<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) June 8, 1998
ACCESS Corporation
_________________________________________________________________
(Exact name of registrant as specified in its charter)
Ohio 2-33108 31-0673364
_________________________________________________________________
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
4350 Glendale-Milford Road, Suite 250, Cincinnati, Ohio 45242
_________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (513) 786-8350
______________
_________________________________________________________________
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
____________
Registrant has entered into an Asset Purchase Agreement
dated as of June 8, 1998 with Scan-Optics, Inc. ("Scan-Optics")
providing for the sale of the Registrant's Hardware Service
Division to Scan-Optics and an Asset Purchase Agreement dated as
of June 8, 1998 with ACCESS Systems LLC ("Systems") providing for
the sale of Registrant's remaining operating assets and business,
including those of its EDMS Division, to Systems. Such sales are
to be entered into pursuant to Registrant's Plan of Complete
Liquidation and Dissolution, which will be submitted for approval
of Registrants' shareholders at a Special Meeting to be held on
June 30, 1998.
Item 7. Financial Statements and Exhibits.
_________________________________
Registrant's Proxy Statement dated June 9, 1998 for the
Special Meeting of Shareholders to be held on June 30, 1998.
SIGNATURES
__________
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
ACCESS Corporation
_______________________________
(Registrant)
Date: June 16, 1998 By /s/ Newton D. Baker
___________________________
(Signature)
Name: Newton D. Baker
Title: Executive Vice President
<PAGE>
June 9, 1998
Dear Access Shareholder:
You are cordially invited to attend a Special Meeting of
Shareholders of ACCESS Corporation to be held at 9:00 a.m.,
E.D.T. on June 30, 1998, at Taft, Stettinius & Hollister LLP, 425
Walnut Street, 18th Floor, Cincinnati, OH 45202.
On June 9, 1998, we announced that the Company had entered
into agreements for the sale of its business. Your Board of
Directors believes these transactions will provide shareholders
with an opportunity to receive cash for their Common Stock on
favorable terms.
To implement these transactions, at the Special Meeting you
will be asked to consider and adopt a Plan of Complete
Liquidation and Dissolution of the Company providing, among other
things, for the sale of the Company's Hardware Service Division
to Scan-Optics, Inc. and the sale of the Company's remaining
operating assets, including its EDMS Division, to ACCESS Systems
LLC, a company organized and owned by the Company's principal
executive officers. In such sales, the Company expects to
receive immediate net cash payments of $2.8 million, plus
possible additional consideration, all as described in the
accompanying Proxy Statement.
Under the Plan of Liquidation, as soon as possible after
the sale of the Company's assets, $1.5 million (plus any accrued
dividends) will be distributed to Oce N.V. with respect to its
Preferred Stock and the Company's remaining cash, less certain
reserves will be distributed to shareholders of the Company
(other than Oce) in redemption of their Common Stock. The
initial distribution will be approximately $.30 per share of
Common Stock. If additional consideration is received by the
Company under such asset purchase agreements and distributed to
the Shareholders, the Shareholders (other than Oce) may receive
up to an additional $.32 per share (calculated as if the closing
had occurred on April 30, 1998, and plus any contingent payments
received from ACCESS Systems LLC).
The Board of Directors has concluded that approval of the
Plan of Liquidation and the sales of assets described above is in
the best interests of the Company and its shareholders. THE
BOARD OF DIRECTORS THEREFORE RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE PLAN OF LIQUIDATION AND THE ASSET SALES.
The enclosed Proxy Statement more fully describes the Plan
of Liquidation and proposed asset sales. Please study the Proxy
Statement and each Exhibit carefully.
<PAGE>
We would, of course, be happy to welcome each of you at the
shareholders' meeting if you are able to attend in person.
Please send in your proxy, however, even if you intend to be
present at the meeting in person. You may always revoke your
proxy at or prior to the time of the Special Meeting if you wish
to vote in person.
Very truly yours,
/s/ Scott D. Watkins
Scott D. Watkins
President
<PAGE>
ACCESS CORPORATION
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Notice is hereby given that a Special Meeting of
Shareholders of ACCESS Corporation (the "Company") will be held
on Tuesday, June 30, 1998, at 9:00 a.m., E.D.T., at the offices
of Taft, Stettinius & Hollister LLP, 425 Walnut Street, 18th
Floor, Cincinnati, Ohio 45202, for the purpose of considering and
acting upon the following:
(1) A proposal to approve the Plan of Complete
Liquidation and Dissolution of the Company (the
"Plan") and, pursuant to the Plan, (a) the sale of
the assets and business of the Company's Hardware
Service Division to Scan-Optics, Inc. pursuant to the
Asset Purchase Agreement dated as of June 8, 1998
between the Company and Scan-Optics, Inc. and (b) the
sale of the remaining operating assets and business
of the Company, including those of its EDMS Division,
to ACCESS Systems LLC pursuant to the Asset Purchase
Agreement dated as of June 8, 1998 between the
Company and ACCESS Systems LLC; and
(2) Such other business as may properly be brought before
the meeting.
Shareholders of record at the close of business on June 5,
1998, are the only shareholders entitled to notice of and to vote
at such meeting. Information relating to matters to be
considered at the meeting is set out in the accompanying Proxy
Statement. The Board of Directors knows of no other business to
be brought before the meeting; however, should other business
properly be brought before the meeting, the Proxy confers
authority on the persons named as proxies to vote on such matters
in accordance with their discretion.
By order of the Board of Directors.
/s/ Newton D. Baker
____________________________
Newton D. Baker
Secretary
Cincinnati, Ohio
June 9, 1998
<PAGE>
ACCESS CORPORATION
PROXY STATEMENT
This Proxy Statement is furnished by the Board of Directors
of ACCESS Corporation (the "Company") in connection with its
solicitation of proxies for a Special Meeting of Shareholders of
the Company to be held on June 30, 1998 and any adjournment or
adjournments thereof (the "Meeting"), all as set forth in the
preceding Notice of Special Meeting. A form of proxy is
enclosed.
At the Meeting, the Company's shareholders will be asked to
adopt a Plan of Complete Liquidation and Dissolution of the
Company (the "Plan"). Pursuant to the Plan, the assets of the
Company's Hardware Service Division (the "Hardware Division")
will be sold to Scan-Optics, Inc. ("Scan-Optics") pursuant to the
Asset Purchase Agreement dated as of June 8, 1998 between the
Company and Scan-Optics (the "Scan-Optics Agreement") and the
Company's remaining operating assets, including those of its EDMS
Division (the "EDMS Division"), will be sold to ACCESS Systems
LLC ("Systems") pursuant to the Asset Purchase Agreement dated as
of June 8, 1998 between the Company and Systems (the "Systems
Agreement"). The Scan-Optics Agreement and the Systems Agreement
are referred to herein collectively as the "Asset Purchase
Agreements" and the transactions contemplated by the Asset
Purchase Agreements are referred to herein individually as the
"Scan-Optics Transaction" and the "Systems Transaction,"
respectively, and collectively as the "Asset Sales." A copy of
the Plan is attached hereto as Exhibit A. A copy of the Scan-
Optics Agreement is attached hereto as Exhibit B. A copy of the
Systems Agreement is attached hereto as Exhibit C.
If the Plan and the Asset Sales are not consummated for any
reason, the Board of Directors expects to continue the business
of the Company as heretofore conducted.
THE TRANSACTIONS TO BE CONSIDERED AT THE MEETING INVOLVE
MATTERS OF GREAT IMPORTANCE TO THE SHAREHOLDERS BECAUSE, IF
APPROVED, THE COMPANY WILL BE COMPLETELY LIQUIDATED, SHAREHOLDERS
WILL HAVE NO FURTHER INTEREST IN THE BUSINESS OF THE COMPANY AND
THE COMPANY WILL MAKE AN INITIAL DISTRIBUTION TO EACH SHAREHOLDER
(OTHER THAN OCE N.V., A NETHERLANDS CORPORATION ("OCE")) FOR EACH
SHARE OF COMMON STOCK OF APPROXIMATELY $.30 IN CASH (SUBJECT TO
ADDITIONAL DISTRIBUTIONS AS DESCRIBED HEREIN). ACCORDINGLY,
SHAREHOLDERS ARE URGED TO READ AND CONSIDER CAREFULLY THE
INFORMATION PRESENTED IN THIS PROXY STATEMENT.
<PAGE>
GENERAL INFORMATION
The executive offices of the Company are located at 4350
Glendale-Milford Road, Suite 250, Cincinnati, Ohio 45242-3700,
and its telephone number is (513) 786-8350. Copies of this Proxy
Statement and form of proxy are first being mailed to
shareholders of the Company on or about June 9, 1998.
The record date for determining the shareholders of the
Company entitled to notice of and to vote at the Meeting is June
5, 1998 (the "Record Date"). Each share of the Company's Common
Stock, no par value ("Common Stock"), then outstanding will be
entitled to one vote upon each matter submitted at the Meeting.
At the close of business on the Record Date, there were
outstanding 4,865,559 shares of Common Stock.
Approval of the Plan and the Asset Sales requires the
approval of the holders of a majority of the outstanding shares
of Common Stock. Shares as to which the authority to vote is
withheld and broker non-votes have the effect of negative votes.
Votes at the Meeting will be tabulated by officers and employees
of the Company, who also act as Inspectors of Election. The
Company has not established a system for confidential voting.
PLAN OF LIQUIDATION AND SALE OF ASSETS
At the Meeting shareholders will be asked to approve the
Plan, which provides, among other things, for the sale of the
operating assets of the Company. Pursuant to the Asset Purchase
Agreements, the Company will sell substantially all of its
business and operating assets to Scan-Optics and Systems and will
receive in consideration therefor approximately $2.8 million in
cash (net of payments to Scan-Optics and subject to the receipt
of additional contingent payments from Scan-Optics and Systems).
Scan-Optics and Systems will also assume certain of the
liabilities of the Company. See "Terms of the Asset Purchase
Agreements." Messrs. Scott D. Watkins and Newton D. Baker, the
President and Executive Vice President, respectively, of the
Company, and who also collectively are the beneficial owners of
approximately 33% of the Common Stock, intend to vote in favor of
the Plan and for the adoption of any other actions concerning the
Asset Purchase Agreements. Oce has also agreed to vote its 44%
of the outstanding Common Stock in favor of the Plan and the
Asset Sales. See "Other Information Pertaining to the Asset
Sales - The Oce Transaction".
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The Purchasers
______________
Scan-Optics is a Delaware corporation which has been a
leader in applying technology to high-speed recognition, data
entry and imaging solutions for the past 30 years. Its common
stock is traded in the over-the-counter market. As of December
31, 1997, Scan-Optics reported total assets of $38.7 million and
stockholders' equity of $27.7 million. For the year ended
December 31, 1997, Scan-Optics reported net income of $5.8
million on total revenues of $56.6 million.
Systems is an Ohio limited liability company formed to
acquire the EDMS Division. All of the equity interests in
Systems currently are owned by Messrs. Watkins and Baker,
although they intend to offer equity positions to employees of
Systems after the closing of the Asset Sales.
Scan-Optics and Systems are sometimes referred to herein
collectively as the "Purchasers."
Background and Reasons for the Asset Sales
__________________________________________
In early 1997, representatives of Med-Plus, Inc. contacted
the Company to discuss their concept of creating a new business
through the combination of the Company and other businesses
focused on computer assisted design applications. Discussions
continued and an agreement for the sale of all of the assets of
the Company to Universal Document Management Systems, Inc., a
subsidiary of Med-Plus ("UDMS"), was executed as of August 19,
1997 and approved by the Company's shareholders at the Annual
Meeting held on October 7, 1997. The transaction contemplated
the sale of substantially all of the Company's assets (other than
$1.5 million in cash) to UDMS in exchange for $3 million in cash,
together with assumption of liabilities and certain contingent
payments. The consummation of that transaction was conditioned
upon UDMS' successful completion of an initial public offering
(the "IPO"). On January 29, 1998, UDMS advised the Company that
it could not complete the IPO at that time, and the transaction
was terminated effective March 1, 1998.
While such transaction was pending and subsequent to its
termination, several other corporations (including Scan-Optics)
contacted the Company to express interest in acquiring all or
part of the Company's assets and business. The Board of
Directors elected to pursue negotiations for the sale of the
Hardware Division to Scan-Optics. The Company signed a
Memorandum of Understanding with Scan-Optics on April 17, 1998.
Neither Scan-Optics nor any other corporation made any
proposal to acquire the remaining assets of the Company,
including the EDMS Division. Nonetheless, the Company must be
entirely liquidated in order to obtain the approval of the Asset
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Sales by Oce. The Company's Board of Directors considered as
alternatives to the Systems Transaction the liquidation of the
remaining assets of the Company (including the assets of the EDMS
Division) or the transfer of the EDMS Division to a new
corporation whose stock then would be distributed to holders of
Common Stock (other than Oce) (the "Spin-Off"). The Board
determined that in such a liquidation, the Company would recover
relatively little of the value of the EDMS Division assets, but
would have to pay in full the liabilities (including the office
leases and approximately $600,000 payable to Messrs. Watkins and
Baker under their Executive Retention Agreements) to be assumed
by Systems pursuant to the Systems Agreement. The Company would
have had to divert a portion of the proceeds under the Scan-
Optics Agreement to pay these liabilities. Accordingly, the
Board concluded that such liquidation would be less advantageous
to the Company's shareholders than the Systems Transaction. The
Board also concluded that the Spin-Off was impracticable because
of the delay and cost of complying with applicable federal
securities regulations which, among other things, would have
required the preparation of multi-year audited historical
financial statements for the EDMS Division. All such
determinations with respect to the Systems Transactions were
confirmed by the directors other than Messrs. Watkins and Baker,
who abstained from such decisions because of their affiliation
with Systems.
In determining that the Plan and the Asset Sales are fair
to, and in the best interests of, the shareholders of the
Company, the Board of Directors considered principally the
following factors:
(1) Based upon its knowledge of the Company's
business, properties and prospects, including its
historical and current earnings and cash flow, and the
possible alternatives available to the Company, including
continuing its current business, the Board determined that
it was unlikely that the Company's stock or assets could be
sold at a higher price in the foreseeable future;
(2) The Company's operations resulted in a loss of
$.22 per share of Common Stock in fiscal 1997 and $.15 per
share in fiscal 1998;
(3) The Common Stock is not actively traded and the
shareholders' investment therein is illiquid. The Plan and
the Asset Sales will enable the shareholders (other than
Oce) to receive cash for their Common Stock;
(4) The approximately $.30 per share of Common
Stock minimum initial distribution expected to be received
by the shareholders (other than Oce) as a result of the
Asset Sales is approximately twice the book value of the
Common Stock ($.165 per share) at April 30, 1998; and
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(5) Under the Oce Agreement (see "Other Information
Pertaining to the Asset Sales - The Oce Transaction"), Oce
waives its right to receive amounts in excess of the
liquidation preference of the Company's Preferred Stock
("Preferred Stock"), the effect of which is to enable the
holders of Common Stock other than Oce to receive the value
which otherwise would have been associated with the Common
Stock held by Oce.
After considering the foregoing and extensive discussion at
special meetings of the Board held on May 21 and June 5, 1998,
the Board of Directors of the Company approved and recommended
that the shareholders approve the Plan and the Asset Sales. The
Board of Directors, in addition to Messrs. Watkins and Baker,
includes Messrs. James M. Anderson, Kent P. Friel, James H.
Hardie, Robert J. Kalthoff, Dennis J. Sullivan and John W. Weil,
none of whom is otherwise affiliated with the Company. None of
the directors of the Company is or is expected to be in any way
associated or affiliated with Scan-Optics (other than Mr.
Watkins, who will serve as a consultant to Scan-Optics in the
transition of the Hardware Division business with the objective
of maximizing the benefits of the transaction to the Company's
shareholders, including the payment of contingent purchase price
to the Company) and the Scan-Optics Agreement was approved
unanimously by the directors. Messrs. Watkins and Baker are the
equity owners of Systems; none of the other directors is or is
expected to be associated or affiliated with Systems. Messrs.
Watkins and Baker's ownership of Systems was disclosed fully to
the other directors prior to their consideration of the Systems
Agreement, and all of the other directors voted to approve the
Systems Agreement. Mr. Hardie abstained from voting on the Oce
Agreement because of his affiliation with Oce.
Mr. Friel did not participate in the June 5 Board of
Directors' Meeting, but confirmed his agreement with the actions
taken by the Board of Directors.
The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is required to adopt the Plan
and approve the Asset Sales. Messrs. Watkins and Baker, who hold
approximately 17% and 16%, respectively, of the Common Stock,
intend to vote their Common Stock in favor of the adoption of the
Plan and the approval of the Asset Sales, and Oce, which pursuant
to the Voting Trust Agreement is entitled to vote 44.82% of the
Common Stock, has agreed to do so. Such votes will ensure
approval of the Plan and the Asset Sales. See "Other Information
Pertaining to the Asset Sales - The Oce Transaction".
Retention Agreements
____________________
Pursuant to the Systems Agreement, Systems will assume all
of the Company's obligations under its Executive Retention
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<PAGE>
Agreements with each of Messrs. Watkins and Baker. See "Other
Information Pertaining to the Asset Sales - Retention
Agreements".
Effects of the Asset Sales
__________________________
Upon the consummation of the Asset Sales, the Company will
no longer be involved in any active business. The Company will
receive cash and contingent payment rights for its assets, which
will be distributed to its shareholders as described in "Other
Information Pertaining to the Asset Sales - Distribution of
Proceeds of the Asset Sales"; upon such distribution the Common
Stock will be redeemed and canceled and the shareholders will no
longer be shareholders in the Company, although they will be
beneficiaries of the liquidating trust which will be established
under the Plan. See "Other Information Pertaining to the Asset
Sales - Distribution of the Proceeds of the Asset Sales" and " -
The Liquidating Trust". As a result of such redemption, the
Company will no longer be required to file reports under the
Securities Exchange Act of 1934, as amended (the "1934 Act").
The former business of the Company will be owned by the
Purchasers and the shareholders of the Company will have no
interest therein.
Federal Income Tax Consequences
_______________________________
To the Company. In accordance with the Internal Revenue
______________
Code of 1986, as amended, to determine the amount and character
of the gain or loss recognized by the Company as a result of the
Asset Sales, consideration paid by the Purchasers must be
allocated among the assets sold. The Company will recognize a
gain on the sale of an asset to the extent the fair market value
of the consideration allocated to the asset exceeds the Company's
basis in the asset. The Company will recognize a loss on the
sale of an asset to the extent the Company's basis in the asset
exceeds the fair market value of consideration allocated to the
asset.
The Company currently has net operating losses and net
operating loss carryovers that can be applied against, and
thereby eliminate, gains, if any, recognized by the Company as a
result of the Asset Sales.
To the extent the Company only distributes cash to its
shareholders or only contributes cash to the liquidating trust in
complete liquidation of the Company, the Company will not
recognize any gain or loss as a result of such distribution or
contribution. If property, in addition to cash, is distributed
to the Company's shareholders, or contributed to the liquidating
trust in complete liquidation of the Company, such asset will be
treated as if sold by the Company to the shareholders or the
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<PAGE>
liquidating trust at fair market value. The Company will
recognize a gain on such distribution or contribution of the
asset to the extent the fair market value of the asset exceeds
the Company's basis in the asset. The Company will recognize a
loss to the extent the Company's basis in the asset exceeds the
fair market value of the asset. If any asset distributed to the
shareholders or contributed to the liquidating trust is subject
to a liability, the fair market value of such asset shall be
treated as not less than zero.
To the Shareholders of the Company. Each shareholder will
__________________________________
recognize gain or loss for Federal income tax purposes with
respect to his Common Stock in an amount equal to the difference
between the shareholder's tax basis in the shares and the sum of
the amount of cash received with respect thereto and the
shareholder's pro rata share of the amount, if any, of cash
contributed to the liquidating trust. If the liquidating trust
is established in 1998 as contemplated, an individual calendar
year taxpayer who receives an amount of cash in 1998 that exceeds
his basis in his shares will recognize a gain in 1998 equal in
amount to such excess and additional gain equal to his pro rata
share of the amount contributed to the trust. No taxable income
will be recognized by any shareholder upon actual distribution of
amounts to such shareholder from the liquidating trust. If the
liquidating trust discharges liabilities of the Company, each
shareholder will recognize a loss in an amount equal to his pro
rata share of the discharged liabilities in the year such
liabilities are discharged. If the shares qualify as a capital
asset in the hands of the shareholder, such gain or loss will be
a capital gain or loss, and if the shares have been held for more
than 18 months as of the distribution date, such gain or loss
will qualify as long term capital gain or loss. Any gain
recognized with respect to (a) shares acquired upon the exercise
of an incentive stock option or (b) amounts received upon the
cancellation of an incentive stock option will be treated as
ordinary income.
The foregoing discussion is intended only as a summary of
certain federal income tax consequences of the Plan and Asset
Sales, and does not purport to be a complete analysis or listing
of all potential tax effects relevant to a decision whether to
vote in favor of approval of the Plan and the Asset Sales. The
discussion does not address the tax consequences that may be
relevant to a particular shareholder subject to special treatment
under certain federal income tax laws, such as dealers in
securities, banks, insurance companies, tax-exempt organizations
or non-United States persons, nor any consequences arising under
the laws of any state, locality or foreign jurisdiction. EACH
SHAREHOLDER AND EACH HOLDER OF AN INCENTIVE STOCK OPTION SHOULD
CONSULT HIS OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES
TO HIM OF THE PROPOSED TRANSACTION, INCLUDING THE APPLICATION OF
FOREIGN, FEDERAL, STATE AND LOCAL INCOME AND OTHER TAX LAWS.
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No Dissenter's Rights
_____________________
Under the Ohio General Corporation Law, shareholders of the
Company are not entitled to dissenter's rights (appraisal rights)
in connection with the Asset Sales.
TERMS OF THE ASSET PURCHASE AGREEMENTS
The Asset Purchase Agreements contain representations,
warranties, covenants and conditions, some of which are
summarized in the following paragraphs. A copy of each of the
Scan-Optics Agreement and the Systems Agreement is attached as
Exhibits B and C hereto, respectively, to which reference is made
and which qualifies the summaries given below. Terms with
initial capitals used without definition have the meanings
assigned to them in the related Asset Purchase Agreement.
The Scan-Optics Agreement
_________________________
Purchase Price. Under the terms of the Scan-Optics
______________
Agreement, the Company will sell to Scan-Optics the assets of the
Hardware Division (including hardware maintenance agreements,
hardware maintenance partner agreements, tangible personal
property used solely in the business of the Hardware Division
(including equipment and inventories), Intellectual Property,
goodwill, automobile leases, accounts receivable (other than
those retained as described below), permits, licenses and
business records). The purchase price for the Acquired Assets
will be $3,500,000, of which $600,000 will be deposited in escrow
with a commercial bank. Scan-Optics will pay the Company an
additional amount representing 75% to 85% of the balance of
certain of the accounts receivable of the Hardware Division, and
the Company will pay Scan-Optics an amount equal to prepaid
maintenance services. If the Closing had occurred at April 30,
1998, these additional payments would have resulted in a net
credit to Scan-Optics of $70,000. Accordingly, if the Closing
had occurred at April 30, 1998, the Company would have received
approximately $2,830,000 in cash (not including the $600,000
deposited into escrow).
The Company will receive the escrowed amount if certain
designated hardware maintenance partners do not terminate, within
90 days after the Closing, their contracts with the Company,
which contracts will be assigned to Scan-Optics under the Scan-
Optics Agreement. Scan-Optics will receive some or all of the
escrowed funds if such cancellations occur. The Company will
retain any hardware service accounts receivable with respect to
which 10% of the amount owed by the customer with respect thereto
is 90 days or more past due. Scan-Optics will use its best
efforts to collect these accounts receivable after the Closing
- 8 -
<PAGE>
and will receive as a collection fee 35% of any collections with
respect thereto; the Company will receive the other 65%. If the
Company receives the full amount of the escrowed funds and such
accounts receivable are collected in full, aggregate cash
proceeds of the Scan-Optics Transaction would be approximately
$3.8 million.
Pursuant to the Scan-Optics Agreement, Scan-Optics will
assume all of the Company's liabilities arising after the Closing
with respect to the contracts assigned to it, including
obligations to provide services for which prepayments have been
received by the Company. As described above, the Company will
pay to Scan-Optics the portion of such prepayments relating to
services to be performed by Scan-Optics. The Company will retain
all other liabilities of the Hardware Division, including
accounts payable and severance obligations to employees who are
not offered employment by Scan-Optics.
Representations, Warranties and Covenants. In the Scan-
_________________________________________
Optics Agreement, the Company has made certain representations,
warranties and disclosures to Scan-Optics with respect to, among
other things, the Company's organization, the Company's corporate
authority with respect to the Scan-Optics Transaction, the
Company's title to the Acquired Assets, the Division's financial
statements, assets, business, undisclosed liabilities, compliance
with law, Intellectual Property, inventory, contracts, accounts
receivable, employees and independent contractors and the
Company's insurance, tax returns and obligations, litigation and
employee benefit plans. The Scan-Optics Agreement also contains
certain representations by Scan-Optics as to its organization and
corporate authority.
Pursuant to the Scan-Optics Agreement, the Company has
agreed that, prior to the Closing, it will use its best efforts
to cause the consummation of the Scan-Optics Transaction, operate
the business of the Hardware Division in the ordinary course, use
its best efforts to preserve the business and relationships of
the Hardware Division, notify Scan-Optics of certain events, use
its best efforts to transfer certain employees, independent
contractors and contractual arrangements to Scan-Optics, use its
best efforts to obtain necessary approvals of third parties and
refrain from engaging in certain actions with respect to the
Hardware Division.
Noncompetition Agreements. The Scan-Optics Agreement
_________________________
provides that, for a period of two years after the Closing Date,
the Company will not engage directly or indirectly in any
business that the Hardware Division conducts as of the Closing
Date in any geographic area in which the Hardware Division
conducts business as of the Closing Date. Scan-Optics has also
required, as a condition to the Closing, that each of Messrs.
Watkins and Baker enter into similar noncompetition agreements,
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for which each of them will receive a payment of $5,000 per annum
for two years.
Conditions to Closing. The obligation of Scan-Optics to
_____________________
consummate the Scan-Optics Transaction is subject to the
satisfaction or waiver by the Closing Date of certain conditions,
including: (a) accuracy in all material respects of the
Company's representations and warranties in the Scan-Optics
Agreement, (b) performance in all material respects by the
Company of its covenants in the Scan-Optics Agreement, (c)
receipt of a legal opinion and other documents, (d) absence of
certain legal proceedings, (e) receipt of governmental approvals,
(f) approval of the Scan-Optics Transaction by the Company's
shareholders at the Meeting, (g) the assignment by the Company to
Scan-Optics of the Hardware Division's third-party maintenance
contracts, (h) certain employees of the Hardware Division
agreement to become employees of Scan-Optics, (i) delivery to
Scan-Optics of clear title to the Acquired Assets, (j) receipt of
the noncompetition agreements with Messrs. Watkins and Baker
described above and (k) closing of the Scan-Optics Transaction by
July 17, 1998.
The obligation of the Company to consummate the Scan-Optics
Transaction is subject to the satisfaction or waiver by the
Closing Date of certain conditions, including (a) accuracy in all
material respects of Scan-Optics representations and warranties
in the Scan-Optics Agreement, (b) performance in all material
respects by Scan-Optics of its covenants in the Scan-Optics
Agreement, (c) receipt of a legal opinion and other documents,
(d) absence of ceratin legal proceedings, (e) receipt of
governmental approvals, (f) approval of the Scan-Optics
Transaction by the Company's shareholders at the Meeting and (g)
closing of the Scan-Optics Transaction by July 17, 1998.
Termination of the Scan-Optics Agreement. The Scan-Optics
________________________________________
Agreement may be terminated and the Scan-Optics Transaction may
be abandoned:
(a) at any time prior to the Closing by mutual
consent;
(b) at any time prior to the Closing by Scan-Optics
or the Company if the other breaches the Scan-Optics Agreement
and the breach is not cured within 30 days after receipt of
notice by the party in breach;
(c) by either Scan-Optics or the Company if it is
not in breach of the Scan-Optics Agreement and the Closing has
not occurred by July 17, 1998; or
(d) by the Company if (i) its Board of Directors
determines in the exercise of its fiduciary duty that such action
is appropriate in furtherance of the best interests of its
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shareholders in order to accept an alternative proposal as
described below (see "Acquisition Proposals" below) and (ii) the
Company pays Scan-Optics a cancellation fee of $25,000 as
liquidated damages.
Indemnification. The Scan-Optics Agreement provides that
_______________
the Company will indemnify Scan-Optics for any breach or alleged
breach of any of the Company's representations, warranties or
covenants or for any Liability of the Company not assumed by
Scan-Optics, including tax liabilities. Scan-Optics will
indemnify the Company for any breach or alleged breach of any of
Scan-Optics' representations, warranties or covenants or for any
Liability of the Company which is assumed by Scan-Optics.
Representations and warranties will survive the Closing until the
earlier of (a) the second anniversary of the Closing and (b) the
liquidation of the Company. No claim for breach of
representation or warranty may be brought by Scan-Optics or the
Company until its aggregate Adverse Consequences exceeds $50,000.
The Systems Agreement
_____________________
Purchase Price. Under the terms of the Systems Agreement,
______________
the Company will sell to Systems all of the Company's assets
(including those of the EDMS Division) not subject to the Scan-
Optics Agreement (including software maintenance agreements,
software partner agreements, tangible personal property
(including office and telecommunication equipment and
inventories), Intellectual Property, goodwill, accounts
receivable, permits, licenses and business records, and the
leases and leasehold improvements relating to the Company's
facilities in Blue Ash, Ohio, Irvine, California and Hebron,
Kentucky). At the Closing, the Company also will transfer to
Systems all of its cash except that received or to be received or
payable to Scan-Optics under the Scan-Optics Agreement, the
proceeds of the exercise of Company stock options and any
payments received with respect to accounts receivable of the
Hardware Division.
Pursuant to the Systems Agreement, Systems will assume all
of the Company's liabilities arising after the Closing with
respect to the contracts assigned to it or under accounts payable
shown on a schedule approved by Systems and the Company at the
Closing and under the Retention Agreements.
Systems will pay to the Company (or to the liquidating
trust to be established under the Plan) an amount equal to 10% of
System's net profit before taxes for each of the three years
following the Closing. If on or before the third anniversary of
the Closing, Systems sells all or substantially all of its assets
(or the owners of Systems sell more than 80% of its equity),
Systems will pay to the Company 30% of the net proceeds of the
sale if the sale is on or before the first anniversary, 20% if
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<PAGE>
the sale is after the first anniversary but on or before the
second anniversary and 10% if the sale is after the second
anniversary but on or before the third anniversary.
Representations, Warranties and Covenants. In the Systems
_________________________________________
Agreement, the Company has made certain limited representations,
warranties and disclosures to Systems with respect to, among
other things, the Company's organization, the Company's corporate
authority with respect to the Systems Transaction and the
Company's title to the Acquired Assets. The Systems Agreement
also contains certain representations by Systems as to its
organization and authority. Systems also represents that it is
fully familiar with the business of the EDMS Division, the
Assumed Liabilities and the Acquired Assets and, except as
specifically set forth in the Systems Agreement, Systems will
purchase the Acquired Assets and assume the Assumed Liabilities
on an "As-Is, Where-Is" basis.
Pursuant to the Systems Agreement, the Company has agreed
that, prior to the Closing, it will use commercially reasonable
efforts to cause the consummation of the Systems Transaction,
operate the business of the EDMS Division in the ordinary course,
use reasonable efforts to preserve the business and relationship
of the EDMS Division, notify Systems of certain events, use
reasonable efforts to transfer certain employees and contractual
arrangements to Systems and use reasonable efforts to obtain
necessary approvals of third parties.
Conditions to Closing. The obligation of Systems to
_____________________
consummate the Systems Transaction is subject to the satisfaction
or waiver by the Closing Date of certain conditions, including
(a) accuracy in all material respects of the Company's
representations and warranties in the Systems Agreement, (b)
performance in all material respects by the Company of its
covenants in the Systems Agreement, (c) absence of certain legal
proceedings, (d) receipt of governmental approvals, (e) approval
of the Systems Transaction by the Company's shareholders at the
Meeting, (f) delivery to Systems of clear title to the Acquired
Assets, (g) closing of the Systems Transaction by July 17, 1998,
(h) satisfaction of all conditions to the closing of the Scan-
Optics Transaction and (i) the release of the Company by Messrs.
Watkins and Baker from its Liabilities under the Retention
Agreements and the assumption of such Liabilities by Systems.
The obligation of the Company to consummate the Systems
Transaction is subject to the satisfaction or waiver by the
Closing Date of certain conditions, including (a) accuracy in all
material respects of Systems' representations and warranties in
the Systems Agreement, (b) performance in all material respects
by Systems of its covenants in the Systems Agreement, (c) the
absence of certain legal proceedings, (d) the receipt of
governmental approvals, (e) approval of the Systems Transaction
by the Company's shareholders at the Meeting, (f) closing of the
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<PAGE>
Systems Transaction by July 17, 1998, (g) the satisfaction of all
conditions to the closing of the Scan-Optics Transaction and (i)
the release of the Company by Messrs. Watkins and Baker from its
Liabilities under the Retention Agreements and the assumption of
such Liabilities by Systems.
Termination of the Systems Agreement. The Systems
____________________________________
Agreement may be terminated and the Systems Transaction may be
abandoned:
(a) at any time prior to the Closing by mutual
consent;
(b) at any time prior to the Closing by Systems or
the Company if the other breaches the Systems Agreement and the
breach is not cured within 30 days after receipt of notice;
(c) by either Systems or the Company if it is not
in breach of the Systems Agreement and the Closing has not
occurred by July 17, 1998;
(d) by the Company if its Board of Directors
determines in the exercise of its fiduciary duty that such action
is appropriate in the furtherance of the best interests of its
shareholders in order to accept an alternative proposal as
described below; or
(e) by either Systems or the Company if the Scan-
Optics Agreement has been terminated.
Indemnification. The Systems Agreement provides that the
_______________
Company will indemnify Systems for any breach or alleged breach
of any of the Company's representations, warranties or covenants
or for any Liability of the Company not assumed by Systems,
including tax liabilities. Systems will indemnify the Company
for any breach or alleged breach of any of Systems'
representations, warranties or covenants or for any Liability of
the Company which is assumed by Systems. Representations and
warranties will survive the Closing until the earlier of (a) the
second anniversary of the Closing and (b) the liquidation of the
Company. No claim for breach of representation or warranty may
be brought by Systems or the Company until its aggregate Adverse
Consequences exceeds $50,000.
Acquisition Proposals
_____________________
In the Scan-Optics Agreement, the Company has agreed that,
except for discussions approved by the Company's Board of
Directors prior to March 6, 1998, the Company will not solicit,
initiate, or encourage the submission of any proposal or offer
from any person relating to the acquisition of any capital stock
or other voting securities of the Company or any substantial
portion of the assets of the Hardware Division (including any
- 13 -
<PAGE>
acquisition structured as a merger, consolidation or share
exchange) or participate in any discussion or negotiations
regarding, furnish any non-public information with respect to,
assist or participate in, or facilitate in any other manner any
effort or attempt by any Person to seek any of the foregoing.
The Company also agreed to notify Scan-Optics immediately if any
person makes any such proposal, offer, inquiry or contact.
Notwithstanding the foregoing, the Company may provide such
information in response to a request which was not solicited
after March 6, 1998 and may negotiate with such person concerning
any such transaction if the Company's Board of Directors
determines in its good faith judgment that such action is
appropriate in furtherance of the best interests of the Company's
shareholders.
Amendments
__________
Each of the Asset Purchase Agreements provides that, to the
maximum extent permitted by law, the Company's Board of Directors
may approve any amendment thereto whether before or after
approval of the Asset Purchase Agreements by the Company's
shareholders.
Assumption of Liabilities
_________________________
Under applicable law, if any liability of the Company
assumed by Scan-Optics or Systems is not paid when due,
shareholders of the Company may be liable therefor, in an amount
not necessarily limited to their pro rata share of any claim but
limited to the extent of the amount received from the Company as
a liquidating distribution.
OTHER INFORMATION PERTAINING TO THE ASSET SALES
Retention Agreements
____________________
On August 24, 1994, the Company entered into Executive
Retention Agreements (the "Retention Agreements") with each of
Mr. Watkins and Mr. Baker. The Retention Agreements provide that
if during the six months preceding or the 24 months following a
Change in Control, Mr. Watkins' or Mr. Baker's employment is
terminated by the Company (other than for Cause or Disability) or
by such executive officer for Good Reason, such executive officer
shall be entitled to a severance payment equal to twice his
highest annual salary in the last five years, continued insurance
coverage and up to $25,000 for outplacement services. Change of
Control is defined to include a merger or other business
combination after which the existing shareholders of the Company
have less than 50% of the voting power, the sale of all or
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<PAGE>
substantially all of the assets of the Company, the acquisition
by, or commencement of a tender offer by any person other than
Oce of or for 20% of the Company's voting power, or a change in
the majority of the Board of Directors without approval of the
existing directors. Good Reason includes an adverse change in
salary, authority or benefits. The Company's obligation under
the Retention Agreements upon a liquidation of the Company would
be approximately $600,000. Under the Systems Agreement, Systems
has agreed to assume these obligations.
Termination of the Stock Option Plans
_____________________________________
Pursuant to the Company's 1983 Stock Option Plan, 1985
Stock Option Plan, 1991 Stock Option Plan and 1993 Stock
Incentive Plan (the "Stock Option Plans"), all outstanding
options will become exercisable upon the closing of the Asset
Sales and the Stock Option Plans will terminate. At April 30,
1998 there were options outstanding under the Stock Option Plans
with respect to an aggregate of 710,000 shares of Common Stock at
prices ranging from $.15 per share to $1.00 per share, with a
weighted average exercise price of $.42 per share. Options with
respect to 593,333 shares of Common Stock are currently
exercisable, including options with respect to 313,333 shares and
196,667 shares held by Messrs. Watkins and Baker, respectively.
All outstanding options become exercisable upon the closing of
the Asset Sales. The Company expects that approximately 350,000
of such options will be exercised in connection with the Asset
Sales.
The Oce Transaction
___________________
In 1987, Oce purchased 1,333,334 shares of the Company's
Class B Common Stock for approximately $4 million ($3.00 per
share). In February 1989, Oce purchased from the Company an
additional 571,429 shares of Class B Common Stock for
approximately $2 million ($3.50 per share) and also purchased
276,191 shares of Common Stock owned by other shareholders for
$2.50 per share. In 1992, all of the Class B Common Stock held
by Oce was converted into an equal number of shares of Common
Stock and substantially all of such Common Stock was deposited in
the Voting Trust.
In 1991, Oce agreed to lend the Company up to $1.5 million
in cash. The notes representing such loans were later exchanged
for the Preferred Stock currently held by Oce.
Accordingly, Oce has invested approximately $8.2 million in
stock of the Company, for which it will receive $1.5 million
(plus accrued dividends, if any) under the Oce Agreement and the
Plan.
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<PAGE>
Oce currently owns Class One Preferred Stock of the Company
with an aggregate liquidation preference of $1.5 million (plus
accrued and unpaid dividends, if any) and 2,180,954 shares of
Common Stock, substantially all of which are held by the Voting
Trust. See "Certain Transactions." Pursuant to the Agreement
dated as of June 8, 1998 between the Company and Oce (the "Oce
Agreement"), a copy of which is attached hereto as Exhibit D, Oce
has agreed that if it receives $1.5 million (plus accrued
dividends, if any) in cash upon the liquidation of the Company,
it will surrender all of its shares of Common Stock and Preferred
Stock to the Company and waive any further claim for payment or
distribution with respect thereto.
Pursuant to the Oce Agreement, Oce has also agreed to vote
its shares of the Company in favor of the Plan and the Asset
Sales.
Distribution of Proceeds of the Asset Sales
___________________________________________
Pursuant to the Plan, the Company will be completely
liquidated and all of its assets will be distributed to its
shareholders. Pursuant to the Oce Agreement, Oce will receive a
distribution of $1.5 million (plus accrued dividends, if any).
The proceeds of the Asset Sales, the remaining cash assets of the
Company and the exercise of any stock options (less any amounts
retained by the Company in the discretion of the Board of
Directors for liabilities not assumed by Scan-Optics or Systems)
will be distributed pro rata to all holders of Common Stock other
than Oce. It is impossible to predict with complete accuracy at
this time the amount which will be available initially for
distribution to shareholders, as this will depend upon a number
of factors, including the amount of the Company's cash, accounts
payable, accounts receivable and prepaid maintenance fees at the
Closing of the Assets Sales and the amount of the Company's other
liabilities, such as severance pay, at such time. Assuming that
all outstanding stock options with an exercise price of $.15 are
exercised, and that reserves of approximately $200,000 are
retained by the Company, it is expected that this would result in
an initial distribution of approximately $.30 per share in cash
with respect to each share of Common Stock (other than those held
by Oce). Receipt of the contingent consideration under either
Asset Purchase Agreement would result in additional distributions
to the shareholders in amounts which can not be determined at
this time. If such additional contingent consideration is
received by the Company and distributed to the Shareholders, the
Shareholders (other than Oce) may receive an additional $.32 per
share (calculated as if the closing had occurred on April 30,
1998, and plus any contingent payments received from Systems).
The Company is a defendant in an action entitled Crachiolo
_________
v. ACCESS Corporation currently pending in the United States
_____________________
District Court for the Southern District of Ohio. Mr. Crachiolo,
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<PAGE>
a former employee of the Company, claims that he was discharged
in violation of the provisions of the Age Discrimination in
Employment Act and comparable Ohio law. He also asserts claims
for breach of contract, promissory estoppel and defamation. Mr.
Crachiolo has asserted claims for an unspecified amount of
damages, including backpay, front pay, reinstatement,
compensatory damages, liquidated damages, punitive damages,
interest and attorney fees. Although the Company believes Mr.
Crachiolo's claims are meritless, the Board of Directors intends
to reserve an appropriate amount from the proceeds of the Asset
Sales until such claims are resolved.
As soon as practicable after the Closing under the Asset
Purchase Agreements, the Company will mail to each shareholder of
record as of such date a letter of transmittal and notice of the
consummation of the Asset Sales. In order for a shareholder to
receive the cash to which he is entitled as a result of the Asset
Sales, he must surrender his stock certificates ("Certificates"),
together with a duly executed letter of transmittal (the "Letter
of Transmittal"), to the Company. Upon receipt of such
Certificates and Letter of Transmittal, and subject to the
availability of cash, the Company will mail or deliver to such
holder a check or checks in an amount equal to approximately $.30
per share. If any shareholder wishes the Company to make any
payment to any person other than the registered owner of a
surrendered Certificate, the Certificate so surrendered must be
properly endorsed or otherwise in proper form for transfer. If
the Letter of Transmittal or any Certificate is signed by a
trustee, executor, administrator, guardian, attorney-in-fact,
corporate officer or other person acting in a fiduciary or
representative capacity, such person will be required to so
indicate when signing and to submit proper evidence of his
authority to act.
FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9
DESCRIBED BELOW MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY
AMOUNTS PAYABLE TO YOU.
Under Federal income tax law, a shareholder who will
receive payments for his Certificates is required to provide the
Company with his correct taxpayer identification number on the
Substitute Form W-9 included with the Letter of Transmittal. If
such shareholder is an individual, the taxpayer identification
number is his social security number.
If the Company is not provided with the correct taxpayer
identification number, the shareholder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such shareholder may be subject to
backup withholding at the rate of 31%. Backup withholding is not
an additional tax. Rather, the tax liability of persons subject
to backup withholding will be reduced by the amount of tax
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<PAGE>
withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the United States Treasury.
To prevent backup withholding on payments that are made to
a shareholder, the shareholder is required to notify the Company
of his correct taxpayer identification number by completing the
Substitute Form W-9 attached to the Letter of Transmittal
certifying that the taxpayer identification number provided
thereon is correct (or that such shareholder is awaiting a
taxpayer identification number) and that (a) the shareholder has
not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of a failure to report
all interest on dividends or (b) the Internal Revenue Service has
notified the shareholder that he is no longer subject to backup
withholding.
Exempt shareholders (including, among others, all
corporations and certain foreign individuals) are not subject to
these backup withholding and reporting requirements. See the
instructions to the Substitute Form W-9 for additional
information.
The Company will send to each such shareholder whose
Certificates are delivered to the Company an acknowledgment of
receipt from the Company for the number of Certificates so
delivered. This acknowledgment of receipt will entitle the
shareholder to receive a portion of any funds distributed to
shareholders from the Liquidating Trust equal to the total amount
of funds being distributed multiplied by a fraction, the
numerator of which will be the number of shares of Common Stock
specified on the acknowledgment of receipt and the denominator of
which will be the number of shares of Common Stock outstanding on
the distribution record date (other than those held by Oce).
The Liquidating Trust
_____________________
At or promptly after the Closing of the Asset Sales, the
Company will contribute to a trust for the benefit of its
shareholders (the "Liquidating Trust") all of its remaining
assets, including its right to contingent payments under the
Asset Purchase Agreements, together with any cash received by the
Company from Scan-Optics or as the proceeds of stock options. It
is expected that the Liquidating Trust will receive all payments
from the escrow account established under the Scan-Optics
Agreement and all future payments, if any, made by Systems under
the Systems Agreement. See "Term of The Asset Purchase
Agreements." Messrs. Watkins, Baker and Friel will be the
trustees of the Liquidating Trust under the trust agreement and
will receive compensation for service as trustees at the rate of
$3,000 per annum. The trustees may invest the corpus of such
Trust in short-term money market investments described above
until such funds are distributed to former shareholders. The
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<PAGE>
right of shareholders to receive any distributions from the
Liquidating Trust will not be transferable except by will or by
operation of law.
Expenses of the Asset Sales.
___________________________
All expenses incurred by the Company in connection with the
negotiation and implementation of the Asset Sales, estimated to
be approximately $40,000, will be paid by the Company. The
Company will pay all expenses incurred by Systems in connection
with the Asset Sales prior to the closing other than Systems'
organization expenses.
THE COMPANY
The Company has two primary lines of business -- its
Hardware Services Division, which services primarily hardware of
third party business partners, and its EDMS (Electronic Document
Management Systems) Division, which sells, installs and maintains
Cimage and Staffware software.
The following table sets forth the results of operations of
these Divisions and the Company for the years ended April 30,
1997 and April 30, 1998:
Hardware EDMS
Division Division Company
________ ________ _______
Year ended
April 30, 1997
______________
Revenue $2,694,516 $4,234,839 $6,929,354
Gross Profit $ 769,415 $ 726,867 $1,496,282
Earnings (loss)
from Operations $ 268,717 $(1,534,533) $(1,265,816)
Year ended
April 30, 1998
______________
Revenue $3,961,405 $4,912,481 $8,873,886
Gross Profit $ 175,270 $1,834,038 $2,009,307
Earnings (loss)
from Operations $ (710,345) $ (66,180) $(776,525)
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<PAGE>
The following table sets forth the assets and liabilities
of these Divisions and the Company at April 30, 1998:
Hardware EDMS
Division Division Company
________ ________ _______
Current Assets $2,013,175 $1,588,538 $3,601,713
Total Assets $2,119,336 $2,290,753 $4,410,089
Current Liabilities $ 382,920 $ 803,013 $1,185,933
Prepaid Maintenance $ 617,490 $ 303,360 $ 920,850
Contracts &
Retainers
Further information concerning the Company is contained in
its Annual Report for Fiscal 1997 on Form 10-K, and its Quarterly
Report for the third quarter of Fiscal 1998 on Form 10-Q, filed
with the Securities and Exchange Commission. A copy of the Form
10-K and Form 10-Q will be mailed to any shareholder without
charge on written request therefor made to ACCESS Corporation,
Attention: Treasurer, 4350 Glendale-Milford Road, Suite 250,
Cincinnati, Ohio 45242-3700.
CERTAIN TRANSACTIONS
As of April 30, 1998, the Company had authorized and issued
a total of 15,000 shares of Class One Preferred Stock, consisting
of 10,000 shares of 7% Class One Preferred Stock, 2,500 shares of
9% Class One Preferred Stock, and 2,500 shares of Variable Rate
Class One Preferred Stock, all of which are held by Oce.
Dividends on the Preferred Stock for any fiscal year are
cumulative to the extent of 50% of the Company's net after-tax
earnings, as defined, for such year. At April 30, 1998, there
were no Preferred Stock dividends accrued. Annually, beginning
in 1995, the Company is required to redeem the Preferred Stock at
a price of $100 per share plus accumulated dividends in an amount
equal to a specified portion of after-tax earnings, as defined.
Unless dividends on the Preferred Stock are current, the Company
may not declare a dividend on, or repurchase any of, the Common
Stock. Oce has agreed to limitations on the voting and transfer
of the Common Stock held by it (including the transfer of such
stock to a voting trust, the trustees of which are four of the
Company's directors) and Oce was released from its obligation
under certain circumstances to make a tender offer for the
Company's common stock. The Company was not required to and did
not redeem any Class One Preferred Stock in Fiscal 1998.
Pursuant to a Voting Trust Agreement, dated April 27, 1992,
Oce transferred 2,180,854 shares to Kent P. Friel, Scott D.
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<PAGE>
Watkins, John W. Weil and Dennis J. Sullivan, Jr. as Voting
Trustees. This Agreement is irrevocable for a period of 10
years, except as described on page 22.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of the Record Date the
beneficial ownership of the Company's Common Stock by (1) each
person known to the Company to own more than 5% of the
outstanding shares of Common Stock, (2) each director, nominee
for director and named Executive Officer individually, and
(3) all directors and officers as a group. The information in
the table has been in part received from the persons listed
therein and in part taken from the records of the Company.
Beneficial ownership of Common Stock of the Company has
been determined for this purpose in accordance with Rule 13d-3 of
the Securities and Exchange Commission ("SEC"), under which a
person is deemed to be the beneficial owner of Common Stock if he
has or shares voting power or investment power in respect of such
Common Stock or has the right to acquire such ownership within 60
days. Accordingly, the amounts shown on the table represent
beneficial ownership for the purposes of compliance with SEC
reporting requirements, and do not necessarily bear on the
economic incidents of ownership of Common Stock.
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP
_______________________
Name and, with Respect
to 5% Ownership, Percent of
Address Direct Indirect Common Stock
______________________ ______ ________ ____________
Oce N.V.(1) 100 2,180,854 44.82%
St. Urbanusweg 43
5900 MA Venlo
The Netherlands
Kent P. Friel, Dennis J. 2,180,854 -- 44.82%
Sullivan, Jr.,
John W. Weil and
Scott D. Watkins,
as Voting Trustees (1)(2)
James M. Anderson 23,700 -- .49%
Newton D. Baker (2)(3) 987,437 -- 19.51%
Kimberly A. Bollinger (3) 52,000 -- 1.06%
Marc D. Baines (3) 33,333 -- .68%
Kent P. Friel (4) 10,742 -- .22%
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<PAGE>
James H. Hardie (5) -- -- --
Robert J. Kalthoff 133,564 58,181 3.94%
Dennis J. Sullivan, Jr. (4) 20,100 -- .41%
Scott D. Watkins (2)(3)(4) 1,121,543 -- 21.66%
John W. Weil (4) 15,000 -- .31%
All directors and officers 2,397,419 58,181 44.98%
as a group (11 Persons)
(2)(3)(4)
(1) On April 27, 1992, Oce entered into a Voting Trust
Agreement appointing Kent P. Friel, Dennis J. Sullivan,
Jr., John W. Weil and Scott D. Watkins (the "Voting
Trustees") as Voting Trustees for 2,180,854 shares. The
Voting Trustees vote on matters relating to the election of
directors, including setting the number of directors, in
their discretion, except that the Voting Trustees must vote
for up to two nominees for director designated by Oce in
its discretion. Oce retains the right to obtain the Voting
Trustees' proxy as to the voting of such shares with
respect to all issues not relating to the election of
directors. (See "Certain Transactions".) Oce retains the
right to dispose of such shares, subject to certain
restrictions in the Note Purchase Agreement. As a result
of these arrangements, Oce and the Voting Trustees share
beneficial ownership of such shares.
The Voting Trust created under the Voting Trust Agreement
has a term of 10 years, and Oce has agreed to renew it for
an additional term of 10 years. The Voting Trust will
terminate upon the sale of the shares of Common Stock
subject thereto, but only with respect to those so sold and
subject to the provision that Oce may not sell more than
50% of its shares without consent of the Company, the
closing of any underwritten public offering of Common Stock
as a result of which not less than $10 million in aggregate
sales price to the public of Common Stock shall have been
sold in such offering plus any previously underwritten
public offering or the acquisition by any person of more
shares of Common Stock than are held by Oce. Oce can also
terminate the Voting Trust by notice given at any time
after October 3, 1995 but if Oce does so, it may be
required to make a tender offer on specified terms for all
shares of Common Stock following the fiscal year in which
the anniversary of the giving of notice occurs.
Mr. Watkins is President and Chief Executive Officer of the
Company. Mr. Friel is Chairman of the Board of Directors
of the Company but is not an employee of the Company.
Messrs. Sullivan and Weil are also non-employee directors
of the Company. The Voting Trustees have no current
intention to change the composition of the Board of
Directors of the Company.
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<PAGE>
Except as set forth above, there are no arrangements or
understandings among Oce and the Voting Trustees with
respect to the election of directors or other matters.
(2) The address of the Voting Trustees, Mr. Baker and Mr.
Watkins is: ACCESS Corporation, 4350 Glendale-Milford
Road, Suite 250, Cincinnati, Ohio 45242.
(3) Includes 593,333 shares which all directors and officers as
a group have the right to acquire upon the exercise of
immediately exercisable stock options, including 313,333
exercisable by Mr. Watkins, 196,667 exercisable by Mr.
Baker, 50,000 exercisable by Ms. Bollinger, and 33,333
exercisable by Mr. Baines.
(4) Does not include shares held by the Voting Trustees in
their capacity as such.
(5) Does not include shares held by Oce.
GENERAL INFORMATION
Deloitte & Touche LLP has served as independent certified
public accountants for the Company for the year ending April 30,
1998 and preceding fiscal years. A representative of Deloitte &
Touche LLP will be in attendance at the Meeting. The
representative will have the opportunity to make a statement, if
he desires to do so, and has advised the Company that he will be
available to respond to appropriate questions from the
shareholders.
The enclosed proxy is solicited by the Board of Directors,
and the cost of solicitation will be paid by the Company. The
only contemplated expenses of solicitation are the preparing and
mailing of the proxies and Proxy Statements.
Shares represented by properly executed proxies in the
enclosed form will be voted at the Meeting in accordance with the
instructions thereon. There are no rights of appraisal or
similar rights of dissenting shareholders with respect to any
matter to be acted upon at the Meeting.
So far as is known, there is no business to be acted upon
at the Meeting other than that referred to in the Notice, and it
is not anticipated that other matters will be brought before the
Meeting. However, it is intended that the persons authorized as
proxies may, in the absence of instructions to the contrary, vote
or act with respect to all matters presented for action at the
Meeting according to their judgment in the light of conditions
then prevailing.
- 23 -
<PAGE>
The Ohio General Corporation Law provides that unless
otherwise provided in the proxy, a shareholder, without affecting
any vote previously taken, may revoke his proxy by giving notice
to the Company in writing or in open meeting.
You are urged to date, sign and return your proxy promptly.
For your convenience, enclosed is a self-addressed envelope
requiring no postage if mailed in the United States.
- 24 -
<PAGE>
EXHIBIT A
Plan of Complete Liquidation and
Dissolution of ACCESS Corporation
_________________________________
This Plan of Complete Liquidation and Dissolution
(hereinafter referred to as this "Plan") is for the purpose of
effecting the complete liquidation, dissolution and distribution
of assets of ACCESS Corporation, an Ohio corporation (hereinafter
referred to as the "Corporation"), in accordance with Sections
1701.86 et seq. of the Ohio Revised Code, as follows:
1. Prior Plan. The Plan of Complete Liquidation and
__________
Dissolution of the Corporation approved by the Shareholders on
October 7, 1997 is hereby terminated, revoked and rescinded.
2. Authorization for Dissolution. The Board of
_____________________________
Directors of the Corporation has adopted a resolution that this
Plan be submitted to the shareholders of the Corporation (the
"Shareholders") for adoption by the holders of a majority of the
outstanding shares of Common Stock of the Corporation, to be
effective, upon its adoption, simultaneously with the completion
of the closings (the "Effective Date") of the Asset Purchase
Agreement, dated as of June 8, 1998 (the "Systems Agreement"),
between the Corporation and ACCESS Systems LLC, an Ohio limited
liability company ("Systems") and the Asset Purchase Agreement,
dated as of June 8, 1998 (the "Scan-Optics Agreement"), between
the Corporation and Scan-Optics, Inc., a Delaware corporation
("Scan-Optics").
3. Approval and Adoption of the Plan. The Board of
_________________________________
Directors of the Corporation has determined that it is in the
best interests of the Corporation and of its Shareholders that
the liquidation of the Corporation and the distribution of its
assets be made pursuant to a formal, written plan of liquidation
and distribution, under which the Corporation shall be completely
liquidated and dissolved, all of its known debts and liabilities
shall be paid or otherwise provided for, and all of its remaining
assets shall be distributed to the Shareholders, according to
their respective interests, in complete redemption and
cancellation of all of the Corporation's shares.
4. Cessation of Business. After the Effective Date, the
_____________________
Corporation shall cease to carry on business, except to the
extent necessary properly to wind up its affairs and to preserve
the value of its business and assets pending liquidation and
distribution.
5. Sale of Assets. On the Effective Date, the Board of
______________
Directors and the officers of the Corporation shall sell (a)
pursuant to the terms of the Systems Agreement, substantially all
of the operating assets of the Corporation (other than those
subject to the Scan-Optics Agreement) to Systems, on such terms
and conditions and for such consideration as is provided for in
the Systems Agreement, including the assumption by Systems of
certain of the liabilities of the Corporation, and (b) pursuant
to the terms of the Scan-Optics Agreement, certain of the assets
of its Hardware Service Division to Scan-Optics, on such terms
and conditions and for such consideration as is provided for in
the Scan-Optics Agreement, including the assumption by Scan-
Optics of certain of the
<PAGE>
liabilities of the Corporation. The Board of Directors and
the officers of the Corporation shall execute any instruments
that are necessary to transfer title to the property and assets.
6. Payment of Debts and Liabilities. Prior to making
________________________________
any distribution of corporate assets to the Shareholders, the
Board of Directors and the officers shall pay or make provision
for the payment of all of the known or ascertainable debts and
liabilities of the Corporation then due and payable, except for
payment of those debts and liabilities acquired or assumed by
Scan-Optics or Systems pursuant to the terms of the Scan-Optics
Agreement or the Systems Agreement, respectively, or by another
third party.
The Corporation shall establish and maintain a
reserve fund (the "Reserve Fund") into which it shall deposit
such amounts, if any, as may be determined by the Board of
Directors and officers as necessary or appropriate for the
payment of unascertained or contingent liabilities and expenses
of the Corporation, including liabilities for taxes and expenses
of liquidation and dissolution and any then pending litigation
claims against the Corporation. Any amount remaining in the
Reserve Fund after payment of such unascertained or contingent
liabilities and expenses shall be distributed to the Shareholders
or the liquidating trust for their benefit as provided in
paragraph 7(c) below.
7. Distribution of Assets. After payment of, or
______________________
provision for, all of the known debts and liabilities of the
Corporation, and not later than November 30, 1998, the Board of
Directors and officers of the Corporation shall distribute the
remaining corporate assets (including any amount remaining in the
Reserve Fund) to the Shareholders of record on the Effective Date
in the following order and manner as provided in the
Corporation's Articles of Incorporation:
(a) $1.5 million in cash (plus accrued dividends,
if any) shall be paid to Oce as payment in full of any rights of
Oce N.V. ("Oce") in respect of all of Oce's shares of capital
stock of ACCESS as provided in the Agreement dated as of June 8,
1998 between the Corporation and Oce;
(b) Any cash in excess of that distributed pursuant
to subparagraph (a) above shall be distributed, pro rata, to and
among the holder(s) of record as of the Effective Date, of the
Corporation's Common Stock (other than that held of record or
beneficially by Oce) (the Board of Directors may elect to cause
the liquidating trust described below to make such
distributions); and
(c) Assets other than cash (including, without
limitation, any contingent rights of the Corporation under the
Scan-Optics Agreement, the Systems Agreement or otherwise to
receive additional payments) and any cash held in the Reserve
Fund shall be distributed to and held by a liquidating trust to
be established by the Corporation pursuant to a trust agreement,
substantially in the form attached hereto as Exhibit A and
incorporated herein by reference, for the purpose of receiving
such additional consideration.
- 2 -
<PAGE>
All such distributions shall be made to or for the
benefit of the Shareholders on the following conditions: (1)
that, on demand made by the Board of Directors, each Shareholder
properly endorse and surrender for cancellation, the certificate
or certificates evidencing ownership of the Shareholder's shares;
(2) that the distribution shall be in complete satisfaction of
the rights of each Shareholder as a Shareholder of the
Corporation and (3) all such distributions shall be subject to
the claims of any creditor of the Corporation not otherwise
satisfied by or for the Corporation.
8. Powers of Directors and Officers. The Board of
________________________________
Directors and the officers of the Corporation shall carry out the
provisions of this Plan and shall take all actions that are
necessary or advisable to effect the complete liquidation of the
Corporation and its dissolution, including the execution of such
instruments as may be required to vest title to the assets in the
Shareholders, and the execution of all documents required by law
to be filed to effect the dissolution of the Corporation.
- 3 -
<PAGE>
LIQUIDATING TRUST AGREEMENT
THIS LIQUIDATING TRUST AGREEMENT (this "Agreement") is
entered into as of the ____ day of ____________, 1998, by and
among ACCESS Corporation, an Ohio corporation, in its capacity as
grantor hereunder (the "Grantor"), and Scott D. Watkins, Newton
W. Baker and Kent P. Friel in their capacities as trustees
hereunder (each, a "Trustee" and, together, the "Trustees").
WHEREAS, (i) pursuant to that certain Asset Purchase
Agreement, dated as of June 8, 1998 (the "Scan-Optics Purchase
Agreement"), by and between the Grantor and Scan-Optics, Inc.
("Scan-Optics"), the Grantor has sold certain of the assets of
its Hardware Service Division to Scan-Optics, and (ii) pursuant
to that certain Asset Purchase Agreement, dated as of June 8,
1998 (the "Systems Purchase Agreement"), by and between the
Grantor and ACCESS Systems LLC ("Systems"), the Grantor has sold
substantially all of its other operating assets to Systems (said
sales together referred to herein as the "Asset Sales");
WHEREAS, the shareholders of the Grantor (the
"Shareholders") have adopted a Plan of Complete Liquidation and
Dissolution of the Grantor (the "Plan"), which Plan calls for the
complete liquidation of the Grantor to be commenced upon closing
of the Asset Sales and completed promptly thereafter;
WHEREAS, closing of the Asset Sales has occurred;
WHEREAS, pursuant to the Plan and that certain Agreement,
dated as of June 8, 1998 (the "Oce Agreement"), between the
Grantor and Oce N.V. the Grantor has agreed to distribute cash
and its assets other than cash (including, without limitations,
any contingent rights of the Grantor under the Scan-Optics
Purchase Agreement or otherwise to receive additional payments)
(all such distributed assets referred to herein as the "Trust
Assets"), to a liquidating trust to be held by the Trustees for
the benefit of the holders (other than Oce N.V.) of record as of
the Effective Date (as defined in the Plan) of the common stock
of the Grantor (the "Beneficiaries") upon the terms and subject
to the uses and purposes hereinafter set forth; and
WHEREAS, this liquidating trust is formed with the
objective of liquidating assets and not as an organization having
as its purpose the carrying on of a profit-making business;
NOW, THEREFORE, in consideration of the premises and the
mutual promises contained herein, the parties hereto agree as
follows:
<PAGE>
ARTICLE I.
TRUST ESTABLISHED
Grantor, desiring to establish the trust created
herein (the "Trust"), has executed this Agreement and hereby
transfers all of its right, title and interest in and to the
Trust Assets to the Trustees to be held by the Trustees in
conformity with this Agreement, for the primary purpose of
facilitating the complete liquidation of the Grantor and to
dispose of such property of the Grantor not sold or otherwise
conveyed as part of the Asset Sales, all subject to the terms,
conditions, powers and agreements as set forth herein. The Trust
shall have no objective to continue or engage in the conduct of a
trade or business. The transfer of the Trust Assets to the Trust
shall be subject to the claims of any creditor of the Grantor not
otherwise satisfied by or for the Grantor.
ARTICLE II.
IRREVOCABILITY OF TRUST
This Agreement shall be irrevocable and not subject
to amendment.
ARTICLE III.
TERM OF TRUST
The term of the Trust shall commence on the date hereof
and shall terminate upon the earlier to occur of: (i) that date
on which the Trustees determine, in their sole discretion, that
all Trust Assets have been distributed to and among the
Beneficiaries as provided herein, or (ii) the third anniversary
of the date hereof (the "Termination Date").
ARTICLE IV
ALLOCATION OF INTERESTS IN TRUST
Each Beneficiary shall, during the term of this
Agreement, have an undivided percentage interest in the Trust
Assets. The undivided percentage interest of each Beneficiary
(the "Beneficiary's Percentage Interest") shall equal such
Beneficiary's percentage interest in the common stock of Grantor
immediately after the cancellation by the Grantor of the Oce
Shares (as defined in and contemplated by the Oce Agreement).
ARTICLE V.
TRUST TERMS
All Trust Assets shall be held by the Trustees for the
benefit of the Beneficiaries, subject to the following terms:
A. Accumulation of Trust Income. During the term of
____________________________
this Agreement, the Trustees shall collect and receive all income
and profits, if any, arising from or growing out of Trustee's
ownership of the Trust Assets, and, after deducting all proper
costs, charges, taxes and expenses as may be due against the
Trust, shall distribute, at least annually, all remaining income
or profits to and among the Beneficiaries in proportion to each
Beneficiary's Percentage Interest.
- 2 -
<PAGE>
B. Payment of Trust Expenses. Prior to the distribution
_________________________
of Trust Assets to the Beneficiaries as provided in paragraph C
below, the Trustees shall pay from the Trust Assets all expenses,
if any, determined in the sole discretion of the Trustees to be
reasonable and necessary in the administration of the Trust,
including the reasonable fees and expenses of the Trustees, and
any valid claims of creditors of the Grantor then due and
payable.
C. Restrictions on Receipt of Certain Assets. The
_________________________________________
Trustees shall not receive transfers of any listed stocks or
securities, any readily-marketable assets, any operating assets
of a going business, any unlisted stock of a single issuer (other
than of the Grantor to facilitate its liquidation) that
represents 80 percent or more of the stock of such issuer, or any
general or limited partnership interests. Nor will the Trust
receive or retain cash in excess of a reasonable amount to meet
claims and contingent liabilities.
D. Distribution of Trust Assets. On the Termination
____________________________
Date, all of the Trust Assets remaining in the Trust, if any,
shall be distributed by the Trustees to and among the
Beneficiaries in proportion to each Beneficiary's Percentage
Interest; provided, however, that all proceeds, if any, except
for a reasonable amount to cover contingencies and claims, from
the sale of Trust Assets shall be distributed to and among the
Beneficiaries at least annually.
ARTICLE VI.
TRUSTEES
The Grantor hereby appoints Scott D. Watkins, Newton W.
Baker and Kent P. Friel as the original Trustees under this
Agreement.
Any Trustee may resign at any time by delivering to the
other Trustees his written resignation, in which event the
resignation shall take effect immediately. If any of the
original Trustees should die, become disabled, resign or
otherwise cease to serve as a Trustee hereunder, then the
remaining original Trustees shall continue to serve as the only
Trustees hereunder. If all of the original Trustees should die,
become disabled, resign or otherwise cease to serve as Trustees
hereunder, then a substitute or successor Trustee or Trustees
shall be appointed by Beneficiaries collectively holding a
majority of the Beneficiary's Percentage Interests.
The use of the term "Trustee" in this Trust Agreement shall
be a reference to the original Trustees above named and any
substitute or successor Trustee or Trustees as provided herein.
No bond shall be required of any Trustee acting hereunder.
ARTICLE VIII.
TRUSTEES DUTIES AND POWERS
The Trust created hereunder shall be held subject to the
following terms and conditions, and the Trustees shall have, in
addition to any other powers granted to the Trustees elsewhere in
this Agreement or by law, the following powers:
- 3 -
<PAGE>
A. Investments. The Trustees shall have the power to
___________
invest Trust Assets in demand and time deposits in banks or
savings institutions, or in temporary investments, such as short-
term United States Treasury Bills and money market funds, in
addition to keeping certain funds, to the extent deemed advisable
by the Trustees, in a readily accessible checking account.
B. Claims. The Trustees shall have the power to
______
arbitrate, defend, enforce, release or settle any claim
pertaining to the Trust Assets, and the Trustees are hereby
expressly authorized to pay any such claim out of the Trust
Assets. Further, the Trustees shall have the power to initiate
litigation on behalf of the Beneficiaries, and to otherwise
pursue any and all claims held jointly by the Beneficiaries;
provided, however, the Trustees shall not be obligated to
initiate litigation or otherwise pursue claims unless the
Trustees are indemnified to their satisfaction against all
expenses and liabilities in which the Trustees may, in their
judgment, be involved by their efforts in pursuing any such
claims.
C. Nominee. The Trustees may take and hold all
_______
securities or other personal property (except as otherwise
provided in this Agreement) in bearer form, in the name of any of
the Trustees, or in the name of a nominee, with or without
disclosing any fiduciary relationship, but the Trustees shall be
liable for any wrongful act of the nominee with respect to such
assets.
D. Employment of Agents. The Trustees may employ and
____________________
pay reasonable compensation to agents, investment counsel and
attorneys, including the Trustees and any person, partnership,
corporation or other entity with which the Trustees may be
associated. The Trustees shall not be liable for any neglect,
omission or wrongdoing of such agents, investment counsel or
attorneys, provided that the Trustees shall have exercised
reasonable care in the selection of any persons.
E. Instruments. The Trustees may execute and deliver
___________
all necessary or proper deeds or other instruments.
F. Distribution to Incapacitated Persons. During the
_____________________________________
incapacity of any one of the Beneficiaries, the Trustees are
authorized, in the Trustees' sole discretion, to pay any sum
distributable to such Beneficiary, without liability to the
Trustees, by paying the sum to such Beneficiary or to any person
whomsoever for the use and benefit of such Beneficiary, whether
or not such person shall be the guardian of such Beneficiary.
G. Nonliability of Trustees; Acts of Predecessor
_____________________________________________
Fiduciary. The Trustees shall not be personally liable for any
_________
assessments, charges or damages, or for any obligations in
carrying out or effectuating the purposes of this Agreement,
provided, however, that nothing shall relieve the Trustees from
liabilities arising out of their own willful misconduct, bad
faith or gross negligence. The Trustees shall not be responsible
in any manner whatsoever for the validity or sufficiency of this
Agreement. A Trustee or successor Trustee shall not be liable
for any act or omission of any predecessor Trustee or co-Trustee,
nor have a duty to enforce any claims against any such
predecessor Trustee or co-Trustee on account of any such act or
omission.
H. Protection on Distributions. The Trustees shall be
___________________________
protected in continuing to make distributions of income or
principal to the Beneficiaries until the Trustees shall have
actual knowledge of the happening of an event such as death or
other occurrence which would affect such distributions.
- 4 -
<PAGE>
I. Reliance on Documents. Each Trustee shall be
_____________________
protected in acting upon any paper or document believed by him to
be genuine.
J. Individual Trustee May Bind Trust. The signature
_________________________________
and/or acts of any of the Trustees shall be sufficient to bind
the Trust.
ARTICLE VIII.
NON-ASSIGNABILITY
No Beneficiary may sell, assign, transfer, convey or
encumber this Agreement or any right or interest under this
Agreement, except by death or operation of law.
ARTICLE IX.
GOVERNING LAW
The validity, effect and interpretation of this Agreement
and of the property interests created herein shall be controlled
by the laws of the State of Ohio.
ARTICLE X.
COMPENSATION OF TRUSTEES
Each Trustee shall be entitled to receive compensation for
his services hereunder from the Trust Assets at the rate of
$3,000 per annum and shall be entitled to reimbursement for his
out of pocket expenses, if any, including attorney's fees,
incurred in connection with the administration of the Trust.
- 5 -
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Liquidating Trust Agreement as of the day and year first above
written.
ACCESS CORPORATION, as Grantor
By: ______________________________
Title: ___________________________
__________________________________
Scott D. Watkins, Trustee
__________________________________
Newton W. Baker, Trustee
__________________________________
Kent P. Friel, Trustee
- 6 -
<PAGE>
EXHIBIT B
PRIVILEGED AND CONFIDENTIAL
ASSET PURCHASE AGREEMENT
BETWEEN
SCAN-OPTICS, INC.
AND
ACCESS CORPORATION
JUNE 8, 1998<PAGE>
TABLE OF CONTENTS
Page
____
1. Definitions . . . . . . . . . . . . . . . . . . . . . . 1
2. Basic Transaction . . . . . . . . . . . . . . . . . . . 7
(a) Purchase and Sale of Assets . . . . . . . . . . . 7
(b) Assumption of Liabilities . . . . . . . . . . . . 8
(c) Purchase Price. . . . . . . . . . . . . . . . . . 8
(d) The Closing . . . . . . . . . . . . . . . . . . . 8
(e) Deliveries at the Closing . . . . . . . . . . . . 8
(f) Allocation. . . . . . . . . . . . . . . . . . . . 9
(g) Escrow Agreement. . . . . . . . . . . . . . . . . 9
3. Representations and Warranties of the Seller. . . . . . 9
(a) Organization of the Seller. . . . . . . . . . . . 9
(b) Authorization of Transaction. . . . . . . . . . . 9
(c) Noncontravention. . . . . . . . . . . . . . . . . 9
(d) Brokers' Fees . . . . . . . . . . . . . . . . . . 10
(e) Title to Assets . . . . . . . . . . . . . . . . . 10
(f) Financial Statements. . . . . . . . . . . . . . . 10
(g) Events Subsequent to Most Recent Fiscal Year End. 11
(h) Undisclosed Liabilities . . . . . . . . . . . . . 12
(i) Legal Compliance. . . . . . . . . . . . . . . . . 13
(j) Tax Matters . . . . . . . . . . . . . . . . . . . 13
(k) Intellectual Property . . . . . . . . . . . . . . 14
(l) Tangible Assets . . . . . . . . . . . . . . . . . 14
(m) Inventory . . . . . . . . . . . . . . . . . . . . 15
(n) Contracts . . . . . . . . . . . . . . . . . . . . 15
(o) Notes and Accounts Receivable. . . . . . . . . . . 16
(p) Powers of Attorney. . . . . . . . . . . . . . . . 16
(q) Insurance. . . . . . . . . . . . . . . . . . . . . 16
(r) Litigation. . . . . . . . . . . . . . . . . . . . 17
(s) Product Warranty. . . . . . . . . . . . . . . . . 17
(t) Product Liability . . . . . . . . . . . . . . . . 18
(u) Employees and Independent Contractors . . . . . . 18
(v) Employee Benefits . . . . . . . . . . . . . . . . 18
(w) Guaranties. . . . . . . . . . . . . . . . . . . . 19
(x) Environment, Health, and Safety . . . . . . . . . 19
(y) Certain Business Relationships with the Division. 20
(z) Disclosure. . . . . . . . . . . . . . . . . . . . 20
4. Representations and Warranties of the Buyer . . . . . . 20
(a) Organization of the Buyer . . . . . . . . . . . . 21
<PAGE>
(b) Authorization of Transaction. . . . . . . . . . . 21
(c) Noncontravention. . . . . . . . . . . . . . . . . 21
(d) Brokers' Fees . . . . . . . . . . . . . . . . . . 21
5. Pre-Closing Covenants . . . . . . . . . . . . . . . . . 21
(a) General . . . . . . . . . . . . . . . . . . . . . 21
(b) Notices and Consents. . . . . . . . . . . . . . . 22
(c) Operation of Business . . . . . . . . . . . . . . 22
(d) Preservation of Business. . . . . . . . . . . . . 22
(e) Full Access . . . . . . . . . . . . . . . . . . . 22
(f) Notice of Developments. . . . . . . . . . . . . . 22
(g) Exclusivity . . . . . . . . . . . . . . . . . . . 22
(h) Employees and Independent Contractors of the
Seller. . . . . . . . . . . . . . . . . . . . . . 23
6. Post-Closing Covenants. . . . . . . . . . . . . . . . . 24
(a) General . . . . . . . . . . . . . . . . . . . . . 25
(b) Litigation Support. . . . . . . . . . . . . . . . 25
(c) Transition. . . . . . . . . . . . . . . . . . . . 25
(d) Confidentiality . . . . . . . . . . . . . . . . . 25
(e) Covenant Not to Compete . . . . . . . . . . . . . 26
(f) Collection of Accounts Receivable . . . . . . . . 26
(g) Third Party Consents. . . . . . . . . . . . . . . 27
7. Conditions to Obligation to Close . . . . . . . . . . . 27
(a) Conditions to Obligation of the Buyer . . . . . . 27
(b) Conditions to Obligation of the Seller. . . . . . 29
8. Remedies for Breaches of this Agreement . . . . . . . . 30
(a) Survival of Representations and Warranties. . . . 30
(b) Indemnification Provisions for Benefit of the
Buyer . . . . . . . . . . . . . . . . . . . . . . 30
(c) Indemnification Provisions for Benefit of the
Seller. . . . . . . . . . . . . . . . . . . . . . 31
(d) Matters Involving Third Parties . . . . . . . . . 32
(e) Determination of Adverse Consequences . . . . . . 33
(f) Other Indemnification Provisions. . . . . . . . . 33
(g) Limitation on Claims. . . . . . . . . . . . . . . 33
9. Termination . . . . . . . . . . . . . . . . . . . . . . 33
(a) Termination of Agreement. . . . . . . . . . . . . 33
(b) Effect of Termination . . . . . . . . . . . . . . 34
10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . 34
(a) Press Releases and Public Announcements . . . . . 34
(b) No Third-Party Beneficiaries. . . . . . . . . . . 35
-ii-
<PAGE>
(c) Entire Agreement. . . . . . . . . . . . . . . . . 35
(d) Succession and Assignment . . . . . . . . . . . . 35
(e) Counterparts. . . . . . . . . . . . . . . . . . . 35
(f) Headings. . . . . . . . . . . . . . . . . . . . . 35
(g) Notices . . . . . . . . . . . . . . . . . . . . . 35
(h) Governing Law . . . . . . . . . . . . . . . . . . 36
(i) Amendments and Waivers. . . . . . . . . . . . . . 36
(j) Severability. . . . . . . . . . . . . . . . . . . 37
(k) Expenses. . . . . . . . . . . . . . . . . . . . . 37
(l) Construction. . . . . . . . . . . . . . . . . . . 37
(m) Incorporation of Exhibits and Schedules . . . . . 37
(n) Specific Performance. . . . . . . . . . . . . . . 37
(o) Tax Matters . . . . . . . . . . . . . . . . . . . 37
(p) Bulk Transfer Laws. . . . . . . . . . . . . . . . 38
Exhibit A - Personal Property
Exhibit B - Form of Assignment
Exhibit C - Form of Assumption
Exhibit D - Allocation Schedule
Exhibit E - Escrow Agreement
Exhibit F - Historical Financial Statements
Exhibit G - Form of Opinion of Counsel to the Seller
Exhibit H - Form of Noncompetition Agreement
Exhibit I - Form of Opinion of Counsel to the Buyer
Disclosure Schedule - Exceptions to the Seller's Representations
and Warranties Buyer's Disclosure Schedule - Exceptions to the
Buyer's Representations and Warranties Schedule 5(h)(i) -- List
of Employees
-iii-<PAGE>
ASSET PURCHASE AGREEMENT
Agreement entered into on as of June 8, 1998, by and
between SCAN-OPTICS, INC., a Delaware corporation with offices at
169 Progress Drive, Manchester, Connecticut 06040 (the "Buyer"),
and ACCESS CORPORATION, an Ohio corporation with offices at 4350
Glendale-Milford Road, Suite 250, Cincinnati, Ohio 45242 (the
"Seller"). The Buyer and the Seller are referred to collectively
herein as the "Parties".
This Agreement contemplates a transaction in which the
Buyer will purchase all of the assets (and assume certain of the
liabilities) of the Hardware Service Division (the "Division") of
the Seller in return for cash.
Now, therefore, in consideration of the premises and the
mutual promises herein made, and in consideration of the
representations, warranties, and covenants herein contained, the
Parties agree as follows.
1. Definitions.
___________
"Acquired Assets" means all right, title, and interest in
and to all of the Seller's assets constituting the Division,
including all of the Seller's rights in the following which
relate solely to the business of the Division: (a) agreements,
contracts and rights thereunder, including without limitation,
all hardware maintenance agreements and hardware maintenance
business partner agreements, (b) tangible personal property used
solely in the business of the Division (success as machinery,
equipment, inventories of raw materials and supplies,
manufactured and purchased parts, goods in process and finished
goods, tools, jigs, and dies (if any)) (each item of such
tangible personal property with a value in excess of $1,000.00
being listed on Exhibit A attached hereto and by reference made a
_________
part hereof); (c) Intellectual Property, goodwill associated
therewith, licenses and sublicenses granted and obtained with
respect thereto, and rights thereunder, remedies against
infringements thereof, and rights to protection of interests
therein under the laws of all jurisdictions, including all
hardware maintenance-related intangible property, (d) rights
under automobile leases and subleases, (e) Receivables, (f)
claims, deposits, prepayments, refunds, causes of action, choses
in action, rights of recovery, rights of set off, and rights of
recoupment relating to the business of the Division and the
Acquired Assets (excluding any such item relating to the payment
of Taxes), and (g) except as otherwise provided herein and to the
extent transferable under applicable law, franchises, approvals,
permits, licenses, orders, registrations, certificates,
variances, and similar rights obtained from governments and
governmental agencies, books, records, ledgers, files, documents,
correspondence, lists, creative materials, advertising and
promotional materials, studies, reports, and other printed or
written materials, including without limitation, all hardware
maintenance customers and vendor lists; provided however, that
the Acquired Assets shall not include (i) the corporate charter
qualifications to conduct business as a foreign corporation,
arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals,
minute books, stock transfer books, blank stock certificates, and
other documents relating to the organization, maintenance, and
existence of the Seller as a corporation, (ii) any leases of real
property, (iii) any Employee Benefit Plans, (iv) any of the
rights of the Seller under this Agreement (or under
<PAGE>
any side agreement between the Seller on the one hand and the
Buyer on the other hand entered into on or after the date of
this Agreement), (v) any assets relating to any other business
of the Seller or (vi) the "Access" name as it relates to any
business other than that of the Division.
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid in
settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and attorneys' fees and
expenses, but excluding any indirect, consequently or punitive
damages unless and only to the extent actually paid to a third
party.
"Affiliate(s)" has the meaning set forth in Rule 12b-2 of
the regulations promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the
meaning of Section 1504(a) of the Code.
"Assumed Liabilities " means (a) Liabilities of the Seller
"with respect to the Division regarding ongoing obligations for
leases and sub leases of automobiles, (b) Liabilities of the
Seller with respect to the Division under the agreements,
contracts, leases, licenses, and other arrangements referred to
in the definition of Acquired Assets either (i) to furnish goods,
services, and other non-Cash benefits to another party after the
Closing, or (ii) to pay for goods, services, and other non-Cash
benefits that another party will furnish to it after the Closing;
provided however, that the Assumed Liabilities shall not include
any other Liability or obligation of the Seller under this
Agreement (or under any side agreement between the Seller, on the
one hand and the Buyer on the other hand entered into on or after
the date of this Agreement), including without limitation,
Employee Benefit Plans, accrued payroll and accounts payable at
the time of Closing.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or
transaction that forms or is reasonably likely to form the basis
for any specified consequence.
"Best Efforts" means the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances
to ensure that such result is achieved as expeditiously as
possible; provided, however, that an obligation to use Best
Efforts under this Agreement does not require the Person subject
to that obligation to take actions that would result in a maximum
aggregate amount to be paid or incurred by such Person of greater
than $25,000.00.
"Buyer" has the meaning set forth in the preface above.
"Buyer's Disclosure Schedule" has the meaning set forth in
Section 4 below.
- 2 -
<PAGE>
"Cash" means cash and cash equivalents (including
marketable securities and short term investments) calculated in
accordance with GAAP applied on a basis consistent with the
preparation of the Financial Statements.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d)
below.
"COBRA" means the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, as set forth in Section
4980B of the Code and Sections 601 through 608 of ERISA, and any
amendments thereto and successor provisions thereof, including
any regulations promulgated under the applicable provisions of
the Code and ERISA.
"Code" means the Internal Revenue Code of 1986, as amended,
including all regulations issued pursuant thereto. All citations
to the Code, or to the Treasury Regulations promulgated
thereunder, shall include any amendments or any substitute or
successor provisions thereof.
"Company Contacts" has the meaning set forth in Section
5(h) below.
"Confidential Information" means (a) any information
concerning the business and affairs of the Division that is not
already generally available to the public, and (b) the matters
subject to the Non-Disclosure Agreement.
"Controlled Group" means the Seller and any entity that is
considered a single employer with the Seller pursuant to
subsections (b), (c), (m) or (o) of Section 414 of the Code.
"Deferred Intercompany Transaction" has the meaning set
forth in Reg. Section 1.1502-13.
"Disclosure Schedule" has the meaning set forth in Section
3 below.
"Division" has the meaning set forth in the recitals above.
"Employee" means an individual who is a common law employee
of another Person.
"Employee Benefit Plans" means all written or oral plans,
contracts or other arrangements for the benefit or advantage of
any officer, director, Employee, contractor or agent, or any
group of such Persons, with respect to which the Seller has or
may have a Liability including, without limitation, plans
described in Section 3(3) of ERISA; deferred compensation
arrangements; supplemental executive retirement plans; rabbi or
secular trusts; corporate-owned life insurance; split-dollar
insurance arrangements; letter of credit or indemnity policies
for deferred compensation arrangements; stock or performance
awards; long and short term incentive plans; golden or tin
parachute agreements; medical, disability, life and other
insurance benefits; severance plans or policies; sick leave;
vacation benefits; educational,
- 3 -
<PAGE>
transportation, parking and other subsidies; allowances for
entertainment; charitable contributions to be made upon an
individual's request; use of an automobile; payment of club
dues; and any other arrangements similar to any of the
foregoing.
"Environmental, Health, and Safety Laws" means the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Resource Conservation and Recovery Act of 1976,
and the Occupational Safety and Health Act of 1970, each as
amended, together with all other laws (including legally binding
rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof) with
jurisdiction over Seller, the Acquired Assets or the Assumed
Liabilities concerning pollution or protection of the
environment, public health and safety, or employee health and
safety, including such laws governing emissions, discharges,
releases, or threatened releases of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or
otherwise governing the manufacture, processing, distribution,
use, treatment, storage, disposal, transmission or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes, all as currently in effect and if and
to the extent applicable to Seller, the Acquired Assets or the
Assumed Liabilities.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, including all regulations issued pursuant
thereto. All citations to ERISA, or to the Department of Labor
Regulations promulgated thereunder, shall include any amendments
or, any substitute or successor provisions thereof.
"Escrow Agreement" has the meaning set forth in Section
2(g) below.
"Excess Loss Account" has the meaning set forth in Reg.
Section 1.1502-19.
"Extremely Hazardous Substance" has the meaning set forth
in Section 302 of the Emergency Planning and Community
Right-to-Know Act of 1986, as amended.
"Financial Statement" has the meaning set forth in Section
3(f) below.
"4O1(k) Plan" means the ACCESS Corporation 401(k) Plan and
any trust adopted in connection therewith.
"GAAP" means United States generally accepted accounting
principles as in effect from
- 4 -<PAGE>
time to time.
"HIPAA" means the Health Insurance Portability and
Accountability Act of 1996 as set forth in Sections 9801 through
9806 of the Code and Sections 701 through 707, 711 through 712,
and 731 through 734 of ERISA and any amendments thereto and
successor provisions thereof, including any regulations
promulgated under the applicable provisions of the Code and
ERISA.
"Indemnified Party" has the meaning set forth in Section
8(d) below.
"Indemnifying Party" has the meaning set forth in Section
8(d) below.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in
connection therewith, (c) all copyrightable works, all
copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all
trade secrets and confidential business information (including
ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all
other proprietary rights, and (h) all copies and tangible
embodiments thereof (in whatever form or medium).
"IRS" means the Internal Revenue Service.
"Knowledge of Seller" and similar phrases means the actual
knowledge of the Seller's directors and officers, after
reasonable investigation.
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for
Taxes.
"Most Recent Balance Sheet" means the balance sheet
contained within the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set
forth in Section 3(f) below.
"Most Recent Fiscal Month End" has the meaning set forth in
Section 3(f) below.
- 5 -
<PAGE>
"Most Recent Fiscal Year End" has the meaning set forth in
Section 3(f) below.
"Non-Disclosure Agreement" means the Non-Disclosure and
Confidentiality Agreement dated November 7, 1997 executed by the
Parties.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with
respect to quantity and frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Benefit Plan" means any plan as defined in Section
3(2) of ERISA with respect to which the Seller has or may have a
Liability.
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Prohibited Transaction" has the meaning set forth in
Section 406 of ERISA and Section 4975 of the Code.
"Purchase Price" has the meaning set forth in Section 2(c)
below.
"Receivables" means Seller's hardware service accounts
receivables with respect to which, at the Closing, less than 10%
of the amount owed by a customer to the Seller is 90 days or more
past due.
"Reportable Event" has the meaning set forth in Section
4043 of ERISA.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for Taxes
not yet due and payable or for Taxes that the taxpayer is
contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under
capital lease arrangements, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with
the borrowing of money.
"Seller" has the meaning set forth in the preface above.
- 6 -
<PAGE>
"Tax(es)" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Section 59A of the Code),
customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever including any interest, penalty, or
addition thereto, whether disputed or not.
"Tax Return(s)" means any return, declaration, report,
claim for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section
8(d) below.
2. Basic Transaction.
_________________
(a) Purchase and Sale of Assets. On and subject to
___________________________
the terms and conditions of this Agreement, the Buyer
agrees to purchase from the Seller, and the Seller agrees
to sell, transfer, convey, and deliver to the Buyer, all of
the Accord Assets at the Closing for the consideration
specified below in this Section 2.
(b) Assumption of Liabilities. On and subject to
_________________________
the terms and conditions of this Agreement, the Buyer
agrees that, at the Closing, it will assume, become
responsible for and discharge when due all of the Assumed
Liabilities. The Buyer will not assume or have any
responsibility, however, with respect to any other
obligation 'or Liability of the Seller not included within
the definition of Assumed Liabilities.
(c) Purchase Price. The Buyer agrees to pay by
______________
delivery of cash payable by wire transfer or delivery of
other immediately available funds at the Closing a purchase
price (the "Purchase Price") consisting of (i) TWO MILLION
NINE HUNDRED THOUSAND DOLLARS ($2,900,000), payable to the
Seller, (ii) with respect to the Receivables, 85% of the
amount thereof outstanding for less than 30 days at
Closing, 80% of the amount thereof then outstanding for 31
to 60 days, and 75% of the amount thereof then outstanding
for 61 to 90 days, payable to the Seller, and (iii) SIX
HUNDRED THOUSAND DOLLARS ($600,000), payable to the escrow
agent referred to in Exhibit E.
_________
(d) The Closing. The closing of the transactions
___________
contemplated by this Agreement (the "Closing") shall take
place at the offices of Taft, Stettinius & Hollister LLP in
Cincinnati, Ohio, commencing at 10:00 a.m. local time on
the second business day following the satisfaction or
waiver of all conditions to the obligations of the Part es
to consummate the transactions contemplated hereby (other
than conditions with respect to actions the respective
Parties will take at the Closing itself) or such other date
as the
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<PAGE>
Parties may mutually determine (the "Closing Date");
provided however, that the Closing Date shall be no later
than July 17, 1998.
(e) Deliveries at the Closing. At the Closing, (i)
_________________________
the Seller will deliver to the Buyer the various
certificates, instruments, and documents referred to in
Section 7(a) below; (ii) the Buyer will deliver to the
Seller the various certificates, instruments, and documents
referred to in Section 7(b) below; (iii) the Seller will
execute, acknowledge (if appropriate), and deliver to the
Buyer (A) assignments (including Intellectual Property
transfer documents) in the form attached hereto as
Exhibit B and (B) such other instruments of sale, transfer,
_________
conveyance, and assignment as the Buyer and its counsel
reasonably may request; (iv) the Buyer will execute,
acknowledge (if appropriate), and deliver to the Seller (A)
an assumption in the form attached hereto as Exhibit C and
_________
(B) such other instruments of assumption as the Seller and
its counsel reasonably may request; and (v) the Buyer will
deliver to the Seller and the Escrow Agent the Purchase
Price as provided in Section 2(c) above.
(f) Allocation. The Parties agree to allocate the
__________
Purchase Price (and all other capitalizable costs) among
the Acquired Assets for all purposes (including financial
accounting and tax purposes) in accordance with the
allocation schedule attached hereto as Exhibit D.
_________
(g) Escrow Agreement. The Parties will enter into
________________
an escrow agreement in the form of Exhibit E (the "Escrow
_________
Agreement") with BankBoston, N.A.
3. Representations and Warranties of the Seller. The
____________________________________________
Seller represents and warrants to the Buyer that the statements
contained in this Section 3 are correct and complete as of the
date of this Agreement and will be correct and complete in all
material respects as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3), except as set forth in the
disclosure schedule accompanying this Agreement and initialed by
the Parties (the "Disclosure Schedule"). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 3.
(a) Organization of the Seller. The Seller is a
__________________________
corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its
incorporation. The Seller is duly authorized to conduct
business and is in good standing under the laws of each
jurisdiction where such qualification is required, except
where the failure to be qualified would not have a material
adverse effect on the Acquired Assets, the business of the
Division or the Seller's ability to perform its obligations
under this Agreement. The Seller has full corporate power
and authority and all licenses, permits, and authorizations
necessary to carry on the business of the Division and to
own and use the Acquired Assets.
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<PAGE>
(b) Authorization of Transaction. The Seller has
____________________________
full power and authority (including full corporate power
and authority) to execute and deliver this Agreement and,
subject to the approval of the Seller's shareholders as
contemplated by Section 5(a) below, to perform its
obligations hereunder. This Agreement constitutes the
valid and legally binding obligation of the Seller,
enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and
________________
the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above), will (i)
violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency,
or court to which the Seller is subject or any provision of
the Articles of Incorporation or Code of Regulations of the
Seller, or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other
arrangement to which the Seller is a party or by which it
is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any
of its assets). The Seller does not need to give any
notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate
the transactions contemplated by this Agreement (including
the assignments and assumptions referred to in Section 2
above).
(d) Brokers' Fees. The Seller has no Liability or
_____________
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions
contemplated by this Agreement for which the Buyer could
become liable or obligated.
(e) Title to Assets. The Seller has good and
_______________
marketable title to, or a valid leasehold interest in, the
properties and assets used by the Division located on the
Seller's premises, or shown on the Most Recent Balance
Sheet or acquired after the date thereof, free and clear of
all Security Interests, except for properties and assets
disposed of in the Ordinary Course of Business since the
date of the Most Recent Balance Sheet. Without limiting
the generality of the foregoing, at the Closing, the Seller
will have good and marketable title to all of the Acquired
Assets, free and clear of any Security Interest or
restriction on transfer.
(f) Financial Statements. Attached hereto as
____________________
Exhibit F are the following financial statements
_________
(collectively, the "Financial Statements"): (i) audited
balance sheets and statements of operations and cash flow
as of and for the fiscal year ended April 30, 1997 (the
"Most Recent Fiscal Year End") for the Seller; (ii)
unaudited balance sheets and statements of operations and
cash flow (the "Most Recent Financial Statements") as of
and for the 11 months ended March 31, 1998 (the "Most
Recent Fiscal Month End'); and (iii) unaudited statements
of operations for the Division for the period ended March
31, 1998 (the "Divisional Statements"). The Financial
Statements
- 9 -
<PAGE>
(including the notes thereto) have been prepared
in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby (except that the
Most Recent Financial Statements and the Divisional
Statements lack complete footnotes and are subject to
year-end and audit adjustments and the Divisional
Statements consist only of statements of operations). The
Financial Statements described in clauses (i) and (ii)
above present fairly the financial condition of the Seller
as of such dates and the results of operations of the
Seller for such periods, are correct and complete in all
material respects, and are consistent with the books and
records of the Seller (which books and records are correct
and complete in all material respects). The Divisional
Statements present fairly the information set forth
therein, are correct and complete in all material respects,
and are consistent with the books and records of the
Division (which books and records are correct and complete
in all material respects).
(g) Events Subsequent to Most Recent Fiscal Year
____________________________________________
End. Since the Most Recent Fiscal Year End, there has not
___
been any adverse change in the business, financial
condition, operations, results of operations, or future
prospects of the Division. Without limiting the generality
of the foregoing, since that date:
(i) the Seller has not sold, leased,
transferred, or assigned any of its assets relating
to the business of the Division, tangible or
intangible, other than for a fair consideration in
the Ordinary Course of Business;
(ii) the Seller has not entered into any
agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses)
relating to the business of the Division either
involving more than $25,000.00 or outside the
Ordinary Course of Business;
(iii) no party has accelerated, terminated,
modified, or cancelled any agreement, contract,
lease, or license (or series of related agreements,
contracts, leases, and licenses) relating to the
business of the Division and involving more than
$15,000.00 of which the Seller is a party or by which
it is bound;
(iv) the Seller has not imposed any Security
Interest upon any of the Division's assets, tangible
or intangible;
(v) the Seller has not made any capital
expenditure (or series of related capital
expenditures) relating to the business of the
Division, the Acquired Assets or the Assumed
Liabilities either involving more than $15,000.00 or
outside the Ordinary Course of Business;
(vi) the Seller has not made any capital
investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series
of related capital investments, loans, and
acquisitions) relating to the business of the
- 10 -
<PAGE>
Division, the Acquired Assets or the Assumed
Liabilities either involving more than $15,000.00
(other than the purchase of inventory in the Ordinary
Course of Business) or outside the Ordinary Course of
Business;
(vii) the Seller has not cancelled,
compromised, waived, or released any right or claim
(or series of related rights and claims) either
involving more than $25,000.00 or outside the
Ordinary Course of Business;
(viii) the Seller has not granted any license
or sub license of any rights under or with respect to
any Intellectual Property included in the Acquired
Assets;
(ix) the Seller has not experienced any
material damage, destruction, or loss (whether or not
covered by insurance) to its property relating to the
business of the Division, the Acquired Assets or the
Assumed Liabilities;
(x) the Seller has not entered into any
employment contract or collective bargaining
agreement, written or oral, or modified the terms of
any existing such contract or agreement relating to
employees of the Division;
(xi) the Seller has not made any change in
employment terms for any of the employees of the
Division outside the Ordinary Course of Business;
(xii) the Seller has not made or pledged to
make any charitable or capital contribution relating
to the business of the Division, the Acquired Assets
or the Assumed Liabilities outside the Ordinary
Course of Business;
(xv) there has not been any other occurrence,
event, incident, action, failure to act, or
transaction outside the Ordinary Course of Business
relating to the Division, the Acquired Assets or the
Assumed Liabilities; and
(xvi) the Seller has not committed to do any of
the foregoing.
(h) Undisclosed Liabilities. The Seller has no
_______________________
Liability (and to Seller's Knowledge, there is no Basis for
any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability) relating to and
material to the business of the Division, the Acquired
Assets or the Assumed Liabilities, except for (i)
Liabilities disclosed in the Most Recent Balance Sheet and
the notes thereto, (ii) Liabilities which have arisen after
the Most Recent Fiscal Month End in the Ordinary Course of
Business (none of which results from, arises out of,
relates to, is in the nature of; or was caused by any
breach of contract, breach of warranty; tort, infringement,
or violation of law), and (iii) Liabilities disclosed in
the Disclosure Schedule.
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<PAGE>
(i) Legal Compliance. In its conduct of the
________________
business of the Division, the Seller has complied in all
material respects with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand,
or notice has been filed or commenced against it alleging
any failure so to comply.
(j) Tax Matters.
___________
(i) The Seller has filed all Tax Returns that
it was required to file except where the failure so
to file would not have a material adverse effect on
the business of the Division, the Acquired Assets,
the Assumed Liabilities or the Seller's ability to
perform its obligations under the Agreement. All
such Tax Returns were correct and complete in all
material respects. All Taxes owed by the Seller
(whether or not shown on any Tax Return) have been
paid, except where the Seller is contesting the same
and where such Taxes are not material to the business
of the Division, the Acquired Assets, the Assumed
Liabilities or the Seller's ability to perform its
obligations under this Agreement. The Seller
currently is not the beneficiary of any extension or
time within which to file any Tax Return. No claim
has been made since April 30, 1994 by an authority in
a jurisdiction where the Seller does not file Tax
Returns that it is or may be subject to taxation by
that jurisdiction. There are no Security Interests
on any of the assets of the Seller that arose in
connection with any failure (or alleged failure) to
pay any Tax.
(ii) The Seller has withheld and paid all
Taxes required to have been withheld and paid in
connection with amounts paid or owing to any
employee, independent contractor, creditor,
stockholder, or other third party.
(iii) No director or officer of the Seller
expects any authority to assess any additional Taxes
for any period for which Tax Returns have been filed.
There is no dispute or claim concerning any Tax
Liability of the Seller either (A) claimed or raised
by any authority in writing or (B) as to which any of
the directors and officers of the Seller has
knowledge based upon personal contact with any agent
of such authority. Section 3(1) of the Disclosure
Schedule lists, all federal and state and any
material local and foreign income Tax Returns filed
with respect to the Seller for taxable periods ended
on or after April 30, 1991 indicates those Tax
Returns that have been audited, and indicates those
Tax Returns that currently are the subject of audit.
The Seller has delivered to the Buyer correct and
complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies
assessed against or agreed to by the Seller since
April 30, 1994.
- 12 -
<PAGE>
(iv) The Seller has not waived any statute of
limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or
deficiency.
(k) Intellectual Property. Except as disclosed in
_____________________
Section 3(k) of the Disclosure Schedule, the Seller, with
respect to the Division, has no right, title or interest in
or to patents, patent rights, manufacturing processes,
trade names, trademarks, service marks, inventions,
specialized treatment protocols, copyrights, formulas and
trade secrets which is material to the business of the
Division. Except for off-the-shelf software licenses, the
Seller, with respect to the Division, is not a licensee in
respect of any patents, trademarks, service marks, trade
names, copyrights or applications therefor, or
manufacturing processes, formulas or trade secrets, except
as disclosed in Section 3(k) of the Disclosure Schedule.
Except as disclosed in Section 3(k) of the Disclosure
Schedule, the Seller owns and possesses adequate licenses
or other rights to use all such patents, trademarks,
service marks, trade names, copyrights, manufacturing
processes, inventions, specialized treatment protocols,
formulas and trade secrets necessary to conduct the
business of the Division as now operated. No claim is
pending or has been made since April 30, 1992 to the effect
that the present or past operations of the Division
infringe upon or conflict with the asserted rights of
others to such patents, patent rights, manufacturing
processes, trade names, trademarks, service marks,
inventions, specialized treatment protocols, copyrights,
formulas and trade secrets.
(l) Tangible Assets. The Seller owns or leases all
_______________
buildings, machinery, equipment, and other tangible assets
necessary for the conduct of the business of the Division
as presently conducted and as presently planned by the
Seller to be conducted. Such tangible assets taken as a
whole have been maintained in accordance with normal
industry practice, are in good operating condition and
repair (subject to normal wear and tear), and are suitable
for the purposes for which they presently are used.
(m) Inventory. The inventory of the Division
_________
consists of raw materials and supplies, manufactured and
purchased parts, goods in process, and finished goods, all
of which is merchantable and fit for the purpose for which
it was procured or manufactured, and none of which is
slow-moving, obsolete, damaged, or defective (except as
disclosed in Section 3(m) of the Disclosure Schedule),
subject only to any reserve for inventory reflected in the
Most Recent Balance Sheet as adjusted for the passage of
time through the Closing Date in accordance with the past
custom and practice of the Seller and the Division.
(n) Contracts. The Seller is not a party to any
_________
agreement concerning confidentiality or noncompetition
(except for the Non-Disclosure Agreement) or any agreement
involving any of the shareholders of the Seller and their
Affiliates (including the Seller) which relates to the
business of the Division, the Acquired Assets or the
Assumed Liabilities or adversely affects the Seller's
ability to perform its obligations
- 13 -
<PAGE>
under this Agreement. Section 3(n) of the Disclosure
Schedule lists the following contracts and other
agreements to which the Seller, with respect to the
Division, is a party:
(i) any agreement (or group of related
agreements) for the lease of personal property to or
from any Person;
(ii) any agreement (or group of related
agreements) for the purchase or sale of raw
materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt
of services, the performance of which will extend
over a period of more than one year, result in a loss
to the Seller, with respect to the Division, or
involve consideration in excess of $15,000.00;
(iii) any agreement concerning a partnership
or joint venture;
(iv) any agreement (or group of related
agreements) under which created, incurred, assumed,
or guaranteed any indebtedness for borrowed money, or
any capitalized lease obligation, in excess of
$10,000.00 or under which it has imposed a Security
Interest on any of its assets, tangible or
intangible;
(v) any agreement under which it has advanced
or loaned any amount to any of the directors,
officers, and employees of the Seller outside the
Ordinary Course of Business;
(vi) any agreement under which the
consequences of a default or termination could have
an adverse effect on the business, financial
condition, operations, results of operations, or
future prospects of the Division; or
(vii) any other agreement (or group of related
agreements) the performance of which involves
consideration to be paid to or by the Seller in
excess of $35,000.00.
The Seller has delivered to the Buyer a correct and complete copy
of each written agreement listed in Section 3(n) of the
Disclosure Schedule (as amended to date) and a written summary
setting forth the terms and conditions of each oral agreement
referred to in Section 3(n) of the Disclosure Schedule. With
respect to each such agreement: (A) the agreement is legal,
valid, binding, enforceable, and in full force and effect; (B)
the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
immediately following the consummation of the transactions
contemplated hereby (including the assignments and assumptions
referred to in Section 2 above); (C) neither the Seller nor, to
the Seller's Knowledge, any other party is in breach or default,
and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination,
modification, or acceleration, under the
- 14 -
<PAGE>
agreement; and (D) neither the Seller nor, to the Seller's
Knowledge, any other party has repudiated any provision
of the agreement.
(o) Notes and Accounts Receivable. The Receivables
_____________________________
are reflected properly on the Seller's books and records
and are valid receivables subject to no setoffs or
counterclaims, are current (as defined in the definition of
Receivables) and collectible, subject only to the reserve
for bad debts reflected in the Most Recent Balance Sheet as
adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of the
Seller and the Division.
(p) Powers of Attorney. There are no outstanding
__________________
powers of attorney executed on behalf of the Seller, with
respect to the Division.
(q) Insurance. Section 3(q) of the Disclosure
_________
Schedule lists and briefly describes each insurance policy
(including policies providing property, casualty,
liability, and workers' compensation coverage and bond and
surety arrangements, but excluding insurance policies for
the benefit of employees, such as health and life
insurance) to which the Seller is or has been a party, a
named insured, or otherwise the beneficiary of coverage at
any time within the past year. With respect to each such
insurance policy, to Seller's Knowledge: (A) the policy is
legal, valid, binding, enforceable, and in full force and
effect; (B) the policy will continue to be legal, valid,
binding, enforceable, and in full force and effect on
identical terms following the consummation of the
transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above); (C)
neither the Seller nor any other party to the policy is in
breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has
occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit
termination, modification, or acceleration, under the
policy; and (D) no party to the policy has repudiated any
provision thereof. The Seller has been covered during the
past six years by insurance in scope and amount customary
and reasonable for the business of the Division during the
aforementioned period. Section 3(q) of the Disclosure
Schedule describes any self-insurance arrangements
affecting the Seller relating to the Division.
(r) Litigation. Section 3(r) of the Disclosure
__________
Schedule sets forth each instance in which the Seller (i)
is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge, or (ii) is a party or, to
Seller's Knowledge, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of' in,
or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the
actions, suits, proceedings, hearings, and investigations
set forth in Section 3(r) of the Disclosure Schedule is
reasonably likely to result in any adverse change in the
business, financial condition, operations or results of
operations of the Seller, or future prospects of the
Division. None of the directors and officers of the Seller
has any reason to believe that any such action, suit,
proceeding,
- 15 -
<PAGE>
hearing, or investigation is reasonably likely
to be brought or threatened against the Seller.
(s) Product Warranty. Subject to matters which
________________
will not affect materially or adversely the business of the
Division, the Acquired Assets, the Assumed Liabilities or
the Seller's ability to perform its obligations under this
Agreement, each product manufactured, sold, leased, or
delivered by the Seller has been in conformity with all
applicable contractual commitments and all express and
implied warranties, and the Seller has no Liability (and
there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint,
claim, or demand against any it giving rise to any
Liability) for replacement or repair thereof or other
damages in connection therewith, subject only to any
reserve for product warranty claims reflected in the Most
Recent Balance Sheet as adjusted for the passage of time
through the Closing Date in accordance with the past custom
and practice of the Seller. No product manufactured, sold,
leased, or delivered by the Division is subject to any
guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale or lease.
Section 3(s) of the Disclosure Schedule includes copies of
the standard terms and conditions of sale or lease for the
Seller, with respect to the Division (containing applicable
guaranty, warranty, and indemnity provisions).
(t) Product Liability. No claim has been asserted
_________________
against the Seller for any Liability (and to Seller's
Knowledge, there is no Basis for any present or, future
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against the Seller giving rise
to any Liability) arising out of any injury to individuals
or property as a result of the ownership, possession, or
use of any product manufactured, sold, leased, or delivered
by the Seller except as covered by insurance.
(u) Employees and Independent Contractors. The
_____________________________________
Division currently has 25 Employees employed full-time, and
2 Employees employed part-time, none of whom are covered by
any union contract and each of whom is listed on Section
3(u) of the Disclosure Schedule. To Seller's Knowledge,
none of these Employees is currently planning or being
solicited to form or join a union nor to terminate
employment with the Division. The date of hire, current
salary, title and last review date for each of the
Employees are as stated in Section 3(u) of the Disclosure
Schedule. Subject to any limitations imposed by applicable
law, all such Employees are employed by the Seller on an
"at will" basis and may be terminated at any time without
notice by the Seller. The Division currently has
agreements with 82 Persons who provide services to the
Division on an independent contractor basis, each of whom
is listed on Section 3(u) of the Disclosure Schedule. The
terms of each such independent contractor agreement are
stated in Section 3(u) of the Disclosure Schedule.
Attached to Section 3(u) of the Disclosure Schedule are
representative copies of each written employment agreement,
independent contractor agreement and any other agreement
currently in effect, if any, with each Employee or
independent contractor of the Division.
- 16 -<PAGE>
(v) Employee Benefits.
_________________
(i) The Seller currently maintains the 401(k)
Plan. The 401(k) Plan is the only Pension Benefit
Plan intended to be qualified under Section 401(a) or
403(a) of the Code ever maintained by the Seller or
with respect to which the Seller has or may have a
Liability. The Seller has heretofore delivered to
the Buyer with respect to the 401(k) Plan a true and
correct copy of the most recent determination letter
issued by the IRS with respect to the 401(k) Plan.
The Seller has no Knowledge of any facts,
circumstances, actions, or failures to act that would
preclude the 401(k) Plan's reliance on the most
recent determination letter issued by the IRS with
respect to the 401(k) Plan as evidence that the
401(k) Plan and any trust adopted in connection
therewith is qualified under Sections 401 and 501,
respectively, of the Code.
(ii) The execution and delivery of this
Agreement by the Seller and the consummation of the
transactions contemplated hereunder will not result
in any Liability (with respect to accrued benefits or
otherwise) of the Buyer to any Employee who transfers
to the Buyer as provided in Section 5(h)(i) of this
Agreement, any Employee or any former Employee of the
Seller's Controlled Group, any Employee Benefit Plan
or the PBGC. No amendment to, termination of, or
withdrawal from, any Employee Benefit Plan at any
time before or after the Closing Date by (A) the
Seller or any other member of the Controlled Group,
or (B) any corporation or other entity if such
Employee Benefit Plan was maintained or sponsored by
a member of the Controlled Group during any part of
the 72 calendar month period ending on the Closing
Date, has or will subject the Buyer to any Liability
to any Employee Benefit Plan, the PBGC or the IRS,
any current or former Employee of the Seller or
the Controlled Group, or any other Party.
(w) Guaranties. The Seller is not a guarantor or
__________
is otherwise liable for any Liability or obligation
(including indebtedness) of any other Person (other than
through the endorsement of checks in the Ordinary Course of
Business).
(x) Environment, Health, and Safety. To the
_______________________________
Seller's Knowledge:
(i) The Seller has complied in all material
respects with all Environmental, Health, and Safety
Laws, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or
notice has been filed or commenced against the Seller
alleging any failure so to comply. Without
limitation, the generality of the preceding sentence,
the Seller has obtained and been in compliance with
all of the terms and conditions of all permits,
licenses, and other authorizations which are required
under, and has compiled with all other limitations,
restrictions, conditions, standards, prohibitions,
requirements,
- 17 -
<PAGE>
obligations, schedules, and timetables
which are contained in, all Environmental, Health,
and Safety Laws, all to the extent legally binding on
the Seller.
(ii) The Seller has no Liability (and the
Seller has not handled or disposed of any substance,
arranged for the disposal of any substance, exposed
any employee or other individual to any substance or
condition, or owned or operated any property or
facility in any manner that is reasonably likely to
form the Basis for any present or future action,
suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against the Seller giving
rise to any Liability) for damage to any site,
location, or body of water (surface or subsurface),
for any illness of or personal injury to any employee
of the Seller or other individual, or for any reason
under any Environmental, Health, and Safety Law.
(iii) All properties and equipment used in the
business of the Division has been free of asbestos,
PCB's, methylene chloride, trichloroethylene, 1, 2-
transdichloroethylene, dioxins, dibenzofurans, and
Extremely Hazardous Substances.
(y) Certain Business Relationships with the
_______________________________________
Division. To Seller's Knowledge, none of the shareholders
________
of the Seller or its Affiliates has been involved in any
business arrangement or relationship with the Seller within
the past 12 months, and none of the shareholders of the
Seller or its Affiliates owns any asset, tangible or
intangible, which is used in the business of the Division.
(z) Disclosure. The representations and warranties
__________
contained in this Section 3 do not contain any untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements and
information contained in this Section 3 not misleading.
4. Representations and Warranties of the Buyer. The
___________________________________________
Buyer represents and warrants to the Seller that the statements
contained in this Section 4 are correct and complete as of the
date of this Agreement and will be correct and complete in all
material respects as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this
Agreement throughout this Section 4), except as set forth in the
Buyer's Disclosure Schedule. The Buyer's Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 4.
(a) Organization of the Buyer. The Buyer is a
_________________________
corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its
incorporation.
- 18 -
<PAGE>
(b) Authorization of Transaction. The Buyer has
____________________________
full power and authority (including full corporate power
and authority) to execute and deliver this Agreement and
to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and
conditions.
(c) Noncontravention. Neither the execution and
________________
the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above), will (i)
violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency,
or court to which the Buyer is subject or any provision of
its charter or bylaws, or (ii) conflict with, result in a
breach of; constitute a default under, result in the
acceleration of; create in any party the right to
accelerate, terminate, modify or cancel, or require any
notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a
party or by which it is bound or to which any of its assets
is subject.
(d) Brokers' Fees. Except for a fee payable to
_____________
Tucker, Anthony, Incorporated, which fee will be paid by
the Buyer, the Buyer has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this
Agreement.
5. Pre-Closing Covenants. The Parties agree as follows
_____________________
with respect to the period between the execution of this
Agreement and the Closing.
(a) General. Each of the Parties will use its best
_______
efforts to take all action and to do all things necessary,
proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the Closing
conditions set forth in Section 7 below). In furtherance
thereof; the Seller shall call a meeting of its
shareholders, to be held prior to the anticipated Closing
Date, to consider the transactions contemplated hereby and,
subject to the limitations of fiduciary duty, shall use its
best efforts to solicit the approval of such transactions
by its shareholders in accordance with applicable law and
the Seller's Articles of Incorporation and Code of
Regulations.
(b) Notices and Consents. The Seller will give any
____________________
notices to third parties, and the Seller will use its
reasonable best efforts to obtain any third party consents,
appropriate to the transaction or that the Buyer may
request in connection with the matters referred to in
Section 3(c) above. Each of the Parties will give any
notices to, make any filings with, and use its reasonable
best efforts to obtain any authorizations, consents, and
approvals of governments and governmental agencies in
connection with the matters referred to in Section 3(c) and
Section 4(c) above.
- 19 -
<PAGE>
(c) Operation of Business. In the conduct of the
_____________________
business of the Division, the Seller will not engage in any
practice, take any action, or enter into any transaction
outside the Ordinary Course of Business. Without limiting
the generality of the foregoing, the Seller will not engage
in any practice, take any action, or enter into any
transaction of the sort described in Section 3(h) above.
(d) Preservation of Business. Except as
________________________
contemplated by this Agreement, the Seller will use its
best efforts to keep the business of the Division and all
properties relating thereto substantially intact, including
its present operations, physical facilities, working
conditions, and relationships with lessors, licensors,
suppliers, customers, and employees.
(e) Full Access. The Seller will permit
___________
representatives of the Buyer to have full access at all
reasonable times, and in a manner so as not to interfere
with the normal business operations of the Seller, to all
premises, properties, personnel, books, records (including
Tax records), contracts, and documents of or pertaining to
the Division.
(f) Notice of Developments. Each Party will give
______________________
prompt written notice to the other Party of any material
adverse development causing a breach of any of its own
representations and warranties in Section 3 and Section 4
above. No disclosure by any Party pursuant to this Section
5(f), however, shall be deemed to amend or supplement the
Disclosure Schedule or the Buyer's Disclosure Schedule, as
the case may be, or to prevent or.cure any
misrepresentation, breach of warranty, or breach of
covenant.
(g) Exclusivity. Except for discussions approved
___________
by the Seller's Board of Directors prior to March 6, 1998,
the Seller will not (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person
relating to the acquisition of any capital stock or other
voting securities, or any substantial portion of the
assets, of the Seller (other than assets not to be included
in the Acquired Assets) (including any acquisition
structured as a merger, consolidation, or share exchange),
or (ii) participate in any discussions or negotiations
regarding, furnish any non-public information with respect
to, assist or participate in, or facilitate in any other
manner any effort or attempt by any Person to do or seek
any of the foregoing. The Seller will notify the Buyer
immediately if any Person makes any proposal offer,
inquiry, or contact with respect to any of the foregoing.
If the Seller breaches any provision of this Section 5(g),
the Buyer may terminate this Agreement and, if it does so,
then upon the Buyer's request, the Seller immediately shall
pay to the Buyer a cancellation fee of $25,000 as
liquidated damages. Notwithstanding the foregoing, the
Seller may, directly or indirectly, furnish information and
access, in each case in response to requests therefor which
are not solicited by the Seller nor any of its officers or
directors or, to the Seller's Knowledge, it employees,
agents or representatives (collectively, "Company
Contacts") after March 6, 1998 (including any such request
from any corporation, partnership, person or other entity
or group contacted by the Company Contacts prior to March
6, 1998), to any corporation,
- 20 -
<PAGE>
partnership, person or other entity or group pursuant
to appropriate confidentiality agreements, and may
participate in discussions and negotiate with such
entity or group concerning any merger, sale of assets,
sale of shares of the Seller's stock or similar
transaction, if the Seller's Board of Directors
determines in its good faith judgment that such action is
appropriate in furtherance of the best interests of the
Seller's shareholders. In addition, the Seller may direct
its officers and other appropriate personnel to cooperate
with and be reasonably available to consult with any such
entity or group.
(h) Employees and Independent Contractors of the
____________________________________________
Seller.
______
(i) On or about the Closing Date, the Buyer
shall offer employment to David Robinson and those
Employees then employed by the Seller who are
indicated on Schedule 5(h)(i) hereto, and shall
offer, at Buyer's discretion, to enter into
agreements with those dependent contractors then
under contract with the Seller, all on terms of
employment or contract substantially not less
favorable to such Employees and independent
contractors than those currently applicable
to them. Except as otherwise expressly indicated,
any such employment Offers will be for
employment-at-will and the Buyer reserves the right,
in its absolute discretion, to terminate or change
the terms of any employment resulting from 'the
acceptance of such offers. The Seller agrees to use
its best efforts to assist the Buyer in hiring such
Employees and entering into agreements with such
independent contractors. In no event shall the
Seller discourage those persons from becoming
Employees or independent contractors of the
Buyer upon the terms offered by the Buyer.
(ii) The Buyer shall inform the Seller prior
to the Closing Date of the names of the Employees and
independent contractors of the Seller who have agreed
to become employees or independent contractors, as
the case may be, of the Buyer upon completion of the
Closing. The Seller shall cooperate with the Buyer
in effecting the transfer of such Employees and
independent contractors from the Seller to the Buyer
upon completion of the Closing.
(iii) The Seller hereby acknowledges that it
is responsible for any future severance (in
accordance with the Seller's severance policies, if
any, and with applicable law) hereafter becoming due
to any Employee of the Seller who is not hired by the
Buyer.
(iv) The Buyer hereby acknowledges that it is
responsible for any future severance (in accordance
with the Buyer's severance policies, if any, and
applicable law) hereafter becoming due to any
employee of the Buyer hired by the Buyer from the
Seller's former workforce.
- 21 -
<PAGE>
(v) At the Buyer's request and expense, the
Seller shall assist the Buyer in attempting to enjoy
to the extent permitted by law the Seller's record,
rating and benefits under the worker's compensation
laws and unemployment compensation laws of the states
and countries in which there is coverage of Employees
of the Seller who become Employees of the Buyer on or
after the Closing Date.
(vi) The Seller shall notify all of its
Employees who will be employed by the Buyer after the
Closing Date that their coverage under the Seller's
Employee Benefit Plans will terminate as of the
Closing Date. For notices and payments related to
events occurring prior to the Closing Date, the
Seller shall be responsible for all notices required
to be given to Employees, including, without
limitation, notices pursuant to COBRA, HPAA, ERISA
and the Code and for any coverage, payments or
benefits required pursuant to such laws or on account
of violation of any requirement of such laws.
6. Post-Closing Covenants. The Parties agree as follows
______________________
with respect to the period following the Closing.
(a) General. In case at any time after the Closing
_______
any further action is necessary or desirable to carry out
the purposes of this Agreement, each of the Parties will
take such further action (including the execution and
delivery of such further instruments and documents) as the
other Party reasonably may request, all the sole cost and
expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Section
8 below). The Seller acknowledges and agrees that from and
after the Closing the Buyer will be entitled to possession
of all documents, books, records (excluding Tax records),
agreements, and financial data of any sort relating to the
Division, provided that the Seller may retain all such
material which it is required by law to retain or which
relates to Liabilities retained by the Seller, in which
case the Seller shall provide copies thereof to the Buyer.
(b) Litigation Support. In the event and for so
__________________
long as any Party actively is contesting or defending
against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in
connection with (i) any transaction contemplated under this
Agreement, or (ii) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence,
event, incident, action, failure to act, or transaction on
or prior to the Closing Date involving the Division, the
other Party will cooperate with the contesting or defending
Party and its counsel in the contest or defense, make
available its personnel, and provide such testimony and
access to its books and records as shall be necessary in
connection with the contest or defense, all at the sole
cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to
indemnification therefor under Section 8 below).
- 22 -
<PAGE>
(c) Transition. The Seller will not take any
__________
action that is designed or intended to have the effect of
discouraging any lessor, licensor, customer, supplier, or
other business associate of the Division from maintaining
the same business relationships with the Buyer and the
Division after the Closing as it maintained with the
Division prior to the Closing. The Seller will refer all
customer inquiries relating to the business of the Division
to the Buyer from and alter the Closing.
(d) Confidentiality. The Seller will treat and
_______________
hold as such all of the Confidential Information, refrain
from using any of the Confidential Information except in
connection with this Agreement, and, to the extent the
Seller is not required by law to retain such material,
deliver promptly to the Buyer or destroy, at the request
and option of the Buyer, all tangible embodiments (and all
copies) of the Confidential Information which are in its
possession. In the event that the Seller is requested or
required by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose
any Confidential Information, the Seller will notify the
Buyer promptly of the request or requirement so that the
Buyer may seek an appropriate protective order or waive
compliance with the provisions of this Section 6(d). If;
in the absence of a protective order or the receipt of a
waiver hereunder, the Seller is, on the advice of counsel,
compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, the Seller may
disclose the Confidential Information to the tribunal;
provided, however, that the Seller shall use its reasonable
best efforts to obtain, at the request of the Buyer, an
order or other assurance that confidential treatment will
be accorded to such portion of the Confidential Information
required to be disclosed as the Buyer shall designate.
(e) Covenant Not to Compete. For a period of two
_______________________
years from and alter the Closing Date, the Seller will not
engage directly or indirectly in any business that the
Division conducts as of the Closing Date in any geographic
area in which the Division conducts that business as of the
Closing Date; provided however, that no owner of less than
1% of the outstanding stock of any publicly traded
corporation shall be deemed to engage solely by reason
thereof in any of its businesses. If the final judgment of
a court of competent jurisdiction declares that any term or
provision of this Section 6(e) is invalid or unenforceable,
the Parties agree that the court making the determination
of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to
replace any invalid or unenforceable term or provision with
a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall
be enforceable as so modified alter the expiration of the
time within which the judgment may be appealed.
(f) Collection of Accounts Receivable. The Buyer
_________________________________
shall use its best efforts to collect the accounts
receivable of the Division which are not included in the
Receivables but which are included on the list delivered by
the Seller pursuant to Section 7(a)(xiii) (the
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<PAGE>
"Excluded Receivables"). If the Buyer collects any of the
Excluded Receivables after the Closing, it shall remit
promptly to the Seller 65% of the amount so collected.
If the Seller collects any of the Excluded Receivables
after the Closing, it shall remit promptly to the Buyer
35% of the amount so collected. If the Seller collects
any of the Receivables after the Closing, it shall remit
promptly to the Buyer an amount equal to the amount paid
by the Buyer with respect thereto pursuant to Section
2(c)(ii). Each of the Buyer and the Seller shall report
to each other at least monthly with respect to all
collections of Receivables and Excluded Receivables.
Any amount received by the Seller or the Buyer from any
customer shall be applied to the Receivable or Excluded
Receivable designated by such customer or, if no such
designation is made, to the oldest unpaid Receivable or
Excluded Receivable from such customer.
(g) Third Party Consents. If any consent
____________________
contemplated by Section 5(b) above is not obtained prior to
the Closing under any third-party maintenance contract
intended to included in the Acquired Assets, the Buyer
shall perform all of the Seller's obligation thereunder as
the Seller's independent contractor and shall be entitled
to all payments by the third party with respect thereto.
7. Conditions to Obligation to Close.
_________________________________
(a) Conditions to Obligation of the Buyer. The
_____________________________________
obligation of the Buyer to consummate the transactions to
be performed by it in connection with the Closing is
subject to satisfaction of the following conditions:
(i) the representations and warranties set
forth in Section 13 above shall be true and correct
in all material respects at and as of the Closing
Date;
(ii) the Seller shall have performed and
complied with all of its covenants hereunder in all
material respects through the Closing;
(iii) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-
judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be
rescinded following consummation, (C) affect
adversely the right of the Buyer to own the Acquired
Assets or to operate and control the former business
of the Division, or (D) affect adversely the right of
the Seller to own its assets and to operate the
business of the Division (and no such injunction,
judgment, order, decree, ruling, or charge shall be
in effect);
- 24 -
<PAGE>
(iv) the Seller shall have delivered to the
Buyer a certificate to the effect that each of the
conditions specified above in Section 7(a)(i)-(iii)
is satisfied in all respects;
(v) the Seller and the Buyer shall have
received all authorizations, consents, and approvals
of governments and governmental agencies referred to
in Section 3(c) and Section 4(c) above;
(vi) without limiting the generality of the
foregoing, the shareholders of the Seller shall have
duly authorized and approved the execution, delivery,
and performance of this Agreement by the Seller and
the transactions contemplated thereby;
(vii) the Buyer shall have received from
counsel to the Seller an opinion in form and
substance as set forth in Exhibit G attached hereto,
_________
addressed to the Buyer, and dated as of the Closing
Date;
(viii) the Seller shall have (I) assigned to
the Buyer all third-party maintenance contracts
relating to the business of the Division, and (2)
made prorata payment to the Buyer for any prepayments
associated with such contracts;
(ix) David Robinson and at least five of the
Employees of the Seller indicated on Schedule 5(h)(i)
hereto shall have agreed to become employees of the
Buyer effective as of the Closing;
(x) the Seller shall have delivered clear
title to all equipment and inventory included as an
Acquired Asset and necessary to perform maintenance
under all third-party maintenance contracts to be
assigned pursuant to the transactions contemplated by
this Agreement;
(xi) all actions to be taken by the Seller in
connection with consummation of the transactions
contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect
the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the
Buyer;
(xii) the Buyer shall have received from the
Seller a list of the Receivables and the Excluded
Receivables outstanding immediately before the
Closing;
(xiii) the Buyer shall have received
Noncompetition Agreements from Scott D. Watkins and
Newton D. Baker in form and substance as set forth in
Exhibit H attached hereto; and
_________
- 25 -
<PAGE>
(xiv) the Closing of the transactions
contemplated by this Agreement shall occur on or
before July 17, 1998.
The Buyer may waive any condition specified in this Section
7(a) if it executes a writing so stating at or prior to the
Closing.
(b) Conditions to Obligation of the Seller. The
______________________________________
obligation of the Seller to consummate the transactions to
be performed by it in connection with the Closing is
subject to satisfaction of the following conditions:
(i) the representations and warranties set
forth in Section 4 above shall be true and correct in
all material respects at and as of the Closing Date;
(ii) the Buyer shall have performed and
complied with all of its covenants hereunder in all
material respects through the Closing;
(iii) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-
judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions
contemplated by this Agreement, or (B) cause any of
the transactions contemplated by this Agreement to be
rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(iv) the Buyer shall have delivered to the
Seller a certificate to the effect that each of the
conditions specified above in Section 7(b)(i)-(iii)
is satisfied in all respects;
(v) the Seller and the Buyer shall have
received all authorizations, consents, and approvals
of governments and governmental agencies referred to
in Section 3(c) and Section 4(c) above;
(vi) all actions to be taken by the Buyer in
connection with consummation of the transactions
contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect
the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the
Seller;
(vii) without limiting the generality of the
foregoing, the shareholders of the Seller shall have
duly authorized the execution, delivery, and
performance of this Agreement by the Seller and the
transactions contemplated thereby;
- 26 -
<PAGE>
(viii) the Seller shall have received from
counsel to the Buyer an opinion in form and substance
as set forth in Exhibit I attached hereto, addressed
_________
to the Seller, and dated as of the Closing Date; and
(ix) the Closing of the transactions
contemplated by this Agreement shall occur on or
before July 17, 1998
The Seller may waive any condition specified in this
Section 7(b) if it executes a writing so stating at or prior to
the Closing.
8. Remedies for Breaches of this Agreement.
_______________________________________
(a) Survival of Representations and Warranties.
All of the representations and warranties of the Buyer and
the Seller contained in this Agreement shall survive the
Closing (even if the damaged Party knew or had reason to
know of any misrepresentation or breach of warranty at the
time of Closing) and continue in full force and effect
forever thereafter until the earlier of (i) the second
anniversary of the Closing and (ii) the liquidation of the
Seller.
(b) Indemnification Provisions for Benefit of the
_____________________________________________
Buyer.
_____
(i) In the event the Seller breaches (or in
the event any third party alleges facts that, if
true, would mean the Seller has breached) any of its
representations, warranties, and covenants contained
in this Agreement, and, if there is an applicable
survival period pursuant to Section 8(a) above,
provided that the Buyer makes a written claim for
indemnification against the Seller above within such
survival period, then the Seller agrees to indemnify
the Buyer from and against the entirety of any
Adverse Consequences the Buyer may suffer through and
alter the date of the claim for indemnification
(including any Adverse Consequences the Buyer may
suffer alter the end of any applicable survival
period) resulting from, arising out of, relating to,
in the nature of, or caused by the breach (or the
alleged breach). Notwithstanding the foregoing, the
Seller shall have no liability to the Buyer for any
representation or warranty which was correct and
complete as of the date of this Agreement but which
is not correct and complete in all material respects
as of the Closing Date (as though made then as though
the Closing Date were substituted for the date of
this Agreement) if (a) such failure to be correct
and complete did not arise from any action or state
of facts within the reasonable control of the Seller
and (b) the Seller advised the Buyer of such failure
prior to the Closing.
(ii) The Seller agrees to indemnify the Buyer
from and against the entirety of any Adverse
Consequences the Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or
caused by:
- 27 -
<PAGE>
(A) any Liability of the Seller which
is not an Assumed Liability (including any
Liability of the Seller that becomes a
Liability of the Buyer under any bulk transfer
law of any jurisdiction, under any common law
doctrine of de facto merger or successor
liability, or otherwise by operation of law);
(B) any Liability of the Seller for
unpaid Taxes with respect to any Tax year or
portion thereof ending on or before the Closing
Date (or for any Tax year beginning before and
ending after the Closing Date to the extent
allocable to the portion of such period
beginning before and ending on the Closing
Date); or
(C) any Liability of the Seller for the
unpaid Taxes of any Person (including the
Seller) under Reg. Section 1.1502-6 (or any
similar provision of state, local, or foreign
law), as a transferee or successor, by
contract, or otherwise.
(c) Indemnification Provisions for Benefit of the
_____________________________________________
Seller.
______
(i) In the event the Buyer breaches (or in
the event any third party alleges facts that, if
true, would mean the Buyer has breached) any of its
representations, warranties, and covenants contained
in this Agreement, and, if there is an applicable
survival period pursuant to Section 8(a) above,
provided that the Seller makes a written claim for
indemnification against the Buyer within such
survival period, then the Buyer agrees to indemnify
the Seller from and against the entirety of any
Adverse Consequences the Seller may,suffer through
and after the date of the claim for indemnification
(including any Adverse Consequences the Seller may
suffer after the end of any applicable survival
period) resulting from, arising out of, relating to,
in the nature of, or caused by the breach (or the
alleged breach).
(ii) The Buyer agrees to indemnify the Seller
from and against the entirety of any Adverse
Consequences the Seller may suffer resulting from,
arising out of, relating to, in the nature of, or
caused by any Assumed Liability or the operation by
the Buyer of the business of the Division after the
Closing.
(d) Matters Involving Third Parties.
_______________________________
(i) If any third party shall notify any Party
(the "Indemnified Party with respect to any matter (a
"Third Party Claim") which may give rise to a claim
for indemnification against the other Party (the
"Indemnifying Party") under this Section 8, then the
Indemnified Party shall promptly notify the
Indemnifying Party thereof in writing; provided,
________
however, that no delay on the part of the
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<PAGE>
Indemnified Party in notifying the Indemnifying Party
___________
shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) The Indemnifying Party will have the
right to defend the Indemnified Party against the
Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so
long as (A) the Indemnifying Party notifies the
Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of
any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of; relating to,
in the nature of; or caused by the Third Party Claim,
(B) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party have
the financial resources to defend against the Third
Party Claim and fulfill its indemnification
obligations hereunder, (C) the Third Party Claim
involves only money damages and does not seek an
injunction or other equitable relief; (0)
settlement of; or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith
judgment of the Indemnified Party, likely to
establish a precedential custom or practice adverse
to the continuing business interests of the
Indemnified Party, and (E) the Indemnifying Party
conducts the defense of the Third Party Claim
actively and diligently.
(iii) So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in
accordance with Section 8(d)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of
the Third Party Claim, (B) the Indemnified Party will
not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying
Party (not to be withheld unreasonably), and (C) the
Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent
of the Indemnified Party (not to be withheld
unreasonably).
(iv) In the event any of the conditions in
Section 8(d)(ii) above is or becomes unsatisfied,
however, (A) the Indemnified Party may defend against,
and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim
in any manner it reasonably may deem appropriate (and
the Indemnified party need not consult with, or obtain
any consent from, the Indemnifying party in connection
therewith) (B) the Indemnifying Party will reimburse
the Indemnified Party promptly and periodically for the
costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses),
and (C) the Indemnifying Party will remain responsible
for any
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<PAGE>
Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of; relating to, in
the nature of; or caused by the Third Party Claim to
the fullest extent provided in this Section 8.
(e) Determination of Adverse Consequences. All
_____________________________________
indemnification payments under this Section 8 shall be
deemed adjustments to the Purchase Price.
(f) Other Indemnification Provisions. The foregoing
________________________________
indemnification provisions are in addition to, and not in
derogation of; any statutory, equitable, or common law
remedy any Party may have for breach of representation,
warranty, or covenant.
(g) Limitation on Claims. No claim for breach of
____________________
representation or warranty may be brought by the Seller or
the Buyer under this Section 8 until its aggregate Adverse
Consequences resulting from all such breaches exceeds
$50,000.
9. Termination.
___________
(a) Termination of Agreement. Certain of the Parties
________________________
may terminate this Agreement as provided below:
(i) the Buyer and the Seller may terminate this
Agreement by mutual written consent at any time prior
to the Closing;
(ii) the Buyer may terminate this Agreement by
giving written notice to the Seller at any time prior
to the Closing in the event the Seller has breached any
material representation, warranty, or covenant
contained in this Agreement in any material respect,
the Buyer has notified the Seller of the breach, and
the breach has continued without cure for a period of
30 days after the notice of breach;
(iii) the Seller may terminate this Agreement by
giving written notice to the Buyer at any time prior to
the Closing in the event the Buyer has breached any
material representation, warranty, or covenant
contained in this Agreement in any material respect,
the Seller has notified the Buyer of the breach, and
the breach has continued without cure for a period of
30 days after the notice of breach;
(iv) the Buyer or the Seller may terminate this
Agreement by giving written notice to the other if the
Closing has not occurred by July 17, 1998 and the party
giving the notice is not then in breach of any
provision hereof; and
- 30 -
<PAGE>
(v) the Seller may terminate this Agreement by
giving written notice to the Buyer if (A) its Board of
Directors determines in the exercise of its fiduciary
duty that such action is appropriate in furtherance of
the best interests of the Seller's shareholders in
order to accept an alternative proposal permitted by
Section 5(b) above and (B) the Seller pays to the Buyer
in cash the cancellation fee provided for in
Section 5(g) above.
(b) Effect of Termination. If any Party terminates
_____________________
this Agreement pursuant to Section 9(a) above, all rights
and obligations of the Parties hereunder shall terminate
without any Liability of any Party to the other Party
(except for any Liability of any Party then in breach).
10. Miscellaneous.
_____________
(a) Press Releases and Public Announcements. No Party
_______________________________________
shall issue any press release or make any public
announcement relating to the subject matter of this.
Agreement prior to the Closing without the prior written
approval of the other Party; provided however, that any
Party may make any public disclosure it believes in good
faith is required by applicable law or any listing or
trading agreement concerning its publicly-traded securities
(in which case the disclosing Party will use its reasonable
best efforts to advise the other Party prior to making the
disclosure).
(b) No Third-Party Beneficiaries. This Agreement
____________________________
shall not confer any rights or remedies upon any Person
other than the Parties and their respective successors and
permitted assigns.
(c) Entire Agreement. This Agreement (including the
________________
documents referred to herein) constitutes the entire
agreement between the Parties and supersedes any prior
understandings, agreements, or representations by or between
the Parties, written or oral, to the extent they have
related in any way to the subject matter hereof.
(d) Succession and Assignment. This Agreement shall
_________________________
be binding upon and inure to the benefit of the Parties
named herein and their respective successors and permitted
assigns. No Party may assign either this Agreement or any
of its rights, interests, or obligations hereunder without
the prior written approval of the other Party; provided
however, that the Buyer may (i) assign any or all of its
rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates
to perform its obligations hereunder (in any or all of which
cases the Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in
____________
one or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and
the same instrument.
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<PAGE>
(f) Headings. The section headings contained in this
________
Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this
Agreement.
(g) Notices. All notices, requests, demands, claims,
_______
and other communications hereunder will be in writing. Any
notice, request, demand, claim, or other communication hereunder
shall be deemed duly given if (and then two business days after)
it is sent by registered or certified mall, return receipt
requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Seller: Mr. Scott D. Watkins
President and Chief Executive
Officer
Access Corporation
4350 Glendale-Milford Road
Suite 250
Cincinnati, Ohio 45242
Copy to: Gerald S. Greenberg, Esq.
Taft, Stettinius & Hollister LLP
1800 Star Bank Center
425 Walnut Street
Cincinnati, OH 45202-3957
If to the Buyer: Mr. James C. Mavel
Chairman, Chief Executive Officer
and President
Scan-Optics, Inc.
169 Progress Drive
Manchester, Connecticut 06040
Copy to: William H. Cuddy, Esq.
Day, Berry & Howard LLP
CityPlace I, 25th Floor
185 Asylum Street
Hartford, Connecticut 06103-3499
Any Party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at
the address set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner
herein set forth.
- 32 -
<PAGE>
(h) Governing Law. This Agreement shall be governed
_____________
by and construed in accordance with the domestic laws of the
State of New York without giving effect to any choice or
conflict of law provision or rule (whether of the State of
New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the
State of New York.
(i) Amendments and Waivers. No amendment of any
______________________
provision of this Agreement shall be valid unless the same
shall be in writing and signed by the Buyer and the Seller.
No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any
rights arising by virtue of any prior or subsequent such
occurrence. To the maximum extent permitted by law, the
Board of Directors of the Seller may approve any amendment
to this Agreement, whether before or after approval by the
shareholders of the Seller.
(j) Severability. Any term or provision of this
____________
Agreement that is invalid or in any situation in any
jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any
other situation or in any other
(k) Expenses. Each of the Buyer and the Seller will
________
bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
(l) Construction. The Parties have participated
____________
jointly in the negotiation and drafting of this Agreement.
In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as
if drafted jointly by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions
of this Agreement Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The word "including"
shall mean including without limitation.
(m) Incorporation of Exhibits and Schedules. The
_______________________________________
Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
(n) Specific Performance. Each of the Parties
____________________
acknowledges and agrees that the other Party would be
damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each
of the Parties agrees that the other Party shall be entitled
to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and
- 33 -
<PAGE>
to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court
of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition
to any other remedy to which it may be entitled, at law or
in equity.
(o) Tax Matters.
___________
(i) The Seller will be responsible for the
preparation and filing of all Tax Returns for the
Seller for all periods as to which Tax Returns are due
before and after the Closing Date and will include
therein the operations of the Division ending on or
before the Closing Date. The Seller will make all
payments required with respect to any such Tax Return.
(ii) The Buyer will be responsible for the
preparation and filing Tax Returns of the Buyer for all
periods as to which Tax Returns are due after the
Closing Date and will include therein the operations of
the Division after the Closing Date. The Buyer will
make all payments required with respect to any such Tax
Return.
(p) Bulk Transfer Laws. The Buyer acknowledges that
__________________
the Seller will not comply with the provisions of any bulk
transfer laws of Ohio in connection with the transactions
contemplated by this Agreement.
- 34 -
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
SCAN-OPTICS, INC.
By: /s/ James C. Mavel
______________________________
Name: James C. Mavel
Title: Chairman, Chief
Executive Officer and
President
ACCESS CORPORATION
By: /s/ Scott D. Watkins
______________________________
Name: Scott D. Watkins
Title: President and Chief
Executive Officer
- 35 -
<PAGE>
EXHIBIT C
PRIVILEGED AND CONFIDENTIAL
ASSET PURCHASE AGREEMENT
BETWEEN
ACCESS SYSTEMS LLC
AND
ACCESS CORPORATION
JUNE 8, 1998
<PAGE>
TABLE OF CONTENTS
Page(s)
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
2. Basic Transaction . . . . . . . . . . . . . . . . . . . . 6
(a) Purchase and Sale of Assets. . . . . . . . . . . . . 6
(b) Assumption of Liabilities. . . . . . . . . . . . . . 6
(c) Purchase Price . . . . . . . . . . . . . . . . . . . 6
(d) The Closing. . . . . . . . . . . . . . . . . . . . . 7
(e) Deliveries at the Closing. . . . . . . . . . . . . . 7
3. Representations and Warranties of the Seller. . . . . . . 7
(a) Organization of the Seller . . . . . . . . . . . . . 8
(b) Authorization of Transaction . . . . . . . . . . . . 8
(c) Noncontravention . . . . . . . . . . . . . . . . . . 8
(d) Brokers' Fees. . . . . . . . . . . . . . . . . . . . 8
(e) Title to Assets. . . . . . . . . . . . . . . . . . . 9
4. Representations and Warranties of the Buyer . . . . . . . 9
(a) Organization of the Buyer. . . . . . . . . . . . . . 9
(b) Authorization of Transaction . . . . . . . . . . . . 9
(c) Noncontravention . . . . . . . . . . . . . . . . . . 9
(d) Brokers' Fees. . . . . . . . . . . . . . . . . . . . 9
(e) Buyer's Knowledge. . . . . . . . . . . . . . . . . . 9
5. Pre-Closing Covenants . . . . . . . . . . . . . . . . . . 10
(a) General. . . . . . . . . . . . . . . . . . . . . . . 10
(b) Notices and Consents . . . . . . . . . . . . . . . . 10
(c) Operation of Business. . . . . . . . . . . . . . . . 10
(d) Preservation of Business . . . . . . . . . . . . . . 10
(e) Full Access. . . . . . . . . . . . . . . . . . . . . 11
(f) Notice of Developments . . . . . . . . . . . . . . . 11
(g) Employees and Independent Contractors of the
Seller . . . . . . . . . . . . . . . . . . . . . . . 11
6. Post-Closing Covenants. . . . . . . . . . . . . . . . . . 12
(a) General. . . . . . . . . . . . . . . . . . . . . . . 12
(b) Litigation Support . . . . . . . . . . . . . . . . . 13
(c) Transition . . . . . . . . . . . . . . . . . . . . . 13
7. Conditions to Obligation to Close . . . . . . . . . . . . 13
(a) Conditions to Obligation of the Buyer. . . . . . . . 13
(b) Conditions to Obligation of the Seller . . . . . . . 15
8. Remedies for Breaches of this Agreement . . . . . . . . . 16
(a) Survival of Representations and Warranties . . . . . 16
(b) Indemnification Provisions for Benefit of the
Buyer. . . . . . . . . . . . . . . . . . . . . . . . 16
- i -
<PAGE>
(c) Indemnification Provisions for Benefit of the
Seller . . . . . . . . . . . . . . . . . . . . . . . 17
(d) Matters Involving Third Parties. . . . . . . . . . . 17
(e) Determination of Adverse Consequences. . . . . . . . 19
(f) Other Indemnification Provisions . . . . . . . . . . 19
(g) Limitation on Claims . . . . . . . . . . . . . . . . 19
9. Termination . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Termination of Agreement . . . . . . . . . . . . . . 19
(b) Effect of Termination. . . . . . . . . . . . . . . . 20
10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 20
(a) Press Releases and Public Announcements. . . . . . . 20
(b) No Third-Party Beneficiaries . . . . . . . . . . . . 20
(c) Entire Agreement . . . . . . . . . . . . . . . . . . 20
(d) Succession and Assignment. . . . . . . . . . . . . . 21
(e) Counterparts . . . . . . . . . . . . . . . . . . . . 21
(f) Headings . . . . . . . . . . . . . . . . . . . . . . 21
(g) Notices. . . . . . . . . . . . . . . . . . . . . . . 21
(h) Governing Law. . . . . . . . . . . . . . . . . . . . 22
(i) Amendments and Waivers . . . . . . . . . . . . . . . 22
(j) Severability . . . . . . . . . . . . . . . . . . . . 22
(k) Expenses . . . . . . . . . . . . . . . . . . . . . . 22
(l) Construction . . . . . . . . . . . . . . . . . . . . 23
(m) Incorporation of Exhibits and Schedules. . . . . . . 23
(n) Specific Performance . . . . . . . . . . . . . . . . 23
(o) Tax Matters. . . . . . . . . . . . . . . . . . . . . 23
(p) Bulk Transfer Laws . . . . . . . . . . . . . . . . . 24
Exhibit A - Real Property Leases
Disclosure Schedule - Exceptions to Seller's Representations
and Warranties
Buyer's Disclosure Schedule - Exceptions to Buyer's
Representations and Warranties
- ii -
<PAGE>
ASSET PURCHASE AGREEMENT
Agreement entered into as of June 8, 1998, by and between
ACCESS SYSTEMS LLC, an Ohio limited liability company with
offices at 4350 Glendale-Milford Road, Suite 250, Cincinnati, OH
45242 (the "Buyer"), and ACCESS CORPORATION, an Ohio corporation
with offices at 4350 Glendale-Milford Road, Suite 250,
Cincinnati, OH 45242 (the "Seller"). The Buyer and the Seller
are referred to collectively herein as the "Parties".
The Seller has entered into an Asset Purchase Agreement
dated as of June 8, 1998 (the "Scan-Optics Agreement") to sell
all of the assets of its Hardware Service Division to Scan-
Optics, Inc. ("Scan-Optics").
This Agreement contemplates a transaction in which the Buyer
will purchase substantially all of Seller's remaining assets (and
assume certain of its liabilities), including those of Seller's
EDMS Division (the "Division").
Now, therefore, in consideration of the premises and the
mutual promises herein made, and in consideration of the
representations, warranties, and covenants herein contained, the
Parties agree as follows.
1. Definitions.
___________
"Acquired Assets" means all right, title, and interest in
and to all of Seller's assets, including all of Seller's rights
in the following: (a) agreements, contracts and rights
thereunder, (b) tangible personal property used in Seller's
business (such as office equipment and furniture,
telecommunications equipment, inventories of raw materials and
supplies, work in process and finished goods), (c) Intellectual
Property, goodwill associated therewith, licenses and sublicenses
granted and obtained with respect thereto (including computer
hardware and software licenses), and rights thereunder, remedies
against infringements thereof, and rights to protection of
interests therein under the laws of all jurisdictions, including
all EDMS-related intangible property, (d) accounts receivable,
(e) claims, deposits, prepayments, refunds, causes of action,
choses in action, rights of recovery, rights of set-off, and
rights of recoupment relating to the business of the Division and
the Acquired Assets (excluding any such item relating to the
payment of Taxes), (f) except as otherwise provided herein and to
the extent transferable under applicable law, franchises,
approvals, permits, licenses, orders, registrations,
certificates, variances, and similar rights obtained from
governments and governmental agencies, books, records, ledgers,
files, documents, correspondence, lists, creative materials,
advertising and promotional materials, studies, reports, and
other printed or written materials, including without limitation,
all EDMS customers and vendor lists, (g) the leases relating to
the Seller's offices in Blue Ash, Ohio, Irvine, California and
<PAGE>
Hebron, Kentucky, all as more specifically described on Exhibit A
hereto, and all leasehold improvements relating thereto, and (h)
all of Seller's cash and cash equivalents as of the Closing (as
defined below), except for any cash paid or payable by or to
Scan-Optics pursuant to the Scan-Optics Agreement, the proceeds
of any of Seller's stock options exercised after the date hereof
or any cash received by the Seller with respect to any accounts
receivable of its Hardware Service Division; provided, however,
that the Acquired Assets shall not include (i) the corporate
charter qualifications to conduct business as a foreign
corporation, arrangements with registered agents relating to
foreign qualifications, taxpayer and other identification
numbers, seals, minute books, stock transfer books, blank stock
certificates, and other documents relating to the organization,
maintenance and existence of the Seller as a corporation, (ii)
the cash excluded from the Acquired Assets as provided above,
(iii) any tax refunds, (iv) any of the rights of the Seller under
this Agreement (or under any side agreement between the Seller on
the one hand and the Buyer on the other hand entered into on or
after the date of this Agreement), (v) any assets of the Hardware
Service Division subject to sale under the Scan-Optics Agreement
or (vi) any rights of the Seller under the Scan-Optics Agreement.
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid in
settlement, Liabilities, obligations, Taxes, liens, losses,
expenses and fees, including court costs and attorneys' fees and
expenses; but excluding any indirect, consequential or punitive
damages unless and only to the extent actually paid to a third
party.
"Affiliate(s)" has the meaning set forth in Rule 12b-2 of
the regulations promulgated under the Securities Exchange Act.
"Assumed Liabilities" means (a) Liabilities of the Seller
with respect to the Division regarding ongoing obligations for
leases of real property, (b) Liabilities of the Seller under the
agreements, contracts, leases, licenses, and other arrangements
referred to in the definition of Acquired Assets either (i) to
furnish goods, services, and other non-cash benefits to another
party after the Closing, or (ii) to pay for goods, services, and
other non-cash benefits that another party will furnish to it
after the Closing, (c) Liabilities under accounts payable of the
Seller shown on a schedule approved by the Buyer and the Seller
at the Closing, (d) to the extent permitted by law and contract,
Liabilities under Employee Benefit Plans and (e) all Liabilities
of the Seller under the Executive Retention Agreements dated as
of August 24, 1994 between the Seller and each of Scott D.
Watkins and Newton D. Baker (the "Executive Retention
Agreements"); provided, however, that the Assumed Liabilities
shall not include any other Liability or any obligation of the
- 2 -
<PAGE>
Seller under this Agreement (or under any side agreement between
the Seller on the one hand and the Buyer on the other hand
entered into on or after the date of this Agreement), including
without limitation, accrued payroll at the time of Closing and
Liabilities of the Seller under the Scan-Optics Agreement.
"Buyer" has the meaning set forth in the preface above.
"Buyer's Disclosure Schedule" has the meaning set forth in
Section4 below.
"Cash" means cash and cash equivalents (including marketable
securities and short term investments) calculated in accordance
with GAAP.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d)
below.
"COBRA" means the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, as set forth in Section 4980B of the
Code and SectionSection 601 through 608 of ERISA, and any
amendments thereto and successor provisions thereof, including
any regulations promulgated under the applicable provisions of
the Code and ERISA.
"Code" means the Internal Revenue Code of 1986, as amended,
including all regulations issued pursuant thereto. All citations
to the Code, or to the Treasury Regulations promulgated
thereunder, shall include any amendments or any substitute or
successor provisions thereof.
"Disclosure Schedule" has the meaning set forth in Section 3
below.
"Division" means the Seller with respect to its EDMS
Division.
"Employee" means an individual who is a common law employee
of another Person.
"Employee Benefit Plans" means all written or oral plans,
contracts or other arrangements for the benefit or advantage of
any officer, director, Employee, contractor or agent, or any
group of such Persons, with respect to which the Seller has or
may have a Liability including, without limitation: plans
described in Section 3(3) of ERISA; deferred compensation
arrangements; supplemental executive retirement plans; rabbi or
secular trusts; corporate-owned life insurance; split-dollar
insurance arrangements; letter of credit or indemnity policies
for deferred compensation arrangements; stock or performance
awards; long and short-term incentive plans; golden or tin
parachute agreements; medical, disability, life and other
insurance benefits; severance
- 3 -
<PAGE>
plans or policies; sick leave; vacation benefits; educational,
transportation, parking and other subsidies; allowances for
entertainment; charitable contributions to be made upon an
individual's request; use of an automobile; payment of club
dues; and any other arrangements similar to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, including all regulations issued pursuant
thereto. All citations to ERISA, or to the Department of Labor
Regulations promulgated thereunder, shall include any amendments
or any substitute or successor provisions thereof.
"401(k) Plan" means the ACCESS Corporation 401(k) Plan and
any trust adopted in connection therewith.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"HIPAA" means the Health Insurance Portability and
Accountability Act of 1996 as set forth in Section 9801 through
9806 of the Code and SectionSection 701 through 707, 711 through
712, and 731 through 734 of ERISA and any amendments thereto and
successor provisions thereof, including any regulations
promulgated under the applicable provisions of the Code and
ERISA.
"Indemnified Party" has the meaning set forth in
Section 8(d) below.
"Indemnifying Party" has the meaning set forth in
Section 8(d) below.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in
connection therewith, (c) all copyrightable works, all
copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all
trade secrets and confidential business information (including
ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all
- 4 -
<PAGE>
other proprietary rights, and (h) all copies and tangible
embodiments thereof (in whatever form or medium).
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for
Taxes.
"Operating Profit" means net income before federal and state
income taxes, calculated in accordance with generally accepted
accounting principles.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with
respect to quantity and frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Purchase Price" has the meaning set forth in Section 2(c)
below.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for Taxes
not yet due and payable or for Taxes that the taxpayer is
contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under
capital lease arrangements, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with
the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Seller's Portion of the Proceeds" means a portion of the
proceeds (net of any expenses of sale and any liabilities
retained by the Buyer or the Buyer's equity owners in such sale)
received by the Buyer or the Buyer's equity owners in any
Disposition Transaction (including, without duplication, any
indebtedness or other Liabilities of the Buyer assumed by any
Person in such Disposition Transaction) equal to 30% thereof if
the Disposition Transaction occurs on or before the first
- 5 -
<PAGE>
anniversary of the Closing Date, 20% thereof if the Disposition
Transaction occurs after such first anniversary and on or before
the second anniversary of the Closing Date and 10% thereof if the
Disposition Transaction occurs after such second anniversary and
on or before the third anniversary of the Closing Date. If, in
connection with any Disposition Transaction, Buyer or its equity
owners receive any contingent payment rights, any payment
thereunder shall be deemed to be proceeds of a Disposition
Transaction occurring in the year in which the payment is
received. If, in connection with any Disposition Transaction,
Buyer or its equity owners receive any deferred payment rights
which are not contingent, the net present value of such future
payments shall be deemed to be received in the year in which the
Disposition Transaction occurs.
"Tax" or "Taxes" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Section 59A of the Code),
customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever including any interest, penalty, or
addition thereto, whether disputed or not.
"Tax Return(s)" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
"Third Party Claim" has the meaning set forth in
Section 8(d) below.
2. Basic Transaction.
_________________
(a) Purchase and Sale of Assets. On and subject to
___________________________
the terms and conditions of this Agreement, the Buyer agrees
to purchase from the Seller, and the Seller agrees to sell,
transfer, convey, and deliver to the Buyer, all of the
Acquired Assets at the Closing for the consideration
specified in Section 2(c) below.
(b) Assumption of Liabilities. On and subject to the
_________________________
terms and conditions of this Agreement, the Buyer agrees at
the Closing to assume, become responsible for, and discharge
when due all of the Assumed Liabilities. The Buyer will not
assume or have any responsibility, however, with respect to
any other obligation or Liability of the Seller not included
within the definition of Assumed Liabilities.
(c) Purchase Price. As payment in full for the
______________
Acquired Assets, (i) the Buyer shall assume and discharge
- 6 -
<PAGE>
and perform when due the Assumed Liabilities, (ii) the Buyer
shall pay to the Seller on the date (each a "Payment Date")
90 days after the end of the 12-month period ending July 31,
1999, July 31, 2000 and July 31, 2001 an amount equal to 10%
of the Buyer's Operating Profit for the preceding 12-month
period (provided that no payment shall be made for any
period following a Disposition Transaction and any payment
for a period in which a Disposition Transaction occurs shall
be pro-rated) and (iii) if on or before July 31, 2001 the
Buyer sells all or substantially all of its assets to, or
engages in a merger with, another Person or another Person
acquires more than 80% of the equity of the Buyer, other
than in a purchase of equity from the Buyer (a "Disposition
Transaction"), the Buyer shall pay to the Seller an amount
equal to the Seller's Portion of the Proceeds. On each
Payment Date or the date of any Disposition Transaction, the
Buyer shall deliver to the Seller a calculation in
reasonable detail showing the Buyer's calculation of the
amount payable to the Seller hereunder and shall provide to
the Seller all such other information relating thereto as
the Seller may reasonably request.
(d) The Closing. The closing of the transactions
___________
contemplated by this Agreement (the "Closing") shall take
place at the offices of the Seller, 4350 Glendale-Milford
Road, Blue Ash, Ohio commencing as promptly as practicable
prior to the closing under the Scan-Optics Agreement or at
such other time and place as the Parties may mutually
determine (the "Closing Date").
(e) Deliveries at the Closing. At the Closing, (i)
_________________________
the Seller will deliver to the Buyer the various
certificates, instruments, and documents referred to in
Section 7(a) below; (ii) the Buyer will deliver to the
Seller the various certificates, instruments, and documents
referred to in Section 7(b) below; (iii) the Seller will
execute, acknowledge (if appropriate), and deliver to the
Buyer (A) assignments (including Intellectual Property
transfer documents) in the forms reasonably requested by the
Buyer and (B) such other instruments of sale, transfer,
conveyance, and assignment as the Buyer and its counsel
reasonably may request; and (iv) the Buyer will execute,
acknowledge (if appropriate), and deliver to the Seller (A)
an assumption in the form reasonably requested by the Seller
and (B) such other instruments of assumption as the Seller
and its counsel reasonably may request.
3. Representations and Warranties of the Seller. The
____________________________________________
Seller represents and warrants to the Buyer that the statements
contained in this Section 3 are correct and complete as of the
date of this Agreement, except as set forth in the disclosure
schedule accompanying this Agreement and initialed by the Parties
(the "Disclosure Schedule"). The Disclosure Schedule will be
arranged
- 7 -
<PAGE>
in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Section 3.
(a) Organization of the Seller. The Seller is a
__________________________
corporation duly organized, validly existing, and in good
standing under the laws of the State of Ohio. The Seller is duly
authorized to conduct business and is in good standing under the
laws of each jurisdiction where such qualification is required,
except where the failure to be qualified would not have a
material adverse effect on the Acquired Assets, the business of
the Division or the Seller's ability to perform its obligations
under this Agreement. The Seller has full corporate power and
authority and all licenses, permits, and authorizations necessary
to carry on the business of the Division and to own and use the
Acquired Assets.
(b) Authorization of Transaction. The Seller has full
____________________________
power and authority (including full corporate power and
authority) to execute and deliver this Agreement and,
subject to approval of the Seller's shareholders as
contemplated by Section5(a) below, to perform its
obligations hereunder. This Agreement constitutes the valid
and legally binding obligation of the Seller, enforceable in
accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the
________________
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above), will (i)
violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or
court to which the Seller is subject or any provision of the
Articles of Incorporation or Code of Regulations of the
Seller, or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other
arrangement to which the Seller is a party or by which it is
bound or to which any of its assets is subject (or result in
the imposition of any Security Interest upon any of its
assets). The Seller does not need to give any notice to,
make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in
order for the Parties to consummate the transactions
contemplated by this Agreement (including the assignments
and assumptions referred to in Section 2 above).
(d) Brokers' Fees. The Seller has no Liability or
_____________
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions
- 8 -
<PAGE>
contemplated by this Agreement for which the Buyer could
become liable or obligated.
(e) Title to Assets. At the Closing the Seller will
_______________
have good and marketable title to all of the Acquired
Assets, free and clear of any Security Interest or
restriction on transfer.
4. Representations and Warranties of the Buyer. The Buyer
___________________________________________
represents and warrants to the Seller that the statements
contained in this Section 4 are correct and complete as of the
date of this Agreement, except as set forth in the Buyer's
Disclosure Schedule. The Buyer's Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Section 4.
(a) Organization of the Buyer. The Buyer is a limited
_________________________
liability company duly organized, validly existing, and in
good standing under the laws of the State of Ohio.
(b) Authorization of Transaction. The Buyer has full
____________________________
power and authority (including full limited liability
company power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding
obligation of the Buyer, enforceable in accordance with its
terms and conditions.
(c) Noncontravention. Neither the execution and the
________________
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above), will (i)
violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or
court to which the Buyer is subject or any provision of its
organizational documents, or (ii) conflict with, result in a
breach of, constitute a default under, result in the
acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any
notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a
party or by which it is bound or to which any of its assets
is subject.
(d) Brokers' Fees. The Buyer has no Liability or
_____________
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions
contemplated by this Agreement.
(e) Buyer's Knowledge. The owners and Managers of the
_________________
Buyer are the Chief Executive Officer and Chief Financial
Officer of the Seller. Accordingly, ,the Buyer is fully
- 9 -
<PAGE>
familiar with the business of the Division, the Assumed
Liabilities and the Acquired Assets. Except as specifically
set forth in this Agreement, the Buyer will purchase the
Acquired Assets and assume the Assumed Liabilities on an
"As-Is, Where-Is" basis.
5. Pre-Closing Covenants. The Parties agree as follows
_____________________
with respect to the period between the execution of this
Agreement and the Closing.
(a) General. Each of the Parties will use all
_______
commercially reasonable efforts to take all action and to do
all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated
by this Agreement (including satisfaction, but not waiver,
of the Closing conditions set forth in Section 7 below),
provided that nothing in this Agreement shall require the
Seller to make any payment to any third party to obtain its
consent to the transactions contemplated hereby. In
furtherance thereof, the Seller shall call a meeting of its
shareholders, to be held prior to the anticipated Closing
Date, to consider the transactions contemplated hereby and
by the Scan-Optics Agreement and, subject to the limitations
of fiduciary duty, shall use all commercially reasonable
efforts to solicit the approval of such transactions by its
shareholders in accordance with applicable law and the
Seller's Articles of Incorporation and Code of Regulations.
(b) Notices and Consents. The Seller will give any
____________________
notices to third parties, and the Seller will use all
commercially reasonable efforts to obtain any third party
consents, appropriate to the transaction or that the Buyer
reasonably may request in connection with the matters
referred to in Section 3(c) above. Each of the Parties will
give any notices to, make any filings with, and use all
commercially reasonable efforts to obtain any
authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters
referred to in Section 3(c) and Section 4(c) above.
(c) Operation of Business. In its conduct of the
_____________________
business of the Division, the Seller will not engage in any
practice, take any action, or enter into any transaction
outside the Ordinary Course of Business.
(d) Preservation of Business. The Seller will use all
________________________
commercially reasonable efforts to keep the business of the
Division and all properties relating thereto substantially
intact, including its present operations, physical
facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers, and employees.
- 10 -
<PAGE>
(e) Full Access. The Seller will permit
___________
representatives of the Buyer to have full access at all
reasonable times, and in a manner so as not to interfere
with the normal business operations of the Seller, to all
premises, properties, personnel, books, records (including
Tax records), contracts, and documents of or pertaining to
the Division.
(f) Notice of Developments. Each Party will give
______________________
prompt written notice to the other Party of any material
adverse development causing a breach of any of its own
representations and warranties in Section 3 and Section 4
above. No disclosure by any Party pursuant to this
Section 5(f), however, shall be deemed to amend or
supplement the Disclosure Schedule or the Buyer's Disclosure
Schedule, as the case may be, or to prevent or cure any
misrepresentation, breach of warranty, or breach of
covenant.
(g) Employees and Independent Contractors of the
____________________________________________
Seller.
______
(i) On or before the Closing Date, the Buyer
shall offer employment to those Employees then employed
by the Seller who are indicated on Schedule 5(h)(i)
hereto [and shall offer to enter into agreements with
those independent contractors then under contract with
the Seller who are indicated on Schedule 5(h)(i)
hereto], all on terms of employment or contract
substantially not less favorable to such Employees [and
independent contractors] than those currently
applicable to them. Except as otherwise expressly
indicated, any such employment offers will be for
employment-at-will and the Buyer reserves the right, in
its absolute discretion, to terminate or change the
terms of any employment resulting from the acceptance
of such offers. The Seller agrees to use all
commercially reasonable efforts to assist the Buyer in
hiring such Employees and entering into agreements with
such independent contractors. In no event shall the
Seller discourage those persons from becoming Employees
or independent contractors of the Buyer upon the terms
offered by the Buyer.
(ii) The Buyer shall inform the Seller prior to
the Closing Date of the names of the Employees and
independent contractors of the Seller who have agreed
to become employees or independent contractors, as the
case may be of the Buyer upon completion of the
Closing. The Seller shall cooperate with the Buyer in
effecting the transfer of such Employees and
independent contractors from the Seller to the Buyer
upon completion of the Closing.
- 11 -
<PAGE>
(iii) The Seller hereby acknowledges that it is
responsible for any future severance (in accordance
with the Seller's severance policies, if any, and with
applicable law) hereafter becoming due to any Employee
of the Seller who is not hired by the Buyer.
(iv) The Buyer hereby acknowledges that it is
responsible for any future severance (in accordance
with the Buyer's severance policies, if any, and
applicable law) hereafter becoming due to any employee
of the Buyer hired by the Buyer from the Seller's
former workforce.
(v) At the Buyer's request and expense, the
Seller shall assist the Buyer in attempting to enjoy to
the extent permitted by law the Seller's record, rating
and benefits under the worker's compensation laws and
unemployment compensation laws of the states and
countries in which there is coverage of Employees of
the Seller who become Employees of the Buyer on or
after the Closing Date.
(vi) The Buyer and Seller shall notify all of the
Seller's Employees that the Seller's Employee Benefit
Plans will be assumed by the Buyer to the extent
permitted by law and contract as of the Closing Date.
The Seller shall be responsible for all notices
required to be given to Employees, including without
limitation, notices pursuant to COBRA, HIPAA, ERISA and
the Code and for any coverage, payments or benefits
required pursuant to such laws or on account of
violation of any requirement of such laws.
6. Post-Closing Covenants. The Parties agree as follows
______________________
with respect to the period following the Closing.
(a) General. In case at any time after the Closing
_______
any further action is necessary or desirable to carry out
the purposes of this Agreement, each of the Parties will
take such further action (including the execution and
delivery of such further instruments and documents) as the
other Party reasonably may request, all at the sole cost and
expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under Section 8
below). The Seller acknowledges and agrees that from and
after the Closing the Buyer will be entitled to possession
of all documents, books, records (excluding Tax records),
agreements, and financial data of any sort relating to the
Division, provided that the Seller may retain all such
material which it is required by law to retain or which
relates to Liabilities retained by the Seller, in which case
the Seller shall provide copies thereof to the Buyer.
- 12 -
<PAGE>
(b) Litigation Support. In the event and for so long
__________________
as any Party actively is contesting or defending against any
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any
fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure
to act, or transaction on or prior to the Closing Date
involving the Division, the other Party will cooperate with
the contesting or defending Party and its counsel in the
contest or defense, make available its personnel, and
provide such testimony and access to its books and records
as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting
or defending Party (unless the contesting or defending Party
is entitled to indemnification therefor under Section 8
below).
(c) Transition. The Seller will not take any action
__________
that is designed or intended to have the effect of
discouraging any lessor, licensor, customer, supplier, or
other business associate of the Division from maintaining
the same business relationships with the Buyer and the
Division after the Closing as it maintained with the
Division prior to the Closing. The Seller will refer all
customer inquiries relating to the business of the Division
to the Buyer from and after the Closing.
(d) Third Party Consents. If any consent contemplated
____________________
by Section 5(a) above is not obtained prior to the Closing
under any third-party maintenance contract intended to be
included in the Acquired Assets, the Buyer shall perform all
of the Seller's obligations thereunder as the Seller's
independent contractor and shall be entitled to all payments
by the third party with respect thereto.
7. Conditions to Obligation to Close.
_________________________________
(a) Conditions to Obligation of the Buyer. The
_____________________________________
obligation of the Buyer to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(i) the representations and warranties set forth
in Section 3 above shall be true and correct in all
material respects at and as of the Closing Date;
(ii) the Seller shall have performed and complied
with all of its covenants hereunder in all material
respects through the Closing;
(iii) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-
judicial or administrative agency of any federal,
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<PAGE>
state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by
this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right
of the Buyer to own the Acquired Assets or to operate
and control the former business of the Division, or (D)
affect adversely the right of the Seller to own its
assets and to operate its businesses by reason of the
acquisition contemplated hereby (and no such
injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(iv) the Seller shall have delivered to the Buyer
a certificate to the effect that each of the conditions
specified above in Section 7(a)(i)-(iii) is satisfied
in all respects;
(v) the Buyer shall have received all
authorizations, consents, and approvals of governments
and governmental agencies referred to in Section 3(c)
and Section 4(c) above;
(vi) the shareholders of the Seller shall have
duly approved the execution, delivery, and performance
of this Agreement by the Seller and the transactions
contemplated thereby;
(vii) the Seller shall have (A) assigned to the
Buyer all third-party maintenance contracts relating to
the business of the Division, and (B) made pro-rata
payment to the Buyer for any prepayments associated
with such contracts;
(viii) the Seller shall have delivered clear
title to all equipment and inventory included as an
Acquired Asset and necessary to perform maintenance
under all third-party maintenance contracts to be
assigned pursuant to the transactions contemplated by
this Agreement;
(ix) the Closing of the transactions contemplated
by this Agreement shall occur on or before July 17,
1998;
(x) all conditions to the consummation of the
transactions contemplated by the Scan-Optics Agreement
shall have been satisfied or will be satisfied at the
closing thereunder; and
- 14 -
<PAGE>
(xi) Messrs. Watkins and Baker shall have
released the Seller from any Liabilities under the
Retention Agreements and all such Liabilities shall
have been assumed by the Buyer.
The Buyer may waive any condition specified in this Section 7(a)
if it executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The
______________________________________
obligation of the Seller to consummate the transactions to
be performed by it in connection with the Closing is subject
to satisfaction of the following conditions:
(i) the representations and warranties set forth
in Section 4 above shall be true and correct in all
material respects at and as of the Closing Date;
(ii) the Buyer shall have performed and complied
with all of its covenants hereunder in all material
respects through the Closing;
(iii) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-
judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by
this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded
following consummation (and no such injunction,
judgment, order, decree, ruling, or charge shall be in
effect);
(iv) the Buyer shall have delivered to the Seller
a certificate to the effect that each of the conditions
specified above in Section 7(b)(i)-(iii) is satisfied
in all respects;
(v) the Seller and the Buyer shall have received
all other authorizations, consents, and approvals of
governments and governmental agencies referred to in
Section 3(c) and Section 4(c) above;
(vi) the shareholders of the Seller shall have
duly approved the execution, delivery and performance
of this Agreement by the Seller and transactions
contemplated thereby; and
(vii) the Closing of the transactions
contemplated by this Agreement shall occur on or before
July 17, 1998;
- 15 -
<PAGE>
(viii) all conditions to the consummation of the
transactions contemplated by the Scan-Optics Agreement
have been satisfied or will be satisfied at the closing
thereunder; and
(ix) Messrs. Watkins and Baker shall have
released the Seller from any Liabilities under the
Retention Agreements and all such Liabilities shall
have been assumed by the Buyer.
The Seller may waive any condition specified in this Section 7(b)
if it executes a writing so stating at or prior to the Closing.
8. Remedies for Breaches of this Agreement.
_______________________________________
(a) Survival of Representations and Warranties. All
__________________________________________
of the representations and warranties of the Buyer and the
Seller contained in this Agreement shall survive the Closing
(even if the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty at the time of
Closing) and continue in full force and effect forever
thereafter until the earlier of (i) the second anniversary
of the Closing and (ii) the liquidation of the Seller.
(b) Indemnification Provisions for Benefit of the
_____________________________________________
Buyer.
_____
(i) In the event the Seller breaches (or in the
event any third party alleges facts that, if true,
would mean the Seller has breached) any of its
representations, warranties, and covenants contained in
this Agreement, and, if there is an applicable survival
period pursuant to Section 8(a) above, provided that
the Buyer makes a written claim for indemnification
against the Seller pursuant to Section 8(d) below
within such survival period, then the Seller agrees to
indemnify the Buyer from and against the entirety of
any Adverse Consequences the Buyer may suffer through
and after the date of the claim for indemnification
(including any Adverse Consequences the Buyer may
suffer after the end of any applicable survival period)
resulting from, arising out of; relating to, in the
nature of; or caused by the breach (or the alleged
breach).
(ii) The Seller agrees to indemnify the Buyer from
and against the entirety of any Adverse Consequences
the Buyer may suffer resulting from, arising out of;
relating to, in the nature of; or caused by:
(A) any Liability of the Seller which is not
an Assumed Liability (including any Liability of
the Seller that becomes a Liability of the Buyer
- 16 -
<PAGE>
under any bulk transfer law of any jurisdiction,
under any common law doctrine of de facto merger
or successor liability, or otherwise by operation
of law);
(B) any Liability of the Seller for unpaid
Taxes with respect to any Tax year or portion
thereof ending on or before the Closing Date (or
for any Tax year beginning before and ending after
the Closing Date to the extent allocable to the
portion of such period beginning before and ending
on Closing Date); or
(C) any Liability of the Seller for the
unpaid Taxes of any Person (including the Seller)
under Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a
transferee or successor, by contract, or
otherwise.
(c) Indemnification Provisions for Benefit of the
_____________________________________________
Seller.
______
(i) In the event the Buyer breaches (or in the
event any third party alleges facts that, if true,
would mean the Buyer has breached) any of its
representations, warranties, and covenants contained in
this Agreement, and, if there is an applicable survival
period pursuant to Section 8(a) above, provided that
the Seller makes a written claim for indemnification
against the Buyer pursuant to Section 8(d) below within
such survival period, then the Buyer agrees to
indemnify the Seller from and against the entirety of
any Adverse Consequences the Seller may suffer through
and after the date of the claim for indemnification
(including any Adverse Consequences the Seller may
suffer after the end of any applicable survival period)
resulting from, arising out of; relating to, in the
nature of; or caused by the breach (or the alleged
breach).
(ii) The Buyer agrees to indemnify the Seller
from and against the entirety of any Adverse
Consequences the Seller may suffer resulting from,
arising out of; relating to, in the nature of; or
caused by any Assumed Liability.
(d) Matters Involving Third Parties.
_______________________________
(i) If any third party shall notify any Party
(the "Indemnified Party") with respect to any matter (a
"Third Party Claim") which may give rise to a claim for
indemnification against the other Party (the
"Indemnifying Party") under this Section 8, then the
Indemnified Party shall promptly notify the
- 17 -
<PAGE>
Indemnifying Party thereof in writing; provided,
________
however, that no delay on the part of the Indemnified
_______
Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent) the Indemnifying
Party thereby is prejudiced.
(ii) The Indemnifying Party will have the right
to defend the Indemnified Party against the Third Party
Claim with counsel of its choice reasonably
satisfactory to the Indemnified Party so long as (A)
the Indemnifying Party notifies the Indemnified Party
in writing within 30 days after the Indemnified Party
has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party
from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of; or
caused by the Third Party Claim, (B) the Indemnifying
Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (C) the Third
Party Claim involves only money damages and does not
seek an injunction or other equitable relief; (D)
settlement of, or an adverse judgment with respect to,
the Third Party Claim is not, in the good faith
judgment of the Indemnified Party, likely to establish
a precedential custom or practice adverse to the
continuing business interests of the Indemnified Party,
and (E) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in
accordance with Section 8(d)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of
the Third Party Claim, (B) the Indemnified Party will
not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying
Party (not to be withheld unreasonably), and (C) the
Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent
of the Indemnified Party (not to be withheld
unreasonably).
(iv) In the event any of the conditions in
Section 8(d)(ii) above is or becomes unsatisfied,
however, (A) the Indemnified Party may defend against
and
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<PAGE>
consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim in
any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any
consent from, the Indemnifying party in connection
therewith), (B) the Indemnifying Party will reimburse
the Indemnified Party promptly and periodically for the
costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses),
and (C) the Indemnifying Party will remain responsible
for any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of; relating to, in
the nature of; or caused by the Third Party Claim to
the fullest extent provided in this Section 8.
(e) Determination of Adverse Consequences. All
_____________________________________
indemnification payments under this Section 8 shall be
deemed adjustments to the Purchase Price.
(f) Other Indemnification Provisions. The foregoing
________________________________
indemnification provisions are in addition to, and not in
derogation of, any statutory, equitable, or common law
remedy any Party may have for breach of representation,
warranty, or covenant.
(g) Limitation on Claims. No claim for breach of
____________________
representation or warranty may be brought by Seller or Buyer
under this Section 8 until its aggregate Adverse
Consequences resulting from all such breaches exceeds
$50,000.
9. Termination.
___________
(a) Termination of Agreement. Certain of the Parties
________________________
may terminate this Agreement as provided below:
(i) the Buyer and the Seller may terminate this
Agreement by mutual written consent at any time prior
to the Closing;
(ii) the Buyer may terminate this Agreement by
giving written notice to the Seller at any time prior
to the Closing in the event the Seller has breached any
material representation, warranty, or covenant
contained in this Agreement in any material respect,
the Buyer has notified the Seller of the breach, and
the breach has continued without cure for a period of
30 days after the notice of breach;
(iii) the Seller may terminate this Agreement by
giving written notice to the Buyer at any time prior to
the Closing in the event the Buyer has breached any
material representation, warranty, or covenant
contained in this Agreement in any material respect,
- 19 -
<PAGE>
the Seller has notified the Buyer of the breach, and
the breach has continued without cure for a period of
30 days after the notice of breach;
(iv) the Buyer or the Seller may terminate this
Agreement by giving written notice to the other if the
Closing has not occurred by July 17, 1998 and the party
giving the notice is not then in breach of any
provision hereof;
(v) the Seller may terminate this Agreement if
its Board of Directors determines in the exercise of
its fiduciary duty that such action is appropriate in
furtherance of the best interests of the Seller's
shareholders in order to accept an alternative
proposal; and
(vi) the Buyer or the Seller may terminate this
Agreement if the Scan-Optics Agreement has been
terminated.
(b) Effect of Termination. If any Party terminates
_____________________
this Agreement pursuant to Section 9(a) above, all rights
and obligations of the Parties hereunder shall terminate
without any Liability of any Party to the other Party
(except for any Liability of any Party then in breach).
10. Miscellaneous.
_____________
(a) Press Releases and Public Announcements. No Party
_______________________________________
shall issue any press release or make any public
announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written
approval of the other Party; provided, however, that any
Party may make any public disclosure it believes in good
faith is required by applicable law or any listing or
trading agreement concerning its publicly-traded securities
(in which case the disclosing Party will use all
commercially reasonable efforts to advise the other Party
prior to making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement
____________________________
shall not confer any rights or remedies upon any Person
other than the Parties and their respective successors and
permitted assigns.
(c) Entire Agreement. This Agreement (including the
________________
documents referred to herein) constitutes the entire
agreement between the Parties and supersedes any prior
understandings, agreements, or representations by or between
the Parties, written or oral, to the extent they have
related in any way to the subject matter hereof.
- 20 -
<PAGE>
(d) Succession and Assignment. This Agreement shall
_________________________
be binding upon and inure to the benefit of the Parties
named herein and their respective successors and permitted
assigns. No Party may assign either this Agreement or any
of its rights interests, or obligations hereunder without
the prior written approval of the other Party; provided
however, that the Buyer may (i) assign any or all of its
rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates
to perform its obligations hereunder (in any or all of which
cases the Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in
____________
one or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and
the same instrument.
(f) Headings. The section headings contained in this
________
Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this
Agreement.
(g) Notices. All notices, requests, demands, claims,
_______
and other communications hereunder will be in writing. Any
notice, request demand, claim, or other communication
hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified
mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below;
If to the Seller: Mr. Scott D. Watkins
President and Chief Executive
Officer
ACCESS Corporation
4350 Glendale-Milford Road
Suite 250
Cincinnati, OH 45242
Copy to: Gerald S. Greenberg, Esq.
Taft, Stettinius & Hollister LLP
1800 Star Bank Center
425 Walnut Street
Cincinnati, OH 45202-3957
If to the Buyer: Mr. Scott D. Watkins
ACCESS Corporation
4350 Glendale-Milford Road
Suite 250
Cincinnati, OH 45242
- 21 -
<PAGE>
Copy to: Gerald S. Greenberg, Esq.
Taft, Stettinius & Hollister LLP
1800 Star Bank Center
425 Walnut Street
Cincinnati, OH 45202-3957
Any Party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at
the address set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, telex ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner
herein set forth.
(h) Governing Law. This Agreement shall be governed
_____________
by and construed in accordance with the domestic laws of the
State of Ohio without giving effect to any choice or
conflict of law provision or rule (whether of the State of
Ohio or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the
State of Ohio.
(i) Amendments and Waivers. No amendment of any
______________________
provision of this Agreement shall be valid unless the same
shall be in writing and signed by the Buyer and the Seller.
No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any
rights arising by virtue of any prior or subsequent such
occurrence. To the maximum extent permitted by law, the
Board of Directors of the Seller may approve any amendment
to this Agreement whether before or after approval by the
shareholders of the Seller.
(j) Severability. Any term or provision of this
____________
Agreement that is invalid or unenforceable in any situation
in any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof
or the validity or enforceability of the offending term or
provision in any other situation or in any other
jurisdiction.
(k) Expenses. Seller will pay all costs and expenses
________
(including legal fees and expenses) incurred by Seller or
Buyer prior to the Closing in connection with this Agreement
and the transactions contemplated hereby, provided that
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<PAGE>
Buyer shall pay all such costs and expenses relating to its
organization.
(l) Construction. The Parties have participated
____________
jointly in the negotiation and drafting of this Agreement.
In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as
if drafted jointly by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions
of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The word "including"
shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained
herein shall have independent significance. If any Party
has breached any representation, warranty, or covenant
contained herein in any respect, the fact that there exists
another representation, warranty, or covenant relating to
the same subject matter (regardless of the relative levels
of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in
breach of the first representation, warranty, or covenant.
(m) Incorporation of Exhibits and Schedules. The
_______________________________________
Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
(n) Specific Performance. Each of the Parties
____________________
acknowledges and agrees that the other Party would be
damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each
of the Parties agrees that the other Party shall be entitled
to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any
state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
(o) Tax Matters.
___________
(i) The Seller will be responsible for the
preparation and filing of all Tax Returns for the
Seller for all periods as to which Tax Returns are due
before and after the Closing Date and will include
therein the operations of the Division ending on or
before the Closing Date. The Seller will make all
payments required with respect to any such Tax Return.
- 23 -
<PAGE>
(ii) The Buyer will be responsible for the
preparation and filing of all Tax Returns of the Buyer
for all periods as to which Tax Returns are due after
the Closing Date and will include therein the
operations of the Division after the Closing Date. The
Buyer will make all payments required with respect to
any such Tax Return.
(p) Bulk Transfer Laws. The Buyer acknowledges that
__________________
the Seller will not comply with the provisions of any bulk
transfer laws of Ohio in connection with the transactions
contemplated by this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
ACCESS SYSTEMS LLC
By: /s/ Scott D. Watkins
________________________________
Name: Scott D. Watkins
Title: Member and Manager
By: /s/ Newton D. Baker
________________________________
Name: Newton D. Baker
Title: Member and Manager
ACCESS CORPORATION
By: /s/ Scott D. Watkins
________________________________
Name: Scott D. Watkins
Title: President and Chief
Executive Officer
By: /s/ Kent P. Friel
________________________________
Name: Kent P. Friel
Title: Chairman of the Board
- 24 -
<PAGE>
EXHIBIT D
AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 8th day of
June, 1998, by and between Oce N.V., a Netherlands corporation
("Oce"), and ACCESS Corporation, an Ohio corporation ("Access").
WITNESSETH:
WHEREAS, Access intends to enter into an Asset Purchase
Agreement dated as of June 8, 1998 with Scan-Optics, Inc. ("Scan-
Optics"), a copy of which is attached hereto as Exhibit I, which
contemplates the acquisition by Scan-Optics of certain of the
assets of Access (the "Scan-Optics Purchase Agreement");
WHEREAS, Access intends to enter into an Asset Purchase
Agreement dated as of June 6, 1998 with ACCESS Systems LLC
("Systems"), a copy of which is attached hereto as Exhibit II,
which contemplates the acquisition by Systems of all operating
assets of Access which are not subject to the Scan-Optics
Purchase Agreement and which will close immediately prior to the
closing under the Scan-Optics Purchase Agreement (the "Systems
Purchase Agreement" and together with the Scan-Optics Purchase
Agreement, the "Asset Purchase Agreements"); and
WHEREAS, the parties desire to set forth their agreement
with respect to the liquidation and dissolution of Access
pursuant to the Plan referenced below (the "Liquidation") that
will commence with the consummation of the transactions
contemplated by the Asset Purchase Agreements (the "Asset
Purchase Closings");
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter contained, and upon the terms and subject to the
conditions hereinafter set forth, the parties agree as follows:
1. Prior Agreement. The Agreement between the parties
_______________
dated as of August 19, 1997 is hereby terminated.
2. Distribution with respect to Shares upon Liquidation.
____________________________________________________
If pursuant to the Liquidation, Access distributes to Oce cash in
the amount of $1.5 million plus accrued dividends on the shares
of Class One Preferred Stock of Access held by Oce (as defined
below), if any, to the Closing Date (as defined in Section 11
below), then, at the times provided in Section 11.2 below, Oce
shall properly endorse and surrender to Access for cancellation
certificates for the following shares of Access (collectively
hereinafter the "Oce Shares") currently owned beneficially by Oce
and shall waive any further claim for payment or distribution
with respect thereto:
1) Ten Thousand (10,000) shares of 7% Class One Preferred
Stock of Access;
2) Two Thousand Five Hundred (2,500) shares of 9% Class
One Preferred Stock of Access;
<PAGE>
3) Two Thousand Five Hundred (2,500) shares of variable
rate Class One Preferred Stock of Access; and
4) One Million Nine Hundred Four Thousand Eight Hundred
Sixty-three (1,904,863) shares of Common Stock (as
defined in Section 5.1 below) of Access.
3. Liquidation and Dissolution of Access. Prior to the
_____________________________________
Asset Purchase Closings, Access shall take all reasonable efforts
to cause its Shareholders to adopt the Plan of Complete
Liquidation and Dissolution attached hereto as Exhibit III (the
"Plan") and shall take all other corporate action necessary under
Ohio law to authorize the Liquidation as contemplated under such
Plan, which Liquidation shall include the Asset Purchase Closings
and shall be concluded as promptly as practicable thereafter.
4. Representations and Warranties of Oce. Oce represents
_____________________________________
and warrants to Access that the following are true and correct as
of the date hereof:
4.1 Organization and Good Standing. Oce is a
______________________________
corporation, duly organized, validly existing and in good
standing under the laws of the Netherlands, with all requisite
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
4.2 Authorization and Validity. The execution,
__________________________
delivery and performance by Oce of this Agreement, and the
consummation of the transactions contemplated hereby, have been
duly authorized by all necessary corporate action of Oce. This
Agreement has been duly executed and delivered by Oce and
constitutes the legal, valid and binding obligation of Oce
enforceable against Oce in accordance with its terms.
4.3 No Violation. Neither the execution, delivery or
____________
performance of this Agreement, nor the consummation of the
transactions contemplated hereby, will (a) conflict with, or
result in a violation or breach of the terms, conditions or
provisions of, or a default under, the organizational documents
of Oce, (b) conflict with, or result in a violation or breach of
the terms, conditions or provisions of, or constitute a default
under, any agreement, indenture or other instrument by which Oce
is bound; or (c) violate or conflict with any judgment, decree,
order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body.
4.4 Title to Shares. Oce owns all of the Oce Shares,
_______________
free and clear of all security interests, liens, adverse claims,
encumbrances, equities, proxies and shareholders' agreements,
except for the Voting Trust Agreement dated April 27, 1992 (the
"Voting Trust Agreement") among Access, Oce and the trustees
thereunder.
5. Representations and Warranties of Access. Access
________________________________________
represents and warrants to Oce that the following are true and
correct as of the date hereof:
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<PAGE>
5.1 Organization and Good Standing. Access is a
______________________________
corporation duly organized, validly existing and in good standing
under the laws of the State of Ohio, with all requisite corporate
power and authority to execute and deliver this Agreement and,
subject to approval by the holders of a majority of the common
shares of the capital stock of Access (the "Common Stock"),
including Oce, to consummate the transactions contemplated
hereby.
5.2 Authorization and Validity. The execution and
__________________________
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the
Board of Directors of Access. Access shall seek approval of the
consummation of the transactions contemplated by this Agreement
(including the adoption of the Plan) and the Asset Purchase
Agreements from the holders of the Common Stock at the Special
Meeting of Shareholders to be held on or about June 30, 1998 or
such later date as the ACCESS Board of Directors may designate.
6. Covenants of Oce. Oce covenants and agrees that:
________________
6.1 Approval of Asset Purchase Agreement and Plan of
________________________________________________
Liquidation. Oce shall vote the Oce Shares to approve the
___________
transactions contemplated by the Plan, including the Asset
Purchase Agreements, and all other matters necessary to
consummate the transactions contemplated hereby.
6.2 Release of Claims. At the Closing, Oce shall
_________________
execute, for itself and its successors and assigns, a release of
all claims (the "Release of Claims"), which shall be in a form
reasonably satisfactory to counsel for Access, pursuant to which
Oce and its successors and assigns discharges and releases Access
and its successors and assigns, and their directors, officers,
employees, agents and shareholders, from all complaints, claims,
counterclaims, damages, actions, obligations, attorneys' fees,
duties, suits, debts, demands, costs, controversies and
liabilities of every nature, at law, in equity or
administratively, under any set of facts, liquidated or
unliquidated, known or unknown, matured or unmatured, foreseeable
or unforeseeable, fixed, vested or contingent, suspected or
unsuspected, which Oce may then or in the future have by reason
of the Liquidation or the distribution to Oce in respect of the
Oce Shares pursuant to the Plan, including any claim that Oce is
entitled to any further distribution or payment with respect to
the Oce Shares.
7. Covenants of Access. Access covenants and agrees that:
___________________
7.1 Consummation of Agreement. Access shall use all
_________________________
commercially reasonable efforts to cause the consummation of the
transactions contemplated hereby and by the Asset Purchase
Agreements in accordance with their respective terms and
conditions; provided, however, that this covenant shall not
require Access to make any expenditures that are not expressly
set forth in this Agreement or the Asset Purchase Agreements or
otherwise contemplated hereby or thereby.
7.2 Transfer of Assets to Scan-Optics. At the Asset
_________________________________
Purchase Closings, Access shall sell and transfer such of its
assets and liabilities to Systems and Scan-Optics as is provided
in the Asset Purchase Agreements.
- 3 -
<PAGE>
8. Conditions Precedent to Obligations of Access. The
_____________________________________________
obligations of Access hereunder are subject to the fulfillment at
or prior to the Closing of each of the following conditions:
8.1 Approval by Access Shareholders. The holders of a
_______________________________
majority of the Common Stock, including the Oce Shares, shall
have approved the execution, delivery and performance of the
Plan, including this Agreement and the Asset Purchase Agreements.
8.2 Proceedings. No action, proceeding or order by
___________
any court or governmental body or agency shall have been
threatened, asserted, instituted or entered to restrain or
prohibit the carrying out of the transactions contemplated by the
Plan, including this Agreement and the Asset Purchase Agreements.
8.3 Closing Deliveries. Access shall have received
__________________
all certificates, documents and agreements to be delivered to
Access pursuant to Section 11 below, duly executed and delivered
in form satisfactory to legal counsel for Access.
8.4 Representations and Warranties. The
______________________________
representations and warranties of Oce contained herein shall be
true and correct in all material respects when made and as of the
Closing Date as if then made.
8.5 Covenants. Oce shall have performed and complied
_________
in all material respects with all covenants and conditions
required by this Agreement to be performed and complied with by
it on or prior to the Closing Date.
9. Conditions Precedent to Obligations of Oce. The
__________________________________________
obligations of Oce hereunder are subject to the fulfillment at or
prior to the Closing of each of the following conditions:
9.1 Proceedings. No action, proceeding or order by
___________
and court or governmental body or agency shall have been
threatened, asserted, instituted or entered to restrain or
prohibit the carrying out of the transactions contemplated by the
Plan, including this Agreement and the Asset Purchase Agreements.
9.2 Closing Deliveries. Oce shall have received all
__________________
certificates, documents and agreements to be delivered to Oce
pursuant to Section 11 below, duly executed and delivered in form
satisfactory to Oce's legal counsel.
9.3 Representations and Warranties. The
______________________________
representations and warranties of Access contained herein shall
be true and correct in all material respects when made and as of
the Closing Date as if then made.
9.4 Covenants. Access shall have performed and
_________
complied in all material respects with all covenants and
conditions required by this Agreement to be performed and
complied with by it on or prior to the Closing Date.
- 4 -
<PAGE>
9.5 Approval by Access Shareholders. The holders of a
_______________________________
majority of the shares of Common Stock, including the Oce Shares,
shall have approved the execution, delivery and performance of
the Plan, including this Agreement and the Asset Purchase
Agreements.
10. Additional Condition Precedent. The obligations of
______________________________
each of Oce and Access under Sections 2 and 7.2 hereof,
respectively, are further subject to the fulfillment at or prior
to the Closing of the following condition: The Asset Purchase
Closings shall have occurred, and no action, proceeding, or order
by any court or governmental body or agency shall have been
threatened, asserted, instituted or entered to restrain or
prohibit the carrying out of the transactions contemplated
thereby.
11. Closing.
_______
11.1 Time, Date and Location. The closing of the
_______________________
transactions contemplated hereby (the "Closing") shall occur on
the day immediately following the completion of the Asset
Purchase Closings or such later date as the parties may agree
(the "Closing Date"), at 10:00 a.m. at the offices of Taft,
Stettinius & Hollister, Star Bank Center, 425 Walnut Street,
Cincinnati, OH 45202-3957.
11.2 Deliveries by Oce. (a) At or prior to the
_________________
Closing, and contemporaneously with the payments by Access to Oce
contemplated by Section 2 hereof, Oce shall deliver to Access the
following, all of which shall be in a form reasonably
satisfactory to counsel for Access:
(i) Certificates representing all of the shares
of Class One Preferred Stock of Access held by Oce duly endorsed
in blank (or accompanied by duly executed stock powers), with
signatures guaranteed by a commercial bank or by a member firm of
the New York Stock Exchange;
(ii) A certificate of an officer of Oce, dated the
Closing Date, (i) as to the performance of and compliance in all
material respects by Oce with all covenants to be performed or
complied with by it on and as of the Closing Date and (ii)
certifying that the representations and warranties of Oce
contained herein are true and correct as of the Closing Date as
if then made;
(iii) The executed Release of Claims; and
(iv) Such other instruments or documents as Access
or its counsel shall reasonably request, to carry out and effect
the purpose and intent of this Agreement.
(b) Upon the completion of the liquidation of Access
as provided in the Plan, Oce shall deliver to Access certificates
representing all of the shares of Common Stock of Access held by
Oce, duly endorsed in blank (or accompanied by duly executed
stock powers), with signatures guaranteed by a commercial bank or
a member firm of the New York Stock Exchange.
- 5 -
<PAGE>
11.3 Deliveries by Access. At or prior to the Closing,
____________________
Access shall deliver to Oce the following, all of which shall be
in a form reasonably satisfactory to counsel for Oce:
(a) A certified copy of resolutions of the board
of directors and the stockholders of Access authorizing the
execution, delivery and performance of this Agreement and the
payments to be made pursuant to Section 2 hereof;
(b) A certificate of an officer of Access, dated
the Closing Date, (i) as to the performance of and compliance in
all material respects by Access with all covenants to be
performed or complied with by it on and as of the Closing Date
and (ii) certifying that the representations and warranties of
Access contained herein are true and correct as of the Closing
Date as if then made; and
(c) Such other instruments or documents as Oce or
its counsel shall reasonably request, to carry out and effect the
purpose and intent of this Agreement.
12. Termination. This Agreement may be terminated by
___________
either party at any time if either of the Asset Purchase
Agreements is terminated for any reason or if the Asset Purchase
Closings and the Closing have not occurred by November 30, 1998.
In addition, this Agreement may be terminated by Oce if there is
any change (a) in the Asset Purchase Agreements from the forms
attached hereto as Exhibits I and II or (b) in the Plan from the
form attached hereto as Exhibit III, or in the transactions
contemplated thereunder which, in the reasonable opinion of
counsel to Oce, in any way materially affects the substance
thereof or the tax consequences of this Agreement or the
transactions contemplated hereunder to Oce.
13. Miscellaneous.
_____________
13.l Amendment; Waivers. This Agreement may be
__________________
amended, modified or supplemented only by an instrument in
writing executed by the parties hereto. Any waiver of any terms
and conditions hereof must be in writing, and signed by the
parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other
terms and conditions hereof.
13.2 Assignment. Neither this Agreement nor any right
__________
created hereby or in any agreement entered into in connection
with the transactions contemplated hereby shall be assignable by
any party hereto without the consent of the other party.
13.3 Parties In Interest; No Third Party Beneficiaries.
_________________________________________________
Except as otherwise provided herein, the terms and conditions of
this Agreement shall inure to the benefit of and be binding upon
the respective legal representatives, successors and permitted
assigns of the parties hereto. Neither this Agreement nor any
other agreement contemplated hereby shall be deemed to confer
upon any person not a party hereto or thereto any rights or
remedies hereunder or thereunder. Each party hereto shall pay
its own expenses incurred in connection with this Agreement.
- 6 -
<PAGE>
13.4 Entire Agreement. This Agreement and the
________________
agreements contemplated hereby constitute the entire agreement of
the parties regarding the subject matter hereof, and supersede
all prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject
matter hereof.
13.5 Severability. If any provision of this Agreement
____________
is held to be illegal, invalid or unenforceable under present or
future laws effective during the term hereof, such provision
shall be fully severable and this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall
not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as
similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
13.6 Governing Law. This agreement and the rights and
_____________
obligations of the parties hereto shall be governed by and
construed and enforced in accordance with the substantive laws
(but not the rules governing conflicts of laws) of the State of
Ohio.
13.7 Captions. The captions in this Agreement are for
________
convenience of reference only and shall not limit or otherwise
affect any of the terms or provisions hereof.
13.8 Notice. Whenever this Agreement requires or
______
permits any notice, request, or demand from one party to another,
the notice, request, or demand must be in writing to be effective
and shall be deemed to be delivered and received (i) if
personally delivered or if delivered by telex, telegram,
facsimile or courier service, when actually received by the party
to whom notice is sent or (ii) if delivered by mail (whether
actually received or not), at the close of business on the third
business day next following the day when placed in the mail,
postage prepaid, certified or registered, addressed to the
appropriate party or parties, at the address of such party set
forth below (or at such other address as such party may designate
by written notice to all other parties in accordance herewith):
If to Access: ACCESS Corporation
4350 Glendale-Milford Rd.
Suite 250
Cincinnati, Ohio 45242
Attn: Newton D. Baker
with a copy to: Taft, Stettinius & Hollister LLP
1800 Star Bank Center
425 Walnut Street
Cincinnati, Ohio 45202-3957
Phone No.: (513) 381-2838
Fax No.: (513) 381-0205
Attn: Gerald S. Greenberg
- 7 -
<PAGE>
If to Oce: Oce N.V.
St. Urbanusweg 43
Box 101, 5900 M.A.
Venlo, The Netherlands
Attn: J.M.M. van der Velden
with a copy to: Reed Smith Shaw & McClay LLP
435 Sixth Avenue
P.O. Box 2009
Pittsburgh, Pennsylvania
15230-2009
Phone No.: (412) 288-3131
Fax No.: (412) 288-3063
Attn: James H. Hardie
13.9 Counterparts. This Agreement may be executed in
____________
multiple counterparts, each of which shall be deemed an original,
and all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
ACCESS CORPORATION
/s/ Scott D. Watkins
By: Scott D. Watkins
________________________________
Title: President
_____________________________
OCE N.V.
/s/ Hannah L. Thompson
By: Hannah L. Thompson
__________________________
Title:________________________
- 8 -
