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EXHIBIT 10.15
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STOCK AND ASSET PURCHASE AGREEMENT
By and Among
Amphion Ventures, L.P.
and
Antiope Partners LLC
(each a "Buyer" and collectively, the "Buyers")
and
Axcess, Inc.
("Seller")
March 30, 1999
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STOCK AND ASSET PURCHASE AGREEMENT
INDEX
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Page
SECTION 1. SALE OF SHARES AND ASSETS; PURCHASE PRICE ......................................................... 1
1.01 Transfer of LMC Shares............................................................................. 1
1.02 Sale of Axcess Assets.............................................................................. 1
1.03 Purchase Price..................................................................................... 4
1.04 Closing............................................................................................ 5
1.05 Further Assurances................................................................................. 5
1.06 Transfer Taxes..................................................................................... 5
1.07 No Assumption; Allocation of Purchase Price........................................................ 5
1.08 Transfer of LMC Shares and Axcess Assets........................................................... 5
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER....................................................... 6
2.01 Making of Representations and Warranties........................................................... 6
2.02 Organization and Qualifications of the Seller and LMC.............................................. 6
2.03 Capital Stock of LMC; Beneficial Ownership......................................................... 6
2.04 Authority.......................................................................................... 7
2.05 Real and Personal Property......................................................................... 8
2.06 Financial Statements............................................................................... 9
2.07 Taxes.............................................................................................. 10
2.08 Absence of Certain Changes......................................................................... 11
2.09 Ordinary Course.................................................................................... 12
2.10 Banking Relations.................................................................................. 12
2.11 Intellectual Property.............................................................................. 13
2.12 Contracts.......................................................................................... 14
2.13 Litigation......................................................................................... 15
2.14 Compliance with Laws............................................................................... 16
2.15 Employee Benefit Programs.......................................................................... 16
2.16 Environmental Matters.............................................................................. 18
2.17 List of Directors and Officers..................................................................... 19
2.18 Transfer of Shares................................................................................. 19
2.19 Assignment of Rights............................................................................... 19
SECTION 3. COVENANTS OF SELLER................................................................................ 19
3.01 Consents........................................................................................... 19
3.02 Consummation of Agreement.......................................................................... 20
3.03 Confidentiality.................................................................................... 20
3.04 No Transfer of Securities.......................................................................... 20
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Page
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYERS........................................................... 20
4.01 Making of Representations and Warranties........................................................... 20
4.02 Organization and Qualifications of Each Buyer...................................................... 21
4.03 Authority of Buyers................................................................................ 21
4.04 Litigation......................................................................................... 21
4.05 Finder's Fee....................................................................................... 22
4.06 Financial Statements............................................................................... 22
4.07 Restrictions on Transfer of Shares................................................................. 22
4.08 Legends............................................................................................ 22
SECTION 5. COVENANTS OF BUYERS................................................................................ 23
5.01 Making of Covenants and Agreements................................................................. 23
5.02 Confidentiality.................................................................................... 23
5.03 Consents........................................................................................... 23
5.04 Consummation of Agreement.......................................................................... 23
5.05 Tax Returns........................................................................................ 24
SECTION 6. CONDITIONS......................................................................................... 24
6.01 Conditions to the Obligations of Buyers............................................................ 24
6.02 Conditions to Obligations of the Seller............................................................ 26
SECTION 7. SURVIVAL........................................................................................... 27
7.01 Survival of Warranties............................................................................. 27
7.02 Limitation on Liability of Seller.................................................................. 27
7.03 Limitation on Liability of Buyer................................................................... 28
SECTION 8. MISCELLANEOUS...................................................................................... 28
8.01 Fees and Expenses.................................................................................. 28
8.02 Governing Law...................................................................................... 28
8.03 Notices............................................................................................ 29
8.04 Entire Agreement................................................................................... 29
8.05 Assignability; Binding Effect...................................................................... 30
8.06 Captions........................................................................................... 30
8.07 Execution in Counterparts.......................................................................... 30
8.08 Amendments......................................................................................... 30
8.09 Consent to Jurisdiction............................................................................ 30
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STOCK AND ASSET PURCHASE AGREEMENT
AGREEMENT entered into as of March 30, 1999 by and among Amphion
Ventures, L.P. ("Amphion"), a Delaware limited partnership, Antiope Partners LLC
("Antiope"), a Delaware limited liability company (each a "Buyer" and
collectively, the "Buyers"), and Axcess, Inc., a Delaware corporation
("Seller").
W I T N E S S E T H
WHEREAS, the Seller is the record and beneficial owner of all of the
issued and outstanding capital stock of Lasertechnics Marking Corporation(TM)
("LMC"), a Delaware corporation, which consists entirely of an aggregate of ten
(10) shares of common stock, $.01 par value per share and two million six
hundred thousand (2,600,000) shares of preferred stock, $.01 par value per share
(the "LMC Shares");
WHEREAS, subject to the terms and conditions set forth herein, the
Seller desires to sell all of the LMC Shares to the Buyers, and each Buyer
desires to acquire all of the LMC Shares set forth opposite its name on Exhibit
A hereto; and
WHEREAS, subject to the terms and conditions hereof, Seller desires to
sell, transfer and assign to the Buyers and the Buyers desire to purchase from
Seller, certain of its properties and assets described herein.
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
SECTION 1. SALE OF SHARES AND ASSETS; PURCHASE PRICE.
1.01 Transfer of LMC Shares. At the Closing (as hereinafter defined),
the Seller shall deliver or cause to be delivered to each Buyer certificates
representing the LMC Shares to be purchased by such Buyer. Such stock
certificates shall be duly endorsed in blank for transfer or shall be presented
with stock powers duly executed in blank, with such signature guarantees and
such other documents as may be reasonably required by such Buyer to effect a
valid transfer of such LMC Shares by the Seller, free and clear of any and all
liens, encumbrances, charges or claims.
1.02 Sale of Axcess Assets. Upon the terms and subject to the
conditions set forth in this Agreement, Seller agrees to sell, assign, transfer
and deliver to the Buyers, and the Buyers agree to purchase from Seller, all
right, title and interest in and to the following assets of Seller (the "Axcess
Assets"):
(a) Rights and Interests to DataGlyph Technology. All of
Seller's nonexclusive rights and interests to the DataGlyph Technology which
Seller has obtained from
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Xerox, Inc. ("Xerox") and which shall have been assigned to the Buyers
substantially in the form of assignment acceptable to the parties; and
(b) Rights and Interests to CombiReader Technology. All of
Seller's rights and interests to the CombiReader Technology which the Seller has
the option to license from XL Vision, Inc. ("XL Vision") and which shall have
been assigned to the Buyers substantially in the form agreed upon by the
parties.
1.03 Purchase Price. In reliance upon the representations and
warranties of the Seller contained herein and made at the Closing and subject to
satisfaction of all of the conditions contained herein the Buyers shall pay to
Seller at the Closing (as defined below) an amount equal to $7,000,000 (the
"Purchase Price") in the following form:
(a) By delivery of evidence of the payment and satisfaction of
the debt of Seller in the amount of $910,000 due to Antiope and of $1,090,000
due to Amphion; and
(b) By delivery of $500,000 in cash; and
(c) By delivery of a Demand Note of Amphion in the principal
amount of $500,000, bearing interest at 6%, and payable upon demand by Seller in
accordance with the terms of the Demand Note in substantially the form agreed
upon by the parties (the "Demand Note"); and
(d) By delivery of a Term Note of Amphion in the principal
amount of $4,000,000, bearing interest at 8%, and payable quarterly; maturing
March 31, 2002 (unless Amphion's term is extended to 2004, in which case the
maturity will by extended to 2004), and requiring principal payments of $300,000
quarterly commencing March 31, 2001; and secured by the Axcess Assets and the
LMC Shares in accordance with the terms of the Term Note in substantially the
form agreed upon by the parties (the "Term Note"); and
(e) By transferring to Seller transferrable warrants to
purchase 430,000 shares of the Common Stock, no par value, of Quantrad Sensor,
Inc. ("Quantrad") in accordance with the terms of the Warrant in substantially
the form agreed upon by the parties (the "Quantrad Warrants") and containing, in
any event, customary registration rights; and
(f) By granting to Seller under the terms of the Quantrad
Warrants the option to exchange the Quantrad Warrants referred to above for 20%
of the Net Profits (as defined below) received by the Buyers or Quantrad, as the
case may be, if the Buyers sell directly or indirectly all the outstanding stock
or substantially all the assets of LMC prior to March 31, 2002, except for the
immediate resale to Quantrad. "Net Profits" for this purpose will mean the
excess of (a) the total consideration received, including all liabilities
assumed, less all transaction costs and taxes due in respect of the sale, less
(b) the sum of (i) $4,000,000, plus (ii) any amounts invested in LMC by Amphion
after March 31, 1999. This
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right will terminate upon the earlier of (i) an initial public offering of the
common stock of LMC or its parent company, or (ii) a sale of all of the
outstanding stock or substantially all the assets of LMC or its parent company.
The Buyers shall give the Seller 10 days notice prior to the occurrence of (ii)
above and Seller shall have the opportunity to exercise such right provided
Seller gives notice of its intention to exercise such right at least 3 days
prior to the occurrence of such sale.
1.04 Closing. The parties acknowledge and agree that, subject to
satisfaction of the conditions to closing set forth in Section 6 hereto, the
execution of this Agreement on the date first set forth above represents the
binding obligation of the parties hereto to consummate the transaction
contemplated by this Agreement. The closing of the purchase and sale of the LMC
Shares and the Axcess Assets provided for in this Agreement (the "Closing")
shall take place at the offices of ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP commencing at
such time and date as may be mutually agreed upon by the parties (the "Closing
Date").
1.05 Further Assurances. The Seller from time to time after the
Closing at the request of either Buyer and without further consideration shall
execute and deliver further instruments of transfer and assignment and take such
other action as such Buyer may reasonably require to more effectively transfer
and assign to, and vest in, such Buyer the LMC Shares, the Axcess Assets and all
rights thereto, and to fully implement the provisions of this Agreement.
1.06 Transfer Taxes. All sales and transfer taxes, fees and duties, if
any, under applicable law incurred in connection with the sale and transfer of
the LMC Shares and Axcess Assets pursuant to this Agreement will be borne and
paid by the Seller, and the Seller shall promptly reimburse LMC and each Buyer
for any such tax, fee or duty which any of them is required to pay under
applicable law.
1.07 No Assumption; Allocation of Purchase Price. Neither Buyer is
assuming and shall not pay or be liable for any liability or obligation of
Seller of any kind or nature, known, unknown, contingent or otherwise. At or
prior to the Closing, each Buyer and Seller shall agree on the allocation of the
Purchase Price, which allocation shall be set forth on Schedule 1.07. Such
allocation shall be made in accordance with (i) the respective fair market
values of the LMC Shares and the Axcess Assets being purchased and sold and (ii)
the provisions of Section 1060 of the Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder, and shall be binding upon each Buyer
and Seller for all purposes (including financial accounting purposes, financial
and regulatory reporting purposes and tax purposes). Each Buyer and Seller
further agrees to file its Federal income tax returns and its other tax returns
reflecting such allocation, Form 8594 and any other reports required by Section
1060 of the Code, in accordance with said allocation.
1.08 Transfer of LMC Shares and Axcess Assets. At the Closing, Seller
shall deliver or cause to be delivered to each Buyer good and sufficient
instruments of transfer
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transferring to such Buyer title to all of the LMC Shares purchased by such
Buyer and Axcess Assets, as applicable, including without limitation,
assignments of the Xerox and XL Vision agreements, together with any required
consents to assignment. Such instruments of transfer (a) shall be in the form
which is usual and customary for transferring the type of property involved
under the laws of the jurisdictions applicable to such transfers, (b) shall be
in form and substance reasonably satisfactory to such Buyer and its counsel, (c)
shall effectively vest in the Buyers good and marketable title to all of the
Axcess Assets free and clear of all Encumbrances (as defined in Section 2.05
hereof), and (d) where applicable, shall be accompanied by evidence of the
discharge of all Encumbrances against the Axcess Assets.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
2.01 Making of Representations and Warranties. As a material
inducement to each Buyer to enter into this Agreement and consummate the
transactions contemplated hereby, the Seller hereby makes to the Buyers the
representations and warranties contained in this Section 2. The Seller shall not
have any right of indemnity or contribution from LMC with respect to the breach
of any representation or warranty hereunder.
2.02 Organization and Qualifications of the Seller and LMC. Except as
set forth on Schedule 2.02, each of Seller and LMC is a corporation duly
organized, validly existing and in good standing under the laws of Delaware,
with full corporate power and authority to own or lease its properties and to
conduct its business in the manner and in the places where such properties are
owned or leased or such business is currently conducted or proposed to be
conducted. The copies of each of Seller and LMC's Articles of Incorporation, as
amended to date, and of each of Seller and LMC's by-laws, as amended to date,
and which shall be delivered at or prior to April 30, 1999 to counsel for the
Buyers, are complete and correct, and no amendments thereto are pending. Each of
Seller and LMC is duly qualified to do business as a foreign corporation in each
jurisdiction where the nature of its properties or the conduct of its business
makes its qualification so necessary, except where the failure to be so
qualified would not have a material adverse effect on the business, assets,
properties, results of operations, condition (financial or otherwise) or
prospects (a "Material Adverse Effect") of Seller and LMC.
2.03 Capital Stock of LMC; Beneficial Ownership.
(a) The authorized capital stock of LMC consists of 5,000,000
shares of voting common stock, $.01 par value per share (the "Voting Common
Stock"), 2,000,000 shares of non-voting common stock, $.01 par value per share
(the "Non-voting Common Stock") and 3,000,000 shares of preferred stock, $.01
par value per share (the "Preferred Stock") of which 10 shares of Voting Common
Stock, no shares of Non-voting Common Stock and 2,600,000 shares of Preferred
Stock are duly and validly issued, outstanding, fully paid and nonassessable and
of which 4,999,990 shares of Voting Common Stock, 2,000,000 shares
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of Non-voting Common Stock and 400,000 shares of Preferred Stock are authorized
but unissued. Except as set forth in Schedule 2.03, there are no outstanding
options, warrants, rights, commitments, preemptive rights or agreements of any
kind for the issuance or sale of, or outstanding securities convertible into,
any additional shares of capital stock of any class of LMC. No capital stock of
LMC has been issued in violation of any federal or state law. Except as set
forth in Schedule 2.03, there are no voting trusts, voting agreements, proxies
or other agreements, instruments or undertakings with respect to the voting of
the LMC Shares to which either LMC or the Seller is a party.
(b) Except as set forth in Schedule 2.03, the Seller owns
beneficially and of record all of the issued and outstanding LMC Shares free and
clear of any and all Encumbrances.
2.04 Authority. Seller has full right, authority and power to enter
into this Agreement and each agreement, document and instrument to be executed
and delivered by Seller pursuant to this Agreement and to carry out the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Seller of this Agreement and each such other agreement, document
and instrument has been duly authorized by all necessary action of Seller and no
other action on the part of Seller is required in connection therewith.
This Agreement and each agreement, document and instrument contemplated
hereby to which Seller is a party constitute, or when executed and delivered by
Seller will constitute, valid and binding obligations of Seller enforceable
against Seller in accordance with their terms, except as limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights and (ii) general
principles of equity that restrict the availability of equitable remedies. The
execution, delivery and performance by Seller of this Agreement and each such
agreement, document and instrument:
(A) does not and will not violate any provision of the
Certificate of Incorporation or by-laws or any similar organizational documents
of Seller;
(B) except as set forth in Schedule 2.04, does not and will
not violate any federal, state or local laws applicable to Seller or require
Seller to obtain any approval, consent or waiver of, or make any filing with,
any person or entity (governmental or otherwise) that has not been obtained or
made; and
(C) does not and will not result in a breach of, constitute a
default under, accelerate any obligation under, or give rise to a right of
termination of any indenture or loan or credit agreement or any other agreement,
contract, instrument, mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award to which Seller
is a party or by which the property of Seller is bound or affected, except as
set forth on Schedule 2.04, or result in the creation or imposition of any
mortgage, pledge,
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lien, security interest or other charge or encumbrance on Seller's assets or on
the capital stock of Seller, except as specifically set forth on Schedule 2.04.
2.05 Real and Personal Property.
(a) Real Property. To the Seller's knowledge after due
inquiry, all of the real property leased by LMC is identified in Schedule
2.05(a) (herein referred to as the "Leased Real Property").
(i) Title. Except as set forth in Schedule 2.05(a), LMC
has enforceable leasehold interests in the Leased Real Property of LMC, free and
clear of all easements, covenants, restrictions, leases, mortgages, liens,
assessments, claims, rights, judgments, encroachments, pledges, conditional sale
agreements, security interests, encumbrances, or other matters affecting title
(collectively, "Encumbrances"), except minor imperfections, if any, which are
not substantial in amount, do not detract from the value of the leasehold
interests or impair the operations of LMC and have arisen only in the ordinary
course of business.
(ii) Status of Leases. To the Seller's knowledge after due
inquiry, all leases of Leased Real Property are identified in Schedule 2.05(a),
and true and complete copies thereof which shall be delivered at or prior to
April 30, 1999 to each Buyer. Each of said leases has been executed by LMC and,
to the Seller's knowledge, is in full force and effect. To the Seller's
knowledge after due inquiry, LMC is not in default under any of said leases or
has received any notice thereof, nor has any event occurred which, with notice
or the passage of time, or both, would give rise to such a default. After giving
effect to the transactions contemplated by this Agreement, to the Seller's
knowledge, each of said leases will be fully enforceable by LMC which is a party
thereto against the other party thereto.
(iii) Consents. Except as set forth in Schedule 2.05(a),
no approval is required with respect to the transactions contemplated by this
Agreement from the other parties to any lease of the Leased Real Property and to
the extent that any such approval is required, LMC will obtain or complete them
before the Closing.
(iv) Condition of the Leased Real Property. To the
knowledge of the Seller, there are no material defects in the physical condition
of any land, buildings or improvements constituting part of the Leased Real
Property, including, without limitation, structural elements, mechanical
systems, parking and loading areas, and all such buildings and improvements are
in good operating condition and repair and have been well maintained.
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(v) Compliance with the Law. To the knowledge of the
Seller, LMC has not received any notice from any governmental authority of any
violation of any law, ordinance, regulation, license, permit or authorization
issued with respect to any Leased Real Property that has not been heretofore
corrected, and no such violation exists which could have a Material Adverse
Effect on the operation or value of any Leased Real Property. To the knowledge
of the Seller, all improvements located on or constituting part of the Leased
Real Property and their use and operation by LMC were and are now in compliance
in all material respects with all applicable laws, ordinances, regulations,
licenses, permits and authorizations, except as set forth in Schedule 2.05(a).
To the knowledge of the Seller, no approval or consent to the transactions
contemplated by this Agreement is required of any governmental authority with
jurisdiction over any aspect of the Leased Real Property or its use or
operations, except where the failure to obtain such approval or consent would
not have a Material Adverse Effect on the operation or value of the Leased Real
Property.
(b) Personal Property. To the Seller's knowledge after due
inquiry, a complete description of the machinery and equipment of LMC is
contained in Schedule 2.05(b). Except as specifically disclosed in said
Schedule, the Base Balance Sheet (as hereinafter defined), the balance sheet of
LMC as of December 31, 1998 securing specific liabilities (with respect to which
no default exists) or minor imperfections of title and Encumbrances, if any,
which are not substantial in amount, do not detract from the value of the
personal property subject thereto or impair the operations of LMC and have
arisen only in the ordinary course of business, LMC has good and marketable
title to all of its personal property. To the Seller's knowledge after due
inquiry, the Base Balance Sheet reflects all personal property of LMC. Except as
otherwise specified in Schedule 2.05(b), all leasehold improvements,
furnishings, machinery and equipment of LMC are in good repair, have been well
maintained and substantially comply with all applicable laws, ordinances and
regulations, and such machinery and equipment is in good working order ordinary
wear excepted; and Seller has no knowledge of any pending or threatened change
of any such law, ordinance or regulation which could have a Material Adverse
Effect on LMC or its business.
2.06 Financial Statements.
(a) Seller shall deliver at or prior to April 30, 1999 to the
Buyers the following financial statements and which shall be attached hereto as
Schedule 2.06:
(i) Unconsolidated unaudited balance sheets of LMC as of
December 31, 1996, 1997 and 1998 and statements of income
and retained earnings and statements of cash flows for the
three (3) years then ended, which statements were included
in the Seller's consolidated financial statements audited
by Seller's independent public accountants. The balance
sheet of LMC as of December 31, 1998 is referred to herein
as the "Base Balance Sheet."
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(ii) Unaudited balance sheet of LMC as of February 28,
1999 and statements of income and retained earnings and
statements of cash flows for the two-month period then
ended, certified by LMC's Controller.
The financial statements described in (i) and (ii) above, have been
prepared in accordance with GAAP applied consistently during the periods covered
thereby, are complete and correct in all material respects and present fairly in
all material respects the financial condition of LMC at the dates of said
statements and the results of operations for the periods covered thereby.
(b) To the knowledge of Seller after due inquiry, LMC does not
have as of the date of the Base Balance Sheet any liabilities of any nature,
whether accrued, absolute, contingent or otherwise, asserted, known or unknown
(including, without limitation, liabilities as guarantor or otherwise with
respect to obligations of others, liabilities for taxes due or then accrued or
to become due, or contingent liabilities relating to activities of LMC or the
conduct of its business prior to the date of the Base Balance Sheet, except (i)
liabilities stated or adequately reserved against on the Base Balance Sheet or
the notes thereto, (ii) liabilities reflected in Schedules furnished to the
Buyers hereunder as of the date hereof, or (iii) immaterial liabilities incurred
in the ordinary course of business, as applicable, in existence as of the date
of the Base Balance Sheet which are not required to be reflected in the Base
Balance Sheet or the notes thereto under GAAP.
(c) As of the date hereof and as of the Closing, LMC does not
have nor will have to Seller's knowledge, any liabilities of any nature, whether
accrued, absolute, contingent or otherwise, asserted, known (including, without
limitation, liabilities as guarantor or otherwise with respect to obligations of
others, liabilities for taxes due or then accrued or to become due, or
contingent or potential liabilities relating to activities of LMC or the conduct
of its business prior to the date hereof or the Closing, as the case may be),
except liabilities (i) stated or adequately reserved against on the Base Balance
Sheet or the notes thereto, (ii) reflected in Schedules furnished to the Buyers
hereunder on the date hereof, or (iii) incurred after the date of the Base
Balance Sheet in the ordinary course of business consistent with the terms of
this Agreement.
2.07 Taxes.
(a) Except as set forth on Schedule 2.07, to the knowledge of
the Seller, LMC has paid or caused to be paid all federal, state, local, foreign
and other taxes, including, without limitation, income taxes, estimated taxes,
capital gains taxes, alternative minimum taxes, excise taxes, sales taxes, goods
and services taxes, use taxes, value-added taxes, gross receipts taxes,
franchise taxes, capital stock taxes, employment and payroll-related taxes,
withholding taxes, stamp taxes, transfer taxes, windfall profit taxes,
environmental taxes and property taxes, whether or not measured in whole or in
part by net income, and all deficiencies, or other additions to tax, interest,
fines and penalties owed by it (collectively,
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"Taxes"), required to be paid by it through the date hereof whether disputed or
not. To the knowledge of the Seller, all Taxes and other assessments and levies
LMC is required to withhold or collect have been withheld and collected and have
been paid over to the proper governmental authorities within the time required
by applicable law.
2.08 Absence of Certain Changes. To the knowledge of the Seller and
except as disclosed in Schedule 2.08, since the date of the Base Balance Sheet
there has not been:
(a) Any change in the financial condition, properties, assets,
liabilities, business or operations of LMC, which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has had a Material Adverse Effect on LMC;
(b) Any contingent liability incurred by LMC as guarantor or
otherwise with respect to the obligations of others or any cancellation of any
material debt or claim owing to, or waiver of any material right of, LMC;
(c) Any Encumbrance placed on any of the properties of LMC
which remains in existence on the date hereof or will remain on the Closing
Date;
(d) Any obligation or liability of any nature, whether
accrued, absolute, contingent or otherwise, asserted, known (including, without
limitation, liabilities for Taxes due or to become due or contingent liabilities
relating to products or services provided by LMC or the conduct of the business
of LMC since the date of the Base Balance Sheet), incurred by LMC other than
obligations and liabilities incurred in the ordinary course of business
consistent with the terms of this Agreement (it being understood that product or
service liability claims shall not be deemed to be incurred in the ordinary
course of business);
(e) Any purchase, sale or other disposition, or any agreement
or other arrangement for the purchase, sale or other disposition, of any of the
properties or assets of LMC other than in the ordinary course of business;
(f) Any damage, destruction or loss, whether or not covered by
insurance, which has had a Material Adverse Effect on LMC;
(g) Any declaration, setting aside or payment of any dividend
by LMC, or the making of any other distribution in respect of the capital stock,
or other ownership interests, of LMC, or any direct or indirect redemption,
purchase or other acquisition by LMC of its own capital stock, or other
ownership interests;
(h) Any labor trouble or claim of unfair labor practices
involving LMC, any change in the compensation payable or to become payable by
LMC to any of its officers, employees, agents or independent contractors other
than normal merit increases in accordance
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with its usual practices, or any bonus payment or arrangement made to or with
any of such officers, employees, agents or independent contractors;
(i) Any change with respect to the officers or management of
LMC;
(j) Any payment or discharge of a material lien or liability
of LMC which was not shown on the Base Balance Sheet or incurred in the ordinary
course of business thereafter;
(k) Any obligation or liability incurred by LMC to any of its
officers, directors, stockholders or employees, or any loans or advances made by
LMC to any of its officers, directors, stockholders or employees, except normal
compensation and expense allowances payable to officers or employees;
(l) Any change in accounting methods or practices, credit
practices or collection policies used by LMC;
(m) Any other transaction entered into by LMC other than
transactions in the ordinary course of business;
(n) Any waiver of any valuable right of, or cancellation of
any debt or claim held by, LMC; or
(o) Any agreement or understanding whether in writing or
otherwise, for LMC to take any of the actions specified in paragraphs (a)
through (o) above.
2.09 Ordinary Course. Since the date of the Base Balance Sheet, the
Seller and LMC have each conducted its business only in the ordinary course and
consistently with prior practices.
2.10 Banking Relations. To the knowledge of the Seller, all
arrangements which LMC has with any banking institution are completely and
accurately described in Schedule 2.10, indicating with respect to each of such
arrangements the type of arrangements maintained (such as checking account,
borrowing arrangements, safe deposit box, etc.) and the person or persons
authorized in respect thereof.
2.11 Intellectual Property.
(a) Except as described in Schedule 2.11, LMC and Seller each
have exclusive ownership of, or a license to use, all patent, copyright, trade
secret, trademark, or other proprietary rights (collectively, "Intellectual
Property") used or to be used in their respective businesses as presently
conducted or contemplated. All of the rights of LMC and Seller in such
Intellectual Property are freely transferable. There are no claims or demands of
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any other person pertaining to any of such Intellectual Property and no
proceedings have been instituted, or are pending or threatened, which challenge
the rights of Seller in respect thereof. To the knowledge of Seller, and except
as described in Schedule 2.11, LMC has the right to use, free and clear of
claims or rights of other persons, all customer lists, designs, manufacturing or
other processes, computer software, systems, data compilations, research results
and other information required for or incident to its products or its business
as presently conducted or contemplated.
(b) All patents, patent applications, trademarks, trademark
applications and registrations and registered copyrights which are owned by or
licensed to either Seller or LMC, pertaining to the business of LMC, are listed
in Schedule 2.11. All of such patents, patent applications, trademark
registrations, trademark applications and registered copyrights have been duly
registered in, filed in or issued by the United States Patent and Trademark
Office or such other applicable governmental office or authority under the
jurisdiction of which the relevant company conducts business, as the case may
be, and have been properly maintained and renewed in accordance with all
applicable provisions of applicable law and administrative regulations.
(c) All licenses or other agreements under which either LMC or
Seller is granted rights in Intellectual Property, pertaining to the business of
LMC, are listed in Schedule 2.11. All said licenses or other agreements are in
full force and effect, there is no material default by any party thereto, and,
except as set forth in Schedule 2.11, all of the rights of each company
thereunder will continue in full force and effect upon consummation of the
transactions contemplated hereby. To the knowledge of the Seller, the licensors
under said licenses and other agreements have and had all requisite power and
authority to grant the rights purported to be conferred thereby. True and
complete copies of all such licenses or other agreements, and any amendments
thereto, shall be provided at or prior to April 30, 1999 to the Buyers.
(d) All licenses or other agreements under which either LMC or
Seller has granted rights to others in Intellectual Property, with respect to
the business of LMC, owned or licensed by either company are listed in Schedule
2.11. All of said licenses or other agreements are in full force and effect and,
to the knowledge of the Seller, there is no material default by any party
thereto, and, except as set forth in Schedule 2.11, all of the rights of each
company thereunder will continue in full force and effect upon consummation of
the transactions contemplated hereby. True and complete copies of all such
licenses or other agreements, and any amendments thereto, shall be provided at
or prior to April 30, 1999 to the Buyers.
(e) Each of LMC and Seller has taken all steps required in
accordance with sound business practice to establish and preserve its ownership
of all material Intellectual Property rights with respect to its products,
services and technology, with respect to the business of LMC. Except as set
forth on Schedule 2.11, the Seller has not made any valuable
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non-public information of Seller available to any person other than its
employees, except pursuant to written agreements requiring the recipients to
maintain the confidentiality of such information and appropriately restricting
the use thereof. Seller has no knowledge of any infringement by others of any
material Intellectual Property rights, with respect to the business of LMC.
(f) To Seller's knowledge after due inquiry, the present and
contemplated business, activities, products and services of LMC does not
infringe any Intellectual Property of any other person. To Seller's knowledge
after due inquiry, no proceeding charging LMC with infringement of any adversely
held Intellectual Property has been filed or is threatened to be filed. To the
knowledge of Seller, there exists no unexpired patent or patent application
which includes claims that would be infringed by or otherwise adversely affect
the products, activities or business of LMC. To Seller's knowledge after due
inquiry, LMC is not making unauthorized use of any confidential information or
trade secrets of any person, including, without limitation, any former employer
of any past or present employee of LMC. Except as set forth in Schedule 2.11, to
the best of Seller's knowledge, none of LMC's employees have any agreements or
arrangements with any persons other than LMC related to confidential information
or trade secrets of such persons or restricting any such employee's ability to
engage in business activities of any nature. The activities of its employees on
behalf of LMC do not violate any such agreements or arrangements known to
Seller.
2.12 Contracts. Except for contracts, commitments, plans, agreements
and licenses described in Schedule 2.12 (true and complete copies of which shall
be delivered at or prior to April 30, 1999 to the Buyers), LMC, to the knowledge
of Seller, is not a party to or subject to:
(a) Any plan or contract providing for bonuses, pensions,
options, stock purchases, deferred compensation, retirement payments, profit
sharing, collective bargaining or the like, or any contract or agreement with
any labor union;
(b) Any employment contract, consulting contract or contract
for services which is not terminable within thirty (30) days by LMC without
liability for any penalty or severance payment;
(c) Any contract or agreement for the purchase of any
commodity, material or equipment except purchase orders in the ordinary course
for less than $10,000 each, such orders not exceeding $50,000 in the aggregate;
(d) Any other contracts or agreements creating any obligations
of LMC of $10,000 or more with respect to any such contract or agreement not
specifically disclosed elsewhere under this Agreement;
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(e) Any contract or agreement providing for the purchase of
all or substantially all of its requirements of a particular product from a
supplier; (f)ab Any contract or agreement which by its terms does not terminate
or is not terminable without penalty by LMC or its successor within one (1) year
after the date hereof;
(g) Any contract or agreement for the sale or lease of its
products not made in the ordinary course of business;
(h) Any contract with any sales agent or distributor of
products of LMC;
(i) Any contract containing covenants limiting the freedom of
LMC to compete in any line of business or with any person or entity;
(j) Any contract or agreement for the purchase of any fixed
asset for a price in excess of $10,000, whether or not such purchase is in the
ordinary course of business;
(k) Any license agreement (as licensor or licensee);
(l) Any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money;
(m) Any contract or agreement with any officer, employee,
director or stockholder of LMC or with any persons or organizations controlled
by or affiliated with any of them; or
(n) Any contract, agreement or understanding whether in
writing or otherwise for LMC to take any of the actions specified in paragraphs
(a) through (m) above.
To the knowledge of Seller, LMC is not in default under any such
contracts, commitments, plans, agreements or licenses described in said Schedule
or has any knowledge of conditions or facts which, with notice or the passage of
time, or both, would constitute a default.
2.13 Litigation. Schedule 2.13 lists all currently pending litigation
and governmental or administrative proceedings or investigations to which LMC is
a party. To the knowledge of Seller, except for matters described in Schedule
2.13, there is no litigation or governmental or administrative proceeding or
investigation pending which may have, either individually or in the aggregate, a
Material Adverse Effect on LMC, or which would prevent or hinder the
consummation of the transactions contemplated by this Agreement. With respect to
each matter set forth therein, Schedule 2.13 sets forth a description of the
matter, the forum (if any) in which it is being conducted, the parties thereto
and the type and amount of relief sought.
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2.14 Compliance with Laws. Except as set forth in Schedule 2.14, to
the knowledge of Seller, LMC is in compliance in all material respects with all
applicable statutes, ordinances, orders, judgments, decrees, rules and
regulations promulgated by any federal, state, municipal or foreign entity,
agency, court or other governmental authority applicable to it or to the conduct
of its business, and to the knowledge of Seller, LMC has not received notice of
a violation or alleged violation of any such statute, ordinance, order, rule or
regulation, except where the failure to be in such compliance would not have,
either individually or in the aggregate, a Material Adverse Effect on LMC, and
LMC has not , to the knowledge of Seller, received notice of a material
violation or alleged material violation of any such statute, ordinance, order,
rule or regulation.
2.15 Employee Benefit Programs. To the knowledge of Seller after due
inquiry, Schedule 2.15 lists every Employee Program (as defined below) that has
been maintained (as defined below) by LMC at any time during the three-year
period ending on the Closing Date.
(a) To the knowledge of Seller after due inquiry, each
Employee Program which has ever been maintained by LMC and which has at any time
been intended to qualify under Section 401(a) or 501(c)(9) of the Internal
Revenue Code of 1986, as amended (the "Code) has received a favorable
determination or approval letter from the Internal Revenue Service (the "IRS")
regarding its qualification under such Section and has, in fact, been qualified
under the applicable section of the Code from the effective date of such
Employee Program through and including the Closing (or, if earlier, the date
that all of such Employee Program's assets were distributed). No event or
omission has occurred which would cause any such Employee Program to lose its
qualification under the applicable Code section.
(b) Seller has no knowledge of or has reason to know, of any
failure of any party to comply with any laws applicable to the Employee Programs
that have been maintained by LMC. With respect to any Employee Program ever
maintained by LMC, to Seller's knowledge, there has occurred no "prohibited
transaction," as defined in Section 406 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code, or
breach of any duty under ERISA or other applicable law (including, without
limitation, any health care continuation requirements or any other tax law
requirements, or conditions to favorable tax treatment, applicable to such
plan), which could result, directly or indirectly, in any taxes, penalties or
other liability to LMC or to either Buyer. No litigation, arbitration,
governmental administrative proceeding (or investigation) or other proceeding
(other than those relating to routine claims for benefits) is pending or
threatened with respect to any such Employee Program. To the knowledge of Seller
after due inquiry, no Employee Program has any material unfunded or underfunded
obligation to provide benefits to any past, current or future participant
therein.
(c) To the knowledge of Seller after due inquiry, neither LMC
nor any Affiliate (as defined below) (i) has ever maintained any Employee
Program which has been subject to Title IV of ERISA (including, but not limited
to, any Multiemployer Plan (as
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defined below)) or (ii) has ever provided health care or any other non-pension
benefits to any employees after their employment is terminated (other than as
required by Part 6 of Subtitle B of Title I of ERISA) or has ever promised to
provide such post-termination benefits.
(d) With respect to each Employee Program maintained by LMC
within the three (3) years preceding the Closing, complete and correct copies of
the following documents (if applicable to such Employee Program) which shall be
delivered at or prior to April 30, 1999 to the Buyers: (i) all documents
embodying or governing such Employee Program, and any funding medium for the
Employee Program (including, without limitation, trust agreements), as they may
have been amended; (ii) the most recent IRS determination or approval letter
with respect to such Employee Program under Code Section 401 or 501(c)(9), and
any applications for determination or approval subsequently filed with the IRS;
(iii) the three (3) most recently filed IRS Forms 5500, with all applicable
schedules and accountants' opinions attached thereto; (iv) the summary plan
description for such Employee Program (or other descriptions of such Employee
Program provided to employees) and all modifications thereto; (v) any insurance
policy (including any fiduciary liability insurance policy) related to such
Employee Program; (vi) any documents evidencing any loan to an Employee Program
that is a leveraged employee stock ownership plan; and (vii) all other materials
reasonably necessary for the Buyers to perform any of its responsibilities with
respect to any Employee Program subsequent to the Closing (including, without
limitation, health care continuation requirements).
(e) For purposes of this Section:
(i) "Employee Program" means (A) all employee benefit
plans within the meaning of ERISA Section 3(3), including, but not limited to,
multiple employer welfare arrangements (within the meaning of ERISA Section
3(4)), plans to which more than one unaffiliated employer contributes and
employee benefit plans (such as foreign or excess benefit plans) which are not
subject to ERISA; and (B) all stock option plans, bonus or incentive award
plans, severance pay policies or agreements, deferred compensation agreements,
supplemental income arrangements, vacation plans, and all other employee benefit
plans, agreements and arrangements not described in (A) above. In the case of an
Employee Program funded through an organization described in Code Section
501(c)(9), each reference to such Employee Program shall include a reference to
such organization.
(ii) An entity "maintains" an Employee Program if such
entity sponsors, contributes to, or provides (or has promised to provide)
benefits under such Employee Program, or has any obligation (by agreement or
under applicable law) to contribute to or provide benefits under such Employee
Program, or if such Employee Program provides benefits to or otherwise covers
employees of such entity, or their spouses, dependents or beneficiaries.
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(iii) An entity is an "Affiliate" of a company if it would
have ever been considered a single employer with such company or any of its
subsidiaries under ERISA Section 4001(b) or part of the same "controlled group"
as such company for purposes of ERISA Section 302(d)(8)(C).
(iv) "Multiemployer Plan" means a (pension or non-pension)
employee benefit plan to which more than one employer contributes and which is
maintained pursuant to one or more collective bargaining agreements.
2.16 Environmental Matters.
(a) Except as set forth in Schedule 2.16, to the knowledge of
Seller, (i) LMC has never generated, transported, used, stored, treated,
disposed of or managed any Hazardous Waste (as defined below); (ii) no Hazardous
Material (as defined below) has ever been spilled, released or disposed of at
any site presently or formerly owned, operated, leased or used by LMC, or has
ever been located in the soil or groundwater at any such site; (iii) no
Hazardous Material has ever been transported from any site presently or formerly
owned, operated, leased or used by LMC for treatment, storage or disposal at any
other place; (iv) LMC does not presently own, operate, lease or use, nor has it
previously owned, operated, leased or used any site on which underground storage
tanks are or were located; and (v) no lien has ever been imposed by any
governmental agency on any property, facility, machinery or equipment owned,
operated, leased or used by LMC in connection with the presence of any Hazardous
Material.
(b) Except as set forth in Schedule 2.16, to the knowledge of
Seller, (i) LMC has no material liability under, nor has it ever violated, any
Environmental Law (as defined below); (ii) any property owned, operated, leased
or used by LMC, and any facilities and operations thereon, are presently in
compliance with all applicable Environmental Laws; (iii) LMC has never entered
into or been subject to any judgment, consent decree, compliance order or
administrative order with respect to any environmental or health and safety
matter or received any request for information, notice, demand letter,
administrative inquiry or formal or informal complaint or claim with respect to
any environmental or health and safety matter or the enforcement of any
Environmental Law; and (iv) LMC has no reason to believe that any of the items
enumerated in clause (iii) of this Subsection will be forthcoming.
(c) Except as set forth in Schedule 2.16, to the knowledge of
Seller, no site owned, operated, leased or used by LMC contains any asbestos or
asbestos-containing material, any polychlorinated biphenyls (PCBs) or equipment
containing PCBs, or any urea formaldehyde foam insulation.
(d) Seller shall provide at or prior to April 30, 1999 to the
Buyers copies of all documents, records, and information available to it
concerning any environmental or health and safety matter relevant to LMC,
whether generated by LMC or others, including, without
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limitation, environmental audits, environmental risk assessments, site
assessments, documentation regarding off-site disposal of Hazardous Materials,
spill control plans and reports, correspondence, permits, licenses, approvals,
consents and other authorizations related to environmental or health and safety
matters issued by any governmental agency.
(e) For purposes of this Section 2.16, (i) "Hazardous
Material" shall mean and include any hazardous waste, hazardous material,
hazardous substance, petroleum product, oil, toxic substance, pollutant,
contaminant or other substance which may pose a threat to the environment or to
human health or safety, as defined or regulated under any Environmental Law;
(ii) "Hazardous Waste" shall mean and include any hazardous waste as defined or
regulated under any Environmental Law; and (iii) "Environmental Law" shall mean
any environmental or health and safety-related law, regulation, rule, ordinance
or by-law at the foreign, federal, state or local level, whether existing as of
the date hereof, previously enforced or subsequently enacted.
2.17 List of Directors and Officers. Schedule 2.17 contains a true and
complete list of all current directors and officers of LMC. In addition,
Schedule 2.17 contains a list of all managers, employees and consultants of LMC
who, individually, have received or are scheduled to receive compensation from
LMC for the year ending December 31, 1999, in excess of $50,000. In each case,
such Schedule includes the current job title and aggregate annual compensation
of each such individual.
2.18 Transfer of Shares. No holder of stock of LMC has at any time
transferred any of such stock to any employee of LMC, which transfer constituted
or could be viewed as compensation for services rendered to LMC or Seller by
said employee.
2.19 Assignment of Rights. On or before the Closing Date, Seller will
have obtained all consents and assignments to the DataGlyph and CombiReader
Technology licenses referred to in Section 1.02 hereof from Xerox and XL Vision
in form and substance reasonably satisfactory to the Buyers.
SECTION 3. COVENANTS OF SELLER.
3.01 Consents. Prior to the Closing Date, Seller shall obtain all
authorizations, waivers, consents and permits, in form and substance reasonably
satisfactory to the Buyers, from all third parties, including, without
limitation, applicable governmental authorities, regulatory agencies, lessors,
lenders and contract parties, required to permit the continuation of the
business of each of Seller and LMC and the consummation of the transactions
contemplated by this Agreement, and to avoid any breach, default, termination,
acceleration or modification of any material agreement, contract, lease or
permit as a result of, or in connection with, the execution and performance of
this Agreement.
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3.02 Consummation of Agreement . Seller shall use its or his best
efforts to perform and fulfill all conditions and obligations on their parts to
be performed and fulfilled under this Agreement, to the end that the
transactions contemplated by this Agreement shall be fully carried out. To this
end, Seller will obtain prior to the Closing all necessary authorizations or
approvals of its stockholders and board of directors.
3.03 Confidentiality . Seller agrees that, unless and until the Closing
has been consummated, Seller, its officers, directors, agents and
representatives will hold in strict confidence, and will not use, any
confidential or proprietary data or information obtained from either Buyer with
respect to its business or financial condition except for the purpose of
evaluating, negotiating and completing the transactions contemplated hereby.
Information generally known in either Buyer's industry or which has been
disclosed to Seller by third parties which have a right to do so shall not be
deemed confidential or proprietary information for purposes of this Agreement.
If the transactions contemplated by this Agreement are not consummated, Seller
will return to each Buyer (or certify that they have destroyed) all copies of
such data and information, including, but not limited to, financial information,
customer lists, business and corporate records, worksheets, test reports, tax
returns, lists, memoranda and other documents prepared by or made available to
Seller in connection with the transactions. Notwithstanding the foregoing,
Seller shall be permitted to disclose such information about either Buyer and
the transactions contemplated hereby as may be legally required, and otherwise
reasonably necessary, in the preparation, completion, filing and distribution of
such reports, filings and other documents required by the Securities Act or the
Exchange Act.
3.04 No Transfer of Securities . Unless and until this Agreement shall
have been terminated in accordance with its terms, the Seller shall not directly
or indirectly exchange, deliver, assign, pledge, encumber or otherwise transfer
or dispose of any of the capital stock of LMC (including any options in respect
thereof), nor shall the Seller directly or indirectly grant any right of any
kind to acquire, dispose of, vote or otherwise control in any manner any such
securities.
3.05 Delivery of Schedules. At or prior to April 30, 1999, Seller shall
have delivered to each Buyer all Schedules required herein and such Schedules
shall have been in a form satisfactory to such Buyer.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYERS.
4.01 Making of Representations and Warranties. As a material
inducement to the Seller to enter into this Agreement and consummate the
transactions contemplated hereby, each Buyer hereby makes the representations
and warranties below, as to itself and not with respect to the other Buyer, to
the Seller contained in this Section 4.
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4.02 Organization and Qualifications of Each Buyer.
(a) Amphion has been duly organized and is validly existing as
a limited partnership under the laws of the State of Delaware, with full power
to own or lease its properties and to conduct its business as such business is
now conducted. Amphion is not in material violation of any provision of its
charter documents. Amphion is not required to be qualified to do business as a
foreign limited partnership in any jurisdiction.
(b) Antiope has been duly formed and is validly existing as a
limited liability company under the laws of the State of Delaware, with all
requisite limited liability company power and authority to own or lease its
properties and to conduct its business as such business in now conducted.
Antiope is not in violation of any term of certificate of formation or limited
liability company operating agreement. Antiope is not required to be qualified
to do business in any other jurisdiction.
4.03 Authority of Buyers. Each Buyer has full right, authority and
power to enter into this Agreement and each agreement, document and instrument
to be executed and delivered by such Buyer pursuant to this Agreement and to
carry out the transactions contemplated hereby and thereby. The execution,
delivery and performance by each Buyer of this Agreement and each such other
agreement, document and instrument have been duly authorized by all necessary
corporate action of such Buyer and no other action on the part of such Buyer is
required in connection therewith. This Agreement and each other agreement,
document and instrument constitute, or when executed and delivered will
constitute, valid and binding obligations of each Buyer enforceable in
accordance with their terms, except as limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights and (ii) general principles of equity
that restrict the availability of equitable remedies. The execution, delivery
and performance by each Buyer of this Agreement and each such agreement,
document and instrument:
(A) does not and will not violate any provision of the charter
documents of either Buyer; and
(B) does not and will not violate any federal, state or local laws
applicable to such Buyer or require such Buyer to obtain any approval, consent
or waiver of, or make any filing with, any person or entity (governmental or
otherwise) which has not been obtained or made.
4.04 Litigation. There is no litigation pending or, to each Buyer's
knowledge, threatened against such Buyer which would prevent or hinder the
consummation of the transactions contemplated by this Agreement.
4.05 Finders Fee. Neither Buyer has incurred or become liable for any
broker's commission or finder's fee which would be payable by the Seller or LMC
relating to or in connection with the transactions contemplated by this
Agreement.
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4.06 Financial Statements.
(a) Each Buyer shall deliver to Seller at or prior to April
30, 1999 balance sheets of such Buyer as of December 31, 1998 and statements of
income and retained earnings and statements of cash flows for the year then
ended, which statements are audited by such Buyer's independent public
accountants and copies of which are set forth on Schedule 4.06.
The financial statements described in (i) and (ii) above have been
prepared in accordance with GAAP applied consistently during the periods covered
thereby, are complete and correct in all material respects and present fairly in
all material respects the financial condition of each Buyer at the dates of said
statements and the results of operations for the periods covered thereby.
4.07 Restrictions on Transfer of Shares. Each Buyer represents to
Seller that it has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks contemplated by
this Agreement and making an informed investment decision with respect thereto.
Each Buyer represents that it is an "accredited investor" as such term is
defined in Rule 501 under the Securities Act of 1933, as amended (the
"Securities Act"). Each Buyer represents to Seller that it is purchasing the LMC
Shares for its own account, for investment only and not with a view to, or any
present intention of, effecting a distribution of such securities or any part
thereof except pursuant to a registration or an available exemption under
applicable law. Such Buyer acknowledges that the LMC Shares have not been
registered under the Securities Act or the securities laws of any state or other
jurisdiction and cannot be disposed of unless they are subsequently registered
under the Securities Act and any applicable state laws or exemption from such
registration is available.
4.08 Legends. Each certificate representing the LMC Shares may be
endorsed with the following legends (or any legends substantially to the same
effect):
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM; and
(b) Any other legends required by applicable state securities
laws.
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SECTION 5. COVENANTS OF BUYERS.
5.01 Making of Covenants and Agreements. Each Buyer hereby makes the
covenants and agreements set forth in this Section 5.
5.02 Confidentiality. Each Buyer agrees that, unless and until the
Closing has been consummated, such Buyer and its officers, members, partners,
agents and representatives will hold in strict confidence, and will not use, any
confidential or proprietary data or information obtained from Seller and LMC
with respect to the business or financial condition of Seller and LMC except for
the purpose of evaluating, negotiating and completing the transactions
contemplated hereby. Information generally known in the industries of Seller and
LMC or which has been disclosed to either Buyer by third parties which have a
right to do so shall not be deemed confidential or proprietary information for
purposes of this Agreement. If the transactions contemplated by this Agreement
are not consummated, each Buyer will return to Seller (or certify that it has
destroyed) all copies of such data and information, including, but not limited
to, financial information, customer lists, business and corporate records,
worksheets, test reports, tax returns, lists, memoranda and other documents
prepared by or made available to such Buyer in connection with the transactions.
Notwithstanding the foregoing, each Buyer shall be permitted to disclose such
information about LMC or Seller and the transactions contemplated hereby as may
be legally required, and otherwise reasonably necessary, in the preparation,
completion, filing and distribution of such reports, filings and other documents
required by the Securities Act or the Exchange Act.
5.03 Consents. Each Buyer shall make all filings with and notifications
of governmental authorities, regulatory agencies and other entities required to
be made by such Buyer in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby; and such
Buyer shall obtain all authorizations, waivers, consents and permits, from all
third parties, including, without limitation, applicable governmental
authorities, regulatory agencies, lessors, lenders and contract parties,
required to permit the consummation of the transactions contemplated by this
Agreement, and to avoid any breach, default, termination, acceleration or
modification of any material agreement, contract, lease or permit as a result
of, or in connection with, the execution and performance of this Agreement.
5.04 Consummation of Agreement. Each Buyer shall use its best efforts
to perform and fulfill all conditions and obligations on its part to be
performed and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement shall be fully carried out.
5.05 Tax Returns. Each Buyer shall cooperate with Seller to permit
Seller in accordance with applicable law to promptly prepare and file on or
before the due date or any extension thereof all federal, state and local tax
returns required to be filed by Seller with respect to taxable periods ending on
or before the Closing.
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SECTION 6. CONDITIONS.
6.01 Conditions to the Obligations of Buyers. The obligation of each
Buyer to consummate this Agreement and the transactions contemplated hereby are
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a) Representations; Warranties; Covenants. Each of the
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects (except for such representations and
warranties that are qualified by their terms as to knowledge or materiality,
which representations and warranties as so qualified shall be true in all
respects) as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing; and Seller shall, on or before the Closing, have
performed all of their obligations hereunder which by the terms hereof are to be
performed on or before the Closing.
(b) No Material Change. There shall have been no change in the
financial condition, prospects, properties, assets, liabilities, business or
operations of LMC since the date hereof which has resulted in or is reasonably
likely to result in a Material Adverse Effect on LMC, whether or not in the
ordinary course of business.
(c) Certificate from Officers. The Seller shall have delivered
to each Buyer a certificate signed by Seller's President dated as of the Closing
Date to the effect that the statements set forth in paragraphs (a), (b) and (c)
above are true and correct.
(d) Approval of Buyers' Counsel. All actions, proceedings,
instruments and documents required to carry out this Agreement and the
transactions contemplated hereby and all related legal matters contemplated by
this Agreement shall have been approved by ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP, as
counsel for Buyers, and such counsel shall have received on behalf of each Buyer
such other certificates, opinions and documents in form satisfactory to such
counsel, as such Buyer may reasonably require from the Seller to evidence
compliance with the terms and conditions hereof as of the Closing and the
correctness as of the Closing of the representations and warranties of the
Seller and the fulfillment of their respective covenants.
(e) Opinion of Counsel. On the Closing Date, the Buyers shall
have received from ▇▇▇▇▇▇ and Lidji, P.C., counsel for the Seller, an opinion as
of said date, in substantially the form acceptable to the parties.
(f) No Litigation. There shall have been no determination by
either Buyer, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become inadvisable or impracticable by reason
of the institution or threat by any person or any federal, state, foreign or
other governmental authority of litigation, proceedings or other action against
such Buyer or LMC.
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(g) Consents. Each of LMC and Seller shall have made all
filings with and notifications of governmental authorities, regulatory agencies
and other entities required to be made by each of them in connection with the
execution and delivery of this Agreement, the performance of the transactions
contemplated hereby and the continued operation of the business of LMC by the
Buyers subsequent to the Closing. Seller, LMC and each Buyer shall have received
all authorizations, waivers, consents and permits, in form and substance
reasonably satisfactory to such Buyer, from all third parties, including,
without limitation, the landlord of LMC's facility in Albuquerque, New Mexico,
▇.▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") in connection with the Note granted to ▇▇▇▇▇▇ by Seller
(the "▇▇▇▇▇▇ Note"), Xerox in connection with the assignment of the DataGlyph
Technology license and XL Vision in connection with the assignment of the
CombiReader Technology license, applicable governmental authorities, regulatory
agencies, lessors, lenders and contract parties, required to permit the
continuation of the business of LMC and the use of the Axcess Assets and the
consummation of the transactions contemplated by this Agreement, and to avoid a
breach, default, termination, acceleration or modification of any indenture,
loan or credit agreement or any other material agreement, contract, instrument,
mortgage, lien, lease, permit, authorization, order, writ, judgment, injunction,
decree, determination or arbitration award as a result of, or in connection
with, the execution and performance of this Agreement.
(h) Employee Programs. LMC shall have taken all steps
necessary under the relevant documents and applicable law to maintain the
qualification of each Employee Program of LMC identified in Schedule 2.16
notwithstanding the purchase of the LMC Shares by each Buyer.
(i) Resignations. LMC shall have delivered to each Buyer
resignations (in their respective capacities as directors and officers, but not
as employees) of all of the directors of LMC and of such officers of LMC as may
be requested by such Buyer at least five (5) days prior to the Closing, such
resignations to be effective at the Closing.
(j) Releases. LMC shall have delivered to each Buyer general
releases signed by the Seller, as the sole stockholder of LMC, and by each
officer and director of LMC of all claims which any of them have against LMC and
such Buyer in substantially the form acceptable to the parties.
(k) Release of Liens. All Encumbrances on the assets of LMC
and the Axcess Assets shall have been terminated and released and each Buyer
shall have received UCC-3 termination statements and such other documents
evidencing such terminations including, but not limited to, the release of liens
which ▇▇▇▇▇▇ holds on the LMC Shares and the release of liens which Seller and
Antiope hold on the Axcess Assets.
(l) Asset Transfer. Seller shall have delivered to each Buyer
the assignment, and other instruments of transfer and assignment substantially
in accordance with
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the provisions hereof, transferring to such Buyer all of Seller's right, title
and interest in and to the Axcess Assets, free and clear of all Encumbrances.
(m) Delivery of Schedules. On or before April 30, 1999, each
Buyer shall have received from Seller all Schedules required herein in a form
satisfactory to such Buyer.
6.02 Conditions to Obligations of the Seller. The obligations of the
Seller to consummate this Agreement and the transactions contemplated hereby are
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a) Representations; Warranties; Covenants. Each of the
representations and warranties of each Buyer contained in this Agreement shall
be true and correct in all material respects as though made on and as of the
Closing Date. Each Buyer shall, on or before the Closing, have performed all of
its obligations hereunder which by the terms hereof are to be performed on or
before the Closing. Each Buyer shall have delivered to the Seller a certificate
of the President or any Vice President of such Buyer dated the Closing Date to
such effect.
(b) Approval of the Seller's Counsel. All actions,
proceedings, instruments and documents required to carry out this Agreement and
the transactions contemplated hereby and all related legal matters contemplated
by this Agreement shall have been approved by ▇▇▇▇▇▇ and Lidji, P.C., as counsel
for the Seller, and such counsel shall have received on behalf of the Seller
such other certificates, opinions and documents in form satisfactory to such
counsel, as the Seller may reasonably require from each Buyer to evidence
compliance with the terms and conditions hereof as of the Closing and the
correctness as of the Closing of the representations and warranties of such
Buyer and the fulfillment of its covenants.
(c) No Litigation. There shall have been no determination by
the Seller, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become inadvisable or impracticable by reason
of the institution or threat by any person or any federal, state, foreign or
other governmental authority of litigation, proceedings or other action against
either Buyer.
(d) Accounting Treatment. The accounting treatment of the
transaction described herein shall be satisfactory to the Seller.
(e) Security Agreement. Amphion shall grant to the Seller a
security interest in the Axcess Assets in a form of Security Agreement
substantially acceptable to the parties.
(f) Pledge Agreement. Each Buyer shall grant to the Seller a
lien on all of the outstanding LMC Shares acquired by such Buyer in a form of
Pledge Agreement substantially acceptable to the parties. (g)ab Repayment of
Debt. Antiope shall provide evidence to Seller of the payment and satisfaction
of the debt of Seller in the amount of $910,000 due to Antiope and Amphion shall
provide evidence to Seller of the payment and satisfaction of the debt of Seller
in the amount of $1,090,000 due to Amphion.
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(h) Demand Note, Term Note and Warrants. Amphion shall deliver
to the Seller a Demand Note, a Term Note and the Quantrad Warrants in accordance
with the terms of Section 1.02 hereof.
(i) Resignation of Director. At or prior to the Closing Date,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall resign as a member of the Board of Directors of the
Seller.
(j) Financial Statements of Buyers. At or prior to the Closing
Date, each Buyer shall have delivered to the Seller the financial statements
referred to in Section 4.06 hereto.
SECTION 7. SURVIVAL
7.01 Survival of Warranties . Each of the representations, warranties,
agreements, covenants and obligations herein or in any Schedule, Exhibit,
Certificate or financial statement delivered by any party to the other party
incident to the transactions contemplated hereby are material, shall be deemed
to have been relied upon by the other party and shall survive until December 31,
1999, regardless of any investigation and shall not merge in the performance of
any obligation by either party hereto. For purposes of this Section 7 "Damages"
shall mean (i) any and all damages, losses, deficiencies or liabilities
("Losses") caused by, resulting or arising from or otherwise relating to any
failure of any representation or warranty of the Seller or either Buyer
contained herein to be true when made and as at the Closing Date; and (ii) any
and all actions, suits, proceedings, claims, liabilities, demands, assessments,
judgments, reasonable costs and expenses, including reasonable attorneys' fees,
incident to any of the foregoing or such indemnification (all together "Costs";
Costs and Losses together shall hereinafter be referred to as "Damages").
7.02 Limitation on Liability of Seller. The liability of Seller to
Buyer for breach of the representations, warranties, agreements, covenants and
obligations herein or in any Schedule, Exhibit, Certificate or financial
statement delivered by any party to the other party incident to the transactions
contemplated hereby (a "Breach") shall be subject to the following:
(a) No Damages shall be recoverable by the Buyers for a
Breach, and no claim therefor shall be asserted for any purpose whatsoever
hereunder, unless the amount of the Damages equals at least $100,000 in the
aggregate and then only to the extent such Damages exceed $100,000 in the
aggregate.
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(b) The aggregate amount of Damages recoverable by the Buyers
for a Breach in the aggregate shall be limited to $7,000,000.
7.03 Limitation on Liability of Buyer. The liability of Buyer to Seller
for a Breach (as defined above) shall be subject to the following:
(a) No Damages shall be recoverable by Seller for a Breach,
and no claim therefor shall be asserted for any purpose whatsoever hereunder,
unless the amount of the Damages equals at least $100,000 in the aggregate and
then only to the extent such Damages exceed $100,000 in the aggregate.
(b) The aggregate amount of Damages recoverable by Seller for
a Breach in the aggregate shall be limited to $7,000,000.
SECTION 8. MISCELLANEOUS.
8.01 Fees and Expenses. Each Buyer shall pay its own expenses and
costs associated with the preparation of this Agreement and the consummation of
the transactions contemplated hereby. Seller shall pay all of its fees and
expenses and all fees and expenses of LMC in connection with the preparation of
this Agreement and the consummation of the transactions contemplated hereby, and
no expenses of Seller or LMC relating in any way to the transactions
contemplated hereby, including, without limitation, legal, accounting or other
professional expenses and any broker's commission or finder's fee, shall be
charged to, paid by or reflected in any account of LMC or either Buyer.
8.02 Governing Law. This Agreement shall be construed under and
governed by the internal laws of the State of Delaware without regard to its
conflict of laws provisions.
8.03 Notices. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon receipt, or if
sent by registered or certified mail, upon the sooner of the date on which
receipt is acknowledged or the expiration of three (3) days after deposit in
United States post office facilities properly addressed with postage prepaid.
All notices to a party will be sent to the addresses set forth below or to such
other address or person as such party may designate by notice to each other
party hereunder:
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TO BUYERS: Amphion Ventures, L.P.
Antiope Partners LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇,
Managing Partner
With a copy to: ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP
Exchange Place
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, P.C.
TO SELLER Axcess, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
With a copy to: ▇▇▇▇▇▇ and Lidji, P.C.
4400 Renaissance Tower
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
8.04 Entire Agreement. This Agreement, including the Schedules and
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings, including the term sheet between
each Buyer and Seller.
8.05 Assignability; Binding Effect. This Agreement shall only be
assignable by each Buyer, whether in whole or in part, to an entity controlling,
controlled by or under common control with such Buyer upon written notice to the
Seller, and such assignment shall not relieve such Buyer of any liability
hereunder. This Agreement may not be assigned by Seller without the prior
written consent of each Buyer. This Agreement shall be binding upon and
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enforceable by, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.
8.06 Captions. The captions in this Agreement are for convenience only
and shall not affect the construction or interpretation of any term or provision
hereof.
8.07 Execution in Counterparts. For the convenience of the parties and
to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
8.08 Amendments. This Agreement may not be amended or modified, nor may
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by each Buyer and Seller, or in the case of
a waiver, the party waiving compliance.
8.09 Consent to Jurisdiction. Each of the parties hereby consents to
personal jurisdiction, service of process and venue in the federal or state
courts of State of Delaware for any claim, suit or proceeding arising under this
Agreement, or in the case of a third-party claim subject to indemnification
hereunder, in the court where such claim is brought.
[End of Text]
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
AMPHION VENTURES, L.P.
By: AMPHION PARTNERS LLC,
its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
Title: Managing Member
ANTIOPE PARTNERS LLC
By: /s/ ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
Title: Managing Member
AXCESS, INC.
By: /s/ ▇▇▇▇▇ ▇. HAIR
-------------------------------------
Name: ▇▇▇▇▇ ▇. Hair
Title: Chief Financial Officer
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List of Exhibits and Schedules
Exhibits
Exhibit A - Allocation of LMC Shares
Schedules
Schedule 1.07 Allocation of Purchase Price
Schedule 2.02 Organization of Seller and LMC
Schedule 2.03 Capitalization of LMC
Schedule 2.04 Authority
Schedule 2.05(a) Leased Real Property
Schedule 2.05(b) Personal Property
Schedule 2.06 Financial Statements of LMC
Schedule 2.07 Taxes
Schedule 2.08 Absence of Certain Changes
Schedule 2.10 Banking Relations
Schedule 2.11 Intellectual Property
Schedule 2.12 Contracts
Schedule 2.13 Litigation
Schedule 2.14 Approvals; Consents
Schedule 2.15 Employee Benefits
Schedule 2.16 Environmental Matters
Schedule 2.17 Directors and Officers
Schedule 4.06 Financial Statements of Buyers