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AGREEMENT OF PURCHASE AND SALE OF STOCK
THIS AGREEMENT is made and entered into on the 31st day of
January, 1997 but effective as of January 1, 1997 (the "Effective Date"),
between and among LASON SYSTEMS, INC., a Delaware corporation, the address of
which is 0000 Xxxxxxxxxx Xxxxxxx, Xxxx, Xxxxxxxx 00000 ("Buyer"); LASON, INC.,
a Delaware corporation, the address of which is 0000 Xxxxxxxxxx Xxxxxxx, Xxxx,
Xxxxxxxx 00000 ("Lason, Inc.") for those certain specific limited purposes
hereinafter set forth; XXXX XXXXX whose address is 000 Xxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 ("Shareholder") and XXXXXXXXX COMMUNICATIONS CORPORATION, a New
York corporation, the address of which is 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 ("Corporation"). Shareholder and Corporation are collectively referred to
in this Agreement as "Selling Parties."
R E C I T A L S:
Shareholder owns all of the issued and outstanding capital
stock of Corporation. Buyer desires to purchase all of the shares in
Corporation owned by Shareholder so that the aggregate shares (the "Shares") to
be purchased by Buyer will give Buyer one hundred (100%) percent ownership
interest in Corporation. Shareholder desires to sell the Shares to Buyer, and
Corporation desires that this transaction be consummated.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained in this Agreement, the
parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
SECTION 1.1 SALE AND TRANSFER OF SHARES. Subject to the
terms and conditions set forth in this Agreement, on the Closing Date (as
defined below in Section 7.1) but effective as of the Effective Date,
Shareholder will transfer and convey the Shares to Buyer, and Buyer will
acquire the Shares from Shareholder, free and clear of all liens, encumbrances,
security agreements, equities, options, claims, charges and restrictions. On
the Closing Date, the certificates representing the Shares are to be duly
endorsed in blank for transfer, or accompanied by a separate written instrument
of assignment and are to be accompanied by such other or further supporting
documents as Buyer or its counsel may reasonably require.
SECTION 1.2 PURCHASE PRICE.
A. Subject to possible adjustment as set forth in
Section 1.3 below, the purchase price for the Shares is $9,000,000.00
(the "Purchase Price"), predicated upon Corporation having a net
worth, as of the Closing Date, of at least $1,000,000.00 and not more
than $1,200,000.00. The Purchase Price will be paid at the Closing
(as hereinafter
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defined) in cash and in shares of the Common Stock of Buyer's parent
corporation, Lason, Inc., as follows: $1,500,000.00 in the Common
Stock of Lason, Inc. (the "Lason Shares") valued for this purpose at
the average closing price of Lason, Inc. Common Stock for the
preceding 20 trading days prior to the Closing Date as reported in the
Wall Street Journal index of NASDAQ National Market Issues but no less
than $18.00 per share and no more than $22.00 per share (appropriately
adjusted for any stock split, reverse stock split or common stock
dividend effected or declared by Buyer) with the balance of the
Purchase Price to be paid in cash, in collected funds via electronic
wire transfer. In connection with the foregoing, on the Closing Date,
Shareholder will deliver to Lason, Inc. a Lock Up Agreement in
mutually acceptable form (the "Lock-Up Agreement") pursuant to which
Shareholder will agree not to sell any of the Lason, Inc. Common Stock
delivered to it in accordance with this Agreement for a period of 18
months from and after the Closing Date.
B. The cash portion of the Purchase Price payable at
Closing will be $7,500,000, subject to adjustment as hereinafter
described, the amount of such adjustment, if any, to be determined by
reference to the unaudited financial statement of Corporation compiled
by Corporation's independent certified public accountants as of and
for the period ended December 31, 1996, as contemplated by Sections
2.7 and 6.2 hereof (the "December Balance Sheet"). In the event that
the December Balance Sheet shows a net worth of not less than
$1,000,000 and not more than $1,200,000, the cash portion of the
Purchase Price payable at Closing will be $7,500,000. In the event
that the December Balance Sheet shows a net worth less than
$1,000,000, the cash portion of the Purchase Price will be reduced, on
a dollar for dollar basis, by an amount equal to the difference
between $1,000,000 and the net worth of Corporation as shown on the
December Balance Sheet. Alternatively, if the December Balance Sheet
shows a net worth of more than $1,200,000, the cash portion of the
Purchase Price payable at the Closing will be increased, on a dollar
for dollar basis, by an amount equal to the difference between the net
worth of Corporation as shown on the December Balance Sheet and
$1,200,000. It is understood and agreed that the Purchase Price is
calculated on a uniform per share price of $45,000.00 for each of the
Shares, subject to adjustment as described herein.
SECTION 1.3 ADJUSTMENT TO PURCHASE PRICE.
A. Within 30 days of the Closing Date, Buyer will
prepare and deliver to Shareholder an unaudited financial statement of
Corporation for the period from the Effective Date to the Closing
Date, showing all changes in Corporation's net worth for such period
and Corporation's net worth as of the Closing Date (as the same may be
adjusted in accordance with this paragraph, the "Interim Statement").
The Interim Statement will be prepared in accordance with generally
accepted accounting principles applied in a manner consistent with the
preparation of the December Balance Sheet and without giving effect to
any of the transactions contemplated hereby (such transactions
including, without limitation, the purchase and sale of the Shares,
the amortization of goodwill associated with said purchase and sale,
the termination of Corporation's status
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as an S corporation and the election under Section 338(h)(10) of the
IRC described in Section 10.6 hereof) except that the Interim Balance
Sheet shall include an accrual for legal fees payable by Corporation
as contemplated by Section 10.2 hereof. In the event that Shareholder
disputes any aspect of the Interim Statement, then Shareholder shall
so notify Buyer within ten days following his receipt thereof. In
such event, the parties, together with their independent public
accountants, shall meet and discuss such dispute in a good faith
effort to resolve such dispute. If no resolution is reached within 30
days of Shareholder's notice, then the dispute shall be submitted to
and resolved by arbitration pursuant to Section 10.15 hereof. The
Interim Statement shall be adjusted to the extent required to reflect
the resolution of any such dispute, either by agreement of the parties
or by arbitration. Shareholder and his accountants shall have full
access to Corporation's books and records in connection with their
review of the Interim Statement delivered by Buyer and the resolution
of any dispute relating thereto.
B. If the net worth of the Corporation, as shown on the
Interim Statement, is different than the net worth shown on the
December Balance Sheet, then Buyer and Shareholder will recalculate
the cash portion of the Purchase Price, in accordance with the formula
described in Section 1.2(B) above but using the net worth shown on
the Interim Statement (the amount of the cash portion of the Purchase
Price, as so recalculated, being hereinafter referred to as the
"Recalculated Purchase Price") instead of the net worth shown on the
December Balance Sheet. If both the December Balance Sheet and the
Interim Statement show a net worth of not less than $1,000,000 and not
more than $1,200,000, then there will be no adjustment in the Purchase
Price. If either the December Balance Sheet or the Interim Statement
shows a net worth of less than $1,000,000 or more than $1,200,000,
then the cash portion of the Purchase Price will be adjusted to equal
the Recalculated Purchase Price and the Buyer will pay the
Shareholder, or the Shareholder will pay the Buyer, as the case may
be, an amount necessary to put the Buyer and the Shareholder in the
positions they would have been in had the Buyer paid the Recalculated
Purchase Price to the Shareholder on the Closing Date (but without any
accrual of interest or otherwise giving effect to the time value of
money). If required, such payment shall be made (1) within fifteen
days following the delivery of the Interim Statement to Shareholder
pursuant to Section 1.3(a) above, or (2) if Shareholder disputes any
aspect of the Interim Statement, then within fifteen days following
the resolution of such dispute. Concurrently with the making of such
payment, Buyer and Shareholder will execute a memorandum setting forth
the adjustment to the Purchase Price, if any.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES
Selling Parties, jointly and severally, represent and warrant
to Buyer that, as of the date hereof (but, except as expressly set forth below,
without giving effect to the transactions contemplated hereby):
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SECTION 2.1 ORGANIZATION, STANDING AND POWER.
Corporation is duly organized, validly existing and in good standing under the
laws of the State of New York, has all necessary corporate power to own its
properties and to carry on its business as now owned and operated by it, is
duly qualified to do intrastate business and is in good standing in each
jurisdiction in which the nature of its business or its properties makes such
qualification necessary and failure to so qualify would have a material adverse
effect on the Corporation. Each jurisdiction in which Corporation is so
qualified to do business is listed on Exhibit "2.1".
SECTION 2.2 CAPITALIZATION. The authorized capital stock
of Corporation consists of two hundred (200) shares of common stock without par
value, of which two hundred (200) shares are issued and outstanding. All of
the Shares are validly issued, fully paid, nonassessable (except as provided in
Section 630 of the New York Business Corporation Law), 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. Shareholder is the owner,
beneficially and of record, of all of the Shares, free and clear of all liens,
encumbrances, security agreements, equities, options, claims, charges and
restrictions except as set forth in Exhibit "2.3".
SECTION 2.4 SUBSIDIARIES. Except as set forth in Exhibit
"2.4," 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.
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. Selling Parties represent and
warrant that they have the right, power, legal capacity and authority to enter
into and perform their respective obligations under this Agreement and that no
consent or approval of, notice to or filing with any governmental authority
having jurisdiction over any aspect of the business or assets of Corporation,
and no consent or approval of or notice to any other person or entity (except
consents, approvals and notices required in connection with contracts and
leases listed in Exhibits "2.14" and "2.25"), is required in connection with
the execution and delivery by Selling Parties of this Agreement or the
consummation by Selling Parties of the transactions contemplated hereby.
SECTION 2.6 NO BREACH OR VIOLATION. The execution,
delivery and performance of this Agreement by Corporation, and the consummation
of the transactions contemplated hereby, 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
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violation of any of the terms, conditions or provisions of the Articles of
Incorporation or By-Laws of Corporation; (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 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; (iv) 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 (v) the creation or imposition of any lien, charge or encumbrance on any of
the properties of Corporation, which, in the case of any matter referred to in
clause (i), (iii), (iv), or (v) above, would have a material adverse effect on
the Corporation or its condition (financial or otherwise), earnings, assets,
liabilities, business, operations or prospects, or the transactions
contemplated hereby.
SECTION 2.7 FINANCIAL STATEMENTS. There have heretofore
been delivered to Buyer: financial statements, including balance sheets,
statements of income and retained earnings, and statements of cash flows for
Corporation as of and for the years ended December 31, 1993, December 31, 1994,
December 31, 1995 and December 31, 1996, compiled by Xxxxxxxxx, Xxxxx &
Infield, certified public accountants, whose compilation reports with respect
to said financial statements (the "Financial Statements") are included therein
provided, however, that the Financial Statements for the year ended December
31, 1996 are in draft form and have not yet been finalized.
Except as set forth in the compilation reports of Xxxxxxxxx, Xxxxx &
Infield delivered to Buyer together with the Financial Statements, all of the
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved.
The Financial Statements present fairly the financial positions of Corporation
to which they relate 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, including the maintenance of an adequate system
of internal controls. 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 corporate action taken by, the
stockholder, the Board of Directors, and committees of the Board of Directors
of Corporation, and no meeting of any such stockholder, Board of Directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books.
SECTION 2.9 UNDISCLOSED LIABILITIES. Except as set forth
in Exhibit "2.9," Corporation has no material debts, liabilities or obligations
of any kind, whether accrued, absolute, contingent or otherwise, which, under
generally accepted accounting principles, should have been so reflected or
reserved against or disclosed in Corporation's balance sheet dated as of
December 31, 1996, included in the Financial Statements and were not so
included, except for those that may have been incurred subsequent to the date
of that balance sheet. Except as set forth in Exhibit "2.9," all debts,
liabilities and obligations incurred after December 31, 1996, were
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incurred in the ordinary course of business and are usual and normal in amount
both individually and in the aggregate.
SECTION 2.10 ABSENCE OF CERTAIN CHANGES. Except as set
forth in Exhibit "2.10," since December 31, 1996, the business of Corporation
has been operated only in the ordinary course and, without limiting the
generality of the foregoing, Corporation has not:
A. Declared, set aside or paid any dividend or other
distribution in respect of its capital stock or otherwise (including
bonus distributions to Shareholder) 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,
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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
$5,000.00;
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 as previously in effect prior to December 1, 1996;
P. Effected any change in its directors or executive
management;
Q. Effected any amendment or modification in its
Articles of Incorporation or By-Laws;
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;
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V. Made any loan to any person or entity, or guaranteed
any loan;
W. 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 Exhibit
"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 hereof. Except as set forth
in Exhibit "2.11," there are no claims pending against Corporation for past-due
taxes, nor has Corporation been notified of any claims. Except as set forth in
Exhibit "2.11," 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 Exhibit
"2.11, there are no outstanding waivers or agreements by Corporation for the
extension of the time for the assessment of any tax. Except as set forth in
Exhibit "2.11," the tax returns of Corporation, if audited, have been finally
determined by the Internal Revenue Service or other taxing authority, or
otherwise closed, and any penalties, deficiencies, assessments, additions to
tax and interest proposed as a result of such audits have been paid or settled.
The charges, accruals and reserves for taxes reflected in the balance sheet as
of December 31, 1996, and included in the Financial Statements, are, adequate
for any and all taxes for the periods ending the date of such balance sheet 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. . Buyer will prepare and file, and Corporation will be responsible for
the cost of such preparation and filing, all requisite federal, state and local
tax returns of Corporation for the periods ended December 31, 1996 and January
31, 1997, respectively. Shareholder and his accountants shall have the right
to review such tax returns and approve same prior to filing, which approval
shall not be unreasonably withheld.
SECTION 2.12 RECEIVABLES. Except as set forth in Exhibit
"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. Except as set forth in Exhibit "2.12," reserves for doubtful
accounts have been established on the books of Corporation in accordance with
generally accepted accounting principles consistently applied and are reflected
on the balance sheets included in the Financial Statements.
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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 Exhibit "2.13."
SECTION 2.14 REAL PROPERTY.
A. Exhibit "2.14" sets forth a complete and accurate
address of each parcel of real property, together with all buildings,
fixtures and other improvements located thereon (collectively, the
"Real Property") which is owned by Corporation.
B. To the best of Selling Parties' 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. 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), sublease,
tenancy, concession, license, occupancy agreement or similar right,
mortgage, deed of trust, lien, encumbrance, claim, charge, equity,
covenant, condition, restriction, easement, right of way or other
matter affecting the Real Property or any portion thereof except as
set forth in Exhibit "2.14."
E. Except as set forth in Exhibit "2.14," 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. Exhibit "2.15" lists all leases,
rental agreements, conditional sales contracts and other similar agreements
(collectively, "Leases"), as amended, which cannot be terminated by Corporation
without liability at any time upon less than thirty (30) days' notice or which
involve payment by it in the future of more than $10,000.00, 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 in all material respects, 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. Notwithstanding anything contained in the Leases,
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, and Selling Parties know of no title defect to which
any of the Leases is subject which might be expected at any time to have a
material adverse effect on Corporation or its condition (financial or other),
earnings, assets, liabilities, business, operations or prospects.
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Exhibit "2.15" sets out any and all advances, deposits and prepayments made by
Corporation under the Leases.
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. Section Section 9601 et seq., Occupational
Safety and Health Act, 29 U.S.C. Section Section 651 et seq.,
Resource Conservation and Recovery Act, 42 U.S.C. Section Section
6901 et seq., Clean Air Act, 42 U.S.C. Section Section 7401 et seq.,
Federal Water Pollution Control Act, 33 U.S.C. Section Section 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. Exhibit "2.17" contains
a list and brief description of all trade names, trademarks, trademark
registrations and applications for registration, service marks, patent rights,
patent applications, trade secrets, copyrights and applications therefor
(herein collectively referred to 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. All Proprietary Rights are owned
by Corporation, and are to the best of Shareholder's and Corporation's
knowledge, valid and in full force and effect.
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SECTION 2.18 NON-INFRINGEMENT; AGREEMENTS. Except as set
forth in Exhibit "2.18," no Proprietary Right is the subject of litigation or
other adversary proceedings. To the Selling Parties' 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, as otherwise previously disclosed by
Corporation to Seller or as otherwise set forth in Exhibit 2.18, 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 Exhibit "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 in an amount in excess of $10,000.00 except as are set forth
on Exhibit "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 Exhibit "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 Exhibit "2.21." There are no facts or circumstances known to
the Selling Parties or any 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. Selling Parties have no knowledge that any of the listed
customers of Corporation intend to cease doing business with Corporation, or
materially decrease the amount of the business that they are presently doing
with Corporation.
SECTION 2.22 EXISTING EMPLOYMENT CONTRACTS AND/OR
REMUNERATION AGREEMENTS. Exhibit "2.22" sets forth a complete and accurate
list of all employment contracts or other agreements or arrangements providing
for employee remuneration or benefits to which Corporation 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
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neither Corporation nor to the best of Selling Parties' knowledge any other
party is in default under any such contract or arrangement, nor are there any
amendments, modifications, changes or releases thereto, written or oral. There
have been no claims of defaults and there are no facts or conditions known to
Selling Parties 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 BENEFITS PLANS. Exhibit "2.23" sets
forth a complete and accurate list of all collective bargaining agreements and
all pension, bonus, profit-sharing, stock option or other plan or arrangement
providing for employee benefits (including any plan within the meaning of
Section 3(3) of the Employment Retirement Income Security Act), to which
Corporation is a party or by which Corporation is bound, copies of the
originals of which are attached hereto as Exhibit "2.23." There are no
unfunded liabilities of Corporation with respect to any such collective
bargaining agreements, or pensions, bonus, profit-sharing, stock option or
other plans or arrangements providing for employee benefits except as set forth
on Exhibit "2.23" hereto.
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 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, to the best of Selling Parties' knowledge, no facts or circumstances exist
which may result in the filing or commencement of any such proceeding. All
currently pending or outstanding worker's compensation claims against
Corporation are listed on Exhibit "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. 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 Selling
Parties' knowledge, attempts to organize a collective bargaining unit which may
adversely affect the business and affairs of Corporation or the transactions
contemplated hereby. Except as set forth on Exhibit "2.24," there is no unfair
labor practice complaint against Corporation pending before the National Labor
Relations Board.
SECTION 2.25 OTHER CONTRACTS. Exhibit "2.25" lists and
briefly describes all contracts, agreements, commitments, guarantees, letters
of intent, understandings or other arrangements of a contractual nature,
written or oral (including, but not limited to, franchise, patent, trademark
and royalty agreements), other than outstanding purchase orders made in the
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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 Selling Parties'
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. Exhibit "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 1995 and 1996, 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 hereof which will equal or
exceed or which will be likely to exceed an annual rate of $50,000.00,
in 1996 or equaled such amount in the year ended December 31, 1995.
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 By-Laws
or by resolution of the Board of Directors or otherwise) to write
checks or borrow funds on behalf of Corporation.
SECTION 2.27 LITIGATION AND CLAIMS. Except as set forth
on Exhibit "2.27," there is: (i) no action, suit, proceeding, claim or
investigation pending or, to the best of Selling Parties' 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) to the best of Selling Parties'
knowledge 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
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(financial or other), earnings, business, assets, operations or prospects of
Corporation are listed on Exhibit "2.27" and Buyer has been provided with
accurate and complete copies of same. The matters set forth in Exhibits
"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 Exhibit
"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. Selling Parties have no
knowledge of any statement of facts or the occurrence of any event forming the
basis for any present material tort claim against Corporation not covered by
insurance, which claim, if determined adversely to Corporation, would have a
material adverse effect on the Corporation or its condition (financial or
otherwise), earnings, assets, liabilities, business, operation or prospects.
SECTION 2.29 OTHER TANGIBLE PERSONAL PROPERTY. Exhibit
"2.29" contains a complete and accurate list and brief description of each item
of 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 which individually (as to each item) has a value in excess of
$5,000.00 (the "Tangible Personal Property"). The Tangible Personal Property
constitutes all tangible personal property reasonably necessary for the conduct
by Corporation of its business as now conducted. All motor vehicles listed on
Exhibit "2.29" have passed emission standards examinations required by
applicable law. Except as stated in Exhibit "2.29," no Tangible Personal
Property used by Corporation in connection with its business is held under any
lease, security agreement, conditional sales contract or other title retention
or security arrangement, or is located other than in the possession of
Corporation.
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
most recent balance sheet included in the Financial Statements; (ii) the lien
of current taxes not yet due and payable; and (iii) possible minor matters
that, in the aggregate, are not substantial in amount and do not materially
detract from or interfere with the present or intended use of any of these
assets, nor materially impair business operations. All real property and
tangible personal property of Corporation is in good operating condition and
repair, ordinary wear and tear excepted. Corporation is in possession of all
premises leased to it from others. Except as set forth in Exhibit 2.30, 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 INVESTMENT REPRESENTATIONS. In connection
with Shareholder's acquisition of Lason, Inc. Common Stock:
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A. Shareholder was given the Prospectus of Lason, Inc.
dated October 9, 1996 (the "Lason Prospectus") and the Form 10-Q (the
"Form 10-Q") filed by Lason, Inc. with the Securities and Exchange
Commission (the "SEC") on November 22, 1996 and the opportunity to ask
questions and receive answers concerning Lason, Inc. and the terms and
conditions of the offer and sale and to obtain any additional
information possessed by Lason, Inc. or which Lason, Inc. could
acquire without unreasonable effort or expense necessary to verify the
accuracy of the information provided to Shareholder about Lason, Inc.;
B. Shareholder is acquiring Lason, Inc. Common Stock
solely for his own account for investment and not with the view to
sale or distribution of the Lason, Inc. Common Stock 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, Inc. Common Stock acquired hereunder or any portion
thereof;
C. Shareholder has received all information he deemed
necessary and appropriate to enable him to evaluate the financial risk
inherent in making an investment in the Lason, Inc. Common Stock;
D. Shareholder 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 risk and benefits of an investment in Lason, Inc.;
E. Shareholder is aware that the Lason, Inc. Common
Stock being delivered to him on the Closing Date has 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 Lason, Inc. Common
Stock will contain a legend noting the restrictions on resale under
the Act and under the lock-up agreement; and
F. The Shareholder will not sell, assign or transfer any
of the shares of the Lason, Inc. Common Stock 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,
in the opinion of counsel reasonably satisfactory to Buyer is not
required to be registered under the Act. Notwithstanding the above,
the foregoing restrictions on transfer shall not apply to any transfer
by Shareholder to Shareholder's spouse and/or descendants or any trust
primarily for the benefit of Shareholder and/or Shareholder's spouse
and or descendants, provided that the transferee agrees to the
foregoing restrictions on resale and to the inclusion of a legend on
the certificate to be issued to transferee noting the restrictions on
resale under the Act and under the lock- up agreement.
SECTION 2.32 BEST KNOWLEDGE. The term "to the best of
Selling Parties' knowledge," or equivalent terms, as used to qualify any of the
foregoing representations and warranties, means actual knowledge of
Shareholder.
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SECTION 2.33 ACCURACY AND COMPLETENESS OF REPRESENTATIONS
AND WARRANTIES. No representation or warranty made by Selling Parties 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 contains 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.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER AND LASON, INC.
Buyer with respect to Buyer and Lason, Inc. with respect to
Lason, Inc. hereby represent and warrant to Selling Parties as follows:
SECTION 3.1 ORGANIZATION. Buyer and Lason, Inc. are
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware, and have the corporate power and are duly
authorized to carry on their businesses where and as now conducted and to own,
lease and operate properties as they now do.
SECTION 3.2 AUTHORITIES AND CONSENTS. The execution,
delivery and performance of this Agreement by Buyer and Lason, Inc., and the
Guaranty attached hereto by Lason, Inc. and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by the Board of Directors of each. Buyer and Lason, Inc. represent
and warrant that they have the right, power, legal capacity and authority to
enter into and perform their respective obligations under this Agreement (and
with respect to Lason, Inc. the Guaranty) 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 Lason, Inc., 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 and Lason, Inc. of this
Agreement or the Guaranty or the consummation by Buyer and Lason, Inc. of the
transactions contemplated hereby or thereby.
SECTION 3.3 NO BREACH OR VIOLATION. The execution,
delivery and performance of this Agreement by Buyer and Lason, Inc., and the
Guaranty of Lason, Inc. 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 and of the
Guaranty by Lason, Inc.; (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 By-Laws of Buyer and Lason, Inc.; (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 and
Lason, Inc. 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 or to
accelerate the maturity of any indebtedness or other obligation of Buyer and
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Lason, Inc.; or (v) the creation or imposition of any lien, charge or
encumbrance on any of the properties of Buyer and Lason, Inc.
SECTION 3.4 NO BREACH. Buyer and Lason, Inc. know of no
facts or circumstances that may tend to cause, or relate to, an existing or
potential breach or default by Selling Parties of the material terms,
conditions, representations and warranties set forth herein.
SECTION 3.5 VALIDLY ISSUED. The total authorized number
of shares of capital stock which Lason, Inc. has authority to issue is
20,000,000 shares of Common Stock, par value $0.01 per share, of which as of
October 31, 1996, 8,610,246 shares are issued and outstanding, and 5,000,000
shares of preferred stock, par value $0.01 per share, of which as of December
31, 1996, no shares are issued and outstanding. Additionally, as of December
31, 1996, certain persons hold options to acquire approximately 789,769 shares
of Lason, Inc. Common Stock. When issued in accordance with the terms of this
Agreement, the Common Stock of Lason, Inc. being issued to Shareholder will be
validly issued, fully paid and non-assessable. Except with respect to the
foregoing, at December 31, 1996, there are no other outstanding subscriptions,
options, rights, warrants, convertible securities or other agreements or
commitments obligating Lason, Inc. to issue any additional shares of its
capital stock of any class. Notwithstanding the above, Lason, Inc. intends to
issue additional securities in connection with, among others, future
acquisitions and employee compensation programs.
SECTION 3.6 TRADING ON THE NASDAQ NATIONAL MARKET. The
shares of Common Stock of Lason, Inc. 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, Lason, Inc. will
prepare and file the applicable listing application with respect to the Lason
Shares with the NASDAQ National Market and will use commercially reasonable
efforts to cause such Lason Shares to be so listed as promptly as practicable
following such filing.
SECTION 3.7 LASON, INC. FORM 10-Q. The Lason
Prospectus and the Form 10-Q do not contain any untrue statement of a 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 no material adverse changes in the condition
(financial or otherwise), earnings, business, assets, liabilities, properties,
or operations or prospects of Buyer or Lason, Inc. since September 30, 1996
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
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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 Selling Parties in respect of the representations,
warranties, schedules, certificates or agreements given hereunder.
SECTION 4.2 CONDUCT OF BUSINESS BY CORPORATION. From
the date hereof 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 a material portion of its
assets or the granting of any preferential right to purchase such
assets, properties or rights, except in connection with the sale or
lease of inventory to customers in the ordinary course of business;
B. Maintain in full force and effect the insurance
policies listed in Exhibit "2.19" to this Agreement;
C. Make no change in its Articles of Incorporation or
By-Laws;
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;
E. Purchase, redeem or otherwise acquire, directly or
indirectly, no shares of its capital stock;
F. 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);
G. 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
$10,000.00;
H. Terminate none of the contracts or agreements listed
in Exhibit "2.25" or modify any of said contracts or agreements except
in accordance with their terms;
I. Except pursuant to existing arrangements disclosed in
Exhibit "2.26:" (i) grant no increase in salaries or compensation
payable or to become payable by it, to any officer, employee, sales
agent or representative, other than increases in customary amounts
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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;
J. Duly comply with all laws, regulations, ordinances,
orders, injunctions and decrees applicable to it and to the conduct of
its business;
K. 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;
L. 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;
M. Make or agree to make no capital expenditures in
excess of $10,000.00 for any single item, or $10,000.00 in the
aggregate, or enter into any leases of capital equipment or property
under which the annual lease charge is in excess of $10,000.00;
N. 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;
O. Perform all of its obligations under contracts
relating to or affecting its assets, properties and rights, except for
non-material failures;
P. 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;
Q. 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;
R. Write off none of the receivables on its books; and
S. Enter into a lease for real property with
Shareholder or any persons or entities affiliated with him.
SECTION 4.3 CONSENTS. Corporation shall use
commercially, reasonable efforts to 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.
SECTION 4.4 COMMUNICATIONS. Each party hereto agrees to
consult and obtain the prior approval of the other parties, which approval
shall not be unreasonably withheld or
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delayed, on reasonable notice as to the content of any press releases or any
written statements for general circulation regarding the subject contained in
this Agreement.
SECTION 4.5 UPDATING OF SCHEDULES. From the date hereof
until the Closing Date, Corporation shall keep up to date all of the schedules,
exhibits and certificates furnished (or to be furnished) under this Agreement,
and shall promptly notify Buyer of any changes, additions or events which may,
after the lapse of time, cause any change or addition thereto.
SECTION 4.6 REGISTRATION OF LASON, INC. COMMON STOCK.
A. Subject only to the proviso set forth in the last
sentence of this Section 4.6(A), Lason, Inc. will at its own cost and
expense: (i) prepare and file with the SEC a registration statement on
Form S-3, or other applicable form (the "Registration Statement")
under the Act covering the maximum number of shares of Lason, Inc.
that may be issued to Shareholder pursuant to Section 1.2 hereof and
naming Shareholder as a "Selling Shareholder" in the Registration
Statement prior to the end of the lock-up period described in this
Agreement; (ii) have the Registration Statement declared effective by
the SEC prior to the end of the lock up period described in this
Agreement; and (iii) maintain the Registration Statement in effect
until the earlier of: (x) the sale of all of the shares of Lason, Inc.
issued to Shareholder pursuant to Section 1.2 hereof; or (y) the date
Shareholder may sell such shares without restriction pursuant to Rule
144(k) under the Act hereunder (currently three years from the date
of the issuance of the shares). Shareholder agrees to cooperate and
provide Lason, Inc. with all information and consents necessary to
permit inclusion of Shareholder as a "Selling Shareholder" in the
Registration Statement. In the event that a registration statement on
Form S-3 cannot be filed due to a change in government regulation,
Lason, Inc. will use its best efforts to accomplish registration
through an alternative means.
X. Xxxxx, Inc. agrees to indemnify and hold harmless the
Shareholder against any losses, claims, damages or liabilities to
which Shareholder may become subject insofar as such losses, claims,
damages or liabilities arise out of any untrue statement of any
material fact contained in the Registration Statement or arise out of
the omission to state in the Registration Statement a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading; provided, however, that Lason, Inc. shall not be liable in
any such case to the extent that any such loss, claim, damage or
liability arises out of an untrue statement or omission made in the
Registration Statement in reliance upon and in conformity with
information furnished to Lason, Inc. by Shareholder.
C. Shareholder agrees to indemnify and hold harmless
Lason, Inc. against any losses, claims, damages, or liabilities to
which Lason, Inc. may become subject insofar as such losses, claims,
damages or liabilities arise out of any untrue statement of any
material fact contained in the Registration Statement or arise out of
the omission to state
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in the Registration Statement a material fact required to be stated
therein or necessary to make the statements therein, and the light of
the circumstances in which made, not misleading, in each case to the
extent that such untrue statement or omission was made in reliance
upon and in conformity with information furnished to Lason, Inc. by
such Shareholder.
SECTION 4.7 DELIVERY OF LASON STOCK CERTIFICATES.
Buyer and Lason shall cause the Transfer Agent (as hereinafter defined) to
issue and deliver to Shareholder certificates registered in Shareholder's name
evidencing the Lason Shares within seven (7) days following the Closing Date.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLING PARTIES
The obligations of Selling Parties to consummate the
transactions contemplated by this Agreement shall be subject to the following
conditions, except as Selling Parties may waive in writing in accordance with
Section 10.5 below:
SECTION 5.1 PERFORMANCE. Buyer shall have performed and
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or satisfied by it on or prior to the Closing
Date.
SECTION 5.2 REPRESENTATIONS AND WARRANTIES. The
representations, warranties and covenants of Buyer and Lason, Inc., set forth
in Article 3 hereof, shall be true and correct in all material respects 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. Selling Parties
shall have been furnished with certificates executed by an officer of Buyer and
an officer of Lason, Inc., in form and substance satisfactory to Selling
Parties, certifying the fulfillment of the condition set forth in Section 5.2
above.
SECTION 5.4 LEGAL OPINION. Seyburn, Kahn, Ginn, Bess,
Xxxxxx and Xxxxxx, P.C., counsel for Buyer and Lason, Inc., shall have
delivered to Selling Parties its opinions to the effect set forth in Exhibit
"5.4".
SECTION 5.5 ROTER EMPLOYMENT AGREEMENT. Corporation and
Shareholder shall have entered into the Employment Agreement contemplated in
Section 6.10 hereof.
SECTION 5.6 AUTHORIZATION OF TRANSACTION. All action
necessary to authorize the execution, delivery and performance of this
Agreement by Buyer and Lason, Inc. and the
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consummation of the transactions contemplated hereby shall have been duly and
validly taken by the Board of Directors of Buyer and Lason, Inc., respectively.
SECTION 5.7 LITIGATION. Immediately prior to the Closing
Date, there shall be no litigation or proceeding: (i) pending or threatened
against Buyer, Lason, Inc. 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, Lason, Inc. 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, Lason, Inc. or any of its
subsidiaries) after the Closing Date, and which, in the judgment of the Board
of Directors of Corporation, 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 or Lason, Inc., might lead to or result in any
litigation or proceeding of the nature referred to in the foregoing sentence.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions
contemplated by this Agreement shall be subject to the following conditions,
except as Buyer may waive in writing in accordance with Section 10.5 below:
SECTION 6.1 AUTHORIZATION OF TRANSACTION. All action
necessary to authorize the execution, delivery and performance of this
Agreement by Selling Parties and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the Board of
Directors of Corporation and by the Shareholder.
SECTION 6.2 SATISFACTORY INVESTIGATIONS. The
investigation of the business of the 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 investigations
shall, in all events, include the approval by Buyer of an unaudited balance
sheet and statement of income and retained earnings for Corporation as of and
for the one year ended December 31, 1996 compiled by Xxxxxxxxx, Xxxxx & Infield
consistent with the standards set forth in Section 2.7 hereof.
SECTION 6.3 MATERIAL ADVERSE CHANGE. Since January 1,
1997, 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),
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including litigation pending or threatened, which might result in any such
material adverse change before or after the Closing Date.
SECTION 6.4 REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Selling Parties 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
Selling Parties 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 6.5 CERTIFICATE OF SELLING PARTIES. Buyer shall
have been furnished with a certificate executed by an officer of Corporation
and certificates executed by the Shareholder, in form and substance
satisfactory to Buyer, certifying to the fulfillment of the condition set forth
in Section 6.4 above.
SECTION 6.6 LEGAL OPINION. Xxxxxx Xxxxxx Butowsky
Xxxxxxx Xxxxxx & Xxxx, counsel for Shareholder and Corporation shall have
delivered to Buyer its opinions to the effect set forth in Exhibit "6.6."
SECTION 6.7 LITIGATION. Immediately prior to the Closing
Date, there shall be no litigation or proceeding: (i) pending or threatened
against Buyer, Lason, Inc. 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, Lason, Inc. 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, Lason, Inc. or any of its
subsidiaries) after the Closing Date, and which, in the judgment of the Board
of Directors of Buyer or Lason, Inc., 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 or Lason, Inc., might lead to or result in any
litigation or proceeding of the nature referred to in the foregoing sentence.
SECTION 6.8 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.
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SECTION 6.9 CORPORATE ACTION. Immediately prior to the
Closing, Buyer shall have received, in form and substance reasonably
satisfactory to Buyer, the resignations of such officers and directors of
Corporation, effective as of the Closing Date, as Buyer may have stipulated to
Corporation in writing prior to the Closing Date.
SECTION 6.10 EMPLOYMENT AGREEMENT. Shareholder shall
have executed and delivered to Buyer an employment agreement with Corporation
on mutually acceptable terms and conditions.
ARTICLE 7
THE CLOSING
SECTION 7.1 TIME AND PLACE. The transfer of the Shares
by Shareholder to Buyer (the "Closing") shall take place at the offices of
Shareholder's counsel, Xxxxxx Xxxxxx Butowsky Xxxxxxx Shalov & Xxxx in New
York, New York at 10:00 a.m., local time, on January 31, 1997, or at such other
time and place as the parties may agree to in writing (the "Closing Date"),
with the closing to be effective as of the Effective Date.
SECTION 7.2 SELLING PARTIES' OBLIGATIONS AT CLOSING. At
the Closing, Selling Parties 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 7.3:
A. Certificates representing the Shares, registered in
the name of the Shareholder, duly endorsed by the Shareholder for
transfer as specified in Section 1.1 above or accompanied by a
separate written instrument of assignment. On submission of such
certificate 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 opinions of counsel as provided in Section 6.7;
D. Except as otherwise specified by Buyer, the written
resignations of all the officers and directors of Corporation;
E. The certificates executed by Corporation's officer
and the Shareholder, dated the Closing Date, as provided in Section
6.5;
F. The Lock-Up Agreement as provided in Section 1.2;
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G. The Employment Agreement contemplated in Section
6.10; and
H. A UCC-3 terminating the existing security interests
of Republic National Bank of New York.
SECTION 7.3 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 7.2:
A. The cash portion of the Purchase Price payable to
Shareholder;
B. Original Issue Order Form No. 1 addressed to The
First Chicago Trust Company (the "Transfer Agent") ;
C. Certified resolutions of Buyer's and Lason, Inc.'s
Boards of Directors, in form reasonably satisfactory to counsel for
Selling Parties, authorizing the execution, delivery and performance
of this Agreement and all actions to be taken by Buyer and Lason, Inc.
under this Agreement; and
D. The certificate executed by Buyer's and Lason, Inc.'s
officers, dated the Closing Date, as provided in Section 5.3.
E. The opinions of counsel as provided in Section 5.4.
ARTICLE 8
OBLIGATIONS AFTER CLOSING
SECTION 8.1 AGREEMENT TO REFRAIN FROM COMPETITION. For
and in consideration of: (i) the payment for the Shares by Buyer and (ii) the
employment arrangement contemplated herein, Shareholder will agree to refrain
from competition and maintain confidential information concerning Corporation,
Buyer and Lason, Inc. during the unexpired term of that certain Employment
Agreement contemplated in Section 6.10 hereof and for a two (2) year period
thereafter all as set forth in such Employment Agreement, which Employment
Agreement is incorporated herein by reference.
SECTION 8.2 FURTHER ASSURANCES. From time to time, at
the request of any party hereto (whether or not after the Closing), and without
further consideration and at the expense of requesting party (unless
requesting party's request arises out of or relates to a breach by the other
party of any of its covenants or agreements hereunder), such other party will
execute and deliver to the requesting party such other documents, and take such
other action, requesting party may reasonably request in order to consummate
more effectively the transactions contemplated
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by this Agreement, to vest in Buyer good, valid and marketable title to the
Shares or to vest in Shareholder good, valid and marketable title to the Lason
Shares.
ARTICLE 9
INDEMNIFICATION AND LOAN REPAYMENT
SECTION 9.1 BUYER'S INDEMNITY. In addition to Buyer's
indemnification obligations pursuant to Section 10.6(b) hereof, Buyer agrees to
indemnify and hold harmless Shareholder 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 he
may incur by reason of Buyer's or Lason, Inc.'s breach of or failure to perform
any of their representations, warranties, commitments, covenants or agreements
in this Agreement, or by reason of any act or omission of Buyer, Lason, Inc. 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 9.2 SHAREHOLDER'S INDEMNITY. Shareholder hereby
indemnifies, defends and holds harmless Buyer from and against, and in respect
to, any and all losses, expenses, costs, obligations, liabilities and damages
including interest, penalties and reasonable attorneys' fees and expenses,
that Buyer may incur by reason of Shareholder's breach of or failure by
Shareholder to perform, any of his representations, warranties, commitments,
covenants or agreements in this Agreement, including any exhibit hereto, as
well as the representations, warranties, commitments, covenants or agreements
of Corporation in this Agreement, including any exhibit hereto.
SECTION 9.3 METHOD OF ASSERTING CLAIMS. The party seeking
indemnification (the "Indemnitee") will give prompt written notice to the other
party or parties (the "Indemnitor") of any claim ("Claim") which it discovers
or of which it receives notice after the Closing and which might give rise to a
Claim by it against Indemnitor under either Section 9.1 or 9.2 hereof as the
case may be, stating the nature, basis and (to the extent known) amount
thereof; provided that failure to give prompt notice shall not jeopardize
Indemnitee's right to indemnification unless such failure shall have materially
prejudiced the ability of Indemnitor to defend such Claim.
SECTION 9.4 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
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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 9.1 or 9.2 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 9.1 or 9.2 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 9.5 SURVIVAL OF SHAREHOLDER'S INDEMNITY OBLIGATIONS.
Shareholder's liability for a breach of the representations, warranties and
covenants made by the Selling Parties 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 and
will continue in full force and effect until a Claim is made by written notice
to Shareholder, which Claim must be made, if at all: (i) within the period
prescribed by the applicable statute of limitations with respect to the
substantive matters addressed therein, in the case of a Claim against
Shareholder for a breach of the representations and warranties set forth in
Sections 2.1, 2.2, 2.3, 2.5, 2.11 and 2.17 hereof; and (ii) within 18 months
from the Closing Date in the case of all other Buyer's Claims.
SECTION 9.6 SURVIVAL OF BUYER'S INDEMNITY OBLIGATIONS.
Buyer's liability for a breach of the representations, warranties and
covenants made by Buyer and Lason, Inc. in this Agreement, or in any schedule,
exhibit, certificate or other document delivered in connection with this
Agreement shall not be deemed to be waived or otherwise affected by any
investigation made by Shareholder and shall survive the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby.
SECTION 9.7 LIMITATION ON INDEMNIFICATION. The following
limitations shall apply to the rights of indemnification set forth in Section
9.1 and 9.2 hereof as applicable: (i) the liability of the Indemnitor shall be
net of any insurance benefits received by Indemnitee (or in the case of
indemnification by Shareholder, insurance benefits received by Corporation) and
any tax benefits received by Indemnitee (or in the case of indemnification by
Shareholder, tax benefits received by Corporation) in respect of the loss
giving rise to the Claim for indemnification; (ii) any indemnification payments
made by Buyer shall constitute a reduction, and any indemnification payments
made by Shareholder shall constitute an increase, of the Purchase
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Price; and (iii) no indemnification shall be required from Shareholder until
the aggregate amount of Buyer's damages exceeds $100,000.00. In the event that
Buyer's damages exceed $100,000.00, in the aggregate, from 1 or more Claims,
Shareholder's indemnity obligation will be for indemnification of the entire
amount of Buyer's damages (i.e., from the first dollar of damage).
ARTICLE 10
MISCELLANEOUS PROVISIONS
SECTION 10.1 FINDER'S OR BROKER'S FEES. Each of the
parties 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. Selling Parties, on
the one hand, and Buyer and Lason, Inc. on the other hand, each agree to
indemnify and hold harmless one another against any loss, liability, damage,
cost, claim or expense incurred by reason of any brokerage, commission or
finder's fee alleged to be payable by reason of any act, omission or statement
of the indemnifying party.
SECTION 10.2 EXPENSES. Except as otherwise expressly
provided herein, Buyer and Shareholder shall, individually, pay all costs and
expenses incurred or to be incurred by either of them in negotiating and
preparing this Agreement and in closing and carrying out the transactions
contemplated hereby. Notwithstanding the foregoing, Corporation shall pay the
reasonable fees and expenses of counsel incurred by Shareholder and Corporation
in connection with the negotiation and preparation of this Agreement and the
other agreements contemplated hereby and in closing the transactions
contemplated herein.
SECTION 10.3 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 10.4 ENTIRE AGREEMENT; MODIFICATION; WAIVER. This
Agreement, together with all of the exhibits furnished hereunder, constitute
the sole and entire agreement between the parties pertaining to the subject
matter contained herein, and supersedes all prior and contemporaneous
agreements, representations and understandings of the parties. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by all the parties.
SECTION 10.5 WAIVER. Buyer may waive in writing
compliance by Shareholder, and Selling Parties may waive in writing compliance
by Buyer or Lason, Inc., with 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
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with any of the provisions hereof. The granting of a written waiver pursuant
to this Section shall apply, unless expressly set forth therein to the
contrary, only to the specific incident of noncompliance with the specific
provisions of this Agreement set forth therein.
SECTION 10.6 SECTION 338(H)(10) ELECTION.
A. Buyer, Shareholder and Corporation shall make an
election in accordance with the provisions of Section 338(h)(10) of
the Internal Revenue Code of 1986, as amended ("IRC"), and with any
applicable provisions of state or local law, to treat the purchase of
stock by Buyer as a purchase of assets for tax purposes. Buyer,
Shareholder and Corporation shall execute at Closing the Corporate
Qualified Stock Purchases forms (Internal Revenue Service Forms
8023-A), and any other such forms or documents required to effect the
election under federal, state, or local tax law. Shareholder will
timely file each of the Forms 8023A with the appropriate Internal
Revenue Service Center(s) via certified mail, return receipt
requested, and will provide Buyer with copies of the Forms as filed
and the stamped certified mail receipts establishing proof of timely
filing, and shall file any such other forms or documents in accordance
with any instructions thereto. Buyer, Shareholder and Corporation
shall execute and timely file any other forms, statements, or other
documentation required to effect the election in the appropriate
manner under federal, state, or local law. Buyer, Shareholder and
Corporation shall provide each of the other parties hereto with
evidence that such other form, statement, or other documentation has
been timely filed in the appropriate manner.
B. The parties acknowledge and agree that all Election
Costs (as hereinafter defined) shall be for the account of Buyer and,
accordingly, Buyer and Corporation hereby indemnify Shareholder and
hold him harmless from and against all such Election Costs. Any
indemnification payments pursuant to this Section shall constitute an
increase in the Purchase Price and, if any such payments are subject
to Federal, state or local taxes ("Taxes"), Buyer shall also pay
Shareholder such additional amounts as may be necessary (assuming, for
this purpose, that the indemnification payments are subject to Taxes
at the highest Federal, state and local marginal rates) to make the
net amounts received by Shareholder, after taking such Taxes into
account, equal to the total amount that he would have received if the
indemnification payments were not subject to Taxes. As used herein,
"Election Costs" means all costs and expenses incurred by Shareholder
in connection with the making of the Election, including without
limitation any and all Taxes, together with related interest and
penalties, payable by Shareholder in respect of the sale of the
Shares, to the extent that the amount of such Taxes exceeds the amount
of Taxes that otherwise would have been payable by Shareholder in
respect of such sale had the Election not been made, and any costs and
expenses incurred by Shareholder in connection with any audit of the
federal, state or local tax returns of Shareholder for the year ending
December 31, 1996, including without limitation the reasonable costs
and expenses of counsel and/or accountants representing Shareholder in
connection with such audit, to the extent that such audit involves
Shareholder's reporting of taxes payable in connection with the sale
of the Shares; provided, however, that: (i) Buyer's indemnity
obligation for Election Costs as hereinabove defined shall not exceed
$50,000.00 (which amount has been agreed to by Buyer and Shareholder's
respective tax advisors prior to the date of this Agreement as a fair
and equitable estimation
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of Shareholder's potential liability as a result of the Section
338(h)(10) election contemplated herein); (ii) Shareholder will take
all reasonable tax return positions on all corporate and individual
federal, state and local tax returns reporting this transaction
consistent with minimizing Buyer's obligation for indemnification of
the Election Costs; and (iii) Buyer's obligation to indemnify for
audit costs is limited strictly to costs associated with that portion
of any audit of Shareholder which relates to the contemplated Section
338(h)(10) election and such election's effect on Shareholder.
In connection with the foregoing, in the event that Buyer
believes that a claim for indemnification is excessive it shall be
able to review Shareholder's tax returns in order to determine if
Shareholder has taken reasonable tax return positions as to the
relevant issues. In the event that Buyer does not believe that
reasonable positions have been taken, Buyer and Shareholder shall
choose a mutually acceptable independent certified public accountant
(the "Designated Auditor") to review Shareholder's tax returns. The
Designated Auditor shall, after reviewing all relevant matters and
interviewing such parties as he or she deems appropriate, deliver to
Buyer and Shareholder a statement setting forth his or her views as to
reasonable tax return positions and adjustments to Shareholder's
request for indemnification, if any, which statement shall be final
and binding on each party. If the final amount of the indemnity to be
made by Buyer is closer to the dollar amount requested by Shareholder
then Buyer shall bear the cost of the Designated Auditor; otherwise
the cost of engaging the Designated Auditor shall be borne by
Shareholder.
SECTION 10.7 SECTION 1362(E)(3) ELECTION. Buyer,
Shareholder and Corporation agree to elect to have all items necessary in the
determination of any income, expense, deduction, credit or other amount
utilized in preparation of the federal (and, if applicable, state) tax returns
of Shareholder and Corporation for the "S Termination Year" (as that term is
defined in IRC Section 1362(e)(4)) to be assigned to each such short taxable
year in the "S Termination Year" under normal tax accounting rules in
accordance with the provisions of IRC Section 1362(e)(3) and any applicable
regulations thereunder. Buyer, Shareholder and Corporation shall execute and
timely file any forms, statements, or other documentation required to effect
the election in the appropriate manner. Buyer, Shareholder and Corporation
shall provide each of the other parties hereto with evidence that such form,
statement, or other documentation has been timely filed in the appropriate
manner.
SECTION 10.8 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.
SECTION 10.9 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 it 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.
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SECTION 10.10 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 assigns except that no
party may assign or transfer its rights or obligations under this Agreement
without the prior written consent of the other parties to this Agreement.
SECTION 10.11 RECOVERY OF LITIGATION COSTS. 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 as determined by the judge or
arbitrator presiding over such legal action or arbitration 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 10.12 CONDITIONS PERMITTING TERMINATION. Either
party may, on or before the Closing Date, terminate this Agreement without
liability to the other if a condition to its performance shall not be fulfilled
or a material default or breach cannot be cured at or prior to January 31,
1997, or such later date as is agreed to by Buyer and Selling Parties, provided
such terminating party is not in default pursuant to the terms of this
Agreement. Termination as provided herein shall not waive any rights of any
party against another for default or breach of any provision of this Agreement
SECTION 10.13 NOTICES. All notices, requests, demands and
other communications required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given on the date of service if
served personally on the party to whom notice is to be given, or on the fifth
(5th) day after mailing if mailed to the party to whom notice is to be given,
by first-class mail, registered or certified, postage paid and properly
addressed as follows:
To Shareholder and
Corporation At: 000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
With A Copy To: Xxxxx X. Xxxxxx, Esq.
Xxxxxx Xxxxxx Butowsky
Xxxxxxx Xxxxxx & Xxxx
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
To Buyer At: Lason Systems, Inc.
0000 Xxxxxxxxxx Xxxxxxx
Xxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Chief
Executive Officer
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With A Copy To: Xxxxxxxx X. Xxxxxx, Esq.
Seyburn, Kahn, Ginn, Bess, Xxxxxx
And Xxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Any party may change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set forth above.
SECTION 10.14 CHOICE OF LAW. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without giving effect to conflict of law rules.
SECTION 10.15 ARBITRATION. In the event of a dispute
between the parties hereto concerning any of the provisions of this Agreement,
the parties shall promptly meet and discuss such dispute in a good faith effort
to resolve such dispute. If no resolution is reached within 30 days following
the date on which one party first notifies the others 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 The City of New York pursuant to
the commercial arbitration rules then prevailing of the American Arbitration
Association. Notwithstanding the foregoing, each party specifically reserves
the right (i) to seek equitable remedies in a Federal or state court of
competent jurisdiction sitting in the State of New York; and (ii) 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
the other party is that the other party is liable, in whole or in part, for any
claim or counterclaim being asserted against the initiating party in such
proceeding. The decision of the arbitrators when rendered shall be final and
binding on the parties hereto. Judgment upon the award of the arbitrators may
be entered by any court of competent jurisdiction. The cost of the arbitration
proceeding (exclusive of counsel fees) shall be borne equally by the parties.
THIS AGREEMENT was executed as of the date and year first set forth
above.
BUYER:
LASON SYSTEMS, INC., a Delaware
corporation
By:
-------------------------------------
Xxxx X. Xxxxxx
Its: Chief Executive Officer
------------------------------------
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CORPORATION:
XXXXXXXXX COMMUNICATIONS
CORPORATION, a New York corporation
By:
-------------------------------------
Xxxx Xxxxx
Its: President
------------------------------------
PARENT OF BUYER:
LASON, INC., a Delaware
corporation
(solely for the purpose of being bound
by Section 1.2, Article 3 and Section
4.6 of this Agreement)
By:
-------------------------------------
Xxxx X. Xxxxxx
Its: Chief Executive Officer
------------------------------------
SHAREHOLDER:
----------------------------------------
XXXX XXXXX
GUARANTY
The undersigned Lason, Inc. a Delaware corporation, as 100%
shareholder of Lason, Systems, Inc., a Delaware corporation does hereby
guaranty to pay and perform, when due, all obligations of the Buyer under the
above-attached Agreement (the "Agreement").
Guarantor further agrees: (i) to any modifications of any terms or
conditions of the Agreement and/or to any extensions or renewals of time of
payment or performance by Buyer, (ii)
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that it shall not be necessary for Shareholder to resort to legal remedies
against Buyer before proceeding against Guarantor for payment; provided,
however, that Guarantor shall have available to it any defenses which would be
available to Buyer under the Agreement or otherwise. Guarantor waives notice
of any election, acceptance, demand, protest, notice of protest and notice of
default, presentment for payment and diligence in collection.
No postponement or delay on the part of Shareholder in the enforcement
of any right hereunder shall constitute a waiver of such right, and all rights
of Shareholder shall be cumulative and not alternative and shall be in addition
to any other rights granted to Shareholder in any other agreement, or by law.
If any provisions hereof shall be, or shall be declared to be, illegal or
unenforceable in any respect, such illegal or unenforceable provision shall be
and become absolutely null and void and of no force and effect, but all other
covenants, terms, conditions and provisions hereof shall nevertheless continue
to be valid and enforceable and this Guaranty shall be so construed. This
Guaranty may not be terminated by any act of Guarantor and shall continue in
full force and effect for so long as any obligations of Buyer under the
Agreement remain outstanding.
This Guaranty shall be governed in all respects by the laws of the
State of New York without giving effect to conflict of law rules. This
Guaranty shall be binding on and shall inure to the benefit of Guarantor and
Shareholder and their respective heirs, legal representatives, successors and
assigns except that Guarantor may not assign or transfer its obligation
hereunder without the prior written consent of Shareholder.
All capitalized terms which are used but not defined herein shall have
the same meanings attributed to them under the Agreement.
LASON, INC., a Delaware corporation
By:
-------------------------------------
Xxxx X. Xxxxxx
Its: Chief Executive Officer
------------------------------------
34
