<PAGE>
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): June 1, 1999
MedQuist Inc.
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(Exact name of registrant as specified in its charter)
New Jersey 0-19941 22-253 1298
- ---------------- ----------- -------------------
(State or other (Commission (I.R.S. Employer
jurisdiction File Identification No.)
of incorporation Number)
or organization)
Five Greentree Centre
Suite 311
Marlton, NJ 08053
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(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 596-8877
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Item 2 - Acquisition of Assets
On June 1, 1999, the registrant completed the acquisition of Lanier
Transcription Services, a national provider of medical transcription services,
for $35 million in cash subject to a net worth adjustment. Lanier generated
revenues of about $25 million in fiscal 1998 through a service network of 30
offices and 550 transcriptionists.
Item 7(c) - Exhibits
Exhibits Exhibit Number
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Press Release dated June 1, 1999 is attached hereto. 1
Asset Purchase Agreement, dated April 9, 1999, among 2
MedQuist Transcriptions, Ltd., Lanier Professional
Services, Inc. And Harris Southwest Properties, Inc.
SIGNATURE
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.
MEDQUIST INC.
Date: June 4, 1999 By: /s/ John M. Suender
------------------------------
Name: John M. Suender
Title: Senior Vice President and
General Counsel
News Release
NASDAQ: MEDQ
FOR IMMEDIATE RELEASE
MEDQUIST COMPLETES ACQUISITION OF
LANIER TRANSCRIPTION SERVICES
MARLTON, NJ, June 1, 1999 - MedQuist Inc. (Nasdaq:MEDQ) today
announced it has completed the acquisition of Lanier Transcription Services, a
national provider of medical transcription services, for $35 million in cash
subject to a net worth adjustment. The acquisition is expected to be accretive
to MedQuist's 1999 earnings. Lanier Transcription Services generated revenues of
about $25 million in fiscal 1998 through a service network of 30 offices and 550
transcriptionists.
MedQuist is the leading national provider of medical transcription
services, a key component in the provision of healthcare services. MedQuist
serves approximately 2,300 customers nationwide through its 77 client service
centers.
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act which involve risks and uncertainties. These statements express
expectations about future events and include forward-looking language such as
"is expected to be accretive to MedQuist 1999 earnings." The Company's actual
results may differ materially from those anticipated or implied in any such
forward-looking statements as a result of various risks, including, without
limitation, failure to successfully integrate the business of Lanier
Transcription Services with our existing business; inability to manage and
maintain growth; rapid technological change; decreased demand for existing
services; and lack of a market for new services. Additional risks associated
with the Company's business can be found in its recent Registration Statement on
Form S-3 and other periodic filings with the SEC.
Contact: John R. Emery, Chief Financial Officer, MedQuist Inc.
(800) 355-6337, Ext. 4418
<PAGE>
ASSET PURCHASE AGREEMENT
BY AND AMONG
MEDQUIST TRANSCRIPTIONS, LTD.,
LANIER PROFESSIONAL SERVICES, INC.
AND
HARRIS SOUTHWEST PROPERTIES, INC.
April 9, 1999
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TABLE OF CONTENTS
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Section 1. Purchase and Sale...........................................................-2-
1.1 Agreement to Purchase and Sell.......................................................-2-
1.2 Included Assets......................................................................-2-
1.3 Excluded Assets......................................................................-3-
1.4 Assumption of Assumed Liabilities....................................................-3-
1.5 Excluded Liabilities.................................................................-4-
1.6 Nonassignable Contracts or Licenses..................................................-4-
Section 2. Closing Effective Time, Purchase Price, Delivery of Consideration
and Post-Closing Price Adjustment...................................-5-
2.1 The Closing..........................................................................-5-
2.2 Purchase Price.......................................................................-5-
2.3 Net Asset Adjustment.................................................................-5-
2.4 Allocation of Purchase Price.........................................................-7-
2.5 Further Assurances...................................................................-7-
Section 3. Employee and Employee Benefit Matters.......................................-7-
3.1 Termination and Offers of Employment.................................................-7-
3.2 Pre-Closing Employment Claims........................................................-8-
Section 4. Representations and Warranties of LPS and HSP...............................-8-
4.1 Organization.........................................................................-8-
4.2 Authorization, Execution and Enforceability..........................................-8-
4.3 Absence of Restrictions and Conflicts................................................-8-
4.4 No Interest in Other Entities........................................................-9-
4.5 Ownership of Assets and Related Matters..............................................-9-
4.6 Financial Statements................................................................-10-
4.7 Absence of Certain Changes..........................................................-11-
4.8 Legal Proceedings...................................................................-11-
4.9 Licenses, Permits and Compliance with Law...........................................-11-
4.10 Assumed Contracts...................................................................-11-
4.11 Tax Returns; Taxes..................................................................-11-
4.12 Employees...........................................................................-12-
4.13 Employee Benefit Plans..............................................................-12-
4.14 Labor Relations.....................................................................-12-
4.15 Insurance...........................................................................-13-
4.16 Environmental Matters...............................................................-13-
4.17 Transactions with Affiliates........................................................-13-
4.18 Brokers, Finders and Investment Bankers.............................................-14-
4.19 Billing Practices...................................................................-14-
4.20 Customer Relations..................................................................-14-
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4.21 Y2K Compliance......................................................................-14-
Section 5. Representations and Warranties of Purchaser................................-14-
5.1 Organization........................................................................-15-
5.2 Authorization, Execution and Enforceability.........................................-15-
5.3 Absence of Restrictions and Conflicts...............................................-15-
5.4 Brokers, Finders and Investment Bankers.............................................-15-
Section 6. Additional Covenants and Agreements........................................-15-
6.1 Conduct of Business by Seller Prior to Closing Date.................................-16-
6.2 No Solicitation; Acquisition Proposals..............................................-17-
6.3 Reasonable Efforts; Further Assurances; Cooperation.................................-17-
6.4 Access..............................................................................-18-
6.5 Confidentiality.....................................................................-18-
6.6 Public Announcements................................................................-18-
6.7 Access to Records...................................................................-18-
6.8 Third-Party Consents................................................................-19-
6.9 Audit...............................................................................-19-
Section 7. Conditions to Obligations of All Parties...................................-19-
7.1 No Injunction.......................................................................-19-
7.2 HSR Act.............................................................................-19-
Section 8. Conditions to Obligations of Purchaser.....................................-19-
8.1 Representations and Warranties......................................................-19-
8.2 Performance of Obligations of Seller................................................-20-
8.3 Certain Agreements..................................................................-20-
8.4 No Material Adverse Effect..........................................................-20-
8.5 Audit...............................................................................-20-
8.6 Compliance Certificates.............................................................-20-
8.7 Legal Opinion.......................................................................-20-
Section 9. Conditions to Obligations of Seller. .....................................-21-
9.1 Representations and Warranties......................................................-21-
9.2 Performance of Obligations of Purchaser.............................................-21-
9.3 Certain Agreements..................................................................-21-
9.4 Compliance Certificates.............................................................-21-
9.5 Legal Opinion.......................................................................-21-
Section 10. Indemnification............................................................-21-
10.1 Indemnification Obligations of Seller...............................................-21-
10.2 Indemnification Obligations of Purchaser............................................-22-
10.3 Indemnification Procedure...........................................................-22-
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10.4 Claims Period.......................................................................-24-
10.5 Liability Limits....................................................................-24-
10.6 Compliance with Bulk Sales Laws.....................................................-25-
10.7 Investigations......................................................................-25-
Section 11. Termination................................................................-26-
11.1 Termination.........................................................................-26-
11.2 Specific Performance and Other Remedies.............................................-26-
11.3 Effect of Termination...............................................................-26-
Section 12. Miscellaneous..............................................................-27-
12.1 Notices.............................................................................-27-
12.2 Attachments.........................................................................-27-
12.3 Knowledge...........................................................................-27-
12.4 Assignment; Successors in Interest..................................................-28-
12.5 Number; Gender......................................................................-28-
12.6 Captions............................................................................-28-
12.7 Controlling Law; Integration; Amendment.............................................-28-
12.8 Severability........................................................................-28-
12.9 Counterparts........................................................................-28-
12.10 Enforcement of Certain Rights.......................................................-28-
12.11 Waiver..............................................................................-29-
12.12 Arbitration; Legal Proceedings......................................................-29-
12.13 Exclusive Remedy....................................................................-30-
12.14 Costs and Expenses..................................................................-30-
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SCHEDULES
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Schedule 1.2(c) ................. Equipment and Fixtures
Schedule 1.2(f) ................. Permits
Schedule 2.4 .................... Asset Valuations and Allocation of Purchase
Price
Schedule 4.1 .................... List of Locations where Qualified as a
Foreign Corporation
Schedule 4.5 (b) ................ List of Real and Personal Property Leases
and Agreements
Schedule 4.5 (c) ................ List of Personal Property Included in the
Assets
Schedule 4.5 (e) ................ Third Party Options
Schedule 4.5 (f) ................ Exceptions to Completeness of Assets
Schedule 4.5 (g) ................ Condition of Certain Assets
Schedule 4.6 .................... Financial Statements
Schedule 4.7 .................... Certain Changes since January 1, 1999
Schedule 4.8 .................... Legal Proceedings
Schedule 4.10 ................... Assumed Contracts and Third Party
Consents
Schedule 4.12 ................... List of Employees, Salary/Rate of Pay and
Hire Date
Schedule 4.13 (a) ............... Summary of Employee Benefit Plans
Schedule 4.13 (b) ............... Summary of ERISA Plans
Schedule 4.13 (c) ............... Employment Contracts
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Schedule 4.14 ................... Labor Relations
Schedule 4.17 ................... Transactions with Affiliates
Schedule 4.20 ................... Customer Relations
Schedule 4.21 ................... Y2K Compliance
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EXHIBITS
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Exhibit A Description of Business
Exhibit B Bill of Sale
Exhibit C Assumption Agreement
Exhibit D Preferred Supplier Agreement
Exhibit E Co-Marketing Agreement
Exhibit F Noncompetition and Nonsolicitation Agreement
Exhibit G Legal Opinion of King & Spalding
Exhibit H Legal Opinion of Purchaser's Counsel
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ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
April 9, 1999, by and among MEDQUIST TRANSCRIPTIONS, LTD., a New Jersey
corporation ("Purchaser"), LANIER PROFESSIONAL SERVICES, INC., a Delaware
corporation ("LPS") and HARRIS SOUTHWEST PROPERTIES, INC., a Delaware
corporation ("HSP" and, together with LPS, "Seller").
W I T N E S S E T H:
WHEREAS, Seller owns and operates Lanier Transcription
Services as a business unit within Seller, which business unit is a provider of
electronic medical transcription services to the healthcare industry and which
business unit is described in greater detail on Exhibit A hereto collectively,
the "Business" (as used herein, the term "LTS" shall refer to (a) the Lanier
Transcription Services business unit of Seller, and (b) the assets, operations
and business which comprise that unit);
WHEREAS, LPS owns all of the tangible assets, properties and
rights of LTS and is subject to all of the liabilities of LTS;
WHEREAS, HSP owns all of the intangible assets, properties and
rights of LTS;
WHEREAS, MedQuist Inc., a New Jersey corporation and the
parent corporation of Purchaser ("MedQuist"), has, simultaneously with the
execution and delivery of this Agreement, executed and delivered a Guaranty in
favor of Seller, such Guaranty to be effective upon the execution of this
Agreement, for the purpose of securing the obligations of Purchaser under this
Agreement;
WHEREAS, Lanier Worldwide, Inc., a Delaware corporation and
the parent corporation of Seller ("Lanier"), has, simultaneously with the
execution and delivery of this Agreement, executed and delivered a Guaranty in
favor of Purchaser, such Guaranty to be effective upon the execution of this
Agreement, for the purpose of securing the obligations of Seller under this
Agreement;
WHEREAS, the sole stockholder and sole director of Purchaser,
the Board of Directors and the sole stockholder of LPS and the Board of
Directors and sole stockholder of HSP each have approved this Agreement and the
acquisition by Purchaser of substantially all of the assets and properties of
LTS and the assumption by Purchaser of certain of the liabilities of LTS (the
"Acquisition") pursuant to this Agreement; and
<PAGE>
WHEREAS, Purchaser and Seller have agreed to effect the
Acquisition upon the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual promises and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
Section 1. Purchase and Sale.
1.1 Agreement to Purchase and Sell. Subject to the terms and conditions
of this Agreement, at the "Closing" (as hereinafter defined) and except as
otherwise specifically provided in this Section 1, Seller will sell, assign,
transfer and deliver to Purchaser, and Purchaser will purchase and acquire from
Seller, all right, title and interest of Seller in and to all of the "Assets"
(as hereinafter defined), free and clear of all liens, pledges, security
interests, and encumbrances of any nature whatsoever, except the "Assumed
Liabilities" (as hereinafter defined).
1.2 Included Assets. Except as otherwise expressly set forth in Section
1.3 hereof, the term "Assets" shall mean and shall include (a) the Business as a
going concern and (b) all assets, properties and rights of Seller to the extent
such assets, properties and rights are used, or are held for use, primarily in
the conduct of, or are generated by, or constitute a part of, LTS as of the
"Closing Date" (as hereinafter defined), including, without limitation:
(a) all accounts receivable of LTS;
(b) all prepaid expenses and credits of LTS (such prepaid
expenses and credits are referred to herein as the "Prepaid Items");
(c) all equipment and fixtures of LTS described on Schedule
1.2(c);
(d) all right, title and interest of LTS in the "Assumed
Contracts" (as hereinafter defined);
(e) all goodwill and customer lists relating to LTS;
(f) to the extent assignable, all governmental permits,
licenses or similar rights relating to LTS as set forth on Schedule
1.2(f) (the "Permits");
(g) notes receivable from employees of LTS arising out of the
employees' purchase of computer equipment from LPS (the "Employee
Notes");
(h) any rights under warranties relating to the Assets;
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(i) any software that can, in accordance with the license to
the software, be transferred to Purchaser; and
(j) all information, files, correspondence and records
relating to LTS, including, without limitation, any personnel files;
exclusive, however, of confidential internal information that is not
necessary for the conduct of the Business,.
It is understood all of the tangible assets, properties and rights which are
included in the Assets are owned solely by LPS, and all the intangible assets,
properties and rights which are included in the Assets are owned solely by HSP.
1.3 Excluded Assets. Notwithstanding anything to the contrary set forth
herein, the Assets shall not include the following assets, properties and rights
of Seller as of the Closing Date (collectively, the "Excluded Assets"):
(a) all cash and cash equivalents in hand, in bank accounts or
in transit;
(b) any note receivable other than the Employee Notes;
(c) any governmental permit, license or similar right that is
not transferable to Purchaser;
(d) the name Lanier, Lanier Transcription Services, Lanier
Professional Services, Lanier Worldwide, Harris, or Harris Southwest
Properties or any derivative or variation thereof or any other
trademark or trade name, whether registered or unregistered;
(e) the rights that accrue to Seller under this Agreement;
(f) the minute books and stock records of Seller;
(g) any assets, properties or rights of Seller used in the
operations and businesses of Seller which are unrelated to LTS or which
are not used primarily in LTS, which operations and businesses are not
being sold to Purchaser hereunder; and
(h) any other asset, property or right of Seller which is not
described in Section 1.2 hereof.
1.4 Assumption of Assumed Liabilities. Except as expressly provided in
this Section 1.4 and subject to Section 2.3, Purchaser shall not assume any
claims, liabilities or obligations of Seller. As the sole exception to the
foregoing, effective as of the Closing Date, Purchaser shall assume and agree to
pay, discharge or perform, as appropriate, the following liabilities and
-3-
<PAGE>
obligations of LPS existing as of the Closing Date arising out of the conduct of
LTS (collectively, the "Assumed Liabilities"):
(a) obligations of LPS under the Assumed Contracts arising
after the Closing Date, including, without limitation, that certain
Employment Agreement dated January 2, 1997 by and between LPS and
Robert Alterman;
(b) accrued but unpaid vacation time and sick pay owed to
employees of LTS who are hired by Purchaser in accordance with Section
3 hereof up to the amount reserved on the "Net Asset Statement" (as
hereinafter defined);
(c) accrued but unpaid salaries and wages (and related costs
for the unpaid wages and salaries only) of LTS attributable to the pay
period commencing immediately prior to the Closing Date owed to
employees of LTS who are hired by Purchaser in accordance with Section
3 hereof; and
(d) trade accounts payable incurred in the ordinary course of
business.
1.5 Excluded Liabilities. Notwithstanding anything to the contrary set
forth herein, the Assumed Liabilities shall not include, and in no event shall
Purchaser assume, agree to pay, discharge or perform or incur any liability or
obligation under this Agreement which is not expressly included as an Assumed
Liability in accordance with Section 1.4 hereof.
1.6 Nonassignable Contracts or Licenses.
(a) To the extent that assignment hereunder by Seller to
Purchaser of any Assumed Contract is not permitted or is not permitted
without the consent of a third party, this Agreement shall not be
deemed to constitute an undertaking to assign the same if such consent
is not given or if such an undertaking otherwise would constitute a
breach of or cause a loss of benefits thereunder. Seller shall use all
reasonable efforts (other than the payment of money or the deposit of
funds by Seller on behalf of Purchaser) to obtain any and all such
third-part consents.
(b) If and to the extent that Seller is unable to obtain any
required third party consent contemplated by subsection (a) above,
Seller shall continue to be bound by any such Assumed Contract (the
"Non-Assigned Contract"). In such event, to the maximum extent
permitted by law or the terms of the Non-Assigned Contract, (i) Seller
shall make the benefit of such Non-Assigned Contract available to
Purchaser, and (ii) the assignment provisions of this Agreement shall
operate to the extent permitted by law or the applicable Non-Assigned
Contract to create a subcontract, sublease or sublicense with Purchaser
to perform each relevant Non-Assigned Contract at a price equal to the
monies, rights and other consideration receivable or payable by Seller
with respect to the performance by or enjoyment of Purchaser under such
subcontract sublease or sublicense.
-4-
<PAGE>
To the extent such benefit is made available, and/or such subcontract,
sublease or sublicense is created, (1) Purchaser shall pay, perform and
discharge fully all obligations of Seller under any such Non-Assigned
Contract from and after the Closing Date and shall indemnify Seller
against any claims, damages, costs, expenses or losses incurred by
Seller arising from Seller's inability to obtain said consent in
connection with such Non- Assigned Contract after the Closing Date, (2)
Seller shall, without further consideration therefor, pay and remit to
Purchaser promptly any monies, rights and other consideration received
in respect of such Non-Assigned Contract performance, and (3) Seller
shall exercise or exploit its rights and options under all such
Non-Assigned Contracts only as directed by Purchaser and at Purchaser's
expense.
(c) If and when any third party consent contemplated by
subsection (b) above shall be obtained or any such Non-Assigned
Contract shall otherwise be assignable, Seller shall promptly assign
all of its rights and obligations thereunder or in connection therewith
to Purchaser without payment of further consideration therefor, and
Purchaser shall assume such rights and obligations.
Section 2. Closing Effective Time, Purchase Price, Delivery
of Consideration and Post-Closing Price Adjustment.
2.1 The Closing. Subject to the terms and conditions of this Agreement,
the closing of the Acquisition and the transactions contemplated by this
Agreement (the "Closing") will take place (a) at the offices of King & Spalding,
191 Peachtree Street, Atlanta, Georgia at 10:00 A.M. (local time), on the fifth
"Business Day" following the satisfaction or waiver of all of the conditions set
forth in Sections 7, 8 and 9 hereof, or (b) at such other time, date or place as
the parties may agree. The date on which the Closing occurs is referred to
herein as the "Closing Date," and, for purposes of determining the "Net Asset
Amount" (as hereinafter defined), the Closing is to be deemed effective as of
12:01 a.m. on the Closing Date. A "Business Day" is a day other than a Saturday,
a Sunday or a day on which banking institutions in New York City are authorized
or obligated by law to remain closed.
2.2 Purchase Price. The purchase price (the "Purchase Price") for the
Assets, in addition to Purchaser's assumption of the Assumed Liabilities, will
be Thirty-Five Million Dollars ($35,000,000) plus or minus the net asset
adjustment described in Section 2.3. At the Closing, Purchaser will pay to
Seller, by wire transfer of immediately available funds, the portion of the
Purchase Price (the "Cash Payment Amount") equal to Thirty-Five Million Dollars
($35,000,000) plus the "Estimated Excess" (as hereinafter defined) or less the
"Estimated Shortfall" (as hereinafter defined), and will assume and agree to
pay, perform and discharge the Assumed Liabilities. Purchaser will wire transfer
the Cash Payment Amount in accordance with wire transfer instructions to be
provided by Seller.
2.3 Net Asset Adjustment.
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<PAGE>
(a) The consideration being paid to Seller pursuant to Section
2.2 has been based on the assumption that the Net Asset Amount shall
equal Five Million Eleven Thousand Dollars ($5,011,000) (the "Required
Amount").
(b) For purposes of this Section 2.3, the following terms
shall have the meanings set forth below:
(i) Net Asset Amount. The "Net Asset Amount" shall be
the net asset amount of the Business determined as of the
Closing Date, which shall consist of (1) the sum of the "Value
of Assets" (as hereinafter defined) less (2) the "Value of
Assumed Liabilities" (as hereinafter defined).
(ii) Value of Assets. The "Value of Assets" shall be
the book value of the Assets, as of the Closing Date, as
calculated in accordance with generally accepted accounting
principles, consistently applied.
(iii) Value of Assumed Liabilities. The "Value of
Assumed Liabilities" will be an amount equal to the
outstanding balance of the Assumed Liabilities, as of the
Closing Date, calculated in accordance with generally accepted
accounting principles, consistently applied.
(c) For purposes of the Closing, Purchaser and Seller will
make a good faith estimate of the Net Asset Amount. Immediately prior
to the Closing, Purchaser and Seller shall estimate the Net Asset
Amount of Seller as of the day prior to the Closing Date, in accordance
with generally accepted accounting principles, consistently applied.
Such estimate of the Net Asset Amount shall be referred to herein as
the "Estimated Net Asset Amount." In the absence of an agreement
between Purchaser and Seller as to the estimate of the Net Asset
Amount, the Estimated Net Asset Amount shall be deemed to be an amount
equal to the Required Amount. In the event that the Estimated Net Asset
Amount is less than the Required Amount, the Cash Payment Amount will
be reduced by the amount of such shortfall (the "Estimated Shortfall").
In the event that the Estimated Net Asset Amount is greater than the
Required Amount, the Cash Payment Amount will be increased by the
amount of such excess (the "Estimated Excess").
(d) Within ninety (90) days following the Closing Date, Seller
will prepare or cause to be prepared a calculation of the Net Asset
Amount of the Business as of the Closing Date, which shall be set forth
in a statement prepared by Seller (such statement being hereinafter
referred to as the "Preliminary Net Asset Statement"). Purchaser shall
be permitted to review the books and related work papers to confirm
Seller's calculation of the Net Asset Amount. Based on the foregoing
review, Purchaser and Seller shall agree on any adjustments that should
be made to the Preliminary Net Asset Statement in order to reflect the
actual Net Asset Amount of the Business as of the Closing Date. If
Purchaser and Seller are unable to resolve any disputed amounts within
twenty (20) days
-6-
<PAGE>
after Purchaser receives the Preliminary Net Asset Statement, Purchaser
and Seller will engage a mutually acceptable nationally recognized
public accounting firm (the "Audit Firm"), at the equal expense of
Purchaser and Seller, to resolve any such matters in accordance with
the terms of this Agreement. The decision of the Audit Firm shall be
made within thirty (30) days after being engaged and shall be final and
binding on the parties. If the Purchaser fails to give Seller written
notice of any disputed amounts within twenty (20) days after Purchaser
receives the Preliminary Net Asset Statement, then the Preliminary Net
Asset Statement shall be deemed to be accepted as is by Purchaser and
shall become the "Net Asset Statement" for the purposes hereof. The
Preliminary Net Asset Statement shall be revised as necessary to
reflect the final determination of the Net Asset Amount (such
statement, as revised, is referred to herein as the "Net Asset
Statement"). Immediately following final determination of the Net Asset
Amount, as an adjustment to the Purchase Price, (i) in the event that
the finally determined Net Asset Amount is greater than the Estimated
Net Asset Amount, Purchaser shall pay Seller in immediately available
funds an amount equal to the difference between the finally determined
Net Asset Amount and the Estimated Net Asset Amount, or (ii) in the
event that the finally determined Net Asset Amount is less than the
Estimated Net Asset Amount, Seller shall pay Purchaser in immediately
available funds an amount equal to the difference between the finally
determined Net Asset Amount and the Estimated Net Asset Amount.
2.4 Allocation of Purchase Price. For purposes of determining both the
Purchaser's basis in the Assets and Seller's gain or loss with respect to the
Acquisition pursuant to Section 1060 of the Internal Revenue Code of 1986, as
amended from time to time, and the Treasury Regulations promulgated thereunder,
certain of the Assets will be valued in accordance with Schedule 2.4. Purchaser
and Seller will use such values (subject to such changes as may hereafter be
agreed to by Purchaser and Seller) in preparing and filing their respective
Forms 8594 with the Internal Revenue Service with respect to the Acquisition.
The Purchase Price, including any adjustments thereto, will be allocated among
LPS and HSP in accordance with Schedule 2.4.
2.5 Further Assurances. Each party hereto shall on the Closing Date and
from time to time thereafter at any other party's reasonable request and without
further consideration execute and deliver to such other party such instruments,
certificates and documents required to effect the Acquisition in addition to
those delivered pursuant to this Section 2 as shall be reasonably requested to
consummate more effectively the transactions contemplated by this Agreement.
Section 3. Employee and Employee Benefit Matters.
3.1 Termination and Offers of Employment. On the Closing Date Seller
shall terminate all of the employees of LTS listed on Schedule 4.12. Commencing
on the Closing Date, Purchaser shall offer employment to all of the employees of
LTS listed on Schedule 4.12 at the same or greater rate of pay as identified on
Schedule 4.12. All such employees who are hired
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by Purchaser shall be entitled to receive employee benefits commensurate with
any employee benefits currently offered by Purchaser, and such employees shall
receive full credit for service with Seller prior to the Closing Date for
purposes of vesting and eligibility, and rate of participant premium payment or
contribution, under any such employee benefit plan of Purchaser.
3.2 Pre-Closing Employment Claims. With the exception of accrued wages,
vacation and sick time included in the Assumed Liabilities, Seller will be
responsible and pay any claim asserted by or with respect to any employee or
former employee which is attributable to any event, state of facts or condition
which occurred on or prior to the Closing Date.
Section 4. Representations and Warranties of LPS and HSP.
Each of LPS and HSP hereby represents and warrants to
Purchaser as follows:
4.1 Organization. Each of LPS and HSP is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority (i) to own, lease and operate LTS,
(ii) to carry on its Business as now being conducted and (iii) to enter into and
perform this Agreement and each of the "Seller Ancillary Documents" (as
hereinafter defined) to be executed and delivered by it. Each of LPS and HSP is
duly qualified to transact business and is in good standing as a foreign
corporation in each jurisdiction where the character of the Business requires
such qualification, except where the failure to be so qualified would not have a
"Material Adverse Effect." Schedule 4.1 contains a correct and complete list of
the jurisdictions in which each of LPS and HSP is qualified to do business as a
foreign corporation with respect to LTS. A "Material Adverse Effect" means any
event or condition that has had or would reasonably be expected to have a
material adverse effect on the properties, assets, liabilities, business,
financial condition, or results of operations of LTS.
4.2 Authorization, Execution and Enforceability. The execution,
delivery and performance of this Agreement and the Seller Ancillary Documents to
which LPS and HSP are parties and the consummation of the transactions
contemplated by this Agreement and such Seller Ancillary Documents have been
duly authorized by all necessary corporate action on the part of LPS and HSP,
respectively. This Agreement has been, and each other certificate, agreement,
document or instrument to be executed and delivered by LPS and HSP in connection
with the transactions contemplated by this Agreement (the "Seller Ancillary
Documents") will be as of the Closing Date, duly executed and delivered by LPS
and HSP, and constitutes or will constitute (as the case may be) the valid and
legally binding agreements of LPS and HSP, enforceable against LPS and HSP in
accordance with their respective terms.
4.3 Absence of Restrictions and Conflicts. Except for consents or
notices required to be obtained under the Assumed Contracts and disclosed in
Schedule 4.10, the execution, delivery and performance of this Agreement and the
Seller Ancillary Documents, the consummation of the transactions contemplated by
this Agreement and the Seller Ancillary Documents and the
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fulfillment of and compliance with the terms and conditions of this Agreement
and the Seller Ancillary Documents do not and will not (as the case may be)
create any lien or encumbrance upon the Assets, and with or without the passing
of time or the giving of notice or both, violate or conflict with, constitute a
breach of or default under, result in the loss of any benefit under, or permit
the acceleration of any obligation under, (a) any term or provision of the
charter documents or bylaws of LPS or HSP, (b) any Assumed Contract, (c) any
judgment, decree or order of any court or governmental authority or agency to
which LPS or HSP is a party or by which LPS or HSP or any of their respective
properties is bound or (d) any statute, law, rule or regulation applicable to
LPS or HSP. Except for compliance with the applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental agency or public or regulatory
unit, agency, body or authority with respect to LPS or HSP is required in
connection with the execution, delivery or performance of this Agreement or the
Seller Ancillary Documents by LPS and HSP or the consummation of the
transactions contemplated by this Agreement or the Seller Ancillary Documents by
LPS and HSP.
4.4 No Interest in Other Entities. The Assets do not include any direct
or indirect equity interest (by stock ownership, partnership interest, joint
venture interest or otherwise) in any other corporation, partnership, joint
venture, firm, association or business enterprise.
4.5 Ownership of Assets and Related Matters.
(a) Real Property. The Assets do not include any owned real
property.
(b) Leases. Schedule 4.5(b) sets forth a true, correct and
complete list of all leases and agreements of Seller granting Seller
possession of or rights to real property used in LTS (the "Real
Property Leases") and all leases and agreements of Seller granting
Seller possession of or rights to personal property utilized in LTS
(the "Personal Property Leases"). Seller has heretofore delivered to
Purchaser correct and complete copies of all of the Real Property
Leases and the Personal Property Leases. Except as otherwise noted on
Schedule 4.5(b), all of the Real Property Leases and the Personal
Property Leases are valid and enforceable in all material respects in
accordance with their respective terms with respect to Seller and, to
the best knowledge of Seller, each other party thereto.
(c) Personal Property. Schedule 4.5(c) sets forth a list of
all tangible personal property included in the Assets (other than items
which were expensed and fully depreciated personal property). LTS has
physical possession of all personal property included in Schedule
4.5(c).
(d) Accounts Receivable. Subject to the reserve for doubtful
accounts created in connection with the determination of the Net Asset
Amount, the accounts receivable included in the Assets will consist of
accounts receivable arising in the ordinary course of business of LTS
which will be validly owing and fully collectible.
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(e) No Third Party Options. Except as disclosed in Schedule
4.5(e), there are no existing agreements, options, commitments or
rights with, of or to any person (other than Purchaser pursuant to this
Agreement) to acquire any assets, properties or rights included in the
Assets or any interest therein.
(f) Ownership. Except for assets leased under the Real
Property Leases and the Personal Property Leases, all assets used or
held for use in the operation of LTS are owned by Seller. Except as
otherwise noted in Schedule 4.5(f) hereto, the Assets constitute all
the assets and properties necessary to permit LTS to conduct the
Business in the same manner as LTS has conducted the Business in the
past.
(g) Condition of Certain Assets. The equipment and other
tangible property owned or leased by LTS are in all material respects
in good operating condition and good state of repair, subject to
ordinary wear and tear.
4.6 Financial Statements. Seller has delivered the following to
Purchaser:
(a) the unaudited balance sheets and related annual statements
of income and cash flow relating to LTS as of June 27, 1997 and July 3,
1998 and for the respective twelve month periods then ended (the
"Annual Financial Statements") (the balance sheet as of July 3, 1998
being referred to herein as the "1998 Balance Sheet"); and
(b) the unaudited balance sheet of LTS as of January 1, 1999
(the "Interim Balance Sheet") and the related unaudited statements of
income and cash flow for the six month period ending January 1, 1999
(together with the Interim Balance Sheet, the "Interim Financial
Statements") (the Interim Financial Statements and the Annual Financial
Statements being referred to collectively as the "Financial
Statements").
Copies of the Financial Statements are attached as Schedule
4.6. Except as otherwise noted in the Financial Statements (including, without
limitation, the notes thereto), the Financial Statements have been prepared
from, and are in accordance with, the books and records of Seller, which books
and records are maintained in accordance with generally accepted accounting
principles, consistently applied. Except as otherwise noted in the Financial
Statements (including, without limitation, the notes thereto), each of the
balance sheets included in the Financial Statements (including any related notes
and schedules) fairly presents in all material respects the financial position
of LTS as of the date thereof, and each of the statements of income and cash
flow included in the Financial Statements (including any related notes and
schedules) fairly presents in all material respects the results of operations
and changes in stockholders' equity and cash flow, as the case may be, of LTS,
for the periods set forth therein, and, in the case of the Interim Financial
Statements, subject to normal year end adjustments consistent with past
practice.
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4.7 Absence of Certain Changes. Except as set forth on Schedule 4.7,
since January 1, 1999, LTS has (a) extended credit to customers, collected
accounts receivable and paid accounts payable and similar obligations in the
ordinary course of business consistent with past practice, (b) conducted the
Business in the ordinary course on a basis consistent with past practice, (c)
not engaged in any new line of business or entered into any agreement,
transaction or activity or made any commitment except those in the ordinary
course of business, (d) used commercially reasonable efforts to preserve the
business, customers and suppliers of LTS, (e) not suffered any Material Adverse
Effect and (f) not made any changes in its accounting policies or procedures.
4.8 Legal Proceedings. Except as set forth in Schedule 4.8, there are
no suits, actions, claims, proceedings or investigations pending or, to the best
knowledge of Seller, threatened against, relating to or involving LTS or any of
LTS's officers or directors (acting in their capacity as such) before any court,
arbitrator or administrative or governmental body, nor, to the best knowledge of
Seller, is there any basis for bringing any such suit, action, claim, proceeding
or investigation.
4.9 Licenses, Permits and Compliance with Law. LTS has all material
authorizations, approvals, licenses, permits and orders of and from all
governmental and regulatory offices and bodies necessary to carry on the
Business as it is currently being conducted. LTS is in compliance in all
material respects with all applicable laws, regulations and court and
administrative orders (including, without limitation, laws and regulations
relating to employee safety, employment, labor or use or occupancy of properties
or any part thereof). Seller is not presently charged with, has not received any
notice of, and, to the best knowledge of Seller, is not under governmental
investigation with respect to any actual or alleged violation of any statute,
ordinance, rule or regulation relating to LTS.
4.10 Assumed Contracts. Schedule 4.10 sets forth (a) a list of
contracts (including, without limitation, the Real Property Leases and the
Personal Property Leases) relating to LTS which are currently outstanding and
(b) a list of all consents or notices required to be obtained or given under the
contracts listed on Schedule 4.10 in connection with this Agreement. As used in
this Agreement, the term "Assumed Contracts" shall mean (1) all contracts listed
in Schedule 4.10 and (2) all other contracts (exclusive of any contracts for
indebtedness of LTS) outstanding as of the Closing Date to which LTS is a party
which were entered into in the ordinary course of the Business. The Assumed
Contracts are valid and enforceable in all material respects in accordance with
their respective terms with respect to LTS and, to the best knowledge of Seller,
each other party thereto.
4.11 Tax Returns; Taxes. Seller has filed all tax returns relating to
LTS that it was required to file and all such tax returns were correct and
complete in all material respects. All taxes owed by Seller relating to LTS
which are due and payable as of the Closing Date have been paid or will be paid.
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4.12 Employees. Schedule 4.12 contains a correct and complete list of
all of the employees of LTS specifying their title or job description, their
current annual salary or applicable pay rate, as appropriate, and their hire
date.
4.13 Employee Benefit Plans.
(a) Schedule 4.13(a) contains a summary of all plans,
programs, policies or arrangements providing compensation or benefits
of any kind or description whatsoever (whether current or deferred and
whether paid in cash or in kind) to, or on behalf of, any current or
former officer, employee or director of LTS or any of their dependents
(individually a "Benefit Plan" and collectively the "Benefit Plans");
(b) Schedule 4.13(b) contains a summary of all Benefit Plans
under which Seller or any "ERISA Affiliate" (as hereinafter defined)
makes or has any obligation to make, or has made or had any obligation
to make, either directly or indirectly (whether by reimbursing another
employer or otherwise), contributions to any plan, program or
arrangement, including a multi-employer plan, that is subject to Title
IV of "ERISA" (a "Title IV Plan") that relates to LTS;
(c) Schedule 4.13 (c) contains a list of all contracts or
other arrangement that relate to LTS under which Seller has agreed to
employ any person or to compensate any person on a termination of
employment (individually an "Employment Contract" and collectively the
"Employment Contracts");
For purposes of this Section 4.13, "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended from time to time, and any
regulations or published rulings promulgated or issued thereunder; and "ERISA
Affiliate" means any trade or business (whether incorporated or unincorporated)
which is a member of a group described in Section 414(b), (c), (m) or (o) of the
Code, of which Seller is also a member.
4.14 Labor Relations.
(a) LTS has not engaged in any unfair labor practice within
the meaning of the National Labor Relations Act or state law equivalent
and there exists no pending or, to the knowledge of Seller, threatened
unfair labor practice charges or race, color, religion, sex, national
origin, age or disability discrimination charges against LTS before any
board, department, commission or agency;
(b) there are no existing or, to the knowledge of Seller,
threatened (i) labor strikes, (ii) grievances, (iii) representation
questions respecting employees of LTS, or (iv) arbitration procedures
arising out of or under any union contract covering employees of LTS;
and
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(c) LTS is not a party to any collective bargaining agreement
or other labor union contract applicable to employees of LTS.
4.15 Insurance. Seller has commercially reasonable insurance policies
and coverages in place or is appropriately self-insured. All such policies are
in full force and effect and all premiums due and payable in respect thereof
have been paid. Since the respective dates of such policies, no notice of
cancellation or non-renewal with respect to any such policy has been received by
Seller. LTS will maintain its current insurance policies and coverages at least
through the Closing Date.
4.16 Environmental Matters.
(a) LTS is in material compliance with all applicable
Environmental Laws (as hereinafter defined);
(b) to the knowledge of Seller, there are no circumstances or
events relating to LTS' operations that could give rise to a material
claim against Purchaser under any Environmental Laws;
(c) LTS has not received any notice from any governmental
authority that it is in violation of any Environmental Laws; and
(d) LTS has not received any notice or claim from any
governmental authority or other third party asserting that LTS is or
could be liable under the federal Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") or any similar state or local
law.
"Environmental Laws" are defined as all federal, state or local laws or
regulations concerning the environment, pollution control or Hazardous
Materials. "Hazardous Materials" are defined as any waste, pollutant, by-product
or other material (including petroleum and petroleum derivatives), the use,
handling or disposal of which by LTS is any way governed by or subject to any
Environmental Laws.
4.17 Transactions with Affiliates. Except as set forth in Schedule
4.17, neither Seller nor any Affiliate of Seller has any interest in any
contract or other arrangement with LTS which will continue in effect after the
Closing. For purposes of this Section 4.17, "Affiliate" of any specified Person
means any other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person. For purposes
of this Agreement, (i) "control," when used with respect to any specified
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, (ii) "controlling" and "controlled" have meanings
correlative to the foregoing, and (iii) "Person" means any individual,
corporation,
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partnership, limited liability company, joint venture, trust unincorporated
organization or government or any agency or political subdivision thereof.
4.18 Brokers, Finders and Investment Bankers. Seller has not employed
any broker, finder, investment banker or other intermediary or incurred any
liability for any investment banking fees, financial advisory fees, brokerage
fees, finders' fees or other similar fees in connection with the transactions
contemplated herein.
4.19 Billing Practices. All invoices for services rendered by LTS have
been prepared in accordance with the terms of its transcription contracts with
its customers.
4.20 Customer Relations. Schedule 4.20 sets forth a list of the top 10
customers of LTS for the three (3) month period from December 1998 to February
1999, adjusted to an annualized basis. Except as set forth on Schedule 4.20, all
such customers are currently customers of LTS at substantially the same volume
as presented in the Confidential Information Memorandum dated December 22, 1998,
and none have given LTS written notice of termination.
4.21 Y2K Compliance. Attached hereto as Schedule 4.21 is the action
plan which Seller had proposed to implement to make the systems used by Seller
in the Business "Y2K Compliant." Except for the matters which were to be
addressed pursuant to the action plan, to the knowledge of Seller, all the
Assets are Y2K Compliant in all material respects. Notwithstanding the
foregoing, however, it is understood that Seller makes no representation or
warranty hereunder with respect to the Y2K Compliance of any products or
services used in the business which are supplied or used by third parties. "Y2K
Compliant" means that the software, computer, equipment, device or system is
able to provide the following functions: (i) manage, manipulate, accept,
process, calculate, compare, sequence, store or retrieve date and time data
involving dates using years consisting of four digits without malfunctioning or
ceasing to function or without generating incorrect values or invalid results;
(ii) function and perform accurately in accordance with its specifications and
without interruption before, during and after January 1, 2000, without any
change in operations associated with the advent of the new century; (iii)
accurately process date data and calculate the ranges of dates from, into, and
between the 20th and the 21st centuries and to accurately recognize all leap
years in the 20th and 21st centuries in processing date data and calculating the
ranges of dates; (iv) respond to two-digit date input in a way that resolves any
ambiguity as to century in a disclosed, defined and predetermined manner; (v)
store and provide output of date information in ways that are unambiguous as to
century; and (vi) correctly process date data fields containing non-date
information and correctly process date data held in non-date fields.
Section 5. Representations and Warranties of Purchaser.
Purchaser hereby represents and warrants to Seller as follows:
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5.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey.
5.2 Authorization, Execution and Enforceability. The execution,
delivery and performance of this Agreement and any other certificate, agreement,
document or instrument to be executed and delivered by Purchaser in connection
with the transactions contemplated by this Agreement (the "Purchaser Ancillary
Documents") and the consummation of the transactions contemplated by this
Agreement and the Purchaser Ancillary Documents have been duly authorized by all
necessary corporate action on the part of Purchaser. This Agreement has been,
and the Purchaser Ancillary Documents will be as of the Closing Date, duly
executed and delivered by Purchaser and do or will (as the case may be)
constitute the valid and legally binding agreements of Purchaser, enforceable
against Purchaser in accordance with their respective terms.
5.3 Absence of Restrictions and Conflicts. The execution, delivery and
performance of this Agreement and the Purchaser Ancillary Documents, the
consummation of the transactions contemplated by this Agreement and the
Purchaser Ancillary Documents and the fulfillment of and compliance with the
terms and conditions of this Agreement and the Purchaser Ancillary Documents do
not or will not (as the case may be), with or without the passing of time or the
giving of notice or both, violate or conflict with, or constitute a breach of or
default under, (a) any term or provision of the bylaws and articles of
incorporation of Purchaser, (b) any judgment, decree or order of any court or
governmental authority or agency to which Purchaser is a party or by which
Purchaser or any of its properties is bound or (c) any statute, law, rule or
regulation applicable to Purchaser or the business engaged in by Purchaser.
Except for compliance with the applicable requirements of the HSR Act, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental agency or public or regulatory unit, agency, body
or authority with respect to Purchaser is required in connection with the
execution, delivery or performance of this Agreement or the Purchaser Ancillary
Documents by Purchaser or the consummation of the transactions contemplated by
this Agreement or the Purchaser Ancillary Documents by Purchaser. No action or
proceeding has been instituted against Purchaser before any court or other
governmental body by any person or public authority seeking to restrain or
prohibit the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
5.4 Brokers, Finders and Investment Bankers. Purchaser has not employed
any broker, finder, investment banker or other intermediary or incurred any
liability for any investment banking fees, financial advisory fees, brokerage
fees, finders' fees or other similar fees in connection with the transactions
contemplated herein.
Section 6. Additional Covenants and Agreements.
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Each of the parties hereto shall comply with the following
additional covenants and agreements to the extent applicable to such party
(unless compliance is waived in advance in accordance with this Agreement):
6.1 Conduct of Business by Seller Prior to Closing Date. From the date
hereof until and including the Closing Date, except as otherwise contemplated by
the terms of this Agreement or as shall hereafter be consented to in writing by
Purchaser, Seller shall, with respect to LTS:
(a) Carry on the Business in the ordinary course in
substantially the same manner as heretofore conducted and not engage in
any new line of business or enter into any agreement, transaction or
activity or make any commitment except those in the ordinary course of
business which are not otherwise prohibited under this Section 6.1;
(b) Not (i) sell any assets, (ii) create, incur or assume any
indebtedness secured by the Assets, (iii) grant, create, incur or
suffer to exist any liens, charges or encumbrances on the Assets which
did not exist on the date hereof, (iv) incur any liability or
obligation (absolute, accrued or contingent) except in the ordinary
course of business consistent with past practice; (v) make any
commitment for any capital expenditure relating to LTS to be made on or
after the Closing Date in excess of $10,000 in the case of any single
expenditure or $100,000 in the case of all capital expenditures;
(c) Not acquire or enter into an agreement to acquire, by
merger, consolidation or purchase of stock or assets, any business;
(d) Use commercially reasonable efforts to preserve intact its
existence, goodwill and business organization, to keep its officers and
employees available to Purchaser and maintain its existing
relationships with distributors, licensees, associates, customers,
suppliers and others having business relations with LTS;
(e) Other than increases occurring in the ordinary course of
business, not enter into, modify, expand, improve or extend in any
manner the terms of any Benefit Plan or Employment Contract nor grant
any increase in the compensation of officers, directors or employees,
whether now or hereafter payable, including any such increase pursuant
to any option, bonus, stock purchase, pension, profit-sharing, deferred
compensation, retirement or other plan, arrangement, contract or
commitment;
(f) Perform in all material respects all of its obligations
under all of its contracts (except those being contested in good faith)
and not enter into, assume, amend or terminate any contract or
commitment other than contracts to provide services entered into in the
ordinary course of business;
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(g) Maintain in full force and effect and in the same amounts
policies of insurance comparable in amount and scope of coverage to
that now maintained by it or on its behalf; and
(h) Use commercially reasonable efforts to obtain the waiver,
consent and approval of all persons whose waiver, consent or approval
is required in order to permit Seller to consummate the transactions
contemplated hereby.
6.2 No Solicitation; Acquisition Proposals. Seller agrees that from the
date hereof through the Closing Date or the date of termination of this
Agreement in accordance with Section 11.1, as the case may be, Seller will not,
directly or indirectly, through any officer, director, employee, partner,
stockholder, agent or affiliate or otherwise, except in furtherance of the
transactions contemplated by this Agreement (a) solicit, initiate or encourage
submission of proposals or offers from any person relating to any transactions
contemplated herein or to the direct or indirect purchase of a material amount
of the assets of, or any equity interest in, or any merger, consolidation or
business combination with, Seller (collectively, an "Acquisition Proposal") that
could interfere with the consummation of the transactions contemplated herein,
(b) participate in any discussions or negotiations regarding, or furnish to any
other person any information with respect to, or otherwise cooperate in any way
with or assist, facilitate or encourage, any Acquisition Proposal with respect
to LTS by any person, or (c) enter into any agreement, arrangement or
understanding with respect to an Acquisition Proposal with respect to LTS.
6.3 Reasonable Efforts; Further Assurances; Cooperation. Subject to the
other provisions of this Agreement, each party hereto shall use such party's
reasonable, good faith efforts to perform such party's obligations hereunder and
to take, or cause to be taken or do, or cause to be done, all things necessary,
proper or advisable under applicable law to obtain all regulatory approvals and
satisfy all conditions to the obligations of the parties under this Agreement
and to cause the transactions contemplated hereby to be effected on or prior to
May 31, 1999 in accordance with the terms hereof and shall cooperate fully with
each other party and their respective officers, directors, employees, agents,
counsel, accountants and other designees in connection with any steps required
to be taken as a part of their respective obligations under this Agreement,
including without limitation:
(a) Each of the parties shall promptly make their respective
filings under applicable laws and regulations to obtain any required
approval of any federal, state or local governmental agency or
regulatory body with jurisdiction over the transactions contemplated
hereby, including all filings required by the HSR Act;
(b) In the event any claim, action, suit, investigation or
other proceeding by any governmental body or other person is commenced
which questions the validity or legality of the transactions
contemplated hereby or seeks damages in connection therewith, the
parties agree to cooperate and use all reasonable efforts to defend
against
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such claim, action, suit, investigation or other proceeding and, if an
injunction or other order is issued in any such action, suit or other
proceeding, to use all reasonable efforts to have such injunction or
other order lifted, and to cooperate reasonably regarding any other
impediment to the consummation of the transactions contemplated hereby;
and
(c) Each party shall give prompt written notice to the others
of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or
warranty of such party contained in this Agreement to be untrue or
inaccurate at any time from the date hereof until the Closing or that
will or may result in the failure to satisfy any of the conditions
specified in Sections 7, 8 and 9, (ii) any failure of any party hereto
or Seller, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder
and (iii) the termination or written notice of termination of any
contract for transcription services or any other material contract.
6.4 Access. Between the date hereof and the Closing, Seller shall
provide the Purchaser and its accountants, counsel and other authorized
representatives reasonable access during reasonable business hours and under
reasonable circumstances to any and all of the business, premises, properties,
assets, liabilities, contracts, commitments, financial condition, books,
records, accountants' work papers and other information of LTS.
6.5 Confidentiality. Information obtained by any party hereto or any of
their representatives pursuant to this Agreement shall be subject to the
provisions of the Confidentiality Agreement (the "Confidentiality Agreement"),
dated November 19, 1998, between MedQuist and Lanier, which agreement remains in
full force and effect.
6.6 Public Announcements. The timing and content of all announcements
regarding any aspect of this Agreement or the transactions contemplated hereby
to the financial community, government agencies, employees or the general public
shall be mutually agreed upon in advance by Purchaser and Seller (unless
Purchaser or Seller is advised by counsel in writing that any such announcement
or other disclosure not mutually agreed upon in advance is required to be made
by law or applicable rules of the Securities and Exchange Commission, New York
Stock Exchange or The Nasdaq Stock Market and then only after consulting the
other party and making a reasonable attempt to comply with the provisions of
this Section).
6.7 Access to Records. After the Closing, for purposes of determining
the Net Asset Amount, preparing and filing Seller's Tax Returns and making such
other reports and taking such other actions as is required by law or contract,
Purchaser hereby agrees to make available to Seller and its accountants, counsel
and other authorized representatives access, during reasonable business hours
and under reasonable circumstances, to the books, records, contracts and other
information of Seller transferred to Purchaser under this Agreement. Purchaser
agrees to maintain the books, records, contracts and other information of Seller
for at least a period of six years following the Closing. To the extent that
Seller retains any books, records, contracts or
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other information relating to LTS and Purchaser has a reasonable business need
to review such documents, Seller hereby agrees to make available to Purchaser
and its accountants, counsel and other authorized representatives access, during
reasonable business hours and under reasonable circumstances, to the books,
records, contracts and other information relating to LTS.
6.8 Third-Party Consents. Promptly upon execution of this Agreement,
Seller will use commercially reasonable efforts to obtain, as and when required,
all consents, approvals and other agreements from third parties identified on
Schedule 4.10.
6.9 Audit. Promptly upon execution of this Agreement, Seller will
request its independent accountants to audit the Annual Financial Statements of
LTS for the financial year ended June 30, 1998 and to issue an audit opinion
with respect thereto. Purchaser will bear the cost of the audit, provided,
however, that if the Acquisition is not consummated as a result of the failure
to satisfy Section 8.5, Seller will bear the cost of the audit.
Section 7. Conditions to Obligations of All Parties.
The obligations of each party to consummate the Closing shall
be subject to the satisfaction (or waiver by such party) at or prior to the
Closing of each of the following conditions:
7.1 No Injunction. There shall be no injunction, writ or preliminary
restraining order or any order of any nature in effect, which has been issued by
a court or governmental agency of competent jurisdiction, to the effect that the
transactions contemplated hereby may not be consummated as herein provided; no
proceeding or lawsuit shall have been commenced by any governmental or
regulatory agency for the purpose of obtaining any such injunction, writ or
preliminary restraining order; and no written notice shall have been received
from any such agency indicating an intent to restrain, prevent, materially delay
or restructure the transactions contemplated by this Agreement.
7.2 HSR Act. All applicable waiting periods under the HSR Act shall
have expired or terminated.
Section 8. Conditions to Obligations of Purchaser. The
obligations of Purchaser to consummate the Closing shall be subject to the
satisfaction (or waiver by Purchaser) at or prior to the Closing of each of the
following additional conditions:
8.1 Representations and Warranties. The representations and warranties
of LPS and HSP set forth in Section 4 shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date.
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8.2 Performance of Obligations of Seller. Seller shall have performed
in all material respects all covenants and agreements required to be performed
by Seller or LTS under this Agreement on or prior to the Closing.
8.3 Certain Agreements. The following agreements shall have been
executed and delivered to Purchaser:
(a) a Bill of Sale among Purchaser, LPS and HSP in the form of
Exhibit B (the "Bill of Sale");
(b) an Assumption Agreement among Purchaser, LPS and HSP in
the form of Exhibit C (the "Assumption Agreement");
(c) a Preferred Supplier Agreement among Lanier, Purchaser and
MedQuist MRC, Inc., a Missouri corporation ("MedQuist MRC") in the form
of Exhibit D (the "Preferred Supplier Agreement");
(d) a Co-Marketing Agreement among Lanier, Purchaser and
MedQuist MRC in the form of Exhibit E (the "Co-Marketing Agreement");
(e) a Noncompetition and Nonsolicitation Agreement between
Lanier and Purchaser in the form of Exhibit F (the "Noncompetition and
Nonsolicitation Agreement"); and
(f) a Transition Services Agreement between Lanier, Purchaser
and MedQuist MRC (the "Transition Services Agreement").
8.4 No Material Adverse Effect. Seller shall not have suffered any
Material Adverse Effect.
8.5 Audit. Seller shall have received Audited Financial Statements of
LTS for the financial year ended June 30, 1998 and an unqualified audit opinion
pursuant to Section 6.9.
8.6 Compliance Certificates. Seller shall furnish Purchaser with a
certificate of the appropriate officers of Seller as to compliance with the
conditions set forth in Sections 8.1, 8.2 and 8.4.
8.7 Legal Opinion. Purchaser shall have received an opinion of King &
Spalding, dated the Closing Date, in the form of Exhibit G.
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Section 9. Conditions to Obligations of Seller. The
obligations of Seller to consummate the Closing shall be subject to the
satisfaction (or waiver by Seller) at or prior to the Closing of each of the
following additional conditions:
9.1 Representations and Warranties. The representations and warranties
of Purchaser set forth in Section 5 shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date.
9.2 Performance of Obligations of Purchaser. Purchaser shall have
performed in all material respects all covenants and agreements required to be
performed by it under this Agreement on or prior to the Closing.
9.3 Certain Agreements. The following agreements shall have been
executed and delivered by Purchaser to Seller:
(a) the Bill of Sale;
(b) the Assumption Agreement;
(c) the Preferred Supplier Agreement;
(d) the Co-Marketing Agreement;
(e) the Noncompetition and Nonsolicitation Agreement; and
(f) the Transition Services Agreement.
9.4 Compliance Certificates. Purchaser shall furnish Seller with a
certificate of appropriate officers of Purchaser as to compliance with the
conditions set forth in Sections 9.1 and 9.2.
9.5 Legal Opinion. Seller shall have received an opinion of Purchaser's
counsel, dated the Closing Date, in the form of Exhibit H.
Section 10. Indemnification.
10.1 Indemnification Obligations of Seller. From and after the Closing
Date, Seller shall indemnify, defend and hold harmless Purchaser and its
officers, directors, employees, and affiliates, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Purchaser Indemnified Parties") from, against and in respect of any and all
claims, liabilities (whether accrued, absolute or contingent, asserted or
unasserted), obligations, losses, costs, expenses, penalties, fines and other
judgments (at equity or at law) and damages
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whenever arising or incurred (including, without limitation, amounts paid in
settlement, costs of investigation and reasonable attorneys' fees and expenses)
arising out of or relating to:
(i) any liability or obligation of Seller of any nature
whatsoever (including, but not limited to, the Excluded Liabilities),
except the Assumed Liabilities;
(ii) any breach or inaccuracy of any representation or
warranty made by Seller in Section 4 hereof; and
(iii) any breach of any covenant, agreement or undertaking
made by Seller in this Agreement.
The claims, liabilities, obligations, losses, costs, expenses, penalties, fines
and damages of the Purchaser Indemnified Parties described in this Section 10.1
as to which the Purchaser Indemnified Parties are entitled to indemnification
are hereinafter collectively referred to as "Purchaser Losses."
10.2 Indemnification Obligations of Purchaser. From and after the
Closing Date, Purchaser shall indemnify and hold harmless LPS, HSP and their
respective officers, directors, employees, and affiliates and their respective
heirs, executors, successors and assigns (collectively, the "Seller Indemnified
Parties") from, against and in respect of any and all claims, liabilities
(whether accrued, absolute or contingent, asserted or unasserted), obligations,
losses, costs, expenses, penalties, fines and other judgments (at equity or at
law) and damages whenever arising or incurred (including, without limitation,
amounts paid in settlement, costs of investigation and reasonable attorneys'
fees and expenses) arising out of or relating to:
(i) any of the Assumed Liabilities;
(ii) any breach or inaccuracy of any representation or
warranty made by Purchaser in Section 5 hereof; or
(iii) any breach of any covenant, agreement or undertaking
made by Purchaser in this Agreement.
The claims, liabilities, obligations, losses, costs, expenses, penalties, fines
and damages of the Seller Indemnified Parties described in this Section 10.2 as
to which the Seller Indemnified Parties are entitled to indemnification are
hereinafter collectively referred to as "Seller Losses."
10.3 Indemnification Procedure.
(a) Promptly after receipt by a Purchaser Indemnified Party or
a Seller Indemnified Party (hereinafter collectively referred to as an
"Indemnified Party") of
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notice by a third party of any complaint or the commencement of any
action or proceeding with respect to which such Indemnified Party may
be entitled to receive payment from the other party for any Purchaser
Losses or Seller Losses (as the case may be), such Indemnified Party
shall, within ten (10) days, notify Purchaser or Seller, as the
appropriate indemnifying party (the "Indemnifying Party"), of such
complaint or of the commencement of such action or proceeding;
provided, however, that the failure to so notify the Indemnifying Party
shall not relieve the Indemnifying Party from liability for such claim
arising otherwise than under this Agreement and such failure to so
notify the Indemnifying Party shall relieve the Indemnifying Party from
liability under this Agreement with respect to such claim only if, and
only to the extent that, such failure to notify the Indemnifying Party
results in the forfeiture by the Indemnifying Party of material rights
and defenses otherwise available to the Indemnifying Party with respect
to such claim. The Indemnifying Party shall have the right, upon
written notice delivered to the Indemnified Party within twenty (20)
days thereafter, to assume the defense of such action or proceeding,
including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of the fees and disbursements of such
counsel. In the event, however, that the Indemnifying Party declines or
fails to assume the defense of the action or proceeding or to employ
counsel reasonably satisfactory to the Indemnified Party, in either
case within such 20-day period, then such Indemnified Party may employ
counsel to represent or defend it in any such action or proceeding and
the Indemnifying Party shall pay the reasonable fees and disbursements
of such counsel as incurred; provided, however, that the Indemnifying
Party shall not be required to pay the fees and disbursements of more
than one counsel for all Indemnified Parties in any jurisdiction in any
single action or proceeding. In any action or proceeding with respect
to which indemnification is being sought hereunder, the Indemnified
Party or the Indemnifying Party, whichever is not assuming the defense
of such action, shall have the right to participate in such litigation
and to retain its own counsel at such party's own expense. The
Indemnifying Party or the Indemnified Party, as the case may be, shall
at all times use reasonable efforts to keep the Indemnifying Party or
the Indemnified Party, as the case may be, reasonably apprised of the
status of the defense of any action the defense of which it is
maintaining, and to cooperate in good faith with each other with
respect to the defense of any such action.
(b) No Indemnified Party may settle or compromise any claim or
consent to the entry of any judgment with respect to which
indemnification is being sought hereunder without the prior written
consent of the Indemnifying Party, unless such settlement, compromise
or consent includes an unconditional release of the Indemnifying Party
from all liability arising out of such claim. An Indemnifying Party may
not, without the prior written consent of the Indemnified Party, settle
or compromise any claim or consent to the entry of any judgment with
respect to which indemnification is being sought hereunder unless (i)
the Indemnifying Party shall pay or cause to be paid all amounts
arising out of such settlement or judgment concurrently with the
effectiveness thereof; (ii) the terms or effect of the settlement shall
not encumber any of the assets of
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any Indemnified Party or any affiliate thereof, or contain or result in
any restriction, interference or condition that would apply to such
Indemnified Party or its affiliates or to the conduct of any of their
respective businesses; and (iii) shall obtain, as a condition of such
settlement, a complete unconditional release of each Indemnified Party.
(c) In the event an Indemnified Party shall claim a right to
payment pursuant to this Agreement, such Indemnified Party shall send
written notice of such claim to the appropriate Indemnifying Party.
Such notice shall specify the basis for such claim. As promptly as
possible after the Indemnified Party has given such notice, such
Indemnified Party and the appropriate Indemnifying Party shall
establish the merits and amount of such claim and, within five business
days of the final determination of the merits and amount of such claim,
the Indemnifying Party shall pay to the Indemnified Party immediately
available funds in an amount equal to such claim as determined
hereunder.
10.4 Claims Period. For purposes of this Agreement, a "Claims Period"
shall be the period during which a claim for indemnification may be asserted
under this Agreement by an Indemnified Party, which period shall (i) begin on
the earlier of the Closing Date or the date of any termination of this Agreement
pursuant to Section 11.1, and (ii) terminate as follows:
(a) with respect to Purchaser Losses arising under Sections
10.1(i) or 10.1(iii), the Claims Period shall terminate on the second
anniversary of the Closing Date; and
(b) with respect to all other Purchaser Losses, the Claims
Period shall terminate on the eighteen (18) month anniversary of the
Closing Date;
(c) with respect to Seller Losses arising under Sections
10.2(i) or 10.2(iii), the Claims Period shall terminate on the second
anniversary of the Closing Date; and
(d) with respect to all other Seller Losses, the Claims Period
shall terminate on the eighteen (18) month anniversary of the Closing
Date.
Notwithstanding the foregoing, if prior to the close of business on the
last day of the applicable Claims Period, an Indemnifying Party shall have been
properly notified of a claim for indemnity hereunder and such claim shall not
have been finally resolved or disposed of at such date, such claim shall
continue to survive and shall remain a basis for indemnity hereunder until such
claim is finally resolved or disposed of in accordance with the terms hereof.
10.5 Liability Limits. Notwithstanding anything to the contrary set
forth herein:
(a) Seller shall only be liable for Purchaser Losses arising
under Section 10.1(ii) only to the extent that any such Purchaser
Losses exceed, in the aggregate, Five Hundred Thousand Dollars
($500,000) (the "Threshold Amount") and such liability shall be only
for amounts which, in the aggregate, are in excess of the Threshold
Amount; and
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the total amount of Purchaser Losses for which Seller will be
responsible with respect to all Purchaser Losses arising under Section
10.1(ii) shall not exceed, in the aggregate, Ten Million Dollars
($10,000,000) (the "Liability Cap"). In no event will Seller be liable
for any special, incidental, indirect or consequential damages of any
kind or nature, regardless of the form of action through which such
damages are sought. In no event will Seller be liable to Purchaser for
lost profits resulting from an alleged breach of this Agreement, even
if under applicable law, such lost damages would not be considered
consequential or special damages. Purchaser acknowledges and agrees
that, except as expressly provided in Section 4 hereof, Seller makes no
representation or warranty whatsoever to Purchaser.
(b) Purchaser shall only be liable for Seller Losses arising
under Section 10.2(ii) only to the extent that any such Seller Losses
exceed, in the aggregate, the Threshold Amount, and such liability
shall be only for amounts which, in the aggregate, are in excess of the
Threshold Amount; and the total amount of Seller Losses for which
Purchaser will be responsible with respect to all Seller Losses arising
under Section 10.2(ii) shall not exceed, in the aggregate, the
Liability Cap. In no event will Purchaser be liable for any special,
incidental, indirect or consequential damages of any kind or nature,
regardless of the form of action through which such damages are sought.
In no event will Purchaser be liable to Seller for lost profits
resulting from an alleged breach of this Agreement, even if under
applicable law, such lost damages would not be considered consequential
or special damages. Seller acknowledges and agrees that, except as
expressly provided in Section 4 hereof, Purchaser makes no
representation or warranty whatsoever to Seller.
10.6 Compliance with Bulk Sales Laws. Purchaser and Seller hereby waive
compliance by Purchaser and Seller with the bulk sales law and any other similar
laws in any applicable jurisdiction in respect of the transactions contemplated
by this Agreement.
10.7 Investigations. The respective representations and warranties of
the parties hereto contained herein or in any Schedule hereto and the rights to
indemnification set forth in this Section 10 shall not be deemed waived or
otherwise affected by any investigation made by a party hereto. As of the date
of this Agreement, and, unless otherwise disclosed in writing to Seller, as of
the Closing Date, to the knowledge of Purchaser, no facts or circumstances exist
(that are not otherwise disclosed in this Agreement or the Schedules attached
hereto) that would cause the representations and warranties of Seller set forth
in Section 4 to be incorrect in any respect which would result in a Material
Adverse Effect. As used herein, the terms "knowledge of Purchaser" shall mean
the knowledge of: David A. Cohen, John A. Donohoe, John R. Emery, John M.
Suender and Bruce van Fossen.
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Section 11. Termination.
11.1 Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by mutual agreement of Seller and Purchaser;
(b) by Seller, if the conditions set forth in Sections 7 and 9
hereof (to the extent compliance or performance thereunder is not
within the control of Seller) shall not have been complied with or
performed and such noncompliance or nonperformance shall not have been
cured or eliminated (or by its nature cannot be cured or eliminated) by
Purchaser on or before May 31, 1999 (or such later date as may be
mutually agreed upon by the parties hereto); and
(c) by Purchaser, if the conditions set forth in Sections 7
and 8 hereof (to the extent compliance or performance thereunder is not
within the control of Purchaser) shall not have been complied with or
performed and such noncompliance or nonperformance shall not have been
cured or eliminated (or by its nature cannot be cured or eliminated) by
Seller on or before May 31, 1999 (or such later date as may be mutually
agreed upon by the parties hereto).
The calendar dates set forth in this Section 11.1 may be extended by mutual
agreement; provided, however the calendar dates set forth in this Section 11.1
will extend automatically up to June 30, 1999, if the Closing is delayed beyond
May 31, 1999, as a result of an inquiry, information request or similar
investigation by the Federal Trade Commission or the Department of Justice under
the HSR Act.
11.2 Specific Performance and Other Remedies. The parties hereto each
acknowledge that the rights of each party to consummate the transactions
contemplated hereby are special, unique and of extraordinary character, and
that, in the event that any party violates or fails or refuses to perform any
covenant or agreement made by it herein, the non-breaching party may be without
an adequate remedy at law. The parties each agree, therefore, that in the event
that either party violates or fails or refuses to perform any covenant or
agreement made by such party herein, the non-breaching party or parties may,
subject to the terms of this Agreement and in addition to any remedies at law
for damages or other relief, institute and prosecute an action in any court of
competent jurisdiction to enforce specific performance of such covenant or
agreement or seek any other equitable relief.
11.3 Effect of Termination. In the event of termination of this
Agreement pursuant to this Section 11, this Agreement shall forthwith become
void and there shall be no liability on the part of any party or its respective
members, officers, directors or stockholders, except for obligations under
Section 12.14, which shall survive the termination. Notwithstanding the
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foregoing, nothing contained herein shall relieve any party from liability for
any breach of any covenant or agreement in this Agreement occurring prior to the
termination of this Agreement.
Section 12. Miscellaneous.
12.1 Notices. All notices, communications and deliveries hereunder
shall be made in writing signed by the party making the same, shall specify the
Section hereunder pursuant to which it is given or being made, and shall be
delivered personally or by telecopy transmission or sent by registered or
certified mail or by any express mail or courier delivery service (with postage
and other fees prepaid) as follows:
To Purchaser:
c/o MedQuist Inc.
Five Greentree Centre
Suite 311
Marlton, NJ 08053
Attention: General Counsel
Telephone: (609) 596-8877
Telecopy: (609) 797-5949
To Seller:
c/o Lanier Worldwide, Inc.
2300 Parklake Drive, N.E.
Atlanta, GA 30345
Attention: General Counsel and Corporate Secretary
Telephone: (770) 621-1063
Telecopy: (770) 621-1073
or to such other representative or at such other address of a party as such
party hereto may furnish to the other parties in writing. Such notice shall be
effective upon the date of delivery or refusal of delivery, if sent by personal
delivery, registered, certified or express mail or courier delivery, or upon
transmission by telecopy transmission, if immediately confirmed by telephone or
electronic means.
12.2 Attachments. All Schedules and Exhibits attached hereto are hereby
incorporated into this Agreement and are hereby made a part hereof as if set out
in full in this Agreement.
12.3 Knowledge. "To the knowledge of Seller" or any similar phrase
contained in this Agreement shall mean the actual knowledge of the following
individuals: Michael Kelly, Dennis Mahoney and Gary McArthur.
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12.4 Assignment; Successors in Interest. No assignment or transfer by
any party of their respective rights and obligations hereunder prior to the
Closing shall be made except with the prior written consent of the other party
hereto. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and each of their respective permitted successors and
assigns.
12.5 Number; Gender. Whenever the context so requires, the singular
number shall include the plural and the plural shall include the singular, and
the gender of any pronoun shall include the other genders.
12.6 Captions. The titles, captions and table of contents contained in
this Agreement are inserted herein only as a matter of convenience and for
reference and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof. Unless otherwise specified to
the contrary, all references to Sections are references to Sections of this
Agreement and all references to Exhibits and Schedules are references to
Exhibits and Schedules to this Agreement.
12.7 Controlling Law; Integration; Amendment. This Agreement shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Delaware without reference to Delaware choice of law rules. Except
as hereinafter provided, this Agreement supersedes all negotiations, agreements
and understandings among the parties with respect to the subject matter hereof.
This Agreement, together with the Confidentiality Agreement and any agreements
entered into on or subsequent to the date hereof, constitute the entire
agreement among the parties hereto. This Agreement may not be amended, modified
or supplemented except by written agreement of Seller and Purchaser. No
provision of this Agreement shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority or by any board of arbitrators by reason of such party or its counsel
having or being deemed to have structured or drafted such provision.
12.8 Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive any
provision of law which renders any such provision prohibited or unenforceable in
any respect.
12.9 Counterparts. This Agreement may be executed in counterparts each
of which shall be deemed an original and all of which together shall constitute
one and the same agreement.
12.10 Enforcement of Certain Rights. Nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon or give any
person, employee, firm or corporation other than the parties hereto, and their
permitted successors or assigns, any rights,
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remedies, obligations or liabilities under or by reason of this Agreement, or
result in such person, firm or corporation being deemed a third party
beneficiary of this Agreement.
12.11 Waiver. Any agreement on the part of a party hereto to any
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. A waiver by one party of the performance of any
covenant, agreement, obligation, condition, representation or warranty shall not
be construed as a waiver of any other covenant, agreement, obligation,
condition, representation or warranty. A waiver by any party of the performance
of any act shall not constitute a waiver of the performance of any other act or
an identical act required to be performed at a later time.
12.12 Arbitration; Legal Proceedings.
(a) Any controversy, claim or question of interpretation in
dispute between Purchaser, on one hand, and Seller, on the other hand
(Purchaser, on one hand, and Seller, on the other hand, each being
referred to as a "party") arising out of or relating to this Agreement
or the breach thereof, except such as may arise under Section 2.3
hereof, shall be finally settled by arbitration in Chicago, Illinois,
under the then-effective Commercial Arbitration Rules of the American
Arbitration Association as modified by this Agreement, and judgment on
the award rendered by the arbitrators may be entered in any court
having jurisdiction. The award rendered by the arbitrators shall be
final and binding on the parties and not subject to further appeal.
Such arbitration can be initiated by written notice by either party
(the "Claimant") to the other party, which notice shall identify the
Claimant's selected arbitrator. The party receiving such notice (the
"Respondent") shall identify its arbitrator within ten (10) business
days following its receipt of such notice. The arbitrator selected by
the Claimant and the arbitrator selected by the Respondent shall,
within ten (10) business days of their appointment, select a third
neutral arbitrator. In the event that they are unable to do so, either
party may request the American Arbitration Association to appoint the
third neutral arbitrator. The arbitrators shall have the authority to
award any remedy or relief that a court in Delaware could order or
grant, including, without limitation, specific performance of any
obligation created under this Agreement, the issuance of injunctive or
other provisional relief, or the imposition of sanctions for abuse or
frustration of the arbitration process. The arbitration award will be
in writing and specify the factual and legal basis for the award.
(b) It is the intent of the parties that any arbitration shall
be concluded as quickly as reasonably practicable. Unless the parties
otherwise agree, once commenced, the hearing on the disputed matters
shall be held four days a week until concluded with each hearing date
to begin at 9:00 a.m. and to conclude at 5:00 p.m. The arbitrators
shall use all reasonable efforts to issue the final award or awards
within a period of five business days after closure of the proceedings.
Failure of the arbitrators to meet the time limits of this Section
12.12(b) shall not be a basis for challenging the award.
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(c) Each party shall bear its own costs incurred in the
proceedings and one-half of the fees and expenses of the arbitrators.
(d) Each party hereto hereby agrees that any legal proceeding
instituted to enforce an arbitration award hereunder will be brought in
the U.S. federal or state courts situated in Illinois, and hereby
submits to personal jurisdiction therein and irrevocably waives any
objection as to venue therein, and further agrees not to plead or claim
in any such court that any such proceeding has been brought in an
inconvenient forum. Seller hereby designates, appoints and empowers
Michael Kelly, General Counsel and Corporate Secretary of Lanier,
presently having offices at 2300 Parklake Drive, N.E., Atlanta, GA
30345, as such person's true and lawful agent for service of process to
receive and accept on Purchaser's behalf service of process in any such
proceeding brought in any such courts. Purchaser hereby designates,
appoints and empowers John M. Suender, Senior Vice President, General
Counsel and Secretary of MedQuist, presently having offices at Five
Greentree Centre, Suite 311, Marlton, NJ 08053, as such Purchaser's
true and lawful agent for service of process to receive and accept on
Purchaser's behalf service of process in any such proceeding brought in
any such courts. Each of the foregoing persons agrees that the failure
of the process agent appointed by such person to give notice of process
to such person shall not impair or affect the validity of service upon
such agent or of any judgment based thereon, and each such person
irrevocably consents to the service of process in any such proceeding
by the mailing of copies thereof by certified mail, postage prepaid, to
such person's address for notices under this Agreement. Nothing herein
shall preclude any of the parties hereto from serving process in any
other manner or bringing suit or taking other legal action in any other
jurisdiction.
12.13 Exclusive Remedy. The sole and exclusive remedy of Seller with
respect to Seller Losses shall be to seek indemnification under this Agreement
in accordance with the terms hereof. The sole and exclusive remedy of Purchaser
with respect to Purchaser Losses shall be to seek indemnification under this
Agreement in accordance with the terms hereof.
12.14 Costs and Expenses. Except as otherwise expressly provided
herein, Seller will bear all costs and expenses (including, without limitation,
any brokers or finders fees and any attorneys and accountants fees) incurred by
it in connection with the transactions contemplated by this Agreement, and
Purchaser will bear all such costs and expenses incurred by Purchaser in
connection herewith; provided, however, Purchaser will pay any filing fee
required to be paid pursuant to the HSR Act.
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement as of the date and year first above written.
MEDQUIST TRANSCRIPTIONS, LTD.
By: ________________________________
Name:___________________________
Title:__________________________
LANIER PROFESSIONAL SERVICES, INC.
By: ________________________________
Name:___________________________
Title:__________________________
HARRIS SOUTHWEST PROPERTIES, INC.
By: ________________________________
Name:___________________________
Title:__________________________
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