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EXHIBIT 2.10
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into on the 13TH day of
November 1997, by 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; VIP LITHO INC., a California corporation, the
address of which is 0 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
("SELLER"); XXXXXX X. XXXXXX AND XXXX X. XXXXXX, whose address is 0000 Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, individually and as Trustees of the
Xxxxxx Family Trust dated June 14, 1996. and XXX XXX, whose address is 000 X
Xxxxxx, Xxx Xxxxxx, Xxxxxxxxxx 00000, individually and as Trustee of the Xxx Xxx
Trust dated March 28, 1996. Xxxxxx X Xxxxxx and Xxxx X. Xxxxxx, individually and
as Trustees of the Xxxxxx Family Trust, and Xxx Xxx, individually and as Trustee
of the Xxx Xxx Trust, together own one hundred percent (100%) of the outstanding
shares of Seller (individually each is referred to as "SHAREHOLDER" and
collectively they are referred to as "SHAREHOLDERS"). Seller and Shareholders
are sometimes hereinafter referred to as "SELLING PARTIES".
R E C I T A L S:
THE FOLLOWING IS A RECITAL OF THE FACTS UNDERLYING THIS
AGREEMENT:
Seller is engaged in the business of commercial and financial
printing including the provision of print on demand services (the "BUSINESS").
Buyer desires to purchase from Seller and Seller desires to
sell to Buyer the assets of Seller used in connection with the Business pursuant
to the terms and subject to the conditions of this Agreement. Lason Inc., as the
100% shareholder of Buyer, is willing to provide a guaranty of all of Buyer's
obligations hereunder.
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants, agreements, representations and warranties and conditions
contained in this Agreement, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
SECTION 1.1 PURCHASED ASSETS. On the terms and subject to the
conditions contained herein, Seller agrees to sell to Buyer and Buyer agrees to
purchase from Seller at the Closing and on the Closing Date (as each such term
is defined in Section 10.1 hereof), free and
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clear of all liens, claims and encumbrances (except as otherwise disclosed in
and permitted by this Agreement), all of Seller's right, title and interest in
and to all of its assets and properties wherever situated used by it in
connection with the Business, except for those assets and properties
specifically excluded by Section 1.2 hereof (the "PURCHASED ASSETS"). The
Purchased Assets shall include, but not be limited to, the following:
1.1.1 MACHINERY AND EQUIPMENT. All machinery and
equipment (including spare parts), data processing hardware and
software, vehicles, fixtures, capital works in process, tools, dies,
patterns, molds, furniture and similar tangible personal property
employed by Seller in the conduct of the Business as the same may exist
at the Closing, other than those items of tangible personal property
listed on Exhibit "1.2.5" hereto (all of such property being
hereinafter sometimes referred to as the "EQUIPMENT"), including,
without limitation, the Equipment listed on Exhibit "1.1.1" hereto.
1.1.2 INVENTORY. All inventories, consisting of raw
materials, work-in-process and finished goods and supplies, employed
and useable by Seller in the conduct of the Business, as the same may
exist at the Closing (all of such properties being hereinafter
sometimes referred to as the "INVENTORY"), including, without
limitation, the Inventory listed on EXHIBIT "1.1.2" hereto.
1.1.3 RECEIVABLES. All of Seller's trade receivables,
note receivables and other accounts receivable , as the same may exist
at the Closing (all of such receivables being hereinafter sometimes
referred to as the "RECEIVABLES").
1.1.4 CERTAIN CASH, CASH EQUIVALENTS AND INVESTMENTS.
All of the xxxxx cash, cash on deposit in banks or other financial
institutions, prepaid accounts and security deposits of Seller and
other cash equivalents, and funds in payroll accounts of Seller; and
all certificates of deposit, bonds, stock and other securities and
investments of Seller.
1.1.5 CONTRACT AND CERTAIN OTHER RIGHTS OF SELLER.
All rights and interests of Seller in, to and under all contracts
between it and any other party or parties and under contracts which
have been acquired by it by assignment or in any other manner that are
disclosed in Exhibit "4.24" hereto; all rights and interests of Seller
in, to and under all such contracts not disclosed or required to be
disclosed in Exhibit "4.24" as the same may exist on the Closing Date;
and, subject to Section 1.2.4, all other claims, rights and causes of
action of Seller against third parties which relate to the Business.
1.1.6 CERTAIN PROPRIETARY RIGHTS. All Proprietary
Rights (as defined in Section 4.16 hereof and as listed and described
in Exhibit "4.16" hereto).
1.1.7 BOOKS AND RECORDS. All papers, records and
files in Seller's care, custody or control relating to the business,
including, but not limited to, all blueprints and specifications, sales
records, accounting and financial records, maintenance and production
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records, plats and surveys of the real property from which the Business
is conducted, and plans and designs of buildings, structures, fixtures
and equipment to the extent that the same are reasonably available.
1.1.8 OTHER ASSETS. All other assets of Seller
employed in the conduct of the Business, whether real or personal,
whether tangible, intangible or mixed and whether or not reflected in
the Financial Statements as defined in Section "4.6" hereof or on the
books or records of Seller as the same may exist on the Closing Date,
including, but not limited to, rights under executory contracts and
purchase and sale orders to be assumed by Buyer hereunder, deposits
under all leases assumed by Buyer and any prepaid expenses to the
extent properly assignable to Buyer and permits and licenses to the
extent transferable under law.
SECTION 1.2 EXCLUDED ASSETS. Notwithstanding anything to the
contrary contained herein, the following assets (the "EXCLUDED ASSETS") shall
not be sold to Buyer and all of such Excluded Assets shall be retained by
Seller:
1.2.1 CORPORATE RECORDS. All of Seller's corporate
minute books and related records.
1.2.2 SELLER'S RIGHTS. All rights of Seller under
this Agreement.
1.2.3 TAX RECORDS. All income tax returns and related
tax records of Seller.
1.2.4 LITIGATION. Any recovery (whether received as
the result of a judgment or a settlement) resulting from any claim,
action, suit or proceeding brought by any Selling Party that is pending
on the Closing Date or that arises out of or related to matters or
events occurring on or prior to the Closing Date.
1.2.5 TANGIBLE PERSONAL PROPERTY. All items of
tangible personal property listed on EXHIBIT "1.2.5" hereto.
Notwithstanding the foregoing, Buyer is entitled to and shall receive
the cash surrender value, if any, of any of the life insurance policies
referenced in Exhibit 1.2.5.
1.2.6 RECOVERIES AND REFUNDS. Any tax refund with
respect to any tax period prior to the Closing Date or any recovery
resulting from any claim under an insurance policy currently in force
and indemnifying Seller that is pending on the Closing Date or that
arises out of or related to matters or events occurring on or prior to
the Closing Date.
1.2.7 EMPLOYEE BENEFIT PLAN ASSETS. All assets
(including bank accounts) relating to any of Seller's Plans (as that
term is defined in Section 3.2.6 hereof).
SECTION 1.3 NAMES CHANGES. Seller has reserved the name AVIP
IMAGING" and immediately following the execution of this Agreement will file:
(i) an amendment to its
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articles of incorporation changing its name to "VIP IMAGING INC" and (ii) a
Fictitious Business Name Statement permitting it to do business under the name
"VIP LITHO". Immediately following the Closing, Seller shall amend its articles
of incorporation so as to change its name to a name which is not, in the
judgment of Buyer, confusingly similar to the name "VIP IMAGING INC" and shall
terminate its Fictitious Business Name Statement allowing it to do business
under the name "VIP LITHO". Seller shall not thereafter use such names or other
names acquired by Buyer hereunder or names confusingly similar thereto.
ARTICLE 2
PURCHASE PRICE FOR PURCHASED ASSETS
SECTION 2.1 PURCHASE PRICE; PAYMENT. Subject to the terms and
conditions contained herein and subject to the possible adjustments set forth in
Section 2.4 hereof, Buyer agrees to pay, and Seller agrees to accept, as the
"Purchase Price" for the Purchased Assets: (i) the assumption, payment,
performance and discharge, when and as due, of the Assumed Liabilities (as such
term is defined in Section 3.1 hereof); and (ii) $18,500,000.00 (the "INITIAL
PURCHASE PRICE") payable to Seller at Closing as follows: (a) $14,250,000.00 by
wire transfer of immediately available funds to such account as shall have been
designated by Seller prior to Closing; (b) $3,000,000.00 in the form of the
Common Stock of Lason, Inc. (the "Lason Common Stock"); and (c) $250,000.00 in
cash and $1,000,000.00 of the Lason Common Stock to be held in escrow pursuant
to the terms and conditions of Section 2.4 below. For the purposes hereof, the
Lason Common Stock will be valued at the average closing price of such stock for
the 10 preceding trading days prior to the Closing Date as reported in the Wall
Street Journal published index of NASDAQ National Market Issues; provided,
however, that in no event will the value of such stock be 10% more than or 10%
less than $28.15 per share. At the explicit direction of Seller, the Lason
Common Stock is to be issued in the name of Shareholders, pro rata. In
connection with the foregoing, on the Closing Date, Shareholders shall deliver
to Lason, Inc. a Lock-Up Agreement in mutually acceptable form pursuant to which
Shareholders will agree not to sell 50% of the Lason Common Stock paid to
Shareholders at the explicit direction of Seller pursuant to this Section 2.1
for a period of 12 months from the Closing Date and the remaining 50% of the
Lason Common Stock paid to Shareholders pursuant to this Section 2.1 for a
period of 24 months from the Closing Date. The cash portion of the Initial
Purchase Price will be used to pay off the debts set forth in Exhibit 3.2 and
release the associated liens on the Purchased Assets.
SECTION 2.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price
shall be allocated among the Purchased Assets in accordance with attached
EXHIBIT "2.2". Buyer and Seller acknowledge that the allocation reflected in
Exhibit 2.2 is predicated on September 30, 1997 financial information.
Accordingly, the parties agree to revise the numbers in conformance with a tax
basis closing date balance sheet which is to be prepared by Seller, subject to
the review and approval of Buyer, and submitted to Buyer (together with
applicable Seller tax returns, work sheets and work papers) as soon as possible
but no later than the earlier of: (i) 45
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days prior to Seller's filing of its tax return, or (ii) August 1, 1998. Buyer
and Seller agree to file duplicate IRS Forms 8594 with an allocation of the
Purchase Price in accordance with this such tax basis closing date balance sheet
and to file all other returns and reports in a manner consistent with the
allocations agreed to in this Section.
SECTION 2.3 ADDITIONAL PURCHASE PRICE. As additional
consideration for the acquisition of the Purchased Assets, Buyer will pay to
Seller up to $1,000,000.00 (the "Total Additional Purchase Price") predicated
upon the relationship of the actual EBIT for the Business for the 12 month
period following the Closing Date and the next 12 month period to certain
minimum and maximum target EBIT figures as follows:
A. Buyer shall calculate the EBIT of the Business for
the 12 month period following the Closing Date and for the next 12
month period (the "First 12 Month EBIT" and the "Second 12 Month EBIT,"
respectively). The maximum target EBIT of the Business for the 12 month
period following the Closing Date and for the next 12 month period are
hereinafter referred to as the "First Maximum Target EBIT" and the
"Second Maximum Target EBIT," respectively. The minimum target EBIT of
the Business for the 12 month period following the Closing Date and for
the next 12 month period are hereinafter referred to as the "First
Minimum Target EBIT" and the "Second Minimum Target EBIT,"
respectively. The First Maximum Target EBIT, the Second Maximum Target
EBIT, the First Minimum Target EBIT and the Second Minimum Target EBIT
will be determined by the parties prior to Closing and memorialized in
an amendment to this Agreement or in a separate letter agreement. If
the First 12 Month EBIT equals or exceeds the First Maximum Target
EBIT, Seller will receive an additional purchase price of $667,000.00
(the "First Additional Purchase Price"). If the Second 12 Month EBIT
equals or exceeds the Second Maximum Target EBIT, Seller will receive
an additional purchase price of $333,000.00 (the "Second Additional
Purchase Price"). To the extent the First 12 Month EBIT exceeds the
First Minimum Target EBIT, but is less than the First Maximum Target
EBIT, Seller shall receive a proportionate amount of the First
Additional Purchase Price. To the extent the Second 12 Month EBIT
exceeds the Second Minimum Target EBIT, but is less than the Second
Maximum Target EBIT, Seller shall receive a proportionate amount of the
Second Additional Purchase Price. (Example: If the actual First 12
Month EBIT is 50% of the amount between the First Minimum Target EBIT
and the First Maximum Target EBIT then, and in that event, Seller will
receive 50% of the First Additional Purchase Price). Notwithstanding
anything to the contrary set forth herein, all references to "12 Month
EBIT" and similar terms shall be understood to mean the 12 months
following the Closing Date plus that number of days from the Closing
Date to the last day of the month in which Closing takes place and the
same period in the succeeding year (the "Calculation Date").
B. The First Additional Purchase Price or any
proportionate amount thereof, if earned as set forth in Section 2.3 A.
above and the Second Additional Purchase Price or any proportionate
amount thereof, if earned as set forth in Section 2.3 A. above shall
each be paid by Buyer 50% in cash and 50% in cash or Lason, Inc. Common
Stock
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or in such other proportions of cash or Lason Common Stock as
determined by Buyer in its sole discretion provided that Seller will,
in no event, receive less than 50% in cash. For the purposes hereof,
the Lason Common Stock will be valued at the average closing price of
such stock for the 10 preceding trading days prior to the end of the 12
month period following the Closing Date and prior to the end of the
next 12 month period, respectively, as reported in the Wall Street
Journal published Index of NASDAQ National Market Issues. In connection
with the foregoing, on the Closing Date, Seller or Shareholders, as the
case may be, will deliver to Lason, Inc. a Lock-Up Agreement in
mutually acceptable form pursuant to which Seller or Shareholders will
agree not to sell any of the Lason Common Stock which may be delivered
to any of them in accordance with this Section 2.3 for a period of 6
months from and after the date it is respectively earned.
C. Buyer shall calculate the First 12 Month EBIT and
the Second 12 Month EBIT and the amounts of the First Additional
Purchase Price (the "First Payment") and the Second Additional Purchase
Price (the "Second Payment"), if any, payable to Seller within 60 days
of the 2 applicable Calculation Dates. The First Payment and the Second
Payment shall be delivered and paid to Seller within 5 business days
thereafter, together with statements of Buyer's Chief Financial Officer
providing the computations of the First 12 Month EBIT and the Second 12
Month EBIT and the First Payment and Second Payment in such detail as
is reasonably necessary to substantiate their respective
determinations. In the event that Seller disputes any aspect of the
statements, the Seller shall so notify Buyer within 30 days following
its receipt thereof. In such event, the parties, together with their
independent public accounts, shall meet and discuss such dispute in a
good faith effort to resolve such dispute. If no resolution is reached
within 30 days of Seller's notice, then the dispute shall be submitted
to and resolved by arbitration pursuant to Section 13.13 hereof.
D. For the purposes hereof, the term "EBIT" is
defined as the pre-tax net income before net interest expense and
before any additional expense attributable to deductions including
amortization or depreciation of the acquisition costs of the
transactions contemplated by this paragraph of the Buyer from the
Business determined on a stand-alone basis in accordance with generally
accepted accounting principles consistently applied, (i) plus, to the
extent deducted in determining net income and without duplication, the
sum of any extraordinary losses; (ii) minus, to the extent included in
determining net income and without duplication, any extraordinary
gains.
E. Subject to the ultimate governance authority of
the Boards of Directors of Buyer and Lason, Inc. in order to create no
material impediment to Seller's opportunity to achieve the Total
Additional Purchase Price during the period of time when the Total
Additional Purchase Price can be earned, Buyer will operate the
Business as if it were a free-standing division and further will
operate the Business in all material respects in a manner consistent
with the manner in which it was operated prior to the acquisition of
the Purchased Assets by Buyer except that: (i) the Business will
participate
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in Buyer's centralized accounting, record keeping, cash management and
budgeting process in a fair and consistent manner as Buyer's other
divisions and subsidiaries, (ii) the Business will participate in
Buyer's centralized purchasing system as may be in place from time to
time in a fair and consistent manner as Buyer's other divisions and
subsidiaries; (iii) the Business will participate in other similar
centralized functions in a fair and consistent manner as Buyer's other
divisions and subsidiaries; (iv) the Business will participate in
Buyer's benefit program; and (v) the work constituting the Business
will continue to be done by the business unit contemplated herein, but
if such work is diverted to other divisions or subsidiaries within
Buyer, Buyer will fairly credit such work to the operating income of
the Business. Further, in no event will any of the corporate overhead
of Buyer and Lason, Inc., including parent company charges, management
fee charges or any similar charges, be allocated to the Business, it
being agreed that only direct costs of the Business shall be so
attributed. In the event that Seller believes that a change in
operational policy will unduly impinge upon Seller's opportunity to
earn the Total Additional Purchase Price, Shareholders and a person or
persons designated by Buyer shall meet in order to discuss in good
faith an equitable resolution to Seller's concerns to the extent
possible and if no such resolution can be reached, to submit their
claim to arbitration pursuant to Section 13.13 hereof.
SECTION 2.4 ESCROW. The unpaid $250,000.00 in cash (the
"Escrowed Funds") and the $1,000,000.00 of the Lason Common Stock (the "Escrowed
Stock") referenced in Section 2.1 above are to be paid into escrow with Seyburn,
Kahn, Ginn, Bess, Xxxxxx and Xxxxxx, P.C. ("Buyer's Counsel") pursuant to the
terms and conditions of a mutually acceptable escrow agreement (the "Escrow
Agreement"). The Escrow Agreement is to provide, inter alia, as follows:
A. With respect to the Escrowed Funds:
1. The Escrowed Funds are to be deposited by
Buyer's Counsel into an interest-bearing account, with
interest to be delivered to the party which is entitled to
receive it under the Escrow Agreement.
2. Within 90 days following the Closing
Date, Buyer will prepare and deliver to Seller an unaudited
balance sheet for the Business determined on a stand-alone
basis dated as of the Closing Date (the "Closing Date Balance
Sheet") showing the Net Current Working Capital of Seller as
that term is defined in subpart (5) below (the "Closing Date
Net Current Working Capital"). If the Closing Date Net Current
Working Capital is less than $4,756,000 (the "Target Capital
Base"), the Initial Purchase Price shall be reduced on a
dollar-for-dollar basis.
3. If the Closing Date Net Current Working
Capital is greater than the Target Capital Base, then, and in
that event, the Initial Purchase Price shall be increased on a
dollar-for-dollar basis.
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4. Within 5 days of Buyer's determination of
the Closing Date Net Current Working Capital, Buyer shall
deliver to Seller and Buyer's Counsel a statement setting
forth its computation of the Closing Date Net Current Working
Capital, the amount of any reduction or increase to the
Initial Purchase Price, and the proper distribution of the
Escrowed Funds (including interest). If Seller disputes the
accuracy of the Closing Date Net Current Working Capital and
the amount of the reduction or increase to the Initial
Purchase Price, Seller shall notify Buyer within 10 days of
delivery of the statement, and Buyer and Seller shall work in
good faith to resolve their differences amicably. If Buyer and
Seller come to an agreement on the amount of the reduction or
increase to the Initial Purchase Price and the proper
distribution of the Escrowed Funds (including interest), they
shall each notify Buyer's Counsel within 120 days of the
Closing Date, and Buyer's Counsel will release the Escrowed
Funds pursuant to the terms of such agreement. If Buyer and
Seller do not notify Buyer's Counsel of their agreement on the
amount of the reduction and the proper distribution of the
Escrowed Funds (including interest) on or before the 120th day
after the Closing Date, unless Seller has submitted the
dispute to arbitration pursuant to Section 13.13 hereof and so
notified Buyer's Counsel (together with proof of such
submission), Buyer's Counsel shall release the Escrowed Funds
(including interest) to Buyer and/or Seller as set forth in
Buyer's statement. If Seller has submitted the dispute to
arbitration as provided herein, Buyer's Counsel will release
the Escrowed Funds in accordance with the determination of the
arbitrators. In all events, the arbitrator for this particular
dispute is to be a certified public accountant familiar with
transactions of this type.
5. For the purposes hereof, the term "Net
Current Working Capital" is hereby defined to consist of the
following, determined in accordance with generally accepted
accounting principles consistently applied:
- Cash
- Accounts receivable
- Deposits on equipment
- Inventories
- Prepaid expenses
Less:
- Accounts payable
- Other payables
- Accrued expenses
In connection with the determination of Closing Date Net
Current Working Capital, the following facts and protocols are
acknowledged by and agreed to by the parties hereto: (i) the
Target Capital Base was arrived at by starting with the June
30, 1997 Net Current Working Capital of $5,506,000 and
deducting $750,000
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from that amount; (ii) Shareholders may withdraw cash from Seller in
order to pay taxes for the period of January 1, 1997 to the Closing
Date on the condition that if such withdrawal results in the Closing
Date Net Current Working Capital being less than the Target Capital
Base, Seller and Shareholders will be responsible for refunding a
portion of the Purchase Price to Buyer, as aforesaid; (iii) the
computation of Closing Date Net Working Capital will be done in the
same manner as was done in computing the June 30, 1997 Net Current
Working Capital as set forth in the parties' letter of intent dated
September 19, 1997 (i.e., with nothing being included for inventories
and accrued expenses except that the applicable amount for nonaccrued
vacation pay (approximately $170,000) will be included as a deduction
in the computation of Net Current Working Capital).
B. With respect to the Escrowed Stock:
1. In order to: (i) facilitate the payment
of any indemnification owed to Buyer by Seller and/or
Shareholders pursuant to Section 12.1 hereof and (ii) to
insure the payment of certain liabilities under Section 6812
of the Revenue and Taxation Code and Section 1731 of the
Unemployment Insurance Code of the State of California, Seller
and Shareholders agree to escrow the Escrowed Stock with
Buyer's Counsel and to execute and deposit with Buyer's
Counsel assignments separate from certificate in blank to
enable a reassignment of such Escrowed Stock.
2. If Buyer receives notice from either the
State Board of Equalization or the California Department of
Employment Development indicating that monies are due to the
state, it shall notify Seller of same. Seller shall then have
3 business days to tender payment to Buyer. If Buyer does not
receive payment as aforesaid, it shall notify Buyer's counsel
of the amount of Escrowed Stock to be returned to it in order
for it to make such payment or payments.
3. If Buyer notifies Buyer's Counsel of a
claim(s) for indemnification, made pursuant to Article 12, and
on how the Escrowed Stock should be divided between Seller and
Buyer, at any time during the 6 months following the Closing
Date, Buyer's Counsel will perform as follows:
a. If Buyer and Seller come to an
agreement on the amount of the claim(s), and on how
the Escrowed Stock should be divided between Seller
and Buyer, they shall each notify Buyer's Counsel of
their agreement within 6 months of the Closing Date,
and Buyer's Counsel will release the Escrowed Stock
pursuant to the terms of such agreement.
b. If Buyer and Seller do not notify
Buyer's Counsel of their agreement on the amount of
the claim(s) and on how the Escrowed Stock should be
divided between Seller and Buyer on or before 6
months
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after the Closing Date, unless Seller has submitted
the dispute to arbitration pursuant to Section 13.13
hereof and so notified Buyer's Counsel (together with
proof of such submission), Buyer's Counsel shall
release the Escrowed Stock to the Buyer as set forth
in Buyer's notice. If Seller has submitted the
dispute into arbitration as provided herein, Buyer's
Counsel will release the Escrowed Stock in accordance
with the determination of the arbitrators.
c. For purposes of this Section 2.4
B., the Escrowed Stock shall be valued at the price
per share set forth in Section 2.1 hereof.
7. If Buyer's Counsel is not notified by
Buyer of any claim(s) for indemnification, made pursuant to
Article 12 hereof, during the 6 months following the Closing
Date, Buyer's Counsel shall release the Escrowed Stock to
Seller.
C. Notwithstanding the foregoing, after disbursement
of the Escrowed Funds and/or Escrowed Stock, Seller and/or
Shareholders, as applicable, shall remain liable for any reduction in
the Initial Purchase Price in excess of the Escrowed Funds and/or shall
remain liable for any claim(s) of indemnification in excess of the
Escrowed Stock. Any such additional liability is to be paid within 5
business days of when due. Any such additional liability not paid when
due is to bear interest at the Prime Rate of Interest charged by First
Union National Bank plus 5% per annum until paid but, in no event,
greater than the maximum amount allowed under applicable law. Further,
any such additional liability may be set off, dollar-for-dollar,
against the First Additional Purchase Price and Second Additional
Purchase Price. Similarly, any increase in the Initial Purchase Price
is to be paid by Buyer within 5 business days of the date when same is
determined to be due. Any such additional Purchase Price not paid when
due is to bear interest at the Prime Rate of Interest charged by First
Union National Bank plus 5% per annum until paid but, in no event,
greater than the maximum amount allowed under applicable law.
ARTICLE 3
ASSUMPTION OF LIABILITIES
SECTION 3.1 LIABILITIES TO BE ASSUMED BY BUYER. At the
Closing, Buyer shall assume and agree to perform and discharge when and as due
those certain liabilities and obligations set forth in this Section , as the
same may exist at or accrue following the Closing Date, and no others (the
"ASSUMED Liabilities"):
3.1.1 ACCOUNTS PAYABLE AND ORDINARY COURSE
LIABILITIES. Accounts payable and accrued expenses of Seller incurred
in the ordinary course of the Business and properly classified as
liabilities in accordance with generally accepted accounting
principles. The accounts payable and ordinary course liabilities as of
September 30, 1997,
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are listed on EXHIBIT 3.1.1 hereto. Notwithstanding that fact, Buyer is
responsible for all accounts payable and ordinary course liabilities as
of the Closing Date (including, but not limited to, liabilities related
to a certain collator and two-color printer), but expressly excluding
liabilities described in Section 3.2 below and those set forth on
Exhibit 3.2 attached hereto. Notwithstanding the above, except for
those liabilities set forth on Exhibit 3.1.1, and accounts payable and
ordinary course liabilities as of the Closing Date, Seller, and not
Buyer, remains solely liable for any and all capital leases and
installment purchase contracts relating to the Purchased Assets.
3.1.2 EXECUTORY AGREEMENTS. Liabilities and
obligations which exist at or accrue following the Closing Date under
(i) the Contracts described in Exhibit "4.24" hereof (including
liabilities under various operating equipment leases); (ii) executory
contracts, agreements or other commitments entered into in the ordinary
course of business in existence on the date hereof and not required to
be disclosed pursuant to Exhibit "4.24"; and (iii) executory contracts,
agreements or other commitments entered into in the ordinary course of
business between the date hereof and the Closing, in accordance with
Section 6.2 hereof.
SECTION 3.2 LIABILITIES OF SELLER NOT ASSUMED. Except as
specifically provided in Section 3.1 hereof, Buyer shall not assume, or in any
way become liable for, any liabilities or obligations of Seller, the
Shareholders or the Business of any kind or nature, whether accrued, absolute,
contingent or otherwise, or whether due or to become due, or otherwise, whether
known or unknown, arising out of events, transactions or facts which shall have
occurred, arisen or existed on or prior to the Closing Date, which liabilities
and obligations, if ever in existence, shall continue to be liabilities and
obligations of Seller or the Shareholders, as the case may be. Specifically, but
without limiting the foregoing, Buyer shall not assume or be liable for those
specific liabilities, including those certain long term debts and notes payable,
set forth on the attached EXHIBIT "3.2". All of the foregoing liabilities,
together with all of the following are hereinafter collectively referred to as
the AExcluded Liabilities":
3.2.1 VIOLATION OF REPRESENTATIONS, ETC. Debts,
obligations or liabilities which arise or exist in violation of any of
the representations, warranties, covenants or agreements of Seller or
the Shareholders contained in this Agreement or in any statement or
certificate delivered to Buyer by or on behalf of Seller or the
Shareholders on or before the Closing Date pursuant to this Agreement
or in connection with the transactions contemplated hereby.
3.2.2 UNDISCLOSED LIABILITIES. Debts, obligations or
liabilities of any kind or nature, whether absolute, accrued,
contingent or otherwise, required by this Agreement to be disclosed to
Buyer, if not so disclosed in writing and specifically assumed in
writing by Buyer.
3.2.3 CONTINGENT LIABILITIES. Contingent liabilities
of Seller or the Shareholders of any kind arising or existing on or
prior to the Closing Date, including,
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but not limited to, claims, proceedings or causes of action which are
currently or hereafter become, the subject of claims, assertions,
litigation or arbitration.
3.2.4 TAXES DUE ON SALE. Debts, obligations or
liabilities of Seller or the Shareholders for Federal, state, county,
local, foreign or other income, sales, use or transfer taxes or
assessments (including interest and penalties thereon, if any) of any
kind whatsoever arising from, based upon or related to the sale,
transfer or delivery of the Purchased Assets pursuant to this
Agreement, except to the extent set forth in Section 10.4 hereof.
3.2.5 OTHER TAXES. Debts, obligations or liabilities
of Seller or the Shareholders, whether absolute, accrued, contingent or
otherwise, for (i) Federal and state income taxes; (ii) all taxes
relating to any real property, including without limitation the real
property included in the Purchased Assets; (iii) all franchise taxes of
Seller, (including interest and penalties thereon, if any); and (iv)
any other taxes of Seller or the Shareholders.
3.2.6 PENSION AND OTHER EMPLOYEE PLANS. Debts,
obligations or liabilities that accrue under any pension, profit
sharing, savings, retirement, health, medical, life, disability,
dental, deferred compensation, stock option, bonus, incentive,
severance pay, group insurance or other similar employee plans or
arrangements, or under any policies, handbooks, custom or practice,
collective bargaining agreements, or employment agreements
(collectively the "PLANS"), whether express or implied, applicable to
any of Seller's employees that accrue at any time through and including
the Closing Date or for claims of wrongful discharge, employment
discrimination or other similar actions at any time through and
including the Closing Date and for claims after the Closing Date which
relate to any of Seller's employees not being offered employment by
Buyer.
3.2.7 PERSONAL INJURY, PRODUCTS LIABILITY AND RECALL
CLAIMS. Debts, expenses, obligations or liabilities of Seller or the
Shareholders arising out of any claim for personal injury (including
worker's compensation or otherwise), property damage, product recall,
product liability or strict liability, arising from events (including
the shipment of goods) occurring on or prior to the Closing Date
(whether or not such claim is then asserted).
3.2.8 ENVIRONMENTAL MATTERS. Any debts, expenses,
obligations or liabilities arising out of claims alleging damage to the
environment or similar claims with respect to the conduct of the
Business or the ownership or operation by Seller or the Shareholders of
real property on or before the Closing Date.
3.2.9 INFRINGEMENTS. Any liability or obligation of
Seller or the Shareholders arising out of any wrongful or unlawful
violation or infringement of any Proprietary Right of any person or
entity occurring on or prior to the Closing Date.
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3.2.10 INDEBTEDNESS. Except as provided in
Sections 3.1.1. and 3.1.2, any liabilities or obligations in respect of
the borrowing of money or issuance of any note, bond, indenture, loan,
credit agreement or other evidence of indebtedness or direct or
indirect guaranty or assumption of indebtedness, liabilities or
obligations of others, whether or not disclosed in this Agreement or
otherwise ("INDEBTEDNESS") of Seller or the Shareholders, including,
without limitation any Indebtedness owed to the Shareholders or any
other affiliates of Seller.
3.2.11 LITIGATION. Debts, expenses, obligations or
liabilities of Seller or the Shareholders arising out of any claim,
action, suit or proceeding pending on Closing Date or arising out of or
relating to matters or events occurring on or prior to the Closing
Date, including without limitation, any claims relating to inventory
shrinkage.
3.2.12 REBATES. Any and all liabilities or
obligations of Seller in respect of rebates payable to any of Seller's
customers relating to products sold, ordered or shipped before the
Closing Date pursuant to the terms of Seller's agreements with any such
customers.
3.2.13 BONUSES. Any and all liabilities or
obligations of Seller for bonus payments to its employees for periods
prior to the Closing Date.
3.2.14 EXCLUDED ASSETS. Any liabilities or
obligations arising out of or relating to the Excluded Assets.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES
Seller and Shareholders, jointly and severally, represent and
warrant the following to Buyer (and acknowledge and confirm that Buyer is
relying on these representations and warranties in entering into this Agreement
and that full, fair and adequate consideration as described in this Agreement
has been received therefor).
SECTION 4.1 ORGANIZATION, STANDING AND POWER. Seller is duly
organized, validly existing and in good standing under the laws of the State of
California and has all necessary corporate power to own its properties and to
carry on its business as now owned and operated by it. Other than California,
there is no jurisdiction in which the nature of Seller's business or its
properties requires that Seller be duly qualified to do intrastate business.
SECTION 4.2 SUBSIDIARIES. Seller 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 (the
"SUBSIDIARIES").
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SECTION 4.3 OFFICERS, DIRECTORS AND SHAREHOLDERS. The
authorized capital stock of Seller consists of 600 shares of common stock of
$100.00 par value, of which 400 shares are currently issued and outstanding.
Xxxxxx X. Xxxxxx is the President and a Director of Seller and owns, together
with his wife, Xxxx X. Xxxxxx, as Trustees of the Xxxxxx Family Trust,
beneficially and of record 200 shares of common stock of Seller. Xxx Xxx is the
Vice President, Secretary and Treasurer, and a Director of Seller and owns as
Trustee of the Xxx Xxx Trust beneficially and of record 200 shares of common
stock of Seller. Neither Seller nor the Shareholders have any obligation to
issue or transfer any shares of common stock to any third party, except for the
fact that 100 of the 200 shares owned by Xxx Xxx are pledged to Xxxxx Xxx in
order to secure certain obligations of Xxx Xxx to his former wife, Xxxxx Xxx.
Shareholders directly hold all of the voting power for all of the issued and
outstanding voting stock of Seller.
SECTION 4.4 AUTHORITIES AND CONSENTS. The execution, delivery
and performance of this Agreement by Seller, and the consummation of the
transactions contemplated hereby, have been duly and validly authorized by the
Board of Directors of Seller. Seller and Shareholders 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 Seller, 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 "4.14" and "4.24", and except for notification and expiration of the
waiting period pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976 (the "Act")), is required in connection with the execution and delivery by
Seller and Shareholders of this Agreement or the consummation by Seller and
Shareholders of the transactions contemplated hereby.
SECTION 4.5 NO BREACH OR VIOLATION. The execution, delivery
and performance of this Agreement by Seller, and the consummation of the
transactions contemplated hereby, does not and will not result in or constitute
any of the following: (i) 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 Seller, or any lease, license, promissory note, security agreement,
commitment, indenture, mortgage, deed of trust or other agreement, instrument or
arrangement to which Seller is a party or by which it or its property is bound,
except as set forth in EXHIBIT "4.5" hereto; (ii) 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 Seller; or (iii) the creation or imposition
of any lien, charge or encumbrance on any of the properties of Seller.
SECTION 4.6 FINANCIAL STATEMENTS. As set forth in Section 8.4
hereof, prior to the Closing Date, Seller will deliver to Buyer: (i) unaudited
financial statements including balance sheets, statements of income and retained
earnings and statements of changes in financial position for Seller as of and
for the years ended December 31, 1995 and December 31, 1996 prepared by Seller;
and (ii) an unaudited balance sheet and statement of income and retained
earnings for Seller as of and for the 9 months ended September 30, 1997, and as
of and for the month
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preceding the month in which the Closing Date actually occurs, both of which
will also be prepared by Seller.
All of the financial statements referred to above whether
previously delivered or yet to be delivered are hereinafter referred to as the
"FINANCIAL STATEMENTS" The Financial Statements present fairly the financial
positions of Seller to which they relate as at the respective dates thereof, and
the related results of operations of Seller for the periods therein referred to.
SECTION 4.7 BOOKS AND RECORDS. The stock record books of
Seller are complete and correct. The other books of account and other records
(other than minute books) of Seller are complete and correct in all material
respects and all such records have been maintained in accordance with sound
business practices in Shareholders' reasonable judgment. Except for omissions
which would not result in a material adverse effect on Seller, the minute books
of Seller contain materially accurate and complete records of all meetings held,
and corporate action taken by, the Shareholders, the Board of Directors, and
committees of the Board of Directors of Seller.
SECTION 4.8 UNDISCLOSED LIABILITIES. Except as set forth in
EXHIBIT "4.8", Seller has no material debts, liabilities or obligations of any
kind, whether accrued, absolute, contingent or otherwise, which should have been
so reflected or reserved against or disclosed in Seller's balance sheet dated as
of September 30, 1997, included in the Financial Statements, except for those
that may have been incurred subsequent to the date of that balance sheet. All
debts, liabilities and obligations incurred after September 30, 1997 were
incurred in the ordinary course of business and are usual and normal in amount
both individually and in the aggregate.
SECTION 4.9 ABSENCE OF CERTAIN CHANGES. Except as set forth in
EXHIBIT "4.9", since January 1, 1997, the business of Seller has been operated
only in the ordinary course and, without limiting the generality of the
foregoing, Seller 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 Shareholders) or redeemed, purchased or
otherwise acquired, directly or indirectly, any of its capital stock;
B. Sustained any damage, destruction or loss, by
reason of fire, explosion, earthquake, casualty, labor trouble,
requisition or taking of property by any government or agency thereof,
windstorm, embargo, riot, act of God or public enemy, flood, accident,
revocation of license or right to do business, total or partial
termination, suspension, default or modification of contracts,
governmental restriction or regulation, other calamity or other similar
or dissimilar event (whether or not covered by insurance), materially
and adversely affecting its condition (financial or otherwise),
earnings, business, assets, liabilities, properties, operations or
prospects;
C. Had any material adverse change in its condition
(financial or otherwise), earnings, business, assets, properties,
liabilities, operations or prospects;
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D. Issued, authorized for issuance, or sold any
equity security, bond, note or other security, or granted, or entered
into, any commitment or obligation to issue or sell any such equity
security, bond, note or other security, whether pursuant to offers,
stock option agreements, stock bonus agreements, stock purchase plans,
incentive compensation plans, warrants, calls, conversion rights or
otherwise;
E. Incurred additional debt for borrowed money, or
incurred any obligation or liability (fixed, contingent or otherwise)
except in the ordinary and usual course of its business;
F. Paid any obligation or liability (fixed,
contingent or otherwise), or discharged or satisfied any lien or
encumbrance, or settled any liability, claim, dispute, proceeding, suit
or appeal, pending or threatened against it or any of its assets or
properties, except in the ordinary and usual course of its business;
G. Mortgaged, pledged, otherwise encumbered or
subjected to lien any of its assets or properties, tangible or
intangible, except for liens for current taxes which are not yet due
and payable and purchase-money liens arising out of the purchase or
sale of products or services made in the ordinary and usual course of
its business;
H. Sold, transferred, leased, licensed or otherwise
disposed of any asset or property, tangible or intangible, except in
the ordinary and usual course of its business, or discontinued any
product line or the manufacture, sale or other disposition of any of
its products or services;
I. Purchased or otherwise acquired any debt or equity
securities of any corporation, partnership, joint venture, firm or
other entity;
J. Made any expenditure for the purchase,
acquisition, construction or improvement of a capital asset, except in
the ordinary and usual course of its business;
K. Entered into any transaction or contract, or made
any commitment to do the same, except in the ordinary and usual course
of business and not involving an amount in any case in excess of
$5,000.00;
L. Waived any right or claim or canceled any debts or
claims other than in the ordinary and usual course of its business 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;
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O. Paid to or for the benefit of any of its
directors, officers, employees or shareholders any compensation of any
kind other than base wages, salaries and benefits at times and rates in
effect prior to January 1, 1997;
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 reasonably
be expected to materially and adversely affect its condition (financial
or otherwise), earnings, business, assets, liabilities, properties,
operations or prospects;
S. Changed its accounting methods or practices
(including, without limitation, any change in depreciation or
amortization policies or rates);
T. Revalued any of its assets;
U. Increased the salary or other compensation payable
or to become payable to any of its officers, directors or employees, or
declared, paid or committed to pay a bonus or other additional salary
or compensation to any such person;
V. Made any loan to any person or entity, or
guaranteed any loan;
W. Had any other event or condition of any character
that has or might reasonably be expected to 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 4.10 TAXES. Except as set forth in EXHIBIT "4.10"
within the times and in the manner prescribed by law, Seller 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 "4.10", there are no
claims pending against Seller for past-due taxes, nor has Seller been notified
of any such claims. Except as set forth in Exhibit "4.10", 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 Seller, and
(ii) are no outstanding waivers or agreements by Seller for the extension of the
time for the assessment of any tax. The tax returns of Seller, 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 September 30, 1997, and included in the Financial
Statements, are adequate for any and all taxes for the period ending the date of
such balance sheet and for all prior periods, whether or not disputed. As used
in this Section 4.10, the terms "tax" and Ataxes" refer to any tax, assessment,
additions to tax, fee, penalty, interest or other governmental charge
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imposed by any federal, state, county, local, foreign, commonwealth or other
governmental entity. Seller has never filed, nor will it file, any consent under
Section 341(f) of the Internal Revenue Code of 1986, as amended on or before the
Closing Date.
SECTION 4.11 RECEIVABLES AND ACCOUNTS PAYABLE. Except as set
forth in EXHIBIT "4.11", all receivables of Seller 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 material pertinent facts known to Seller as of the date hereof, and
represent valid and binding obligations of the debtors requiring no further
performance by Seller and are collectible in full without any set-off whatsoever
within 90 days of the date on which such receivable was created. Except as set
forth in Exhibit "4.11", reserves for doubtful accounts have been established on
the books of Seller in accordance with generally accepted accounting principles
consistently applied and are reflected on the balance sheets included in the
Financial Statements. The accounts payable listed in Exhibit 3.1.1 are all of
the accounts payable of Seller and such list is complete and accurate.
SECTION 4.12 INVESTMENTS AND INVESTMENT SECURITIES. Seller has
no interest, of record or beneficial, direct or indirect, in any governmental
bonds or notes, other investment securities assets held for investment except as
set forth in EXHIBIT "4.12".
SECTION 4.13 REAL PROPERTY.
A. EXHIBIT "4.13" sets forth a complete and accurate
address of each parcel of real property, together with all buildings,
fixtures and other improvements located thereon (collectively, the
"REAL PROPERTY") which is either owned by or leased to Seller.
B. To the best of Seller's and Shareholders'
knowledge, the Real Property and the current and currently planned use
thereof by Seller is and will be in material 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 Seller by any governmental
authority having jurisdiction over the Real Property or by any other
person entitled to enforce the same.
D. Seller has not subjected, and will not hereafter
subject, the Real Property or any portion thereof to any lease (except
a lease by Seller), 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 "4.13", other than any of the
foregoing that would not reasonably be expected
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to have, individually or in the aggregate, a material affect on the
business or financial results of Seller.
E. To the best of Selling Partners' knowledge, there
are no unpaid taxes, assessments (special, general or otherwise) or
bonds of any nature affecting the Real Property or any portion thereof,
that are due and payable by Seller.
SECTION 4.14 LEASES. EXHIBIT "4.14" lists all leases, rental
agreements, conditional sales contracts and other similar agreements
(collectively, "LEASES"), as amended, which cannot be terminated by Seller
without liability at any time upon 30 days' notice or which involve payment by
Seller in the future of more than $5,000.00, under which Seller holds or uses
any real or personal property or leases any of the same to others. Seller has
complied with the material provisions of all Leases, and all such Leases are
valid and enforceable by Seller 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, Seller 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
there is no title defect to which any of the Leases is subject which might
reasonably be expected at any time to have a material adverse effect on Seller
or its condition (financial or other), earnings, assets, liabilities, business,
operations or prospects. Exhibit "4.14" sets out any and all advances, deposits
and prepayments made by Seller under the Leases.
SECTION 4.15 ENVIRONMENTAL MATTERS.
A. None of the operations or property of Seller 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. " 9601 et seq., Occupational Safety and Health Act, 29 U.S.C.
" 651 et seq., Resource Conservation and Recovery Act, 42 U.S.C. " 6901
et seq., Clean Air Act, 42 U.S.C. " 7401 et seq., Federal Water
Pollution Control Act, 33 U.S.C. " 1251 et seq., and any similar
federal or state acts or statutes now in effect), which requirements
are sometimes herein collectively referred to as the "ENVIRONMENTAL
LAWS".
B. Neither Seller nor the Shareholders have any
knowledge of a ARelease" nor has any Selling Party 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 AContaminant" (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),
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or indicating past or present treatment, storage (other than for less
than 90 days) or disposal of a "hazardous waste" (as that term is
defined under 40 Code of Federal Regulations Part 261 or any state
equivalent) or reporting a material violation of any applicable
Environmental Laws, other than Releases that would not reasonably be
expected to have, individually or in the aggregate, a material adverse
effect on the business of financial results of Seller.
C. Neither Seller nor the Shareholders have received
any written notice, claim or report from any governmental authority or
third party to the effect that Seller 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 4.16 PROPRIETARY RIGHTS. EXHIBIT "4.16" 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 Seller, used in the
conduct of its business, or in which Seller has any rights or licenses
immunities and of all patent licensing and similar arrangements to which Seller
is a party. All Proprietary Rights are, valid and in full force and effect.
SECTION 4.17 NON-INFRINGEMENT; AGREEMENTS. Except as set forth
in EXHIBIT "4.17", no Proprietary Right is the subject of litigation or other
adversarial proceedings known to Selling Parties. To the best of Selling
Parties' knowledge, no present or presently proposed operation or activity of
Seller infringes the rights of any other person or entity, and no person or
entity is infringing the Proprietary Rights of Seller in any material respect.
Seller has the right and authority, including without limitation adequate
licenses, to use such Proprietary Rights as are necessary to enable Seller to
conduct and continue to conduct all phases of its business in the manner
presently conducted by it. Except as set forth in Exhibit "4.17", Seller 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, Seller is not a party to any agreement:
(i) prohibiting 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 4.18 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 Seller, its
directors, officers, employees, properties, assets and business are listed and
briefly described on EXHIBIT "4.18". All of said policies are valid and in good
standing. Seller has not experienced losses or made claims under any of such
policies which are extraordinary for a company of its size except as are set
forth on Exhibit "4.18".
SECTION 4.19 INTERESTED TRANSACTIONS. Seller 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 month's salary at no more
than the current annual rate) to any officer, director, employee or stockholder
of Seller or any relative of any such person or any corporation or other
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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 "4.19".
SECTION 4.20 CUSTOMERS AND SALES. A correct and current list
of all customers of Seller whose annual purchases exceed $10,000.00, is set
forth on EXHIBIT "4.20". 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 Seller which have not yet been delivered intends to
cancel such order. Selling Parties have no knowledge that any of the listed
customers of Seller intend to cease doing business with Seller, or materially
alter the amount of the business that they are presently doing with Seller.
SECTION 4.21 EXISTING EMPLOYMENT CONTRACTS AND/OR REMUNERATION
AGREEMENTS. EXHIBIT "4.21" sets forth a complete and accurate list of all
employment contracts or other agreements or arrangements providing for employee
remuneration or benefits to which Seller is a party or by which Seller is bound,
copies of the originals of which have been provided to Buyer. All such contracts
and arrangements are in full force and effect, and neither Seller nor any other
party is in default under any such contract or arrangement, nor are there any
material amendments, modifications, changes or releases thereto, written or
oral. There have been no claims of defaults and there are no facts or conditions
which if continued, or upon notice, will result in a default under such
contracts or arrangements. There is no pending or, to the Selling Parties' best
knowledge, threatened labor dispute, strike or work stoppage affecting the
business of Seller.
SECTION 4.22 EMPLOYEE BENEFITS PLANS. EXHIBIT "4.22" sets
forth a complete and accurate list of the Plans (including any plan within the
meaning of Section 3(3) of the Employment Retirement Income Security Act), to
which Seller is a party or by which Seller is bound, copies of which have
previously been delivered to Buyer. There are no unfunded liabilities or other
obligations of Seller with respect to any of the Plans except as set forth on
Exhibit "4.22" hereto.
SECTION 4.23 WORKERS COMPENSATION; EMPLOYMENT DISCRIMINATION;
LABOR RELATIONS. Seller 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 Seller
currently pending or to Selling Parties' best knowledge, threatened before any
state or federal court or state or federal administrative agency, tribunal,
commission or board and no facts or circumstances exist which might reasonably
be expected to result in the filing or commencement of any such proceeding. All
currently pending or outstanding worker's compensation claims are listed on
EXHIBIT "4.23" attached hereto and all such claims are fully insured against. To
Selling Parties' best knowledge, there is no effort being made to organize the
employees of Seller into any collective bargaining unit or to solicit them to
join any labor organization, and Seller 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. Seller is not bound by any prior court,
administrative agency, tribunal, commission or board, decree, judgment,
decision, arbitration agreement or settlement
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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 Seller or
the transactions contemplated hereby. Except as set forth on Exhibit A4.23",
there is no unfair labor practice complaint against Seller pending before the
National Labor Relations Board.
SECTION 4.24 OTHER CONTRACTS. EXHIBIT "4.24" lists and briefly
describes all contracts, agreements, commitments, guarantees, letters of intent,
understandings or other arrangements of a contractual nature, written or oral
(including, but not limited to, franchise, patent, trademark and royalty
agreements), other than outstanding purchase orders made in the ordinary course
of business and other than as listed in any other schedule hereto, to which
Seller is a party and which: (i) involve payment by Seller of more than
$10,000.00; or (ii) materially affect the condition (financial or other),
earnings, assets, liabilities, business, operations or prospects of Seller.
Seller 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 is
not in material default and has not claimed default under any thereof.
SECTION 4.25 OFFICERS AND DIRECTORS, ETC. EXHIBIT "4.25" is a
true and complete list of:
A. The names of all present officers and directors of
Seller, 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 have been provided to Buyer);
B. The names, titles and annual compensation of all
salaried employees of Seller whose compensation (in whatever form) from
Seller as of the date hereof will equal or exceed or which will be
likely to exceed an annual rate of $40,000.00 in 1997 or which equaled
such amount in the year ended December 31, 1996.
C. The names of all persons holding tax related or
other powers of attorney from Seller and a summary of the terms of each
such power of attorney; and
D. 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 Seller.
SECTION 4.26 LITIGATION AND CLAIMS. Except as set forth on
EXHIBIT "4.26", 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) no other unresolved claim made against Seller 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 Seller has received within the 12 months
preceding the date hereof
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concerning, or relating to, complaints or expressions of dissatisfaction with
the products, services or personnel of Seller, which Complaints, either
individually, or in the aggregate, might reasonably be expected to result in a
material adverse change to the condition (financial or other), earnings,
business, assets, operations or prospects of Seller are listed on Exhibit "4.26"
and Buyer has been provided with accurate and complete copies of same. Except as
set forth on Exhibit "4.26", Seller is not presently engaged in any legal action
to recover monies due to it or damages sustained by it.
SECTION 4.27 INVENTORY. The inventory of Seller, including all
raw materials, work-in-process and finished goods, reflected in the Financial
Statements, and the inventory acquired since the date thereof, net, in each
case, of provisions for shrinkage and obsolescence, if any, reflected on the
Financial Statements and Seller's books and records, are and will at the Closing
Date consist of items of a quantity and quality which are usable and salable in
the ordinary course of the business of Seller consistent with past practice.
SECTION 4.28 BANK ACCOUNTS, GUARANTEES AND POWERS. EXHIBIT
"4.28" sets forth: (a) a list of all accounts, borrowing resolutions and deposit
boxes maintained by Seller at any bank or other financial institution and the
names of the persons authorized to effect transactions in such accounts and with
access to such boxes; (b) all agreements or commitments of Seller guaranteeing
the payment of money or the performance of other contracts by Seller or by any
third persons; and (c) the names of all persons, firms, associations,
corporations or business organizations holding guard or special powers of
attorney from Seller, together with a summary of the terms thereof.
SECTION 4.29 GENERAL LIABILITY. Selling Parties have no
knowledge of any statement of facts or the occurrence of any event that would
reasonably be expected to form the basis for any present tort claim against
Seller not covered by insurance.
SECTION 4.30 OTHER TANGIBLE PERSONAL PROPERTY. EXHIBIT "4.30"
contains a complete and accurate list and brief description of all machinery,
tools, dies, appliances, vehicles, furniture, equipment (including essential
replacement parts) and other tangible personal property of any kind and
description, other than inventories, owned or leased by Seller (the "TANGIBLE
PERSONAL PROPERTY"). The Tangible Personal Property constitutes all tangible
personal property necessary for the conduct by Seller of its business as now
conducted. All motor vehicles listed on Exhibit A4.30" have passed emission
standards examinations required by applicable law. Except as stated in Exhibit
A4.30", no Tangible Personal Property used by Seller 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 Seller.
SECTION 4.31 TITLE TO ASSETS. Except for property leased by
Seller, Seller has good and marketable title to all its assets and interests in
assets, whether real, personal, mixed, tangible and intangible, that are used in
its business. All these assets are free and clear of mortgages, liens, pledges,
charges, encumbrances, claims, easements, rights of way, covenants, conditions
or restrictions, except for: (i) those disclosed in Seller's balance sheet
included in the Financial Statements; (ii) the lien of current taxes not yet due
and payable; and (iii) 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.
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All real property and tangible personal property of Seller is in good operating
condition and repair, ordinary wear and tear excepted. Seller is in possession
of all premises leased to it from others. No officer, nor any director or
employee of Seller, 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 Seller.
SECTION 4.32 INVESTMENT REPRESENTATIONS. In connection with
Seller and/or Shareholders potential acquisition of Lason Common Stock pursuant
to Sections 2.1 and 2.3 hereof:
A. Seller and Shareholders were given the Prospectus
of Lason, Inc. dated August 22, 1997 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 Seller and Shareholders about Lason,
Inc.;
B. Seller and the Shareholders are acquiring Lason,
Inc. Common Stock solely for their 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 intention of
selling, offering to sell, or otherwise disposing of or distributing
the Lason, Inc. Common Stock acquired hereunder or any portion thereof;
C. Seller and the Shareholders have received all
information each deemed necessary and appropriate to enable such entity
or person to evaluate the financial risk inherent in making an
investment in the Lason, Inc. Common Stock;
D. Each Shareholder is an accredited investor as such
term is defined in Regulation D, Rule 501 under the Securities Act of
1933, as amended (the A1933 Act"), or is sophisticated in financial
matters and able to evaluate the risk and benefits of an investment in
Lason, Inc.; and
E. Seller and the Shareholders represent and warrant
that each will not sell, assign or transfer any of the shares of the
Lason, Inc. Common Stock received in exchange for the Shares except (i)
pursuant to an effective registration statement under the 1933 Act; or
(ii) in a transaction which, in the opinion of independent counsel
reasonably satisfactory to Buyer, is not required to be registered
under the 1933 Act.
SECTION 4.33 MINORITY CONTRACTOR STATUS. No material portion
of the Business is dependent on Seller's status as a minority contractor.
SECTION 4.34 BEST KNOWLEDGE. The term Ato the best of Selling
Parties' knowledge," or equivalent terms, as used to qualify any of the
foregoing representations and
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warranties, means knowledge of a Shareholder as to the subject matter of such
representations and warranties.
SECTION 4.35 ACCURACY AND COMPLETENESS OF REPRESENTATIONS AND
WARRANTIES. No representation or warranty made by Seller and Shareholders 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 5
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 5.1 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 5.2 AUTHORIZATION. 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 Guaranty or the consummation by
Buyer and Lason, Inc. of the transactions contemplated hereby or
SECTION 5.3 NO BREACH. The execution, delivery and performance
of this Agreement by Buyer and 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; (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 or 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 of 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
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agreement to accelerate the maturity of any indebtedness or other obligation of
Buyer or Lason, Inc.; or (v) the creation or imposition of any lien, charge or
encumbrance on any of the properties of Buyer or Lason, Inc.
SECTION 5.4 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 5.5 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 of $0.01 per share, of which as of October 31,
1997, 11,467,175 shares are issued and outstanding, and 5,000,000 shares of
preferred stock, par value $0.01 per share, of which as of October 31, 1997, no
shares are issued and outstanding. Additionally, as of October 31, 1997, certain
persons hold options to acquire approximately 645,214 shares of Lason Common
Stock. When issued in accordance with the terms of this Agreement, the Lason
Common Stock being issued to Shareholders will be validly issued, fully paid and
non-assessable. Except with respect to the foregoing and future acquisitions by
Lason, Inc., at October 31, 1997, 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
SECTION 5.6 TRADING ON THE NASDAQ NATIONAL MARKET. The shares
of Lason Common Stock are currently registered for trading on the NASDAQ
National Market under the symbol XXXXX". 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 5.7 LASON, INC. PROSPECTUS. The Lason Prospectus dated
August 22, 1997 does not contain any untrue statements of material fact or omit
to state any material fact necessary to make the statements contained therein,
in light of the circumstances under which they were made, not misleading. There
have been 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 August 22, 1997.
ARTICLE 6
FURTHER AGREEMENTS OF THE PARTIES
SECTION 6.1 ACCESS TO INFORMATION. Buyer and its
representatives may make such investigation of the properties, assets and
business of Seller as Buyer may reasonably request, and Seller 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 Seller, and shall furnish to Buyer all such
documents and copies of documents (certified as true and complete if requested)
and such information concerning the business and affairs of Seller as Buyer may
reasonably request. Such investigation shall not be
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deemed in any way to diminish the liability of Selling Parties in respect of the
representations, warranties, schedules, certificates or agreements given
hereunder. Buyer will promptly make Seller and Shareholders aware of any alleged
breaches of covenants or alleged misrepresentations, if any, discovered as a
result of such investigation.
SECTION 6.2 CONDUCT OF BUSINESS BY SELLER. From the date
hereof until the Closing Date, except as Buyer may previously consent in
writing, Seller 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 Seller as of the date of
this Agreement. Without limitation of the generality of the foregoing,
Seller shall not enter into any agreement or arrangement involving the
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 A4.18" to this Agreement;
C. Make no change in its Articles of Incorporation or
By-Laws;
D. 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 Seller of more than
$5,000.00;
E. Terminate none of the contracts or agreements
listed in Exhibit A4.24" or modify any of said contracts or agreements
except in accordance with their terms;
F. Except pursuant to existing arrangements disclosed
in Exhibit A4.21", and except for distributions not to exceed
$1,000,000 in the aggregate) to the Shareholders in amounts sufficient
to permit them to pay their personal taxes related to recognition of
Seller's distributable income for the period beginning January 1, 1997
and ending as of the Closing Date: (i) grant no increase in salaries or
compensation payable or to become payable by it to any officer,
employee, sales agent or representative, other than increases in
customary amounts pursuant to normally scheduled salary reviews; or
(ii) increase no benefits payable under any employee plan or otherwise
to any officer, employee, sales agent or representative;
G. Duly comply in all material respects with all
laws, regulations, ordinances, orders, injunctions and decrees
applicable to it and to the conduct of its business;
H. 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
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advances to or assume, guarantee, endorse or otherwise become liable
with respect to, the obligations of any other person, firm or
corporation;
I. 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;
J. Make or agree to make no capital expenditures in
excess of $5,000.00 for any single item, or $5,000.00 in the aggregate,
or enter into any leases of capital equipment or property under which
the annual lease charge is in excess of $5,000.00;
K. 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;
L. Perform all of its obligations under contracts
relating to or affecting its assets, properties and rights, except for
non-material failures;
M. 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 Seller;
N. Enter into no negotiations or agreements with any
governmental authority (other than negotiations or agreements for the
purchase of goods or services from Seller) which would affect the
future operation of its business;
O. Write off none of the receivables on its books;
and
P. Enter into a lease for real property with any
Shareholder or any persons or entities affiliated with him.
SECTION 6.3 CONSENTS. Seller shall obtain the consent of all
persons whose consent is required to the consummation of the transactions
contemplated hereby, in form and substance satisfactory to Buyer.
SECTION 6.4 COMMUNICATIONS. Each party hereto agrees to
consult and obtain the prior approval of the other parties, which approval shall
not be unreasonably withheld or 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 6.5 UPDATING OF SCHEDULES. From the date hereof until
the Closing Date, Seller 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.
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SECTION 6.6 REGISTRATION OF LASON, INC. COMMON STOCK.
A. Subject only to the proviso set forth in the last sentence
of this Section 6.6(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 ARegistration Statement") under the Act
covering the maximum number of shares of Lason, Inc. that may be issued
to Shareholders pursuant to Sections 2.1 and 2.3 hereof and naming
Shareholders as a ASelling 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;
(iii) maintain the Registration Statement in effect until the earlier
of: (x) the sale of all of the shares of Lason, Inc. issued to
Shareholders pursuant to Sections 2.1 and 2.3 hereof; or (y) the date
Shareholders may sell such shares without restriction pursuant to Rule
144(k) under the Act hereunder (currently two years from the date of
the issuance of the shares). Shareholders agree to cooperate and
provide Lason, Inc. with all information and consents necessary to
permit inclusion of Shareholders as ASelling 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 Shareholders against any losses, claims, damages or liabilities to
which Shareholders 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 of 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. Each 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 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 the respective Shareholder.
SECTION 6.7 DELIVERY OF LASON STOCK CERTIFICATE. Buyer and
Lason shall cause the Transfer Agent (as hereinafter defined) to issue and
deliver to Shareholders certificates registered in Shareholders' names
evidencing the Lason Shares within seven (7) days following the Closing Date.
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SECTION 6.8 EMPLOYMENT CONTRACTS. Xxxxxx X. Xxxxxx and Xxx Xxx
agree to all of the terms and conditions of those certain Employment Agreements
in the forms attached hereto as Exhibit 6.8.A. and Exhibit 6.8.B., except with
respect to the blanks to be completed therein.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS
OF SELLER AND SHAREHOLDERS
The obligations of Seller and Shareholders to consummate the
transactions contemplated by this Agreement shall be subject to the following
conditions, except as Seller and Shareholders may waive in writing in accordance
with Section 13.5 below:
SECTION 7.1 PERFORMANCE. Buyer shall have performed and
complied with all agreements and covenants required by this Agreement to be
performed or satisfied by it on or prior to the Closing Date.
SECTION 7.2 REPRESENTATIONS AND WARRANTIES. The
representations, warranties and covenants of Buyer and Lason, Inc., set forth in
Article 5 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 7.3 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 conditions set forth in Sections 7.1 and 7.2
above.
SECTION 7.4 LEGAL OPINION. Seyburn, Kahn, Ginn, Bess, Xxxxxx
and Xxxxxx, P.C., counsel for Buyer and Lason, Inc., shall have delivered to
Selling Parties at Closing its opinion to the effect set forth in EXHIBIT "7.4".
SECTION 7.5 AUTHORIZATION OF TRANSACTION. All actions
necessary to authorize the execution, delivery and performance of this Agreement
by Buyer and Lason, Inc., and the consummation of the transactions contemplated
thereby, shall have been duly and validly taken by the Boards of Directors of
Buyer and Lason, Inc.
SECTION 7.6 HSR ACT. All of the legal requirements imposed
under the HSR Act shall have been fulfilled and neither the Federal Trade
Commission nor the Department of Justice shall have instituted an action to
restrain or enjoin the consummation of this transaction.
ARTICLE 8
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 13.5 below:
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SECTION 8.1 AUTHORIZATION OF TRANSACTION. All action necessary
to authorize the execution, delivery and performance of this Agreement by Seller
and the Shareholders and the consummation of the transactions contemplated
hereby shall have been duly and validly taken by the Board of Directors of
Seller and by the Shareholders.
SECTION 8.2 SATISFACTORY INVESTIGATIONS. The investigation of
the business of the Seller contemplated in Section 6.1 hereof shall be
satisfactory to Buyer in all respects as determined in the exercise of its sole,
absolute and exclusive discretion.
SECTION 8.3 UNTRUE STATEMENTS. This Agreement, together with
the Exhibits attached hereto or subsequently provided to Buyer at the time of
Closing, shall not contain any untrue statement of a known material fact or omit
to state a known material fact required to be stated therein or necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading.
SECTION 8.4 FINANCIAL STATEMENTS. The Financial Statements as
of and for the month preceding the month in which the Closing Date actually
occurs shall have been delivered to Buyer and such statements are to be
satisfactory to Buyer in all respects as determined in the exercise of its sole
discretion.
SECTION 8.5 MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change in the condition (financial or otherwise), earnings,
business, assets, liabilities, properties, operations or prospects of Seller,
and there shall not have been any occurrence, circumstance or combination
thereof (whether arising heretofore or hereafter), including litigation pending
or threatened, which might reasonably be expected to result in any such material
adverse change before or after the Closing Date.
SECTION 8.6 REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Selling Parties contained in this Agreement,
shall be true in all material respects at and as of the Closing Date with the
same effect as though such representations and warranties were made at and as of
such time, subject to any transactions that are contemplated as permitted by
this Agreement, 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 8.7 CERTIFICATE OF SELLING PARTIES. Buyer shall have
been furnished with a certificate executed by an officer of Seller and
certificates executed by the Shareholders, in form and substance satisfactory to
Buyer, certifying to the fulfillment of the condition set forth in Section 8.6
above.
SECTION 8.8 LEGAL OPINION. Xxxxxx Xxxxx & Xxxxxx, counsel for
Shareholders and Seller shall have delivered to Buyer at Closing its opinions to
the effect set forth in EXHIBIT "8.8".
SECTION 8.9 LITIGATION. Immediately prior to the Closing Date,
there shall be no litigation or proceeding: (i) pending or, to the best
knowledge of any party hereto, threatened
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against Buyer, Lason, Inc. or Seller, 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 Seller 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 Seller (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 8.10 THIRD PARTY CONSENTS. Prior to the Closing,
Seller shall have obtained the written consent, waiver or approval of each
person: (i) who is a party to a contract or agreement with Seller or a contract
or agreement by which Seller or its property is bound; and (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, including those
contracts or agreements referenced in Exhibit 4.5. Alternatively, Buyer may, in
the exercise of its sole discretion, waive the production of any particular
consent.
SECTION 8.11 EMPLOYMENT AGREEMENTS/TERM OF EMPLOYMENT. Xxxxxx
X. Xxxxxx and Xxx Xxx shall have executed and delivered to Buyer those certain
Employment Agreements with Buyer in the forms attached hereto as Exhibit 6.8.A.
and Exhibit 6.8.B. Additionally, the following key employees of Seller, Xxxxxx
X.X. Xxxxxxxx, Xxxx Xxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxxx and Xxxxx Xxxxxxx
shall have made and entered into employment agreements with Buyer on mutually
acceptable terms and conditions including provisions (i) providing such
employees with the same salary and bonus arrangements currently in effect with
Seller and (ii) with the same benefits generally available to all Buyer's
employees in the same or similar positions with Buyer, and on such other terms
and conditions as set forth in the form of employment agreement set forth in
EXHIBIT "8.11" hereto.
SECTION 8.12 TERMINATION OF NAME. Immediately prior to
Closing, Seller shall have delivered to Buyer an executed certificate to be
filed terminating Seller's name AVIP LITHO INC." and an assignment of all of
Seller's rights in and to such name.
SECTION 8.13 CERTIFICATE OF RELEASE. Seller shall have
furnished to Buyer all information (and assignments, if applicable) necessary
for it to obtain (i) a Certificate of Release from the California Department of
Employment Development stating that no contribution, interest or penalties are
due to the California Department of Employment Development from Seller, (ii) a
Business Tax Registration Certificate from the Office of the Tax Collector of
the City and County of San Francisco, and (iii) permits from the Bay Area Air
Quality Management District on all of those items of equipment as to which
Seller currently has permits or has applied for permits.
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SECTION 8.14 TAXES. Seller shall have furnished to Buyer all
information necessary for it to obtain a Clearance Certificate from the State
Board of Equalization.
SECTION 8.15 HSR ACT. All of the legal requirements imposed
under the HSR Act shall have been fulfilled and neither the Federal Trade
Commission nor the Department of Justice shall have instituted an action to
restrain or enjoin the consummation of this transaction.
SECTION 8.16 RELEASE. Xxx Xxx shall have produced a release
executed by his former wife, Xxxxx Xxx, in which she acknowledges her release of
any interest in both Seller and the Purchased Assets. The form and content of
such release will be satisfactory in all respects to Buyer in the exercise of
its sole discretion.
SECTION 8.17 SIX COLOR PRESS. Seller shall have provided Buyer
with satisfactory evidence that its order for a Heidelberg Six Color, 40-inch
press has been canceled.
SECTION 8.18 RE-PAYMENT OF RECEIVABLES. Xxxxxx X. Xxxxxx and
Xxx Xxx shall have provided satisfactory evidence to Buyer that they have
re-paid all current outstanding indebtedness of each of them to Seller.
SECTION 8.19 UPDATED EXHIBITS. Seller shall provide, and Buyer
must approve, updated exhibits to the Agreement to the extent that the
information included in such exhibits was generally based on financial statement
information available at or around September 30, 1997 and there have been
changes in such information as set forth in Seller's October 31, 1997 financial
statements or later financial statements which are required to be delivered to
Buyer pursuant to Section 8.4 above.
SECTION 8.20 RELEASE OF LIENS.Seller shall provide Buyer with
releases of all liens on any and all of the Purchased Assets, including, but not
limited to releases from General Electric Corporation (File No. 90122692), Xxxxx
Financial Corporation (File Nos. 93024727 and 93070467), Mercedes-Benz Credit
Corporation (File No. 93200887), the Pacific Bank, N.A. (File Nos. 9503860875,
0000000000 and 9515360209), Litho Development & Research (File Xx. 0000000000),
xxx Xxxxxxxxxx XXX, Inc. (File No. 971506418).
ARTICLE 9
TERMINATION
SECTION 9.1 TERMINATION OF AGREEMENT. This Agreement and the
transactions contemplated hereby may be terminated at any time prior to the
Closing Date, as follows:
9.1.1 MUTUAL CONSENT. By mutual consent of all of the
parties hereto.
9.1.2 BREACH. By Buyer on the one hand or by the
Shareholders or Seller on the other hand by reason of the breach by the
other in any material respect of any of
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its or their representations, warranties, covenants or agreements
contained in this Agreement.
9.1.3 UNSATISFACTORY INVESTIGATION. By Buyer at any
time prior to one week from the date of this Agreement if the
investigation of the business of Seller is not satisfactory to Buyer
pursuant to Section 8.2 above.
9.1.4 RESPECTIVE CONDITIONS. By Buyer on the one hand
or by the Shareholders or Seller on the other hand if the conditions
precedent to their respective obligations contained in Articles 7 or 8
hereof have not been met in all material respects through no fault of
the terminating party by December 31, 1997.
9.2 NO WAIVER. Termination as provided herein shall
not waive any rights of any party against another for default or breach
of any provision of this Agreement.
ARTICLE 10
THE CLOSING
SECTION 10.1 TIME AND PLACE. The consummation of the
transactions contemplated by this Agreement (the "CLOSING") shall take place at
the offices of Buyer's counsel, Xxxxxx Xxxxx & Xxxxxx in San Francisco,
California at 10:00 a.m., local time, within two business days following
termination of the applicable HSR waiting period, or at such other time and
place as the parties may agree to in writing (the "CLOSING DATE").
SECTION 10.2 SELLER AND SHAREHOLDERS' OBLIGATIONS AT CLOSING.
At the Closing, Seller and Shareholders 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 10.3:
A. All warranty deeds, bills of sale and other
documents or instruments of conveyance, transfer or assignment as shall
be necessary or appropriate to vest or confirm in Buyer marketable
title to all real estate included in the Purchased Assets and all
right, title and interest of Seller and the Shareholders in and to all
of the remainder of the Purchased Assets, all of which documents shall
be in form and substance satisfactory to counsel for Buyer, acting
reasonably.
B. The opinion of counsel as provided in Section 8.8;
C. The certificates executed by Seller's officer and
Shareholders, dated the Closing Date, as provided in Section 8.7;
D. The consents contemplated in Section 8.10;
E. On or before the Closing Date, but effective as of
the Closing Date, Seller will terminate the employment of all of its
employees and provide Buyer with a letter of termination to each of the
employees in form and substance satisfactory to Buyer;
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F. The employment agreements contemplated in Section
8.11;
G. The executed amendment to the articles of
incorporation terminating the name AVIP IMAGING, INC." and the executed
certificate terminating the Fictitious Business Name Statement
permitting it to do business under the name AVIP LITHO";
H. An assignment of all of Seller's right, title and
interest in and to the names "VIP Imaging INC." and "VIP LITHO";
I. All requisite information necessary for Buyer's
Counsel to obtain the certificates referenced in Section 8.13 and 8.14
hereof;
J. The Lock-Up Agreements referenced in Sections 2.1
and 2.3 above;
K. The Escrow Agreement referenced in Section 2.4
above;
L. The Assignments Separate From Certificate
referenced in Section 2.4(B) above;
M. A closing statement reflecting, among other
things, the payment of the Purchase Price less payment of debt as
contemplated herein and the prorations described in Section 10.4
hereof; and
N. The payment of all long-term debt scheduled on
Exhibit A3.2" and the release of all liens on any and all of the
Purchased Assets.
O. Such other and further instruments as counsel for
Seller and Buyer shall mutually agree are necessary to consummate the
transactions contemplated herein.
SECTION 10.3 BUYER'S OBLIGATIONS AT CLOSING. At the Closing,
Buyer shall deliver to Seller and Shareholders the following instruments and
documents against delivery of the items specified in Section 10.2:
A. The cash portion of the Purchase Price;
B. Certified resolutions of Buyer's Board of
Directors, in forms reasonably satisfactory to counsel for Selling
Parties, authorizing the execution, delivery and performance of this
Agreement and all actions to be taken by Buyer under this Agreement;
C. The certificates executed by Buyer's and Lason,
Inc.'s officers, dated the Closing Date, as provided in Section 7.3;
D. The opinion of counsel as provided in Section 7.4;
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E. Original Issue Order Form No. 1 addressed to the
First Chicago Trust Company, the transfer agent for Lason, Inc.
directing the transfer agent to issue shares of Common Stock of Lason,
Inc. to Shareholders;
F. The Escrow Agreement referenced in Section 2.4
above; and
G. A closing statement reflecting, among other
things, the payment of the Purchase Price less payment of long-term
debt as contemplated herein and the prorations described in Section
10.4 hereof.
H. Such other and further instruments as counsel for
Seller and Buyer shall mutually agree are necessary to consummate the
transactions contemplated hereby.
SECTION 10.4 PRORATIONS. Seller and Buyer will prorate, as of
the Closing Date, proratable items known at the time of Closing and will make a
cash settlement between themselves with respect thereto. Proratable items
contemplated hereby include (but are not necessarily limited to) accrued
personal property taxes, rent, operating expenses, and, as applicable, any other
payments, costs or expenses required under the Purchased Assets, and other
prepaid or accrued items such as insurance premiums and various occupancy costs.
Seller will be responsible for all of the foregoing items through and including
the Closing Date. Proratable items which are not known as of the Closing Date
will be calculated and settled between Seller and Buyer as soon as practicable
thereafter. Additionally, Buyer and Seller agree to split equally all state and
local sales taxes due in connection with the sale of assets contemplated herein.
Buyer further agrees that Seller may elect to pay its portion of such obligation
by means of the Lason Common Stock which is to be issued to it.
ARTICLE 11
OBLIGATIONS AFTER CLOSING
SECTION 11.1 XXXXXX AND XXX'X AGREEMENT TO REFRAIN FROM
COMPETITION. Xxxxxx X. Xxxxxx and Xxx Xxx agree to refrain from competition and
to maintain confidential information concerning Buyer for a term of the longer
of: (i) the 5 years immediately following the Closing Date or (ii) during the
term of each person's Employment Agreement plus the 2 year period immediately
thereafter (the "NONCOMPETITION PERIOD"), with respect to, inter alia, the
Business in each county, state and other geographic area constituting the United
States, including, but not limited to, those areas of the United States in which
either Seller or Buyer or one of its affiliates has conducted its business
during the Noncompetition Period, all as set forth in their Employment
Agreements, which Employment Agreements are incorporated herein by reference.
SECTION 11.2 SELLER AND CERTAIN SHAREHOLDER'S AGREEMENT TO
REFRAIN FROM COMPETITION.
A. NON-COMPETITION AND SOLICITATION. For and in
consideration of $1,000.00, which is a portion of the Purchase Price,
and the economic benefits accruing to Seller and the Shareholders
generally hereunder, Seller and Xxxx X. Xxxxxx agree that
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for the Non-Competition Period, neither Seller nor Xxxx X. Xxxxxx
shall, either directly or indirectly (and whether or not for
compensation), work for, be employed by, own, participate or engage in,
or have any interest in, any person, firm, entity, partnership, limited
partnership, limited liability company, corporation or business
(whether as an employee, owner, partner, member, shareholder, officer,
director, agent, creditor, consultant or in any capacity which calls
for the rendering of personal services, advice, acts of management,
operation or control) which is substantially the same as or competitive
with the Business in each county, state and other geographic area
constituting the United States including those areas of the Unites
States in which either Seller or Buyer or one of its affiliates has
conducted the Business at any time during the three years immediately
preceding the Closing Date and during the Noncompetition Period (the
"RESTRICTED TERRITORY"). The foregoing shall not, however, be deemed to
prevent Seller nor Xxxx X. Xxxxxx from owning, for investment purposes
only, up to 5.0% of the securities of any corporation the shares of
which are traded on a securities exchange or in the over-the-counter
market.
Seller further agrees that it shall not, directly or
indirectly, at any time during the Noncompetition Period: (i) divert or
attempt to divert from Buyer any Business whether in the Restricted
Territory or not; (ii) solicit, contact, call upon or attempt to
solicit, or provide services to, any of Buyer's customers, suppliers or
actively sought potential customers or suppliers for the purpose of
doing anything within the definition of the Business or any work
reasonably related to the Business whether in the Restricted Territory
or not; or (iii) induce or attempt to induce any person who is an
employee of Buyer to leave the employ of Buyer.
B. CONFIDENTIALITY. During the Noncompetition Period,
Seller shall keep secret and inviolate and shall not divulge,
communicate, use to the detriment of Buyer or for the benefit of any
other person or persons or misuse in any way any knowledge or
information of a confidential nature which it may know as a result of
its association with and which is unique to Buyer (AConfidential
Information"), including, without limitation, all trade secrets,
information, computer programs, technical data, customer lists and
unpublished matters relating to the business, assets, accounts, books,
records, customers and contracts of Buyer. Seller may disclose
Confidential Information if required by any judicial or governmental
request, requirement or order; provided that Seller will take
reasonable steps to give Buyer sufficient prior notice in order to
contest such request, requirement or order.
C. REMEDIES. Seller has had knowledge of the affairs,
trade secrets, customers, potential customers and other proprietary
information of Buyer, and Seller acknowledges and agrees that
compliance with the covenants set forth in this Section 11.1 is
necessary for the protection of the Business, goodwill and other
proprietary interests of Buyer and that any violation of this Section
11.1 will cause severe and irreparable injury to the Business and
goodwill of Buyer, which injury is not compensable by money damages.
Accordingly, in the event of a breach (or threatened or attempted
breach) of this Section 11.1, Buyer shall, in addition to any other
rights and remedies, be entitled to immediate appropriate injunctive
relief or a decree of specific performance, without the necessity of
showing any irreparable injury or special damages.
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D. SEVERABILITY. The non-competition covenants in
this Agreement shall be deemed to apply to each county within the State
of California, each State of the United States, and each other
geographic area, including the United States in its entirety,
separately, not collectively, and shall be severable as to each such
county, state or other geographic area. If, in any judicial proceeding,
any provisions of this Section 11.2(D) shall be found to be
unenforceable or if a court shall refuse to enforce any of the
covenants included herein, including the Non-Competition Period, then
said unenforceable covenant(s) shall be deemed modified so as to become
enforceable to the maximum extent permitted, and if such modification
is not permitted, then such unenforceable covenant(s) shall be deemed
eliminated from these provisions for the purpose of the proceeding to
the extent necessary to permit the remaining separate covenants to be
enforced. It is the intent and agreement of Corporation and Employee
that these covenants be given the maximum force, effect and application
permissible under law.
SECTION 11.3 AUTHORIZATION TO BUYER CONCERNING MAIL. Seller
hereby authorizes Buyer from and after the Closing Date to receive and open all
mail and other communications to Seller received by Buyer and to act with
respect to such communications in such reasonable manner as Buyer may elect.
SECTION 11.4 SELLER'S OBLIGATION CONCERNING MAIL. After the
Closing Date, Seller shall promptly deliver to Buyer (i) the original of any
mail or other communications received by it pertaining to the Business, the
Purchased Assets or the Assumed Liabilities; or (ii) any moneys, checks or
instruments of payment to which Buyer is entitled.
SECTION 11.5 EMPLOYEES AND BENEFITS.
11.5.1 CONTINUATION OF EMPLOYMENT. It is understood
that Buyer shall be under no obligation to continue the employment of
Seller's employees. If Buyer, in its sole discretion, hires any of
Seller's then former employees, to the extent applicable and legally
permissible, Buyer shall credit such employees with their prior period
of employment with Seller for purposes of eligibility under Buyer's
employee benefit plans. Seller represents that none of the Plans or any
contract or agreement provides for severance pay payable by Buyer upon
the termination of an employee's employment.
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11.5.2 COVERAGE UNDER SELLER'S EMPLOYEE BENEFIT PLANS.
(a) Except as otherwise agreed to in writing by the
parties hereto, Seller shall retain all of the liabilities and
obligations arising under any of the Plans including, without
limitation, any obligations with respect to any employees or former
employees of Seller or an affiliate of Seller, or to any of such
persons' spouses, children, other dependents or beneficiaries. Buyer
shall not assume any of Seller's Plans.
(b) Seller shall pay any claims with respect to
occurrences arising prior to the Closing Date as contemplated in
Section 12.1 relating to (i) disability, medical and dental benefits
relating to event occurring on or prior to the Closing Date to the
extent covered by the Plans; and (ii) workers' compensation benefits
when the same become due and payable, whether prior to or after the
Closing Date. Seller shall be solely responsible for any retiree
medical liabilities and related costs of medical and life insurance for
persons who shall have retired from Seller prior to the Closing Date.
Seller shall be responsible for employee benefit claims of employees
(or their eligible dependents) with respect to Claim Events occurring
prior to the Closing Date, and to the extent that Buyer implements
benefit plans for employees, Buyer shall be responsible for such claims
with respect to Claim Events occurring on and after the Closing Date. A
AClaim Event" shall be defined as the illness or injury giving rise to
the reimbursable event. Subsequent to the Closing Date, Seller shall
remain responsible for and Buyer shall not assume any obligations
arising under COBRA relating to continuation health care coverage with
respect to: (i) those of Seller's employees who continue in Seller's
employ subsequent to the Closing Date and the qualifying dependents of
such employees; (ii) those of Seller's employees who cease employment
with Seller as a result of the transaction contemplated by this
Agreement and the qualifying dependents of such employees; and (iii)
those of Seller's former employees and the qualifying dependents of
such former employees who remain eligible for COBRA benefits.
11.5.3 BUYER'S EMPLOYEE BENEFIT PLANS. Buyer may, but
shall not be required to, sponsor and maintain employee benefit plans
previously maintained by Seller for Seller's employees who become
employed by Buyer after the Closing Date.
SECTION 11.6 FURTHER ASSURANCES. From time to time, at Buyer's
request , and without further consideration and at the expense of Buyer, Seller
and the Shareholders will execute and deliver to Buyer such other documents, and
take such other action, as Buyer may reasonably request in order to consummate
more effectively the transactions contemplated by this Agreement, and to vest in
Buyer good, valid and marketable title to the Purchased Assets.
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ARTICLE 12
INDEMNIFICATION
From and after the Closing, the parties hereto shall be
indemnified as set forth below.
SECTION 12.1 INDEMNIFICATION OF BUYER. Seller and Shareholders
covenant and agree with Buyer that they shall reimburse and indemnify and hold
Buyer harmless, jointly and severally, from, against and in respect of the
following claim(s):
A. Any and all damage, loss, liability, claim or
deficiency incurred by Buyer resulting from, or which exists or arises
due to, any untruth, inaccuracy, breach or omission of, from or in, the
representations and warranties made to Buyer herein; or any claim, suit
or proceeding under California bulk sale laws and regulations from a
claimant under such laws and regulations who is not included in Exhibit
3.1.1. or who is included, but with respect to whom the liability owed
is an amount greater than that disclosed in Exhibit 3.1.1.; or any
nonfulfillment of any covenant or agreement of the Shareholders or
Seller under this Agreement; or from any untruth, inaccuracy, breach or
omission of, from or in, any representation or warranty, or any
nonfulfillment of any covenant or agreement made by Shareholders or
Seller in the Exhibits or any other written statement, list,
certificate or other instrument furnished to Buyer by or on behalf of
Shareholders or Seller pursuant to this Agreement;
B. Any liabilities and obligations of Seller that are
not Assumed Liabilities;
C. Any fees, expenses or other payments incurred or
owed by Seller to any brokers or comparable third parties retained or
employed by it in connection with the transactions contemplated by the
Agreement;
D. Any claims, suits or proceedings brought against
Buyer by any third parties arising out of or relating to the operation
of the Business prior to the Closing Date;
E. Any claim made by a third party alleging facts
which, if true, would entitle Buyer to indemnification pursuant to the
above; and
F. Any claim for environmental liability arising out
of the use of past chemicals by Seller before Closing which is declared
to be a hazardous substance after the Closing Date unless such
chemicals are used by Buyer after the Closing Date.
G. Any and all actions, suits, claims, proceedings,
investigations, audits, demands, assessments, fines, judgments, costs
and other expenses (including, without
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limitation, reasonable audit and legal fees) incurred by Buyer
resulting from the circumstances described in Section 12.1(A) through
(F) above.
In the event of indemnification hereunder, Buyer shall be entitled to
its reasonable attorney fees and related costs.
SECTION 12.2 INDEMNIFICATION OF SELLER AND SHAREHOLDERS. Buyer
covenants and agrees with Seller and Shareholders that it shall reimburse and
indemnify and hold Shareholders and Seller harmless from, against and in respect
of the following claim(s):
A. Any and all damage, loss, liability, claim or
deficiency incurred by Seller and Shareholders resulting from, or which
exists or arises due to, any untruth, inaccuracy, breach or omission
of, from or in, the representations and warranties made to Seller and
Shareholders herein; or any nonfulfillment of any covenant or agreement
of Buyer or Lason, Inc. under this Agreement; or from any untruth,
inaccuracy, breach or omission of, from or in, any representation or
warranty, or any nonfulfillment of any covenant or agreement made by
Buyer in the Schedules or any other written statement, list,
certificate or other instrument furnished to Seller and Shareholders by
or on behalf of Buyer or Lason, Inc. pursuant to this Agreement;
B. Any liabilities and obligations of any Selling
Party that are assumed liabilities;
C. Any fees, expenses or other payment incurred or
owed by Buyer to any brokers or comparable third parties retained or
employed by it in connection with the transactions contemplated by this
Agreement;
D. Any claims, suits or proceedings brought against
Seller and Shareholders by any third parties arising out of or relating
the operation of the Business from and after the Closing Date;
E. Any claim made by a third party alleging facts
which, if true, would entitle Seller and Shareholders to
indemnification pursuant to the above;
F. Any and all actions, suits, claims, proceedings,
investigations, audits, demands, fines, judgments, costs and other
expenses (including, without limitation, reasonable audit and legal
fees) incurred by Seller and Shareholders resulting from the
circumstances described in Section 12.2(A) through (D) above; and
G. Any claim arising out of an untrue statement in
the Lason Prospectus dated August 22, 1997, contemplated in Section 5.7
hereof.
H. Any liability to any of Seller's employees under
Worker Adjustment and Retraining Notification Act, 29 U.S.C. 2101, et
seq.
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In the event of indemnification hereunder, Seller and Shareholders
shall be entitled to their reasonable attorney fees and costs.
SECTION 12.3 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 claims ("CLAIMS") 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 the Article, 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 12.4 THIRD PARTY CLAIMS. In case of any Claim or suit
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 this Section 12, Indemnitor shall be
entitled to participate therein, and, to the extent desired by Indemnitor, to
assume the defense thereof, and after notice from Indemnitor to Indemnitee of
the election so to assume the defense thereof. Indemnitor will not be liable to
Indemnitee for any legal or other expenses subsequently incurred by Indemnitee
in connection with the defense thereof, other than reasonable costs of
investigation, unless Indemnitor does not actually assume the defense thereof
following notice of such election or the Indemnitee shall have reasonably
concluded that there may be defenses available to Indemnitee which are different
from or additional to those available to Indemnitor (in which case Indemnitor
shall not have the right to direct the defense of such action on behalf of the
Indemnitee), in any of which events such fees and expenses shall be borne by
Indemnitor. 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
Claim which might give rise to liability of Idemnitor under the indemnity
agreements contained in this Article 12 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 this
Section 12 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 12.5 SURVIVAL OF SELLER'S AND SHAREHOLDERS' INDEMNITY
OBLIGATIONS. Seller's and Shareholders' liability for a breach of the
representations, warranties and covenants made by the Selling 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, within 12
months from the Closing Date in the case of all of Buyer's claims except for
claims against Seller or Shareholders for a breach on the representations and
warranties
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set forth in Sections 4.4, 4.5, 4.15, 4.31 and 4.32 hereof, which shall survive
for an unlimited period of time.
SECTION 12.6 SURVIVAL OF BUYER'S INDEMNITY OBLIGATIONS.
Buyer's liability for a breach of the representations, warranties and covenants
made by Buyer in this Agreement, or in any schedule, exhibit, certificate or
other document delivered in connection with this Agreement shall not be deemed
to be waived or otherwise affected by any investigation made by Seller and
Shareholders and shall survive the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.
SECTION 12.7 SURVIVAL OF REPRESENTATIONS AND/OR WARRANTIES.
All representations, warranties and covenants made by the Seller and the
Shareholders, on the one hand and Buyer and Lason, Inc. on the other hand, 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 the other party hereto and shall
survive the Closing Date, provided, however, that such representations,
warranties, covenants and agreements shall survive only to the extent that the
right of indemnification for breach thereof is not otherwise limited pursuant to
Section 12.5 hereof.
SECTION 12.8 LIMITATION ON INDEMNIFICATION. The following
limitations shall apply to the rights of indemnification set forth in Section
12.1 and 12.2 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 Shareholders, insurance benefits received by Buyer) and any
tax benefits received by Indemnitee (or in the case of indemnification by
Shareholders, tax benefits received by Buyer) in respect of the loss giving rise
to the Claim for Indemnification; (ii) any indemnification payments made by
Seller or Shareholders shall constitute a reduction, and any indemnification
payments made by Buyer shall constitute an increase of the Purchase Price; (iii)
no indemnification shall be required from Seller or the Shareholders until the
aggregate amount of Buyer's damages (determined in accordance with clause (i))
exceeds $100,000.00 and then only for the amount in excess of $100,000.00 and
(iv) the liability of each of Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxx, jointly and
severally, and Xxx Xxx shall be limited to $2,000,000 for each such Indemnitor
(i.e., a total of $4,000,000 being allocated as $2,000,000 for Xxxxxx X. Xxxxxx
and Xxxx X. Xxxxxx and $2,000,000 for Xxx Xxx). The liability of Xxxxxx X.
Xxxxxx and Xxxx X. Xxxxxx and Xxx Xxx shall be both in their capacity as trustee
and individually.
SECTION 12.9 EXCLUSIVE REMEDY. This Article 12 shall provide
the exclusive remedy for the indemnified parties for any loss or other claim
arising from this Agreement or consummation of the transactions contemplated
hereby including, but not limited to, any claim for breach of a representation
or warranty, except (i) any right of the parties to specific performance of the
terms of this Agreement and (ii) in the case of intentional fraud.
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ARTICLE 13
MISCELLANEOUS PROVISIONS
SECTION 13.1 FINDER'S OR BROKER'S FEES. Except for Buyer's
contractual arrangement with Harlingwood & Company, for which Buyer shall be
solely responsible, 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. Seller and Shareholders, jointly and severally, and Buyer
each agree to indemnify and hold harmless one another against any loss,
liability, damage, cost, claim or expense incurred by reason of any brokerage,
commission or finder's fee alleged to be payable by reason of any act, omission
or statement of the indemnifying party.
SECTION 13.2 EXPENSES. Except as specifically provided
otherwise herein, Buyer and Seller and the Shareholders shall, individually, pay
all costs and expenses incurred or to be incurred by any of them in negotiating
and preparing this Agreement and in closing and carrying out the transactions
contemplated hereby.
SECTION 13.3 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 13.4 ENTIRE AGREEMENT; MODIFICATION; WAIVER. This
Agreement, together with all of the exhibits furnished hereunder, constitutes
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 13.5 WAIVER. Buyer may waive in writing compliance by
Seller and the Shareholders, and Seller and the Shareholders may waive in
writing compliance by Buyer, 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
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 13.6 COUNTERPARTS. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
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SECTION 13.7 PARTIES IN INTEREST. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the parties have to and
their respective successors and assigns, or is intended to relieve or discharge
the obligation or liability of any third persons to any party to this Agreement.
None of the provisions hereof shall be deemed to give any third persons any
right of subrogation or action over or against any party to this Agreement.
SECTION 13.8 BINDING EFFECT. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto and their respective
heirs, legal representatives, successors and assigns. This Agreement may not be
assigned by any of the parties hereto.
SECTION 13.9 RECOVERY OF LITIGATION COSTS. Except as otherwise
provided elsewhere in this Agreement, if any legal action or any arbitration or
other proceeding is brought for the enforcement of this Agreement or by reason
of an alleged dispute, breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorneys' fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it or they may be entitled.
SECTION 13.10 NOTICES. Each notice, demand, request, request
for approval, consent, approval, disapproval, designation or other communication
(each of the foregoing being referred to herein as a notice) required or desired
to be given or made under this Agreement shall be in writing (except as other
wise provided in this Agreement), and shall be effective and deemed to have been
received (i) when delivered in person, (ii) 5 days after having been mailed by
certified or registered Unites States mail, postage prepaid, return receipt
requested, or (iii) the next business day after having been sent by a nationally
recognized overnight mail or courier service, return receipt requested. Notices
shall be addressed as follows:
TO SHAREHOLDERS AND
SELLER AT: Xxxxxx X. Xxxxxx
Xxx Xxx
VIP LITHO INC.
0 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
WITH A COPY TO: Xxxxxx Xxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
ATTN: Xxxxxxx Xxxxxx, Esq.
TO BUYER AT: Lason Systems, Inc.
0000 Xxxxxxxxxx Xxxxxxx
Xxxx, Xxxxxxxx 00000
ATTN: Xxxx X. Xxxxxx,
President and Chief Executive Officer
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WITH A COPY TO: Seyburn, Kahn, Ginn, Bess, Xxxxxx
and Xxxxxx, P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
ATTN: Xxxxxxxx X. Xxxxxx, Esq.
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 13.11 DEFINITIONAL PROVISIONS. All terms defined in
this Agreement shall have such defined meanings when used in any exhibit,
schedule, or any certificate or other document made or delivered pursuant
thereto or thereto, unless otherwise defined therein.
SECTION 13.12 CHOICE OF LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of California, without
giving effect to any choice of law or conflict provision or rule, whether of the
State of California (or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of California to be applied. In furtherance of
the foregoing, the internal law of the State of California will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law or analysis, the substantive law
of some other jurisdiction would ordinarily apply.
SECTION 13.13 ARBITRATION. In the event of a dispute between
the parties hereto concerning any of the provisions of this Agreement, the
parties shall promptly meet and discuss such dispute in a good faith effort to
resolve such dispute. If no resolution is reached within 30 days following the
date on which one party first notifies the other of his or its request that such
a meeting be held, then the dispute shall be resolved by final and binding
arbitration in San Francisco, California 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 California; 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 he other party is that the other party
is liable, in whole or in part, for any claim or counterclaim being asserted
against the initiating party in such proceeding. The decision of the arbitrators
when rendered shall be final and binding on the parties hereto. Judgment upon
the award of the arbitrators may be entered by any court of competent
jurisdiction. The cost of the arbitration proceeding (exclusive of counsel fees)
shall be borne equally by the parties.
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SECTION 13.14 HSR ACT. Buyer and Selling Parties shall cooperate in
good faith in complying with the HSR Act and in attempting to secure early
termination of the applicable HSR Act waiting period. In connection therewith,
Buyer acknowledges that it shall pay and is solely responsible for all expenses
related to complying with HSR Act, including the initial HSR Act filing fee in
the amount of $45,000.00 and the fees of Seller's counsel in complying with the
HSR Act. As a pre-condition to the obligations of Buyer to consummate the
transaction contemplated by this Agreement, Selling Parties shall have fully
complied with the applicable provisions of the HSR Act, and any and all
applicable waiting periods thereunder shall have expired, or an opinion
reasonably acceptable to Buyer stating that no such filing is required shall
have been delivered to Buyer. As a pre-condition to the obligations of Selling
Parties to consummate the transaction contemplated by this Agreement, Buyer
shall have fully complied with the applicable provisions of the HSR Act, and any
and all applicable waiting periods thereunder shall have expired or an opinion
reasonably acceptable to Selling Parties stating that no such filing is required
shall have been delivered to Selling Parties.
THIS AGREEMENT was executed as of the date and year first set
forth above.
BUYER:
LASON SYSTEMS, INC., a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxxxx
Its: Executive Vice President
SELLER:
VIP LITHO INC., a California corporation
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx
Its: President
SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
XXXXXX X. XXXXXX, INDIVIDUALLY AND AS
TRUSTEE OF THE XXXXXX FAMILY TRUST DATED
JUNE 14, 1996
/s/ Xxxx X. Xxxxxx
----------------------------------------
XXXX X. XXXXXX, INDIVIDUALLY AND AS
TRUSTEE OF THE XXXXXX FAMILY TRUST DATED
JUNE 14, 1996
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/s/ Xxx Xxx
----------------------------------------------
XXX XXX, INDIVIDUALLY AND AS TRUSTEE OF
THE XXX XXX TRUST DATED MARCH 28, 1996
LASON, INC.:
LASON, INC., a Delaware
corporation (solely for the
purpose of being bound by
Articles 2.1, 5, 6.6 and
6.7 of this Agreement)
By: /s/ Xxxxxxx X. Xxxxxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxxxxx
Its: Executive Vice President
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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) that it shall not be necessary for
Shareholders 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 due
diligence in collection.
No postponement or delay on the part of Shareholders in the enforcement
of any right hereunder shall constitute a waiver of such right, and all rights
of Shareholders shall be cumulative and not alternative and shall be in addition
to any other rights granted to Shareholders 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 California without giving effect to conflict of law rules. This
Guaranty shall be binding on and shall inure to the benefit of Guarantor and
Shareholders 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 Shareholders.
All capitalized terms which are used but not defined herein shall have
the same meanings attributed to them under this Agreement.
LASON, INC., A DELAWARE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxxxx
Its: Executive Vice President
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