AGREEMENT AND PLAN OF REORGANIZATION
dated as of the 14th day of October, 1996
by and among
EXPRESSPOINT TECHNOLOGY SERVICES, INC.,
DELTA ACQUISITION CORP.
And
DELTA PARTS, INC.
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"), DELTA ACQUISITION CORP., a Minnesota
corporation and a wholly-owned subsidiary of ETS ("DAC"), and DELTA PARTS, INC.,
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, DAC
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 DAC have been organized solely for the
purpose of completing the transactions set forth herein.
B. The respective Boards of Directors of ETS, DAC and the
COMPANY each deem it advisable and in the respective best interests of ETS, DAC
and the COMPANY and their respective stockholders that DAC merge with and into
the COMPANY (DAC 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 AMCOM ACQUISITION CORP., a Minnesota corporation
and a wholly-owned subsidiary of ETS ("AAC"), have entered into a separate
agreement substantially similar to this Agreement with Amcom Corporation (the
"Amcom Agreement") in order to acquire Amcom Corporation ("Amcom;" which,
together with the COMPANY, are collectively referred to as the "Founding
Companies").
D. This Agreement, the Amcom 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, DAC, AAC 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 the other Founding
Company 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 DAC 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:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
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 DAC. The respective designations and numbers of outstanding
shares and voting
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rights of each class of outstanding capital stock of the COMPANY, ETS and DAC as
of the date of this Agreement are as follows:
(i) The authorized capital stock of the COMPANY consists of
10,000,000 shares of common stock, par value $.01 ("COMPANY Stock"), of which
1,345,798 shares are issued and outstanding; 334,532 shares which are subject to
outstanding options; 222,926 shares which are subject to outstanding warrants
and 102,629 shares which are subject to issuance upon conversion of convertible
debt (the "Notes;" such options, warrants and Notes being hereinafter referred
to collectively as the "Convertible Securities").
(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 DAC consists of 100 shares
of common stock, $.01 par value ("DAC 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 chooses in action, and all and every other interest of or
belonging to or due to the COMPANY or DAC 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 DAC, and (ii) the Surviving Corporation
shall thenceforth be responsible and liable for all the debts, liabilities,
duties and obligations of the COMPANY and DAC and neither the rights of
creditors nor any liens upon the property of the COMPANY or DAC shall be
impaired by the Merger, and may be enforced against the Surviving Corporation.
2. CONVERSION OF STOCK
2.1 Manner of Conversion. The manner of converting the shares of
COMPANY Stock and Convertible Securities and DAC 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:
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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 Notes shall be converted into an aggregate of 102,629
shares of ETS Stock, subject to adjustment as set forth in Section 2.3 hereof.
All holders of other Convertible Securities who, prior to the Effective Time of
the Merger, have not exercised their rights under their respective Convertible
Securities to become stockholders of the COMPANY, shall be issued options or
warrants in ETS, as the case may be, with substantially the same rights, terms,
conditions and obligations as are set forth in their respective Convertible
Securities (collectively, "ETS Convertible Securities"), except that such ETS
Convertible Securities shall provide for the issuance of a number of shares of
ETS Stock determined pursuant to Sections 2.2 and 2.3 hereof.
(iii) All shares of DAC 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 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.
(iv) 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, and each
right to purchase shares of COMPANY Stock pursuant to Convertible Securities
shall be converted, as a result of the Merger, into a like ETS Convertible
Security representing a right to purchase an equal number of shares of ETS
Stock, in each case 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 holders of COMPANY Stock and Convertible
Securities (collectively, "Company Holders") own or have the right to purchase,
in the aggregate, less than 51.5% of the total number of ETS shares issued or
subject to a right to purchase, without giving effect to the IPO, then the
Company Holders shall receive, on a pro rata basis, additional Merger
consideration (in shares of ETS Stock or in additional ETS Convertible
Securities, as is appropriate) such that the Company Holders, in the aggregate,
own or have a right to purchase that number of shares of ETS Stock which
represents not less than 51.5% of the total number of ETS shares issued or
subject to a right to purchase, without giving effect to the IPO.
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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) The Notes shall, upon surrender thereof, be entitled to
receive the number of shares of ETS Stock calculated pursuant to Sections 2.2
and 2.3 hereof.
(iii) The holders of other Convertible Securities shall, upon
surrender of such instruments, be entitled to receive like ETS Convertible
Securities to purchase a number of shares of ETS Stock calculated pursuant to
Sections 2.2 and 2.3 hereof.
(iv) Until the certificates representing the COMPANY Stock and
Notes have been surrendered by the STOCKHOLDERS and replaced by the ETS Stock
and Convertible Securities have been surrendered by the holders thereof and
replaced by ETS Convertible Securities, the certificates for COMPANY Stock, the
Notes and instruments for Convertible Securities shall, for all corporate and
legal purposes be deemed to evidence the right to receive shares of ETS Stock
and ETS Convertible Securities, 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
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. The holders of Convertible Securities shall deliver to ETS at Closing the
instruments representing the Convertible Securities.
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 ▇▇▇▇▇▇▇, Street and Deinard, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, 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
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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.
5.2 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 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 Bylaws 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
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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 except as set forth in Section
1.4(i) hereto 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, except for
certain put rights held by holders of warrants.
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 the COMPANY is not in material
default and will not, with the giving of notice or lapse of time or both, be in
material 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 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 respective properties or assets,
may be bound; (c) any indenture, mortgage, agreement or other instrument to
which the COMPANY is a party or by which 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 or 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
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
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COMPANY as of and for the three years ended December 31, 1995 (the "Balance
Sheet Date"); and interim financial statements for the COMPANY as of June 30,
1996 and for the six months ended June 30, 1996. 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 December 31, 1995,
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 December 31, 1995, 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 $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.
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(k) Conducted its business other than substantially in the ordinary
course and in a manner consistent with past practice.
5.9 Licenses. All permits, authorizations, registrations or licenses
(collectively, 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 each such 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.
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) Except as set forth in Schedule 5.11 hereto, 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) Except as disclosed on Schedule 5.11 hereof, 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
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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 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 lien, claim, encumbrance or defect of title and the
COMPANY is not in material default under any lease.
5.15 Guaranties. 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 have been or are 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 and each Subsidiary 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 such
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,
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"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. The only
Employee Plans which individually or collectively would constitute an "employee
pension benefit plan" as defined in Section 3(2) of ERISA (the "Pension Plans")
are identified as such in Schedule 5.17. 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 January 1, 1990. Each such company has
provided ETS with complete age, salary, service and related data as of December
31, 1995 for employees and former employees of the COMPANY and any affiliate
covered as of the Closing Date under the Pension Plans.
(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 any such company or any affiliate, officer or director of
the 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 the Buyer 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 any such
company or any of its affiliates that would have a material adverse effect on
the business or condition (financial or otherwise) of the COMPANY.
(iii) There is no contract, agreement, plan or arrangement
covering any employee or former employee of any such company or any affiliate
that, individually or
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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 such Employee Plan or Benefit Arrangement
above the level of the expense incurred in respect thereof for the fiscal year
ended on December 31, 1995.
(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 any 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. Except as set forth on Schedule 5.18 hereto or
as contemplated herein, 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 the
COMPANY's balance sheet as of December 31, 1995, 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 December 31, 1995 in the ordinary course of business
consistent with past practice.
5.20 Related Transactions. Except as set forth on Schedule 5.20 hereto,
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 the 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.
12
5.21 Accounts Payable. The COMPANY has delivered to ETS a true, correct
and complete aged list of all accounts payable of such company as of June 30,
1996. No account payable by such a company 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 December 31, 1995, and all accounts receivable
arising 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
as of the Closing Date, have been collected or are collectible in the ordinary
course of business of such 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. 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 materially complied with
and is in material compliance with all federal, state, local and foreign
statutes (civil and criminal), 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
13
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 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 Amcom, and Amcom 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
14
occur at all; (ii) that neither ETS or any of its officers, directors, agents or
representatives nor any prospective underwriters in 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 DAC
ETS and DAC, 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 STOCKHOLDERS actually incur 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. DAC 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 and which will be issued and delivered
pursuant to the terms of the ETS Convertible Securities 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
and which will be issued pursuant to the terms of the ETS Convertible Securities
will not be registered under the ▇▇▇▇ ▇▇▇.
6.3 Due Authorization. ETS and DAC 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 DAC 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
DAC and the consummation by
15
them of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by ETS and DAC 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 DAC 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 DAC is necessary to authorize the execution, delivery and
performance of this Agreement or the transactions contemplated hereby.
6.4 No Violation. Neither ETS or DAC 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 DAC. 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
DAC; (c) any statute, rule, regulation, order or decree of any public body or
authority by which ETS or DAC or any of their properties or assets, may be
bound; (c)any indenture, mortgage, agreement or other instrument to which ETS or
DAC 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 DAC or any
judgment, decree, order, regulation or rule of any court or governmental or
regulatory authority applicable to ETS or DAC 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 DAC 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 Amcom 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 none of such shares were or will be
issued in violation of the preemptive rights of any past or present stockholder.
16
6.7 No Side Agreements. ETS has not entered into any agreement other
than the Amcom Agreement and the agreements contemplated by the Amcom Agreement,
including the employment agreements referred to therein. 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
Amcom.
6.8 Subsidiaries. Except for Amcom, 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 DAC and AAC. 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 DAC has conducted any business since the date of
its inception, except in connection with this Agreement, the Amcom Agreement and
the IPO of ETS Stock. Neither ETS nor DAC 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 Amcom Agreement and the agreements contemplated thereby and to
such agreements as will be filed as Exhibits to the Registration Statement. ETS
and DAC were formed in April and October 1996, respectively, and have no
material historical financial statements or information. Neither ETS nor DAC
have any material liabilities other than those incurred in connection with this
Agreement, the Amcom Agreement and the contemplated IPO of ETS Stock.
6.10 Conformity with Law. Neither ETS nor DAC 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 DAC. There are no
material claims, actions, suits or proceedings, pending or, to the knowledge of
ETS or DAC, threatened, against or affecting ETS or DAC, 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 DAC have been delivered to the COMPANY. Neither ETS
nor DAC 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 DAC, as made available to the COMPANY,
are true and correct.
7. COVENANTS PRIOR TO CLOSING
17
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 Amcom access to all of the COMPANY's
sites, properties, books and records and will furnish ETS and Amcom with such
additional financial and operating data and other information as to the business
and properties of the COMPANY as ETS or Amcom may from time to time reasonably
request. The COMPANY will cooperate with ETS and Amcom, 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, party hereto 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 Amcom Agreement to contain a provision similar to this Section 7.1 requiring
Amcom 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;
(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
18
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;
(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 (including the Subsidiaries), (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,
19
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"), or (3) liens set forth on Schedule 5.14 hereto;
(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 DAC;
(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.
7.6 Notification of Certain Matters. The STOCKHOLDERS and 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 or the STOCKHOLDERS contained herein
to be untrue or inaccurate in any material respect at or prior to the Closing
and (ii) any material failure of any STOCKHOLDER or 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-
20
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 7.7 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 7.8, (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.
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 Amcom 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 Amcom seeks to
amend or supplement a Schedule pursuant to Section 7.7 of the Amcom 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 Amcom 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 or 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.
21
(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 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 amount of the proceeds received by the
STOCKHOLDERS in connection with the Merger. For purposes of calculating
the amount of any proceeds received by a STOCKHOLDER, 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
or the STOCKHOLDERS 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.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY
22
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 ▇▇▇▇▇▇▇" 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.
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
23
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 Amcom shall have occurred simultaneously with the Closing
hereunder.
8.9 Dissenter's Rights. Dissenter's rights shall not have been
exercised by Stockholders holding more than 2% of the outstanding shares of the
Company.
8.10 Employment Agreements. Effective on the Closing Date, ETS
shall have entered into employment agreements with the persons specified on
Schedule 8.10 hereto.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF ETS
The obligations of ETS and DAC 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 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), and the
COMPANY's CEO and CFO shall have delivered to ETS a certificate dated the
Consummation Date to such effect; each and all of the agreements of
24
the COMPANY to be performed on or before the Consummation Date pursuant to the
terms hereof shall have been performed.
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 DAC 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.
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
25
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
AAC and Amcom shall have occurred simultaneously with the Closing hereunder.
10. COVENANTS OF ETS
10.1 Release From Guarantees; Repayment of Certain Obligations. ETS
shall use its best efforts to have each STOCKHOLDER released from any and all
guarantees on any indebtedness that he personally guaranteed for the benefit of
the COMPANY, with all such guarantees on indebtedness being assumed by ETS. In
the event that ETS cannot obtain such releases from the lenders of any such
guaranteed indebtedness on or prior to ninety (90) days subsequent to the
Closing, ETS shall pay off or otherwise refinance or retire such indebtedness
and, in the event that ETS cannot obtain releases on or prior to the Closing,
ETS agrees to indemnify the STOCKHOLDERS against any and all claims made by
lenders under such guarantees which arise as a result of ETS's failure to cause
such guarantees to be released on or prior to the Closings.
11. INDEMNIFICATION
11.1 Indemnification by ETS.
ETS and DAC, 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 DAC 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 DAC under this
Agreement, (iii) any liabilities which the STOCKHOLDERS may incur due to or DAC
under this Agreement, (iv) any liabilities which the STOCKHOLDERS 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 DAC has claims against the COMPANY by reason
of such liabilities); or (v) 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 untrue statement of a
material fact
26
relating to ETS or DAC or Amcom 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
DAC or Amcom 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 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
27
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,
DAC 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 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;
28
(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 Amcom, or its stockholders,
they shall be dissatisfied with any information learned or issues that
arose concerning ETS, Amcom 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 Amcom
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 Amcom, 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 Amcom, 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
13.1 ETS and DAC. ETS and DAC 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 DAC 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 DAC, (ii) disclosure is required by law or the
29
order of any governmental authority under color of law, provided, that prior to
disclosing any information pursuant to this clause (ii), ETS and DAC 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 DAC of the provisions of this Section, the
COMPANY shall be entitled to an injunction restraining ETS and DAC from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting the COMPANY 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
such STOCKHOLDERS will be offered, sold, assigned, pledged, hypothecated,
transferred 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
30
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 DAC 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 Amcom 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 DAC 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 and DAC, 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.
31
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. 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.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with copies to:
▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) If to the COMPANY, addressed to it at:
Delta Parts, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with copies to:
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇, Street and Deinard
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
32
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.
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 of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
33
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
DELTA PARTS, INC.
By:___________________________
Its:_________________________
EXPRESSPOINT TECHNOLOGY
SERVICES, INC.
By:___________________________
Its: ________________________
DELTA ACQUISITION CORP.
By:___________________________
Its:_________________________
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