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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 6, 1996
LEASING EDGE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-18303 11-2990598
(State or other (Commission (I.R.S. Employer
jurisdiction) File Number) Identification No.)
6540 South Pecos Road, Suite 103, Las Vegas, Nevada 89120
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(702) 454-7900
N/A
(Former name and former address, if changed since last report)
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Item 5. Other Events.
On December 6, 1996, Leasing Edge Corporation, a Delaware
corporation (the "Company") acquired Minneapolis based Superior
Computer Systems, Inc., a Minnesota corporation ("Superior").
Based upon financial statements provided by Superior, Superior had
1995 revenues of $15 million. Superior specializes in the
distribution of IBM manufactured peripheral equipment. The total
acquisition price paid by the Company for Superior was $600,000
comprised of promissory notes and the Company's common stock.
The Company has retained both principals of Superior
under long term employment contracts. Mr. Mark Smith has been
appointed President of Superior.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements
N/A
(b) Exhibits
Exhibit No. Description
2(a) Stock Acquisition Agreement dated as of December
6, 1996, by and between Superior Computer Systems,
Inc., a Minnesota corporation, Leasing Edge
Corporation, a Delaware corporation, Mark G. Smith
and Scott Walsh. <PAGE>
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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.
LEASING EDGE CORPORATION
By:/s/ William Vargas
-------------------------------
Name: William Vargas
Title: Secretary
Dated: January 10, 1997
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<ex. 2a>
STOCK ACQUISITION AGREEMENT
AGREEMENT dated as of December 6, 1996 by and between
Superior Computer Systems, Inc., a Minnesota corporation
("Superior"), Mr. Mark G. Smith ("Smith"), Mr. Scott Walsh
("Walsh," and together with Smith the "Selling Stockholders" and
collectively with Superior, the "Sellers"), on one hand, and
Leasing Edge Corporation, a Delaware corporation (the "Buyer"),
on the other hand.
W I T N E S E T H
WHEREAS, Superior is a distributor and marketer of
computers and related products (the "Business");
WHEREAS, the Sellers wish to sell a 100% interest in
the issued and outstanding shares (the "Shares") of the common
stock, par value $0.01 of Superior (the "Superior Common Stock")
to the Buyer and the Buyer wishes to purchase the Shares;
NOW THEREFORE, in consideration of the foregoing
premises and the mutual covenants, representations, warranties
and agreements contained herein, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
SECTION 1. AGREEMENT TO SELL AND PURCHASE
1.1 Sale of the Shares. At the Closing of the
transaction (as defined in Section 1.3) the Selling Stockholders
shall transfer to the Buyer all right, title and interest in the
Shares set forth opposite their names on Schedule 1.1 hereto.
1.2 Title to the Shares and Delivery. Upon Closing,
the Selling Stockholders shall transfer to Buyer good and
marketable title in and to the Shares free and clear of all liens
and encumbrances and the rights and claims of others. Against
such transfer, the Buyer shall deliver to the Sellers the
purchase price as described in Section 2.1 below. All
transactions at the Closing shall be deemed to take place
simultaneously and none shall be deemed to take place until all
shall have taken place.
1.3 Closing. The Closing of the transactions provided
for herein (the "Closing") shall take place by telephone
conference and by facsimile originating at the offices of Werbel
& Carnelutti, 711 Fifth Avenue, New York, New York 10022 on
December 6, 1996 (the "Closing Date"), or at such other place or
on such other date as shall be mutually agreed upon by the Buyer
and the Sellers. At the Closing, all documents required to be
delivered hereunder by the parties to this Agreement shall be so
delivered.<PAGE>
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SECTION 2. PURCHASE PRICE
2.1 Purchase Price. The purchase price (the
"Purchase Price") for the Shares shall be paid by Buyer as
follows:
(a) at the Closing, the issuance by Buyer to the
Selling Stockholders in the percentages set forth opposite their
names on Schedule 2.1(a) hereto, of stock certificates evidencing
the number of unregistered shares of Buyer's common stock, par
value $0.01 (the "Buyer's Common Stock") which equals the
quotient obtained by dividing $400,000 by the Market Value (as
defined below) of the Buyer's Common Stock. Notwithstanding the
foregoing, Sellers shall be afforded price protection with
respect to the Buyer's Common Stock as set forth in the following
three sentences. On December 1, 1998, the Market Value of the
Buyer's Common Stock shall be computed (the "Recomputed Value").
On December 1, 1998, the Buyer shall issue to the Selling
Stockholders, in the percentages set forth opposite their names
on Schedule 2.1(b) hereto, at Buyer's sole option either (x)
stock certificates evidencing the number of unregistered shares
of Buyer's Common Stock, which equals the difference of (i) the
quotient obtained by dividing $400,000 by the Recomputed Value
less (ii) the number of unregistered shares of Buyer's Common
Stock issued to the Selling Stockholders on the Closing Date (the
"Recomputed Shares") or (y) cash equal to the number of
Recomputed Shares times the Market Value of such Recomputed
Shares. In the event the Recomputed Value shall be greater than
the Market Value determined on the Closing Date, no additional
Buyer's Common Stock shall be issued to the Selling Stockholders.
For purposes of this Agreement, "Market Value" shall mean, on any
day that it is computed, the average of the closing price per
share of the Buyer's Common Stock on the five consecutive trading
days ending on such date, as quoted on the National Association
of Securities Dealers' Automated Quotation SmallCap System;
(b) by delivery, at the Closing, of a promissory
note payable to each Selling Stockholder in the form of Exhibit
C-1 and Exhibit C-2 attached hereto (the "Notes") which shall
evidence (i) a payment of $50,000 payable to each Selling
Stockholder on January 1 , 1997, (ii) a payment of $25,000 to
each Selling Stockholder on May 1, 1997 and (iii) a payment of
$25,000 to each Selling Stockholder on December 1, 1997.
2.2 Adjustment Procedure. Buyer and Sellers hereby
acknowledge that the Purchase Price, as set forth in Section 2.1
hereof, is predicated upon the Preliminary Financial Statements
(as defined in Section 3.5 hereof), as well the representations
and warranties of the Selling Stockholders set forth herein.
Therefore, the Purchase Price shall be adjusted by the Adjustment
Amount (as defined below).<PAGE>
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The Adjustment Amount shall be decreased by $10,000 if
it is a positive number and increased by $10,000 if it is a
negative number and then added to the cash payments contemplated
in Section 2.2 (c), and such cash payments will be increased or
decreased accordingly. For purposes of this Agreement, except as
mutually agreed upon in writing by Buyer and Sellers, the
"Adjustment Amount" (which may be a negative number) will be
equal to the amount obtained by subtracting (a) the stockholder's
equity of Superior as set forth in the Preliminary Financial
Statements from (b) the stockholder's equity of Superior as of
the Closing Date, determined in accordance with generally
accepted accounting principles.
2.3 Registration of Recomputed Shares. The Buyer shall
include any Recomputed Shares issued in any registration which
the Buyer undertakes in order to make such Recomputed Shares
freely tradeable in accordance with the Securities Act of 1933,
as amended (the "Securities Act"). If no such incidental
registration occurs, the Buyer shall cause the Recomputed Shares
to be registered under the Securities Act on or before the date
which is the earlier of (i) ninety (90) days from the issuance
thereof or (ii) April 1, 1999.
2.4 Future sale of Buyer's Common Stock. The
Selling Stockholders agree (i) to abide by the Buyer's Insider
Trading Policy, attached hereto as Exhibit D, (ii) not to sell
any shares of Buyer's Common Stock except in accordance with the
rules and regulations of the Securities Act or an applicable
exemption therefrom and (iii) that they are acquiring the shares
of Buyer's Common Stock for investment purposes and not with a
view toward, or for sale in connection with, any distribution
thereof nor with any present intention of distributing or selling
such shares.
2.5 Effective Date. The Selling Stockholders and
Buyer hereby agree that for accounting purposes, the effective
date of the acquisition of the Business was 12:00 p.m., October
31, 1996. Furthermore, the Selling Stockholders agree that Buyer
had the right and authority to direct the operations of Superior
subsequent to such date, including but not limited to, decisions
regarding commission structure, product offerings, employment
decisions and the obtaining of additional financing.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF
SELLERS.
Sellers, jointly and severally, make the following
representations and warranties to Buyer:
3.1 Organization and Good Standing of Superior.
Superior is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
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incorporation and has full power and authority, corporate and
otherwise, including all necessary authorizations, approvals,
licenses and orders of and from all governmental or regulatory
officials and bodies material to its business, to carry on its
business as it is now being conducted, to own or hold under lease
the properties and assets which it owns or holds under lease and
to perform all its obligations under the agreements to which it
is a party. The copies of the Certificate of Incorporation and
By-Laws or analogous documents (the "Organizational Documents")
of Superior and all minutes of meetings of Superior's
stockholders and Board of Directors (including all committees
thereof), copies of which shall have been delivered to the Buyer
at or prior to Closing, are complete and correct in all material
respects.
3.2 Authority to Execute and Perform Agreements.
Sellers have full power and authority required to enter into,
execute and deliver this Agreement and to perform fully such
Sellers' obligations hereunder. The execution, delivery and
performance by the Sellers of this Agreement have been duly
authorized by all requisite action, and, with respect to
Superior, all requisite corporate and, if necessary, stockholder
action. The Board of Directors of Superior and the Selling
Stockholders, as the sole stockholders of Superior, have taken
(or before the Closing, shall have taken) all action required by
law and the Organizational Documents to authorize the execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby. This Agreement has
been duly executed and delivered by the Sellers and constitutes
the valid and binding obligation of the Sellers, enforceable
against the Sellers in accordance with its terms, except (i) as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditor's rights generally, and (ii) to the
extent such enforceability is subject to general principles of
equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law). No approval or consent of any
foreign, federal, state, county, local or other governmental or
regulatory body is required in connection with the execution and
delivery by Sellers of this Agreement and consummation and
performance by Sellers of the transactions contemplated hereby.
The execution and delivery of this Agreement, the consummation of
the transactions contemplated under this Agreement, and the
performance by Sellers of this Agreement in accordance with its
terms and conditions will not conflict with or result in the
breach or violation of any of the terms or conditions of (i) the
Organizational Documents; (ii) any statute, regulation, order,
judgment or decree of any court or governmental or regulatory
body applicable to each Seller; or (iii) any indenture, agreement
or other instrument to which either Seller is a party or by which
either Seller or any of their respective assets are bound.
Neither the execution and delivery of this Agreement, nor the
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consummation of the transactions contemplated hereby, will result
in a breach of, or constitute a default under, or with lapse of
time or giving of notice or both will result in a breach of or
constitute a default under, or require the giving of notice or
the obtaining of a consent, or otherwise give any party thereto
the right to terminate, (a) any mortgage, indenture, loan or
credit agreement or any other agreement or instrument evidencing
indebtedness for money borrowed to which any Seller is a party or
by which any of them or their assets are bound or affected, or
any Seller has guaranteed the indebtedness of any person, or (b)
any lease, license, permit, contract or other agreement to which
any Seller is a party or by which any of them or their assets are
bound or affected. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will result in, or require, the creation or imposition of
any mortgage, deed of trust, pledge, lien, security interest, or
other charge or encumbrance of any nature upon or with respect to
any of the assets now or hereafter owned by Superior.
3.3 Capitalization. (a) The authorized capital
stock of Superior consists of the following: 1,000 shares of
common stock, $0.01 par value. All of the outstanding shares of
Superior Common Stock have been validly issued and are fully paid
and nonassessable. The issuance of all outstanding Superior
Common Stock did not violate any applicable securities laws.
(b) As of the date hereof, 1,000 shares of
Superior Common Stock were issued and are outstanding, of which
500 are owned by Smith and 500 are owned by Walsh. There are no
other shares of capital stock of Superior outstanding. There are
no existing covenants, options, warrants, rights, calls or
commitments of any character relating to unissued shares of
Superior Common Stock, and there are no outstanding securities or
other instruments convertible into or exchangeable for shares of
Superior Common Stock and no commitments to issue such securities
or instruments.
3.4 Agreements. Buyer has been provided with all of
the agreements (or series of agreements) to which Superior is a
party and which require the payment to or from Superior of at
least $5,000 on an annual basis. Copies of all such agreements
are attached as Schedule 3.4(a) hereto and are valid and in full
force and effect and there are no defaults (with or without
notice or lapse of time or both) by Superior thereunder, or any
other party thereunder. All distribution agreements (the
"Distribution Agreements") with vendors are listed on Schedule
3.4(a) hereto. The Distribution Agreements with IBM Personal
Computer Company and IBM Printing System Company (the "Material
Vendors") are herein referred to as the "Material Distribution
Agreements". No Material Vendor has given notice to either
Seller, orally or in writing, that it will not extend the term of
its Material Distribution Agreement.
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3.5 Financial Statements; Balance Sheet. The
Sellers have furnished to Buyer a combined income statement of
Superior and Superior Computer Exchange for the year ended
December 31, 1995, and an income statement of Superior Computer
Exchange for the year ended December 31, 1994 and the combined
balance sheet of Superior and Superior Computer Exchange as of
December 31, 1995 and the balance sheet of Superior Computer
Exchange as of December 31, 1994 (collectively, the "Full Year
Financial Statements"), and a combined preliminary income
statement and balance sheet of Superior and Superior Computer
Exchange for the nine months ended September 30, 1996 (the
"Preliminary Financial Statements" and together with the Full
Year Financial Statements, the "Financial Statements") all of
which statements are attached as Schedule 3.5 hereto. The
Financial Statements have been prepared and are consistent with
Superior's basis of accounting used for Federal Income Tax
reporting purposes and in such regard, the Financial Statements
present fairly the financial condition, assets, liabilities,
results of operations and stockholder's equity of Superior as of
their dates and for the periods indicated.
3.6 No Undisclosed Liabilities. Except to the extent
provided for on the face of the Financial Statements, to the
extent arising under the agreements set out in Schedule 3.4(a)
hereto, if so set out, and except for liabilities arising in the
ordinary course of Business, since January 1, 1996, Superior has
no liabilities, whether accrued, absolute, contingent or
otherwise, whether due or to become due and whether the amount
thereof is readily ascertainable or not. Superior has no
contractual arrangement with or commitment to or from any of its
stockholder, officers, directors or employees other than those as
may have been entered into in the normal course of employment.
No stockholder, officer, director or employee of Superior was or
is, directly or indirectly, a joint investor or co-venturer with,
or owner, lessor, lessee, licensor or licensee of any real or
personal property, tangible or intangible, owned or used by
Superior, and no such person is, directly or indirectly, a lender
to or debtor of Superior.
3.7 Accuracy of Information. To the best of Sellers'
knowledge, none of the information provided by the Sellers to the
Buyer (orally or in writing) contains any misstatement of a
material fact or omits to state a material fact necessary, in
light of the circumstances under which such information was
provided, to make the statements contained therein not
misleading. There is no fact with respect to the business of
Superior (including business done through any joint venture,
partnership or affiliate of Superior, active or inactive) or
condition which the Sellers have not disclosed to the Buyer in
writing which might materially and adversely affect the Sellers'
ability to perform their obligations hereunder or materially and
adversely affect the condition, financial results, assets,
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properties or prospects of Superior.
3.8 Accounts Receivable. All accounts receivable
reflected in the Financial Statements and the books and records
of Superior are enforceable obligations of the account debtors
thereof arising from bona fide sales. Based on Superior's
collection experience, of such accounts receivable, as of the
close of business of the date prior to the Closing, Superior
estimates that $565,495.03 are collectible.
3.9 Property.
(a) Intangible Property. Superior is the sole
owner of or has the full exclusive right to use for the life of
the property right, all patents, trademarks, servicemarks, trade
names (whether registered or unregistered), copyrights and
confidential information, and has the non-exclusive right to use
any non-confidential information (including, without limitation,
know-how, processes and technology), used in or necessary for the
conduct of the Business as heretofore conducted (the "Intangible
Property"). The use of such Intangible Property by Superior does
not (i) violate any license agreement to which Superior is a
party or (ii) to the best of Sellers' knowledge infringe on the
rights of any other person and neither the Selling Stockholders
nor Superior has received any notice of any conflict with the
asserted rights of others with respect to such Intangible
Property; and Superior has made all filings, applications or
notifications with all governmental authorities and agencies
necessary or appropriate to evidence or otherwise register or
document its ownership of all the Intangible Property.
(b) Title to Property; Leases; Condition of
Equipment and Inventory.
(i) Superior has good and marketable title
to all of its properties and assets, real and personal (including
those reflected in the Financial Statements), free and clear of
all mortgages, pledges, security interests, liens and
encumbrances, except for the security interests held by IBM and
IBM Credit Corp. and other security interests which, in the
aggregate, are not material to the Business.
(ii) All leases and licenses pursuant to
which Superior leases or licenses real or personal property from
others are in good standing, valid and effective in accordance
with their respective terms, and there is not, under any of such
leases or licenses, any existing default or event of default (or
event which with notice or lapse of time, or both, would
constitute a default, or, to the Sellers' knowledge, would
constitute a basis for a claim of force majeure or other claim of
excusable delay or non-performance). Superior has provided a
true and correct copy of all such leases and licenses to the
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Buyer.
(iii) No warranty is made regarding the
condition of the material personal property owned or leased by
Superior. All such personal property is AS IS, WHERE IS, WITH
ALL FAULTS AND DEFECTS. All new inventory is in saleable
condition in the normal course of business. The cost basis of
such inventory at October 31, 1996 was $ 1,348,484.
(c) Quiet Possession. Superior has complied in
all material respects with all obligations under all of its
leases, and all such leases are in full force and effect, and
Superior enjoys peaceful and undisturbed possession under all
such leases.
(d) Adequate Insurance. Schedule 3.9(d) sets
forth all insurance policies covering the Business. Superior
maintains valid, and is not in default with respect to any
provisions or requirements of, policies of workers' compensation
insurance and of insurance with respect to its properties and
business of the kinds and in the amounts not less than is
customarily obtained by corporations of established reputation
engaged in the same or similar business and similarly situated,
including, without limitation, insurance against loss, damage,
fire, theft, public liability, and other risks.
3.10 No Broker. No broker, finder, agent or similar
intermediary has acted for or on behalf of Sellers in connection
with this Agreement or the transactions contemplated hereby, and
no broker, finder, agent or similar intermediary is entitled to
any broker's, finder's or similar fee or other commission in
connection therewith based upon any agreement, arrangement or
understanding with Sellers or any action taken by Sellers.
3.11 Litigation; Compliance with Laws. There is no
action, suit, proceeding, or investigation by any government or
governmental agency or instrumentality or other agency or
regulatory authority, domestic or foreign, now pending or, to the
best of Sellers' knowledge, threatened against any Seller, or any
of Superior's assets, business or good will, before any court,
government or governmental agency or instrumentality or other
agency or regulatory authority, nor is there any outstanding
writ, judgment, stipulation, decree, award or order of any court,
government or governmental agency or instrumentality, domestic or
foreign, against any Seller. Each of the Sellers is in
compliance with all provisions of law, statutes, ordinances,
rules, regulations, judgments, writs, injunctions, decrees and
standards promulgated by the government of the United States of
America or by any state or municipality thereof or by any court,
agency, instrumentality, regulatory authority or commission of
any of the foregoing, including but not limited to compliance
with all environmental laws, where the failure so to comply would
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have a material adverse effect on the assets, operations or
condition, financial or otherwise, of the Business or would
prohibit the Buyer from conducting normal operations utilizing
the assets of Superior without being subject to any material
fines or penalties or to posting any security.
3.12 No Defaults; Material Agreements. No event has
occurred, or to the best of Sellers' knowledge, is alleged to
have occurred, which constitutes, or with lapse of time or giving
of notice or both, would constitute, a default or, to any
Seller's knowledge, a basis for a claim of force majeure or other
claim of excusable delay or non-performance or termination (i)
under any mortgage, indenture, loan or credit agreement or any
other agreement or instrument evidencing indebtedness for money
borrowed to which Superior is a party or by which any of its
properties are bound or affected or pursuant to which Superior
has guaranteed the indebtedness of any person, (ii) under any
lease of property, whether real or personal, by Superior or (iii)
under any other contract, agreement, instrument or obligation to
which Superior is a party and which is material to the business,
properties, assets, operations or condition, financial or
otherwise, of the Business or the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument relating to the Business
to which Superior is a party. For purposes of this Agreement,
each Distribution Agreement is a material agreement. No party
with whom Superior has a contract or agreement is in default
thereunder or, to any Seller's knowledge, has failed in respect
to performance thereunder by reason of a claim of force majeure
or other claim of excusable delay or non-performance thereunder.
3.13 Benefit Plans.
(a) Schedule 3.13(a) hereto lists all plans,
contracts, commitments, programs and policies (including, but not
limited to, any stock option, stock purchase, stock appreciation
right, bonus, deferred compensation, excess benefits, profit
sharing, pension, thrift, savings, stock bonus, employee stock
ownership, salary continuation, severance, retirement,
supplemental retirement, short- or long-term disability,
hospitalization, major medical, life, and accident insurance,
vacation and sick leave policies, union contract, non-competition
agreement, funds, programs, policies, arrangements, practices,
customs, or other employee benefit plans, contracts, commitments,
programs and policies) maintained by Superior providing benefits
to any employee or former employee or present or former
beneficiary, dependent or assignee of any such employee or former
employee of Superior, whether or not any of the foregoing is
funded, (i) with respect to which Superior has an obligation
(other than commissions terminable without severance or penalty
payments on notice of thirty (30) days or less) or (ii) with
respect to which Superior has made any payments or contributions
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or may otherwise have any liability, including any such plan
formerly maintained by Superior at any time (collectively, the
"Plans" and individually, a "Plan"). Superior has no commitment
to create any additional Plan.
(b) All obligations of any kind of Superior,
whether arising by operation of law, by contract, or by past
custom or practice, for (i) payments by Superior to any trust or
other fund or to any governmental or administrative authority,
with respect to pension benefits, unemployment compensation
benefits, social security, or other benefits, or (ii) salaries
and bonuses for employees or former employees of Superior have
been paid or fully funded, or adequate accruals therefor have
been made.
3.14 Employees. Schedule 3.14 sets forth as of its
date the names, positions and monthly salaries for each employee
employed by the Sellers in the Business.
3.15 No Bankruptcy. No Seller is subject to receiver-
ship; there is no application for receivership pending and no
proceeding is pending or to the best of Sellers' knowledge,
threatened by or against any Seller for bankruptcy or
reorganization in any State or Federal Court.
3.16 Absence of Certain Changes. Except as disclosed
in writing to the Buyer, since January 1, 1996, Superior has not:
(a) incurred any liability or obligation under
agreements or otherwise, except current liabilities entered into
or incurred in the ordinary course of business;
(b) issued any notes or other corporate debt
securities or waived any of its rights;
(c) declared, set aside or made any payment or
distribution upon Superior Common Stock, including any purchase
or redemption thereof or cash dividend thereon;
(d) sold, assigned, transferred, or made other
disposition of any assets or properties used in the Business
other than in the ordinary course of business;
(e) sold, assigned or granted any rights under
patents, trade names, trademarks or copyrights used in the
Business, or any application therefor for use in the Business
other than as contemplated by this Agreement;
(f) mortgaged, pledged or subjected to any lien
any asset; entered into any lease of real property, machinery,
equipment or buildings; or
(g) suffered any material adverse change in its
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business, properties, assets, operations, or financial condition
of the Business.
3.17 Ownership of Superior Capital Stock. The
Selling Stockholders are the owners, beneficially and of record,
of all of the Shares free and clear of any pledge, lien, security
interest, encumbrance, option, third-party right, claim or equity
of any kind. Upon delivery of the Shares to the Buyer pursuant
to this Agreement, Buyer shall receive good and marketable title
thereto, free and clear of any pledge, lien, security interest,
encumbrance, claim or equity of any kind.
3.18 Subsidiaries, Partnerships and Joint Ventures.
There are no corporations, partnerships, joint ventures, business
trusts, or other legal entities owned or controlled, directly or
indirectly, by Superior, or in which Superior has any direct or
indirect equity interest.
3.19 Government Regulations. Superior has (or has made
timely application for) all approvals, franchises, licenses,
permits, certifications and other authorizations and clearances
of all national, state and local government regulatory
authorities ("Government Approvals") necessary to enable Superior
to materially carry on its business as presently conducted and
proposed to be conducted. Superior has not violated, and to the
best of Sellers' knowledge, is not alleged to have violated, any
order, writ, judgment, stipulation, injunction, decree, deter-
mination, award or order of any national, state, provincial or
local government or governmental agency or instrumentality nor
has Superior violated or is to the best of Sellers' knowledge,
alleged to have violated, any law, rule or regulation which would
have a material adverse effect on the Business.
3.20 Labor Relations. There are no strikes or other
labor troubles in progress or pending or, to the best knowledge
of Sellers, threatened against Superior. Sellers are not aware
of any efforts by or on behalf of any labor organization to
represent the employees of Superior.
3.21 Books and Records. The minute books of Superior
contain accurate records of all meetings and other corporate
actions of its stockholders and its Board of Directors and
Committees thereof. The stock ledger of Superior is complete and
reflects all issuances, transfers, repurchases, and cancellations
of shares of the Superior capital stock.
3.22 Taxes. (a) All federal, state and local tax
returns (the "Returns") required to be filed by or with respect
to Superior have been accurately prepared and have been duly and
timely filed. All taxes, levies, duties, license and
registration fees, charges and withholdings of any nature
whatsoever, including taxes required to be withheld from or paid
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in respect of employees' salaries and other withholding taxes and
obligations and all deposits required to be made by or with
respect to Superior with respect to such withholding taxes or
otherwise, and interest, penalties, assessments and/or
deficiencies due with respect to such tax returns (collectively,
"Taxes"), including, without limitation, any Taxes payable by or
attributable to Superior pursuant to this Agreement, have been
paid, and if not due to be paid, adequate provision for the
payment thereof has been made. None of the Sellers has received
any notice or notification that any income tax return for
Superior is now under examination by the United States Internal
Revenue Service or any other governmental authority. No waivers
of statutes of limitations are in effect in respect of any Taxes.
(b) Notwithstanding the representations made in
Section 3.22(a) hereof, Selling Stockholders hereby expressly
agree to assume any liabilities which may arise respecting (i)
any Taxes of Superior which accrue or (ii) the failure to timely
file any Return, in each case, for the period commencing on
January 1, 1996, and ending on the date hereof.
3.23 Disclosure. To the best of Sellers' knowledge,
this Agreement with the schedules hereto, when taken as a whole,
does not contain any untrue statement of a material fact or omit
to state a material fact necessary, in light of the circumstances
under which such information was provided, to make the statements
contained therein not misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 Organization and Good Standing of Buyer. Buyer is
a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full
power and authority, corporate and otherwise, to enter into this
Agreement and to consummate the transactions contemplated hereby.
4.2 Authority of Buyer; Validity of Agreement. Buyer
has taken all requisite corporate action necessary to authorize
the execution and delivery of this Agreement and the consummation
on behalf of it of the transactions contemplated hereby. This
Agreement constitutes the legal, valid and binding obligation of
Buyer. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i)
violate any provision of the Certificate of Incorporation or By-
Laws of Buyer, or (ii) violate or conflict with any provision of
any law, rule, regulation, order, writ, judgment, injunction,
decree, determination, award or other order of any court,
government, governmental agency or instrumentality; domestic or
foreign, binding upon the Buyer.
<PAGE>
4.3 Financial Statements. Buyer has furnished the
Sellers with (i) the audited consolidated balance sheets of the
Buyer as of December 31, 1995 and December 31, 1994 and the
related statements of operations and cash flows for the years
then ended and (ii) the unaudited consolidated balance sheets of
the Buyer as of June 30, 1996 and the related unaudited
statements of operations and cash flows as of June 30, 1996. The
audited financial statements set forth above fairly present the
Buyer's consolidated financial conditions and results of the
operations in conformity with United States generally accepted
accounting principles applied on a consistent basis. The
unaudited financial statements set forth above fairly present the
Buyer's consolidated financial condition and results of
operations, subject to all adjustments, consisting of normal
recurring accruals, which the Buyer considers necessary for a
fair presentation of its financial condition and results of
operations.
4.4 Quotation of Common Stock. All the shares of
common stock of the Buyer are listed on The Nasdaq Stock Market
SmallCap Market. No federal or state securities authority or
other regulatory body has issued any order preventing or
suspending trading in any securities of the Buyer. There is no
action, proceeding or investigation pending or, to the knowledge
of the Buyer, threatened against or affecting the Buyer at law or
in equity or before or by any federal, state, municipal or other
governmental department, commission, board or agency, domestic or
foreign, which could in any way materially adversely affect, or
which questions the validity of the completion of, the
transactions contemplated hereby to be completed by the Buyer.
Upon issuance, the Buyer's Common Stock shall be validly issued,
fully paid and nonassessable shares of common stock of the Buyer.
4.5 Authorized Capital. The authorized capital of the
Buyer consists of 12,500,000 shares of Common Stock of which, as
of September 30, 1996, 3,783,811 shares were outstanding.
4.6 Compliance with Laws. The issuance of the
shares of the Buyer as contemplated hereby shall be in compliance
with all applicable state and federal securities laws and any and
all consents or approvals of regulatory authorities having
jurisdiction with respect to the issuance of the shares of the
Buyer, if necessary, shall have been obtained prior to Closing.
4.7 Bankruptcy. Buyer has not committed an act of
bankruptcy, proposed a compromise or arrangement to its creditors
generally, taken any proceeding with respect to a compromise or
arrangement, taken any proceeding to have itself declared
bankrupt or wound up, taken any proceeding to have a receiver
appointed of any part of its assets, had any receiver or similar
entity take possession of any of its property, had any execution
or distress become enforceable or levied upon any of its property
<PAGE>
or had any petition for a receiving order in bankruptcy filed
against it.
4.8 SEC Reports. Buyer has provided to the Sellers
its Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995, the Quarterly Report on Form 10-QSB for the
fiscal quarter ended June 30, 1996, Post-Effective Amendment No.
2 to its Registration Statement on Form SB-2 filed with the
Securities and Exchange Commission on July 19, 1996 and Post-
Effective No. 3 to its Registration Statement on Form SB-2 filed
with the Securities and Exchange Commission on December 5, 1996
(the "SEC Reports"). None of the information in the SEC Reports
contains any misstatement of a material fact or omits to state a
material fact necessary, in light of the circumstances under
which such information was provided, to make the statements
contained therein not misleading.
4.9 No Broker. No broker, finder, agent or similar
intermediary has acted for or on behalf of Buyer in connection
with this Agreement or the transactions contemplated hereby, and
no broker, finder, agent or similar intermediary is entitled to
any broker's, finder's, or similar fee or other commission in
connection therewith based on any agreement, arrangement or
understanding with Buyer or any action taken by Buyer.
4.10 Acquisition of Stock for Investment. Buyer is
acquiring the Shares for investment purposes and not with a view
toward, or for sale in connection with, any distribution thereof,
nor with any present intention of distributing or selling such
Shares.
SECTION 5. COVENANTS
5.1 Further Action. As soon as practicable after
the date hereof, Sellers will take all reasonable actions
necessary to secure any required corporate approval by Superior
of the transactions contemplated by this Agreement if same should
be required under the jurisdiction of its organization and,
subject to the terms and conditions herein provided, Sellers will
use their best efforts to take any and all additional action
necessary or appropriate to consummate the transactions
contemplated hereby.
5.2 Preparation of Filings. Sellers will cooperate in
the preparation of any filings, statements or applications
required by any governmental or regulatory authorities in
connection with the transactions contemplated by this Agreement
and will promptly furnish all information required for inclusion
in such filings, statements or applications. Sellers will use
their best efforts to secure the consents and approvals of all
third parties and governmental and regulatory authorities
necessary or, in the opinion of Sellers, desirable in connection
<PAGE>
with the consummation of the transactions contemplated by this
Agreement.
5.3 Conduct of Business Prior to Closing. From and
after the execution and delivery of this Agreement and until the
Closing, the Selling Stockholders will cause Superior to and
Superior will:
(a) continue to conduct its business in its usual
manner and not, without Buyer's prior written consent, engage in
any material activity or transaction including, but not limited
to, lease, sell, dispose, mortgage, pledge, subject to any lien,
encumbrance, or other security interest, or otherwise dispose of
any of its Business or assets, except in the ordinary course of
its business in a manner consistent with past practice or grant
licenses or incur any material obligation or waive any material
right or claim having material value except in the ordinary
course of its business, or enter into any contracts or leases,
except in the ordinary course of its business;
(b) comply with all laws applicable to it and the
conduct of its business;
(c) perform all of its contractual obligations,
except as otherwise set forth herein;
(d) maintain and keep its properties and
facilities in good condition and working order, except for
depreciation due to ordinary wear and tear;
(e) give prompt notice to Buyer of any notice,
claim or threat received by Superior of any default, violation or
termination under any instrument or agreement to which Superior
is a party or any intent by a party not to renew or extend any
Material Agreement to which Superior is a party;
(f) give prompt notice to Buyer of any
litigation, arbitration or governmental proceeding, or threatened
litigation, arbitration or proceeding, involving Superior which
might have a material adverse effect on Superior's business or
condition or interfere with the transactions contemplated by this
Agreement;
(g) not, directly or indirectly, purchase, lease,
enter into a partnership or joint venture, otherwise acquire,
begin or enter into any other ownership (debt or equity)
arrangement or relationship respecting any business or business
activity other than that presently conducted by the Sellers;
(h) not increase the compensation of, or pay (or
obligate themselves to pay) any bonus or commission to, or enter
into any special contract of employment with, any of their
<PAGE>
employees, except as consistent with existing agreements
disclosed herein;
(i) consult with Buyer and keep Buyer current
with respect to information regarding the Business.
5.4 No Change in Capital Stock, etc. From and after
the date hereof and until the Closing, subject to the provisions
of this Agreement, the Selling Stockholders will cause Superior
not to and Superior will not:
(a) amend its Certificate of Incorporation,
including, without limitation, change its capital stock by
reclassification, subdivision, reorganization or otherwise, or
amend its By-Laws; or
(b) issue, sell or otherwise dispose of any share
of its Capital Stock or create any obligation or option to issue,
sell or otherwise dispose of any shares of its Capital Stock.
5.5 Dividends. Superior will not, and the Selling
Stockholders will cause Superior not to, declare, set aside
payment, pay or make any dividend or other distribution on
Superior Common Stock or make any distribution with respect
thereto or directly or indirectly purchase, redeem or otherwise
acquire or agree to purchase, redeem or otherwise acquire, any
Superior Common Stock.
5.6 Cause Conditions to be Satisfied. Sellers will
use their best efforts to cause all of the conditions to their
and Superior's respective obligations under this Agreement to be
satisfied.
5.7 Employment Agreements. Buyer and Smith and Buyer
and Walsh shall enter into employment agreements substantially in
the forms of Exhibit A and Exhibit E, respectively, attached
hereto.
5.8 Reasonable Access. The Sellers shall afford to
Buyer and to its authorized representatives, during normal
business hours, full access to the plant, properties, personnel,
books and records of Superior in order that Buyer may have full
opportunity to make such investigations as it shall reasonably
desire to make of the affairs of Superior and to obtain copies of
relevant documents in connection therewith.
5.9 Waiver of Rights as Stockholder. At the date of
Closing, the Selling Stockholders shall waive and release,
pursuant to documents reasonably acceptable to Buyer and its
counsel, any and all rights and claims the Selling Stockholders
may have against Superior, whether asserted or unasserted, fixed
or contingent, known or unknown, arising out of or related to its
status as stockholder of Superior.
<PAGE>
5.10 Financial Statements. The balance sheet of
Superior as of the most recent practicable date, and the related
statement of income for the most recent practicable period
(commencing at least the month of October, 1996), shall be
supplied to the Buyer as soon as practicable, but in any event
not more than three business days prior to the Closing. Such
Financial Statements shall present fairly the financial position
and results of operations of Superior at the dates shown and for
the periods therein specified and shall not show results
materially adverse compared to the results shown in the
Preliminary Financial Statements.
5.11 Sellers' Efforts with Respect to Continuing
Employees. Sellers covenant that they shall not discourage
any employee currently employed in the Business to whom Buyer
makes an offer of employment from accepting such offer. Sellers
further covenant that they shall not, and shall cause their
affiliates not to, solicit any employee employed in the Business
to whom Buyer offers to employ from and after the Closing.
5.12 Additional Agreements. Upon the terms and
subject to the conditions herein provided, the Sellers and the
Buyer agree to, and the Selling Stockholders agree to use all
reasonable efforts to cause Superior to, take all action and to
do, or cause to be done, all things required under applicable
laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as expeditiously as
practicable.
5.13 Delivery of Notes. Buyer shall have delivered the
Notes at the Closing.
SECTION 6. CONDITIONS PRECEDENT TO THE OBLIGATION
OF BUYER TO CLOSE. The obligations of Buyer under this Agreement
are subject to, and shall be conditioned upon, the satisfaction
(or the waiver in writing by a duly authorized officer of Buyer)
prior to the Closing Date of each of the following conditions:
6.1 Compliance by Sellers and Representations
Correct. All of the covenants and obligations of this Agreement
to be complied with and performed by Sellers at or before the
Closing shall have been complied with and fully performed in all
material respects, and the representations and warranties made by
Sellers, respectively, in this Agreement, including in any
Schedules hereto, shall be true, correct and complete in all
material respects, (i) on and as of the date of this Agreement,
and (ii) on and as of the Closing Date, with the same force and
effect as though such representations and warranties had been
made on and as of the date of Closing.
<PAGE>
<PAGE>
6.2 Certificates. Sellers shall have delivered to
Buyer a certificate, dated the date of Closing, signed by an
authorized officer of Superior and each of the Selling
Stockholders, certifying that all of Sellers' representations and
warranties contained in this Agreement are true, correct and
complete in all material respects.
6.3 Consents and Government Approvals. All consents,
permits, approvals, waivers and authorizations (whether or not
referred to in any Schedule hereto) of all third parties and
governmental and regulatory authorities that are (i) required to
consummate this Agreement and the transactions contemplated
hereby or (ii) necessary or required by an agreement in order to
permit the Business or Superior to be conducted after the
acquisition by the Buyer in the same manner as heretofore
conducted, shall have been obtained. No governmental statute,
law or regulation relating to the Business of Superior is
reasonably likely to be enacted which in the reasonable judgment
of Sellers are reasonably likely to materially and adversely
affect Superior's business or condition.
6.4 No Legal Action. No action, suit,
investigation, other proceeding or claim shall have been
threatened or instituted before any court or before or by any
government or governmental agency or instrumentality either (i)
to enjoin, restrain, prohibit or invalidate the transactions
contemplated by this Agreement, (ii) to obtain damages or other
relief in connection with such transactions, (iii) to impose any
restrictions, limitations or conditions with respect to such
transactions, or (iv) which seeks to obtain information about the
Buyer which Buyer deems adverse to its interests. No action,
suit, investigation, other proceeding or claim against Superior
shall have been threatened or instituted before any court or
before or by any government or governmental agency or
instrumentality or threatened, which, in the judgment of the
Buyer, might materially and adversely affect Superior's condition
or the operation of the Business.
6.5 Absence of Adverse Rulings, Orders, etc. No
statute, rule, regulation, decree, executive order, preliminary
or permanent injunction or other order issued, promulgated or
enacted by any federal, state, local or foreign government,
governmental or regulatory authority or court shall be in effect
at the Closing Date which declares this Agreement invalid in any
respect or prevents the consummation of the transactions
contemplated hereby; and no action or proceeding before any
federal, state, local or foreign court or governmental or
regulatory authority shall have been instituted or threatened by
any federal, state, local or foreign government or governmental
or regulatory authority, or by any other person, entity or
organization which seeks to prevent or delay the consummation of
the transactions contemplated by this Agreement or which
<PAGE>
challenges the validity or enforceability of this Agreement or
any term or provision hereof.
6.6 Opinion of Counsel for Sellers. Sellers shall
have delivered to Buyer an opinion of counsel to Sellers dated
the Closing Date in substantially the form of Exhibit B hereto.
6.7 Buyer's Investigation. Buyer shall be reasonably
satisfied with its due diligence investigation of the Business.
6.8 Material Distribution Agreements. The Material
Distribution Agreements shall be in full force and effect in
accordance with their terms.
6.9 Additional Documents. Sellers shall have
furnished Buyer with such other duly executed documents (i) to
evidence the accuracy of Sellers' representations and warranties,
(ii) to evidence the performance of the covenants and agreements
made and to be performed by Sellers and the compliance by Sellers
with all conditions to be satisfied by Sellers and/or (iii) as
may be reasonably requested by Buyer.
SECTION 7. CONDITIONS PRECEDENT TO THE OBLIGATION
OF SELLERS TO CLOSE. The obligations of Sellers under this
Agreement are subject to, and shall be conditioned upon, the
satisfaction (or the waiver in writing by a duly authorized
officer of the Sellers) prior to the Closing Date of each of the
following conditions:
7.1 Compliance by Buyer and Representations Correct.
All of the covenants and obligations of this Agreement to be
complied with and performed by Buyer at or before the Closing
shall have been complied with and fully performed in all material
respects, and the representations and warranties made by Buyer in
this Agreement shall be true, correct and complete in all
material respects, (a) on and as of the date of this Agreement,
and (b) on and as of the Closing Date, with the same force and
effect as though such representations and warranties had been
made on and as of the date of Closing Date.
7.2 Certificates. Buyer shall have delivered to
Sellers a certificate, dated the Closing Date, signed by an
authorized officer of the Buyer, certifying that all of Buyer's
representations and warranties contained in this Agreement are
true, correct and complete in all material respects.
7.3 Consents and Government Approvals. All consents,
permits, approvals, waivers and authorizations of all third
parties and governmental and regulatory authorities that are
required to consummate this Agreement shall have been obtained.
<PAGE>
7.4 No Legal Action. No action, suit,
investigation, other proceeding or claim shall have been
threatened or instituted before any court or before or by any
government or governmental agency or instrumentality either (i)
to enjoin, restrain, prohibit or invalidate the transactions
contemplated by this Agreement, (ii) to obtain damages or other
relief in connection with such transactions, (iii) to impose any
restrictions, limitations or conditions with respect to such
transactions, or (iv) which seeks to obtain information about the
Sellers which they deem adverse to their interests.
7.5 Additional Documents. Buyer shall have
furnished Sellers with such other duly executed documents (i) to
evidence the accuracy of Buyer's representations and warranties,
(ii) to evidence the performance by Buyer and the compliance by
Buyer with all conditions to be satisfied by Buyer and/or (iii)
as may be reasonably requested by Sellers.
7.6 Opinion of Counsel for Buyer. Buyer shall have
delivered to Sellers an opinion of counsel to Buyer dated the
Closing Date in substantially the form of Exhibit F hereto.
SECTION 8. INDEMNIFICATION
8.1 Indemnity of Buyer. Sellers jointly and severally
agree to indemnify, defend and hold Buyer harmless from and
against any and all Losses (as defined below) arising out of or
resulting from any Breach (as defined below) by Sellers provided,
however that Sellers shall not have any obligation to indemnify
Buyer from and against any Breaches unless Buyer has suffered
Losses by reason of all such Breaches in excess of a $20,000
aggregate threshold (at which point Sellers will be obligated to
indemnify Buyer from and against all such Losses relating back to
the first dollar). For purposes of this Agreement, a "Breach" of
a representation, warranty, covenant, obligation or other
provision of this Agreement, or any instrument delivered pursuant
to this Agreement will be deemed to have occurred if there is or
has been (i) any inaccuracy in or breach of, or any failure to
perform or comply with, such representation, warranty, covenant,
obligation, or other provision, or (ii) any claim (by any person)
or other occurrence or circumstance that is or was inconsistent
with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy,
breach, failure, claim, occurrence, or circumstance.
8.2 Indemnity of Sellers. Buyer agrees to
indemnify, defend and hold Sellers harmless from and against any
and all Losses arising out of or resulting from any Breach by
Buyer.
8.3 Losses. For purposes of this Section 8, the term
"Losses" shall mean all damages, costs, expenses, claims, and
<PAGE>
judgments including reasonably attorneys' fees, of every kind,
nature or description provided, however that Losses shall not
exceed an amount equal to the greater of (a) $600,000 or (b)
$200,000 plus the Market Value on the date of any Breach times
the number of shares of Buyer Common Stock issued on the Closing
Date. It is the intent of the parties that the amount of any such
Losses shall be the amount necessary to restore the indemnified
party to the position it would have been in, economically or
otherwise, including any costs or expenses incident to such
restoration, had the breach, event, occurrence or condition
occasioning such Loss or Losses never occurred.
8.4 Notice and Resolution of Claims. An indemnified
party hereunder shall give prompt written notice to the
indemnifying party of any claim and within fifteen (15) days of
receipt of notice of any lawsuit or other proceeding which
recovery may be sought under this Section 8, but any failure to
so notify the indemnifying party shall not relieve it from any
liability that it may have to the indemnified party other than
under this Section 8. If such indemnity shall arise from the
claim of a third party, the indemnified party shall permit the
indemnifying party to assume the defense of any such claim or any
litigation resulting from such claim; provided, however, that the
indemnified party shall have the right to participate in such
defense at its own expense.
The indemnifying party assuming the defense of such
litigation or claim shall take all steps necessary in the defense
or settlement of such claim or litigation; provided, however,
that the indemnifying party may not compromise or settle the
claim or consent to the entry of any judgment without the prior
written consent of the indemnified party unless such compromise,
settlement or judgment only provides for the payment of money and
includes a full and final release of the indemnified party from
any liability associated with such claim or litigation.
8.5 Defense of Third Party Claims. Failure by the
indemnifying party to notify the indemnified party of its
election to defend any such claim or litigation by a third party
within fifteen (15) days after notice thereof shall have been
received by the indemnifying party, shall be deemed a waiver by
the indemnifying party of its right to defend such claim or
litigation. If the indemnifying party shall not assume the
defense of any such claim by a third party or a litigation
resulting therefrom the indemnified party may defend against such
claim or litigation in such manner as it may deem appropriate and
may settle such claim or litigation on terms as it may deem
appropriate.
8.6 Payment and Remedies of Buyer. Upon written
demand from the indemnified party to the indemnifying party, the
indemnifying party shall promptly pay or reimburse the
<PAGE>
indemnified party for any Loss incurred to the extent provided
herein.
SECTION 9. MODIFICATION AND TERMINATION
9.1 Modification. Sellers and Buyer, by mutual
consent, may amend, modify and supplement this Agreement in such
manner as may be agreed upon by them in writing at any time.
9.2 Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual agreement of Buyer and Sellers;
(b) by the Board of Directors of Buyer if Buyer
is not in default hereunder and there is no reasonable
expectation that the conditions set forth in Section 6 will be
satisfied (or waived) and the Closing will occur on or prior to
three months from the date hereof;
(c) by either party at any time after ninety days
from the date hereof.
In the event of termination pursuant to this Section 9, no party
shall have any liability to any other party so long as such party
is not in breach or in default with respect to any of its
representations or obligations hereunder.
SECTION 10. SURVIVAL
10.1 Survival. All of the representations, warranties,
covenants and agreements set forth in Section 3.22 hereof shall
survive the Closing for the duration of the applicable statute of
limitations. The indemnification obligations set forth in
Section 8, shall survive the Closing for a period of eighteen
(18) months. Any claim asserted by written notice to the
indemnifying party prior to the expiration of any representation,
warranty, covenant or agreement shall survive the expiration
thereof.
SECTION 11. [INTENTIONALLY OMITTED]
SECTION 12. MISCELLANEOUS
12.1 Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
12.2 Governing Law. This Agreement shall be governed by
the laws of the State of Delaware.
<PAGE>
12.3 Entire Agreement. This Agreement and the
Schedules which are attached hereto or incorporated herein by
reference and any other agreement referred to herein constitute
the entire agreement among the Sellers and the Buyer pertaining
to the subject matter hereof, and supersede any and all prior or
contemporaneous agreements or understandings of the parties
relating to the subject matter hereof, and may not be modified or
amended except by a writing duly executed by the party against
whom the modification or amendment is asserted.
12.4 Headings. The headings in the Sections in this
Agreement are for convenience of reference only and shall not
form a part hereof.
12.5 Counterparts. This Agreement may be executed in
counterparts, each of which when so executed shall be deemed to
be an original, and such counterparts shall together constitute
but one and the same instrument.
12.6 Assignment. This Agreement and all of the
provisions hereof and thereof shall be binding upon and shall
enure to the benefit of the parties hereto and their respective
heirs, executors, legal representatives, successors and permitted
assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder or thereunder is assignable,
or shall be assigned, by Sellers or by Buyer.
12.7 Notices. Any notice or other communication
required or which may be given hereunder shall be in writing and
shall be delivered personally or telecopied or sent express mail,
postage prepaid, and shall be deemed given when so delivered
personally or telecopied or if mailed, three business days after
the date of mailing as follows:
(a) If to Buyer, to:
Leasing Edge Corporation
6540 S. Pecos Road
Suite 103
Las Vegas, Nevada 89120
Attention:
Fax No.: (702)454-7779
with a copy to:
Stephen M. Davis, Esq.
Werbel & Carnelutti
711 Fifth Avenue
New York, New York 10022
Fax No.: (212) 832-3353
<PAGE>
<PAGE>
(b) If to Superior, to:
Superior Computer Systems, Inc.
7424 Washington Avenue South
Eden Prairie, Minnesota 55344
Fax No.: (612) 942-8718
with a copy to:
Scott P. Moen, Esq.
Chandler and Mason, Ltd.
1607 Pioneer Building
336 North Robert Street
St. Paul, Minnesota 55101
Fax No.: (612) 228-9237
(c) If to Smith, to:
Mr. Mark G. Smith
c/o Superior Computer Systems, Inc.
7424 Washington Avenue South
Eden Prairie, Minnesota 55344
Fax No.: (612) 942-8718
with a copy to:
Scott P. Moen, Esq.
Chandler and Mason, Ltd.
1607 Pioneer Building
336 North Robert Street
St. Paul, Minnesota 55101
(d) If to Walsh, to:
Scott T. Walsh
6395 Northshore Drive
Greenfield, Minnesota 55373
with a copy to:
Scott P. Moen, Esq.
Chandler and Mason, Ltd.
1607 Pioneer Building
336 North Robert Street
St. Paul, Minnesota 55101
(612) 228-9237
<PAGE>
<PAGE>
IN WITNESS WHEREOF, each party hereto has caused this
Stock Acquisition Agreement to be duly executed as of the date
first above written.
LEASING EDGE CORPORATION
By:
-------------------------------
Name: Michael F. Daniels
Title: President and Chief
Executive Officer
SUPERIOR COMPUTER SYSTEMS, INC.
By:
---------------------------------
Name: Mark G. Smith
Title: President
-------------------------------
Mark G. Smith
-------------------------------
Scott Walsh
<PAGE>
<PAGE>
SCHEDULE 1.1
LIST OF SHARES SOLD
Selling Stockholder Shares Sold
Mark G. Smith 500
Scott Walsh 500
<PAGE>
<PAGE>
SCHEDULE 2.1 (a)
PERCENTAGE OF BUYER COMMON STOCK RECEIVED
Selling Stockholder Percentage
Mark G. Smith 50 %
Scott Walsh 50 %
<PAGE>
<PAGE>
SCHEDULE 3.4 (a)
MATERIAL AGREEMENTS
IBM Personal Computer Company
IBM Printing Systems Company
<PAGE>
<PAGE>
SCHEDULE 3.5
SUPERIOR'S FINANCIAL STATEMENTS
PREVIOUSLY PROVIDED
<PAGE>
<PAGE>
SCHEDULE 3.9 (d)
LIST OF INSURANCE POLICIES
PREVIOUSLY PROVIDED
<PAGE>
<PAGE>
SCHEDULE 3.13 (a)
LIST OF EMPLOYEE BENEFIT PLANS
PREVIOUSLY PROVIDED
<PAGE>
<PAGE>
SCHEDULE 3.14
LIST OF EMPLOYEES
PREVIOUSLY PROVIDED
<PAGE>
<PAGE>
EXHIBIT A
FORM OF SMITH EMPLOYMENT
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into this
day of December, 1996, by and between Superior Computer
Systems, Inc., a Minnesota corporation (the "Company"), and Mark
G. Smith, an individual ("Employee").
RECITALS
A. Leasing Edge Corporation ("LEC") has entered into a
Stock Acquisition Agreement, dated the date hereof, by and
between Employee, the Company and Mr. Scott Walsh (the
"Acquisition Agreement"), whereby LEC is acquiring on the date
hereof, a 100% interest in the issued and outstanding capital
stock of the Company.
B. The Company and LEC desire to be assured of the
association and services of Employee for the Company.
C. Employee is willing and desires to be employed by
the Company and to serve the Company upon the terms, covenants
and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual terms,
covenants and conditions hereinafter set forth, the parties
hereto do hereby agree as follows:
1. Employment. The Company hereby employs Employee
to perform the services described in Section 2 hereof, and
Employee hereby agrees to perform such services upon the terms
and conditions set forth herein. Employee shall devote all of
his time and energies during normal business hours to the day-to-
day business and affairs of the Company.
2. Services to be Performed. During the term of
Employee's employment under this Agreement, Employee agrees to
serve as full-time President of the Company, subject to the
supervision and direction of the Chief Executive Officer of LEC
(the "CEO"), and to perform such duties as shall be assigned to
Employee by the CEO, including, but not limited to, such
managerial responsibilities as are necessary in managing the day-
to-day operations of the Company, including, without limitation,
recruiting, compensating and dismissing employees, implementing
sales and marketing plans, establishing projections, budgets and
forecasts of the Company (including creating a sales incentive
plan for the Company) and having managerial responsibility of the<PAGE>
<PAGE>
Company. The foregoing specifications are not intended as a
complete itemization of the duties which Employee shall perform
and undertake on behalf of the Company in satisfaction of his
employment obligations under this Agreement.
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into this
6th day of December, 1996, by and between Superior Computer
Systems, Inc., a Minnesota corporation (the "Company"), and Mark
G. Smith, an individual ("Employee").
RECITALS
A. Leasing Edge Corporation ("LEC") has entered into a
Stock Acquisition Agreement, dated the date hereof, by and
between Employee, the Company and Mr. Scott Walsh (the
"Acquisition Agreement"), whereby LEC is acquiring on the date
hereof, a 100% interest in the issued and outstanding capital
stock of the Company.
B. The Company and LEC desire to be assured of the
association and services of Employee for the Company.
C. Employee is willing and desires to be employed by
the Company and to serve the Company upon the terms, covenants
and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual terms,
covenants and conditions hereinafter set forth, the parties
hereto do hereby agree as follows:
1. Employment. The Company hereby employs Employee
to perform the services described in Section 2 hereof, and
Employee hereby agrees to perform such services upon the terms
and conditions set forth herein. Employee shall devote all of
his time and energies during normal business hours to the day-to-
day business and affairs of the Company.
2. Services to be Performed. During the term of
Employee's employment under this Agreement, Employee agrees to
serve as full-time President of the Company, subject to the
supervision and direction of the Chief Executive Officer of LEC
(the "CEO"), and to perform such duties as shall be assigned to
Employee by the CEO, including, but not limited to, such
managerial responsibilities as are necessary in managing the day-
to-day operations of the Company, including, without limitation,
recruiting, compensating and dismissing employees, implementing<PAGE>
<PAGE>
sales and marketing plans, establishing projections, budgets and
forecasts of the Company (including creating a sales incentive
plan for the Company) and having managerial responsibility of the
Company. The foregoing specifications are not intended as a
complete itemization of the duties which Employee shall perform
and undertake on behalf of the Company in satisfaction of his
employment obligations under this Agreement.
3. Term. Subject to Section 6 hereof, the term of
Employee's employment hereunder shall be for a period of three
(3) years and two months commencing on the date hereof and shall
continue thereafter until December 31, 1999.
4. Compensation; Reimbursement.
4.1 Base Salary. During the term of Employee's
employment and for all services rendered by Employee under this
Agreement, the Company shall pay Employee a minimum salary of One
Hundred Twenty Thousand Dollars ($120,000) per annum (the "Base
Salary") payable in a manner consistent with the Company's
current payroll practice.
4.2 Company Incentive Plan. In addition to the Base
Salary, Employee shall receive an annual Company Incentive Bonus
("Incentive Bonus") if the Company's Actual Profit Amount (as
defined below) exceeds the Projected Profit Amount (as defined
below). The Incentive Bonus shall equal twenty-five percent
(25%) of the amount by which the Actual Profit amount exceeds the
Projected Profit Amount. If Employee's employment is terminated
other than at the end of a year, the Actual Profit Amount and the
Projected Profit Amount shall be prorated to determine the amount
of Employee's Incentive Bonus.
"Projected Profit Amount" as used herein shall be, for
each fiscal year as indicated, the amount reflected in the
horizontal column titled "Projected Profit Amount" in the
following table:
Nov. 1, 1996-
Dec. 31, 1997 1998 1999
Pre-tax Projected
Profit Amount $200,025 $212,200 $271,775
Projected State
and Federal taxes (70,426) (78,694) (105,488)
-------- --------- ---------
Projected Profit
Amount $129,599 $133,506 $166,287
-------- -------- ----------
-------- -------- ----------
<PAGE>
<PAGE>
"Pre-tax Profit Amount" as used herein shall mean the
earnings of Superior before taxes.
"Actual Profit Amount" as used herein shall mean the
pre-tax income from operations of the Company plus a pro-forma
adjustment equal to 10% of any intercompany transactions between
Superior or Buyer or any affiliate of Buyer, less a pro-forma
adjustment for income taxes computed in the same ratio which was
used to calculate the projected state and Federal income taxes as
indicated in the horizontal column titled "Pre-tax Projected
Profit Amount" in the table immediately preceding this sentence.
The Incentive Bonus will be paid in cash on April 1 of
each year that an Incentive Bonus is payable hereunder.
4.3 Base Salary Increase. In each year that the
Company equals or exceeds the Projected Profit Amount, the Base
Salary shall be increased by ten (10%) percent on an annualized
basis for the next succeeding year.
4.4 Additional Benefits. The Employee shall be
entitled to all other benefits of employment generally provided
to the employees of the Company, including participation in
medical plans.
4.5 Reimbursement of Direct Business Expenses.
Employee shall be reimbursed for all reasonable "out-of-pocket"
business
expenses directly incurred by him in connection with the
performance of his duties under this Agreement. The
reimbursement of Employee's business expenses shall be upon
monthly presentation to and approval by the Company of valid
receipts and other appropriate documentation for such expenses.
Employee shall be entitled to an automobile allowance in an
amount of $300 per month, net of taxes.
4.6 Vacation. The Employee shall be entitled to two
weeks vacation during each calendar year in addition to customary
holidays for the Company as is generally applicable to all
executive employees of the Company. The Employee shall accrue
full salary during such vacation and holiday time.
5. Non-Competition; Non-Solicitation; and
Confidentiality.
(a) The Employee covenants and agrees with the
Company that during the Restricted Period (as defined below)
neither the Employee nor any entity of which 5% or more of the
beneficial ownership is held or owned directly or indirectly by
Employee or is controlled directly or indirectly by Employee,
will, anywhere in the United States, directly or indirectly, own,
manage, operate, advise (whether or not for compensation),
control or invest or acquire an interest in any business
exceeding 10% or more of the equity of any such business, or
<PAGE>
otherwise engage or participate, whether as a proprietor,
partner, stockholder, director, officer, "Key Employee" (defined
herein to include any person who is employed in a management,
executive, supervisory, marketing or sales capacity for another
person), joint venturer, lender, advisor (whether or not for
compensation), consultant, investor or other participant, in any
business involving the distribution and marketing of computer
hardware.
(b) During the Restricted Period, the Employee
will not, directly or indirectly, solicit, induce or influence
any customer, supplier, or any other person or entity which has a
business relationship with the Company to discontinue or reduce
the extent of such relationship with the Company.
(c) During the Restricted Period, Employee will
not, directly or indirectly, solicit the employment of any
employee of the Company or a person who was an employee of the
Company at any time during the nine (9) month period prior to
such solicitation or induce or influence any employee of the
Company to discontinue such employment with the Company who at
the time has a business relationship with the Company.
(d) The Employee further agrees not to divulge,
communicate, use to the detriment of the Company or for the
benefit of any other person or persons, or misuse in any way, any
confidential information or trade secrets of the Company,
including, without limitation, personnel information, secret
processes, know-how, discoveries, computer programs, customer
lists, sales data, cost information, customer and distributor
lists or other technical data, transactions or proposed
transactions and business plans of the Company.
(e) The parties intend that the covenants
contained in this Section 5 shall be construed as a series of
separate covenants, each such separate covenant shall be deemed
identical in terms to the covenant contained in the preceding
subsection. If, in any judicial proceeding, a court shall refuse
to enforce any of such separate covenants, then the unenforceable
covenant or covenants shall be deemed eliminated from these
provisions for the purpose of those proceedings to the extent
necessary to permit the remaining separate covenants to be
enforced.
(f) Employee acknowledges that LEC is relying on
the Employee's covenants contained herein in purchasing, on the
date hereof, 100% of the Employee's interest in the issued and
outstanding capital stock of the Company.
(g) For purposes of this Section 5, the term
"Company" shall include the subsidiaries and affiliates of LEC
and its successors and assigns.
<PAGE>
(h) "Restricted Period" as used herein shall mean
the term of this Agreement plus a period of six (6) months after
any termination hereof.
(i) With respect to the covenants contained in
this Section 5, Employee acknowledges and further agrees that
money damages for any breach thereof will be an inadequate remedy
and that, therefore, the Company shall be entitled to specific
performance, injunctive and/or any other mode of equitable relief
to enforce its rights hereunder.
6. Earlier Termination.
(a) The employment of Employee hereunder and the
provisions of this Agreement other than the provisions of
Section 5 (which shall continue in accordance with their terms)
shall terminate upon Employee's death and may terminate promptly
at the sole option of the Company:
(i) upon the disability of Employee, which term
shall mean the inability of Employee to discharge properly his
duties hereunder in a manner consistent with prior practice due
to physical or mental illness, or bodily injury, for a period of
ninety (90) consecutive days (for purposes of this Agreement,
Employee shall be deemed to have become disabled upon the
expiration of such 90 day period); or
(ii) for "cause"; as used herein, termination for
cause shall mean termination of Employee's employment as a result
of (A) a default or breach which, if curable, has not been cured
to the reasonable satisfaction of the Company within ten (10)
days after notice thereof has been delivered to Employee in the
performance of Employee's obligations under this Agreement,
including, without limitation, Employee's obligations under
Section 5 hereof, (B) any act of dishonesty or disloyalty on
Employee's part against the Company or any affiliate or
Employee's conviction of a felony (whether or not involving the
Company), or (C) any other action by Employee which is so serious
or of such a nature that Employee's continued employment would
adversely affect the Company's or any of its affiliate's
reputation or relationships with customers or employees.
(b) In the event that the Company terminates
Employee's employment in accordance with Section 6(a) hereof, all
of the Company's payment obligations under this Employment
Agreement shall terminate and the Company shall have no further
obligation to the Employee, except for compensation and/or
Incentive Bonus payments accrued as of such termination date.
<PAGE>
<PAGE>
7. Termination of Restrictive Covenants. In the
event the Company is unable to fulfill the terms of this
Agreement, or is sold, becomes insolvent, files for bankruptcy,
ceases to operate or is dissolved, the restrictive covenants set
forth in Section 5 hereof shall terminate and be of no further
force or effect.
8. Miscellaneous.
8.1 Transfer and Assignment. This Agreement is
personal to, and shall not be assigned, transferred or assignable
by, Employee. This Agreement shall be assignable by the Company
to its successors in interest.
8.2 Severability. Nothing contained herein shall be
construed to require the commission of any act contrary to law.
Should there be any conflict between any provisions hereof and
any present or future statute, law, ordinance, regulation, or
other pronouncement having the force of law, the latter shall
prevail, but the provision of this Agreement affected thereby
shall be curtailed and limited only to the extent necessary to
bring it within the requirements of the law, and the remaining
provisions of this Agreement shall remain in full force and
effect.
8.3 Governing Law. This Agreement is made under and
shall be construed pursuant to the laws of the State of
Minnesota.
8.4 Counterparts. This Agreement may be executed in
several counterparts and all documents so executed shall
constitute one agreement, binding on all of the parties hereto,
notwithstanding that all of the parties did not sign the original
or the same counterparts.
8.5 Entire Agreement. This Agreement constitutes the
entire agreement and understanding of the parties with respect to
the subject matter hereof and supersedes all prior oral or
written agreements, arrangements, and understandings with respect
thereto. No representation, promise, inducement, statement or
intention has been made by any party hereto that is not embodied
herein, and no party shall be bound by or liable for any alleged
representation, promise, inducement, or statement not so set
forth herein.
8.6 Modification. This Agreement may be modified,
amended, superseded, or cancelled, and any of the terms,
covenants, representations, warranties or conditions hereof may
be waived, only by a written instrument executed by the party or
parties to be bound by any such modification, amendment,
supersession, cancellation, or waiver.
<PAGE>
8.7 Attorneys' Fees and Costs. In the event of any
dispute arising out of the subject matter of this Agreement, the
prevailing party shall recover, in addition to any other damages
assessed, its attorneys' fees and court costs incurred in
litigating or otherwise settling or resolving such dispute
whether or not an action is brought or prosecuted to judgment.
8.8 Company's Rules. Except as expressly set forth
herein to the contrary, Employee shall be subject to the
Company's rules, practices and policies applicable to all
employees generally.
8.9 Cumulative Remedies. Each and all of the
several rights and remedies provided in this Agreement, or by law
or in equity, shall be cumulative, and no one of them shall be
exclusive of any other right or remedy, and the exercise of any
one of such rights or remedies shall not be deemed a waiver of,
or an election to exercise, any other such right or remedy.
8.10 Headings. The sections and other headings
contained in this Agreement are for reference purposes only and
shall not in any way affect the meaning and interpretation of
this Agreement.
8.11 Notices. Any notice under this Agreement shall be
sufficient if in writing and if delivered personally or by mail
registered or certified, postage prepaid and return receipt
requested, by facsimile or telex machine, or by courier services.
The addresses of the parties for the receipt of notice shall be
as follows:
If to the Company:
Superior Computer Systems, Inc.
c/o Leasing Edge Corporation
6540 S. Pecos Road, Suite 103
Las Vegas, Nevada 89120
Attention: Michael F. Daniels
If to the Employee:
Mr. Mark G. Smith
c/o Superior Computer Systems, Inc.
7424 Washington Avenue South
Eden Prairie, Minnesota 55344
Each notice given by registered or certified mail shall be deemed
delivered and effective on the date of delivery as shown on the
return receipt, and each notice delivered in any other manner
shall be deemed to be effective as of the time of actual delivery
thereof. Each party may change its address for notice by giving
notice thereof in the manner provided above.
<PAGE>
8.12 Survival. The covenants and agreements set forth
in Section 5 shall survive the expiration or any termination of
this Agreement and remain in full force and effect regardless of
the cause of termination.
8.13 Effective Date. The Company and Employee
hereby agree that for accounting purposes and with respect to all
calculations respecting salary, the effective date of the
employment hereunder was 12:00 p.m., October 31, 1996.
IN WITNESS WHEREOF, the parties hereto have caused this
Employment Agreement to be executed as of the date first set
forth above.
SUPERIOR COMPUTER SYSTEMS INC.
By:
-------------------------- ------------------------------
Name: Michael F. Daniels Mark G. Smith
Title: Chairman of the Board
and Chief Executive
Officer
<PAGE>
<PAGE>
EXHIBIT B
FORM OF OPINION OF COUNSEL OF SELLERS
Leasing Edge Corporation
6540 S. Pecos Road, Suite 103
Las Vegas, NV 89120
Gentlemen:
We have acted as counsel to Superior Computer Systems,
Inc., a Minnesota corporation ("Superior") in connection with the
execution and deliver of the Stock Acquisition Agreement, dated
as of December , 1996 (the "Agreement") between Superior and
you and Mr. Mark G. Smith and Mr. Scott Walsh, as Selling
Stockholders relating to the sale of the Shares by the Selling
Stockholders to you. This opinion is being delivered to you
pursuant to Section 6.6 of the Agreement. Capitalized terms used
herein, unless otherwise defined herein, shall have the meanings
ascribed to them in the Agreement.
1. Superior is a corporation duly organized under the laws
of the State of Minnesota. Superior has all requisite corporate
power and corporate authority to own or lease its properties and
assets and to conduct its business as presently conducted.
2. Superior has all requisite corporate power and
authority to execute, deliver and perform the Agreement. All
necessary corporate actions on the part of Superior have been
duly taken to authorize the execution, delivery and performance
by Buyer of the Agreement. The Agreement (i) has been duly
authorized, executed and delivered by Superior and (ii) is the
legal, valid and binding obligation of Superior, enforceable
against Superior in accordance with its terms, except (x) as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally, and (y) to the
extent that such enforceability is subject to general principles
of equity (regardless of whether such enforcement is considered
in a proceeding in equity or at law).
3. Neither the execution, delivery and performance of the
Agreement by Superior, nor the consummation of the transactions
contemplated thereby (i) conflicts or will conflict with or (with
or without the giving of notice or the passage of time or both)
results or will result in a breach of the terms, conditions or
provisions of, (ii) constitutes or will constitute a default
under, (iii) results or will result in the creation of any Lien
upon Buyer's assets pursuant to, (iv) constitutes or will
constitute an event creating rights of acceleration, termination
<PAGE>
or cancellation, or loss of rights under, or (v) results or will
result in a violation of, (A) the certificate of incorporation or
the by-laws, as amended to date, of Superior, (B) to our
knowledge, any law, statute, rule, regulation, order, award,
judgment or decree to which Superior is subject, or (C) to our
knowledge, any material contract (other than the Agreement),
agreement, instrument or lease to which Superior is a party or by
which Superior is bound.
4. The Shares have been duly authorized and validly issued
and are fully paid and nonassessable and free of any preemptive
or similar rights.
5. We know of no actions, suits or proceedings, pending or
threatened, in any court or before any administrative agency or
other governmental agency or authority against or affecting
Superior which, if adversely decided, would or could,
individually or in the aggregate, materially and adversely affect
the business, operations, property or financial condition of
Superior, or the ability of Superior to perform any of its
obligations under the Agreement.
6. All consents, approvals, authorizations, waivers or
notifications of, or declarations or filings with and the taking
of any other action by or in respect of, any governmental body or
regulatory authority, or, to our knowledge, any creditor or other
person, required in connection with the execution, delivery or
performance by the Superior of the Agreement have been obtained
or performed.
<PAGE>
<PAGE>
EXHIBIT C-1
FORM OF PROMISSORY NOTE
<PAGE>
<PAGE>
EXHIBIT C-2
FORM OF PROMISSORY NOTE
<PAGE>
<PAGE>
EXHIBIT D
LEC INSIDER TRADING POLICY
<PAGE>
<PAGE>
EXHIBIT E
FORM OF WALSH EMPLOYMENT AGREEMENT
<PAGE>
<PAGE>
EXHIBIT F
FORM OF OPINION OF COUNSEL OF BUYER
Date
Superior Computer Systems
7424 Washington Avenue South
Eden Praire, Minnesota 55344
Gentlemen:
We have acted as counsel to Leasing Edge Corporation, a Delaware
corporation ("LEC") in connection with the execution and delivery
of the Stock Acquisition Agreement, dated as of December , 1996
(the "Agreement") between LEC and you and Mr. Mark G. Smith and
Mr. Scott Walsh, as Selling Stockholders relating to the sale of
Shares by the Selling Stockholders to LEC. This opinion is being
delivered to you pursuant to Section 7.6 of the Agreement.
Capitalized terms used herein, unless otherwise defined herein,
shall have the meanings ascribed to them in the Agreement. The
law covered by the opinions expressed herein are limited to the
laws of the State of New York and the General Corporation Law of
the State of Delaware.
1. LEC is a corporation duly organized under the laws
of the State of Delaware. LEC has all requisite corporate power
and corporate authority to own or lease its properties and assets
and to conduct its business as presently conducted.
2. LEC has all requisite corporate power and
authority to execute, deliver and perform the Agreement. All
necessary corporate actions on the part of LEC have been duly
taken to authorize the execution, delivery and performance by LEC
of the Agreement. The Agreement (i) has been duly authorized,
executed and delivered by LEC and (ii) is the legal, valid and
binding obligation of LEC, enforceable against LEC in accordance
with its terms, except (x) as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights
generally, and (y) to the extent that such enforceability is
subject to general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at
law).
<PAGE>
<PAGE>
3. Neither the execution, delivery and performance of
the Agreement by LEC, nor the consummation of the transactions
contemplated thereby (i) conflicts or will conflict with or (with
or without the giving of notice or the passage of time or both)
results or will result in a breach of the terms, conditions or
provisions of, (ii) constitutes or will constitute a default
under, (iii) results or will result in the creation of any lien
upon LEC's assets pursuant to, (iv) constitutes or will
constitute an event creating rights of acceleration, termination
or cancellation, or loss of rights under, or (v) results or will
result in a violation of, (A) the certificate of incorporation or
the by-laws, as amended to date, of LEC, (B) to our knowledge,
any law, statute, rule, regulation, order, award, judgment or
decree to which LEC is subject, or (C) to our knowledge, the
material agreements to which LEC is a party that we listed on
Exhibit A hereto.
4. The shares of Buyer Common Stock have been duly
authorized and validly issued and are fully paid and
nonassessable and free of any preemptive or similar rights.
5. We know of no actions, suits or proceedings,
pending or threatened, in any court or before any administrative
agency or other governmental agency or authority against or
affecting LEC which, if adversely decided, would or could,
individually or in the aggregate, materially and adversely affect
the business, operations, property or financial condition of LEC,
or the ability of LEC to perform any of its obligations under the
Agreement.
6. All consents, approvals, authorizations, waivers
or notifications of, or declarations or filings with and the
taking of any other action by or in respect of, any governmental
body or regulatory authority, or, to our knowledge, any creditor
or other person, required in connection with the execution,
delivery or performance by LEC of the Agreement have been
obtained or performed.
<PAGE>
<PAGE>
EXHIBIT A TO OPINION OF COUNSEL OF BUYER
1. Business Loan Agreement, dated as of July 11, 1995 (as
amended) among Bank of America Nevada, a Nevada banking
corporation, TJ Systems Corporation, a Delaware corporation and
TJ Computer services, Inc. a Delaware corporation.
2. Letter Agreement, dated as of November 27, 1995 between
Union Chelsea National Bank, Leasing Edge Corporation, T.J.
Computer Services, Inc. and T.J. Leasing Resources.
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