EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
U-SHIP, INC.
ADVANCED COURIER SERVICES, INC.
TWIN CITY TRANSPORTATION, INC.
AND
THE SHAREHOLDER OF
TWIN CITY TRANSPORTATION, INC.
JANUARY 13, 1999
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TABLE OF CONTENTS
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AGREEMENT AND PLAN OF REORGANIZATION...........................................1
ARTICLE 1 - THE MERGER.........................................................1
Section 1.1 THE MERGER................................................1
Section 1.2 CLOSING...................................................2
Section 1.3 EFFECTIVE TIME............................................2
Section 1.4 EFFECT OF THE MERGER......................................2
Section 1.5 ARTICLES OF INCORPORATION AND BY-LAWS.....................2
Section 1.6 DIRECTORS AND OFFICERS....................................2
ARTICLE 2 - CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES.................2
Section 2.1 CONVERSION OF SECURITIES..................................2
Section 2.2 EXCHANGE OF CERTIFICATES, CASH............................3
Section 2.3 STOCK TRANSFER BOOKS......................................5
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE SHAREHOLDER...............................................5
Section 3.1 ORGANIZATION..............................................6
Section 3.2 ARTICLES OF INCORPORATION AND BY-LAWS.....................6
Section 3.3 CAPITALIZATION............................................6
Section 3.4 AUTHORITY RELATIVE TO THIS AGREEMENT......................6
Section 3.5 CONSENTS AND APPROVALS; NO VIOLATIONS.....................7
Section 3.6 COMPLIANCE................................................7
Section 3.7 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.............9
Section 3.8 ABSENCE OF CERTAIN CHANGES................................9
Section 3.9 ENVIRONMENTAL MATTERS....................................11
Section 3.10 LITIGATION...............................................11
Section 3.11 ERISA COMPLIANCE, ETC....................................12
Section 3.12 TRADEMARKS...............................................12
Section 3.13 TAXES....................................................12
Section 3.14 LABOR AND EMPLOYMENT MATTERS.............................13
Section 3.15 SHAREHOLDER LOANS........................................13
Section 3.16 ADEQUACY OF PROPERTIES...................................13
Section 3.17 OWNED REAL PROPERTY......................................14
Section 3.18 TANGIBLE PERSONAL PROPERTY...............................14
Section 3.19 BANK ACCOUNTS............................................14
Section 3.20 RECEIVABLES; AGING.......................................14
Section 3.21 NO BURDENSOME CONTRACTS..................................14
Section 3.22 BROKERS..................................................14
Section 3.23 CONTRACTS AND OTHER AGREEMENTS...........................15
Section 3.24 SUBSIDIARIES.............................................16
Section 3.25 INSURANCE................................................16
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Section 3.26 ABSENCE OF CERTAIN BUSINESS PRACTICES....................16
Section 3.27 VEHICLES.................................................16
Section 3.28 VEHICLE REGISTRATION.....................................16
Section 3.29 AFFILIATE TRANSACTIONS...................................16
Section 3.30 EMPLOYEES................................................16
Section 3.31 DISCLOSURE...............................................17
Section 3.32 MILLENNIAL DATA..........................................17
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF U-SHIP..........................17
Section 4.1 ORGANIZATION.............................................17
Section 4.2 ARTICLES OF INCORPORATION AND BY-LAWS....................18
Section 4.3 CAPITALIZATION...........................................18
Section 4.4 AUTHORITY RELATIVE TO THIS AGREEMENT.....................18
Section 4.5 CONSENTS AND APPROVALS; NO VIOLATIONS....................18
Section 4.6 SEC REPORTS..............................................19
Section 4.7 BROKERS..................................................19
Section 4.8 ENVIRONMENTAL MATTERS....................................19
Section 4.9 LITIGATION...............................................20
Section 4.10 TRADEMARKS...............................................20
Section 4.11 TAXES....................................................20
Section 4.12 NO BURDENSOME CONTRACTS..................................20
Section 4.13 DISCLOSURE...............................................20
Section 4.14 COMPLIANCE...............................................21
ARTICLE 5 - COVENANTS PENDING CLOSING.........................................21
Section 5.1 COVENANTS OF THE COMPANY AND SHAREHOLDER.................21
Section 5.2 NO SOLICITATIONS.........................................24
Section 5.3 ACCESS TO INFORMATION; CONFIDENTIALITY...................24
Section 5.4 FURTHER ACTION; REASONABLE BEST EFFORTS..................24
Section 5.5 PUBLIC ANNOUNCEMENTS.....................................25
Section 5.6 COVENANTS OF SHAREHOLDER.................................25
Section 5.7 NOTIFICATION OF CERTAIN MATTERS..........................26
ARTICLE 6 - FEDERAL SECURITIES LAWS MATTERS...................................26
Section 6.1 DEFINITIONS..............................................26
Section 6.2 RESALE REGISTRATION......................................27
Section 6.3 REGISTRATION PROCEDURES..................................29
Section 6.4 REGISTRATION EXPENSES....................................30
Section 6.5 INDEMNIFICATION AND CONTRIBUTION.........................31
Section 6.6 TRANSFER OF REGISTRATION RIGHTS..........................32
Section 6.7 LIMITATION ON RESALE.....................................32
Section 6.8 REPRESENTATIONS AND WARRANTIES...........................32
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ARTICLE 7 - CONDITIONS........................................................34
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER..................................................34
Section 7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF U-SHIP...........34
Section 7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY......35
ARTICLE 8 - TERMINATION AND AMENDMENT.........................................37
Section 8.1 TERMINATION..............................................37
Section 8.2 EFFECT OF TERMINATION....................................37
Section 8.3 AMENDMENT................................................38
Section 8.4 EXTENSION; WAIVER........................................38
ARTICLE 8A - PROVISIONS AS TO TAX MATTERS.....................................38
Section 8A.1 CERTAIN TAX RETURNS......................................38
ARTICLE 9 - SURVIVAL; INDEMNIFICATION.........................................39
Section 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES...............39
Section 9.2 INDEMNIFICATION BY SHAREHOLDER...........................39
Section 9.3 METHOD OF ASSERTING CLAIMS...............................40
Section 9.4 ASSIGNMENT OF INSURANCE; SUBROGATION.....................41
Section 9.5 INDEMNIFICATION OF SHAREHOLDER IN RESPECT TO LIABILITIES
ASSUMED..................................................41
ARTICLE 10 - MISCELLANEOUS....................................................42
Section 10.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS..............................................42
Section 10.2 NOTICES..................................................42
Section 10.3 DESCRIPTIVE HEADINGS.....................................43
Section 10.4 COUNTERPARTS.............................................43
Section 10.5 ENTIRE AGREEMENT.........................................43
Section 10.6 GOVERNING LAW............................................43
Section 10.7 SPECIFIC PERFORMANCE.....................................43
Section 10.8 EXPENSES.................................................44
Section 10.9 PARTIES IN INTEREST......................................44
Section 10.10 SEVERABILITY.............................................44
Section 10.11 CERTAIN DEFINITIONS......................................44
EXHIBIT A - ARTICLES OF MERGER...............................................A-1
EXHIBIT B - FORM OF WARRANT..................................................B-1
EXHIBIT C - [INTENTIONALLY DELETED]..........................................C-1
EXHIBIT D - OPINION OF COUNSEL TO COMPANY....................................D-1
EXHIBIT E - FORM OF EMPLOYMENT AGREEMENT.....................................E-1
EXHIBIT F - OPINION OF COUNSEL TO U-SHIP.....................................F-1
EXHIBIT G - FORM OF AFFILIATE LETTER.........................................G-1
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of January 13, 1999 (the
"Agreement"), by and among Twin City Transportation, Inc., a Minnesota
corporation (the "Company") and Xxxxxx X. Xxxxxxxx (the "Shareholder"), Advanced
Courier Services Inc., a Minnesota corporation ("ACS") and U-Ship, Inc., a Utah
corporation ("U-Ship").
WHEREAS, upon the terms and subject to the conditions of this Agreement
and in accordance with the Minnesota Business Corporation Act ("Minnesota Law")
ACS and the Company will enter into a business combination transaction pursuant
to which the Company will merge with and into ACS (the "Merger") and in
connection therewith U-Ship, Inc., parent corporation of ACS, will issue to the
Shareholder: (a) that number of shares of Common Stock, par value $.004 per
share, of U-Ship, Inc. ("U-Ship Common Stock") as determined by Section 2.1
hereof; (b) $400,000 by certified or cashiers check; and (c) a Warrant for the
purchase of 1,000 shares of U-Ship Common Stock, all in exchange for each share
of Common Stock, par value $.01 per share, of the Company ("Company Common
Stock") that the Shareholder owns (and cash in lieu of any fractional share of
U-Ship Common Stock that such shareholder would otherwise be entitled to); and
WHEREAS, the Board of Directors and the Shareholder of the Company has
determined that the Merger is consistent with and in furtherance of the
long-term business strategy of the Company and is fair to, and in the best
interests of, the Company and Shareholder and have approved and adopted this
Agreement, the Merger and the other transactions contemplated hereby; and
WHEREAS, the Boards of Directors of U-Ship, Inc. and ACS have
determined that the Merger is consistent with and in furtherance of the
long-term business strategy of U-Ship and ACS and is fair to, and in the best
interests of, U-Ship and have approved and adopted this Agreement, the Merger
and the other transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, the Shareholder, ACS and U-Ship hereby agree as follows.
ARTICLE 1
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the relevant provisions of
Minnesota Law, at the Effective Time (as defined in Section 1.3), the Company
shall be merged with and into ACS. As a result of the Merger, the separate
corporate existence of the Company shall cease and ACS shall continue as the
surviving corporation (the "Surviving Corporation") of the Merger.
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Section 1.2 CLOSING. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1, and subject to the satisfaction or waiver of the conditions set
forth in Article 7, the consummation of the Merger will take place as promptly
as practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article 7 at the offices of ACS at 0000
Xxxx 00xx Xxxxxx, Xxxxx, Xxxxxxxxx, unless another date, time or place is agreed
to in writing by the parties hereto. The date of such consummation is
hereinafter referred to as the "Closing Date."
Section 1.3 EFFECTIVE TIME. On the Closing Date or as promptly as
practicable thereafter, the parties hereto shall cause the Merger to be
consummated by filing articles of merger in the form of Exhibit A attached
hereto with the Secretary of State of the State of Minnesota duly executed in
accordance with the relevant provisions of Minnesota Law (the date and time of
such filing with the Minnesota Secretary of State, or such later date or time as
set forth therein, being the "Effective Time").
Section 1.4 EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Minnesota Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise provided herein, all the property, rights
privileges, powers and franchises of the Company shall vest in ACS, and all
debts, liabilities and duties of the Company shall become the debts, liabilities
and duties of ACS.
Section 1.5 ARTICLES OF INCORPORATION AND BY-LAWS.
(a) The Articles of Incorporation of ACS as in effect
immediately prior to the Effective Time shall remain the Articles of
Incorporation of ACS after the Effective Time without any modification
or amendment in the Merger.
(b) The By-laws of ACS as in effect immediately prior to the
Effective Time shall remain the By-laws of ACS without any modification
or amendment in the Merger.
Section 1.6 DIRECTORS AND OFFICERS. The directors and officers of ACS
immediately prior to the Effective Time shall be the directors and officers of
ACS (retaining their respective positions and terms of office).
ARTICLE 2
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1 CONVERSION OF SECURITIES. At the Effective Time and without
any action on the part of ACS, the Company or the holder of Company Common
Stock, each of the following shall occur:
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(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted, subject to
the provisions of Section 2.2(c), into the right to receive 4.2333 of
shares of U-Ship Common Stock and the sum of $400.00 (such number of
shares and each payment hereinafter referred to as the "Exchange
Ratio"). The aggregate number of shares of U-Ship Common Stock issuable
pursuant to this Agreement shall be 423,330, and the aggregate amount
of cash payments shall be $400,000. Notwithstanding the foregoing, if
between the date of this Agreement and the Effective Time the
outstanding shares of U-Ship Common Stock shall have been changed into
a different number of shares or a different class or series, by reason
of any stock dividend, subdivision, reclassification, recapitalization,
split, combination, exchange of shares or any similar action which
would increase or decrease the number of issued and outstanding shares,
the Exchange Ratio and the U-Ship Common Stock Price that determines
the Exchange Ratio and the Warrant and Warrant Exercise Price referred
to below, shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split,
combination, exchange of shares or other action. Upon such conversion
all shares of Company Common Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist,
and each certificate previously evidencing any such shares shall
thereafter represent the right to receive, subject to the escrow
requirements of Section 2.2(c), upon the surrender of such certificate
in accordance with the provisions of Section 2.2, certificates
evidencing such number of whole shares of U-Ship Common Stock into
which such Company Common Stock was converted in accordance with the
Exchange Ratio. The Shareholder, as sole holder of such certificates
previously evidencing such shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights
with respect to such shares of Company Common Stock, except as
otherwise provided herein or by law. No fractional shares of U-Ship
Common Stock shall be issued in connection with the Merger, and in lieu
thereof, a cash payment shall be made in accordance with the provisions
of Section 2.2(c).
(b) Each share of Company Common Stock held in the treasury of
the Company, if any, shall automatically be canceled and extinguished
without any conversion thereof and no payment shall be made with
respect thereto.
(c) The Shareholder, as sole holder of the Company Common
Stock, shall be entitled to receive, at the Effective Time, a warrant
(the "Warrant") in the form of Exhibit B, for the purchase of 1,000
shares of U-Ship Common Stock, par value $.004 per share, exercisable
for twenty-four months at an exercise price of $1.063 per share (the
"Warrant Exercise Price").
Section 2.2 EXCHANGE OF CERTIFICATES, CASH AND WARRANTS; ESCROW.
(a) As soon as practicable after the Effective Time, U-Ship
shall deliver to the Shareholder: (a) certificates representing the
U-Ship Common Stock required to be issued pursuant to Section 2.1;
(b)$400,000 by certified or cashiers check; and (c) the Warrant,
against receipt of certificates representing the outstanding Company
Common
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Stock and the remaining documents and instruments to be delivered by
Shareholder pursuant to the Agreement.
(b) No fraction of a share of U-Ship Common Stock shall be
issued in connection with the Merger. In lieu of any such fractional
shares, each holder of Company Common Stock upon surrender of a
certificate for exchange pursuant to this Section 2.2 shall be paid an
amount in cash (without interest), rounded to the nearest cent,
determined by multiplying (i) the closing sale price of a share of
U-Ship Common Stock as reported by Nasdaq on the last trading day
immediately preceding the Effective Time, by (ii) the fraction of a
share of U-Ship Common Stock to which such holder would otherwise be
entitled to receive under Section 2.1 of this Agreement.
(c) On the Effective Date, concurrent with the delivery to the
Shareholder of the U-Ship Common Stock, the Shareholder shall deliver
to U-Ship, Inc. to hold as escrow property pursuant to the terms of
this Section 2.2(c), 47,000 shares of U-Ship Common Stock (the "Escrow
Shares"). Notwithstanding such escrow, the Shareholder shall retain all
voting rights and all rights to all dividends and other distributions
with respect to the Escrow Shares. The Escrow Shares shall, from and
after the date of delivery to U-Ship pursuant to this Section 2.2(c) be
appropriately adjusted to take into account any stock split, stock
dividend, reverse stock split, recapitalization, or other like change
that may occur between the date of delivery to U-Ship and the date on
which any or all of such Escrow Shares are delivered to the Shareholder
pursuant to this Agreement. The Escrow Shares shall be held, canceled
or released, as the case may be, in accordance with the following terms
and conditions:
(i) Subject to Section 9.2(a), the Escrow Shares
shall be released from escrow and distributed to the
Shareholder within 30 days after a final determination that
shall indicate that for a period ending six full calendar
months following the month in which the Effective Time occurs;
ACS has average gross margin for any two consecutive months of
such six month period of at least 20.45% ("Gross Margin").
(ii) Gross Margin shall mean gross revenues less cost
of sales divided by gross revenues times 100 from courier
operations, determined in accordance with generally accepted
accounting principles ("GAAP"), before taxes, interest,
depreciation and amortization, computed without regard to
extraordinary items of gain or loss (as those terms shall be
defined in accordance with GAAP); without including any gains,
losses or profits realized from the sale of capital assets;
and without deducting expenses for management fees or general
overhead expenses or charges charged by U-Ship or any other
affiliate of U-Ship, except that U-Ship may charge interest
on advances to ACS at a rate of not more than two percentage
points above the prime interest rate as stated in the WALL
STREET JOURNAL at the date of any such advances; provided,
however, that there shall be deducted as an expense an amount
equal to the normal overhead and other general and
administrative expenses of a business comparable to that
incurred or experienced by TCT prior to its merger with
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ACS. In connection with any inter-company transfers of goods
or services between ACS and any other affiliate of ACS or
U-Ship, the same shall be adjusted to reflect amounts that ACS
would have paid or incurred if dealing with an unrelated party
on an arms-length basis. In the event any other business,
business line or entity is acquired by ACS or otherwise
included in the operations of ACS during such six-month
measurement period, Gross Margin shall be determined in a
manner to exclude both revenues and expenses of such other
business, business line or entity and shall be determined in a
manner to reduce any effect, positive or negative, from the
operations of such additional business, business line or
entity.
(iii) At such time as it has been determined that
Gross Margin has been achieved, the Escrow Shares shall be
distributed to the Shareholder as provided in Section
2.2(c)(i). If such Gross Margin has not been achieved, the
Escrow Shares shall be canceled by U-Ship. U-Ship shall give
the Shareholder a full accounting of its determination of
Gross Margin and shall give Shareholder at least ten (10)
days' notice prior to the date on which the Escrow Shares are
to be canceled. If the Shareholder objects to such
cancellation and sets forth a specific basis for such
objection, the parties agree to meet within seven (7) days
following U-Ship's receipt of such objection. The parties
shall attempt to resolve any dispute over U-Ship's
determination of the Gross Margin of ACS. If such objection
cannot be resolved by them, either party hereto may require
that such dispute be submitted to arbitration by and in
accordance with the rules of the American Arbitration
Association. The arbitration shall be conducted by a single
arbitrator who shall be an accountant or who shall be
knowledgeable in accounting matters. The decision of the
arbitrator shall be conclusive and binding on the parties
hereto.
Section 2.3 STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. On or after the Effective Time, any certificates
presented to U-Ship for any reason shall be converted into shares of U-Ship
Common Stock pursuant to Section 2.1(a) and/or cash pursuant to Section 2.1(c).
Section 2.4 ARTICLES OF MERGER. Concurrent with the transactions
described in Section 2.2 (a) and (c), the Company and ACS shall execute and
deliver the Articles of Merger, in the form of Exhibit A, and the parties hereto
shall execute and deliver the Agreement and Plan of Merger attached thereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE SHAREHOLDER
To induce ACS and U-Ship to enter into this Agreement, the Company and
the Shareholder, represent, warrant and covenant to ACS and U-Ship as follows:
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Section 3.1 ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Minnesota.
The Company has the requisite power and authority and all necessary governmental
approvals to own, lease and operate its properties and to conduct its businesses
as currently conducted, except where the failure to have such power, authority
or governmental approval would not, individually or in the aggregate, have a
Company Material Adverse Effect (as defined below). The Company is not qualified
or licensed as a corporation in any jurisdiction other than Minnesota. The
Company's business activities in Wisconsin are not, and have not been of a
nature that require it to be qualified as a foreign corporation in that state.
The term "Company Material Adverse Effect" means any change or effect that is or
would be materially adverse to the business, results of operations or financial
condition of the Company taken as a whole.
Section 3.2 ARTICLES OF INCORPORATION AND BY-LAWS. The Company has
previously delivered to ACS and U-Ship a true, complete and correct copy of the
Articles of Incorporation and the By-laws or equivalent organizational
documents, each as amended to date, of the Company. Such Articles of
Incorporation, By-laws and equivalent organizational documents are in full force
and effect. The Company is not in violation of any provision of its Articles of
Incorporation, By-laws or equivalent organizational documents.
Section 3.3 CAPITALIZATION. The authorized capital stock of the Company
consists of 100,000 shares of Company Common Stock no par value, of which 1,000
shares are issued and outstanding. The Company has no restricted Company Common
Stock that is subject to vesting or a restricted stock grant. All of the
outstanding shares of Company Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable and free of preemptive rights, and
the Shareholder owns the outstanding shares of Company Common Stock free and
clear of all liens, charges, encumbrances, equities, claims and options of any
kind whatsoever. The Company does not have any outstanding options, warrants,
subscriptions or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Company or
obligating the Company to issue or sell any shares of capital stock of, or other
equity interests in, the Company. There are no agreements or understandings to
which the Company or any of the Shareholder is a party with respect to the
voting of any shares of Company Common Stock or which restrict the transfer of
any such shares. There are no outstanding contractual obligations of the Company
to repurchase, redeem or otherwise acquire any shares of capital stock of the
Company.
Section 3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company and the
Shareholder have all necessary power and authority to execute and deliver this
Agreement, to perform their obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of the Company, and no other corporate proceedings or action on the
part of the Company are necessary to authorize this Agreement or to consummate
the transactions contemplated by this Agreement (other than the approval of the
Merger and this Agreement by the holders of not less than two-thirds of the
outstanding shares of Company Common Stock and the filing and recordation of
appropriate merger documents as required by Minnesota Law). This Agreement has
been duly and validly executed and delivered by the Company and the
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Shareholder and, assuming the due authorization, execution and delivery by
U-Ship and ACS, constitutes the valid and binding agreement of the Company and
the Shareholder, enforceable against them in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization or
other laws and subject to general principles of equity.
Section 3.5 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except as set forth in Section 3.5(a), the execution and
delivery of this Agreement by the Company does not, and the performance
of the transactions contemplated by this Agreement by the Company will
not, require any filing with or notification to, or any consent,
approval, authorization or permit from, any governmental or regulatory
authority, domestic or foreign (a "Governmental Entity") or any other
person except for (i) applicable requirements of the Securities Act,
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and state securities or "blue sky" laws, and (ii) the filing and
recordation of Articles of Merger as required by Minnesota Law.
(b) The execution and delivery of this Agreement by the
Company does not, and the performance of the transactions contemplated
by this Agreement by the Company will not, (i) conflict with or violate
the Articles of Incorporation, By-laws or equivalent documents of the
Company or (ii) result in a violation or a breach of, or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or result in the loss of a benefit under, or
give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the
Company is a party or by which the Company or any property or asset of
the Company is bound or affected, except for any of the foregoing that
would not, individually or in the aggregate, have a Company Material
Adverse Effect. To the best of their knowledge, the execution and
delivery of this Agreement and the performance of the transactions
contemplated by this Agreement will not conflict with or violate any
order, injunction, decree, law, rule or regulation applicable to the
Company or by which its assets or property is bound or affected.
Section 3.6 COMPLIANCE.
(a) Except for any of the following that would not,
individually or in the aggregate, have a Company Material Adverse
Effect and except as set forth in Schedule 3.6 the Company has all
licenses, permits, franchises, orders or approvals of any federal,
state, local or foreign governmental or regulatory body or other
Governmental Entity which are necessary for the conduct of the business
of the Company as presently conducted (collectively, "Company
Permits"), and such Company Permits are in full force and effect and no
proceeding is pending or, to the best knowledge of the Company and the
Shareholder, threatened to revoke or limit any Company Permit. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement will not adversely affect
any Company Permit or result in any Company
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Permit being either revoked or limited in any material respect. The
Company has made available for review by ACS and U-Ship all Company
Permits. Shareholder agrees to indemnify and hold harmless ACS and
U-Ship from any damages or fines assessed against them for action
occurring prior to the Effective Time and arising from Company's lack
of Interstate Common Carrier Authority
(b) Except for any of the following that would not,
individually or in the aggregate, have a Company Material Adverse
Effect and except as set forth in Schedule 3.6, the Company is not in
conflict with, or in default or violation of, (i) any law, rule,
ordinance, regulation, order, judgment or decree applicable to the
Company or by which any property or asset of the Company is bound or
affected or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company is a party or by which the Company or
any property or asset of the Company is bound or affected. To the best
knowledge of the Company and the Shareholder, no other party to any
material contract or agreement to which the Company is a party is in
default and no event or condition exists or has occurred which, after
notice or lapse of time, or both, would constitute a default
thereunder. No investigation or review by any Governmental Entity or
any other person concerning any such possible violations by the Company
is pending or, to the best knowledge of the Company and the
Shareholder, threatened, nor has any Governmental Entity or any other
person indicated an intention to conduct the same.
(c) Except as provided in Schedule 3.6(c), the Company
possesses all material U.S., state and local operating authorities
required to operate its motor carrier business as presently conducted.
Schedule 3.6(c) contains a list of (i) all jurisdictions in which the
Company operates, and (ii) all jurisdictions in which the Company has
been granted operating authority. Except as provided in Schedule
3.6(c), each jurisdiction in which the Company operates but does not
possess authority does not require such authority or the Company is not
subject to such jurisdiction's regulation. Except as provided in
Schedule 3.6(c), the Company is in good standing in all material
respects with the Surface Transportation Board and in all jurisdictions
in which it operates, and, to the knowledge of the Company it has done
nothing to jeopardize any operating authority under which it operates.
Except as provided in Schedule 3.6(c), the Company has owned, leased,
and used all of their properties and assets, and has conducted its
business, in full compliance with all applicable federal, state and
local laws and regulations. Except as provided in Schedule 3.6(c), the
Company has not been charged with any violation of law except for any
non-compliance which would be immaterial (it being understood that for
the purpose of this sentence, immaterial means having no dollar
impact). No proceeding is pending or threatened by any governmental
authority with respect to any violation of law by the Company. Except
as provided in Schedule 3.6(c), the Company possesses all permits,
licenses, franchises, interstate and intrastate operating rights, and
other approvals of governmental authorities (collectively, "Permits")
required to operate its business, such Permits are in full force and
effect, any applications for renewal have been duly filed on a timely
basis, no proceeding is pending or threatened to revoke or limit any
Permit, and the Company is operating in full compliance with all
Permits. The Company does not
8
engage and has not engaged in, the transportation of Hazardous
Materials as defined in 49 CFR 170-189.
Section 3.7 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) The Company has previously delivered to ACS and U-Ship the
following financial statements:
(i) Unaudited Balance Sheet, Statement of Income of
the Company for the years ending December 31, 1995, 1996 and
1997; and
(ii) Unaudited Balance Sheet of the Company as of
October 31, 1998 (the most recent date being referred to as
the "Latest Balance Sheet") and a statement of operations for
the eleven month period then ended.
The foregoing financial statements, together with the balance sheets
and statements of operations of the Company to be delivered to ACS and
U-Ship from the date hereof until the Closing Date in accordance with
Section 5.1(b), are hereinafter collectively called "Company Financial
Statements." Except as set forth in Schedule 3.7, the Company Financial
Statements delivered or to be delivered to ACS and U-Ship pursuant
hereto fairly present in all material respects, or when delivered to
ACS and U-Ship will fairly present in all material respects, the
financial position, results of operations, net assets and retained
earnings of the Company as of the dates and for the periods therein set
forth.
(b) Except as set forth in Schedule 3.7, as of the date of the
Latest Balance Sheet, the Company had no material liability, obligation
or commitment of any kind or nature whatsoever, known or unknown,
whether absolute, accrued, contingent or otherwise, and whether due or
to become due, which was not reflected or reserved against in the
Latest Balance Sheet.
(c) To the best of the knowledge of the Company and
Shareholder, the Company has all accounting records and supporting
documentation related to the Company Financial Statements for the years
ending December 31, 1997 and December 31, 1998 (including Northland
Courier, Inc.), including without limitation invoices, cancelled
checks, deposit slips, bank statements and other such material
necessary for ACS and U-Ship's accountant to audit the books of the
Company. Shareholder will cooperate with ACS, U-Ship and their
representatives to facilitate the timely access to such records in
order for U-Ship to have prepared an audit of such Company Financial
Statements in accordance with SEC guidelines.
Section 3.8 ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule
3.8, since the date of the Latest Balance Sheet the Company has not:
(a) Undergone any change in its financial condition,
properties, assets, liabilities, business or operations other than
changes in the ordinary course of business
9
which have not had, either in any case or in the aggregate, a Company
Material Adverse Effect;
(b) Declared, set aside, made or paid any dividend or other
distribution in respect of the Company Common Stock or purchased or
redeemed, directly or indirectly, any shares of Company Common Stock;
(c) Issued or sold any shares of capital stock of any class or
any options, subscriptions, warrants or other rights to purchase any
such shares or any securities convertible into or exchangeable for such
shares;
(d) Incurred any indebtedness for borrowed money other than in
the ordinary course of business or issued or sold any debt securities;
(e) Subjected any of its properties to, or permitted any of
its properties or assets to become subject to, any lien, claim,
encumbrance or other adverse interest other than in the ordinary course
of business;
(f) Acquired or disposed of any assets or properties of
material value except in the ordinary course of business;
(g) Forgiven or canceled any debts or claims or waived any
rights except in the ordinary course of business;
(h) Entered into any material transaction other than in the
ordinary course of business;
(i) Granted to any officer, salaried employee or other
employee any increase in compensation in any form, except merit
increases consistent with prior practices and increases required by
written agreements; granted to any officer or salaried employee or
former employee any severance or termination pay (including but not
limited to excess parachute payments as said term is defined at Section
280G(b)(l) of the Code; or entered into any employment agreement with
any officer or salaried employee that provides or may provide for the
payment of a "parachute payment" as defined by Section 280(G)(b)(2)(A)
of the Code or is not terminable by the employer, without cause and
without penalty or liability, upon notice of 30 days or less;
(j) Adopted or amended any ERISA Plan or Non-ERISA Arrangement
(as each is defined below), (whether or not legally binding) except to
the extent required to comply with law;
(k) Incurred any liability, obligation or commitment, whether
absolute, accrued, contingent or otherwise, and whether due or to
become due except in the ordinary course of business;
10
(l) Received any notice of termination of any Company Permit,
material contract or agreement or suffered any damage, destruction or
loss (whether or not covered by insurance) which, in any case or in the
aggregate, has had or insofar as can reasonably be foreseen is probable
of having a Company Material Adverse Effect;
(m) Made any change in accounting policies or practices,
including any change in depreciation or amortization policies;
(n) Suffered any strike or other labor trouble or received
notice of any material controversy with any of its employees;
(o) Suffered any loss of customers which has had, or insofar
as can reasonably be foreseen will have, a Company Material Adverse
Effect;
(p) Made any capital expenditures or capital additions or
improvements in excess of $4,000 in the aggregate; or
(q) Entered into any agreement or made any commitment to take
any of the types of action described in clauses (a) through (p) of this
Section 3.8.
Section 3.9 ENVIRONMENTAL MATTERS. The Company and its subsidiaries are
in compliance with all Environmental Laws, except for any noncompliance that,
either singly or in the aggregate, could not have a Company Material Adverse
Effect. "Environmental Laws" shall mean all federal, state and local laws,
rules, regulations, ordinances and orders that purport to regulate the release
of hazardous substances or other materials into the environment, or impose
requirements relating to environmental protection. The Company has previously
furnished to U-Ship a true and correct list of all Hazardous Materials (as
hereinafter defined) generated, used, handled or stored by the Company or any of
its subsidiaries, the proper disposal of which will require any material
expenditure by the Company or any of its subsidiaries. "Hazardous Materials"
means any "hazardous waste" as defined in either the United States Resource
Conservation and Recovery Act or regulations adopted pursuant to said act, any
"hazardous substances" or "hazardous materials" as defined in the United States
Comprehensive Environmental Response, Compensation and Liability Act and, to the
extent not included in the foregoing, any medical waste. The Company has
previously made available to U-Ship copies of all documents concerning any
environmental or health and safety matter adversely affecting the Company and
copies of any environmental audits or risk assessments, site assessments,
documentation regarding off-site disposal of Hazardous Materials, spill control
plans and material correspondence with any Governmental Entity regarding the
foregoing.
Section 3.10 LITIGATION. Except as set forth in Schedule 3.10, there is
no litigation, claim, suit, action, proceeding, investigation or complaint
pending or, to the best knowledge of the Shareholder and the Company, threatened
against the Company or any of its officers or directors before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign.
11
Section 3.11 ERISA COMPLIANCE, ETC.
(a) The Company does not now maintain and has never had an
"employee welfare benefit plans," "employee benefit plan," "employee
pension benefit plan," "defined contribution plan" or "multi-employer
plan" (all as defined in Section 3 of the Employee Retirement Income
Security Act of 1974 as amended ("ERISA") and any applicable rules and
regulations promulgated thereunder (an "ERISA Plan")), or any other
bonus or incentive plan, stock option plan, restricted stock plan,
stock bonus plan, deferred bonus plan, salary reduction agreement,
change-of-control agreement, employment agreement, consulting
agreement, severance agreement or plan, material fringe benefit plan or
payroll practice, whether written or oral.
Section 3.12 TRADEMARKS.
(a) General. The Company does not own, or possesses licenses
rights to use, any trademarks, trademark rights, trade names, trade
name rights, service marks, service xxxx rights, trade secrets, or have
applications to register or registrations for, the foregoing. To the
best knowledge of the Company and the Shareholder, the conduct of the
business of the Company as currently conducted does not conflict in any
way with any patent, patent rights, license, trademark, trademark
right, trade name, trade name right, service xxxx, copyright or other
proprietary right of any other person, the Company has received no
claim or threat that any such conflict exists, and no litigation,
claim, suit, action, proceeding, or complaint concerning the foregoing
has been filed or is pending.
Section 3.13 TAXES. To the best of the Company's and the Shareholder's
knowledge, the Company has timely filed all federal, state, local and foreign
tax returns and reports required to be filed by it through the date hereof and
shall timely file all returns and reports required on or before the Effective
Time. Such reports and returns are and will be true, correct and complete in all
material respects. To the best of the Company's knowledge, the Company has paid
and discharged all federal, state, local and foreign taxes due from it, other
than such taxes that are being contested in good faith by appropriate
proceedings and are adequately reserved for as shown in the Latest Balance
Sheet. Neither the IRS nor any other taxing authority or agency, domestic or
foreign, is now asserting or, to the best knowledge of the Shareholder and the
Company, threatening to assert against the Company any deficiency or claim for
additional taxes or interest thereon or penalties in connection therewith. To
the best of the Company's knowledge, the accruals and reserves for taxes
(including interest and penalties, if any, thereon) reflected in the Latest
Balance Sheet are adequate in accordance with generally accepted accounting
principles to cover all liabilities of the Company (including those arising from
possible audit adjustments) for all periods ending on or prior to the date of
the Latest Balance Sheet. To the best of the knowledge of the Company and the
Shareholder, the Company has withheld or collected and paid over to the
appropriate governmental authorities or are properly holding for such payment
all taxes required by law to be withheld or collected. There are no liens for
taxes upon the assets of the Company. The Company has not agreed to or is not
required to make any adjustment under Section 481(a) of the Code. The Company
has not made an election under Section 341(f) of the Code. The Company is not
subject to any agreement or obligation to indemnify any other person for tax
liabilities. No payment will be made to any
12
"disqualified individual" as defined in Section 280G(c) of the Code as a result
of the Merger that will result in a loss of deduction by U-Ship or ACS as a
result of the provisions of Section 280G of the Code. The Company has elected to
be an "S corporation" pursuant to Section 1362(a) of the Code beginning with the
tax year starting January 1, 1993, and such election has, at all times since
such date, remained in effect. The Company has elected or is otherwise entitled,
to be treated in a manner comparable to the federal tax treatment under Section
1362(a) of the Code, for purposes of the tax imposed on a corporation by the
states set forth on Schedule 3.13 hereto. The Company is subject to a tax
imposed on a corporation in the jurisdictions set forth on Schedule 3.13 hereto,
with respect to which no analogous election has been made. No action has been
taken by the Company or by any of its shareholders (other than the execution of
this Agreement) which has resulted, or will result, in the termination of the
status of the Company as an "S corporation" pursuant to Section 1362(a) of the
Code, or any comparable status with respect to any other jurisdiction.
Section 3.14 LABOR AND EMPLOYMENT MATTERS. There is not currently, and
within the last three years the Company has not experienced, any strike,
picketing, boycott, work stoppage or slow down or union organization activity.
No employee of the Company is represented by a union or any similar entity and
there is no request for representation pending. The Company and Shareholder have
no knowledge (i) of any allegation, charge or complaint of unfair labor
practice, employment discrimination or other matter relating to the employment
of labor pending or threatened against the Company, or (ii) of any basis for any
such allegation, charge or complaint. Except as provided in Schedule 3.6(c):
(a), the Company maintains files on all employee and independent contractor
truck drivers; (b) each employee and independent contractor driver of the
Company meets all Department of Transportation ("DOT") requirements, and all
driver files contain all required materials; (c) all independent contractors
providing equipment and/or services to the Company have been retained under
valid contracts that comply with DOT leasing rules and qualify for independent
contractor status under existing IRS rules and interpretations, and (d) the
Company has taken no action in respect of its employees that would require
notice or create liability under the Worker Adjustment and Retraining
Notification Act, and the Company has no present plan to take such action. The
Company has complied with all applicable laws relating to the employment of
labor except for violations which would not, either singly or in the aggregate
have a Company Material Adverse Effect.
Section 3.15 SHAREHOLDER LOANS. Except as set forth in Schedule 3.15,
there are no loans, advances or other obligations for borrowed money owing by
the Company to the Shareholder or any Affiliate of the Shareholder as of the
date hereof other than the Company's obligations for employee compensation and
expense reimbursement to the Shareholder arising in the ordinary course of
business. The Shareholder has no claim of any kind against the Company other
than for employee compensation and expense reimbursements arising in the
ordinary course of business (none of which is past due).
Section 3.16 ADEQUACY OF PROPERTIES. The Company owns, leases or
otherwise has adequate rights to use all tangible and intangible personal
property necessary for the conduct of its business in the manner in which such
business is presently being conducted with no conflict with or infringement of
the rights of others, and none of such property or the Company's rights thereto
is subject to any proceeding pending, or to the best knowledge of the Company
and the
13
Shareholder, threatened, which may result in the revocation, termination,
supervision, cancellation or adverse modification of any such property.
Section 3.17 OWNED REAL PROPERTY. The Company owns no real property.
Schedule 3.17 sets forth a complete and accurate list of all real estate leases
to which the Company is a party, each of which is held by the Company on a
month-to-month basis, terminable upon 30 days written notice. The Company is not
in default under any such lease.
Section 3.18 TANGIBLE PERSONAL PROPERTY. Schedule 3.18 contains a
complete and accurate list as of the date of the Latest Balance Sheet of all
items of tangible personal property owned or leased by the Company or used by
the Company in the ordinary course of its business (including vehicles) with an
individual value of greater than $1,000. Except for tangible personal property
that is leased or rented by the Company and as set forth in Schedule 3.18, the
Company has good and valid title to all of such tangible personal property,
including all items of tangible personal property reflected on the Latest
Balance Sheet, free of all liens, charges, encumbrances and other adverse claims
not reflected in the Latest Balance Sheet, except those assets disposed of or
consumed in the ordinary course of business since the date of the Latest Balance
Sheet. All such tangible personal property is in good working order, condition
and repair and suitable to carry out and conduct the Company's business as
presently conducted. To the best of Company's and Shareholders knowledge, all
parts, tires, and other inventory related to transportation and vehicles are
usable by the Company, and not obsolete and such vehicles are properly equipped
in compliance with applicable federal and Minnesota Department of Transportation
regulations.
Section 3.19 BANK ACCOUNTS. Schedule 3.19 contains a true, complete and
accurate list of the name and address of each bank or other depository in which
the Company has an account or safe deposit box and the name and title of each
person authorized to draw thereon or have access thereto, the amount of
authorized borrowing, if any, and the extent to which such borrowing has been
exercised.
Section 3.20 RECEIVABLES; AGING. Schedule 3.20 contains a true, correct
and complete list as of the date of the Latest Balance Sheet of all accounts
receivable, contract receivables, notes receivable and other receivables. The
accounts, contracts, notes and other receivables of the Company which remain
uncollected on the date hereof, have arisen in the ordinary course of business.
Section 3.21 NO BURDENSOME CONTRACTS. To the best knowledge of the
Company and the Shareholder, the Company is not a party to, and its business is
not bound by, any contract which will, by its terms under current circumstances,
result in a loss to the Company that would have a Company Material Adverse
Effect.
Section 3.22 BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission from the Company
in connection with the transactions contemplated by this Agreement.
14
Section 3.23 CONTRACTS AND OTHER AGREEMENTS.
(a) The Company is not a party to or bound by, nor is any of
its properties or assets bound or subject to, any other material
contract or other agreement. All such contracts and other agreements
and each of the contracts set forth in Schedule 3.23 are valid,
existing, in full force and effect, binding upon the Company or its
subsidiaries, as the case may be, and to the best knowledge of the
Company and the Shareholder, binding upon the other parties thereto in
accordance with their terms.
(b) Schedule 3.23 sets forth a list of the following contracts
and other agreements to which the Company is a party or by or to which
its assets or properties are bound or subject:
(i) any agreement that individually requires
aggregate expenditures by the Company in any one year of more
than $10,000;
(ii) any indenture, trust agreement, loan agreement
or note that involves or evidences outstanding indebtedness,
obligations or liabilities for borrowed money;
(iii) any lease, sublease, installment purchase or
similar arrangement for the purchase, use or occupancy of real
or personal property that individually requires aggregate
expenditures by the Company, or any of its subsidiaries in any
one year of more than $5,000;
(iv) any agreement of surety, guarantee or
indemnification;
(v) any agreement, including without limitation
employment agreements and bonus plans, relating to the
compensation of, or obligating the Company to make payments
to, (i) officers, (ii) employees, (iii) former employees, (iv)
consultants, (v) advisors or (vi) directors;
(vi) any agreement containing covenants of the
Company not to compete in any line of business, in any
geographic area or with any person or covenants of any other
person not to compete with the Company or in any line of
business of the Company;
(vii) any agreement with any customer or supplier
that cannot be terminated without penalty in excess of $5,000
by the Company or any of its subsidiaries within one year; and
(viii) any material software license agreement.
True and complete copies of all of the contracts and other agreements
set forth in Schedule 3.23 (or required to be set forth therein) have been
previously provided to ACS or U-Ship.
15
Section 3.24 SUBSIDIARIES. The Company has no subsidiaries and does not
have any interest, direct or indirect, in any partnership, joint venture or
other business entity.
Section 3.25 INSURANCE. Since its incorporation, the Company has
maintained liability insurance policies of a commercially reasonable amount and
nature consistent for a company of its size and operations at such time.
Section 3.26 ABSENCE OF CERTAIN BUSINESS PRACTICES. To the best
knowledge of the Company and the Shareholder, neither the Company nor any person
acting on its behalf has, directly or indirectly, within the past six years
given or agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the business of the Company (or assist the Company in connection with any
actual or proposed transaction) which (i) might subject the Company to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, might have had an adverse effect on
the financial condition, business or results of operations of the Company or
(iii) if not continued in the future, might adversely affect the financial
condition, business or operations of the Company or which might subject the
Company to suit or penalty in any private or governmental litigation or
proceedings.
Section 3.27 VEHICLES. To the best knowledge of the Company and the
Shareholder, and except as set forth in Schedule 3.27, each truck, tractor and
trailer or other vehicle identified on Schedule 3.18 is in compliance with
applicable safety requirements for use on streets and highways, is now and at
Closing will be licensed to operate on streets and highways and has been
inspected by the Company as required by all laws and regulations.
Section 3.28 VEHICLE REGISTRATION. The Company has and will execute and
deliver to ACS at the closing registration cards, title cards, certificates of
title or other evidence of title for the equipment and vehicles listed on
Schedule 3.18. Except as noted and identified on Schedule 3.18, all of such
assets are presently used or are useable by the Company.
Section 3.29 AFFILIATE TRANSACTIONS. Set forth in Schedule 3.29 is a
description of all transactions which have occurred since January 1, 1998, or
are pending which involve the expenditure or incurrence of indebtedness
(including a guaranty of an obligation) between the Company and the Shareholder
or the Company and any affiliate of the Shareholder, which transaction involves
more than $5,000.
Section 3.30 EMPLOYEES. As of 90 days prior to the date hereof and at
all times from such date up to and including the Closing Date, the Company has
not had and will not have more than 7 employees at any "single site of
employment" (including any and all employees working or otherwise deemed to be
"covered" employees at that single site of employment and excluding "part-time"
employees) and (b) no other "single site of employment" has or will have 50 or
more employees (including any and all employees working or otherwise deemed to
be "covered") employees at that single site of employment and excluding
"part-time" employees) all as defined in the Worker Adjustment and Retraining
Notification Act and any regulations adopted pursuant thereto. The Company has
agreements with 60 independent contractors.
16
Section 3.31 DISCLOSURE. All material facts relating to the business,
operations, properties, assets, liabilities (contingent or otherwise), and
financial condition of the Company and its subsidiaries have been disclosed to
ACS or U-Ship in or in connection with this Agreement. The representations,
warranties and statements made by the Company in this Agreement and in the
certificates delivered pursuant hereto do not contain any untrue statement of a
material fact, and, when taken together, do not omit to state any material fact
necessary to make such representations, warranties and statements, in light of
the circumstances under which they are made, not misleading.
Section 3.32 MILLENNIAL DATA. The Company has implemented and is
currently implementing revisions and related testing of its material software
that it licenses and maintains pursuant to contracts from third parties
("Licensed Software") in order to enable such software to process accurately
(including calculating, comparing and sequencing) in all material respects date
data from, into and between the twentieth and twenty-first centuries, including
leap year calculations ("Millennial Date Data"). The Licensed Software includes
a new dispatching software. On November 28, 1998, the estimated date, for
installation of such new dispatching software, and except as provided in
Schedule 3.32, the Company and the Shareholder reasonably believe that all such
Licensed Software will so process Millennial Date Data without material errors
or omissions and without materially affecting functionality when used in
accordance with the product documentation provided to the Company therefore. The
Company has not made any representation or warranty to any third party that
varies in any material respect from the preceding warranty.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF U-SHIP
ACS and U-Ship represent and warrant to the Company as follows:
Section 4.1 ORGANIZATION. ACS is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota. U-Ship
is a corporation duly organized, validly existing and in good standing under the
laws of Utah. ACS and U-Ship have the requisite power and authority and all
necessary governmental approvals to own, lease and operate their properties and
to conduct their respective business as currently conducted, except where the
failure to have such power, authority or governmental approval would not,
individually or in the aggregate, have on ACS or U-Ship a Material Adverse
Effect (as defined below). U-Ship is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would not,
individually or in the aggregate, have a U-Ship Material Adverse Effect. The
term "U-Ship Material Adverse Effect" means any change or effect that is or
would be materially adverse to the business, results of operations or financial
condition of the U-Ship and its subsidiaries taken as a whole.
17
Section 4.2 ARTICLES OF INCORPORATION AND BY-LAWS. U-Ship has
previously delivered to the Company a true, complete and correct copy of the
Articles of Incorporation, the By-laws or equivalent organizational documents,
each as amended to date, of U-Ship. Such Articles of Incorporation, By-laws and
equivalent organizational documents are in full force and effect. U-Ship is not
in violation of any provision of its Articles of Incorporation, By-laws or
equivalent organizational documents.
Section 4.3 CAPITALIZATION. At September 30, 1998, the authorized
capital stock of U-Ship consisted of 75,000,000 shares of U-Ship Common Stock
and 25,000,000 shares of preferred stock, $.004 par value per share ("U-Ship
Preferred Stock") ("U-Ship Series A Stock"). As of September 30, 1998, (i)
4,979,709 shares of U-Ship Common Stock were issued and outstanding, and (ii)
4,455,498 shares of U-Ship Series A Convertible Preferred Stock were
outstanding.
Section 4.4 AUTHORITY RELATIVE TO THIS AGREEMENT. ACS and U-Ship has
all necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by ACS and
U-Ship and the consummation by ACS and U-Ship of the transactions contemplated
hereby have been duly and validly authorized by the Boards of Directors of ACS
and U-Ship, and no other corporate proceedings or action on the part of U-Ship
are necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement (other than, with respect to consummation of the
Merger, the filing and recordation of the appropriate merger documents as
required by Minnesota Law). This Agreement has been duly and validly executed
and delivered by ACS and U-Ship and, assuming the due authorization, execution
and delivery by the Company and the Shareholder, constitutes the valid and
binding agreements of U-Ship, enforceable against ACS and U-Ship in accordance
with their terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization or other laws and subject to general principles of
equity.
Section 4.5 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) The execution and delivery of this Agreement by ACS and
U-Ship does not, and the performance of the transactions contemplated
by this Agreement by ACS and U-Ship will not, require any filing with
or notification to, or any consent, approval, authorization or permit
from, any Governmental Entity or any other person except (i) for (A)
applicable requirements of the Securities Act, the Exchange Act and
state securities or "blue sky" laws, and (B) the filing and recordation
of the Articles of Merger, as required by Minnesota Law, or (ii) where
failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, (X) would not prevent or
delay consummation of the Merger in any material respect or otherwise
prevent or delay U-Ship from performing its obligations under this
Agreement in any material respect, or (Y) would not, individually or in
the aggregate, have a U-Ship Material Adverse Effect.
18
(b) The execution and delivery of this Agreement by ACS and
U-Ship does not, and the performance of the transactions contemplated
by this Agreement by ACS and U-Ship will not, (i) conflict with or
violate the Articles of Incorporation, By-laws or equivalent documents
of U-Ship, (ii) conflict with or violate any order, writ, injunction,
decree, statute, treaty, law, rule or regulation applicable to ACS and
U-Ship or by which any property or asset of ACS and U-Ship is bound or
affected, or (iii) result in a violation or a breach of, or constitute
a default (or an event that with notice or lapse of time or both would
become a default) under, or result in the loss of a benefit under, or
give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of ACS and U-Ship pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which ACS or
U-Ship is a party or by which any property or asset of ACS or U-Ship is
bound or affected.
Section 4.6 SEC REPORTS. U-Ship has filed all forms, reports and
documents required to be filed by it with the SEC since June 30, 1998 and has
heretofore made available to the Company, in the form filed with the SEC
(excluding any exhibits thereto), (i) its Annual Report on Form 10-KS8 for the
fiscal year ended June 30, 1998, and (ii) all other forms, reports, registration
statements and other documents filed by U-Ship with the SEC since June 30, 1998
(the forms, reports, registration statements and other documents referred to in
clauses (i) and (ii) above being referred to herein, collectively, as the
"U-Ship SEC Reports"). The U-Ship SEC Reports and any other forms, reports and
other documents filed by U-Ship with the SEC after the date of this Agreement
(i) were or will be prepared in accordance with the requirements of the
Securities Act and the Exchange Act, as the case may be, and the rules and
regulations thereunder and (ii) did not at the time they were filed, or will not
at the time they are filed, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were or are made, not misleading.
Section 4.7 BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission from U-Ship in connection
with the transactions contemplated herein by this Agreement.
Section 4.8 ENVIRONMENTAL MATTERS. U-ship and ACS are in compliance
with all Environmental Laws, except for any noncompliance that, either singly or
in the aggregate, could not have a Material Adverse Effect on U-Ship or ACS.
"Environmental Laws" shall mean all federal, state and local laws, rules,
regulations, ordinances and orders that purport to regulate the release of
hazardous substances or other materials into the environment, or impose
requirements relating to environmental protection. "Hazardous Materials" means
any "hazardous waste" as defined in either the United States Resource
Conservation and Recovery Act or regulations adopted pursuant to said act, any
"hazardous substances" or "hazardous materials" as defined in the United States
Comprehensive Environmental Response, Compensation and Liability Act and, to the
extent not included in the foregoing, any medical waste.
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Section 4.9 LITIGATION. Except as set forth in Schedule 4.9, there is
no litigation, claim, suit, action, proceeding, investigation or complaint
pending or, to the best knowledge of U-Ship or ACS, threatened against the
U-Ship or ACS or any of its officers or directors before any court, arbitrator
or administrative, governmental or regulatory authority or body, domestic or
foreign.
Section 4.10 TRADEMARKS.
(a) General. To the best knowledge of U-Ship and ACS, the
conduct of the business of U-Ship and ACS as currently conducted does
not conflict in any way with any patent, patent rights, license,
trademark, trademark right, trade name, trade name right, service xxxx,
copyright or other proprietary right of any other person, U-Ship and
ACS have received no claim or threat that any such conflict exists, and
no litigation, claim, suit, action, proceeding, or complaint concerning
the foregoing has been filed or is pending.
Section 4.11 TAXES. To the best of U-Ship's and ACS's knowledge, U-Ship
and ACS have timely filed all federal, state, local and foreign tax returns and
reports required to be filed by them through the date hereof and shall timely
file all returns and reports required on or before the Effective Time. Such
reports and returns are and will be true, correct and complete in all material
respects. To the best of U-Ship and ACS's knowledge, U-Ship and ACS have paid
and discharged all federal, state, local and foreign taxes due from it, other
than such taxes that are being contested in good faith by appropriate
proceedings and are adequately reserved for as shown in the Latest Balance
Sheet. Neither the IRS nor any other taxing authority or agency, domestic or
foreign, is now asserting or, to the best knowledge of the U-Ship and ACS,
threatening to assert against U-Ship or ACS any deficiency or claim for
additional taxes or interest thereon or penalties in connection therewith. To
the best of U-Ship and ACS's knowledge, the accruals and reserves for taxes
(including interest and penalties, if any, thereon) are adequate in accordance
with generally accepted accounting principles to cover all liabilities of U-Ship
and ACS (including those arising from possible audit adjustments). To the best
of the knowledge of U-Ship and ACS, U-Ship and ACS have withheld or collected
and paid over to the appropriate governmental authorities or are properly
holding for such payment all taxes required by law to be withheld or collected.
There are no liens for taxes upon the assets of U-Ship and ACS. U-Ship and ACS
have not agreed to or is not required to make any adjustment under Section
481(a) of the Code. U-Ship and ACS have not made an election under Section
341(f) of the Code. U-Ship and ACS are not subject to any agreement or
obligation to indemnify any other person for tax liabilities.
Section 4.12 NO BURDENSOME CONTRACTS. To the best knowledge of U-Ship
and ACS, U-Ship and ACS are not party to, and their businesses are not bound by,
any contract which will, by its terms under current circumstances, result in a
loss to U-Ship or ACS that would have a Material Adverse Effect on U-Ship or
ACS.
Section 4.13 DISCLOSURE. All material facts relating to the business,
operations, properties, assets, liabilities (contingent or otherwise), and
financial condition of U-Ship and ACS have been disclosed to the Company in or
in connection with this Agreement. The
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representations, warranties and statements made by U-Ship and ACS in this
Agreement and in the certificates delivered pursuant hereto do not contain any
untrue statement of a material fact.
Section 4.14 COMPLIANCE.
(a) Except for any of the following that would not,
individually or in the aggregate, have a Material Adverse Effect on
U-Ship or ACS, the Company has all licenses, permits, franchises,
orders or approvals of any federal, state, local or foreign
governmental or regulatory body or other Governmental Entity which are
necessary for the conduct of the business of U-Ship and ACS as
presently conducted (collectively, "Permits"), and such Permits are in
full force and effect and no proceeding is pending or, to the best
knowledge of U-Ship and ACS, threatened to revoke or limit any Permit.
The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement will not adversely
affect any Permit or result in any Permit being either revoked or
limited in any material respect. U-Ship and ACS have made available for
review by the Company all Permits.
(b) Except for any of the following that would not,
individually or in the aggregate, have a Material Adverse Effect on
U-Ship or ACS are not in conflict with, or in default or violation of,
(i) any law, rule, ordinance, regulation, order, judgment or decree
applicable to U-Ship or ACS or by which any property or asset of U-Ship
or ACS are bound or affected or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which U-Ship or ACS is a party or by
which U-Ship or ACS or any property or asset of U-Ship or ACS are bound
or affected. To the best knowledge of U-Ship or ACS, no other party to
any material contract or agreement to which U-Ship or ACS are a party
is in default and no event or condition exists or has occurred which,
after notice or lapse of time, or both, would constitute a default
thereunder. No investigation or review by any Governmental Entity or
any other person concerning any such possible violations by U-Ship or
ACS is pending or, to the best knowledge of U-Ship or ACS, threatened,
nor has any Governmental Entity or any other person indicated an
intention to conduct the same.
As used in this Article 4, "to the best of knowledge" as it is used for U-Ship
or ACS relates to the actual knowledge of the officer executing this Agreement.
ARTICLE 5
COVENANTS PENDING CLOSING
Section 5.1 COVENANTS OF THE COMPANY AND SHAREHOLDER. The Company
covenants and agrees that between the date of this Agreement and the Effective
Time, it shall, and the Shareholder agree to cause the Company to, carry on its
business in the usual, regular and ordinary course, consistent with past
practice, and use its best efforts to preserve intact its present business
organization, keep available the services of its present officers and employees,
keep in effect casualty, public liability, worker's compensation and other
insurance policies in coverage
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amounts not less than those in effect as of the date of this Agreement, to
preserve and protect the Company Proprietary Rights and preserve its
relationships with customers, franchisees, suppliers, licensors and other
persons with which it has significant business dealings. Without limiting the
foregoing:
(a) Negative Covenants. The Company shall not, between the
date of this Agreement and the Effective Time, directly or indirectly,
do, or propose or agree to do, any of the following, and the
Shareholder agree not to permit the Company to do or agree to do any of
the following without the prior written consent of U-Ship:
(i) (x) Except as permitted by Section 5.9, declare,
set aside or pay any dividend or other distribution (whether
in cash, stock, or property or any combination thereof) in
respect of any of its capital stock, (y) split, combine,
reclassify or subdivide any of its capital stock or (z)
repurchase, redeem or otherwise acquire any of its capital
stock;
(ii) Authorize for issuance, issue, sell, deliver or
agree or commit to issue, sell or deliver (whether through the
issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any shares of
stock of any class or any other securities (including
indebtedness having the right to vote) or equity equivalents
(including, without limitation, phantom stock or stock
appreciation rights);
(iii) Acquire, mortgage, sell or otherwise encumber,
or sell, lease, transfer or dispose of any assets other than
in the ordinary course of business consistent with past
practice;
(iv) Borrow any money from the Shareholder, incur any
long-term indebtedness for borrowed money, guarantee any
indebtedness, issue or sell debt securities or warrants or
rights to acquire any debt securities, guarantee (or otherwise
become liable or potentially liable for) any debt of others,
make any loans, advances or capital contributions, or incur
any short term indebtedness for borrowed money except for
borrowings under credit facilities in existence on the date
hereof;
(v) Pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than any payment, discharge or
satisfaction (x) in the ordinary course of business consistent
with past practice, (y) in connection with the transactions
contemplated by this Agreement, or (x) in accordance with
their terms, of liabilities reflected or reserved against in
the Latest Balance Sheet;
(vi) Change any of the accounting principles or
practices used by it (except as required by generally accepted
accounting principles);
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(vii) Increase the compensation payable or to become
payable to its officers or employees, except for increases in
the ordinary course of business in accordance with past
practice, or grant any, severance or termination pay to, or
enter into any employment or severance agreement with, any
director or officer of it or any of its subsidiaries, or
establish, adopt, enter into or amend in any material respect
or take action to accelerate any rights or benefits under or
terminate any ERISA Plan or Non-ERISA Arrangement;
(viii) Amend or otherwise change its Articles of
Incorporation or By-laws;
(ix) Except as set forth in Schedule 5.1, enter into
a new agreement, contract or commitment involving payment to
or by the Company of $10,000 or more or amend any existing
agreement that could reasonably be expected to have a Company
Material Adverse Effect;
(x) Merge or consolidate with any other corporation
or other entity;
(xi) Take any action which would result in the
termination of the Company's election to be treated as an "S
corporation" pursuant to Section 1362(a) of the Code; or
(xii) Enter into an agreement to take any of the
foregoing actions or take, or enter into an agreement to take,
any action (x) that would result in any of the representation
and warranties of the Shareholder becoming untrue or the
conditions to the Merger set forth in Article 7 not being
satisfied, or (y) which is represented in clauses (a) through
(q) of Section 3.8 not to have been taken since the date of
the Latest Balance Sheet.
(b) Affirmative Covenants. Between the date of this Agreement
and the Effective Time, the Company shall, and the Shareholder shall
cause the Company to:
(i) Maintain all of its material structures,
equipment and other tangible personal property in good repair,
order and condition, except for ordinary wear and tear;
(ii) Except for U.S. Dept. of Transportation
Regulations, with which there is material non-compliance,
discharge and perform all of its liabilities, obligations and
duties as they become due under all Governmental Permits and
contracts relating to or affecting its properties, assets and
business;
(iii) Maintain its books of account and records in
the usual, regular and ordinary manner;
(iv) Comply with all laws applicable to its
properties, assets and business;
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(v) Promptly advise U-Ship in writing, of (x) any
legal proceeding which is commenced or threatened by any
person, or (y) any material adverse change in the Company's
financial condition, results of operations, assets or
business; and
(vi) Within 20 days after the end of each calendar
month, deliver to U-Ship an unaudited Balance Sheet,
Statement of Operations and Accumulated Deficits of the
Company.
Section 5.2 NO SOLICITATIONS. Unless and until this Agreement shall
have terminated in accordance with its terms, neither the Company nor any
Shareholder shall (and the Company and each of the Shareholder shall use its
best efforts to cause all of its officers, directors, employees, agents,
representatives and advisors, including, without limitation, investment bankers,
attorneys and accountants, not to), directly or indirectly, solicit, initiate,
knowingly encourage or enter into any agreement with respect to or participate
in negotiations with, provide any confidential information to, enter into any
agreement with or otherwise cooperate in any way in connection with, any other
person concerning any acquisition, merger, consolidation, liquidation,
disposition or other transaction that would result in the transfer to any such
person of any substantial part of the assets, business or equity of the Company
(collectively, a "Competing Transaction").
Section 5.3 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) From the date hereof to the Effective Time, the Company
shall (and shall cause its officers, directors, employees, auditors and
agents to) afford the officers, employees and agents of U-Ship (the
"Representatives") access upon reasonable prior notice at all
reasonable times to its officers, employees, agents, properties,
offices, plants and other facilities, books and records, and shall
furnish such Representatives with all financial, operating and other
data and information as may be reasonably requested.
(b) Any confidential information or trade secrets received by
U-Ship pursuant to this Section 5.3 shall be treated confidentially,
and any correspondence, memoranda, records, copies, documents and
electronic or other media of any kind containing either such
confidential information, or trade secrets or both shall be destroyed
by U-Ship or, at the Company's request, returned to the Company in the
event the Agreement is terminated as provided in Section 8.1. In no
event shall any such information or trade secrets be used by U-Ship or
its agents to the detriment of the Company.
(c) No investigation pursuant to this Section 5.3 shall affect
any representation or warranty in this Agreement of the Shareholder or
any condition to the obligations of the parties hereto.
Section 5.4 FURTHER ACTION; REASONABLE BEST EFFORTS. Upon the terms and
subject to the conditions hereof each of the parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary,
24
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated herein including, without limitation,
using its reasonable best efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Entities
and all parties to contracts with the Company and its subsidiaries as are
necessary for the consummation of the transactions contemplated herein. In case
at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall use their reasonable best
efforts to take all such action. Each party shall promptly consult with the
other with respect to, provide any necessary information with respect to and
provide the other (or its counsel) with copies of, (i) all filings made by such
party with any Governmental Entity or any other person in connection with the
execution of this Agreement and the consummation of the transactions
contemplated hereby and (ii) all other written materials submitted or prepared
by any such party concerning obtaining all licenses, permits, consents,
approvals, authorizations and orders that are required to be obtained in
connection with the execution of this Agreement and the consummation of the
transactions contemplated by this Agreement.
Section 5.5 PUBLIC ANNOUNCEMENTS. U-Ship and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or any transaction contemplated herein
and shall not issue any such press release or make any such public statement
without the prior consent of the other party, which consent shall not be
unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party, issue such press release or make such public
statement as may be required by law if it has used all reasonable efforts to
consult with the other party and to obtain such party's consent but has been
unable to do so in a timely manner.
Section 5.6 COVENANTS OF SHAREHOLDER.
(a) AFFILIATE RESALE RESTRICTIONS. The Shareholder
acknowledges and agrees that he is an affiliate of the Company as
defined in Rule 145 under the Securities Act. The Shareholder agree to
execute and deliver to U-Ship, on or prior to the Closing Date, an
affiliate letter substantially in the form of Exhibit G. The
certificates representing U-Ship Common Stock received by the
Shareholder shall bear a customary legend regarding applicable
Securities Act restrictions and the provisions of this Section.
(b) TRANSFERS OF COMPANY COMMON STOCK; PRESERVATION OF S
ELECTION. From the date hereof until the Effective Time, the
Shareholder shall not (i) transfer, sell or otherwise dispose of, or
grant any option with respect to, their shares of Company Common Stock,
or (ii) take any action which would result in the termination of the
Company's election to be treated as an "S corporation" pursuant to
Section 1362(a) of the Code.
(c) APPROVAL OF MERGER. The Shareholder agrees to vote in
favor of approval of this Agreement and the Merger and not to exercise
their statutory right to dissent from and obtain payment for the value
of their shares of Company Common Stock.
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Section 5.7 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to U-Ship, and U-Ship shall give prompt notice to Company, of (i)
the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause (x) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
adverse respect or (y) any covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied in any material respect and (ii)
any failure of the Company or U-Ship, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder in any material respect; provided, however, that the delivery of
any notice pursuant to this Section 5.7 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
ARTICLE 6
FEDERAL SECURITIES LAWS MATTERS
Section 6.1 DEFINITIONS. As used in this Article 6, the following terms
shall have the following meanings:
"Act" means the Securities Act of 1933, as amended.
"Advice" has the meaning set forth in Section 6.3(d).
"Affiliate" means, with respect to any specified person, any other
person who, directly or indirectly, controls, is controlled by, or is
under common control with such specified person.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute, and the rules and
regulations of the Commission promulgated thereunder.
"Holder" means (i) the Shareholder and (ii) each person to whom any of
such Shareholder transfers the Shares as provided in Section 6.6
hereof, if the person to whom the Shares are transferred acquires the
Shares as Registrable Securities.
"Prospectus" means the prospectus included in any Registration
Statement (including without limitation, a prospectus that discloses
information previously omitted from a Prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Act), as amended or supplemented by any Prospectus
supplement, and by all other amendments and supplements to the
Prospectus, including post-effective amendments, and in each case
including all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
26
"Registrable Securities" means the Shares; provided, however, that any
Shares shall cease to be Registrable Securities when (i) a Registration
Statement covering such Registrable Securities has been declared
effective and such Registrable Securities have been disposed of
pursuant to such effective Registration Statement, or (ii) such
Registrable Securities become eligible for sale pursuant to Commission
Rule 144(k) (or any similar provision then in force) under the Act, or
(iii) such Securities cease to be outstanding.
"Registration Statement" means any registration statement of U-Ship
that covers any of the Registrable Securities pursuant to the
provisions of this Agreement and all amendments and supplements to any
such registration statement, including post-effective amendments, in
each case including the Prospectus, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in
such registration statement.
"Shares" means the shares of U-Ship Common Stock issued to the
Shareholder pursuant to this Agreement so long as they are owned
beneficially and of record by a Holder.
"Suspension Notice" has the meaning set forth in Section 6.3.
Section 6.2 RESALE REGISTRATION.
(a) Demand Registration. If the Holder shall make a demand of
U-Ship in writing at any time after the first anniversary of the
Closing Date that he desires U-Ship to register all or any portion of
his Registrable Securities for resale, U-Ship shall use reasonable
efforts to prepare and file one registration statement on Form S-3 (the
"Registration Statement") under the Act covering the resale by such
Holder of its Registrable Securities pursuant to Rule 415 under the Act
from time to time in transactions not involving any underwritten public
offering and use reasonable efforts (i) to cause such Registration
Statement to be declared effective by the Commission for such
Registrable Securities as soon as practicable thereafter and (ii) to
keep the Registration Statement continuously effective until the
earliest of (x) the date on which such Holder no longer holds any
Registrable Securities registered under the Registration Statement or
(y) the third anniversary of the Closing Date, or such lesser time as
may be permitted under Rule 144 under the Act (or any successor rule
thereto) to enable Holder to sell any of the Registrable Securities
under the Act. U-Ship shall not be required to cause a Registration
Statement requested pursuant to this Section 6.2 to become effective
prior to 180 days following the effective date of a registration
statement for a publicly underwritten offering of U-Ship Common Stock
initiated by U-Ship if any managing underwriter named in such
registration statement for the publicly underwritten offering has
advised U-Ship in writing that the registration or sale of additional
securities by stockholders (including its officer and directors) of
U-Ship within such 90-day period would have a material adverse effect
on the likelihood of success of such underwritten offering; provided,
however, that U-Ship shall use its best efforts to achieve such
effectiveness promptly following such 180-day period if the request
pursuant to this Section 6.2 has been made prior to the expiration of
such 180-day period. Notwithstanding the foregoing, U-Ship shall not be
obligated to register the Registrable Securities if the same may at the
27
time of, or within 30 days following the receipt of such demand, be
sold under 144 under the Act. U-Ship may postpone the filing of any
Registration Statement required hereunder for a reasonable period of
time, not to exceed 60 days, if U-Ship has been advised by outside
legal counsel that such filing would require the disclosure of a
material transaction or other matter and U-Ship determines reasonably
and in good faith that such disclosure would have a material adverse
effect on U-Ship; provided, however, that U-Ship shall (A) use
reasonable efforts to disclose such material transaction or other
matter as soon as in its good faith judgment it is prudent to do so and
(B) may so postpone such filing only if all other persons who are named
as selling securityholders under then effective registration statements
filed by U-Ship with the Commission and all directors of U-Ship are
advised of the fact that a material transaction or other matter is not
being disclosed during the length of such postponement and of the
consequences of such nondisclosure under the Act and the Exchange Act.
The disclosure to any Holder of any material transaction, or of the
existence thereof, pursuant to the preceding sentence shall be held in
confidence by Holder until U-Ship or a third party not under the
control of Holder has made a public disclosure thereof.
(b) Incidental Registration. Each time that U-Ship shall
determine to proceed with the actual preparation and filing of a
registration statement under the Securities Act in connection with the
proposed offer and sale for money of any of its Common Stock by it or
any of its security holders, other than a registration statement on
Form S-4 or S-8, U-Ship shall give written notice of its determination
to the Holders. Upon the written request of the Holder within fifteen
(15) days after receipt of any such notice from the Holder, U-Ship
will, except as herein provided, cause all Common Stock of U-Ship, the
Holders of which has so requested registration thereof, to be included
in such registration statement, all to the extent requisite to permit
the sale or other disposition thereof by the Holder; provided, however,
that nothing herein shall prevent the Company from, at any time,
abandoning or delaying any such registration initiated by it. If any
registration pursuant to this Section shall be underwritten in whole or
in part, U-Ship may require that the shares requested for inclusion
pursuant to this Section be included in the underwriting on the same
terms and conditions as the securities otherwise being sold through the
underwriters. If in the good faith judgment of the managing underwriter
of such public offering the inclusion of all of the shares originally
covered by a request for registration would reduce the number of shares
to be offered by U-Ship or interfere with the successful marketing of
the shares of stock offered by U-Ship, the number of shares otherwise
to be included in the underwritten public offering may be reduced pro
rata among the holders thereof requesting such registration to a number
that the managing underwriter believes will not adversely affect the
sale of shares by U-Ship. Those securities which are thus excluded from
the underwritten public offering, and any other Common Stock owned by
the Holder, shall be withheld from the market by the holders thereof
for a period, not to exceed one hundred eighty (180) days, which the
managing underwriter reasonably determines is necessary in order to
effect the underwritten public offering, provided that the Company and
the managing underwriter of such public offering impose the same
withholding requirement on U-Ship's officers and directors.
28
(c) Effective Registration. A registration will not be deemed
to have been effected unless the Registration Statement has been
declared effective by the Commission; provided, however, that if after
it has been declared effective, the offering of Registrable Securities
pursuant to a Registration Statement is interfered with by any stop
order, injunction or other order or requirement of the Commission or
any other governmental agency or court, such Registration Statement
will be deemed not to have become effective during the period of such
interference until the offering of Registrable Securities pursuant to
such Registration Statement may legally resume.
Section 6.3 REGISTRATION PROCEDURES. In connection with the obligations
of U-Ship to effect or cause the registration of any Registrable Securities
pursuant to the terms and conditions of this Agreement, U-Ship shall use
reasonable efforts to effect the registration and sale of such Registrable
Securities in accordance with the intended method of distribution thereof, and
in connection therewith:
(a) U-Ship shall prepare and file with the Commission a
Registration Statement on Form S-3 or other similar form under the Act
which permits secondary sales of securities in a "shelf registration,"
and use reasonable efforts to cause such Registration Statement to
become effective and remain effective in accordance with the provisions
of this Agreement;
(b) U-Ship shall promptly prepare and file with the Commission
such amendments and post-effective amendments to each Registration
Statement as may be necessary to keep such Registration Statement
effective and shall timely file with the Commission all required
filings under the Exchange Act as are necessary to keep the
Registration Statement effective for as long as such registration is
required to remain effective pursuant to the terms hereof; shall cause
the Prospectus to be supplemented by any required Prospectus
supplement, and, as so supplemented, to be filed pursuant to Rule 424
under the Act; and shall comply with the provisions of the Act
applicable to it with respect to the disposition of all Registrable
Securities covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by Holder
set forth in such Registration Statement or supplement to the
Prospectus;
(c) U-Ship shall promptly furnish to Holder such number of
copies of the Prospectus (including each preliminary Prospectus) and
any amendments or supplements thereto, as Holder may reasonably request
in order to facilitate the public sale or other disposition of the
Registrable Securities being sold by Holder;
(d) U-Ship shall promptly notify Holder, (i) when a Prospectus
or any Prospectus supplement or post-effective amendment has been filed
and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by
the Commission or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of a
29
Registration Statement, (iv) of the issuance by any state securities
commission or other regulatory authority of any order suspending the
qualification or exemption from qualification of any of the Registrable
Securities under state securities or "blue sky" laws, and (v) of the
happening of any event which makes any statement made in a Registration
Statement or related Prospectus untrue or which requires the making of
any changes in such Registration Statement or Prospectus so that they
will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading. As soon as practicable following
expiration of the Suspension Period (as defined below), U-Ship shall
prepare and file with the Commission and furnish a supplement or
amendment to such Prospectus so that, as thereafter deliverable to the
purchasers of such Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Upon receipt of any notice (a "Suspension Notice") by Holder from
U-Ship of the happening of any event of the kind described in Section
6.3(d), Holder shall forthwith discontinue disposition of the
Registrable Securities pursuant to the Resale Registration Statement
covering such Registrable Securities until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by
Section 6.3(d) or until Holder is advised in writing (the "Advice") by
U-Ship that the use of the Prospectus may be resumed, and has received
copies of any additional or supplemental filings which are incorporated
by reference in the Prospectus, and, if so directed by U-Ship, will, or
will request any broker-dealer acting as Holder's agent to, deliver to
U-Ship (at U-Ship expense) all copies, other than permanent file copies
then in Holder's or a broker-dealer's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of
such notice; provided, however, that in no event shall the period from
the date on which Holder receives a Suspension Notice to the date on
which Holder receives either the Advice or copies of the supplemented
or amended Prospectus contemplated by Section 6.3(d) (the "Suspension
Period") exceed 60 days.
Section 6.4 REGISTRATION EXPENSES. U-Ship shall bear all expenses
incurred in connection with the registration of the Registrable Shares pursuant
to Section 6.2 (b) of this Agreement. Such expenses shall include, without
limitation, all printing, legal and accounting expenses incurred by U-Ship and
all registration and filing fees imposed by the Commission, any state securities
commission or the NASDAQ Stock Market. Each Holder shall be responsible for any
brokerage fees or commissions and taxes of any kind (including, without
limitation, transfer taxes) with respect to any disposition, sale or transfer of
Registrable Securities and for any legal, accounting and other expenses incurred
by such Holder. The Shareholder shall be responsible for, and shall bear in
advance, all reasonable expenses relating to a demand registration pursuant to
Section 6.2 (a), including all expenses described in this Section 6.4. The
Company shall provide the Holder with a written estimate of such expenses, which
shall be advanced by the Shareholder upon the Company's commencement of
preparation of the Registration Statement. A payment of remaining expenses, if
any, shall be made by the Shareholder within 24 hours of written notice from the
Company.
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Section 6.5 INDEMNIFICATION AND CONTRIBUTION.
(a) Indemnification by U-Ship. U-Ship agrees to indemnity and
hold harmless, to the full extent permitted by law, each Holder from
and against all losses, claims, damages, liabilities and expenses
(including without limitation reasonable legal fees and expenses
incurred by Holder (collectively, the "Damages") to which Holder may
become subject under the Act or otherwise, insofar as such Damages (or
proceedings in respect thereat) arise out of or are based upon any
untrue statement of material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which Registrable
Securities were registered under the Act, or caused by any omission to
state therein a material fact necessary to make the statements therein
in light of the circumstances under which they were made not
misleading, or caused by any untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if U-Ship shall
have furnished any amendments or supplements thereto), or caused by any
omission to state therein a material fact necessary to make the
statements therein in light of the circumstances under which they were
made not misleading, except insofar as such Damages arise out of or are
based upon any such untrue statement or omission based upon information
relating to Holder furnished in writing to U-Ship by Holder
specifically for use therein; provided, however, that U-Ship shall not
be liable to Holder under this Section 6.5(a) to the extent that any
such Damages were caused by the fact that Holder sold Securities to a
person as to whom it shall be established that there was not sent or
given, at or prior to the written confirmation of such sale, a copy of
the Prospectus as then amended or supplemented if, but only if, (i)
U-Ship has previously furnished copies of such amended or supplemented
Prospectus to Holder and (ii) such Damages were caused by any untrue
statement or omission contained in the Prospectus so delivered which
was corrected in such amended or supplemented Prospectus.
(b) Indemnification by the Holder. Holder agrees to indemnify
and hold harmless U-Ship, its stockholders, directors, officers and
each person, if any, who controls U-Ship within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from U-Ship to Holder, but only with
reference to information relating to Holder furnished in writing to
U-Ship by Holder specifically for use in any Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or
supplement thereto); provided, however, that Holder shall not be
obligated to provide such indemnity to the extent that such Damages
result from the failure of U-Ship to promptly amend or take action to
correct or supplement any such Registration Statement or Prospectus on
the basis of corrected or supplemental information provided by Holder
to U-Ship expressly for such purpose. In no event shall the liability
of Holder hereunder be greater in amount than the amount of the
proceeds received by Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(c) Contribution. To the extent that the indemnification
provided for in Sections 6.5(a) or 6.5(b) is unavailable to an
indemnified party or insufficient in respect of any Damages, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
31
payable by such indemnified party as a result of such Damages in such
proportion as is appropriate to reflect the relative fault of U-Ship on
the one hand and Holder on the other hand in connection with the
statements or omissions that resulted in such Damages, as well as any
other relevant equitable considerations. The relative fault of U-Ship
on the one hand and of Holder on the other hand shall be determined by
reference to, among other things, whether the untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by U-Ship or by Holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
If indemnification is available under Section 6.5(a) or 6.5(b), the
indemnifying parties shall indemnify each indemnified party to the full
extent provided in such Sections without regard to the relative fault
of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 6.5(c). U-Ship and Holder
agree that it would not be just or equitable if contribution pursuant
to this Section 6.5(c) were determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable
considerations referred to herein.
Section 6.6 TRANSFER OF REGISTRATION RIGHTS. The registration rights of
the Shareholder and any subsequent Holder under this Article 6 may be
transferred to any transferee of Registrable Securities that acquires at least
100,000 shares of Registrable Securities (appropriately adjusted for stock
splits, stock dividends and the like), or to any transferee who is a bona fide
donee and family member of the Shareholder.
Section 6.7 LIMITATION ON RESALE. The U-Ship Common Stock is issued to
Shareholder pursuant to exemptions from registration under the Act. Because the
U-Ship Common Stock shall be issued in a transaction not involving a public
offering, such securities are "restricted securities" as that term is defined in
paragraph (a)(3) of Rule 144. The U-Ship Common Stock may not be resold except
as permitted under the Act and the applicable state securities laws pursuant to
registration or exemption therefrom.
Section 6.8 REPRESENTATIONS AND WARRANTIES. As a material inducement to
U-Ship to enter into this Agreement and to consummate the transactions
contemplated hereby, the Shareholder represent and warrant:
(a) The Shareholder is acquiring the shares of U-Ship Common
Stock to be issued to such Shareholder hereunder for Shareholder's own
account for investment only and not with a view to, or with any
intention of, a distribution or resale thereof, in whole or in part, in
violation of the Act or any rule or regulation thereunder, as amended
from time to time.
(b) The Shareholder is not directly or indirectly controlled
by, or acting on behalf of any person which is, an "investment company"
within the meaning of the Investment Company Act of 1940 (the "1940
Act"), as amended, required to register as such under the 1940 Act.
32
(c) The Shareholder (i) has carefully reviewed the disclosure
information provided by U-Ship; (ii) has requested and received such
other information, as he has deemed relevant, regarding U-Ship for
purposes of evaluating his acquisition of U-Ship Common Stock to be
issued hereunder; (iii) is aware of the risks associated with an
investment in U-Ship Common Stock; and (iv) has not received any form
of general solicitation or advertising in connection with his decision
to acquire U-Ship Common Stock hereunder. Except as described on
Schedule 6.8(c), the Shareholder has not relied in any way on any
information with respect to the U-Ship Common Stock or U-Ship generally
other than the representations of U-Ship contained herein or materials
furnished by U-Ship in writing in connection herewith.
(d) The Shareholder acknowledges and understands that (i) the
U-Ship Common Stock to be issued to the Shareholder hereunder has not
been registered under the Act or any state securities laws; (ii) the
U-Ship Common Stock to be issued to Shareholder hereunder will be
subject to transfer restrictions under the Act and applicable state
securities laws and may not be transferred unless (x) subsequently
registered under the Act and applicable state securities laws or (y)
there is delivered to U-Ship an opinion of counsel satisfactory to
U-Ship that such registration is not required; and (iii) U-Ship will
place a restrictive legend on the certificate(s) representing the
U-Ship Common Stock to be issued to Shareholder hereunder, containing
the following language:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT") AND WITHOUT
REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS,
IN RELIANCE UPON EXEMPTIONS CONTAINED IN THE ACT AND
SUCH LAWS. NO TRANSFER OF THESE SHARES OR ANY
INTEREST THEREIN MAY BE MADE EXCEPT PURSUANT TO
EFFECTIVE REGISTRATION STATEMENTS UNDER SAID LAWS
UNLESS THIS CORPORATION HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER OR
DISPOSITION DOES NOT REQUIRE REGISTRATION UNDER SAID
LAWS AND, FOR ANY SALES UNDER RULE 144 OR 145 OF THE
ACT, SUCH EVIDENCE AS IT SHALL REQUEST FOR
COMPLIANCE WITH THAT RULE.
Upon written request, U-Ship agrees to issue to Shareholder a
replacement stock certificate for U-Ship Common Stock without such
legend upon the registration under the Act of the shares of U-Ship
Common Stock represented thereby, or upon the expiration of the
restrictions imposed by Rule 144.
(e) The Shareholder represents that (i) he is able to bear the
economic risks of the acquisition of shares of U-Ship Common Stock
hereunder and has adequate means of providing for current needs and
possible contingencies; (ii) either alone or with his advisors has had
the opportunity to ask questions and receive answers concerning U-Ship
and the terms and conditions of the acquisition of U-Ship Common Stock,
as well as the opportunity to obtain any additional information
necessary to verify the accuracy of information furnished in connection
therewith which U-Ship possesses or can acquire without unreasonable
effort or expense; and (iii) together with his advisors, if any, has
such knowledge and experience in financial and business matters that
Holder is capable
33
of evaluating the merits and risks of this acquisition of U-Ship Common
Stock in exchange for the shares of Company Common Stock, and of making
an informed investment decision, and has relied solely upon the advice
of his own counsel, accountant and other advisors, with regard to the
legal, investment, tax and other considerations regarding such
acquisition.
ARTICLE 7
CONDITIONS
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger and the other
transactions contemplated herein shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions, any or all of which may
be waived, in whole or in part, to the extent permitted by applicable law:
(a) NO INJUNCTION OR RESTRAINTS; ILLEGALITY. The consummation
of the Merger shall not be prohibited by any injunction, order, decree
or ruling (an "Injunction") of a United States federal or state court
of competent jurisdiction (each party agreeing to use its best efforts
to have any such Injunction stayed or reversed), and there shall not
have been any action taken or any statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger, or any executive order
or decree issued, by any Governmental Entity that is in effect and that
makes consummation of the Merger illegal.
(b) APPROVALS; CONSENTS. Other than the filing of merger
documents in accordance with Minnesota Law, all authorizations,
consents, waivers, orders and approvals required to be obtained, and
all filings, notices and declarations required to be made, by U-Ship
and the Company prior to the consummation of the Merger and the
transactions contemplated hereunder shall have been obtained from, and
made with, all required Governmental Entities and all other persons
except for such authorizations, consents, waivers, orders, approvals,
filings, notices or declarations the failure to obtain or make would
not have, at or after the Effective Time, a Company Material Adverse
Effect or a U-Ship Material Adverse Effect.
(c) SHAREHOLDER APPROVAL. This Agreement and the Merger shall
have been approved and adopted by the Shareholder pursuant to Minnesota
Law.
Section 7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF U-SHIP. The
obligations of U-Ship and ACS to effect the Merger and the transactions
contemplated herein are also subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by U-Ship in
its sole discretion:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Shareholder contained in this
Agreement shall be true and correct in all material respects as of the
date of this Agreement and true and correct in all material
34
respects as of the Effective Time as though made on and as of the
Effective Time (except for such representations and warranties which
are qualified by their terms by a reference to materiality or a Company
Material Adverse Effect, which representations and warranties as so
qualified shall be correct in all respects as of the Effective Time as
though made on and as of the Effective Time). U-Ship shall have
received a certificate signed on behalf of the Company by the Chief
Executive Officer of the Company to the foregoing effect.
(b) AGREEMENT AND COVENANTS. The Company shall have performed
or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time. U-Ship shall have received a certificate
signed on behalf of the Company by the Chief Executive Officer of the
Company to the foregoing effect.
(c) ACCOUNTANTS' LETTERS. U-Ship shall have received a letter
from Lurie, Besikof, Xxxxxxx & Co., LLP to the effect that based upon a
limited review of the books and records maintained by the Company, the
financial statements of the Company as of and for the three years ended
December 31, 1998, can (assuming full access to information and
cooperation by the persons maintaining such books and records), be
audited to meet the requirements of SEC Regulation SB.
(d) MATERIAL ADVERSE CHANGE. There shall not have occurred any
change concerning the Company that, individually or in the aggregate,
has had or reasonably could be expected to have a Material Adverse
Effect on the Company taken as a whole since November 30, 1998,. and
U-Ship shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer and Chief Financial Officer of
the Company to the foregoing effect.
(e) LITIGATION. There shall not be instituted or pending any
suit, action or proceeding by a Governmental Entity or any other person
as a result of this Agreement or any of the transactions contemplated
herein which would reasonably be expected to have a Material Adverse
Effect on U-Ship (assuming for purposes of this Section 7.2(e) that the
Merger shall have occurred).
(f) OPINION OF COMPANY COUNSEL. U-Ship shall have received an
opinion dated as of the Closing Date from Xxxxxxx Xxxxxxx, Esq.,
counsel to the Company, in the form of Exhibit D hereto.
(g) NON-COMPETITION AGREEMENTS. U-Ship, ACS and the
Shareholder shall have entered into the Employment Agreement in the
form of Exhibit E hereto.
Section 7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligation of the Company to effect the Merger and the other transactions
contemplated in this Agreement are also subject to the satisfaction of following
conditions, any or all of which may be waived by the Company in its sole
discretion:
35
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of U-Ship contained in this Agreement
shall be true and correct in all material respects as of the date of
this Agreement and true and correct in all material respects as of the
Effective Time, as though made on and as of the Effective Time (except
for such representations and warranties which are qualified by their
terms by a reference to materiality or a U-Ship Material Adverse
Effect, which representations and warranties as so qualified shall be
correct in all respects as of the date of this Agreement and as of the
Effective Time as though made on and as Effective Time). The Company
shall have received a certificate signed on behalf of U-Ship by an
officer of U-Ship to the foregoing effect.
(b) AGREEMENTS AND COVENANTS. U-Ship shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time. The Company shall have received a
certificate signed on behalf of U-Ship by an officer of U-Ship to the
foregoing effect.
(c) MATERIAL ADVERSE CHANGE. There shall not have occurred any
change concerning U-Ship or any of its subsidiaries that, individually
or in the aggregate, has had a Material Adverse Effect on U-Ship and
its subsidiaries taken as a whole since the date of this Agreement and
the Company shall have received a certificate signed on behalf of
U-Ship by an officer of U-Ship to the foregoing effect.
(d) OPINION OF U-SHIP COUNSEL. The Shareholder shall have
received an opinion of Xxxxxxx X. Xxxxxxx, counsel to U-Ship, in the
form of Exhibit F hereto.
(e) EMPLOYMENT AGREEMENTS. ACS and the Shareholder shall have
entered into the Employment Agreement in the form of Exhibit E hereto.
(f) LITIGATION. There shall not be instituted or pending any
suit, action or proceeding by a Governmental Entity or any other person
as a result of this Agreement or any of the transactions contemplated
herein which would reasonably be expected to have a Material Adverse
Effect on the Company (assuming for purposes of this Section 7.3(f)
that the Merger shall have occurred).
(g) RELIEF FROM FINANCIAL OBLIGATIONS. ACS and/or U-Ship shall
have assumed or satisfied the financial obligations of the Shareholder
to Richfield Bank and Trust Co. in the amount of approximately $199,000
and the obligation of Shareholder to Northland Courier, Inc. in the
original amount of $100,000 pursuant to that Purchase Agreement dated
September 23, 1998, between the Company and Northland Courier, Inc. and
the Shareholder shall have been otherwise released from any liability
on account of personal guaranties thereon, or the Company shall have
made alternative financing arrangements satisfactory to the
Shareholder.
36
ARTICLE 8
TERMINATION AND AMENDMENT
Section 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval and adoption of
this Agreement by the stockholders of the Company or the approval by the Board
of U-Ship:
(a) by mutual written consent of U-Ship and the Company;
(b) by either U-Ship or the Company if any United States
federal or state court of competent jurisdiction or other Government
Entity shall have issued an Injunction or taken any other action
permanently restraining, enjoining or otherwise prohibiting the Merger
and such Injunction or other action shall have become final and
non-appealable;
(c) by U-Ship or ACS, upon a breach of any representation,
warranty, covenant or agreement on the part of the Shareholder or the
Company set forth in this Agreement, or if any representation or
warranty of the Shareholder shall have become untrue, in each case such
that the conditions set forth in Section 7.2(a) through Section 7.2(g),
as the case may be, would be incapable of being satisfied by January
31, 1999; provided that, in any case, a willful breach shall be deemed
to cause such conditions to be incapable of being satisfied for
purposes of this Section 8.1(c);
(d) by the Company or the Shareholder, upon a breach of any
representation, warranty, covenant or agreement on the part of U-Ship
or ACS set forth in this Agreement, or if any representation or
warranty of U-Ship shall have become untrue, in either case such that
the conditions set forth in Section 7.3(a) or Section 7.3(g), as the
case may be, would be incapable of being satisfied by January 31, 1999;
provided that, in any case, a willful breach shall be deemed to cause
such conditions to be incapable of being satisfied for purposes of this
Section 8.1(d); or
(e) by either U-Ship or ACS, or the Company or the
Shareholder, if the Merger shall not have been consummated on or before
January 31, 1999, unless such nonoccurrence is due to the failure of
the party seeking to terminate this Agreement to perform or observe any
of the covenants, agreements or conditions herein to be performed or
observed by such party.
Section 8.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1 hereof, this Agreement
shall forthwith become void and have no effect, without any liability on the
part of any party hereto or its affiliates, directors, officers or stockholders
and all rights and obligations of any party hereto shall cease except as set
forth in Sections 5.3, 10.1 and 10.8; provided that nothing contained in this
Section 8.2 shall relieve any party from liability for any breach of this
Agreement.
37
Section 8.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the shareholders of the Company, no amendment that under
applicable law may not be made without the approval of the shareholders of the
Company may be made without such approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 8.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (ii) waive any inaccuracies
in the representations and warranties of the other party contained herein or in
any document delivered pursuant hereto or (iii) waive compliance by the other
party with any of the agreements or conditions contained herein. Any agreement
on the part of a party hereto to any such extension or waiver shall be valid
only if set forth in a written instrument signed on behalf of such party.
ARTICLE 8A
PROVISIONS AS TO TAX MATTERS
Section 8A.1 CERTAIN TAX RETURNS. Shareholder shall be responsible, at
his expense, for filing (and, if necessary, obtaining extensions for filing) all
federal income tax returns and state income tax returns of the Company for those
jurisdictions in which the Company is entitled to be treated in a manner
comparable to the federal tax treatment under Section 1362(a) of the Code,
required to be filed by or on behalf of the Company for taxable periods ending
on or prior to the Effective Time which tax returns are due after the Effective
Time, taking into account extensions. With respect to any tax return required to
be filed by Shareholder pursuant to this Section 8A.1, Shareholder shall provide
the U-Ship and their authorized representatives with copies of such completed
tax returns at least thirty (30) business days prior to the due date for the
filing of such tax returns and the U-Ship and their authorized representatives
shall have the right to review such tax returns prior to the filing of such tax
returns. Such tax returns shall become final and binding between the parties
unless the U-Ship give written notice of disagreement (a "Notice of
Disagreement") to Shareholder within ten (10) business days following receipt
thereof. Any such Notice of Disagreement shall specify in reasonable detail the
nature of any disagreement so asserted.
During a period of five days following the ten-day period specified in
the immediately preceding paragraph, the Shareholder and U-Ship shall in good
faith attempt to resolve in writing any differences which they may have with
respect to any matter specified in any Notice of Disagreement. If at the end of
such latter five-day period the Shareholder and U-Ship have failed to reach
written agreement with respect to all of such matters, then all such matters as
specified in any Notice of Disagreement as to which such written agreement has
not been reached (collectively, the "Disputed Matters") shall be submitted to
and reviewed by an arbitrator (the "Arbitrator") mutually acceptable to U-Ship
and Shareholder, which shall be any national or regional accounting firm, but
excluding any such firm which has performed services for U-Ship within the
previous two years. The Shareholder, U-Ship and their respective accountants
shall
38
make readily available to the Arbitrator all relevant books and records and work
papers prepared by them and requested by the Arbitrator to resolve the Disputed
Matters. The Arbitrator shall act promptly to resolve all Disputed Matters and
its decision with respect to all Disputed Matters shall be final and binding
upon the Shareholder and U-Ship. Upon resolution by the Arbitrator of all
Disputed Matters, the Arbitrator shall direct U-Ship to prepare and deliver to
the Shareholder copies of the tax returns which are the subject of the Disputed
Matters in accordance with the decision of the Arbitrator, provided however,
that if the Arbitrator adopts a position advocated by the Shareholder, at
U-Ship's request the Shareholder shall provide an opinion of tax counsel of
nationally recognized standing, chosen by the Shareholder and reasonably
acceptable to U-Ship, that there is "substantial authority" within the meaning
of Section 6662 of the Code, for any position required to be taken by U-Ship in
any such tax return. The fees and expenses of Arbitrator shall be paid one half
by the Shareholder and one half by U-Ship. Notwithstanding the foregoing, if
within one business day prior to the due date of such tax returns (taking into
account all available extensions) the parties have not agreed as to the form and
content of such tax returns and the Arbitrator's decision has not yet been
received by U-Ship, U-Ship shall file such tax returns in the manner in which it
sees fit with respect to any disputed issues and in the manner in which the
parties have agreed with respect to all other issues. The tax return actually
filed with the Internal Revenue Service shall be referred to as the "Final
Return."
ARTICLE 9
SURVIVAL; INDEMNIFICATION
Section 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as
otherwise expressly provided for in this Agreement, the covenants,
representations and warranties contained in this Agreement shall survive for a
period of three years following the Effective Time notwithstanding the foregoing
and any investigation made by or on behalf of any party to this Agreement.
Section 9.2 INDEMNIFICATION BY SHAREHOLDER.
(a) Subject to the limitations of Section 9.2(b), the
Shareholder agrees to indemnify ACS, U-Ship, and their respective
officers, directors, employees, affiliates and agents (collectively,
"U-Ship Indemnified Parties") and hold them harmless from, against and
in respect of any loss, liability, deficiency, damage, expense or cost
(including reasonable legal expenses), whether or not actually incurred
or paid prior to the date a Third Party Claim or Claim for
indemnification is made (collectively, "Losses"), which the U-Ship
Indemnified Parties may suffer, sustain or become subject to, as a
result of (i) any breach of the representations and warranties of the
Company or Shareholder contained in this Agreement, or (ii) any breach
of, or failure to perform, any agreement of any Shareholder or the
Company contained in this Agreement. Losses resulting from a breach of
a representation or warranty of any of the Shareholder shall be payable
only to U-Ship. In the event a claim is asserted by U-Ship against the
Shareholder for indemnification hereunder, and such claim has not been
satisfied, U-Ship may, at its
39
election, retain and cancel such number of the Escrow Shares as shall
be sufficient to satisfy such claim.
(b) Notwithstanding any provisions of this Agreement to the
contrary, the maximum liability of the Shareholder for any alleged
breach of the representations and warranties set forth in Sections 3.12
and 3.30, or of any covenant hereunder in the aggregate, shall be
$400,000 and no Claim or Third Party Claim for indemnity under this
Article 9 may be asserted by the U-Ship Indemnified Parties with
respect to any alleged breach of any of the representations and
warranties set forth in Sections 3.12 or 3.31 unless: (i) the aggregate
of such Claims and Third Party Claims exceeds $10,000 and then only to
the extent of such excess; and (ii) such Claim or Third Party Claim is
asserted prior to 12:01 a.m. on the first anniversary of the Effective
Time; provided, however, that any Claim or Third Party Claim asserted
in good faith prior to said date, whether or not any Loss has then been
incurred, shall not terminate on said date but each such Claim or Third
Party Claim shall survive until it shall have been settled or it shall
have been subject to a Final Determination. The limitation on indemnity
with respect to U-Ship Losses set forth above in this Section 9.2(b)
shall not have any applicability in the event of fraud or intentional
misrepresentation.
Section 9.3 METHOD OF ASSERTING CLAIMS.
(a) In the event that any of the U-Ship Indemnified Parties is
made or threatened to be made a defendant in or party to any action or
proceeding, judicial or administrative, instituted or threatened to be
instituted by any third party the liability for which or the costs or
expenses of which are or would be Losses (any such third party action
or proceeding being referred to as a "Third Party Claim"), the U-Ship
Indemnified Parties shall give the Shareholder prompt notice thereof.
The failure to give such notice shall not affect any U-Ship Indemnified
Parties' ability to seek reimbursement unless such failure has
materially and adversely affected the Shareholder' ability to defend
successfully a Third Party Claim. The Shareholder shall be entitled to
contest and defend such Third Party Claim; provided, that the
Shareholder (i) have a reasonable basis for concluding that such
defense may be successful and (ii) diligently contest and defend such
Third Party Claim. Notice of the intention so to contest and defend
shall be given by the Shareholder to the U-Ship Indemnified Parties
within 20 business days after the U-Ship Indemnified Parties' notice
of such Third Party Claim. Such contest and defense shall be conducted
by reputable attorneys employed by the Shareholder. The U-Ship
Indemnified Parties shall be entitled at any time, at their own cost
and expense (which expense shall not constitute a Loss unless the
attorneys retained by the Shareholder determine that because of a
conflict of interest, such attorneys may not adequately represent the
interests of the U-Ship Indemnified Parties, and only to the extent
that such expenses are reasonable), to participate in such contest and
defense and to be represented by attorneys of its own or their own
choosing. If the U-Ship Indemnified Parties elect to participate in
such defense, the U-Ship Indemnified Parties will cooperate with the
Shareholder in the conduct of such defense. Neither the U-Ship
Indemnified Parties nor the Shareholder may concede, settle or
compromise any Third Party Claim without the consent of the other
party, which consent may not be unreasonably withheld.
40
(b) In the event any U-Ship Indemnified Party should have a
claim against the Shareholder that does not involve a Third Party Claim
("Claim"), the U-Ship Indemnified Parties shall deliver a notice of
such Claim with reasonable promptness to the Shareholder. If the
Shareholder notify the U-Ship Indemnified Parties that they do not
dispute the Claim described in such notice or fails to notify the
U-Ship Indemnified Parties within 30 days after delivery of such notice
by the U-Ship Indemnified Parties whether the Shareholder dispute the
Claim described in such notice, the Loss in the amount specified in the
U-Ship Indemnified Parties' notice will be conclusively deemed a
liability of the Shareholder and the Shareholder shall pay the amount
of such Loss to the U-Ship Indemnified Parties on demand.
Section 9.4 ASSIGNMENT OF INSURANCE; SUBROGATION. If and to the extent
that the U-Ship Indemnified Party has insurance coverage, or the right to make
claim against any third party for any amount to be indemnified against as set
forth in Section 9.2, the U-Ship Indemnified Party shall, upon full performance
by the Shareholder of their indemnification obligations, assign such rights to
the Shareholder.
Section 9.5 INDEMNIFICATION OF SHAREHOLDER IN RESPECT TO LIABILITIES
ASSUMED.
(a) U-Ship and ACS jointly and severally agree to indemnify
and hold harmless the Shareholder from and against any liability, loss,
deficiency, damage, expenses or cost (including reasonable legal
expenses), whether or not actually incurred or paid prior to the date a
claim for indemnification is made ("Shareholder Loss"), which the
Shareholder may suffer, sustain or become subject to, as a result of
the failure of U-Ship or ACS to pay or discharge on a liability for
which Shareholder was personally obligated or liable, including, but
not limited to, the obligations referred to in Section 7.3(g).
(b) Notwithstanding the foregoing, U-Ship and ACS shall not
have an obligation to Shareholder if such Shareholder Loss resulted
from a liability, obligation or claim not disclosed in writing in this
Agreement or not provided for in the Latest Balance Sheet.
(c) In the event that the Shareholder is made or threatened to
be made a defendant in or party to any action or proceeding, judicial
or administrative, instituted or threatened to be instituted by any
third party the liability for which or the costs or expenses of which
are or would be a Shareholder Loss, the Shareholder shall give U-Ship
and ACS prompt notice thereof. The failure to give such notice shall
not affect the Shareholder's ability to seek indemnification unless
such failure has materially and adversely affected the ability of
U-Ship and ACS to defend successfully the claim in question. U-Ship and
ACS shall be entitled to contest and defend such claim; provided, that
U-Ship and ACS (i) have a reasonable basis for concluding that such
defense may be successful and (ii) diligently contest and defend such
claim. Notice of the intention so to contest and defend shall be given
by U-Ship and ACS to the Shareholder within 20 business days after the
Shareholder's notice of such claim. Such contest and defense shall be
conducted by reputable attorneys employed by U-Ship and ACS and
approved by
41
Shareholder which shall not be unreasonably withheld or delayed. The
Shareholder shall be entitled at any time, at his own cost and expense
(which expense shall not constitute a Shareholder Loss unless the
attorneys retained by U-Ship and ACS determine that because of a
conflict of interest, such attorneys may not adequately represent the
interests of the Shareholder, and only to the extent that such expenses
are reasonable), to participate in such contest and defense and to be
represented by attorneys of it own or their own choosing. If the
Shareholder elects to participate in such defense, the Shareholder will
cooperate with U-Ship and ACS in the conduct of such defense. Neither
the Shareholder nor U-Ship and ACS may concede, settle or compromise
any Shareholder Claim without the consent of the other party, which
consent may not be unreasonably withheld.
(d) If and to the extent that the Shareholder has insurance
coverage, or the right to make claim against any third party for any
amount to be indemnified against as set forth in Section 9.5, the
Shareholder shall, upon full performance by U-Ship and ACS of their
indemnification obligations, assign such rights to U-Ship and ACS.
ARTICLE 10
MISCELLANEOUS
Section 10.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements of each party hereto
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any other party hereto, any person
controlling any such party or any of their officers or directors, whether prior
to or after the execution of this Agreement.
Section 10.2 NOTICES. All notices and other communications hereunder
shall be in writing (and shall be deemed given upon receipt) if delivered
personally, telecopied (which is confirmed) or mailed by registered or certified
mail (return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to U-Ship, to
U-Ship, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Vice President-Administration,
General Counsel and Secretary
Tel: (000) 000-0000
Fax: (000) 000-0000
42
with a copy to
Xxxxxx and Xxxxxx, P.A.
2400 IDS Center
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
(b) if to the Company and the Shareholder, to
0000 Xxxx Xxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
with a copy to
Xxxxxxx Xxxxxxx, Esq.
0000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Section 10.3 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
Section 10.4 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 10.5 ENTIRE AGREEMENT. This Agreement together with the
Exhibits and Schedules hereto and the other documents delivered pursuant hereto,
constitute the entire agreement of the parties and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
Section 10.6 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Minnesota without regard
to any applicable principles of conflicts of law.
Section 10.7 SPECIFIC PERFORMANCE. The parties hereto agree that if any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and
43
damages would be difficult to determine, and that the parties shall be entitled
to specific performance of the terms hereof, without the posting of any bond
whatsoever in addition to any other remedy at law or equity.
Section 10.8 EXPENSES. Except as set forth in Article 6, fees, expenses
and all out-of-pocket costs and expenses, including, without limitation, fees
and disbursements of counsel, financial advisors and accountants, incurred by
the parties hereto in connection with this Agreement shall be borne solely and
entirely by the party that has incurred such costs and expenses. In furtherance
of the foregoing, all such fees and expenses incurred by the Company shall be
borne by the Shareholder such that U-Ship shall have no liability for such fees
and expenses of the Company after the Effective Time.
Section 10.9 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement express or implied, is intended to or shall confer upon any other
person or persons any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 10.10 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
Section 10.11 CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
(a) "affiliate" means a person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by or is
under common control with, the first mentioned person;
(b) "control" (including the terms "controlled," "controlled
by" and "under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause
the direction of the management or policies of a person, whether
through the ownership of stock or as trustee or executor, by contract
or credit arrangement or otherwise;
(c) "person" shall mean any individual, corporation,
partnership, joint venture, association, trust, unincorporated
organization or government or any agency or political subdivision
thereof or any other entity; and
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
44
U-SHIP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxx
Treasurer and Chief Financial
Officer
ADVANCED COURIER SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxx
Chief Financial Officer
TWIN CITY TRANSPORTATION, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxx
Individually as Shareholder of
Twin City Transportation, Inc.
45
EXHIBIT A
[PURSUANT TO SECTION 1.3]
ARTICLES OF MERGER
TWIN CITY TRANSPORTATION, INC.
(A MINNESOTA CORPORATION)
WITH AND INTO
ADVANCED COURIER SERVICES, INC.
(A MINNESOTA CORPORATION)
Pursuant to Section 302A.615 of Chapter 302A of the Minnesota Statutes,
the Minnesota Business Corporation Act, the undersigned corporations, Twin City
Transportation, Inc., a Minnesota corporation (the "TCTI") and Advanced Courier
Services, Inc., a Minnesota corporation (the "ACS" and together with TCTI, the
"Constituent Corporations"), hereby adopt the following Articles of Merger.
FIRST: The names of the Corporations participating in the merger and
the states under the laws of which they are respectively organized are as
follows:
Name of Corporation State
------------------- -----
Advanced Courier Services, Inc. Minnesota
Twin City Transportation, Inc. Minnesota
SECOND: The Plan of Merger attached hereto as Exhibit A, has been duly
adopted by the Constituent Corporations in accordance with the requirements of
the Minnesota Business Corporation Act, Chapter 302A of the Minnesota Statutes.
IN WITNESS WHEREOF, these Articles of Merger have been executed by each
Constituent Corporation this 13th day of January, 1999.
ADVANCED COURIER SERVICES, TWIN CITY TRANSPORTATION, INC.
INC.
By: By:
----------------------------------- -----------------------------------
Authorized Officer Authorized Officer
A-1
EXHIBIT A
PLAN OF MERGER
THIS PLAN OF MERGER ("Plan") dated as of __________ __, 1999, by and
between TWIN CITY TRANSPORTATION, INC., a Minnesota corporation (hereinafter
referred to as the "TCTI") and U-SHIP, INC., a Utah corporation ("U-Ship"), and
ADVANCED COURIER SERVICES, INC., a Minnesota corporation (hereinafter referred
to as "ACS").
RECITALS
A. TCTI is a corporation duly organized and existing under the laws of
the State of Minnesota; and
B. ACS is a corporation duly organized and existing under the laws of
the State of Minnesota and is a direct, wholly-owned subsidiary of U-Ship; and
C. The Board of Directors and the sole shareholder of TCTI deem it
advisable to merge with and into ACS, which will be the surviving corporation of
the Merger, and U-Ship, as sole shareholder of ACS, and the Board of Directors
of ACS deem it advisable that TCTI merge with and into ACS under the terms, and
subject to the conditions hereinafter set forth, and TCTI and ACS have,
respectively, approved this Plan pursuant to and in accordance with the
applicable provisions of Chapter 302A of the Minnesota Statutes, and
D. The terms and conditions of such merger (the "Merger"), the mode of
carrying the same into effect, the assumption of liabilities of the TCTI stock
by ACS, the conversion and exchange of TCTI's stock for the Common Stock of
U-Ship, and a cash payment and such other facts, details or provisions as may be
required or permitted to be stated in this Plan are hereinbelow set forth.
NOW, THEREFORE, in consideration of the foregoing recitals, and of the
mutual agreements, covenants and provisions herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 Subject to, and in accordance with, the provisions of this
Plan, TCTI shall be merged with and into ACS in accordance with the applicable
provisions of the Minnesota Business Corporation Act and the Articles of Merger
shall be executed by both ACS and TCTI, and thereafter delivered to the
Secretary of State of Minnesota for filing. The Merger shall become effective
upon the filing of the Articles of Merger with the Secretary of State of
A-2
Minnesota (the "Effective Time") and TCTI shall be merged with and into ACS, and
the separate existence of TCTI shall cease. ACS shall be the surviving
corporation and shall continue its corporate existence under the laws of the
State of Minnesota.
Section 1.2 Prior to and after the Effective Time, ACS and TCTI shall
each take all such actions as may be necessary or appropriate in order to
effectuate the Merger. If at any time after the Effective Time, any further
action is necessary or desirable to carry out the purposes of this Plan and to
vest ACS with full title to all properties, assets, rights or interests of TCTI,
the officers of TCTI, and ACS as of or after the Effective Time, shall take all
such further actions as deemed by them to be necessary or proper in the
circumstances.
ARTICLE 2
CONVERSION AND EXCHANGE OF SHARES
At and as of the Effective Time:
Section 2.1 At the Effective Time and without any action on the part of
ACS, TCTI holder of TCTI Common Stock, each of the following shall occur:
(a) Each share of TCTI Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted, subject to
the provisions of Section 2.1(f), into the right to receive 4.2333
shares of U-Ship Common Stock, par value $.004 per share, and a cash
payment of $400.00 (the "Cash Payment").
(b) Each share of TCTI Common Stock held in the treasury of
TCTI and each share of TCTI Common Stock owned by any direct or
indirect wholly-owned subsidiary of TCTI immediately prior to the
Effective Time shall automatically be canceled and extinguished without
any conversion thereof and no payment shall be made with respect
thereto.
(c) Any common stock options and warrants of TCTI, and any
rights, claims, demands, and choses in action arising out of or
relating to the issuance or ownership thereof, not yet exercised by
their terms, shall be deemed to expire as of the Effective Time.
(d) As soon as practicable after the Effective Time, ACS shall
deliver certificates representing the U-Ship Common Stock required to
be issued pursuant to this Section 2.1 to holder of shares of TCTI
Common Stock, against receipt of certificates representing TCTI Common
Stock; and concurrent therewith shall deliver to such holder the
aggregate Cash Payment payable to this Section 2.1, and a stock
purchase warrant to purchase 1,000 shares of U-Ship, Inc. in a form
agreed upon by the parties hereto, exercisable at a price of $1.063 per
share.
A-3
(e) Until surrender by the holders of TCTI Common Stock, each
outstanding certificate which, immediately prior to the Effective Time,
represented shares of TCTI Common Stock shall be deemed for all
corporate purposes, subject to the further provisions of this Section,
to evidence the ownership of the number of whole shares of U-Ship
Common Stock into which such shares shall be so converted; provided,
however, that unless and until any such certificate shall be so
surrendered, (i) the holder of such certificate shall not have any
voting rights in respect of the number of whole shares of U-Ship
Common Stock into which the shares of TCTI Common Stock represented by
such certificate shall be so converted and (ii) dividends payable to
holders of record of shares of U-Ship Common Stock shall not be paid to
the holders of such certificates. Subject to the effect of unclaimed
property, escheat and other applicable laws, upon surrender of any such
certificate for shares of U-Ship Common Stock issued in exchange
therefor, there shall be paid to the record holder of such certificate
any dividends which shall have become payable between the Effective
Time and the date of such surrender with respect to the number of whole
shares of U-Ship Common Stock evidenced by the certificates issued in
exchange upon such surrender, such amounts to be paid upon such
surrender, but without interest.
(f) No fraction of a share of U-Ship Common Stock shall be
issued in connection with the Merger. In lieu of any such fractional
shares, each holder of TCTI Common Stock upon surrender of a
certificate for exchange pursuant to this Section 2.1 shall be paid an
amount in cash (without interest), rounded to the nearest cent,
determined by multiplying (i) $1.063 by (ii) the fraction of a share of
U-Ship Common Stock to which such holder would otherwise be entitled to
receive under this Section 2.1.
ARTICLE 3
RIGHTS AND LIABILITIES OF SURVIVING CORPORATION
Section 3.1 At and after the Effective Time of the Merger, ACS shall
succeed to and possess all of the rights, interests, privileges, immunities and
franchises, of a public as well as of a private nature, of TCTI. All property
(real, personal and mixed) and all debts due on any account, including
subscriptions for shares, and all other causes of action, and every other
interest of, belonging or due to TCTI shall vest in and be held by ACS, without
any further act or deed as fully and entirely without change as if the same were
held and enjoyed by TCTI, and shall be managed and controlled by ACS.
Section 3.2 ACS shall be responsible and liable for all of the debts,
liabilities, duties and obligations of TCTI, and any existing claim of or
against, or any action pending by or against TCTI may be prosecuted as if the
Merger had not taken place, or ACS may be substituted in the place of TCTI.
Neither the rights of creditors (including secured creditors) nor any liens upon
the property of TCTI shall be impaired by the Merger.
A-4
ARTICLE 4
NAME
OFFICERS AND DIRECTORS OF ACS
Section 4.1 The name of the surviving corporation of the Merger shall
be Advanced Courier Services, Inc. following the Merger, as provided in its
Articles of Incorporation.
Section 4.2 The directors and officers of ACS immediately prior to the
Effective Time shall be the directors and officers of ACS as the surviving
corporation of the Merger (retaining their respective positions and terms of
office).
ARTICLE 5
CONDITIONS OF THE MERGER
Consummation of the Merger is subject to the satisfaction of the
following conditions:
(a) The Merger shall have received the approval of the
shareholders of each of ACS and TCTI to the extent required by the
applicable provisions of the laws of the State of Minnesota, and the
respective articles of incorporation of ACS and TCTI.
(b) All necessary documents shall have been properly executed,
filed and recorded, and all such acts and things required to accomplish
the Merger, in accordance with the laws of the State of Minnesota shall
have been properly taken.
(c) Resolutions shall have been adopted by the Board of
Directors of ACS and the Board of Directors and the shareholder of TCTI
finally approving the Merger.
(d) Any other requisite statutory or regulatory approvals
shall have been obtained.
ARTICLE 6
MISCELLANEOUS
Section 6.1 This Plan may be terminated and the Merger and other
transactions herein provided for abandoned by either of TCTI or ACS by written
notice at any time prior to the Effective Time of the Merger if either TCTI or
ACS or their stockholder(s) breaches and fails to cure any term or condition of
this Plan.
Section 6.2 The headings set forth herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Plan.
A-5
Section 6.3 This Plan may be executed in two or more counterparts, each
of which shall constitute an original, and all of which, when taken together,
shall constitute one and the same instrument.
Section 6.4 This Plan shall be governed by, and construed in accordance
with, the laws of the State of Minnesota without giving effect to the principles
of conflicts of law thereof. By resolutions adopted by their respective Boards
of Directors and shareholders, if required, each of the undersigned has caused
this Plan to be executed by an authorized officer as of the 13th day of January,
1999.
TWIN CITY TRANSPORTATION, INC.
By
---------------------------------------
Xxxxxx X. Xxxxxxxx
President and Chief Executive Officer
U-SHIP, INC.
By
---------------------------------------
Xxxxxxx X. Xxxxxx
Treasurer and Chief Financial Officer
ADVANCED COURIER SERVICES,
INC.
By
---------------------------------------
Xxxxxxx X. Xxxxxx
Treasurer and Chief Financial Officer
A-6
EXHIBIT B
FORM OF WARRANT
WARRANT
TO PURCHASE SHARES OF
COMMON STOCK OF
U-SHIP, INC.
1,000 SHARES JANUARY 13, 1999
This Certifies that for good and valuable consideration, receipt of
which is hereby acknowledged by U-Ship, Inc., a Utah corporation (the "Company")
Xxxxxx X. Xxxxxxxx (the "Warrantholder"), is entitled to subscribe for and
purchase from the Company, at any time after the date of this Warrant and prior
to the second anniversary of the date of this Warrant, up to 1,000 shares of the
Company's Common Stock $.004 par value, at $1.063 per share (the "Purchase
Price"), subject to adjustment as hereinafter set forth.
1. Definitions. For the purposes of this Warrant the following terms
shall have the following meanings:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency then administering the
Securities Act.
"Company" shall mean U-Ship, Inc., a Utah corporation, and any
corporation which shall succeed to, or assume, the obligations of said
corporation hereunder.
"Common Stock" shall mean the shares of Common Stock of the
Company, $0.001 par value.
"Other Securities" shall mean any stock (other than Common
Stock) or other securities of the Company which the Warrantholder at
any time shall be entitled to receive, or shall have received, upon the
exercise of the Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, as
in effect at the time.
"Subscription Form" shall mean the subscription forms attached
hereto.
"Transfer" shall mean any sale, assignment, pledge, or other
disposition of any Warrants and/or Warrant Shares, or of any interest
in either thereof, which would constitute a sale thereof within the
meaning of Section 2(3) of the Securities Act.
B-1
"Warrant Shares" shall mean the shares of Common Stock
purchased or purchasable by the Warrantholder upon the exercise of the
Warrants pursuant to Section 2 hereof.
"Warrantholder" shall mean the holder or holders of the
Warrants or any related Warrant Shares.
"Warrants" shall mean the Warrants (including this Warrant),
identical as to terms and conditions and date, evidencing the right to
purchase initially an aggregate of 370,000 shares of Common Stock, and
all Warrants issued in exchange, transfer or replacement thereof.
All terms used in this Warrant which are not defined in Section 1
hereof have the meanings respectively set forth elsewhere in this Warrant.
2. Exercise of Warrant, Issuance of Certificate, and Payment for
Warrant Shares. The rights represented by this Warrant may be exercised at any
time after __________, 1999, and prior to __________, 2001 by the Warrantholder,
in whole or in part (but not as to any fractional share of Common Stock), by:
(a) delivery to the Company of a completed Subscription Form, (b) surrender to
the Company of this Warrant properly endorsed and signature guaranteed, and (c)
delivery to the Company of a certified or cashier's check made payable to the
Company in an amount equal to the aggregate Purchase Price of the shares of
Common Stock being purchased, at its principal office or agency in Minnesota (or
such other office or agency of the Company as the Company may designate by
notice in writing to the holder hereof). The Company agrees and acknowledges
that the shares of Common Stock so purchased shall be deemed to be issued to the
holder hereof as the record owner of such shares as of the close of business on
the date on which this Warrant, properly endorsed, and the Subscription Form
shall have been surrendered and payment made for such shares as aforesaid. Upon
receipt thereof, the Company shall, as promptly as practicable, and in any event
within fifteen (15) days thereafter, execute or cause to be executed and deliver
to the Warrantholder a certificate or certificates representing the aggregate
number of shares of Common Stock specified in said Subscription Form. Each stock
certificate so delivered shall be in such denomination as may be requested by
the Warrantholder and shall be registered in the name of the Warrantholder or
such other name as shall be designated by the Warrantholder. If this Warrant
shall have been exercised only in part, the Company shall, at the time of
delivery of said stock certificate or certificates, deliver to the Warrantholder
a new Warrant evidencing the rights of such holder to purchase the remaining
shares of Common Stock covered by this Warrant. The Company shall pay all
expenses, taxes, and other charges payable in connection with the preparation,
execution, and delivery of stock certificates pursuant to this Section 2, except
that, in case any such stock certificate or certificates shall be registered in
a name or names other than the name of the Warrantholder, funds sufficient to
pay all stock transfer taxes which shall be payable upon the execution and
delivery of such stock certificate or certificates shall be paid by the
Warrantholder to the Company at the time of delivering this Warrant to the
Company as mentioned above.
B-2
3. Ownership of this Warrant. The Company may deem and treat the
registered Warrantholder as the holder and owner hereof (notwithstanding any
notations of ownership or writing made hereon by anyone other than the Company)
for all purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for transfer as provided herein and then only if
such transfer meets the requirements of Section 5.
4. Exchange, Transfer, and Replacement. Subject to Section 5 hereof,
this Warrant is exchangeable upon the surrender hereof by the Warrantholder to
the Company at its office or agency described in Section 2 hereof for new
Warrants of like tenor and date representing in the aggregate the right to
purchase the number of shares purchasable hereunder, each of such new Warrants
to represent the right to purchase such number of shares (not to exceed the
aggregate total number purchasable hereunder) as shall be designated by the
Warrantholder at the time of such surrender. Subject to Section 5 hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, upon the
books of the Company by the Warrantholder in person or by duly authorized
attorney, and a new Warrant of the same tenor and date as this Warrant, but
registered in the name of the transferee, shall be executed and delivered by the
Company upon surrender of this Warrant, duly endorsed, at such office or agency
of the Company. Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction, or mutilation of this Warrant, and, in
the case of loss, theft, or destruction, of indemnity or security reasonably
satisfactory to it, and upon surrender and cancellation of this Warrant, if
mutilated, the Company will make and deliver a new Warrant of like tenor, in
lieu of this Warrant. This Warrant shall be promptly canceled by the Company
upon the surrender hereof in connection with any exchange, transfer, or
replacement. The Company shall pay all expenses, taxes (other than stock
transfer taxes), and other charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 4.
5. Restrictions on Transfer. Notwithstanding any provisions contained
in this Warrant to the contrary, neither this Warrant nor the Warrant Shares
shall be transferable except upon the conditions specified in this Section 5,
which conditions are intended, among other things, to ensure compliance with the
provisions of the Securities Act in respect of the transfer of this Warrant or
such Warrant Shares. The holder of this Warrant agrees that such holder will not
transfer this Warrant or the related Warrant Shares (a) prior to delivery to the
Company of an opinion of counsel selected by the Warrantholder and reasonably
satisfactory to the Company, stating that such transfer is exempt from
registration under the Securities Act, or (b) until registration of such
Warrants and/or Warrant Shares under the Securities Act has become effective and
continues to be effective at the time of such transfer. An appropriate legend
may be endorsed on the Warrants and the certificates of the Warrant Shares
evidencing these restrictions.
6. Antidilution Provisions. The rights granted hereunder are subject to
the following:
(a) Stock Splits and Reverse Splits. In case at any time the
Company shall subdivide its outstanding shares of Common Stock into a
greater number of shares, the Purchase Price in effect immediately
prior to such subdivision shall be proportionately reduced and the
number of Warrant Shares purchasable pursuant to this Warrant
immediately prior to such subdivision shall be proportionately
increased, and conversely,
B-3
in case at any time the Company shall combine its outstanding shares of
Common Stock into a smaller number of shares, the Purchase Price in
effect immediately prior to such combination shall be proportionately
increased and the number of Warrant Shares purchasable upon the
exercise of this Warrant immediately prior to such combination shall be
proportionately reduced.
(b) Reorganization, Reclassification, Consolidation, Merger,
or Sale. If any capital reorganization or reclassification or merger of
the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation, shall be
effected in such a way that holders of shares of Common Stock shall be
entitled to receive Common Stock, Other Securities or assets with
respect to or in exchange for shares of Common Stock, then, as a
condition of such reorganization, reclassification, consolidation,
merger or sale, lawful and adequate provision shall be made whereby the
Warrantholder shall thereafter have the right to purchase and receive
upon the basis and upon the terms and conditions specified in the
Warrants and in lieu of the shares of Common Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of
the Warrants such shares of Common Stock, Other Securities or assets as
may be issued or payable with respect to or in exchange for a number of
outstanding shares of Common Stock equal to the number of shares of
Common Stock immediately theretofore purchasable and receivable upon
the exercise of the Warrants had such reorganization, reclassification,
consolidation, merger or sale not taken place, and in any such case
appropriate provision shall be made with respect to the rights and
interests of the Warrantholder so that the provisions of the Warrants
(including, without limitation, provisions for adjustment of the
Purchase Price and the number of shares purchasable upon the exercise
of the Warrants) shall thereafter be applicable, as nearly as may be,
in relation to any shares of Common Stock, Other Securities or assets
thereafter deliverable upon the exercise of the Warrants.
7. Special Agreements of the Company.
(a) Will Reserve Shares. The Company will reserve and set
apart and have at all times the number of shares of authorized but
unissued Common Stock deliverable upon the exercise of the Warrants,
and it will have at all times any other rights or privileges provided
for herein sufficient to enable it at any time to fulfill all of its
obligations hereunder.
(b) Will Avoid Certain Actions. The Company will not, by
amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, issue or
sale of securities or otherwise, avoid or take any action which would
have the effect of avoiding the observance or performance hereunder by
the Company, but will at all times in good faith assist in carrying out
of all the provisions of the Warrants and in taking all such actions as
may be necessary or appropriate in order to protect the rights of the
Warrantholder against dilution or other impairment.
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8. Provisions for Registration. Notwithstanding anything in this
Warrant to the contrary, the Warrantholder shall have the rights regarding
registration of Warrant Shares which may be hereafter acquired upon exercise of
this Warrant, set forth in Article 6 of the Agreement and Plan of Merger between
the Company, Advanced Courier Services, Inc., Twin City Transportation, Inc. and
the Warrantholder of even date.
9. Notices. Any notice or other document required or permitted to be
given or delivered to the Warrantholder shall be delivered or sent by certified
mail to the Warrantholder at the last address shown on the books of the Company
maintained for the registry and transfer of the Warrants. Any notice or other
document required or permitted to be given or delivered to the Company shall be
delivered or sent by certified or registered mail to the principal office of the
Company.
10. No Rights as Shareholders; Limitation of Liability. This Warrant
shall not entitle any holder hereof to any of the rights of a shareholder of the
Company. No provisions hereof, in the absence of affirmative action by the
holder hereof to purchase shares of Common Stock, and no mere enumeration herein
of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Purchase Price or as a shareholder of the
Company whether such liability is asserted by the Company or by creditors of the
Company.
11. Governing Law. This Warrant shall be governed by, and construed and
enforced in accordance with, the laws of the State of Minnesota, without regard
to conflicts of laws principles.
12. Miscellaneous. This Warrant and any provision hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party (or any predecessor in interest thereof) against which
enforcement of the same is sought. The headings in this Warrant are for purposes
of reference only and shall not affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
a duly authorized officer, and to be dated as of the 13th day of January, 1999.
U-SHIP, INC.
By:
--------------------------------------
Xxxxxxx X. Xxxxxx, Treasurer and
Chief Financial Officer
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "1933 ACT") OR UNDER THE SECURITIES LAWS OF ANY
OTHER STATE AND MAY NOT BE TRANSFERRED WITHOUT (i) THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT
REGISTRATION UNDER THE 1933 ACT OR THE SECURITIES LAWS OF ANY APPLICABLE STATE;
OR (ii) SUCH REGISTRATION."
B-5
FULL SUBSCRIPTION FORM
To Be Executed By the Registered Warrantholder if It/
She/He Desires to Exercise in Full the Within Warrant
The undersigned hereby exercises the right to purchase the ____________
shares of Common Stock covered by the within Warrant at the date of this
subscription and herewith makes payment of the sum of $_________________________
representing the Purchase Price of $__________ per share in effect at that date.
Certificates for such shares shall be issued in the name of and delivered to the
undersigned, unless otherwise specified by written instructions, signed by the
undersigned and accompanying this subscription.
Dated:
-------------------------------
Signature:
-------------------------------
Address:
B-6
PARTIAL SUBSCRIPTION FORM
To be Executed by the Registered Warrantholder if It/She/He
Desires to Exercise in Part Only the Within Warrant
The undersigned hereby exercises the right to purchase _________ shares
of the total shares of Common Stock covered by the within Warrant at the date of
this subscription and herewith makes payment of the sum of $____________
representing the Purchase Price of $____________ per share in effect at this
date.
Certificates for such shares and a new Warrant of like tenor and date
for the balance of the shares not subscribed for (if any) shall be issued in the
name of and delivered to the undersigned, unless otherwise specified by written
instructions, signed by the undersigned and accompanying this subscription.
[The following paragraph need be completed only if the Purchase Price and number
of shares of Common Stock specified in the within Warrant have been adjusted
pursuant to Section 6.]
The shares hereby subscribed for constitute ________________ shares of
Common Stock (to the nearest whole share) resulting from adjustment of
________________ shares of the total of __________________ shares of Common
Stock covered by the within Warrant, as said shares were constituted at the date
of the Warrant.
Dated:
-------------------------------
Signature:
-------------------------------
Address:
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EXHIBIT C
[INTENTIONALLY DELETED]
C-1
EXHIBIT D
OPINION OF COUNSEL TO COMPANY
[PURSUANT TO SECTION 7.2(E)]
U-Ship, Inc. and
Advanced Courier Services, Inc,.
0000 Xxxx 00xx Xxxxxx
Xxxxx, XX 00000
Ladies and Gentlemen:
I have acted as counsel to Twin City Transportation, Inc., a Minnesota
Corporation ("TCTI") (the "Company") and Xxxxxx X. Xxxxxxxx (the "Shareholder"),
in connection with that certain Agreement and Plan of Merger dated as of
__________, 1999, by and among U-Ship, Inc., a Utah corporation ("(U-Ship") and
Advanced Courier Services, Inc., a Minnesota corporation ("ACS"), the Company
and the Shareholder (the "Merger Agreement"), and the Employment Agreement dated
as of __________, 1999 between ACS and the Shareholder (the "Employment
Agreement"). This opinion is being delivered pursuant to Section 7.2(f) of the
Merger Agreement. All capitalized terms used herein and not defined herein have
the meanings assigned to them in the Merger Agreement.
I have examined such documents and have reviewed such questions of law
as I have considered necessary and appropriate for the purposes of my opinions
set forth below.
In rendering our opinions set forth below, I have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures and the conformity to authentic originals of all documents
submitted to us as copies. I have also assumed the legal capacity for all
purposes relevant hereto of all natural persons and, with respect to all parties
to agreements or instruments relative hereto other than the Company and the
Shareholders, that such parties had the requisite power and authority (corporate
or otherwise) to execute, deliver and perform such agreements or instruments,
that such agreements or instruments have been duly authorized by all requisite
action (corporate or otherwise), executed and delivered by such parties and that
such agreements or instruments are the valid, binding and enforceable
obligations of such parties. As to questions of fact material to our opinions, I
have relied upon certificates of the Shareholder and certificates of public
officials.
On the basis of the foregoing and of our examination of such other
questions of law and fact as we deem relevant under the circumstances, and in
reliance thereon, and subject to the limitations, qualifications and exceptions
set forth herein, I am of the opinion that, as of the date hereof:
D-1
U-Ship, Inc. and
Advanced Courier Services, Inc.
_______________, 1999
Page 2
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Minnesota
and has all requisite corporate power and authority necessary to
consummate the transactions on its part contemplated by the Merger
Agreement and to conduct any lawful business activity.
2. The authorized capital stock of the Company consists of (i)
________ shares of Common Stock, par value $ ________ per share of
which, as of the date hereof and based upon the stock records of the
Company, 1,000 shares are issued and outstanding (the "Shares"), all of
which are owned beneficially and of record by the Shareholder and, to
my knowledge, free and clear of any security interests, claims, liens,
pledges, options, encumbrances, charges, agreements, voting trusts,
proxies or other arrangements, restrictions or other legal or equitable
limitations of any kind. The Shares have been duly authorized and
validly issued and are fully paid and nonassessable.
3. The Merger Agreement has been duly authorized by all
necessary corporate action and has been duly executed and delivered by
the Company and the Shareholder and constitutes a valid and binding
obligation of the Company and the Shareholder, enforceable against each
Shareholder in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally, and to the exercise of
judicial discretion in accordance with general principles of equity,
including (without limitation) concepts of materiality, reasonableness,
good faith and fair dealing, and other similar doctrines affecting the
enforceability of agreements generally (regardless of whether
considered in a proceeding in equity or at law).
4. The Employment Agreements has been duly executed and
delivered by the Shareholder and constitutes a valid and binding
obligation of the Shareholder, enforceable against the Shareholder in
accordance with its terms, (i) subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
rights of creditors generally, and to the exercise of judicial
discretion in accordance with general principles of equity, including
(without limitation) concepts of materiality, reasonableness, good
faith and fair dealing, and other similar doctrines affecting the
enforceability of agreements generally (regardless of whether
considered in a proceeding in equity or at law), and (ii) subject to
the exercise of judicial discretion in enforcing geographic scope and
duration provisions of the noncompetition covenants therein.
5. The execution and delivery of the Merger Agreement, the
Noncompetition Agreements and the Employment Agreements, and the
consummation of
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U-Ship, Inc. and
Advanced Courier Services, Inc.
_______________, 1999
Page 3
the Merger, will not violate or conflict with the Articles of
Incorporation or Bylaws of the Company or any agreement, instrument,
statute, regulation, order, judgment or decree known to me to which the
Shareholder or the Company is a party or by which the Shareholder, the
Company or the Company's assets are bound.
6. No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body, any court or
any third party is required to be obtained or made by the Shareholders
or the Company for the consummation of the Merger pursuant to the
Merger Agreement, except for the filing of Articles of Merger with the
Secretary of State of the State of Minnesota.
My opinions expressed above are limited to the laws of the State of
Minnesota and the federal laws of the United States of America. I have not
examined and express no opinion with respect to the laws of any other
jurisdiction.
The foregoing opinions are being furnished to you solely for your
benefit and may not be relied upon by, nor may copies be delivered to, any other
person without prior written consent.
Very truly yours,
Xxxxxxx __. Xxxxxxx, Esq.
D-3
EXHIBIT E
FORM OF EMPLOYMENT AGREEMENT
[PURSUANT TO SECTIONS 7.2(g) AND 7.3(e)]
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 13th day of January, 1999, by and
between Xxxxxx X. Xxxxxxxx, 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xx. Xxxx, Xxxxxxxxx
00000 ("Employee"), and ADVANCED COURIER SERVICES, INC., a Minnesota corporation
having its principal office at 0000 Xxxx 00xx Xxxxxx, Xxxxx, Xxxxxxxxx 00000
("Employer").
WHEREAS, Employer intends to engage in the business of providing
courier services; and
WHEREAS, Employee has had considerable experience in the organization,
operating and management of a courier service business and is currently employed
by Twin City Transportation, Inc. ("TCT:); and
WHEREAS, TCT has merged with and into Employer pursuant to that certain
Agreement and Plan of Merger by and among U-Ship, Inc., TCT and the Shareholder
dated as of the date hereof (the "Merger Agreement"); and
WHEREAS, Employer desires to hire and employ Employee, and Employee
desires to accept such employment, all on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, Employer and Employee agree as follows:
1. Employment. Employer hereby hires and employs Employee as an
executive employee of Employer in the Minneapolis-St. Xxxx area, and Employee
accepts such employment with Employer on the terms and conditions set forth
herein. Employee shall hold the title of President and shall report to the
Chairman or Chief Executive officer of Employer, or to such other person as the
Employer shall designate. During his employment, Employee shall serve on the
board of directors of Employer.
2. Term. This Agreement shall be for a period of two (2) years
commencing on the effective date hereof; thereafter, unless otherwise expressly
agreed in writing by Employer and Employee, Employee's employment shall be on an
"at-will" basis.
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3. Duties and Responsibilities. Employee shall serve Employer
diligently and faithfully in the performance of his duties on Employer's behalf,
which shall include the duties outlined in Exhibit A, and such duties and
responsibilities as Employer may from time to time reasonably prescribe.
Employee agrees to devote his full working time, energy and skill to said
employment to accomplish the aforementioned duties. Employee shall be permitted
to own and manage a separate proprietary business, Twin City Medical
Transportation, Inc., provided that such company has separate operating
management and employees and does not interfere with Employee's primary
responsibilities to Employer. The foregoing exception to Employee's
responsibilities is made based upon Employee's representation that Twin City
Medical Transportation, Inc., does not and will not directly compete with the
business of Employer.
4. Compensation.
(a) For all services rendered to Employer pursuant to this
Agreement, Employee shall be paid $1 per month salary through the first
two full months of employment, thereafter, Employee shall receive a
base annual salary of $75,000; provided, however, that at such time,
during the term Employee's employment hereunder, Employer's gross
revenue from courier operations shall reach $5,000,000 run rate (the
"Target Revenue"), Employees' base annual salary, commencing with the
month in which the Target Revenue is achieved, shall be at the rate of
$100,000. The measurement shall be on an annualized basis and commence
with the first full calendar month following the date of this
Agreement. In addition, Employee shall be eligible for a target annual
bonus to be paid within ninety (90) days following the end of
Employer's fiscal year based upon the criteria set forth in Exhibit B;
and
(b) Employer agrees to make available to Employee fringe
benefits in accordance with the policies and plans adopted by Employer,
which fringe benefits shall be no less favorable to the Employee than
those provided to other employees with similar experience employed by
Employer. Employer shall provide directors and officers and other
insurance consistent with those provided directors and officers of
U-Ship.
5. Termination.
(a) This Agreement may be terminated upon thirty (30) days'
written notice in the event of (i) a breach of any material term,
condition or covenant contained herein and such breach remains uncured
during said period. Any such written notice of termination sent to
Employee based on a material breach shall specify the grounds for
termination. Employee shall be provided a reasonable opportunity within
the 30 days to cure any conduct or act alleged as grounds for
termination, if curable, and shall be provided a reasonable opportunity
to present to Employer his position regarding any dispute relating to
the existence of such grounds. It shall not be grounds for termination
of Employee that if, after reasonable efforts by Employee, the business
operations of
E-2
Employer that are managed by Employee, do not achieve financial
performance objectives of Employer.
(b) Notwithstanding any other provision hereof, Employee
further agrees that this Agreement may be immediately terminated
without prior notice to Employee, or any liability to Employee of
whatsoever kind: (i) in the event Employee has perpetrated fraud or
embezzlement, or knowingly diverted or wasted substantial corporate
assets, engages in conduct which violates laws or regulations
applicable to Employer's business which damages or jeopardizes
Employer's right to engage in its business, results in the loss of
licenses, authority or permits to engage in business, or results in the
imposition of fines or penalties; or (ii) knowingly and deliberately
violated or refuses to carry out policies adopted from time to time by
Employer and communicated in writing to Employee; or (iii) Employee
demonstrates gross misconduct.
(c) This Agreement may be terminated by Employer without cause
upon thirty (30) days' written notice.
(d) This Agreement may be terminated by mutual agreement of
the parties.
(e) Except for termination pursuant to Section 5(a), (b) and
(d), Employee shall receive as severance pay the continuation of
Employee's base salary for the remainder of the two-year term of this
Agreement. The base salary shall be paid in equal installments
throughout the remainder of the term of this Agreement pursuant to
Employer's regular payroll schedule. No other form of compensation, by
way of bonus or otherwise, shall be payable to Employee, except to the
extent the same was earned and payable as the date of termination.
6. Remedies. The parties agree that Employee's services to be rendered
pursuant to the terms hereof are unique and special; that in the event of
Employee's material breach of this Agreement or any of its provisions thereof,
the damages likely to be sustained by Employer would be difficult to ascertain;
that in the event of such breach by Employee, Employer, in addition to any
remedies Employer may have at law, shall have the right to equitable relief,
including injunctive relief, against Employee in the event of breach of the
covenants contained in Paragraphs 7, 8 and 9 hereof.
7. Restrictive Covenant.
(a) Employee agrees, as part of the consideration hereof, for
a period of two (2) years following termination of this Agreement, but
in no event beyond the fourth anniversary of the date of Employee's
employment under this Agreement (the "Non-compete Period"), that
he/she shall not directly or indirectly, either individually or with
others, engage or have any interest, as an owner, employee,
representative, agent, consultant or otherwise, in any business which
is in competition with the business conducted by Employer at the date
of termination of Employee's employment within the
E-3
same geographical boundaries in which Employer then currently engages
in its business. This restriction shall be limited to competitive
employment, relationships or acts which compete or may compete with the
business of Employee as being conducted on date of termination of
Employee's employment, or such business that Employer plans to engage
in within a reasonable period following such termination, based upon
objective evidence of such plans provided Employee shall be allowed to
own and manage Twin City Medical Transportation, Inc. in accordance
with Section 3 above.
(b) Further, Employee agrees that during such Non-compete
Period Employee shall not directly or indirectly, or through any entity
or future employer, solicit the employment of, nor employ any person
who was employed by Employer prior to or during the Non-Compete Period.
This restriction shall apply to Employer's drivers and other persons
engaged as independent contractors.
(c) Ownership by Employee, as a passive investment, of less
than two percent (2%) of the outstanding shares of capital stock of any
corporation listed on a national securities exchange or publicly traded
on any nationally recognized over-the-counter market shall not
constitute a breach of this Section 7.
(d) Employer further agrees that during such Non-compete
Period subsequent to the termination of this Agreement, he/she shall
not solicit Employer's customers on behalf of himself/herself or any
other business or entity in competition with the business then
conducted by Employer. For purposes hereof, the term "Employer's
customers" shall mean any person or entity to which Employer has
provided services or products, during the 24-month period immediately
preceding the termination of this Agreement. The foregoing restriction
shall apply in the State of Minnesota or in any other state or
territory in which Employer conducted material business during the
period of Employee's employment.
8. Confidential Information.
(a) For purposes of this Paragraph 8, the term "Confidential
Information" means, in addition to its meaning under applicable law,
information which is not generally known in Employer's industry, which
is proprietary to Employer or its affiliates and which is subject to
efforts by the Employer to maintain its confidentiality, including (i)
trade secret information about Employer and its products; and (ii)
information relating to the business of Employer as conducted at any
time within the previous five years or anticipated to be conducted by
Employer, and to any of its past, current or anticipated products and
services, including, without limitation, information about Employer's
purchasing, product development, accounting, marketing, selling,
servicing, customer lists and lists of independent contractors.
"Confidential Information" shall not include information that is or
thereafter by legal means becomes lawfully available from public
sources or any information that is required by a law or any competent
administrative
E-4
agency or judicial authority to be disclosed, or the disclosure of
which is otherwise reasonably necessary or appropriate in connection
with performance by Employee of his duties under this Agreement. The
parties also acknowledge that Employee has substantial prior experience
and background in the courier industry and nothing herein shall act to
treat or consider that prior background and experience as "Confidential
Information" within the meaning of this Agreement.
(b) Employee shall not, either during the term of this
Agreement or any time following expiration or termination of this
Agreement, use or disclose any Confidential Information to any person
not employed by Employer without the prior written authorization of
Employer or as may be necessary for Employee to perform his duties
hereunder and shall exercise prudence and the highest degree of care to
safeguard and protect, and to prevent the unauthorized disclosure of,
all such Confidential Information. The foregoing shall not prevent
Employee from disclosing to his attorneys relevant information
concerning Employee's employment, to the extent necessary to advise
Employee concerning this Agreement or to the extent necessary in an
action by or against Employee arising out of this Agreement or the
termination thereof.
(c) Upon expiration or termination of this Agreement, Employee
shall turn over to a designated representative of Employer all property
in Employee's possession and custody and belonging to Employer.
Employee shall not retain any copies or reproductions of
correspondence, business plans, financial statements, memoranda,
reports, notebooks, drawings, photographs or other documents relating
in any way to the affairs of Employer and containing Confidential
Information which came into Employee's possession at any time during
the term of this Agreement.
9. Intellectual Property.
(a) Disclosure and Assignment. Employee shall promptly
disclose in writing to Employer complete information concerning each
and every invention, discovery, improvement, computer program, device,
design, apparatus, practice, process, method or product, whether or not
patentable or copyrightable, made, developed, perfected, devised,
conceived or first reduced to practice by Employee, either solely or in
collaboration with others, during the term of this Agreement, whether
or not during regular working hours, relating either directly or
indirectly to the business, products, practices or techniques of
Employer (hereinafter referred to as "Developments"). Employee, to the
extent that he has the legal right to do so, hereby acknowledges that
any and all of such Developments are the property of Employer and
hereby assigns and agrees to assign to Employer any and all of
Employee's right, title and interest in and to any and all of such
Developments.
E-5
(b) Future Developments. As to any future Developments made by
Employee which relate to the business, products or practices of
Employer and which are first conceived or reduced to practice during
the term of this Agreement, or within six months thereafter, but which
are claimed for any reason to belong to an entity or person other than
Employer, Employee shall promptly disclose the same in writing to
Employer and shall not disclose the same to others if Employer, within
twenty (20) days thereafter, shall claim ownership of such Developments
under the terms of this Agreement. If Employer makes such claim,
Employee and Employer agree that, insofar as their respective rights
(if any) are involved, it shall be settled by arbitration by and in
accordance with the rules then obtaining of the American Arbitration
Association. The locale of the arbitration shall be Minneapolis,
Minnesota (or other locale convenient to Employer's principal executive
offices). If Employer makes no such claim, Employee hereby acknowledges
that Employer has made no promise to receive and hold in confidence any
such information disclosed by Employee.
(c) Limitation on Paragraphs 9(a) and 9(b). The provisions of
Paragraphs 9(a) and 9(b) shall not apply to any Development meeting the
following conditions:
(i) such Development was developed entirely on
Employee's own time; and
(ii) such Development was made without the use of any
Employer equipment, supplies, facility or trade secret
information; and
(iii) such Development does not, at the time it is
conceived or reduced to practice, relate (A) to the business
of Employer, or (B) to Employer's actual or demonstrably
anticipated research or development; and
(iv) such Development does not result from any work
performed by Employee for Employer.
(d) Assistance of Employee. Upon request and without further
compensation therefor, but at no expense to Employee, and whether
during the term of this Agreement or thereafter, Employee shall do all
lawful acts, including, but not limited to, the execution of papers and
lawful oaths and the giving of testimony, that in the opinion of
Employer, its successors and assigns, may be necessary or desirable in
obtaining, sustaining, reissuing, extending and enforcing United States
and foreign Letters Patent, including, but not limited to, design
patents, on any and all of such Developments, and for perfecting,
affirming and recording Employer's complete ownership and title
thereto, and to cooperate otherwise in all proceedings and matters
relating thereto, provided, however, that if Employee is no longer
employed by Employer at that time, Employee shall be fairly compensated
at a rate no less than the rate of base
E-6
salary compensation payable under this Agreement for any time expended
by Employee pursuant to this provision.
(e) Records. Employee shall keep complete, accurate and
authentic accounts, notes, data and records of all Developments in the
manner and form requested by Employer. Such accounts, notes, data and
records shall be the property of Employer, and, upon its request,
Employee shall promptly surrender the same to it or, if not previously
surrendered upon its request or otherwise, Employee shall surrender the
same, and all copies thereof, to Employer upon the termination of this
Agreement.
(f) Obligations, Restrictions and Limitations. Employee
understands that Employer may enter into agreements or arrangements
with agencies of the United States Government, and that Employer may be
subject to laws and regulations which impose obligations, restrictions
and limitations on it with respect to inventions and patents which may
be acquired by it or which may be conceived or developed by employees,
consultants or other agents rendering services to it. Employee agrees
that he shall be bound by all such obligations, restrictions and
limitations applicable to any such invention conceived or developed by
him during the term of this Agreement and shall take any and all
further action which may be required to discharge such obligations and
to comply with such restrictions and limitations.
10. Third Party Beneficiaries. Employee acknowledges and agrees that
the covenants contained in Paragraphs 7, 8 and 9 hereof are expressly intended
to benefit Employer and all of its Affiliates, and that for purposes of such
Paragraphs the term "Employer" shall include all of Employer's Affiliates. The
term "Affiliate" shall mean U-Ship, Inc. and its direct and indirect
wholly-owned subsidiaries.
11. Waiver. No waiver of any term, condition or covenant of this
Agreement shall be deemed to be a waiver of subsequent breaches of the same or
other terms, covenants or conditions hereof.
12. Amendment. This Agreement may not be amended, altered or modified
except by a written agreement between the parties hereto.
13. Assignability. Employee may not assign this Agreement to any third
party for whatever purpose without the express written consent of Employer.
Employer may not assign this Agreement to any third party except by operation of
law, or through merger, liquidation, recapitalization or sale of all or
substantially all of the assets of Employer, or to an Affiliate of Employer,
without the express written consent of Employee.
X-0
00. Invalidity. In the event part or any portion of this Agreement is
determined in a legally binding manner to be invalid and unenforceable, the
parties agree that this Agreement as so construed shall remain in force and
effect between them and applied as if the offending part or portion did not
comprise an element hereof.
15. Survival. The provisions of Sections 6, 7, 8 and 9 shall in all
events survive the termination of this Agreement. Except for termination
pursuant to Sections 5(a), (b) and (d), upon termination of this Agreement,
Employee shall be entitled to his remaining compensation as provided in Section
5(e).
16. Entire Agreement. This Agreement contains the entire agreement of
the parties and there is no provision, condition or understanding relative to
the employment of Employee outside this Agreement.
17. Notices. Any notice required to be given hereunder shall be duly
and properly given, effective as of the date of mailing, if mailed postage
prepaid to either party at the addresses set forth above, or to such other
address as this party may subsequently notify to the other.
18. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Minnesota.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
ADVANCED COURIER SERVICES,
INC.
By
--------------------------------------
Xxxxxxx X. Xxxxxx
Chief Financial Officer
EMPLOYEE
----------------------------------------
Xxxxxx X. Xxxxxxxx
E-8
EXHIBIT A
GENERAL DESCRIPTION OF DUTIES
AND RESPONSIBILITIES
OF XXXXXX X. XXXXXXXX
E-9
EXHIBIT B
BONUS PLAN/CRITERIA
E-10
EXHIBIT F
OPINION OF COUNSEL TO U-SHIP
[PURSUANT TO SECTION 7.3(d)]
Xx. Xxxxxx X. Xxxxxxxx and
Twin City Transportation, Inc.
0000 Xxxx Xxx Xxxxx
Xxxxxxxxxx, XX 00000
Gentlemen:
I have acted as counsel to U-Ship, Inc., a Utah corporation ("U-Ship")
and Advanced Courier Services, Inc., a Minnesota corporation ("ACS"), in
connection with that certain Agreement and Plan of Merger dated as of
_______________, 1999, by and among U-Ship, ACS and Twin City Transportation,
Inc. ("TCT") and is sole shareholder, Xxxxxx X. Xxxxxxxx (the "Shareholder")
(the "Merger Agreement") and the Employment Agreement dated as of _____________,
1999 between ACS and the Shareholder. This opinion is being delivered pursuant
to Section 7.3(d) of the Merger Agreement. All capitalized terms used herein and
not defined herein have the meanings assigned to them in the Merger Agreement.
I have examined such documents and have reviewed such questions of law
as we have considered necessary and appropriate for the purposes of our opinions
set forth below.
In rendering my opinion set forth below, I have assumed the
authenticity of all documents submitted to me as originals, the genuineness of
all signatures and the conformity to authentic originals of all documents
submitted to me as copies. I have also assumed the legal capacity for all
purposes relevant hereto of all natural persons and, with respect to all parties
to agreements or instruments relative hereto other than U-Ship, that such
parties had the requisite power and authority (corporate or otherwise) to
execute, deliver and perform such agreements or instruments, that such
agreements or instruments have been duly authorized by all requisite action
(corporate or otherwise), executed and delivered by such parties and that such
agreements or instruments are the valid, binding and enforceable obligations of
such parties. As to questions of fact material to my opinion, I have relied upon
certificates of officers of U-Ship and of public officials.
My opinion expressed below as to certain factual matters is qualified
as being limited "to my knowledge" or by other words to the same or similar
effect. Such words, as used herein, mean information known to me. In rendering
such opinion, with your permission, I have not conducted any independent
investigation or consulted with other attorneys with respect to the matters
covered thereby.
F-1
Xx. Xxxxxx X. Xxxxxxxx and
Twin City Transportation, Inc.
_______________, 1999
Page 2
On the basis of the foregoing and of my examination of such other
questions of law and fact as I deem relevant under the circumstances, and in
reliance thereon, and subject to the limitations, qualifications and exceptions
set forth herein, I am of the opinion that, as of the date hereof:
1. U-Ship and ACS are corporations duly incorporated, validly
existing and in good standing under the laws of the States of Utah and
Minnesota, respectively, and have all requisite corporate power and
authority necessary to consummate the transactions on its part
contemplated by the Merger Agreement and to conduct any lawful business
activity.
2. The Merger Agreement has been duly authorized by all
necessary corporate action and has been duly executed and delivered by
U-Ship and ACS and constitutes the valid and binding obligations of
U-Ship and ACS, enforceable against them in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the rights of creditors generally,
and to the exercise of judicial discretion in accordance with general
principles of equity, including (without limitation) concepts of
materiality, reasonableness, good faith and fair dealing, and other
similar doctrines affecting the enforceability of agreements generally
(regardless of whether considered in a proceeding in equity or at law).
3. The Employment Agreement has been duly executed and
delivered by ACS and constitutes a valid and binding obligation of ACS,
enforceable against it in accordance with its terms, (i) subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the rights of creditors generally, and to the exercise
of judicial discretion in accordance with general principles of equity,
including (without limitation) concepts of materiality, reasonableness,
good faith and fair dealing, and other similar doctrines affecting the
enforceability of agreements generally (regardless of whether
considered in a proceeding in equity or at law), and (ii) subject to
the exercise of judicial discretion in enforcing geographic scope and
duration provisions of the noncompetition covenants therein.
4. The shares of U-Ship issued pursuant to the terms of the
Merger Agreement are fully paid and non-assessable.
My opinion expressed above is limited to the laws of the State of
Minnesota and the federal laws of the United States of America. I have not
examined and express no opinion with respect to the laws of any other
jurisdiction.
F-2
Xx. Xxxxxx X. Xxxxxxxx and
Twin City Transportation, Inc.
_______________, 1999
Page 3
The foregoing opinions are being furnished to you solely for your
benefit and may not be relied upon by, nor may copies be delivered to, any other
person without my prior written consent.
Very truly yours,
By
Xxxxxxx X. Xxxxxxx
F-3
EXHIBIT G
FORM OF AFFILIATE LETTER
Ladies and Gentlemen:
I have been advised that as of the date of this letter, I may be deemed
to be an "affiliate" of Twin City Transportation, Inc., a Minnesota corporation
(the "Company"), as the term "affiliate" is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in and for
purposes of Accounting Series Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Reorganization
dated as of July 16, 1997 (the "Merger Agreement") among U-Ship, Inc., a
Minnesota corporation ("U-Ship, Inc."), Advanced Courier Services, Inc., the
Company, and the shareholders of the Company, the Company will be merged with
and into Advanced Courier Services, Inc. (the "Merger"). Capitalized terms used
in this letter without definition shall have the meanings assigned to them in
the Merger Agreement.
As a result of the Merger, I will receive shares of common stock, par
value $.004 per share, of U-Ship, Inc. (the "U-Ship, Inc. Shares") in exchange
for shares owned by me of common stock of the Company (the "Company Shares").
1. I represent, warrant and covenant to U-Ship, Inc.:
A. I shall not make any sale, transfer or other disposition of
the U-Ship, Inc. Shares in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Merger Agreement
and discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of
the U-Ship, Inc. Shares, to the extent I felt necessary, with my
counsel or counsel for the Company.
C. I have been advised that the issuance of the U-Ship, Inc.
Shares to me pursuant to the Merger will not be registered with the
Commission under the Act, but may be registered under circumstances
described in Article 6 of the Merger Agreement pursuant to a
Registration Statement on Form S-3. I have also been advised that,
because at the time the Merger is submitted for a vote of the
shareholders of the Company, 1. I may be deemed to be an affiliate of
the Company and 2. the distribution by me of the U-Ship, Inc. Shares
has not been registered under the Act, I may not sell, transfer or
G-1
otherwise dispose of the U-Ship, Inc. Shares issued in the Merger
unless (i) such sale, transfer or other disposition has been registered
under the Act or (ii) in the opinion of counsel reasonably acceptable
to U-Ship, Inc., such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
D. I understand that, except as set forth in Article 6 of the
Merger Agreement, U-Ship, Inc. is under no obligation to register the
sale, transfer or other disposition of the U-Ship, Inc. Shares by me or
on my behalf under the Act or, except as provided in paragraph 2(A)
below, to take any other action necessary in order to make compliance
with an exemption from such registration available.
E. I also understand that there will be placed on the
certificates for the U-Ship, Inc. Shares issued to me, or any
substitution therefor, a legend stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND WITHOUT
REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS,
IN RELIANCE UPON EXEMPTIONS CONTAINED IN THE ACT AND
SUCH LAWS. NO TRANSFER OF THESE SHARES OR ANY
INTEREST THEREIN MAY BE MADE EXCEPT PURSUANT TO
EFFECTIVE REGISTRATION STATEMENTS UNDER SAID LAWS
UNLESS THIS CORPORATION HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER OR
DISPOSITION DOES NOT REQUIRE REGISTRATION UNDER SAID
LAWS AND, FOR ANY SALES UNDER RULE 144 OR 145 OF THE
ACT, SUCH EVIDENCE AS IT SHALL REQUEST FOR
COMPLIANCE WITH THAT RULE.
2. By U-Ship, Inc.'s acceptance of this letter, U-Ship, Inc. hereby
agrees with me as follows:
A. For so long as and to the extent necessary to permit me to
sell the U-Ship, Inc. Shares pursuant to Rule 144 under the Act,
U-Ship, Inc. shall 1. use its reasonable best efforts to (i) file, on a
timely basis, all reports and data required to be filed with the
Commission by it pursuant to Section 13 of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and (ii) furnish to me upon
request a written statement as to whether U-Ship, Inc. has complied
with such reporting requirements during the 12 months preceding any
proposed sale of the U-Ship, Inc. Shares by me under Rule 144, and 2.
otherwise use its reasonable best efforts to permit such sales pursuant
to Rule 144. U-Ship, Inc. has filed all reports required to be filed
with the Commission under Section 13 of the 1934 Act during the
preceding 12 months.
B. It is understood and agreed that this agreement will
terminate and be of no further force and effect and the legend set
forth in paragraph 1.E above will be removed by delivery of substitute
certificates without such legends, and the related transfer
G-2
restrictions shall be lifted forthwith, if the Pooling Period has
passed and (i) the U-Ship, Inc. Shares shall have been registered under
the Act for sale, transfer or other disposition by me or on my behalf,
or (ii) I am not at the time an "affiliate" of U-Ship, Inc. and have
held the U-Ship, Inc. Shares for at least one year or such other period
as may be prescribed by the Act and the rules and regulations
thereunder) and U-Ship, Inc. meets the requirements of Rule 144(c), or
(iii) I am not and have not been for at least three months an
"affiliate" of U-Ship, Inc. and I have held the U-Ship, Inc. Shares for
at least two years, or (iv) U-Ship, Inc. shall have received a
"no-action" letter from the Staff of the Commission, or an opinion of
counsel acceptable to U-Ship, Inc., to the effect that the stock
transfer restrictions and the legends are not required.
----------------------------------------
Name:
Agreed and accepted this 13th day of
January, 1999, by
U-SHIP, INC.
By:
------------------------------------
Name:
Title:
[SIGNATURE PAGE TO AFFILIATE LETTER DATED January 13, 1999]
G-3
