. Buyer, Shareholders and
Corporation agree to consult with each other and obtain the prior approval of
one another, which approval shall not be unreasonably withheld or delayed, on
reasonable notice as to the content of any press release or any written
statement for general circulation regarding the subject matter of this
Agreement.
SECTION 4.6 UPDATING OF SCHEDULES AND EXHIBITS. 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.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS OF
SHAREHOLDERS AND CORPORATION
The obligations 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.
25
30
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 conditions 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 and
Corporation its opinions to the effect set forth in EXHIBIT 5.4.
SECTION 5.5 EMPLOYMENT AGREEMENTS. Lundeen, Chamberlain,
Xxxxx and French 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.
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.
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 10.5 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 SATISFACTORY INVESTIGATION. The investigation of
the business of Corporation contemplated in Section 4.1 hereof shall be
satisfactory to Buyer in all respects as determined in the exercise of its sole,
absolute and exclusive discretion. Such investigation shall, in all events,
include the approval by Buyer of the Financial Statements including, but not
limited to, the June Balance Sheet.
SECTION 6.3 UNTRUE STATEMENTS. This Agreement, together with
the Schedules 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.
SECTION 6.4 NO 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, 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.
26
31
SECTION 6.5 REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Shareholders and Corporation contained in this
Agreement, shall be true at and as of the Closing Date with the same effect as
though such representations and warranties have 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 conditions set forth
in Section 6.5 above.
SECTION 6.7 LEGAL OPINION. Xxxxx Xxx, Esq. counsel for
Shareholders and Corporation, shall have delivered to Buyer his opinion 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 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 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 (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 a
contract or agreement by which Corporation or its 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.
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 all officers and directors of
Corporation, effective as of the Closing Date.
SECTION 6.11 EMPLOYMENT AGREEMENTS. Lundeen, Chamberlain,
Xxxxx and French shall have executed and delivered to Buyer employment
agreements on mutually acceptable terms and conditions.
SECTION 6.12 LOCK-UP AGREEMENT. Shareholders and Corporation
shall have executed and delivered to Buyer a Lock-Up Agreement in the form of
Exhibit 1.2(A-1).
SECTION 6.13 ESCROW AGREEMENT. Shareholders, Corporation and
Buyer shall have executed and delivered the Escrow Agreement contemplated in
Section 1.2 hereof.
SECTION 6.14 XXXXXX TRANSACTIONS. With regard to Xxxxxx,
Corporation shall have: (i) caused the conversion of all preferred stock held by
Xxxxxx to Common Stock in a manner acceptable to Buyer; (ii) secured an estoppel
letter from Xxxxxxx X. Xxxxxx attesting to the fact that Corporation is not in
default under either his non-competition and/or employment agreements; (iii)
repaid all amounts owed to Xxxxxx under
27
32
a certain Secured Note inclusive of both principal and interest, as well as
termination of the Security Agreement securing such Note; (iv) provided Buyer
with a full and unconditional release with respect to all agreements between
Xxxxxx and Corporation prior to closing, including but not limited to, a Stock
Redemption Agreement, Stock Pledge Agreement, Promissory Note and Security
Agreement except for obligations arising under those certain Non-Competition and
Employment Agreements dated July 1, 1996.
SECTION 6.15 OPTIONS. The options granted by Xxxxxxx to
Sipes, Lauderdale, Hazell and Xxxxxxxxxxx shall have been exercised.
SECTION 6.16 REPAYMENT OF NOTE. The Promissory Note owed to
Corporation by Xxxxxxx Xxxxxx, a California limited partnership, shall have been
repaid in full (principal and interest).
SECTION 6.17 EXTENSION OF LEASES. Corporation's leases for its
headquarters facilities in Irvine, California which is leased from Xxxxxxx
Xxxxxx, a California limited partnership, and its facility in Tustin, California
which is leased from Xxxxxx X. Xxxxxx d/b/a Consolidated Land Company shall have
been extended in writing for 5 years each on mutually acceptable terms and
conditions.
SECTION 6.18 UNITED REPROGRAPHICS. The Sellers in the United
Reprographics transaction shall have provided Buyer with an estoppel letter
attesting to the fact that Corporation is not in default under any existing
agreements.
SECTION 6.19 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.
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
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.
C. UNSATISFACTORY INVESTIGATION. By Buyer at any
time prior to the Closing Date if the investigation of the business of
Corporation is not satisfactory to Buyer.
D. RESPECTIVE CONDITIONS. By Buyer on the one hand
or by 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 September 30, 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.
28
33
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
Seyburn, Kahn, Ginn, Bess, Xxxxxx and Xxxxxx, P.C., at 10:00 a.m., local time,
within 1 business day 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 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. The stock book, stock ledger, minute book and
corporate seal of Corporation;
C. The opinion of counsel as provided in
Section 6.7;
D. The written resignations of all the officers an
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 6.13, 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 and Section 1.2;
I. All requisite instruments related to the Xxxxxx
Transactions as contemplated in Section 6.14;
J. The United Reprographics Estoppel Letter as
contemplated in Section 6.19;
K. The Canceled Promissory Note referenced in
Section 6.17;
L. 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;
M. A Certificate of Good Standing issued by the
Secretary of State of California and in such other jurisdictions as
Corporation is qualified to do business;
29
34
N. Payoff letters and UCC termination statements
paying off Corporation's indebtedness to Xxxxx Fargo and Xxxxxx and
releasing all liens on its assets imposed in connection with such
indebtedness;
O. All requisite third party consents;
P. Written extensions of certain leases as
contemplated in Section 6.18 hereof; and
Q. 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 Shareholder 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 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. For and in
consideration of the economic benefits generally accruing to Shareholders
hereunder, each Shareholder, other than Hazell and Lauderdale with such
Shareholders hereinafter being referred to as "Key Shareholders" for the
purposes of this Section 9.1, hereby agrees that for a term equal to the term of
those certain Employment Agreements contemplated in Section 6.11 hereof and for
a 3 year period thereafter (but in no event less than the 60 months period
following the Closing Date) in the case of Lundeen, Chamberlain, Xxxxx and
French and for the 60 month period following the Closing Date in the case of
Xxxxxx (each, as applicable the "Non-Compete Period"), he or she shall not,
either directly or indirectly (and whether or not for compensation), work for,
be employed by, own, participate or engage in, or have any interest in, any
person, firm, entity, partnership, limited partnership, limited liability
company, corporation or business (whether as an employee, owner, partner,
member, shareholder, officer, director, agent, consultant or in any capacity
which calls for the rendering of personal services, advice, acts of management,
operation or control) that engages in any activity
30
35
substantially the same as or competitive with the Business in Orange, Los
Angeles, Ventura, San Bernardino, Riverside and San Diego counties in the State
of California, or in the States of Arizona and Nevada (the "RESTRICTED
TERRITORY"). The foregoing shall not, however, be deemed to prevent the Key
Shareholders from owning in the aggregate up to 5.0% of the securities of any
corporation the shares of which are traded on a securities exchange or in the
over-the-counter market.
Each Key Shareholder further agrees that he or she shall not,
directly or indirectly, and in any of those capacities referenced above, at any
time during the Non-Compete Period: (i) divert or attempt to divert any Business
from Corporation (or any successor) or Buyer (and its subsidiaries) whether or
not in the Restricted Territory;(ii) solicit, contact, call upon or attempt to
solicit, or provide services to, any of the Corporation's (or its successors) or
Buyer's (and its subsidiaries) customers, suppliers or actively sought potential
customers or suppliers for the purpose of doing anything encompassed within the
definition of the Business or any work reasonably related to the Business
whether or not in the Restricted Territory; or (iii) induce or attempt to induce
any person who is an employee of Corporation (or any successor) or Buyer (and
its subsidiaries), or knowingly induce or attempt to induce any person who is an
employee of Corporation (or any successor) or Buyer (and its subsidiaries) to
leave the employ of Corporation (or any successor) or Buyer (and its
subsidiaries) whether or not in the Restricted Territory.
Each Key Shareholder shall keep secret and inviolate and shall
not divulge, communicate, use to the detriment of Corporation (or any successor)
or Buyer (and its subsidiaries) or for the benefit of any other person or
persons or misuse in any way any knowledge or information of a confidential
nature, including, without limitation, all trade secrets, personnel information,
computer programs, technical data, customer lists and unpublished matters
relating to the business, assets, accounts, books, records, customers and
contracts of Corporation (or any successor) or Buyer (and its subsidiaries)
which he may or hereafter come to know as a result of his association with and
which is unique to Corporation (or any successor) or Buyer (and its
subsidiaries) ("Confidential Information"). Each Key Shareholder may disclose
Confidential Information if required by any judicial or governmental request,
requirement or order provided that each Key Shareholder will take reasonable
steps to give Corporation (or any successor) or Buyer (and its subsidiaries), as
applicable, sufficient prior notice in order to contest such request,
requirement or order.
Key Shareholders have had knowledge of the affairs, trade
secrets, customers, potential customers and other proprietary information of
Corporation (or any successor) or Buyer (and its subsidiaries), and Key
Shareholders acknowledge and agree that compliance with the covenants set forth
in this Section 9.1 is necessary for the protection of the business, goodwill
and other proprietary interests of Corporation (or any successor) and Buyer (and
its subsidiaries) and that any violation of this Section 9.1 will cause severe
and irreparable injury to the business, goodwill and proprietary interests of
Corporation (or any successor) or Buyer (and its subsidiaries), which injury is
not compensable by money damages. Accordingly, in the event of a breach (or
threatened or attempted breach) of this Section 9.1, Corporation (or any
successor), Buyer (and its subsidiaries) shall, in addition to any other rights
and remedies, be entitled to immediate appropriate injunctive relief or a decree
of specific performance, without the necessity of showing any irreparable injury
or special damages.
If, in any judicial proceeding, a court shall refuse to
enforce any of the covenants included herein, then said unenforceable
covenant(s) shall be deemed modified so as to become unenforceable to the
maximum extent permitted, and if such modification is not permitted, then such
unenforceable covenants shall be deemed eliminated from these provisions for the
purpose of those proceedings to the extent necessary to permit the remaining
separate covenants to be enforced. It is the intent and agreement of
Corporation, Buyer and Key Shareholders that these covenants be given the
maximum force, effect and application permissible under law.
31
36
The provisions of this Section 9.1 shall survive the closing
of the transaction contemplated in this Agreement.
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 hold 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, 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: (i) any and all costs or expenses related to
Corporation's compliance with foreign, federal, state, and local tax laws for
periods of time prior to the Closing Date including, but not limited to, paying
all taxes when and as requested to do so by Buyer (the "Tax Indemnity") and (ii)
any and all costs or expenses of whatsoever type or kind (including tax
liability inclusive of interest and penalties) related to those certain
unresolved accounting issues disclosed in Schedule 2.7, notwithstanding their
disclosure in such Schedule 2.7 (collectively, the "GAAP Exceptions"), provided,
however, Shareholders shall have no liability arising out of the exercise of
stock options including no effect on the Earnout Payment. The liability of
Shareholders hereunder shall be joint and several with the following exceptions:
(i) Except as noted herein, Xxxxxx, Hazell and Lauderdale shall only be liable
up to the amount of their pro rata Shareholder interest as set forth on Schedule
1.2 (A-2) for indemnification and damages arising out of breaches of any
representation and warranty by Shareholders or any other damages attributable to
Shareholders arising out of the Agreement that would result in a reduction of
the Purchase Price or Earnout Payments; (ii) Each Shareholder's liability for
damages attributable to a misrepresentation or breach by said Shareholder of the
representations and warranties set forth in Sections 2.2, 2.3, 2.5, 2.36 and 9.1
shall be limited to those damages arising out of said Shareholder's
misrepresentation or breach.
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
32
37
Claim by it against Indemnitor under Sections 10.1 or 10.2 and Section 1.4 B.
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. Thereafter, the
parties shall meet in good faith in an effort to resolve the Claim. If no such
mutually satisfactory resolution is reached within 30 days after the date of
written notice of a Claim, either party shall have the right to submit the
question to arbitration in accordance with Section 11.14 hereof.
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 9.1. or
9.2 as the case may be, Indemnitor shall be entitled to participate therein,
and, to the extent desired by 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. 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 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 Shareholders 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 for a
period of 18 months from the Closing Date, except for Claims relating to
Sections 2.3, 2.5, 2.11, 2.16 and 2.36, any of which may be brought during any
applicable period of limitations and except for Claims arising out of, or
relating to, the Tax Indemnity and the GAAP Exceptions which may be brought at
any time following the date hereof.
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 Shareholders and
shall survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby.
SECTION 10.7 LIMITATION ON INDEMNIFICATION. Except as set
forth herein, the following limitations shall apply to the rights of
indemnification set forth in Section 10.1 and 10.2 hereof as applicable (and
notwithstanding Section 10.5 hereof): (i) the liability of the Indemnitor shall
be net of any insurance benefits received by Indemnitee (or in the case of
indemnification by Shareholders, of insurance benefits received by Corporation)
and any tax benefits received by Indemnitee (or in the case of indemnification
by Shareholders, of tax benefits received by Corporation) in respect of the loss
giving rise to the Claim for
33
38
indemnification; (ii) any indemnification payments made by Buyer shall
constitute an increase, and any indemnification payments made by Shareholders
shall constitute a reduction, of the Purchase Price; and (iii) no
indemnification shall be required from Shareholders until the aggregate amount
of Buyer's damages (determined in accordance with clause (I) of this Section
10.7) exceed $300,000 and then only for amounts in excess of $300,000; provided,
however, that no such limitation on indemnification shall be applicable to: (i)
claims arising under Section 2.11 hereof or under the Tax Indemnity or (ii)
claims arising in connection with the GAAP Exceptions.
SECTION 10.8 RECEIVABLES INDEMNITY. In the event that
Shareholders pay any amounts to Buyer with respect to uncollected receivables
pursuant to Section 2.12 hereof then, and in that event, such receivable or
receivables shall be assigned to Shareholders for collection.
ARTICLE 11
MISCELLANEOUS PROVISIONS
SECTION 11.1 FINDER'S OR BROKER'S FEES. Except for its
agreement with Harlingwood, Buyer represents and warrants that it has dealt with
no broker or finder in connection with any of the transactions contemplated by
this Agreement, and, insofar as it knows, no broker or other person is entitled
to any commission or finder's fee in connection with any of these transactions,
except for Harlingwood. Buyer agrees to indemnify and hold harmless Corporation
and Shareholders against any loss, liability, damage, cost, claim or expense
incurred by reason of any brokerage, commission or finder's fee alleged to be
payable to Harlingwood by reason of any act, omission or statement of Buyer.
Each of Corporation and Shareholders represent and warrant 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 and Corporation each agree to indemnify
and hold harmless Buyer 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 of their acts, omissions or statements.
SECTION 11.2 EXPENSES. Except as otherwise provided in Section
11.15, Buyer and Shareholders 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, constitute
the sole and entire agreement among 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
34
39
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 and transmit its signature by
facsimile, which shall be fully binding, and the party taking such actions shall
deliver a manually signed original as soon as is 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 provided that Buyer shall
remain primarily liable hereunder. 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 Shareholders or CONSOLIDATED REPROGRAPHICS
Corporation at: 00 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
With a copy (which XXXXX X. XXX, ESQ.
shall not constitute 0000 Xxxx Xxxxxx, Xxxxx 0000
notice) to: Xxxxxx, Xxxxxxxxxx 00000
35
40
If to Buyer at: LASON, INC.
0000 Xxxxxxxxxx Xxxxxxx
Xxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Chairman, President
and Chief Executive Officer
With a copy SEYBURN, KAHN, XXXX, XXXX
(which shall not XXXXXX AND XXXXXX, P.C.
constitute notice) 0000 Xxxx Xxxxxx, Xxxxx 0000
to: 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. Except for claims arising out of
Section 9.1 of this Agreement (which claims may be brought in a Federal or State
court of competent jurisdiction in either the State of Michigan or the State of
California as Buyer may elect) 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 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 Orange County, California pursuant to the commercial
arbitration rules then prevailing of the American Arbitration Association.
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 either the State of Michigan or in the State of California as
plaintiff in the action may elect, except for claims arising under Section 9.1
hereof, where Buyer shall have the sole right to select the venue for
adjudication; and (b) to bring a third party action against any other party in
any proceeding to 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 he 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
36
41
proceeding (exclusive of counsel fees) shall be borne equally by the parties,
except as otherwise specifically provided herein.
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 Corporation and Shareholders
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.
SECTION 11.16 POWER OF ATTORNEY. Shareholders hereby appoint
Xxxxxxx (or in the event of his death, incapacity or unwillingness to serve,
Xxxxxxxxxxx) as their attorney-in-fact for the following purposes: (i) to act as
their spokesman and to bind them with regard to any matters arising hereunder
requiring the action of Shareholders, including, but not limited to, matters
related to the Net Working Capital adjustment, the Earnout Payments and
indemnification; and (ii) to execute and deliver any and all documents necessary
to close the transaction contemplated herein, not executed by a Shareholder
individually.
37
42
IN WITNESS WHEREOF, each of the parties hereto have 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: Chairman, President and Chief Executive
Officer
SHAREHOLDERS:
/s/ XXXXXX X. XXXXXXX
------------------------------------------------
XXXXXX X. XXXXXXX
/s/ XXXXX X. XXXXXXXXXXX
------------------------------------------------
XXXXX X. XXXXXXXXXXX, individually and as
Trustee of the Xxxxxxxxxxx Family Trust U/T/D
dated March 6, 1997
/s/ XXXXXX X. XXXXXXXXXXX
------------------------------------------------
XXXXXX X. XXXXXXXXXXX, individually and as
Trustee of the Xxxxxxxxxxx Family Trust U/T/D
dated March 6, 1997
/s/ XXXX X. XXXXX
------------------------------------------------
XXXX X. XXXXX
/s/ XXXXXXX X. XXXXXX
------------------------------------------------
XXXXXXX X. XXXXXX
/s/ XXXXXXX X. XXXXXX
------------------------------------------------
XXXXXXX X. XXXXXX, individually and as
Co-Trustee of the Xxxxxxx X. Xxxxxx Family Trust
established November 22, 1982
38
43
/s/ XXXXX X. XXXXXX
------------------------------------------------
XXXXX X. XXXXXX, individually and as Co-Trustee
of the Xxxxxxx X. Xxxxxx Family Trust
established November 22, 1982
/s/ XXXXXXX X. XXXXXXXXXX
------------------------------------------------
XXXXXXX X. XXXXXXXXXX
/s/ XXXX XXXXXX
------------------------------------------------
XXXX XXXXXX
CORPORATION:
CONSOLIDATED REPROGRAPHICS,
a California corporation
By:/s/ XXXXXX X. XXXXXXX
---------------------------------------------
XXXXXX X. XXXXXXX, PRESIDENT
39
44
SPOUSAL CONSENT
I acknowledge that I have read the foregoing Agreement and that I know
its contents. I am aware that by its provisions my spouse, Xxxx X. Xxxxx, agrees
to sell all his shares of the Company, including my community interest in them,
if any. I hereby acknowledge and agree that the Shares are my spouse's sole and
separate property and that I will take no action at any time to hinder the
operation of the Agreement on those Shares.
/s/ Xxxxx X. Xxxxx
--------------------------------
Xxxxx X. Xxxxx
SPOUSAL CONSENT
I acknowledge that I have read the foregoing Agreement and that I know
its contents. I am aware that by its provisions my spouse, Xxxxxx X. Xxxxxxx,
agrees to sell all his shares of the Company, including my community interest in
them, if any. I hereby acknowledge and agree that the Shares are my spouse's
sole and separate property and that I will take no action at any time to hinder
the operation of the Agreement on those Shares.
/s/ Xxxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxxx X. Xxxxxxx
SPOUSAL CONSENT
I acknowledge that I have read the foregoing Agreement and that I know
its contents. I am aware that by its provisions my spouse, Xxxxxxx X.
Xxxxxxxxxx, agrees to sell all his shares of the Company, including my community
interest in them, if any. I hereby acknowledge and agree that the Shares are my
spouse's sole and separate property and that I will take no action at any time
to hinder the operation of the Agreement on those Shares.
/s/ Xxxxxxxx X. Xxxxxxxxxx
--------------------------------
Xxxxxxxx X. Xxxxxxxxxx
SPOUSAL CONSENT
I acknowledge that I have read the foregoing Agreement and that I know
its contents. I am aware that by its provisions my spouse, Xxxx Xxxxxx, agrees
to sell all his shares of the Company, including my community interest in them,
if any. I hereby acknowledge and agree that the Shares are my spouse's sole and
separate property and that I will take no action at any time to hinder the
operation of the Agreement on those Shares.
/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
40
