-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ELTRAX SYSTEMS, INC.,
EJG TECHLINE ACQUIRING CORP.,
EJG TECHLINE, INCORPORATED
XXXXXX X. XXXXXXX, XX.
XXXXXXXX X. XXXXXXX
XXXXX X. XXXXX
AND
XXXXX X. XXXXX
MAY 14, 1997
----------------------------------------------------------------------------
----------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
ARTICLE 1. THE MERGER 1
1.1. The Merger. 1
1.2. Surviving Corporation. 1
1.3. Merger Consideration. 2
1.4. Conversion of Shares. 2
1.5. Closing. 2
1.6. Articles of Incorporation. 2
1.7. Bylaws. 3
1.8. Directors and Officers. 3
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF TECHLINE AND
THE SHAREHOLDERS 3
2.1. Corporate Organization. 3
2.2. Capitalization. 3
2.3. Authorization. 4
2.4. Non-Contravention. 4
2.5. Financial Statements. 4
2.6. Accounts Receivable. 4
2.7. Liabilities. 5
2.8. Investigations; Litigaton. 5
2.9. Absence of Certain Changes. 5
2.10. Title to Property; Condition. 5
2.11. Tax Returns. 5
2.12. Insurance. 6
2.13. Benefit Plans. 6
2.14. Contracts and Commitments; No Default. 6
2.15. Labor Matters. 7
2.16. Intellectual Property Rights. 7
2.17. Hazardous Substances and Hazardous Wastes. 8
2.18. Brokers 8
2.19. Shareholders' Representations. 9
2.20. Accuracy of Information. 10
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF PARENT 10
3.1. Organization. 10
3.2. Authority and Validity of Agreement. 10
3.3. Consents and Approvals. 10
3.4. Capitalization. 11
3.5. Non-Contravention. 11
3.6. Commission Reports. 11
3.7. Accuracy of Information. 11
i
ARTICLE 4. COVENANTS 12
4.1. Techline's Agreements as to Specified Matters. 12
4.2. Confidentiality. 12
4.3. Further Assurances; Cooperation; Notification. 12
4.4. Registration Rights. 13
4.5. Pooling 13
4.6. Maintenance of and Access to Books and Records. 13
4.7. Preparation of Tax Returns. 13
4.8. Amendment of Prior Returns; Audit. 13
4.9. Successors and Assigns. 14
ARTICLE 5. CONDITIONS TO OBLIGATION OF PARENT AND ACQUIRING
SUB 14
ARTICLE 6. CONDITIONS TO THE OBLIGATIONS OF TECHLINE AND
SHAREHOLDERS 14
ARTICLE 7. TERMINATION AND ABANDONMENT 15
7.1. Methods of Termination 15
7.2. Procedure Upon Termination. 15
ARTICLE 8. SURVIVAL AND INDEMNIFICATION 16
8.1. Survival 16
8.2. Indemnification by Parent. 16
8.3. Indemnification by Shareholders. 16
8.4. Limitation on Indemnification. 16
8.5. Indemnification De Minimis Threshold. 17
8.6. Claims for Indemnification. 17
8.7. Shareholder Payment of Indemnification Claims of Parent. 18
ARTICLE 9. MISCELLANEOUS PROVISIONS 18
9.1. Expenses. 18
9.2. Amendment and Modification. 18
9.3. Waiver of Compliance; Consents. 18
9.4. No Third Party Beneficiaries 19
9.5. Notices. 19
9.6. Assignment. 20
9.7. Governing Law. 20
9.8. Counterparts. 20
9.9. Headings. 20
9.10. Entire Agreement. 21
9.11. Injunctive Relief. 21
9.12. Arbitration 21
9.13. Attorneys Fees. 21
9.14. Knowledge of Techline and Shareholders. 21
ii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of May 14, 1997 (the
"Agreement"), is by and among ELTRAX SYSTEMS, INC., a Minnesota corporation
(the "Parent"), EJG TECHLINE ACQUIRING CORP., a California corporation and a
wholly owned subsidiary of Parent ("Acquiring Sub"), EJG TECHLINE,
INCORPORATED, a California corporation ("Techline"), and Xxxxxx X. Xxxxxxx, Xx.
("Gorlitz") and Xxxxxxxx X. Xxxxxxx ("X. Xxxxxxx" and together with
Gorlitz, the "Gorlitzes") and Xxxxx X. Xxxxx ("Xxxxx") and Xxxxx X. Xxxxx
("X. Xxxxx" and together with Xxxxx, the "Quinns"), the shareholders of
Techline (collectively, the "Shareholders").
RECITALS
--------
A. The Boards of Directors of Parent, Acquiring Sub and Techline and
the shareholders of Acquiring Sub and Techline each have approved the merger
of Acquiring Sub with and into Techline, upon the terms and subject to the
conditions set forth herein (the "Merger") and deem it advisable and in the
best interests of their respective shareholders that the foregoing Merger be
consummated;
B. For federal income tax purposes, it is intended that the Merger will
qualify as a reorganization within the meaning of Section 368(a)(2)(E) or
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the
"Code"); and
C. For accounting purposes, it is intended that the Merger will be
accounted for as a pooling of interests within the meaning of Accounting
Principles Board Opinion Xx. 00 ("XXX Xxxxxxx Xx. 00").
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, the parties hereto agree as
follows:
ARTICLE 1.
THE MERGER
1.1. THE MERGER.
Simultaneously with the Closing (defined below), the parties hereto will
effect the Merger by filing the required number of originals of the Agreement
of Merger in the form of Exhibit 1.1. The Merger will become effective at
the time specified in the Articles of Merger (the "Effective Time").
1.2. SURVIVING CORPORATION.
At the Effective Time, Acquiring Sub will be merged with and into
Techline, in accordance with the applicable provisions of the California
General Corporation Law (the "CGCL"), whereupon the separate existence of
Acquiring Sub will cease and Techline will continue as the surviving
corporation (the "Surviving Corporation"). The identity, existence, rights,
privileges, powers, franchises, properties and assets of Techline shall
continue unaffected and unimpaired by the Merger, and all of the rights,
privileges, powers, franchises, properties, and assets of Acquiring Sub shall
be vested in the Surviving Corporation.
1
1.3. MERGER CONSIDERATION.
The aggregate consideration payable to the Shareholders will be Two
Hundred Thirty Thousand (230,000) shares of Parent common stock, par value
$.01 per share (the "Merger Consideration").
1.4. CONVERSION OF SHARES.
At the Effective Time:
(a) Each share of Techline Common Stock outstanding immediately prior
thereto will, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into the right to receive, Two Hundred
Eighty Seven and One-Half (287.50) shares of Parent common stock (in the
aggregate, the "Parent Common Stock"), adjusted to the nearest whole number,
as set forth below:
SHAREHOLDER MERGER CONSIDERATION
------------ ---------------------
Gorlitzes 138,000 shares of Parent Common Stock
Quinns 92,000 shares of Parent Common Stock
(b) Each share of common stock of Acquiring Sub, no par value, issued
and outstanding immediately prior thereto will, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into one
share of the common stock of Techline, no par value.
(c) The Shareholders will cease to have any rights as Shareholders of
Techline, except such rights, if any, as they may have pursuant to the CGCL.
1.5. CLOSING.
The closing of the Merger (the "Closing") will be held on or prior to
May 14, 1997, as determined by Parent, or on such later date as Parent may
decide (the "Closing Date"), but not later than May 20, 1997 (the
"Termination Date"). The Closing will be held at the offices of Techline,
0000 Xxxxx Xxx., Xxx. X., Xxxxxx Xxxxx, Xxxxxxxxxx 00000, or such other
location as the parties hereto shall mutually determine. At the Closing upon
surrender of all the issued and outstanding shares of capital stock of
Techline, Parent will deliver to the Shareholders certificates representing
Two Hundred Thirty Thousand (230,000) shares of Parent Common Stock,
allocated between the Shareholders in accordance with Section 1.4(a).
1.6. ARTICLES OF INCORPORATION.
The articles of incorporation of Techline as in effect immediately prior
to the Effective Time will be the articles of incorporation of the Surviving
Corporation until further amended in accordance with applicable law.
2
1.7. BYLAWS.
The bylaws of Techline as in effect immediately prior to the Effective
Time will be the bylaws of the Surviving Corporation until amended or
repealed in accordance with the articles of incorporation of the Surviving
Corporation and applicable law.
1.8. DIRECTORS AND OFFICERS.
Immediately after the Effective Time of the Merger, the directors and
officers of the Surviving Corporation will be as set forth below, and will
serve in such capacities until their respective successors are duly elected
and qualified:
DIRECTORS OFFICERS
--------- --------
Clunet X. Xxxxx Xxxxxx X. Xxxxxxx, Xx. - President
Clunet X. Xxxxx - Vice President/Secretary
Xxxxxxxx X. Xxxxx - Chief Financial Officer
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES
OF TECHLINE AND THE SHAREHOLDERS
Techline and each of the Shareholders, jointly and severally, represent
and warrant to Parent and to Acquiring Sub that the following statements are
true and correct as of the date hereof and shall be true and correct as of
the Closing Date:
2.1. CORPORATE ORGANIZATION.
Techline is a corporation duly organized, validly existing and in good
standing under the laws of California, has full corporate power and authority
to carry on its business as it is now being conducted and to own, lease and
operate its properties and assets. Techline has heretofore delivered to
Parent complete and correct copies of its articles of incorporation, as
amended, and bylaws, as presently in effect. Except as set forth on Schedule
2.1, Techline is duly qualified or licensed to do business as a foreign
corporation and is in good standing in every jurisdiction in which the
character or location of the properties and assets owned, leased or operated
by it or the nature of the business conducted by it requires such
qualification or licensing, except where the failure to be so qualified,
licensed or in good standing in such other jurisdiction could not,
individually or in the aggregate, have a material adverse effect on the
business of Techline taken as a whole. Techline does not own or control any
interest in any corporation, partnership, joint venture or other business
association or entity.
2.2. CAPITALIZATION.
The authorized capital stock of Techline consists of one thousand
(1,000) shares of common stock, no par value, of which eight hundred (800)
will be issued and outstanding on or prior to the Closing. All issued and
outstanding shares of capital stock of Techline are duly authorized, validly
3
issued, fully paid and nonassessable and have not been issued in violation
of, any preemptive rights. There are no outstanding options, warrants,
conversion privileges or other rights to purchase or acquire any shares of
capital stock or other equity securities of Techline or any outstanding
securities that are convertible into or exchangeable for such shares,
securities or rights. Except as set forth on Schedule 2.2, there are no
contracts, commitments, understandings, arrangements or restrictions by which
Techline or any of its Shareholders are bound to issue or acquire any
additional shares of its capital stock or other equity securities or any
options, warrants, conversion privileges or other rights to purchase or
acquire any capital stock or other equity securities of Techline or any
securities convertible into or exchangeable for such shares, securities or
rights.
2.3. AUTHORIZATION.
The Shareholders and the Board of Directors of Techline have taken all
action required by law, the articles of incorporation and bylaws of Techline
and otherwise to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions described herein (the
"Transactions"). No other consent or approval from any party is necessary to
validly complete the Transactions. This Agreement has been duly and validly
executed and delivered by the Shareholders and Techline, and is the valid and
binding legal obligation of the Shareholders and Techline, enforceable
against each of them in accordance with its terms, subject to the affect of
applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance and other laws affecting the rights of creditors generally (the
"Enforceability Exceptions"), or the availability of specific performance,
injunctive relief and other equitable remedies and to general principles of
equity (regardless of whether such principles are considered in a proceeding
in equity or at law).
2.4. NON-CONTRAVENTION.
Except as set forth on Schedule 2.4, neither the execution, delivery and
performance of this Agreement nor the consummation of the transactions
contemplated herein will: (i) violate or be in conflict with any provision
of the articles of incorporation or bylaws of Techline; or (ii) be in
conflict with, or constitute a default under, any instrument, agreement or
obligation to which Techline is a party.
2.5. FINANCIAL STATEMENTS.
Attached at Schedule 2.5, are the unaudited balance sheet and statement
of earnings for Techline as of and for the fiscal years ended December 1995
and December 1996, which have been based exclusively upon the tax returns of
Techline filed for each such year, and the unaudited balance sheet and
statement of earnings for the three month period ended March 1997 (the
"Latest Balance Sheet") (collectively, the "Financial Statements"). Except as
set forth on Schedule 2.5, the Financial Statements: (i) are in accordance
with the books and records of Techline; (ii) fairly present the financial
position and the results of operations of Techline; and (iii) accurately
state the various account balances.
2.6. ACCOUNTS RECEIVABLE.
Except as set forth on Schedule 2.6: (i) the accounts receivable which
are reflected in the Latest Balance Sheet or which arose subsequent thereto
were validly obtained in the ordinary course of business of Techline; and
(ii) except to the extent of applicable reserves shown in the Latest Balance
Sheet, all of the receivables owing to Techline constitute valid and
enforceable claims arising from bona fide arms-
4
length transactions, and Techline has not received any written or oral
claims, defenses or refusals to pay, or granted any rights of set-off with
respect to any receivables.
2.7. LIABILITIES.
Except as set forth on Schedule 2.7, Techline has no liability or
obligation of any nature, asserted or unasserted, accrued, absolute or
contingent or otherwise, and whether due or to become due, that is required
to be set forth in accordance with generally accepted accounting principles
that is not reflected or reserved against on the Latest Balance Sheet, except
those that may have been incurred after the date of the Latest Balance Sheet
in the ordinary course of business and consistent with past practices.
2.8. INVESTIGATIONS; LITIGATION.
Except as described on Schedule 2.8, Techline has not received any
notice of any claims or actions by anyone against or affecting Techline, nor
to the knowledge of Techline or any of the Shareholders, have any such claims
or actions been threatened. To the knowledge of Techline or any of the
Shareholders, there is no basis for any such claim or action.
2.9. ABSENCE OF CERTAIN CHANGES.
Except as set forth on Schedule 2.9, since March 31, 1997, Techline has
not suffered any adverse change in its condition (financial or otherwise),
working capital, assets, properties, liabilities, obligations, reserves or
businesses, or experienced any event or failed to take any action which could
reasonably be expected to have a material adverse effect on the business of
Techline.
2.10. TITLE TO PROPERTY; CONDITION.
Except as set forth on Schedule 2.10:
(a) Techline has good and marketable title in and to all of the assets
reflected in the Latest Balance Sheet and all of the assets purchased or
otherwise acquired since March 31, 1997 (except for such assets as may have
been sold or otherwise disposed of in the ordinary course of business),
subject to no lien of any kind or nature;
(b) Techline owns no real property;
(c) All inventory of Techline consists of a quality and quantity usable
and salable in the ordinary course of business.
5
2.11. TAX RETURNS.
Proper and accurate amounts have been and will be withheld by Techline from
its employees for federal and state tax purposes and properly deposited in
appropriate accounts, for all periods up to and through the Closing Date in
full and complete compliance with the tax withholding, deposit and payment
provisions of applicable federal, state and local laws. Techline has filed
all federal, state and local, as well as other returns and reports that were
required to be filed for all periods for which returns were due up to and
through the Closing Date, and Techline has made timely payments of all
governmental taxes, levies, duties, license and registration fees, charges or
withholdings of any nature whatsoever ("Taxes") shown to be due and payable
in respect of such returns and reports. To the knowledge of Techline and the
Shareholders, all such returns are true, correct and complete in all material
respects. Techline has had in effect under Code Section 1362 and applicable
California rules, a valid election to be treated as an "S Corporation" since
its inception. Neither Techline nor any Shareholder has taken any action to
revoke that election. Neither Techline nor any Shareholder have any
knowledge of any basis or the existence of any facts that would permit the
Internal Revenue Service to revoke that election as an S Corporation prior to
and including the Closing Date. Since the effective date of Techline's
election to be taxed as an S Corporation prior to and including the Closing
Date, Techline will not have incurred or become liable for the payment of any
corporate level income tax (other than the California tax on S Corporations),
or any related penalties or interest. Except as disclosed on Schedule 2.11,
Techline does not owe any deficiency for any Taxes, and no tax returns are
presently under audit or examination by any federal, state or local tax
authority, and no adjustments have been proposed or asserted by the Internal
Revenue Service or any other agency in respect of any liability for Taxes
arising out of or relating to such returns.
2.12. INSURANCE.
Schedule 2.12 contains an accurate and complete list of all policies of
fire and other casualty, general liability, theft, life, workers'
compensation, health, directors and officers liability, business interruption
and other forms of insurance owned or held by Techline, specifying the
insurer, the policy number, the term of the coverage and the same information
as to predecessor policies for the previous five years. All present policies
are in full force and effect and all premiums that are due as of the date
hereof and as of the Closing Date with respect thereto have been paid.
Neither Techline nor any of the Shareholders has been denied any form of
insurance and no policy of insurance has been revoked or rescinded during the
past three years, except as described under Schedule 2.12.
2.13. BENEFIT PLANS.
Techline does not maintain, is not a party to, bound by or a contributor
to, or required to contribute to, (a) any employee pension benefit plans
whether or not qualified under Section 401(a) of the Code, (b) any employee
welfare benefit plans, or (c) any other compensation, fringe or welfare plan
or program, policy, understanding or arrangement providing plan benefits or
welfare, with respect to its employees or employees of others (collectively,
the "Employee Plans"). As used in this Section, the terms "employee pension
benefit plan" and "employee welfare benefit plan" will have the respective
meanings assigned to such terms in Section 3 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). To the knowledge of
Techline and the Shareholders, all required government filings and
disclosures have been timely and fully made, are true, correct and complete
in all material respects, and no prohibited transaction or other act or
omission which could result in the imposition of an excise tax has occurred.
6
2.14. CONTRACTS AND COMMITMENTS; NO DEFAULT.
Schedule 2.14 sets forth a complete and accurate list of all agreements
or other binding commitments or proposals involving a possible liability or
obligation of Techline or the other party of at least $25,000 within any
one-year period, or which are not terminable without penalty at the option of
Techline upon no more than 30 days' notice (the "Contracts"). The aggregate
amount of the liabilities or obligations of Techline or the other parties
under agreements or other binding commitments or proposals not listed on
Schedule 2.14 does not exceed $100,000. Techline has made available to Parent
true and accurate copies of the Contracts. The Contracts are valid, binding
and in full force and effect, and are enforceable in accordance with their
respective terms (subject to the Enforceability Exceptions). Techline is not
in default under any of the Contracts, nor has any notice of default been
received by Techline. To the knowledge of Techline and the Shareholders, all
other parties to the Contracts have performed or are performing all
obligations required to be performed by them and are not in default
thereunder.
2.15. LABOR MATTERS.
Schedule 2.15 sets forth a list of all employees of Techline and includes
their position, current salary, and 1996 wage information for each person.
Except as set forth on Schedule 2.15 and except as are not material to the
business of Techline: (i) to the knowledge of Techline and the Shareholders,
Techline is and has at all times been in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, including without limitation any such laws
respecting employment discrimination and occupational safety and health
requirements, and has not and is not engaged in any unfair labor practice;
(ii) neither Techline nor any of the Shareholders has received any notice of
any unfair labor practice before the National Labor Relations Board or any
other comparable government authority, and to the knowledge of Techline and
each of the Shareholders, no such complaints have been threatened;
(iii) there is no labor strike, dispute, slowdown or stoppage actually pending
or, to the knowledge of Techline and each of the Shareholders, threatened
against or directly affecting Techline; (iv) no collective bargaining agreement
is binding and in force against either Techline or any of the Shareholders or
currently being negotiated by either Techline or any of the Shareholders;
(v) Techline is not delinquent in payments to any person for any wages,
salaries, commissions, bonuses or other direct or indirect compensation for any
services performed by them or amounts required to be reimbursed to such
persons, including without limitation any amounts due under any pension plan,
welfare plan or compensation plan; and (vi) within the 12 month period prior
to the date hereof there has not been any expression of intention to Techline
by any officer or key employee to terminate such employment.
2.16. INTELLECTUAL PROPERTY RIGHTS.
Except as disclosed on Schedule 2.16, Techline does not own or use any
patents, trade names, service names, trademarks, service marks, copyrights,
or any other intellectual or intangible property or applications therefor and
has not conducted business under any corporate, trade or fictitious name
other than its current corporate name. Neither Techline nor any of the
Shareholders has received any notice of any claims of infringement upon the
rights to any intellectual or intangible property of others or any agreements
or undertakings with respect to any such rights, nor to the knowledge of
Techline and each of the Shareholders, have any such claims been threatened.
7
2.17. HAZARDOUS SUBSTANCES AND HAZARDOUS WASTES.
Except as set forth on Schedule 2.17:
(a) To the knowledge of Techline and its Shareholders, there is not now,
nor has there ever been, any disposal, release or threatened release of
Hazardous Materials (as defined below) on, from or under properties now or
ever owned or leased by or to Techline (the "Properties"). There has not
been generated by or on behalf of Techline any Hazardous Material. No
Hazardous Material has been disposed of or knowingly allowed to be disposed
of on or off any of the Properties during the period that Techline owned or
leased the property which may, to the knowledge of Techline and its
Shareholders, give rise to a clean-up responsibility, personal injury
liability or property damage claim against Techline or Techline being named a
potentially responsible party for any such clean-up costs, personal injuries
or property damage or create any cause of action by any third party against
Techline. For purposes of this subsection, the terms "disposal, "release,"
and "threatened release" shall have the definitions assigned thereto by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, and the term "Hazardous Material" means any hazardous or toxic
substance, material or waste or pollutants, contaminants or asbestos
containing material which is or becomes regulated by any Authority in any
jurisdiction in which any of the Properties is located. The term "Hazardous
Material" includes without limitation any material or substance which is
(i) defined as a "hazardous waste" or a "hazardous substance" under applicable
Law, (ii) designated as a "hazardous substance" pursuant to Section 311 of
the Federal Water Pollution Control Act, (iii) defined as a "hazardous waste"
pursuant to Section 1004 of the Federal Resource Conservation and Recovery
Act, or (iv) defined as a "hazardous substance" pursuant to Section 101 of
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended.
(b) To the knowledge of Techline and its Shareholders, none of the
Properties is (or, with respect to past Properties and Properties of former
subsidiaries, was at the time of disposition) in violation of any law (with
respect to past Properties and Properties of former subsidiaries, laws in
effect at the time of disposition) relating to industrial hygiene or to the
environmental conditions on, under or about such Properties, including
without limitation soil and ground water condition and there are (or at the
time of disposition were) no underground tanks or related piping, conduits or
related structures. During the period that Techline owned or leased the
Properties, to the knowledge of Techline and its Shareholders, neither
Techline nor any third party used, generated, manufactured or stored on,
under or about such Properties or transported to or from such Properties any
Hazardous Materials, and neither Techline nor any of the Shareholders has
received notice of any litigation brought or threatened against Techline, and
there have been no settlements reached by Techline with any third party or
third parties with respect to, or otherwise alleging the presence, disposal,
release or threatened release of any Hazardous Materials on, from or under
any of such Properties.
2.18. BROKERS.
Neither the Shareholders nor Techline or any of its directors, officers or
employees has employed any broker, finder, or financial advisor or incurred
any liability for any brokerage fee or commission, finder's fee or financial
advisory fee, in connection with the transactions contemplated hereby, nor is
8
there any basis known to either Techline or any of the Shareholders for any
such fee or commission to be claimed by any person or entity.
2.19. SHAREHOLDERS' REPRESENTATIONS.
In addition to the foregoing representations of each of the
Shareholders, each of the Shareholders individually represents and warrants
to Parent as follows:
(a) The Shareholders are acquiring the shares of Parent's Common Stock
pursuant to the Merger for such Shareholders' sole account (and such
Shareholders will be the sole beneficial owners thereof) for the purpose of
investment and not with a view to distribution thereof within the meaning of
the Securities Act of 1933, as amended (the "1933 Act"), nor with any present
intention of distribution or selling such shares of Parent Common Stock in
connection with any such distribution, and such Shareholders understand that
such shares have not been registered under the Securities Act and therefore
cannot be resold unless they are registered under the 1933 Act or unless an
exemption from registration is available.
(b) The Shareholders have received the reports, proxy statements and
registration statements listed on Schedule 2.19 (the "Eltrax Reports"), and
have had sufficient time to review and consider such Eltrax Reports. The
Shareholders have been afforded an opportunity to ask questions of and
receive answers from representatives of Parent concerning the terms and
conditions of the Transactions and to obtain any additional information as
such Shareholders have requested in writing to verify the accuracy of the
Eltrax Reports and copies of any exhibits identified in such documents that
such Shareholders have requested.
(c) The Shareholders have accurately, truthfully and completely executed
the Investor Questionnaire, in the form of Exhibit 2.19.
(d) The Shareholders have consented to the following legend on the
certificate or certificates for shares of Parent Common Stock to be issued to
each such Shareholder in connection with the Merger:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES
LAWS AND MAY BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED ONLY IF A
REGISTRATION STATEMENT WITH RESPECT TO SUCH TRANSACTION IS IN EFFECT PURSUANT
TO THE PROVISIONS OF SUCH LAWS OR IF, IN THE OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH LAWS IS AVAILABLE.
9
2.20. ACCURACY OF INFORMATION.
Neither this Agreement, the Exhibits and Schedules hereto, the Financial
Statements, nor any other document delivered in connection herewith and
expressly referred to herein, contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained therein or herein not misleading in light of the circumstances
under which they were made. All information and documents provided prior to
the date of this Agreement, and all information and documents subsequently
provided to Parent or its representatives by or on behalf of Techline or the
Shareholders are or contain, or will be or will contain as to subsequently
provided information or documents, true, accurate and complete information in
all material respects with respect to the subject matter thereof in light of
the circumstances under which they were made. Techline and the Shareholders
promptly shall notify Parent of any change or event which could adversely
affect the assets, operations, business, condition or prospects of Techline.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
OF PARENT
The Parent represents and warrants to the Shareholders that the
following statements are true and correct as of the date hereof and shall be
true and correct as of the Closing Date:
3.1. ORGANIZATION.
Each of Parent and Acquiring Sub is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation and each has all requisite corporate power and authority to
own, lease and operate its respective properties and to carry on its business
as it is now being conducted. Acquiring Sub is a recently-formed California
corporation that has not conducted, and will not conduct prior to the
Closing, any activities other than those incident to its formation and in
connection with the consummation of the Merger. Each of Parent and Acquiring
Sub is duly qualified and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary and
where the failure to qualify could have a material adverse effect on the
business, results of operations or financial condition of the Parent and its
subsidiaries taken as a whole.
3.2. AUTHORITY AND VALIDITY OF AGREEMENT.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Boards of Directors of Parent and Acquiring Sub and by Parent
as the sole shareholder of Acquiring Sub, and no other corporate proceedings
on the part of Parent or Acquiring Sub are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed by each of Parent and Acquiring
Sub and constitutes valid and binding obligations of Parent and Acquiring
Sub, enforceable against each of them in accordance with their terms, subject
to the Enforceability Exceptions.
10
3.3. CONSENTS AND APPROVALS.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not, except for any applicable
requirements of the 1933 Act and the rules and regulations thereunder and
state securities laws, and the filing and recordation of appropriate merger
documents as required by the CGCL, require any filing with or permit, consent
or approval of any authority.
3.4. CAPITALIZATION.
The authorized capital stock of the Parent consists of 50,000,000 shares
of Parent Common Stock and 970,000 shares of undesignated preferred stock, of
which there were 7,582,063 shares of Parent Common Stock issued and
outstanding on April 15, 1997. All shares of Parent Common Stock to be
issued and delivered in the Merger will be, at the time of issuance and
delivery, validly issued, fully paid, nonassessable and free of preemptive
rights.
3.5. NON-CONTRAVENTION.
Neither the execution, delivery and performance of this Agreement nor
the consummation of the transactions contemplated herein will: (i) violate
or be in conflict with any provision of the articles or certificate of
incorporation or bylaws of the Parent or Acquiring Sub; or (ii) be in
conflict with, or constitute a default under, any instrument or other
agreement or obligation to which the Parent or Acquiring Sub is a party.
3.6. COMMISSION REPORTS.
Parent has duly and timely made all required filings with the Securities
and Exchange Commission (the "Commission") under the 1933 Act and the
Securities Exchange Act of 1934 (the "Exchange Act"), each as amended, and
all of the reports, forms and documents so filed complied in all material
respects with all applicable requirements.
3.7. ACCURACY OF INFORMATION.
Neither this Agreement, the Eltrax Reports, nor any other document
delivered in connection herewith and expressly referred to herein, contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein or herein not
misleading in light of the circumstances under which they were made. All
information and documents provided prior to the date of this Agreement, and
all information and documents subsequently provided to the Shareholders or
their representatives by or on behalf of Parent are or contain, or will be or
will contain as to subsequently provided information or documents, true,
accurate and complete information in all material respects with respect to
the subject matter thereof, in light of the circumstances under which they
were made. Parent promptly shall notify the Shareholders of any change or
event which could adversely affect the assets, operations, business,
condition or prospects of Parent.
11
ARTICLE 4.
COVENANTS
4.1. TECHLINE'S AGREEMENTS AS TO SPECIFIED MATTERS.
Except as agreed to in writing by Parent, from the date hereof until the
Closing Date, Techline will operate its business only in the ordinary course
consistent with past practice. Techline will use and the Shareholders will
cause it to use its best efforts to preserve intact its business
organizations, existing business relationships, goodwill and going concern
value.
4.2. CONFIDENTIALITY.
The parties hereto will not use, or permit the use of, any of the
non-public information relating to any other party hereto furnished to it in
connection with the transactions contemplated herein ("Information") in a
manner or for a purpose detrimental to such other party or otherwise than in
connection with the transaction, and they will not disclose, divulge, provide
or make accessible (collectively, "Disclose"), or permit the Disclosure of,
any of the Information to any person or entity, other than their responsible
directors, officers, employees, investment advisors, accountants, counsel and
other authorized representatives and agents, except as may be required by
judicial or administrative process or, in the opinion of such party's
counsel, by other requirements of law, unless the disclosing party first
obtains the prior written consent of the other parties hereto. The parties
hereto also will promptly return to the party from whom originally received
all original and duplicate copies of written materials containing Information
should the transactions contemplated herein not occur. This Section 4.2
survives Closing and any termination of this Agreement.
4.3. FURTHER ASSURANCES; COOPERATION; NOTIFICATION.
(a) Each party hereto will, before, at and after Closing, execute and
deliver such instruments and take such other actions as the other party or
parties, as the case may be, may reasonably require in order to carry out the
intent of this Agreement, including, but not limited to, any securities
filings.
(b) At all times from the date hereof until the Closing, each party will
promptly notify the other in writing of the occurrence of any event which it
reasonably believes will or may result in a failure by such party to satisfy
the conditions specified in Article 5 and Article 6 hereof.
(c) Techline and the Shareholders shall promptly notify Parent of any
change or event which could adversely affect the assets, operations,
business, condition or prospects of Techline. Parent shall notify the
Shareholders of any change or event which could adversely affect the assets,
operations, business, condition or prospects of Parent.
12
4.4. REGISTRATION RIGHTS.
Parent agrees to provide the Shareholders with the registration rights
with respect to Parent Common Stock they receive as Merger Consideration as
set forth on Exhibit 4.4 hereto.
4.5. POOLING.
The Shareholders will take no action that is inconsistent with pooling
of interests accounting treatment for the Merger under APB Opinion No. 16,
including, but not limited to the agreement of each Shareholder that he will
not sell, transfer or otherwise dispose of his or its shares of Parent Common
Stock before Parent publicly discloses, based on the financial statements of
the Parent and the Surviving Corporation on a combined basis, the combined
earnings of Parent and Surviving Corporation which includes at least a thirty
(30) day period of combined operations. Shareholders and Parent acknowledge
and agree that it is anticipated that such first public disclosure by Parent
will be through Parent's filing of its quarterly report on Form 10-QSB for
the quarter ended June 30, 1997, which filing is due on August 14, 1997.
4.6. MAINTENANCE OF AND ACCESS TO BOOKS AND RECORDS.
For three (3) years after the Closing, the Parent will cause the
Surviving Corporation to maintain all of the financial, accounting, tax and
other books and records of Techline with respect to any period prior to the
Closing and to cooperate with and provide the Shareholders and their
authorized representatives reasonable access to any and all of such records
during normal business hours.
4.7. PREPARATION OF TAX RETURNS.
The Parent and the Shareholders will cooperate and jointly prepare
and/or cause Techline to prepare, at the Parent's expense, any and all of
Techline's income tax returns necessary for the period beginning on January
1, 1997 and ending immediately prior to the Closing (the "Stub Returns").
Items of income and loss for the month of May, 1997 will be allocated 10/22
(45.45%) to such Stub Returns.
4.8. AMENDMENT OF PRIOR RETURNS; AUDIT.
The Surviving Corporation will not file any amended federal, state,
local or other tax return, or take any other action which would increase the
taxable income or tax liability of any of the Shareholders for any period
prior to the Closing without the written consent of the Shareholders. In the
event of an audit of any of the tax returns of the Company for any period
prior to the Closing, the Parent will provide copies of any and all notices
of such audit and correspondence related to such audit to the Shareholders,
who will have the right to participate in the conduct of the audit, and any
appeal or other proceeding resulting therefrom. Neither the Parent nor the
Surviving Corporation will agree to any assessment, adjustment or other
modification of the tax returns or tax liability of Techline for any period
prior to the Closing (collectively, a "Deficiency"), provided such Deficiency
increases the tax liability of the Shareholders without the prior written
consent of the Shareholders.
13
4.9. SUCCESSORS AND ASSIGNS.
The Parent will not assign or otherwise transfer control of the
Surviving Corporation or approve any liquidation, merger, consolidation, or
sale of substantially all of the assets of the Surviving Corporation, unless
the person or persons acquiring control of the Surviving Corporation, or the
successor-in-interest of the Surviving Corporation in the event of any such
action other than a transfer of the Surviving Corporation's Stock, agrees to
the foregoing covenants set forth in Section 4.6 to 4.9 hereof.
ARTICLE 5.
CONDITIONS TO OBLIGATION OF PARENT AND ACQUIRING SUB
The following are conditions to the obligations of the Parent and Acquiring
Sub to close the Transactions:
(a) The accuracy of the representations and warranties of Techline and
the Shareholders contained in this Agreement;
(b) The full performance of all obligations of each of Techline and the
Shareholders contained in this Agreement;
(c) Parent's receipt of the opinion of Allen, Matkins, Xxxx, Xxxxxx &
Xxxxxxx, LLP, counsel for Techline, dated on the Closing Date, in the form
reasonably agreed to by counsel for Parent.
(d) Parent's receipt of the employment and non-competition agreements of
the Shareholders, in a form reasonably agreed to by and among the Parent and
Shareholders; and
(e) Parent's receipt of advice from Coopers & Xxxxxxx LLP that the
Merger qualifies as a pooling of interests transaction under APB Opinion
No. 16.
ARTICLE 6.
CONDITIONS TO THE OBLIGATION OF TECHLINE AND SHAREHOLDERS
The following are conditions to the obligations of Techline and the
Shareholders to close the Transactions:
(a) The accuracy of the representations and warranties of Parent
contained in this Agreement;
14
(b) The full performance of all obligations of the Parent contained in
this Agreement;
(c) Techline's receipt of the opinion of Jaffe, Raitt, Heuer & Xxxxx,
P.C., counsel for Parent, dated on the Closing Date, in the form reasonably
agreed to by counsel for Techline;
(d) The receipt by Gorlitz and Xxxxx of employment and non-competition
agreements with Parent, in a form reasonably agreed to by and among each such
employee and the Parent;
(e) The receipt by the Shareholders of reasonable assurance from
counsel for Parent that the Merger will constitute a tax-free reorganization
under the Internal Revenue Code of 1986, as amended; and
(f) On the business day immediately preceding the Closing, shares of
Parent's common stock shall have traded at a price per share of at least Four
Dollars ($4.00).
ARTICLE 7.
TERMINATION AND ABANDONMENT
7.1. METHODS OF TERMINATION.
This Agreement may be terminated and the transactions contemplated herein
may be abandoned in accordance with the following:
(a) By mutual written consent of Parent, Acquiring Sub, Techline and the
Shareholders;
(b) By the Parent and Acquiring Sub, if any of the conditions provided
for in Article 5 have not been satisfied or waived in writing by Parent prior
to Closing; or
(c) By Techline and the Shareholders, if any of the conditions provided
for in Article 6 have not been satisfied or waived in writing by Techline and
Shareholders prior to Closing; and
(d) On May 31, 1997, if the Transactions have not already closed.
7.2. PROCEDURE UPON TERMINATION.
In the event of termination and abandonment pursuant to Section 7.1(a),
written notice thereof will forthwith be given to the other party or parties,
and the provisions of this Agreement (except to the extent provided in
Section 9.1) will terminate, and the transactions contemplated herein will be
abandoned, without further action by any party hereto. If this Agreement is
terminated as provided herein: (i) each party will, upon request, redeliver
all documents, work papers and other material of any
15
other party (and all copies thereof) relating to the transactions contemplated
herein, whether so obtained before or after the execution hereof, to the
party furnishing the same; (ii) the confidentiality obligations of Section
4.2 will continue to be applicable; and (iii) except as provided in this
Section, no party will have any liability for a breach of any representation,
warranty, agreement, covenant or other provision of this Agreement, unless
such breach was due to a willful or bad faith action or omission of such
party or any representative, agent, employee or independent contractor
thereof.
ARTICLE 8.
SURVIVAL AND INDEMNIFICATION
8.1. SURVIVAL.
The representations, warranties and covenants of each of the parties
hereto will survive the Closing until one (1) year after the Closing Date.
8.2. INDEMNIFICATION BY PARENT.
Parent agrees to indemnify each of the Shareholders from and against any
and all loss, liability or damage suffered or incurred by them including any
and all costs and expenses, including without limitation reasonable legal
fees and expenses incurred, in connection with enforcing the indemnification
rights of Shareholders pursuant to this Section 8.2 by reason of (i) any
untrue representation of or breach of warranty set forth in Article 3, and
(ii) any and all loss, liability or damage suffered or incurred by the
Shareholders by reason of any nonfulfillment of any covenant, agreement or
undertaking of Parent in this Agreement
8.3. INDEMNIFICATION BY SHAREHOLDERS.
The Shareholders jointly and severally agree to indemnify Parent,
Acquiring Sub, their directors, officers, employees and agents, from and
against any and all loss, liability or damage suffered or incurred by it
including any and all costs and expenses, including without limitation
reasonable legal fees and expenses incurred, in connection with enforcing the
indemnification rights of Parent or Acquiring Sub pursuant to this Section
8.3 by reason of (i) any untrue representation of or breach of warranty set
forth in Article 2, and (ii) any and all loss, liability or damage suffered
or incurred by Parent or Acquiring Sub by reason of any nonfulfillment of any
covenant, agreement or undertaking of Techline or any Shareholder in this
Agreement.
8.4. LIMITATION ON INDEMNIFICATION.
Each Shareholders' aggregate indemnification obligations under this
Article 8 will be limited to: (a) the Merger Consideration received by such
Shareholder multiplied by the trading price of Parent's stock on the Closing
Date, (b) in the case of the Quinns, forty percent (40%) of any indemnified
claim or loss, and (c) in the case of the Gorlitzes, sixty percent (60%) of
any indemnified claim or loss.
16
8.5. INDEMNIFICATION DE MINIMIS THRESHOLD.
(a) Except as expressively provided otherwise herein, and subject to the
provisions of Section 8.5(b), neither the Shareholders nor the Parent, as the
case may be, will be entitled to indemnification under this Agreement unless
the aggregate of all claims with respect to matters arising hereunder is more
than One Hundred Thousand Dollars ($100,000) (the "Threshold Amount"). When
the aggregate amount of all such indemnification claims hereunder equals or
exceeds the Threshold Amount, the Parent or the Shareholders, as the case may
be, will be entitled to full indemnification of all claims, including the One
Hundred Thousand Dollars ($100,000) that amounted to the Threshold Amount.
Once the aggregate amount of all indemnification claims hereunder equal or
exceed the Threshold Amount, the Shareholders or the Parent, as the case may
be, will be entitled to full indemnification for all claims. The parties
hereto agree that the Threshold Amount is not a deductible amount, nor will
the Threshold Amount will be deemed to be a definition of "material" for any
purpose in this Agreement.
(b) Notwithstanding the foregoing, in the case of any untrue
representation with respect to which any party had actual knowledge or had
actual knowledge of the potential or probable loss, liability or damage
(based on actual knowledge of the facts and circumstances giving rise to such
loss, liability or damage), without disclosing such information on or prior
to the Closing Date, such party shall pay the full indemnification claim
without regard to the Threshold Amount or the time limitation set forth in
Section 8.1.
8.6. CLAIMS FOR INDEMNIFICATION.
The parties intend that all indemnification claims hereunder be made as
promptly as practicable by the party seeking indemnification (the
"Indemnified Party"). Whenever any claim arises for indemnification hereunder
the Indemnified Party will promptly notify the party from whom
indemnification is sought (the "Indemnifying Party") of the claim and, when
known, the facts constituting the basis for such claim. In the case of any
such claim for indemnification hereunder resulting from or in connection with
any claim or legal proceedings of a third party (a "Third Party Claim"), the
notice to the Indemnifying Party will specify, if known, the amount or an
estimate of the amount of the liability arising therefrom. The Indemnifying
Party shall have the right to dispute and defend all Third Party Claims and
thereafter so defend and pay any adverse final judgment or award or
settlement amount in regard thereto. Such defense shall be controlled by the
Indemnifying Party, and the cost of such defense shall be borne by the
Indemnifying Party, except that the Indemnified Party shall have the right to
participate in such defense at its own expense, and PROVIDED, HOWEVER that
the Indemnifying Party must first acknowledge that the claim is a bona fide
indemnification claim under this Agreement. The Indemnified Party shall
cooperate in all reasonable respects in the defense of any such claim,
including making personnel, books, and records relevant to the claim
available to the Indemnifying Party, without charge, except for reasonable
out-of-pocket expenses. If the Indemnifying Party fails to take action
within thirty (30) days as set forth above, then the Indemnified Party shall
have the right to pay, compromise or defend any Third Party Claim and to
assert the amount of any payment on the Third Party Claim plus the reasonable
expenses of defense or settlement of the claim. The Indemnified Party shall
also have the right, exercisable in good faith, to take such action as may be
necessary to avoid a default prior to the assumption of the defense of the
Third Party Claim by the Indemnifying Party, and any reasonable expenses
incurred by Indemnified Party so acting shall be paid by the Indemnifying
Party. Except as otherwise provided herein, the Indemnified Party will not
settle or compromise any Third Party Claim for
17
which it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party, which will not be unreasonably withheld.
If the Indemnifying Party is of the opinion that the Indemnified Party is not
entitled to indemnification, or is not entitled to indemnification in the
amount claimed in such notice, it will deliver, within ten (10) business days
after the receipt of such notice, a written objection to such claim and
written specifications in reasonable detail of the aspects or details
objected to, and the grounds for such objection. If the Indemnifying Party
filed timely written notice of objection to any claim for indemnification,
the validity and amount of such claim will be determined by arbitration
pursuant to Section 9.12 hereof. If timely notice of objection is not
delivered or if a claim by an Indemnified Party is admitted in writing by an
Indemnifying Party or if an arbitration award is made in favor of an
Indemnified Party, the Indemnified Party, as a non-exclusive remedy, will
have the right to set-off the amount of such claim or award against any
amount yet owed, whether due or to become due, by the Indemnified Party or
any subsidiary thereof to any Indemnifying Party by reason of this Agreement
or any agreement or arrangement or contract to be entered into at the Closing.
8.7. SHAREHOLDER PAYMENT OF INDEMNIFICATION CLAIMS OF PARENT.
In the discretion of each of the Shareholders, any payment on a claim
made pursuant to Section 8.6, may be made in cash or shares of Parent Common
Stock, with the value of such shares, for purposes of satisfying any such
claim, equal to the trading price of Parent's stock in effect on the Closing
Date.
ARTICLE 9.
MISCELLANEOUS PROVISIONS
9.1. EXPENSES.
Each of the parties hereto will bear its own costs, fees and expenses in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, including without limitation fees, commissions and
expenses payable to brokers, finders, investment bankers, consultants,
exchange or transfer agents, attorneys, accountants and other professionals,
whether or not the Transactions are consummated, PROVIDED, however, that
subject to review of invoices and approval by Parent, Parent shall pay the
reasonable legal and accounting expenses of Techline directly related to the
Merger, but only if the Transactions are consummated.
9.2. AMENDMENT AND MODIFICATION.
Subject to applicable law, this Agreement may be amended or modified by
the parties hereto at any time prior to the Closing with respect to any of
the terms contained herein; provided, however, that all such amendments and
modifications must be in writing duly executed by all of the parties hereto.
9.3. WAIVER OF COMPLIANCE; CONSENTS.
Any failure of a party to comply with any obligation, covenant,
agreement or condition herein may be expressly waived in writing by the party
entitled hereby to such compliance, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition will
not
18
operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. No single or partial exercise of a right or remedy will
preclude any other or further exercise thereof or of any other right or
remedy hereunder. Whenever this Agreement requires or permits the consent by
or on behalf of a party, such consent will be given in writing in the same
manner as for waivers of compliance.
9.4. NO THIRD PARTY BENEFICIARIES.
Nothing in this Agreement will entitle any person or entity (other than
a party hereto and his, her or its respective successors and assigns
permitted hereby) to any claim, cause of action, remedy or right of any kind.
9.5. NOTICES.
All notices, requests, demands and other communications required or
permitted hereunder will be made in writing and will be deemed to have been
duly given and effective: (i) on the date of delivery, if delivered
personally; (ii) on the earlier of the fourth (4th) day after mailing or the
date of the return receipt acknowledgment, if mailed, postage prepaid, by
certified or registered mail, return receipt requested; or (iii) on the date
of transmission, if sent by facsimile, telecopy, telegraph, telex or other
similar telegraphic communications equipment:
If to either Techline or the Shareholders:
To: EJG Techline, Inc.
0000 Xxxxx Xxxxxx, Xxxxx X
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx.
Fax: (000) 000-0000
With a copy to:
Allen, Matkins, Xxxx, Xxxxxx & Xxxxxxx, LLP
00000 Xxx Xxxxxx, Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: S. Xxx Xxxxxxx, Esq.
Fax (000) 000-0000
or to such other person or address as either Techline or the Shareholders
will furnish to the other parties hereto in writing in accordance with this
Section.
19
If to Parent or the Acquiring Sub:
To: Eltrax Systems, Inc.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Clunet X. Xxxxx
Fax: (000) 000-0000
With a copy to:
Jaffe, Raitt, Heuer & Xxxxx
Xxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
or to such other person or address as either Parent or Acquiring Sub will
furnish to the other parties hereto in writing in accordance with this
Section.
9.6. ASSIGNMENT.
This Agreement and all of the provisions hereof will be binding upon and
inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned (whether voluntarily,
involuntarily, by operation of law or otherwise) by any of the parties hereto
without the prior written consent of the other parties, provided, however,
that Parent may assign this Agreement upon notice to Techline and each of the
Shareholders, in whole or in any part, and from time to time, to a
wholly-owned, direct or indirect, subsidiary of Parent, if Parent remains
bound hereby.
9.7. GOVERNING LAW.
This Agreement and all legal relations among the parties hereto will be
governed by and construed in accordance with the internal substantive laws of
the State of Minnesota (without regard to principles of conflict of laws that
might otherwise apply) as to all matters, including without limitation
matters of validity, construction, effect, performance and remedies.
9.8. COUNTERPARTS.
This Agreement may be executed simultaneously in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
9.9. HEADINGS.
The table of contents and the headings of the sections and Sections of
this Agreement are inserted for convenience only and will not constitute a
part hereof.
20
9.10. ENTIRE AGREEMENT.
The Schedules and the Exhibits and other writings referred to in this
Agreement, together with this Agreement embody the entire agreement and
understanding of the parties hereto in respect of the transactions
contemplated by this Agreement and together they are referred to as "this
Agreement" or the "Agreement". This Agreement supersedes all prior and
contemporaneous oral and written agreements and understandings between the
parties with respect to the transaction or transactions contemplated by this
Agreement (including without limitation the letter of intent dated April 1,
1997 between Parent, Techline, and Shareholders and all amendments and
extensions thereof).
9.11. INJUNCTIVE RELIEF.
It is expressly agreed among the parties hereto that monetary damages
would be inadequate to compensate a party hereto for any breach by any other
party of its covenants in Section 4.2. Accordingly, the parties agree and
acknowledge that any such violation or threatened violation will cause
irreparable injury to the other and that, in addition to any other remedies
which may be available, such party will be entitled to injunctive relief
against the threatened breach of Section 4.2 hereof or the continuation of
any such breach without the necessity of proving actual damages and may seek
specific enforcement of the terms thereof.
9.12. ARBITRATION.
With the sole exception of the injunctive relief contemplated by Section
9.11 hereof, any controversy or claim arising out of or relating to this
Agreement, or the making, performance or interpretation hereof, including
without limitation alleged fraudulent inducement hereof, will be settled by
binding arbitration in Southfield, Michigan by a panel of three arbitrators
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Judgment upon any arbitration award may be entered
in any court having jurisdiction thereof and the parties consent to the
jurisdiction of the courts of the State of Michigan for this purpose.
9.13. ATTORNEYS FEES.
If any arbitration, litigation or similar proceedings are brought by any
party to enforce any obligation or to pursue any remedy under this Agreement,
the party prevailing in any such arbitration, litigation or similar
proceedings will be entitled to costs of collection, if any, and reasonable
attorneys fees incurred in connection with such proceedings and in collecting
or enforcing any award granted therein.
9.14. KNOWLEDGE OF TECHLINE AND SHAREHOLDERS.
Where any representation or warranty contained in this Agreement is
expressly qualified by reference to the knowledge of Techline and the
Shareholders, such phrase will include the actual present knowledge of either
one or all of the Shareholders assuming that such Shareholders have made
reasonable diligent inquiry as to the matters that are the subject of the
representations and warranties.
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PARENT: TECHLINE:
Eltrax Systems, Inc. EJG Techline, Incorporated
By: /s/ Xxxx X. Xxxxxxx III By: /s/ Xxxxxx X. Xxxxxxx, Xx.
------------------------------ ------------------------------
Xxxx X. Xxxxxxx III, its President Xxxxxx X. Xxxxxxx, Xx., its President
ACQUIRING SUB: By: /s/ Xxxxx X. Xxxxx
-------------- ------------------------------
Xxxxx X. Xxxxx, its Secretary
EJG Techline Acquiring Corp.
By: /s/ Clunet X. Xxxxx
-------------------
Clunet X. Xxxxx, its President SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxxx, Xx.
-------------------------
Xxxxxx X. Xxxxxxx, Xx.
/s/ Xxxxx X. Xxxxx
------------------
Xxxxx X. Xxxxx
/s/ Xxxxxxxx X. Xxxxxxx
------------------------
Xxxxxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxx
------------------
Xxxxx X. Xxxxx
EXHIBITS and SCHEDULES
----------------------
Exhibit 1.1 Articles of Merger - Acquiring Sub into Techline
Schedule 2.1 Techline Disclosure Regarding Corporate Organization
Schedule 2.2 Techline Disclosure Regarding Outstanding Stock
Schedule 2.4 Techline Disclosure Regarding Non-Contravention
Schedule 2.5 Techline Disclosure Regarding Financials
Schedule 2.6 Techline Disclosure Regarding Accounts Receivable
Schedule 2.7 Techline Disclosure Regarding Liabilities
Schedule 2.8 Techline Disclosure Regarding Litigation
Schedule 2.9 Techline Disclosure Regarding Adverse Changes
Schedule 2.10 Techline Disclosure Regarding Title to Assets
Schedule 2.11 Techline Disclosure Regarding Taxes
Schedule 2.12 Techline Disclosure Regarding Insurance
Schedule 2.13 Techline Disclosure Regarding Benefit Plans
Schedule 2.14 Techline Disclosure Regarding Contract
Schedule 2.15 Techline Disclosure Regarding Labor Matters
Schedule 2.16 Techline Disclosure Regarding Intellectual Property
Schedule 2.17 Techline Disclosure Regarding Hazardous Substances
Schedule 2.19 Parent Disclosure of Eltrax Reports
Exhibit 2.19 Investor Questionnaire
Exhibit 4.4 Registration Rights of Shareholders
In accordance with Item 601(b)(2) of Regulation S-K, the exhibits and
schedules described in the List of Exhibits and Schedules of this Agreement
have not been filed with the Current Report on Form 8-K to which this
Agreement is an exhibit. The Registrant hereby agrees to furnish
supplementally copies of such exhibits and schedules to the Commission upon
request.
