AGREEMENT AND PLAN OF REORGANIZATION
dated as of the 14th day of October, 1996
by and among
EXPRESSPOINT TECHNOLOGY SERVICES, INC.,
AMCOM ACQUISITION CORP.
and
AMCOM CORPORATION
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
the 14th day of October, 1996 by and among EXPRESSPOINT TECHNOLOGY SERVICES,
INC., a Delaware Corporation ("ETS"), AMCOM ACQUISITION CORP., a Minnesota
corporation and a wholly-owned subsidiary of ETS ("AAC"), and AMCOM CORPORATION,
a Minnesota corporation (the "COMPANY").
RECITALS
A. ETS is a corporation duly organized and existing under the laws of
the State of Minnesota, having been incorporated on April 23, 1996, AAC is a
corporation duly organized and existing under the laws of the State of
Minnesota, having been incorporated on October 15, 1996 as a wholly-owned
subsidiary of ETS, and both ETS and AAC have been organized solely for the
purpose of completing the transactions set forth herein.
B. The respective Boards of Directors of ETS, AAC and the COMPANY each
deem it advisable and in the respective best interests of ETS, AAC and the
COMPANY and their respective stockholders that AAC merge with and into the
COMPANY (AAC and the COMPANY being hereinafter referred to as the "Constituent
Corporations"), pursuant to this Agreement and the applicable provisions of the
laws of the State of Minnesota, such transaction sometimes being herein called
the "Merger";
C. ETS and DELTA ACQUISITION CORP., a Minnesota corporation and a
wholly-owned subsidiary of ETS ("DAC"), have entered into a separate agreement
substantially similar to this Agreement with Delta Parts, Inc. (the "Delta
Agreement") in order to acquire Delta Parts, Inc. ("Delta;" which, together with
the COMPANY, are collectively referred to as the "Founding Companies").
D. This Agreement, the Delta Agreement and the IPO of ETS Stock (as
defined in Section 4 hereof) constitute the "ETS Plan of Organization."
E. The Boards of Directors of ETS, AAC, DAC and each of the Founding
Companies have approved and adopted the ETS Plan of Organization as an
integrated plan to transfer the capital stock of the Founding Companies to ETS
as a tax-free transfer of property under Section 351 of the Internal Revenue
Code of 1986, as amended (the "Code").
F. In consideration of the agreements of Delta pursuant to the Amcom
Agreement, the Board of Directors of the COMPANY has approved this Agreement as
part of the ETS Plan of Organization in order to transfer the capital stock of
the COMPANY to ETS.
TERMS AND CONDITIONS
In consideration of the premises and of the mutual agreements,
representations, warranties, provisions and covenants contained herein, the
parties hereto agree as follows:
1. THE MERGER
1.1 Delivery and Filing of Articles of Merger. The Constituent Corporations
will cause Articles of Merger with respect to the Merger (the "Articles of
Merger") to be signed, verified and delivered to the Secretary of State of the
State of Minnesota on or before the "Consummation Date," as defined in Section
4.
1.2 Effective Time of the Merger. The "Effective Time of the Merger" shall
be the Consummation Date as defined in Section 4. At the Effective Time of the
Merger, the separate existence of AAC shall cease. The COMPANY shall be the
surviving party in the Merger, as a wholly-owned subsidiary of ETS, and is
hereinafter sometimes referred to as the "Surviving Corporation".
1.3 Articles of Incorporation, By-laws and Board of Directors of Surviving
Corporation. At the Effective Time of the Merger:
(i) The Articles of Incorporation of the COMPANY shall be the Articles
of Incorporation of the Surviving Corporation until changed as provided by law.
(ii) The By-laws of the COMPANY shall be the By-laws of the Surviving
Corporation until they shall thereafter be duly amended.
(iii) The Board of Directors of the Surviving Corporation shall consist
of the following persons:
Del X. Xxxxxxx Xxxx X. Xxxxx
Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxx
The Board of Directors of the Surviving Corporation shall hold office
subject to the provisions of the laws of the State of Minnesota and of the
Articles of Incorporation and By-laws of the Surviving Corporation.
(iv) The officers of the Surviving Corporation shall be the persons set
forth on Schedule 1.3 (iv) hereto, each of such officers to serve at the
discretion of the Surviving Corporation's Board of Directors.
1.4 Certain Information With Respect to the Capital Stock of The COMPANY,
ETS and AAC. The respective designations and numbers of outstanding shares and
voting rights of each class of outstanding capital stock of the COMPANY, ETS and
AAC as of the date of this Agreement are as follows:
2
(i) The authorized capital stock of the COMPANY consists of 2,500,000
shares of common stock, par value $.01 ("COMPANY Stock"), of which 1,108,647
shares are issued and outstanding.
(ii) The authorized capital stock of ETS consists of 15,000,000 shares
of common stock, par value $.01 ("ETS Stock"), of which 100 shares are issued
and outstanding and 904,892 shares which are subject to outstanding options.
(iii) The authorized capital stock of AAC consists of 100 shares of
common stock, $.01 par value ("AAC Stock"), of which 100 shares are issued and
outstanding.
1.5 Effect of Merger. At the Effective Time of the Merger, the effect of the
merger shall be as provided in the applicable provisions of the Business
Corporation Act of the State of Minnesota (the "Minnesota BCA"). Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time of the Merger (i) all the rights, privileges, powers and franchises, of a
public as well as of a private nature, and all property, real, personal and
mixed, and all debts due on whatever account, including subscriptions to shares,
and all other choses in action, and all and every other interest of or belonging
to or due to the COMPANY or AAC shall be taken and deemed to be transferred to,
and vested in, the Surviving Corporation without further act or deed; and all
property, privileges, powers and franchises and all and every other interest
shall be thereafter as effectually the property of the Surviving Corporation, as
they were of COMPANY and AAC, and (ii) the Surviving Corporation shall
thenceforth be responsible and liable for all the debts, liabilities, duties and
obligations of the COMPANY and AAC and neither the rights of creditors nor any
liens upon the property of the COMPANY or AAC shall be impaired by the Merger,
and may be enforced against the Surviving Corporation.
2. CONSIDERATION; CONVERSION OF STOCK
2.1 Manner of Conversion. The manner of converting the shares of COMPANY
Stock and AAC Stock, issued and outstanding immediately prior to the Effective
Time of the Merger, respectively, into shares of common stock of the Surviving
Corporation, shall be as follows:
As of the Effective Time of the Merger:
(i) All of the shares of COMPANY Stock issued and outstanding
immediately prior to the Effective Time of the Merger, by virtue of the Merger
and without any action on the part of the holder thereof, automatically shall be
converted into, and deemed to represent, that number of shares of ETS Stock
determined pursuant to Sections 2.2 and 2.3 hereof.
(ii) All shares of AAC Stock issued and outstanding immediately prior to
the Effective Time of the Merger shall, by virtue of the Merger and without any
action on the
3
part of the holder thereof or any Constituent Corporation, be converted into,
and deemed to represent, an equal number of shares of Common Stock of the
COMPANY, such that the COMPANY shall be a wholly-owned subsidiary of ETS.
(iii) All ETS Stock received by the stockholders of the COMPANY (the
"STOCKHOLDERS") as of the Effective Time of the Merger shall, except for
restrictions on resale or transfer described in Section 15 hereof, have the same
rights as all other shares of outstanding ETS Stock. All voting rights of such
ETS Stock received by the STOCKHOLDERS shall be fully exercisable by the
STOCKHOLDERS and the STOCKHOLDERS shall not be deprived nor restricted in
exercising those rights.
2.2 Calculation of ETS Shares. Each share of COMPANY Stock shall be
converted, as a result of the Merger, into one share of ETS Stock, subject to
adjustment as set forth in Section 2.3 hereof.
2.3 Adjustment of ETS Shares. In the event that, upon the consummation of
the ETS Plan of Organization, the STOCKHOLDERS and those who have the right to
purchase (pursuant to options granted to Amcom employees under the employment
agreements contemplated by Section 8.9 hereof), in the aggregate, less than
49.9% of the total number of ETS shares issued or subject to a right to
purchase, without giving effect to the IPO, then the STOCKHOLDERS shall receive,
on a pro rata basis, additional Merger consideration (in shares of ETS Stock)
such that they own, in the aggregate, or have a right to purchase, that number
of shares of ETS Stock which represents not less than 49.9% of the total number
of ETS shares issued or subject to a right to purchase, without giving effect to
the IPO.
2.4 Cash Consideration. The Stockholders shall also receive, at the
Effective Time of the Merger, $6,300,000 in cash, to be distributed on a pro
rata basis to the stockholders of the Company.
3. DELIVERY OF SHARES
3.1 At or after the Effective Time of the Merger and at Closing:
(i) The STOCKHOLDERS, as the holders of all outstanding certificates
representing shares of COMPANY Stock, shall, upon surrender of such
certificates, be entitled to receive the number of shares of ETS Stock
calculated pursuant to Sections 2.2 and 2.3 hereof.
(ii) Until the certificates representing the COMPANY Stock have been
surrendered by the STOCKHOLDERS and replaced by the ETS Stock, the certificates
for COMPANY Stock shall, for all corporate and legal purposes be deemed to
evidence the right to receive shares of ETS Stock, as set forth in Sections 2.2
and 2.3 hereof.
3.2 The STOCKHOLDERS shall deliver to ETS at Closing the certificates
representing COMPANY Stock, duly endorsed in blank by the STOCKHOLDERS, or
4
accompanied by blank stock powers, and with all necessary transfer tax and other
revenue stamps, acquired at the STOCKHOLDERS' expense, affixed and canceled. The
STOCKHOLDERS agree promptly to cure any deficiencies with respect to the
endorsement of the certificates or other documents of conveyance with respect to
such COMPANY Stock or with respect to the stock powers accompanying any COMPANY
Stock.
4. CLOSING
The consummation of the Merger and conversion and delivery of shares
referred to in Section 3 hereof and the other transactions contemplated by this
Agreement (hereinafter referred to as the "Closing") shall take place at the
offices of Xxxxxxx, Street and Deinard, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx, contemporaneously with the closing of the initial public offering of
ETS Stock (the "IPO") described in the Registration Statement referred to in
Section 8.6 (the "Registration Statement"), or at such other time, place and
date as ETS, the COMPANY and the STOCKHOLDERS may mutually agree, which date
shall be referred to as the "Consummation Date" or the "Closing Date."
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
(A) Representations and Warranties of the COMPANY
The COMPANY represents and warrants that all of the following
representations and warranties in this Section 5(A) are true at the date of this
Agreement and, subject to Section 7.8 hereof, shall be true at the time of
Closing and that such representations and warranties as made at the time of
Closing shall survive the Closing for a period of twelve (12) months from the
Consummation Date (which date is hereinafter called the "Expiration Date"),
except that (i) the warranties and representations set forth in Section 5.16
hereof shall survive until such time as the limitations period has run for all
tax periods ended prior to the Consummation Date, which shall be deemed to be
the Expiration Date for Section 5.16 and (ii) solely for purposes of Section
11.1(iii) hereof, and solely to the extent that ETS actually incurs liability
under the Securities Act of 1933, as amended (the "1933 Act"), the Securities
Exchange Act of 1934, as amended (the "1934 Act"), or any other Federal or state
securities laws, the representations and warranties set forth herein shall
survive until the expiration of any applicable limitations period.
5.1 Due Organization. The COMPANY is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and is duly authorized and qualified to do business under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted except where the
failure to be so authorized or qualified would not have a material adverse
effect on the business of the COMPANY taken as a whole.
5
5.2 Due Authorization. The COMPANY has full power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. All acts and other proceedings required to be taken by or on the part of
each of the COMPANY to authorize it to carry out this Agreement and the
transactions contemplated hereby have been duly and properly taken or will be
duly and properly taken prior to the Closing Date. This Agreement has been duly
executed and delivered by the COMPANY and constitutes the legal, valid and
binding obligation of it, enforceable in accordance with its terms.
5.3 Corporate Documents.
(a) True, correct and complete copies of the Articles of Incorporation
and By-laws of the COMPANY, as amended to date and currently in effect, have
been delivered to ETS.
(b) The books of account, asset ledgers, stock ledgers and related
records of the COMPANY are complete and accurate in all material respects, have
been maintained on a consistent basis and fairly reflect all of its income,
expenses, assets, liabilities, obligations and commitments.
(c) The minute books of the COMPANY contain the records of all of the
official actions of its board of directors and its shareholders and there are no
material omissions therefrom or misstatements therein.
5.4 Capitalization. The authorized capitalization of the COMPANY is set
forth in Section 1.4(i) hereof. The outstanding shares of the capital stock of
the COMPANY were duly authorized and validly issued, and are fully paid and
nonassessable and such shares were sold in compliance with all applicable state
and federal laws concerning the issuance of securities. No stockholder or other
person has any preemptive right, right of first refusal or co-sale rights with
respect to the issue or sale of any of such stock that has not been waived by
such stockholder. All of the outstanding shares of capital stock of the COMPANY
are owned free and clear of all security interests, charges, liens, claims,
encumbrances and defects of title and were not issued in violation of any
preemptive right. There are no outstanding options, warrants or other rights,
commitments or arrangements, written or oral, to purchase or otherwise acquire
any authorized but unissued shares of capital stock of the COMPANY or any
security directly or indirectly convertible into or exchangeable for any capital
stock of the COMPANY and none of the capital stock of any Company is reserved
for any purpose. The COMPANY has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its capital stock or any interests
therein or to pay any dividend or make any distribution in respect thereof.
5.5 No Violation. The COMPANY is not in material violation of any of the
provisions of its Articles of Incorporation or By-laws or any other governing
documents, all as amended to date, and is not in default and will not, with the
giving of notice or lapse of time or both, be in default in the performance or
observance of any obligation, agreement,
6
covenant, or condition contained in any bond, debenture, note or other evidence
of indebtedness or in any material contract, indenture, mortgage, loan
agreement, franchise agreement, joint venture or other agreement or instrument
where such default could have a material adverse effect on the business,
condition (financial or other), results of operations, properties, assets, or
liabilities of it. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not materially
conflict with or result in any material breach or violation of, or constitute a
material default (or an event which with notice or lapse of time or both would
become a default) under, or give rise to any right of termination, cancellation
or acceleration under, (a) the Articles of Incorporation or By-laws of the
COMPANY; (b) any statute, rule, regulation, order or decree of any public body
or authority by which the COMPANY or any of its properties or assets, may be
bound; (c) any indenture, mortgage, agreement or other instrument to which the
COMPANY is a party or by which any of it or its properties or assets may be
bound or affected; or (d) any permit, franchise or license held by the COMPANY
or any judgment, decree, order, regulation or rule of any court or governmental
or regulatory authority applicable to the COMPANY result in the creation of a
lien, charge or encumbrance on any of the properties or assets of the COMPANY.
5.6 No Consent. No consent of any person or entity is required to be
obtained by the COMPANY in order for the COMPANY to execute, deliver and perform
this Agreement and the transactions contemplated hereby or for the COMPANY to
undergo a change of control and no approval, authorization, consent, order or
action of, or filing with, any court or governmental or regulatory authority is
required to be obtained by the COMPANY in connection with the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby, except for consents which have been obtained or will be obtained by the
closing.
5.7 Financial Statements. The COMPANY has delivered to ETS true, complete
and correct copies of its financial statements, which include the audited
financial statements of the COMPANY as of and for the three years ended May 31,
1996 (the "Balance Sheet Date"). Such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods indicated (except as may be indicated therein or in the
notes thereto) and fairly present the financial condition, assets and
liabilities (whether accrued, absolute, contingent or otherwise) and results of
operations as of the dates thereof. Except as set forth in the interim or
monthly financial statements, since May 31, 1996, there has not been any
material adverse change in, and there is no fact or circumstance which will
materially adversely affect, the assets or liabilities, or the business or
condition, financial or otherwise, or the results of operations, of the COMPANY.
5.8 No Changes. Except as set forth on Schedule 5.8 hereto, since May 31,
1996, the COMPANY has not:
(a) Incurred any obligations or liabilities of any nature (whether
absolute, accrued, contingent or otherwise and whether due or to become due) in
excess of
7
$50,000, other than items incurred in the ordinary course of business consistent
with past practice or for which insurance coverage is in effect.
(b) Permitted, allowed or caused any of its property or assets to be
subjected to any mortgage, pledge, lien, encumbrance, restriction or charge of
any kind, other than in the ordinary course of business.
(c) Waived any claims or rights of substantial value, other than in the
ordinary course of business.
(d) Sold, transferred or otherwise disposed of any of its material
assets, other than in the ordinary course of business.
(e) Suffered any loss which would materially adversely affect the assets
or liabilities, or the business or condition (financial or otherwise), or the
results of operations.
(f) Agreed, whether in writing or otherwise, to take any of the actions
set forth in this Section 5.8.
(g) Changed its accounting principles or methods.
(h) Made any declaration, payment or setting aside for payment of any
dividend or any redemption purchase or other acquisition of any shares of
capital stock or securities.
(i) Made any return of any capital or other distribution of assets to
STOCKHOLDERS.
(j) Experienced any other event or condition of any character materially
and adversely affecting the financial condition, business or results of
operations.
(k) Conducted its business other than substantially in the ordinary
course and in a manner consistent with past practice.
5.9 Licenses. All registrations, permits, authorizations, or licenses (the
"Rights") necessary for the operation of the COMPANY'S business are in full
force and effect and there is no reason to believe that any of the Rights will
be revoked or is subject to hearings or proceedings by any regulatory authority
and there is no fact or circumstance presently existing which would, and the
business of the COMPANY has been and is currently being conducted in such manner
that will not, subject any of the Rights to revocation, forfeiture or
restriction, nor to any proceedings for revocation, forfeiture or restriction.
The COMPANY is not in material default under, or in material violation of, the
terms of any of the Rights.
8
5.10 No Violation of Law. The business of the COMPANY is not being conducted
in material violation of any applicable federal, state, local or foreign law,
ordinance, regulation, judgment, decree, injunction or order or requirement of
any court or other governmental entity. The COMPANY has not been authorized to
receive or make, and is not receiving or making, any bribe, kickback, or other
illegal payment with respect to the business conducted by such company. No
stockholder, officer, director, employee, or agent of the COMPANY has been
authorized to receive or make, nor is any such person receiving or making, any
bribe, kickback, or other illegal payment.
5.11 Litigation.
(a) No investigation or review by any federal, state, local or foreign
body or authority with respect to the COMPANY is pending or threatened, nor has
any such authority or agency indicated an intention to conduct the same and
there is no action, suit, arbitration or proceeding pending or threatened
against or affecting any such company before any federal, state, local, foreign
or other governmental department, commission, board, bureau, agency,
instrumentality or court. There is no basis for any such suit, action,
arbitration, proceeding, investigation or review. There are no judgments,
consent decrees, injunctions or other judicial or administrative mandates
outstanding against the COMPANY.
(b) The COMPANY is not aware of any circumstances which may result in
any material claims being made against the COMPANY, or any of its present or
past officers or employees, which claims are of the nature and type that would
not be covered by any such company's existing errors and omissions insurance
policy.
5.12 Contracts. The COMPANY has made available to ETS copies of all material
agreements, contracts, arrangements and understandings, whether written or oral,
to which it is a party, including, without limiting the generality of the
foregoing, employment contracts; plans or understandings regarding employee
benefits, stock options, severance or bonuses; leases; advisory and management
agreements; agency agreements or arrangements for the provision of services;
commission agreements; and reinsurance agreements and treaties. All of such
agreements, contracts, arrangements and understandings are in full force and
effect without any material default or breach thereof and no event has occurred
which, with the giving of notice or the passage of time or both, would
constitute a material breach or default under any of such contracts or
agreements.
5.13 Subsidiaries. The COMPANY has no subsidiaries and no investment or
ownership interest in any other corporation, joint venture, partnership or other
business entity and has no obligation to make any such investment.
5.14 Real Property. All real property owned by the COMPANY is held free and
clear of any material lien, claim, encumbrance or defect of title and the
COMPANY is not in material default under any lease.
9
5.15 Guaranties. Except as described in Schedule 5.15 hereto, there are no
material contracts or commitments by the COMPANY guaranteeing the payment or
performance of others, or whereby it is, or may be, in any way liable with
respect to the obligations of any other person, firm, corporation or other
entity.
5.16 Taxes. All federal, state, county, municipal and foreign tax returns,
reports and declarations of the COMPANY, including federal excise tax returns,
if any, which are required to be filed prior to the date hereof have been duly
filed, and no taxes which are shown thereon to be due or any other taxes,
assessments and other governmental charges imposed by law upon each such company
or any of its properties, assets, income, receipts, payrolls, transactions,
purchases, sales, capital, net worth or franchises which have become due and
payable as shown therein are delinquent. Neither the Internal Revenue Service
nor any other taxing authority is now asserting or threatening to assert against
any such company any deficiency or claim for additional taxes or interest
thereon or penalties in connection therewith. No tax returns of the COMPANY has
been or is currently under audit by the Internal Revenue Service or by the tax
authorities of any jurisdiction, and the COMPANY has not granted any waiver of
any statute of limitations with respect to, or any extension of a period for the
assessment of, any federal, state, county, municipal or foreign tax except as
the period for such assessment may be extended in conjunction with an authorized
extension of time to file an initial tax return. The accruals and reserves for
taxes reflected in the balance sheets of each such company included in the
Financial Statements are adequate to cover all taxes due and payable or
accruable (including interest and penalties, if any, thereon) as a result of its
operations and investment for all periods prior to the date hereof.
5.17 Employee Benefits.
(a) Copies of each "employee benefit plan," as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974 ("ERISA"), for the
COMPANY which (i) is subject to any provision of ERISA and (ii) is maintained,
administered or contributed to by the COMPANY or any affiliate (as defined
below) and covers any employee or former employee of the COMPANY or any
affiliate or under which the COMPANY or any affiliate has any liability (and, if
applicable, related trust agreements) and all amendments thereto and summary
plan descriptions thereof and any material employee communications with respect
to them have been made available to ETS, together with the three most recent
annual reports (Form 5500 including, if applicable, Schedule B thereto) prepared
in connection with any such plan. Such plans are hereinafter referred to
collectively as the "Employee Plans." For purposes of this Section, "affiliate"
of any person means any other person which, together with any such company, is
treated as a single employer under Section 414 of the Code. Neither the COMPANY
nor any affiliate has terminated or caused to be terminated in whole or in part
or merged any Pension Plan during the period since June 1, 1990. The COMPANY has
provided ETS with complete age, salary, service and related data as of May 31,
1996 for employees and former employees of the COMPANY and any affiliate covered
as of the Closing Date under the Pension Plans.
10
(b) Except as set forth in Schedule 5.17 hereto:
(i) No Employee Plan constitutes a "multiemployer plan," as defined
in Section 3(37) of ERISA (a "Multiemployer Plan"); there are no reserves,
assets, surpluses or prepaid premiums under any Employee Plan which is a welfare
plan as defined in ERISA Section 3(1); no Employee Plan is subject to Title IV
of ERISA; and there are no unfunded benefit obligations arising in any
jurisdiction which are not accounted for by reserves shown on the Balance Sheet.
Neither the COMPANY nor any disqualified person, as defined in Section 4975 of
the Code, has engaged in any "prohibited transaction," as defined in Section 406
of ERISA or Section 4975 of the Code, with respect to any Employee Plan which is
covered by Title I of ERISA, excluding transactions effected pursuant to a
statutory or administrative exemption. Nothing done or omitted to be done and no
transaction or holding of any asset under or in connection with any Employee
Plan has or will make the COMPANY or any affiliate, officer or director of any
such company subject to any liability under Title I of ERISA or liable for any
tax pursuant to Section 4975 of the Code or could have a material adverse effect
on the business or condition (financial or otherwise) of the COMPANY.
(ii) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is or was the subject of a favorable Internal Revenue
Service determination with respect to such qualification, and the COMPANY has
furnished to ETS copies of the most recent such determination letters, and
nothing has occurred since the date thereof that would have an adverse effect on
such qualification. There are no accrued liabilities under any Employee Plan
which have not been fully provided for by contributions to such Employee Plans.
Each Employee Plan has been maintained in substantial compliance with its terms
and with the requirements prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code, which are
applicable to such Employee Plans, including without limitation those
requirements necessary to maintain its qualification and the continuation of
coverage requirements of Code Section 4980B or ERISA Sections 601-608. Other
than for claims in the ordinary course for benefits under the Employee Plans,
there are no suits, actions, claims or proceedings pending or threatened which
would result in any liability with respect to any such Employee Plan of the
COMPANY or any of its affiliates that would have a material adverse effect on
the business or condition (financial or otherwise) of such company.
(iii) There is no contract, agreement, plan or arrangement covering
any employee or former employee of the COMPANY or any affiliate that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G or Section
162(a)(1) of the Code.
(iv) There has been no amendment to, written interpretation or
announcement (whether or not written) by any such company or any of its
affiliates relating to, or change in employee participation or coverage under,
any Employee Plan or Benefit Arrangement which would increase materially the
expense (whether or not such expense is recognized under generally accepted
accounting principles) of maintaining
11
such Employee Plan or Benefit Arrangement above the level of the expense
incurred in respect thereof for the fiscal year ended on May 31, 1996.
(c) The COMPANY has provided ETS with a list of each employment,
severance or other similar contract, arrangement or policy and each plan or
arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits or
for deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits in effect on the Closing Date which (i) is
not an Employee Plan; (ii) is entered into, maintained or contributed to, as the
case may be; and (iii) covers any employee or former employee. Such contracts,
plans and arrangements as are described above, copies or descriptions of all of
which have been furnished previously to the Buyer are hereinafter referred to
collectively as the "Benefit Arrangements." Each Benefit Arrangement has been
maintained in substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations which are
applicable to such Benefit Arrangement. The COMPANY has no liability with
respect to post-retirement medical or death benefits for retired employees other
than death benefits under any Pension Plan.
5.18 Prospective Change. There are no existing events, actions or
developments which may materially adversely affect the assets or liabilities,
business or condition (financial or otherwise) of the COMPANY.
5.19 Liabilities. The COMPANY has no material liabilities or obligations
(whether absolute, accrued, contingent or otherwise), whether or not required by
generally accepted accounting principles to be reflected on such company's
balance sheet as of May 31, 1996, except (i) liabilities, obligations or
contingencies which are accrued or reserved against on such balance sheet or
reflected in the notes thereto, and (ii) normally recurring liabilities incurred
after May 31, 1996 in the ordinary course of business consistent with past
practice.
5.20 Related Transactions. No director, officer, employee, shareholder or
partner of the COMPANY nor any member of the immediate family of any such
person, is presently a party to any material transaction with any such company
including, but not limited to, any contract, agreement or other arrangement
providing for the furnishing of services by, or rental of real or personal
property from, or otherwise requiring payments to, any of such persons.
5.21 Accounts Payable. The COMPANY has delivered to ETS a true, correct and
complete aged list of all accounts payable as of June 30, 1996. No account
payable that has arisen subsequent to such date has been otherwise than in the
ordinary course of business.
5.22 Accounts Receivable. All accounts receivable, reflected on balance
sheets of the COMPANY as of May 31, 1996, and all accounts receivable arising
12
subsequent to such date, have arisen in the ordinary course of business of each
such company, represent valid obligations due to the COMPANY and, subject to an
anticipated uncollectible amount reserved for on the balance sheet of the
COMPANY as of the Closing Date, have been collected or are collectible in the
ordinary course of business of the COMPANY in the aggregate recorded amounts
thereof in accordance with their terms.
5.23 Insurance. All policies or binders of fire, liability, product
liability, workmen's compensation, vehicular, errors and omissions and other
insurance held by or on behalf of the COMPANY are valid and enforceable in
accordance with their terms, are in full force and effect, and insure against
risks and liabilities to the extent and in the manner generally deemed
appropriate and sufficient by the management of the COMPANY. The COMPANY is not
in material default with respect to any provision contained in any such policy
or binder and has not failed to give any notice or present any claim under any
such policy or binder in due and timely fashion. There are no outstanding unpaid
claims under any such policy or binder. The COMPANY has not received notice of
cancellation or non-renewal of any such policy or binder. The COMPANY has no
knowledge of any inaccuracy in any application for such policies or binders, any
failure to pay premiums when due or any similar state of facts that might form
the basis for termination for any such insurance. The COMPANY has not received
any notice from any of its insurance carriers that any insurance premiums will
be materially increased in the future or that any insurance coverage will not be
available in the future on substantially the same terms as now in effect.
5.24 Environmental Matters. The COMPANY has complied materially with and is
in material compliance with all federal, state, local and foreign statutes
(civil and criminal), material laws, ordinances, regulations, rules, notices,
permits, judgments, orders and decrees applicable to any of them or any of their
respective properties, assets, operations and businesses relating to
environmental protection (collectively "Environmental Laws") including, without
limitation, Environmental Laws relating to air, water, land and the generation,
storage, use, handling, transportation, treatment or disposal of Hazardous
Wastes and Hazardous Substances (as such terms are defined in any applicable
Environmental Law), (ii) the COMPANY has obtained and adhered to all necessary
permits and other approvals necessary to treat, transport, store, dispose of and
otherwise handle Hazardous Wastes and Hazardous Substances and have reported, to
the extent required by all Environmental Laws, all past and present sites owned
and operated by the COMPANY where Hazardous Wastes or Hazardous Substances have
been treated, stored, disposed of or otherwise handled; (iii) there have been no
releases or threats of releases (as defined in Environmental Laws) at, from, in
or on any property owned or operated by the COMPANY except as permitted by
Environmental Laws; (iv) the COMPANY knows of no on-site or off-site location to
which the COMPANY has transported or disposed of Hazardous Wastes and Hazardous
Substances or arranged for the transportation of Hazardous Wastes and Hazardous
Substances, which site is the subject of any federal, state, local or foreign
enforcement action or any other investigation which could lead to any claim
against the COMPANY or ETS for any clean-up cost, remedial work, damage, to
natural resources or personal injury, including, but not limited
13
to any claim under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended; and (v) the COMPANY has no contingent
liability in connection with any release of any Hazardous Waste or Hazardous
Substance into the environment.
5.25 Representations Complete. No representation or warranty made to ETS in
this Agreement, the Schedules, or any other written statement or certificate
furnished or to be furnished to ETS in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements contained therein not misleading.
5.26 Due Diligence. The COMPANY has provided, or will by the Closing Date
have provided, true and complete copies of all documents and information
requested by ETS and no document or information provided to ETS contains a
misrepresentation of a material fact or omits to state a material fact necessary
to make the statements made therein not misleading.
5.27 Disclosure. (a) This Agreement, including the schedules hereto,
together with all other documents information made available to ETS and its
representatives pursuant hereto, present fairly the business and operations of
the COMPANY. The COMPANY's rights under the documents delivered pursuant hereto
would not be materially adversely affected by, and no statement made herein
would be rendered untrue by, and any other document to which the COMPANY is a
party, or by which its properties are subject, or by any other fact or
circumstance regarding the COMPANY that is not disclosed pursuant hereto.
(b) This Agreement, including the schedules hereto, shall be made
available to Delta, and Delta shall be a third-party beneficiary of the
representations and warranties contained herein, in accordance with the
provisions of Section 16.2 hereof.
(c) If, prior to the 25th day after the date of the final prospectus of
ETS utilized in connection with the IPO, the COMPANY becomes aware of any fact
or circumstance which would change (or, if after the Consummation Date, would
have changed) a representation or warranty of COMPANY in this Agreement or would
affect the document delivered pursuant hereto in any material respect, the
COMPANY shall immediately give notice of such fact or circumstance to ETS.
However, subject to the provisions of Section 7.8, at the sole option of ETS,
the truth and accuracy of any and all warranties and representation of the
COMPANY, or on behalf of the COMPANY at the date of this Agreement and at the
Closing, shall be a precondition to the consummation of this transaction.
(d) The COMPANY acknowledges and agrees (i) that there exists no firm
commitment, binding agreement, or promise or other assurance of any kind,
whether express or implied, oral or written, that a Registration Statement will
be filed, a Registration Statement will become effective, or that IPO pursuant
thereto will occur at a particular price or within a particular range of prices
or occur at all; (ii) that neither ETS or any of its officers, directors, agents
or representatives nor any prospective underwriters in
14
the IPO (the "Underwriters") shall have liability to the COMPANY or any other
person affiliated or associated with the COMPANY for any failure of the
Registration Statement to be filed, a Registration Statement to become
effective, the IPO to occur at a particular price or within a particular range
of prices or to occur at all; and (iii) that the decision of the COMPANY to
enter into this Agreement, or of any shareholders thereof to vote in favor of or
consent to the proposed Merger, has been or will be made independent of, and
without reliance upon, any statements, opinions or other communications, or due
diligence investigations which have been or will be made or performed by any
prospective Underwriter, relative to ETS or the prospective IPO.
6. REPRESENTATIONS OF ETS AND AAC
ETS and AAC, jointly and severally, represent and warrant that (i) all of
the following representations and warranties shall be true at the time of
Closing and shall survive the Closing for a period of twelve months following
the Closing and (ii) solely for purposes of Section 11.2(iv) hereof, and solely
to the extent that the COMPANY actually incurs liability under the 1933 Act, the
1934 Act, or any other Federal or state securities laws, the representations and
warranties set forth herein shall survive until the expiration of any applicable
limitations period.
6.1 Due Organization. ETS is duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is duly authorized and
qualified under all applicable laws, regulations and ordinances of public
authorities to carry on its business in the places and in the manner as now
conducted, except for where the failure to be so authorized or qualified would
not have a material adverse effect on its business. AAC is duly organized,
validly existing and in good standing under the laws of the State of Minnesota,
and is duly authorized and qualified under all applicable laws, regulations and
ordinances of public authorities to carry on its business in the places and in
the manner as now conducted, except for where the failure to be so authorized or
qualified would not have a material adverse effect on its business.
6.2 ETS Stock. The ETS Stock to be issued and delivered to the STOCKHOLDERS
at the Consummation Date will constitute valid and legally issued shares of ETS,
fully paid and nonassessable and, with the exception of restrictions upon
resale, will be legally equivalent in all respects to the ETS Stock issued and
outstanding as of the date hereof. The shares of ETS Stock to be issued to the
STOCKHOLDERS pursuant to this Agreement will not be registered under the 0000
Xxx.
6.3 Due Authorization. ETS and AAC have full power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. All acts and other proceedings required to be taken by or on the part of
ETS or AAC to authorize them to carry out this Agreement and the transactions
contemplated hereby have been duly and properly taken or will be duly and
properly taken prior to the Closing Date. No other proceedings are necessary to
authorize the execution and delivery of this Agreement by ETS and AAC and the
consummation by them of the transactions
15
contemplated hereby. This Agreement has been duly executed and delivered by ETS
and AAC and constitutes the legal, valid and binding obligations of such
entities, enforceable in accordance with its terms. The Board of Directors and
stockholders of ETS and AAC have taken all action required by law and by their
respective Certificate or Articles of Incorporation and By-laws, to authorize
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. No other act or proceeding on the part of ETS
or AAC is necessary to authorize the execution, delivery and performance of this
Agreement or the transactions contemplated hereby.
6.4 No Violation. Neither ETS or AAC is in material violation of any of the
provisions of their respective Certificate or Articles of Incorporation or
By-laws (or comparable instruments or documents), or any other governing
documents, all as amended to date, and are not in default and will not, with the
giving of notice or lapse of time or both, be in default in the performance or
observance of any obligation, agreement, covenant, or condition contained in any
bond, debenture, note or other evidence of indebtedness or in any material
contract, indenture, mortgage, loan agreement, franchise agreement, joint
venture or other agreement or instrument where such default could have a
material adverse effect on the business, condition (financial or other), results
of operations, properties, assets, or liabilities of ETS or AAC. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby will not conflict with or result in any material breach or
violation of, or constitute a material default (or an event which with notice or
lapse of time or both would become a default) under, or give rise to any right
of termination, cancellation or acceleration under, (a)the Certificate of
Incorporation or By-laws of ETS; (b) the Articles of Incorporation or By-laws of
AAC; (c) any statute, rule, regulation, order or decree of any public body or
authority by which ETS or AAC or any of their properties or assets, may be
bound; (c)any indenture, mortgage, agreement or other instrument to which ETS or
AAC is a party or by which they or their properties or assets may be bound or
affected; or (d)any permit, franchise or license held by ETS or AAC or any
judgment, decree, order, regulation or rule of any court or governmental or
regulatory authority applicable to ETS or AAC or result in the creation of a
lien, charge or encumbrance on any of the properties or assets of ETS.
6.5 No Consent. No consent of any person or entity is required to be
obtained by ETS or AAC in order for it to execute, deliver and perform this
Agreement and the transactions contemplated hereby and no approval,
authorization, consent, order or action of, or filing with, any court or
governmental or regulatory authority is required to be obtained by ETS in
connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby.
6.6 Capitalization of ETS and Ownership of ETS Stock. All of the shares of
ETS Stock to be issued to the STOCKHOLDERS in accordance herewith will be, duly
authorized, validly issued, fully paid and nonassessable. All of the shares of
ETS Stock to be issued pursuant to the Plan Of Organization, based on the
representations of the COMPANY contained in this Agreement and representations
contained in the Delta Agreement, were or will be offered, issued, sold and
delivered by ETS in compliance with all applicable state and federal laws
concerning the issuance of securities and
16
none of such shares were or will be issued in violation of the preemptive rights
of any past or present stockholder.
6.7 No Side Agreements. ETS has not entered into any agreement other than
the Delta Agreement. Upon request, ETS will provide to the COMPANY copies of all
agreements entered into, or to be entered into prior to the Consummation Date,
between ETS and any of its affiliates and Delta.
6.8 Subsidiaries. Except for Delta, which ETS has agreed to purchase as of
the Closing Date, ETS does not presently have any subsidiaries or own, of record
or beneficially, or control, directly or indirectly, any capital stock,
securities convertible into capital stock or any other equity interest in any
corporation, association or business entity, except AAC and DAC. ETS is not,
directly or indirectly, a participant in any joint venture, partnership or other
noncorporate entity.
6.9 Business; Real Property; Material Agreements; Financial Information.
Neither ETS nor AAC has conducted any business since the date of its inception,
except in connection with this Agreement, the Delta Agreement and the IPO of ETS
Stock. Neither ETS nor AAC own any real property or any material personal
property or is a party to any other material agreement, except that ETS is a
party to the Delta Agreement and the agreements contemplated thereby and to such
agreements as will be filed as Exhibits to the Registration Statement. ETS and
AAC were formed in April and October 1996, respectively, and have no material
historical financial statements or information. Neither ETS nor AAC have any
material liabilities other than those incurred in connection with this
Agreement, the Delta Agreement and the contemplated IPO of ETS Stock.
6.10 Conformity with Law. Neither ETS nor AAC is in material violation of
any law or regulation or any order of any court or federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over either of them which would have a
material adverse effect on the contemplated business of ETS or AAC. There are no
material claims, actions, suits or proceedings, pending or, to the knowledge of
ETS or AAC, threatened, against or affecting ETS or AAC, at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over
either of them and no notice of any claim, action, suit or proceeding, whether
pending or threatened, has been received.
6.11 No Violations. A certified copy of the Certificate or Articles of
Incorporation and a true, complete and correct copy of the By-laws, both as
amended to date, of ETS and AAC have been delivered to the COMPANY. Neither ETS
nor AAC is in violation of any of such documents and the execution of this
Agreement and the performance of the obligations hereunder and the consummation
of the transactions contemplated hereby will not result in any violation or
breach or constitute a default under, any of the terms or provisions of
documents. The minute books of ETS and AAC, as made available to the COMPANY,
are true and correct.
17
7. COVENANTS PRIOR TO CLOSING
7.1 Access and Cooperation; Due Diligence. (a) Between the date of this
Agreement and the Consummation Date, the COMPANY will afford to the officers and
authorized representatives of ETS and Delta access to all of the COMPANY's
sites, properties, books and records and will furnish ETS and Delta with such
additional financial and operating data and other information as to the business
and properties of the COMPANY as ETS or Delta may from time to time reasonably
request. The COMPANY will cooperate with ETS and Delta, its representatives,
engineers, auditors and counsel in the preparation of any documents or other
material which may be required in connection with any documents or materials
required in connection with any documents or materials required by this
Agreement. ETS, and the COMPANY will treat all information obtained in
connection with the negotiation and performance of this Agreement or the due
diligence investigations conducted with respect to Amcom as confidential in
accordance with the provisions of Section 13 hereof. In addition, ETS will cause
the Delta Agreement to contain a provision similar to this Section 7.1 requiring
Delta and its stockholders to keep confidential any information obtained by them
regarding the COMPANY.
(b) Between the date of this Agreement and the Consummation Date, ETS
will afford to the officers and authorized representatives of the COMPANY access
to all of ETS's sites, properties, books and records and will furnish the
COMPANY with such additional financial and operating data and other information
as to the business and properties of ETS as the COMPANY may from time to time
reasonably request. ETS will cooperate with the COMPANY, its representatives,
engineers, auditors and counsel in the preparation of any documents or other
material which may be required in connection with any documents or materials
required by this Agreement. The COMPANY will cause all information obtained in
connection with the negotiation and performance of this Agreement to be treated
as confidential in accordance with the provisions of Section 13 hereof.
7.2 Conduct of Business Pending Closing. Between the Balance Sheet Date and
the Consummation Date, the COMPANY will, except as set forth on Schedule 7.2:
(i) carry on its business in substantially the same manner as it has
heretofore and not introduce any material new method of management, operation or
accounting;
(ii) maintain its respective properties and facilities, including those
held under leases, in as good working order and condition as present, ordinary
wear and tear excepted;
18
(iii) perform all of its respective obligations under agreements
relating to or affecting its respective assets, properties or rights;
(iv) keep in full force and effect present insurance policies or other
comparable insurance coverage;
(v) use its reasonable efforts to maintain and preserve its business
organization intact, retain its respective present employees and maintain its
respective relationships with suppliers, customers and others having business
relations with the COMPANY (including the Subsidiaries);
(vi) maintain compliance with all permits, laws, rules and regulations,
consent orders, and all other orders or applicable courts, regulatory agencies
and similar governmental authorities;
(vii) maintain present material debt and lease instruments and not enter
into new or amended debt or lease instruments, without the knowledge and consent
of ETS (which consent shall not be unreasonably withheld), provided that debt
and/or lease instruments may be replaced without the consent of ETS if such
replacement instruments are on terms at least as favorable to COMPANY as the
instruments being replaced; and
(viii) maintain or reduce present salaries and commission levels for all
officers, directors, employees and agents.
7.3 Prohibited Activities. Except as disclosed on Schedule 7.3 hereto,
between the Balance Sheet Date and the Consummation Date, the COMPANY has not
and, without the prior written consent of ETS, will not:
(i) make any change in its Articles of Incorporation or By-laws;
(ii) issue any securities, options, warrants, calls, conversion rights
or commitments relating to its securities of any kind other than in connection
with the exercise of options or warrants listed on Schedule 1.4 (i) hereto;
(iii) declare or pay any dividend, or make any distribution in respect
of its stock whether now or hereafter outstanding, or purchase, redeem or
otherwise acquire or retire for value any shares of its stock;
(iv) enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditures, except if it is in the normal
course of business (consistent with past practice) or involves an amount not in
excess of $30,000, including contracts to provide services to customers;
(v) increase the compensation payable or to become payable to any
officer, director, STOCKHOLDER, employee or agent, or make any bonus or
management fee payment to any such person;
19
(vi) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned or hereafter
acquired, except (1) with respect to purchase money liens incurred in connection
with the acquisition of equipment with an aggregate cost not in excess of
$10,000 necessary or desirable for the conduct of the businesses of the COMPANY,
(2) (A) liens for taxes either not yet due or being contested in good faith and
by appropriate proceedings (and for which contested taxes adequate reserves have
been established and are being maintained) or (B) materialmen's, mechanics'
workers', repairmen's employees' or other like liens arising in the ordinary
course of business (the liens set forth in clause (2) being referred to herein
as "Statutory Liens");
(vii) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business;
(viii) negotiate for the acquisition of any business or the start-up of
any new business;
(ix) merge or consolidate or agree to merge or consolidate with or into
any other corporation other than AAC;
(x) waive any material rights or claims of the COMPANY, provided that
the COMPANY may negotiate and adjust bills in the course of good faith disputes
with customers in a manner consistent with past practice;
(xi) commit a material breach or amend or terminate any material
agreement, permit, license or other right of the COMPANY; or
(xii) enter into any other transaction outside the ordinary course of
its business or prohibited hereunder.
7.4 Notice to Bargaining Agents. Prior to the Closing Date, the COMPANY
shall satisfy any requirement for notice of the transactions contemplated by
this Agreement under applicable collective bargaining agreements, and shall
provide ETS with proof that any required notice has been sent.
7.5 Authorized Capital. ETS shall maintain its authorized capital stock
substantially as set forth herein, except for such changes in authorized capital
stock as are made to respond to comments made by the Securities and Exchange
Commission ("SEC") or the requirements of any exchange or automated trading
system for which application is made to register the ETS Stock. Except pursuant
to the Amcom Agreement and the agreements contemplated therein and otherwise as
will be disclosed in the Registration Statement, there have been no issuances
of, or agreements regarding the issuance of, any capital stock, warrants,
options or other securities convertible into or exchangeable for capital stock
or rights to acquire the same.
20
7.6 Notification of Certain Matters. The COMPANY shall give prompt notice to
ETS of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would likely to cause any representation or warranty of
the COMPANY contained herein to be untrue or inaccurate in any material respect
at or prior to the Closing and (ii) any material failure of the COMPANY to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by any such person hereunder. ETS shall give prompt notice to the
COMPANY of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would likely to cause any representation or warranty of
ETS and (ii) any material failure of ETS to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder. The
delivery of any notice pursuant to this Section 7.6 shall not be deemed to
(i)modify the representations or warranties hereunder of the party delivering
such notice, which modification may only be made pursuant to Section 7.7, (ii)
modify the conditions set forth in Sections 8 and 9, or (iii) limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
21
7.7 Amendment of Schedules. Each party hereto agrees that, with respect to
the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until the Closing to supplement
or amend promptly the Schedules hereto with respect to any matter hereafter
arising or discovered which, if existing or known at the date of this Agreement,
would have been required to be set forth or described in the Schedules, provided
that no amendment or supplement to a Schedule that constitutes or reflects a
material adverse change to the COMPANY (including the Subsidiaries) may be made
unless ETS and Delta consent to such amendment or supplement. For all purposes
of this Agreement, including without limitation for purposes of determining
whether the conditions set forth in Sections 8.1 and 9.1 have been fulfilled,
the Schedules hereto shall be deemed to be the Schedules as amended or
supplemented pursuant to this Section 7.7. In the event that Delta seeks to
amend or supplement a Schedule pursuant to Section 7.7 of the Delta Agreement,
and ETS consents to such amendment or supplement but the COMPANY does not, the
COMPANY may terminate this Agreement pursuant to Section 12.1(v) hereof. In the
event that the COMPANY seeks to amend or supplement a Schedule pursuant to this
Section 7.7, and ETS or Delta does not consent to such amendment or supplement,
this Agreement shall be deemed terminated by mutual consent as set forth in
Section 12.1(i) hereof. No party to this Agreement shall be liable to any other
party if this Agreement shall be terminated pursuant to the provisions of this
Section 7.7. No amendment or supplement to a schedule shall be made later than
48 hours prior to the anticipated effectiveness of the Registration Statement.
7.8 Cooperation in Preparation of Registration Statement.
(a) The COMPANY shall furnish or cause to be furnished to ETS and the
Underwriters all of the information concerning the COMPANY required for
inclusion in, and will cooperate with ETS and the Underwriters in the
preparation of, the Registration Statement and the prospectus included therein
(including audited financial statements prepared in accordance with generally
adopted accounting principles, in form suitable for inclusion in the
Registration Statement). The COMPANY agrees promptly to advise ETS if at any
time during the period in which a prospectus relating to the offering is
required to be delivered under the Securities Act, any information contained in
the prospectus concerning the COMPANY becomes incorrect or incomplete in any
material respect, and to provide the information needed to correct such
inaccuracy. Insofar as the information relates solely to the COMPANY, the
COMPANY represents and warrants that the Registration Statement will not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading.
(b) Provided that ETS shall have complied with Section 7.8(e), the
COMPANY shall make the following representation directly to the Underwriters in
connection with the IPO:
There is no untrue statement of a material fact relating to the COMPANY
contained in any preliminary prospectus, the Registration Statement or any
prospectus
22
forming a part thereof, or any amendment thereof or supplement thereto, or any
omission to state therein a material fact relating to such COMPANY required to
be stated therein or necessary to make the statements therein not misleading.
(c) Provided that ETS shall have complied with Section 7.8(e), the
COMPANY shall indemnify the Underwriters directly in connection with the IPO as
follows:
The COMPANY covenants and agrees that it will indemnify, defend, protect
and hold harmless the Underwriters at all times from and after the date
of the Underwriting Agreement entered into between ETS and the
Underwriters in connection with the IPO from and against all claims,
damages, actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) under the 1933
Act, the 1934 Act or other Federal or state law or regulation, at common
law or otherwise, arising out of or based upon any untrue statement of a
material fact relating to COMPANY, contained in any preliminary
prospectus, the Registration Statement or any prospectus forming a part
thereof, or any amendment thereof or supplement thereto, or arising out
of or based upon any omission or alleged omission to state therein a
material fact relating to COMPANY required to be stated therein or
necessary to make the statements therein not misleading, provided, that
the COMPANY shall not be liable for any amount in excess of the
aggregate amount of the proceeds received by the STOCKHOLDERS of the
COMPANY in connection with the Merger. For purposes of calculating the
amount of any proceeds received by the STOCKHOLDERS of the COMPANY, ETS
Stock received by such STOCKHOLDER shall be valued at its initial public
offering price.
(d) The representation contained in Section 7.8(b) and the
indemnification contained in Section 7.8(c) shall be null and void and of no
force and effect in the event comparable provisions are contained in the
Underwriting Agreement executed in connection with the IPO.
(e) ETS agrees that it will provide to the COMPANY and its counsel
copies of the drafts of the Registration Statement as they are prepared and will
not (i) file with the SEC, (ii) request the acceleration of the effectiveness of
or (iii) circulate any prospectus forming a part of, the Registration Statement
(or any amendment thereto) that contains information with respect to the COMPANY
that varies materially from the last draft of the Registration Statement (or any
amendment thereto) reviewed by the COMPANY and its counsel unless the COMPANY
and such counsel (x) have had at least two days to review such revised
information and (y) have not objected to the substance of the information
contained therein.
7.9 Shareholder Meetings. The Company, promptly upon execution of this
Agreement, shall call a meeting of shareholders to vote on this Agreement and
Plan of Reorganization and shall cooperate with ETS, Delta and their
representatives in
23
preparing informative materials to be provided to the STOCKHOLDERS and the
Participants and shall hold such meeting within thirty days of the date of this
Agreement. Certain STOCKHOLDERS, concurrently with the execution of this
Agreement, shall execute and deliver to ETS duly executed irrevocable proxies,
coupled with an interest in the form of Exhibit A hereto, with respect to the
voting of such STOCKHOLDER'S shares held in their individual capacities and not
as trustees at such meeting. The immediately preceding sentence shall be deemed
to be a Shareholder Voting Agreement pursuant to Section 302A.455 of the BCA
and, without been waived, except that no such waiver shall be deemed to affect
the survival of the representations and warranties of the STOCKHOLDERS as
provided in Section 5 hereof.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY
The obligations of the COMPANY hereunder are, at the option of the COMPANY,
subject to the following conditions. Upon consummation of this Agreement, all
conditions not satisfied shall be deemed to have been waived, except that no
such waiver shall be deemed to affect the survival of the representations and
warranties of ETS and DAC contained in Section 6 hereof.
8.1 Representations and Warranties; Performance of Obligations. All
representations and warranties of ETS and DAC contained in Section 6 shall be
true and correct as of the Consummation Date as though such representations and
warranties had been made as of that time; all of the terms, covenants and
conditions of this Agreement to be complied with and performed by ETS and DAC on
or before the Consummation Date shall have been duly complied with and
performed; and a certificate to the foregoing effect dated the Consummation Date
and signed by the President or any Vice President of each of ETS and DAC shall
have been delivered to the COMPANY.
8.2 Satisfaction. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall be satisfactory to the COMPANY and its counsel. The COMPANY
shall be satisfied that the Registration Statement or any prospectus forming a
part thereof, including the preliminary prospectus or any amendment thereof or
supplement thereto, shall not contain any untrue statement of a material fact
relating to the COMPANY or omit to state therein a material fact relating to the
COMPANY required to be stated therein or necessary to make the statements
therein related to the COMPANY not misleading, provided, that the condition
contained in this sentence shall be deemed satisfied if (i) ETS shall have
complied with its obligations under Section 7.8(e) and (ii) the COMPANY failed
to inform ETS in writing of the existence of an untrue statement of a material
fact or the omission of such a statement of a material fact (a) in the case of
any printed "red xxxxxxx" preliminary prospectus, prior to the distribution
thereof or (b) in the case of any final prospectus, prior to the second day
preceding the effectiveness of the Registration Statement.
24
8.3 No Litigation. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the merger of DAC with and into the COMPANY or the offering and sale
by ETS of ETS Stock pursuant to the Registration Statement and no governmental
agency or body shall have taken any other action or made any request of the
COMPANY as a result of which the management of the COMPANY deems it inadvisable
to proceed with the transactions hereunder.
8.4 Opinion of Counsel. The COMPANY shall have received an opinion from
counsel for ETS, dated the Closing Date, in form and substance reasonably
satisfactory to the COMPANY.
8.5 Registration Statement. ETS shall have filed with the SEC a registration
statement on Form S-1 covering the offer and sale of shares of ETS Stock having
a value (the "Offered Value") of at least $16 million. The Registration
Statement shall have been declared effective by the SEC and the Underwriters
named therein shall have agreed to acquire, subject to the conditions set forth
in the underwriting agreement, shares of ETS Stock at a price not less that
$8.00 per share (prior to any underwriters' discount) and having a value at
least equal to the Offered Value. The closing of the sale of the ETS Stock to
the Underwriters shall have occurred simultaneously with the Closing hereunder.
8.6 Consents and Approvals. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the transaction
contemplated herein shall have been obtained and made and no action or
proceeding shall have been instituted or threatened to restrain or prohibit
ETS's acquisition of the COMPANY Stock and no governmental agency or body shall
have taken any other action or made any request of COMPANY as a result of which
COMPANY deems it inadvisable to proceed with the transactions hereunder.
8.7 Good Standing Certificates. ETS and DAC shall have delivered to the
COMPANY a certificate, dated as of a date no later than five days prior to the
Closing Date, duly issued by the Secretary of State of each state in which ETS
and DAC is organized or authorized to do business, showing that ETS and DAC are
in good standing and authorized to do business and that all state franchise
and/or income tax returns and taxes, for all periods prior to the Closing, have
been filed and paid.
8.8 Plan of Reorganization. All conditions precedent to the consummation of
the Plan of Organization shall have been satisfied or waived and the merger of
AAC and Delta shall have occurred simultaneously with the Closing hereunder.
8.9 Employment Agreements. Effective on the Closing Date, ETS shall have
entered into employment agreements with the persons specified on Schedule 8.9
hereto, certain of which agreements shall have provided for cash payments and
option grants, as specified therein.
25
8.10 Board of Directors. The Board of Directors of ETS, effective the
Closing Date, shall include Del X. Xxxxxxx and Xxxx Xxxxx.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF ETS
The obligations of ETS and AAC hereunder are, at their option, subject to
the satisfaction, on or prior to the Consummation Date, of the following
conditions. Upon consummation of this Agreement, all conditions not satisfied
shall be deemed to have been waived, except that no such waiver shall be deemed
to affect the survival of the representations and warranties of the STOCKHOLDERS
as provided in Section 5 hereof.
9.1 Representations and Warranties; Performance of Obligations. All the
representations and warranties of the COMPANY contained in this Agreement shall
be true on and as of the Consummation Date with the same effect as though such
representations and warranties had been made on and as of such date (except for
matters expressly disclosed in the certificate or a schedule thereto), each and
all of the agreements of the COMPANY to be performed on or before the
Consummation Date pursuant to the terms hereof shall have been performed and the
COMPANY shall have delivered to ETS a certificate dated the Consummation Date
and signed by its Chief Executive Officer and Chief Financial Officer to such
effect.
9.2 No Litigation. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the merger of AAC with and into the COMPANY or the offering and sale
by ETS of the ETS Stock pursuant to the Registration Statement and no
governmental agency or body shall have taken any other action or made any
request of the COMPANY as a result of which the management of the ETS deems it
inadvisable to proceed with the transactions hereunder.
9.3 Examination of Final Financial Statements. Prior to the Consummation
Date, ETS shall have had sufficient time to review, if available, the unaudited
consolidated balance sheets of the COMPANY as of September 30, 1996, and any
following fiscal quarters, and the unaudited consolidated statements of any
earnings, cash flows and retained earnings of the COMPANY for the fiscal quarter
ended September 30, 1996, and any following fiscal quarters, disclosing no
material adverse change in the financial condition of the COMPANY or the results
of its operations from the financial statements as of the Balance Sheet Date.
9.4 No Material Adverse Change. No material adverse change in the results of
operations, financial conditions or business of the COMPANY shall have occurred,
and the COMPANY shall not have suffered any material loss or damages to any of
its properties or assets, whether or not covered by insurance, since the Balance
Sheet Date, which change, loss or damage materially affects or impairs the
ability of the COMPANY to conduct its business; and ETS shall have received a
certificate signed by the COMPANY's CEO and CFO dated the Consummation Date to
such effect.
26
9.5 Regulatory Review. ETS, through its authorized representatives, shall
have completed a satisfactory review of the practices and procedures of the
COMPANY including, but not limited to, compliance with contracts and federal,
state and local laws and regulations governing the respective operations of
COMPANY, disclosing no material actual or probable violations, compliance
problems, required capital expenditures or other substantive concerns.
9.6 Satisfaction. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall have been approved by counsel to ETS.
9.7 Consents and Approvals. ETS shall have received an opinion from counsel
to the COMPANY, dated the Closing Date, in form and substance reasonably
satisfactory to ETS, and the Underwriters shall have received a copy of the same
opinion addressed to them.
9.8 Good Standing Certificates. The COMPANY shall have delivered to ETS a
certificate, dated as of a date no later than five days prior to the Closing
Date, duly issued by the appropriate governmental authority in the COMPANY's
state of incorporation and, unless waived by ETS, in each state in which the
COMPANY is authorized to do business, showing the COMPANY is in good standing
and authorized to do business and that all state franchise and/or income tax
returns and taxes for the COMPANY for all periods prior to the Closing have been
filed and paid.
9.9 Registration Statement. The Registration Statement shall have been
declared effective by the SEC and the underwriters named therein shall have
agreed to acquire, subject to the conditions set forth in the underwriting
agreement, shares of ETS stock at a price not less than $8.00 per share (prior
to any underwriters' discount) and having value of not less than $16 million.
9.10 Plan of Reorganization. All conditions precedent to the closing of the
Plan of Organization shall have been satisfied or waived and the merger of DAC
and Delta shall have occurred simultaneously with the Closing hereunder.
9.11 ESOP Matters. The COMPANY shall have taken all steps necessary to
terminate the COMPANY'S employee stock option plan (the "ESOP") as of the
Effective Time of the Merger. The ESOP trustees shall have received an opinion
of Summit Investment Corp. that the consideration to be received by the
Participants is fair to them, from a financial point of view and the
Participants shall have approved the transactions contemplated hereby by the
affirmative vote of at least 75% in interest of the Participants.
9.12 Termination of Buy-Sell Agreements. That certain Buy-Sell Agreement,
dated June 7, 1989, among certain STOCKHOLDERS, shall have been terminated.
27
9.13 Dissenter's Rights. Dissenter's rights shall not have been exercised by
Stockholders or Participants holding, in the aggregate, more
than 2% of the outstanding shares of the Company.
10. COVENANTS OF ETS AND THE COMPANY
10.1 ESOP Matters. As soon as practicable, subsequent to the Effective Time
of the Merger, the Company shall, following termination of the ESOP, prepare and
file a request to the Internal Revenue Service for a determination letter that
the termination of the ESOP does not adversely affect the tax qualified status
of the Plan of which the ESOP is a part, including the 401(K) Plan. ETS will use
its best efforts to file a registration statement on Form S-8 covering the ESOP
shares.
10.2 Company Governance. For a period of two (2) years following the
Effective Time of the Merger, no significant operational changes in the Company
shall be made by ETS without the consent of Del X. Xxxxxxx, which consent may be
given by his affirmative vote as a member of ETS' Board of Directors.
10.3 Option Plan. ETS shall have established an option plan, under which
options which are ETS Convertible Securities (as defined in the Delta
Agreement), shall be issued.
10.4 Profit Sharing. ETS shall establish an employee benefit plan, such as a
401(k) Plan, pursuant to which contributions shall be made by ETS for the
benefit of employees.
11. INDEMNIFICATION
11.1 Indemnification by ETS.
ETS and AAC, jointly and severally, covenant and agree that they will
indemnify, defend, protect and hold harmless the COMPANY and the STOCKHOLDERS at
all times from and after the date of this Agreement until the Expiration Date,
from and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
("Losses") incurred by the COMPANY and the STOCKHOLDERS as a result of or
arising from (i) any breach by ETS or AAC of their representations and
warranties set forth herein or on the schedules or certificates attached hereto,
(ii) any nonfulfillment of any agreement on the part of ETS or AAC under this
Agreement, (iii) any liabilities which the COMPANY may incur due to or AAC under
this Agreement, (iv) any liabilities which the COMPANY may incur due to the
failure of the Surviving Corporation to be responsible for the liabilities and
obligations of the COMPANY as provided in Section 1 hereof (except to the extent
that ETS or AAC has claims against the COMPANY by reason of such liabilities) or
any liability under the 1933 Act, the 1934 Act or other Federal or state law or
regulation, at common law or otherwise, arising out of or based upon any untrue
statement or alleged
28
untrue statement of a material fact relating to ETS or AAC contained in any
preliminary prospectus, the Registration Statement or any prospectus forming a
part thereof, or any amendment thereof or supplement thereto, or arising out of
or based upon any omission or alleged omission to state therein a material fact
relating to ETS or AAC required to be stated therein or necessary to make the
statements therein not misleading ("Securities Liabilities").
11.2 Indemnification by the COMPANY. The COMPANY will indemnify, defend,
protect and hold harmless ETS, until the Expiration Date from all Losses as a
result of or arising out of (i) any breach by the COMPANY of its representations
and warranties set forth herein, (ii) any nonfulfillment of any agreement on the
part of the COMPANY hereunder or (iii) any Securities Liabilities, relating to
statements or omissions regarding the COMPANY.
11.3 Third Person Claims. Promptly after any party hereto (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person not a party to this Agreement ("Third Person"), or the commencement of
any action or proceeding by a Third Person, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 11.1 or 11.2 hereof
(hereinafter the "Indemnifying Party"), give the Indemnifying Party written
notice of such claim or the commencement of such action or proceeding. Such
notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have the right to
defend and settle, at its own expense and by its own counsel, any such matter so
long as the Indemnifying Party pursues the same in good faith and diligently,
provided that the Indemnifying Party shall not settle any criminal proceeding
without the consent of the Indemnified Party. If the Indemnifying Party
undertakes to defend or settle, it shall promptly notify the Indemnified Party
of its intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in the defense thereof and in any settlement
thereof. Such cooperation shall include, but shall not be limited to furnishing
the Indemnifying Party with any books, records or information reasonably
requested by the Indemnifying Party that are in the Indemnified Party's
possession or control. All Indemnified Parties shall use the same counsel, which
shall be the counsel selected by Indemnifying Party, provided that if counsel to
the Indemnifying Party shall have a conflict of interest that prevents counsel
for the Indemnifying Party from representing an Indemnified Party, such
Indemnified Party shall have the right to participate in such matter through
counsel of its own choosing and the Indemnifying Party will reimburse the
Indemnified Party for the expenses of its counsel. After the Indemnifying Party
has notified the Indemnified Party of its intention to undertake to defend or
settle any such asserted liability, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall not be liable for
any additional legal expenses incurred by the Indemnified Party in connection
with any defense or settlement of such asserted liability, except to the extent
such participation is requested by the Indemnifying Party, in which event the
Indemnified Party shall be reimbursed by the Indemnifying Party for reasonable
additional legal expenses and out-of-pocket expenses. If the Indemnifying Party
desires to accept a
29
final and complete settlement of any such Third Person claim and the Indemnified
Party refuses to consent to such settlement, then the Indemnifying Party's
liability under this Section with respect to such Third Person claim shall be
limited to the amount so offered in settlement by said Third Person and the
Indemnified Party shall reimburse the Indemnifying Party for any additional
costs of defense which it subsequently incurs with respect to such claim and all
additional costs of settlement or judgment. If the Indemnifying Party does not
undertake to defend such matter to which the Indemnified Party is entitled to
indemnification hereunder, or fails diligently to pursue such defense, the
Indemnified Party may undertake such defense through counsel of its choice, at
the cost and expense of the Indemnifying Party, and the Indemnified Party may
settle such matter, and the Indemnifying Party shall reimburse the Indemnified
Party for the amount paid in such settlement and any other liabilities or
expenses incurred by the Indemnified Party in connection therewith, provided,
however, that under no circumstances shall the Indemnified Party settle any
Third Person claim without the written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed. All settlements hereunder
shall effect a complete release of the Indemnified Party, unless the Indemnified
Party otherwise agrees in writing. The parties hereto will make appropriate
adjustments for any Tax benefits, Tax detriments or insurance proceeds in
determining the amount of any indemnification obligation under this section,
provided that no Indemnifying Party shall be obligated to seek any payment
pursuant to the terms of any insurance policy. All indemnification payments
under this section shall be deemed adjustments to the Merger consideration
provided for herein.
11.4 Exclusive Remedy. The indemnification provided for in this Section 11
shall be the exclusive remedy in any action seeking damages or any other form of
monetary relief brought by any party to this Agreement against another party,
provided that, nothing herein shall be construed to limit the right of a party,
in a proper case, to seek injunctive relief for a breach of this Agreement.
12. TERMINATION OF AGREEMENT
12.1 Termination. This Agreement may be terminated at any time prior to the
Consummation Date solely:
(i) by mutual consent of the Boards of Directors of ETS, AAC and the
COMPANY;
(ii) by the COMPANY or ETS (acting through their respective boards
of directors) at any time prior to the time at which the Registration
Statement is declared effective by the SEC if the IPO price (without
regard to any underwriters' discount) of the Shares of ETS Stock into
which the COMPANY Stock is to be converted shall be less than $8.00 per
share;
(iii) by the COMPANY (acting through its board of directors), on the
one hand, or by ETS (acting through its board of directors), on the
other hand, if the transactions contemplated by this Agreement to take
place at the Closing
30
shall not have been consummated by March 31, 1997, unless the
failure of such transactions to be consummated is due to the willful
failure of the party seeking to terminate this Agreement to perform any
of its obligations under this Agreement to the extent required to be
performed by it prior to or on the Consummation Date;
(iv) by the COMPANY, on the one hand, or by ETS, on the other hand,
if a material breach or default shall be made by the other party in the
observance or in the due and timely performance of any of the covenants,
agreements or conditions contained herein, and the curing of such
default shall not have been made on or before the Consummation Date and
shall not reasonably be expected to occur;
(v) pursuant to Section 7.7 hereof; or
(vi) by the COMPANY (acting through its board of directors) at any
time prior to the date the Registration Statement is filed with the SEC
(the "Filing Date") if (a) in the course of their investigations of or
due diligence with respect to ETS or Delta, or its stockholders, they
shall be dissatisfied with any information learned or issues that arose
concerning ETS, Delta or the stockholders thereof, (b) on or prior to
the Filing Date, the COMPANY shall have given written notice to ETS of
such dissatisfaction and of the particular information and/or issues
from which such dissatisfaction results and (c) ETS or Delta shall have
failed to reasonably satisfy the COMPANY with respect to the information
and/or issues identified in such notice. Without limiting their right to
terminate under Section 12.1(iv), if this Agreement shall not have been
terminated in accordance with this Section 12.1(vi), the COMPANY shall
have no right to refuse to consummate the transactions contemplated
hereby as a result of any information learned or issues that arose
during the course of or as a result of any investigation of or due
diligence with respect to ETS or Delta, or the stockholders thereof and
the condition set forth in the first sentence of Section 8.2, to the
extent that it applies to such information about ETS and Delta, shall be
deemed to have been waived by the COMPANY with respect to all matters
with respect to which this Agreement could have been terminated pursuant
to this Section 12.1(vi).
12.2 Liabilities in Event of Termination. Except as otherwise provided
herein, the termination of this Agreement will in no way limit any obligation or
liability of any party based on or arising from a breach or default by such
party with respect to any of its representations, warranties, covenants or
agreements contained in this Agreement including, but not limited to, legal and
audit costs and out-of-pocket expenses.
13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
31
13.1 ETS and AAC. ETS and AAC recognize and acknowledge that they had in the
past and currently have access to certain confidential information of the
COMPANY, such as lists of customers, operational policies, and pricing and cost
policies that are valuable, special and unique assets of the COMPANY's business.
ETS and AAC agree that, prior to the Closing, they will not disclose such
confidential information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except (a) to their authorized
representatives, (b) to counsel and other advisers, provided that such advisers
(other than counsel) agree to the confidentiality provisions of this Section
13.1 and (c) to Amcom and their representatives pursuant to Section 7.1(a)
hereof, unless (i) such information becomes known to the public generally
through no fault of ETS or AAC, (ii) disclosure is required by law or the order
of any governmental authority under color of law, provided, that prior to
disclosing any information pursuant to this clause (ii), ETS and AAC shall, if
possible, give prior written notice thereof to the COMPANY and provide the
COMPANY with the opportunity to contest such disclosure, or (iii) the disclosing
party reasonably believes that such disclosure is required in connection with
the defense of a lawsuit against the disclosing party. In the event of a breach
or threatened breach by ETS or AAC of the provisions of this Section, the
COMPANY shall be entitled to an injunction restraining ETS and AAC from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting the COMPANY and the CONTROLLING STOCKHOLDERS
from pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
13.2 Survival. The obligations of the parties under this Article 13 shall
survive the termination of this Agreement.
14. REORGANIZATION ACCOUNTING AND TRANSFER RESTRICTIONS
14.1 Tax-Free Transfer of Property. ETS and the COMPANY are entering into
this Agreement with the intention that it qualify as a tax-free transfer of
property pursuant to Section 351 of the Code for federal income tax purposes
(except to the extent of any boot received).
15. FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON ETS STOCK
The COMPANY acknowledges that the shares of ETS Stock to be delivered to the
STOCKHOLDERS pursuant to this Agreement have not been and will not be registered
under the Act and, therefore, may not be resold without compliance with the Act.
The ETS Stock to be acquired by such STOCKHOLDERS pursuant to this Agreement is
being acquired solely for their own respective accounts, for investment purposes
only, and with no present intention of distributing, selling or otherwise
disposing of it in connection with a distribution.
15.1 Compliance with Law. None of the shares of ETS Stock issued to the
STOCKHOLDERS will be offered, sold, assigned, pledged, hypothecated, transferred
32
or otherwise disposed of except after full compliance with all of the applicable
provisions of the Act and the rules and regulations of the SEC. All of the ETS
Stock shall bear the following legend:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IF THE
HOLDER HEREOF COMPLIES WITH THE ACT AND APPLICABLE SECURITIES LAW.
15.2 Economic Risk; Sophistication. The STOCKHOLDERS have had an adequate
opportunity to ask questions and receive answers from the officers of ETS
concerning any and all matters relating to this Agreement, the Plan of
Organization and the IPO, and have been informed that any investment decision
involves risks. They have had the opportunity to obtain professional assistance
in making an investment decision to the extent desired.
16. GENERAL
16.1 Cooperation. The COMPANY, ETS and AAC shall each deliver or cause to be
delivered to the other on the Consummation Date, and at such other times and
places as shall be reasonably agreed to, such additional instruments as the
other may reasonably request for the purpose of carrying out this Agreement. The
COMPANY shall cooperate and use its reasonable efforts to have the present
officers, directors and employees of the COMPANY cooperate with ETS on and after
the Consummation Date in furnishing information, evidence, testimony and other
assistance in connection with any Return filing obligations, actions,
proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to the Consummation Date.
16.2 Successors and Assigns. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, and their successors.
The stockholders of Delta have relied upon the representations of the COMPANY
contained in Section 5 hereof, are third-party beneficiaries of such
representations and warranties and of the provisions of Section 7.1(a) hereof
and are Indemnified Parties, as such term is used with respect to the
indemnification provided for in Section 11.2 hereof. The STOCKHOLDERS are
Indemnified Parties with respect to Section 11.1 hereof. Except as set forth
herein, no person other than the parties hereto shall have any rights under this
Agreement.
16.3 Entire Agreement. This Agreement (including the schedules, exhibits and
annexes attached hereto) and the documents delivered pursuant hereto constitute
the entire agreement and understanding among the COMPANY, ETS and AAC and
supersede any prior agreement and understanding relating to the subject matter
of this Agreement. This Agreement, upon execution, constitutes a valid and
binding agreement of the parties hereto enforceable in accordance with its terms
and may be modified or amended only by a written instrument executed by the
COMPANY, ETS
33
and AAC, acting through their respective officers, duly authorized by their
respective Board of Directors. Any disclosure made on any Schedule delivered
pursuant hereto shall be deemed to have been disclosed for purposes of any other
Schedule required hereby.
16.4 Counterparts. This Agreement may be executed simultaneously in two (2)
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
16.5 Brokers and Agents. Except as disclosed on Schedule 16.5 hereto, each
party represents and warrants that it employed no broker or agent in connection
with the transactions contemplated hereby and agrees to indemnify the other
against all loss, costs, damages or expense arising out of claims for fees or
commission of brokers employed or alleged to have been employed by such
indemnifying party.
16.6 Expenses. Whether or not the transactions contemplated hereby shall be
consummated, each party shall pay its fees, expenses and disbursements and those
of its agents, representatives, accountants and counsel incurred in connection
with the subject matter of this Agreement and any amendments thereto, including
all costs and expenses incurred in the performance and compliance with all
conditions to be performed under this Agreement, except that Delta shall pay for
the costs and fees associated with the audit of the financial statements of the
Company by Coopers & Xxxxxxx. If the transactions herein contemplated shall be
consummated, ETS shall pay the fees, expenses and disbursements of the COMPANY
and their respective agents, representatives, financial advisors, accountants
and counsel incurred in connection with the subject matter of this Agreement and
any amendments hereto and all other costs and expenses incurred in the
performance and compliance with all conditions to be performed by the COMPANY
under this Agreement.
16.7 Notices. All notices of communication required or permitted hereunder
shall be in writing and may be made (a) by depositing the same in United States
mail, addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, (b) by delivering the same to an
overnight courier service of national reputation, (c) by facsimile transmission
with transmission confirmed, or (d) by delivering the same in person to an
officer or agent of such party.
(a) If to ETS, addressed to them at:
ExpressPoint Technology Services, Inc.
00000 Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
34
with copies to:
Xxxxx Xxxxxx, Esq.
00 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
(b) If to the COMPANY, addressed to it at:
Amcom Corporation
0000 Xxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
with copies to:
Xxxxxxx Xxxxxx
Xxxxxx Xxxx Xxxxxxxxxx & Xxxxxxx Ltd.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
or to such other address or counsel as any party hereto shall specify
pursuant to this Section 16.7 from time to time.
16.8 Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Minnesota.
16.9 Survival of Representations and Warranties. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties until the Expiration Date. The
covenants contained in Section 10 hereof shall survive the closing.
16.10 Exercise of Rights and Remedies. Except as otherwise provided
herein, no delay of or omission in the exercise of any rights, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
16.11 Time. Time is of the essence with respect to this Agreement.
16.12 Reformation and Severability. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability
35
of the remaining provisions of this Agreement shall not in any way be affected
or impaired thereby.
36
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
AMCOM CORPORATION
By:
------------------------------
Its:
-------------------------
EXPRESSPOINT TECHNOLOGY
SERVICES, INC.
By:
------------------------------
Its:
-------------------------
AMCOM ACQUISITION CORP.
By:
------------------------------
Its:
-------------------------
AGREEMENT AND PLAN OF REORGANIZATION
SCHEDULES 2.4, 5.8, 5.15, 5.17, 7.2, 7.3
1. The ESOT owes the Company a balance of approximately $68,000 on an exempt
loan for the purchase of shares from Xxxx Xxxxxxx on November 4, 1993. This
obligation must be repaid from Company contributions or earnings of the ESOT
prior to termination of the ESOP.
2. The pending Merger and exchange of ESOP shares in part, for cash
consideration, may possibly be considered a "taxable event" described in Code
Sections 4978 or 4978B with respect to some of the ESOP shares acquired in a
December 1993 transaction to which Code Sections 1042 and 133 applied. This tax,
if applicable, would be a liability of the Company as of the Closing.
3. Until the shares of the Company's stock are readily tradeable or are
exchanged for shares of employer securities that are readily traceable on a
public stock exchange, the Company is subject to a statutory put option in favor
of the ESOP participants with respect to shares distributed from the ESOP. The
termination of the ESOP anticipates a distribution of shares following the
receipt of a favorable IRS determination letter except for any shares that must
be distributed earlier as required by law. Exercise of a put option by a
participant would be considered a redemption of the Company's shares.
4. It is anticipated that a cash bonus will be awarded to the Company's outside
directors for service during the period through September 30, 1996 prior to the
Consummation Date. This payment will not exceed $25,000.
2
