EXHIBIT 2.2
REORGANIZATION AGREEMENT
BY AND BETWEEN
NATIONAL PAINTBALL SUPPLY CO., INC.
AND
AMERICAN INFLATABLES, INC.
Dated as of October 12, 2000
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This REORGANIZATION AGREEMENT is entered into as of this 12th day of
Cotober, 2000 by and between National Paintball Supply Co., Inc. ("NPSC"), a
corporation organized and existing under the laws of the State of South Carolina
and American Inflatables, Inc. ("American"), a corporation organized and
existing under the laws of the State of Delaware.
RECITALS
A. American is a Delaware corporation headquartered in Costa Mesa,
California.
B. NPSC is a South Carolina corporation headquartered in Greenville, South
Carolina.
C. The parties hereto desire that NPSC acquire American through the merger
of an interim subsidiary of NPSC with and into American, upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein contained, NPSC and American
hereby agree as follows:
SECTION 1. DEFINITIONS
1.1. Articles of Merger. The Certificate/Articles of Merger to be executed
by Interim and American in a form appropriate for filing with the appropriate
state agencies or offices and relating to the effective consummation of the
Merger as contemplated by the Plan of Merger.
1.2. Benefit Plans. All employee benefit plans within the meaning of
Section 3(3) of ERISA and any related or separate contracts, plans, trusts,
annuities, programs, policies, arrangements, practices, customs and
understandings that provide benefits of economic value to any present or former
employee, or current or former beneficiary, dependent or assignee of any such
employee or former employee.
1.3. CERCLA. The Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. 9601 et seq.
1.4. NPSC. National Paintball Supply Co., Inc. , a South Carolina
corporation headquartered in Greenville, South Carolina.
1.5. NPSC Benefit Plans. All Benefit Plans, and all other material fringe
benefit plans or programs, sponsored or maintained by NPSC or under which it may
be obligated.
1.6. NPSC Common Stock. The common stock, no par value per share, of NPSC.
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1.7. American. American Inflatables, Inc., a corporation organized and
existing under the laws of the State of Delaware.
1.8. American Benefit Plans. All Benefit Plans, and all other material
fringe benefit plans or programs, sponsored or maintained by American or under
which American may be obligated.
1.9. American Common Stock. The common stock, par value $__.00 per share,
of American.
1.10. Closing; Closing Date. The terms "Closing" and "Closing Date" shall
have the meanings ascribed to them in Section 2.2 hereof.
1.11. Code. The Internal Revenue Code of 1986, as amended, including, if
the context permits, the applicable regulations promulgated pursuant thereto.
1.12. Confidential Information. The term "Confidential Information" shall
mean all information of any kind concerning a party hereto that is furnished by
such party or on its behalf pursuant to Section 6.1 hereof as a result of the
transactions contemplated herein, except information (i) ascertainable or
obtained from public or published information, (ii) received from a third party
not known to the recipient of Confidential Information to be under an obligation
to keep such information confidential, (iii) which is or becomes known to the
public (other than through a breach of this Reorganization Agreement), (iv) of
which the recipient was in possession prior to disclosure thereof in connection
with the Merger, or (v) which was independently developed by the recipient
without the benefit of Confidential Information.
1.13. Derivatives Contract. Any exchange-traded or over-the-counter swap,
forward, future, option, cap, floor or collar financial contract or any other
contract not included on a balance sheet which is a derivative contract
(including various combinations thereof).
1.14. ERISAI. The Employee Retirement Income Security Act of 1974, as
amended.
1.15. Effective Time. The date and time which the Merger becomes effective
as set forth in the Articles of Merger. Subject to the terms and conditions
hereof, the Effective Time shall be such time on such date as NPSC shall notify
American in writing not less than five days prior thereto, which date shall not
be more than 30 days after all conditions have been satisfied or waived in
writing.
1.16. Exchange Act. The Securities Exchange Act of 1934, as amended.
1.17. GAAP. Generally accepted accounting principles consistently applied.
1.18. Interim. NPSC Interim, Inc., an interim subsidiary of NPSC, whether
now existing or hereafter organized, which shall be used for purposes of
effecting the Merger and other transactions contemplated herein.
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1.19. IRS. The Internal Revenue Service.
1.20. Knowledge. When used in the phrase "to the knowledge" or a similar
phrase, shall mean the actual knowledge of the executive officers of the
referenced party or parties, as applicable, after reasonable inquiry of the
other executive officers and the directors of the parties and the Persons
responsible for the day-to-day operations of the parties or their subsidiaries
(although this definition shall not give rise to any duty of any independent
verification or confirmation by members of senior management or the board of
directors of the entity making the representation or warranty from other
Persons).
1.21. Lien. Any lien, claim, encumbrance, security interest, assessment,
charge, restriction (including restriction on voting rights or rights of
disposition), mortgage, deed of trust, equity of any character, third party
right of whatever nature or other similar or like charge.
1.22. Material Adverse Event; Material Adverse Effect. This shall mean an
event, effect, occurrence or circumstance which, alone or when taken with other
breaches, events, effects, occurrences or circumstances existing concurrently
therewith (including without limitation, any breach of a representation or
warranty contained herein by such party) (i) has or is reasonably expected to
have a material adverse effect on the properties, financial condition, results
of operations, or business of such party and its subsidiaries, taken as a whole,
or (ii) would materially prevent such party's, or any affiliated party's,
ability to perform its obligations under this Reorganization Agreement or the
consummation of any of the transactions contemplated hereby; provided, however,
that in determining whether a Material Adverse Effect or Material Adverse Event
has occurred, there shall be excluded any effect the cause of which is (A) any
change in tax and similar laws of general applicability or interpretations
thereof by courts or governmental authorities, (B) any change in GAAP or
regulatory accounting requirements applicable to the parties hereto, (C) any
action or omission of American or NPSC or a subsidiary thereof taken with the
prior written consent of NPSC or American, as applicable, in contemplation of
the transaction contemplated herein, (D) the actions contemplated by Section
6.12 or Section 7.11.
1.23. Merger. The Merger of Interim with and into American, all as provided
herein.
1.24. PBGC. The Pension Benefit Guaranty Corporation.
1.25. Person. An individual, a partnership, a corporation, limited
liability company, an association, a joint stock company, a trust, a business
trust, a joint venture, an unincorporated organization, a governmental entity
(or any department, agency, or political subdivision thereof) or other entity.
1.26. Plan of Merger. The Plan of Merger attached to this Reorganization
Agreement as Appendix A.
1.27. Proxy Statement. The proxy statement/prospectus included in the
Registration Statement which shall be furnished to the American shareholders in
connection with the Shareholders' Meeting and the matters contemplated thereby.
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1.28. Registration Statement. The Registration Statement on Form S-4 to be
filed with the SEC registering the issuance of the NPSC Common Stock to be
issued to the American shareholders in connection with the Merger.
1.29. Regulations. The regulations issued by the IRS under the Code.
1.30. Reorganization Agreement. This Reorganization Agreement, including
all schedules, appendices and exhibits attached hereto.
1.31. Rights. Rights shall mean warrants, calls, commitments, options,
rights (whether stock appreciation rights, conversion rights, exchange rights,
profit participation rights, or otherwise), securities or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, and other arrangements or commitments which obligate a
Person to issue, otherwise cause to become outstanding, sell, transfer, pledge,
or otherwise dispose of any of its capital stock or other ownership interests,
or any voting rights thereof or therein, or to pay monetary sums by reference to
the existence or market valuation of, any of its capital stock or ownership
interests therein.
1.32. SEC. The Securities and Exchange Commission.
1.33. Securities Act. The Securities Act of 1933, as amended.
1.34. Shareholder Approval. The approval of the Merger by the requisite
vote of the shareholders of American at the Shareholders' Meeting, all in
accordance with this Reorganization Agreement and the Plan of Merger.
1.35. Shareholders' Meeting. The meeting of American shareholders at which
the Merger will be voted upon.
SECTION 2. THE MERGER
2.1 Merger. Subject to the terms and conditions of this Reorganization
Agreement, including the Plan of Merger, Interim shall merge with and into
American (the "Merger"), the separate existence of Interim shall cease, and
American shall survive and the name of the surviving corporation shall be
"American Inflatables, Inc.." The parties agree that the Merger will be effected
pursuant to the terms set forth in the Plan of Merger, the terms of which are
incorporated herein.
2.2 The Closing. The Closing of the transaction contemplated herein shall
be held as soon as reasonably practicable after fulfillment of all conditions
set forth in Section 7 and Section 8 hereof (the "Closing Date"), at the offices
of Wyche, Burgess, Xxxxxxx & Xxxxxx, P.A. or at such other place and time as the
parties hereto may mutually agree; provided, however, that in the event that
Closing has not occurred by February 28, 2001, either party hereto shall have
the right to terminate this Reorganization Agreement so long as the failure to
Close is not the result of a breach of this Reorganization Agreement by the
party seeking to effect such termination.
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2.3 Consideration for the Merger. The manner of converting the shares of
American into shares of NPSC shall be as set forth in the Plan of Merger.
2.4. Interim; Shareholder Approval; Registration Statement. NPSC agrees to
cause Interim to be in existence (if not already formed) such that the Merger
may be consummated in a timely manner and to vote all shares of Interim in favor
of this Reorganization Agreement and the Merger. American shall call its
Shareholder's Meeting in accordance with the applicable provisions of Delaware
law for the purpose of considering and voting on this Reorganization Agreement
and the transactions contemplated hereby. The Shareholders' Meeting shall be
held as soon as practicable. The board of directors of American shall recommend
(subject to compliance with their legal and fiduciary duties, as advised by
counsel) to its shareholders and use its best efforts to obtain their approval
of this Reorganization Agreement and the Merger. NPSC shall file the
Registration Statement with the SEC and shall pay the required filing fees. The
parties will use their respective best efforts and cooperate with each other to
obtain promptly the effectiveness of the Registration Statement. NPSC shall also
take any reasonable action required to be taken under applicable blue sky laws
in connection with the issuance of NPSC Common Stock in the Merger. NPSC and
American shall jointly prepare the Proxy Statement, which shall be reasonably
acceptable to all parties. The Proxy Statement shall be mailed to the American
shareholders as soon as reasonably practicable after the SEC's declaration of
effectiveness of the Registration Statement. American shall mail, at its
expense, the Proxy Statement to its shareholders.
2.5. Cooperation; Regulatory Filings. Subject to the terms and conditions
of this Reorganization Agreement, NPSC and American shall cooperate, and shall
cause each of their subsidiaries to cooperate, in the preparation and submission
by NPSC and American, as promptly as reasonably practicable, of such
applications, petitions, and other documents and materials as any of them may
reasonably deem necessary or desirable to the SEC, any appropriate regulatory
authorities, the shareholders of American, and any other Persons for the purpose
of obtaining any approvals or consents necessary to consummate the transactions
contemplated by this Reorganization Agreement. Prior to the making of any
written disclosures with respect to the transactions contemplated hereby to
shareholders or to any third person (such as mailings to shareholders or press
releases), the parties shall submit to each other the material to be filed,
mailed, or released. Any such materials shall be reasonably acceptable to all
parties prior to the disclosures to shareholders or to any third person, except
to the extent that any person is legally required to proceed prior to obtaining
the approvals of the other parties.
2.6. Tax Treatment. NPSC and American intend that the Merger shall qualify
as a tax-free reorganization under Section 368(a) of the Code.
2.7. Reservation of Right to Revise Transaction. NPSC may at any time
change the method of effecting the acquisition of American (including without
limitation the provisions of this Section 2) if and to the extent it deems such
change to be desirable; provided, however, that no such change shall (i) alter
the type of consideration to be issued to the holders of American Common Stock
as provided for in this Reorganization Agreement, (ii) reduce the value of such
consideration, (iii) adversely affect the intended tax-free treatment to
American' stockholders as a result of receiving such consideration, (iv)
materially impair the ability to receive any necessary approvals, or (v)
materially delay the Closing.
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2.8. Accounting Treatment. The parties presently intend that the Merger
shall be accounted for as a "pooling-of-interests" (although NPSC, in its sole
discretion, has the right to cause the Merger to be accounted for as a
"purchase").
SECTION 3. REPRESENTATIONS AND WARRANTIES OF AMERICAN
American hereby represents and warrants to NPSC the following matters
on and as of the date of this Reorganization Agreement and at the Effective
Time; provided, however, that before any breach of or inaccuracy in any of the
representations or warranties given in this Section 3 shall be actionable or
shall constitute grounds for termination of or failure to perform under the
terms of this Reorganization Agreement by NPSC, such breach or inaccuracy must
have had a Material Adverse Effect.
3.1. Organization, Good Standing and Conduct of Business. American is a
corporation, duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has full power and authority and all
governmental and regulatory authorizations ("Authorizations") necessary to own
all of its properties and assets and to carry on its business as it is presently
being conducted, and is properly licensed, qualified and in good standing as a
foreign corporation in all jurisdictions wherein the character of the properties
or the nature of the business transacted by American makes such licensing or
qualification necessary.
3.2. Subsidiaries.. American neither owns nor controls five percent (5%) or
more of the outstanding equity securities, either directly or indirectly, of any
Person.
3.3. Corporate Authority. The execution, delivery and performance of this
Reorganization Agreement have been duly authorized by the Board of Directors of
American. Other than the Shareholder Approval, no further corporate acts or
proceedings on the part of American are required or necessary to authorize this
Reorganization Agreement or the Merger.
3.4. Binding Effect. Subject to receipt of the Shareholder Approval, when
executed, this Reorganization Agreement will constitute valid and legally
binding obligations of American, enforceable against American in accordance with
its terms, subject to (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect or the relief of
debtors generally and (ii) general principles of equity. Each document and
instrument contemplated by this Reorganization Agreement, when executed and
delivered by American in accordance with the provisions hereof, shall be duly
authorized, executed and delivered by American and enforceable against American
in accordance with its terms, subject to the exceptions in the previous
sentence.
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3.5. Capitalization of American. The authorized capital stock of American
consists solely of 20,000,000 authorized shares of common stock ($__.00 par
value), of which 8,621,346 shares are issued and outstanding as of the date
hereof. All of the issued and outstanding shares of American are validly issued
and fully paid and nonassessable. Except as set forth on Schedule 3.5, there are
no outstanding Rights to purchase shares of any class of capital stock of
American, or outstanding agreements pursuant to which American is or may become
obligated to issue any shares of its capital stock. None of the shares of the
American Common Stock is subject to any restrictions as to the transfer thereof,
except as set forth in American's Certificate of Incorporation or Bylaws and
except for restrictions on account of applicable Federal or state securities
laws.
3.6. Compliance with Laws; Absence of Defaults. (a) American is not in
default under, or in violation of, any provision of its Certificate of
Incorporation or Bylaws. American is not in default under, or in violation of,
any material agreement to which American is a party.
(b) Except as disclosed on Schedule 3.6, American is not in violation
of any applicable law, rule or regulation. American has not received any
notification or communication from, or consented to or entered into any
memorandum, agreement or order with, any regulatory authority (i) asserting that
American is not in compliance with any of statute, regulation, rule or
ordinance, or the internal policies and procedures of American, as applicable,
(ii) threatening to revoke any Authorization, (iii) requiring or threatening to
require American, or indicating that American may be required, to enter into a
cease and desist order, agreement or memorandum of understanding or any other
agreement restricting or limiting or purporting to restrict or limit in any
manner the operations of American, or (iv) directing, restricting or limiting,
or threatening to direct, restrict or limit in any manner the operations of
American (any such notification, communication, memorandum, agreement or order
described in this sentence herein referred to as a "Regulatory Agreement").
3.7. Non-Contravention and Defaults; No LiensIII.7. Non-Contravention
and Defaults; No Liens. Neither the execution or delivery of this Reorganization
Agreement, nor the fulfillment of, or compliance with, the terms and provisions
hereof, will (i) result in a breach of the terms, conditions or provisions of,
or constitute a default under, or result in a violation of, termination of or
acceleration of the performance provided by the terms of, any material agreement
to which American is a party or by which it may be bound, (ii) violate any
provision of any law, rule or regulation, (iii) result in the creation or
imposition of any Lien on any asset of American, or (iv) violate any provisions
of American' Certificate of Incorporation or Bylaws. To the best of American'
knowledge, no other party to any material agreement to which American is a party
is in default thereunder or in breach of any provision thereof. To the best of
American' knowledge, there exists no condition or event which, after notice or
lapse of time or both, would constitute a default by any party to any such
agreement.
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3.8. Necessary Approvals. American has obtained all certificates of
authority, licenses, permits, franchises, registrations of foreign ownership or
other regulatory approvals in every jurisdiction necessary for the continuing
conduct of its business and ownership of its assets. Except for those which may
be renewed or extended in the ordinary course of business, no such certificate,
license, permit, franchise, registration or other approval is about to expire or
lapse, has been threatened to be revoked or has otherwise become restricted by
its terms which would, upon such expiration, lapse, revocation or restriction,
have a Material Adverse Effect. Further, there is no reasonable basis for any
such expiration, lapse, revocation, threat of revocation or restriction. No
consent, approval, Authorization, registration, or filing with or by any
governmental authority, foreign or domestic, is required on the part of American
in connection with the execution and delivery of this Reorganization Agreement
or the consummation by American of the transactions contemplated hereby.
American is not required to procure the approval of any Person in order to
prevent the termination of any right, privilege, license or contract of American
as a result of this Reorganization Agreement.
3.9. Financial Statements. The financial statements of American at and for
each of the twelve months ended December 31, 1998 and 1999 and at and for the
six months ended June 30, 2000 (the "American Financial Statements") all of
which have been provided to NPSC, are true, correct and complete in all material
respects and present fairly, in conformity with GAAP, the financial position of
American at the dates indicated and the results of its operations for each of
the periods indicated. The books and records of American have been kept, and
will be kept to the Closing Date, in reasonable detail, and will fairly and
accurately reflect in all material respects to the Closing Date, the
transactions of American.
3.10. Tax Returns. American files its income tax returns and maintains its
tax books and records on the basis of a taxable year ending December 31.
American has duly filed all tax reports and returns required to be filed by any
Federal, state and local taxing authorities (including, without limitation,
those due in respect of its properties, income, franchises, licenses, sales,
payrolls, and trusts established by American) through the date hereof, and
American has duly paid all taxes with respect to the periods covered thereby and
has established adequate reserves in accordance with GAAP for the payment of all
income, franchises, property, sales, employment or other taxes anticipated to be
payable after the date hereof. American is not delinquent in the payment of any
taxes, assessments or governmental charges and no deficiencies have been
asserted or assessed, which have not been paid or for which adequate reserves
have not been established and which are not being contested in good faith.
American does not have in effect any waiver relating to any statute of
limitations for assessment of taxes with respect to any Federal, state or local
income, property, franchise, sales, license or payroll tax. American does not
know of, or have reason to know of, any questions which have been raised or
which may be raised by any taxing authority relating to taxes or assessments of
American which, if determined adversely, would result in the assertion of any
deficiency. All tax information reported by American to Federal and state
authorities and other Persons has been accurately and timely reported, except
such as will not have a Material Adverse Effect. Any exceptions to the foregoing
is set forth on Schedule 3.10.
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3.11. Undisclosed Liabilities. Except for the liabilities which are
disclosed in the American Financial Statements or as set forth on Schedule 3.11,
American has no material liabilities or material obligations of any nature,
whether absolute, accrued, contingent or otherwise, and whether due or to become
due. Since December 31, 1999, there has been no (i) Material Adverse Event with
respect to American, or (ii) any incurrence by or subjection of American to any
obligation or liability (whether fixed, accrued or contingent) or commitment
material to American not referred to in this Reorganization Agreement, except
such obligations or liabilities as were or may be incurred in the ordinary
course of business and which are reflected on the American Financial Statements
at and for the periods subsequent to December 31, 1999.
3.12. Properties, Encumbrances. American has good and marketable title to
all of the real property and depreciable tangible personal property owned by it,
free and clear of any Lien, except for any Lien for (i) current taxes not yet
due and payable, (ii) such imperfections of title, easements and other
encumbrances, if any, as are not material in character, amount or extent, or
(iii) such items as are set forth on Schedule 3.12. Set forth on Schedule 3.12
are all business locations of American, including whether such locations are
owned or leased and a statement of when such locations were first occupied by
American. All buildings and all fixtures, equipment, and other property and
assets which are material to its business are held by American under valid
leases or subleases enforceable in accordance with their respective terms.
3.13. Litigation. Except as shown on Schedule 3.13, there are no claims,
actions, suits or proceedings pending or threatened against American, or to its
knowledge affecting American, at law or in equity, before or by any Federal,
state, municipal, administrative or other court, governmental department,
commission, board, or agency, an adverse determination of which could have a
Material Adverse Effect, and American knows of no basis for any of the
foregoing. There is no order, writ, memorandum, agreement, injunction, or decree
of any court, domestic or foreign, or any Federal or state agency affecting
American specifically or to which American is subject. Schedule 3.13 also sets
forth each pending claim against American related to the Occupational Safety and
Health Act, each claim related to American pending before the Wage/Hour Division
of the Department of Labor, each claim against American relating to conciliation
agreements or complaints by the Office of Federal Contract Compliance Programs,
charges filed with the Equal Employment Opportunity Commission with respect to
American and charges filed with the Department of Labor alleging violations of
the Family Medical Leave Act by American, regardless of whether such matters are
expected to have a Material Adverse Effect.
3.14. Reports. American has duly made all reports and filings required to
be made pursuant to applicable law.
3.15. Brokers. American has not incurred any liability for any commission
or fee in the nature of a finder's, originator's or broker's fee in connection
with the transaction contemplated herein.
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3.16. Expenditures. Schedule 3.16 sets forth any single expenditure of
$25,000 or more proposed to be made by American after the date hereof and a
summary of the terms and conditions pertaining thereto. At least 20 business
days prior to the Closing Date, American will advise NPSC of any changes to
Schedule 3.16 reflecting additions or deletions thereto since the date hereof.
3.17. Insurance. Attached hereto as Schedule 3.17 is a list of the policies
of fire, liability, life and other types of insurance held by American, setting
forth with respect to each such policy, the policy number, name of the insured
party, type of insurance, insurance company, annual premium, expiration date,
deductible amount, if any, and amount of coverage. American management believes
that each such policy is in an amount reasonably sufficient for the protection
of the assets and business covered thereby, and, in the aggregate, all such
policies are reasonably adequate for the protection of all the assets and
business of American taking into account the availability and cost of such
coverage. To the extent permissible pursuant to such policies, all such policies
shall remain in full force and effect for a period of at least 90 days following
the Closing Date. There is no reason known to American that any such policy
would not be renewable on terms and conditions as favorable as those set forth
in such policy.
3.18. Contracts and Commitments. (a) Schedule 3.18 attached hereto sets
forth each contract or other commitment of American which requires an aggregate
payment by American after the date hereof of more than $25,000, and any other
contract or commitment that in the opinion of American management Materially
Adversely Effects the business of American. Except for the contracts and
commitments described in this Reorganization Agreement or as set forth on
Schedule 3.18, American is not party to or subject to:
1. Any contracts or commitments which are material to its business,
operations or financial condition other than loans or agreements with
respect thereto entered into in the ordinary course of its business;
2. Any employment contract or arrangement, whether oral or written,
with any officer, consultant, director or employee which is not terminable
on 30 days' notice without penalty or liability to make any payment
thereunder for more than 30 days after such termination;
3. Any plan or contract or other arrangement, oral or written,
providing for insurance for any officer or employee or members of their
families;
4. Any plan or contract or other arrangement, oral or written,
providing for bonuses, pensions, options, deferred compensation, retirement
payments, profit-sharing or other benefits for employees;
5. Any contract or agreement with any labor union;
6. Any contract or agreement with customers for the sale of products
or the furnishing of services, or any sales agency, broker, distribution or
similar contract, except contracts made in the ordinary course of business;
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7. Any instrument or arrangement evidencing or related to indebtedness
for money borrowed or to be borrowed, whether directly or indirectly, by
way of purchase money obligation, guaranty, conditional sale,
lease-purchase, or otherwise;
8. Any joint venture contract or arrangement or any other agreement
involving a sharing of profits;
9. Any license agreement in which American is the licensor or
licensee; and
10. Any material contract or agreement, not of the type covered by any
of the other items of this Section 3.18, which by its terms is either (i)
not to be performed prior to 30 days from the date hereof, or (ii) does not
terminate, or is not terminable without penalty to American, or any
successors or assigns prior to 30 days from the date hereof.
3.19. Employee Benefit Plans and Contracts. (a) Schedule 3.19 contains a
complete list of all American Benefit Plans. American has delivered to NPSC (i)
accurate and complete copies of all American Benefit Plan documents and all
other material documents relating thereto, including all summary plan
descriptions, summary annual reports and insurance contracts, (ii) accurate and
complete detailed summaries of all unwritten American Benefit Plans, (iii)
accurate and complete copies of the most recent financial statements and
actuarial reports with respect to all American Benefit Plans for which financial
statements or actuarial reports are required or have been prepared, (iv)
accurate and complete copies of all annual reports for all American Benefit
Plans (for which annual reports are required) prepared within the last two
years, and (v) accurate and complete copies of determination letters from the
IRS for any American Benefit Plan maintained or intended to be maintained under
Section 401(a) of the Code. Any American Benefit Plan providing benefits that
are funded through a policy of insurance is indicated by the word "insured"
placed by the listing of the American Benefit Plan on Schedule 3.19.
(b) All American Benefit Plans conform in all material respects to, and
are being administered and operated in material compliance with, all applicable
requirements of ERISA and the Code. All returns, reports and disclosure
statements required to be filed or delivered under ERISA and the Code with
respect to all American Benefit Plans have been filed or delivered. There have
not been any "prohibited transactions," as such term is defined in Section 4975
of the Code or Section 406 of ERISA, involving any of the American Benefit Plans
that could subject American to any material penalty or tax imposed under the
Code or ERISA.
(c) Except as set forth on Schedule 3.19, any American Benefit Plan
that is intended to be qualified under Section 401(a) of the Code and exempt
from tax under Section 501(a) of the Code has been determined by the IRS to be
so qualified, and such determination is current, remains in effect and has not
been revoked. Nothing has occurred since the date of any such determination that
is reasonably likely to affect adversely such qualification or exemption, or
result in the imposition of excise taxes or income taxes on unrelated business
income under the Code or ERISA with respect to any American Benefit Plan.
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(d) American adequately reserved for all liabilities accrued prior to
the Effective Time under American' nonqualified retirement or deferred
compensation plans.
(e) Except as set forth on Schedule 3.19, American has no current or
contingent obligation to contribute to any multiemployer plan (as defined in
Section 3(37) of ERISA). American has no liability with respect to any employee
benefit plan (as defined in Section 3(3) of ERISA) other than with respect to
the American Benefit Plans.
(f) There are no pending or threatened claims by or on behalf of any
American Benefit Plan, or by or on behalf of any individual participants or
beneficiaries of any American Benefit Plan, alleging any breach of fiduciary
duty on the part of American or any of its officers, directors or employees
under ERISA, the Code or any applicable regulations, or claiming benefit
payments other than those made in the ordinary operation of such plans. The
American Benefit Plans are not the subject of any investigation, audit or action
by the IRS, the Department of Labor or the PBGC. American has made all required
contributions under the American Benefit Plans, including the payment of any
premiums payable to the PBGC and other insurance premiums. There is no
underfunding liability for any American Benefit Plan that is subject to the
funding requirements of Section 412 of the Code.
(g) American does not maintain any defined benefit plan, and neither
has incurred, nor has any reason to expect that it will incur, any liability to
the PBGC or otherwise under Title IV or ERISA (including early withdrawal
liability) or under the Code with respect to any such plan. No American Benefit
Plan has been subject to a reportable event for which notice would be required
to be filed with the PBGC, and no proceeding by the PBGC to terminate any
American Benefit Plan has been instituted or threatened.
(h) With respect to any American Benefit Plan that is an employee
welfare benefit plan (within the meaning of Section 3(1) of ERISA) (in this
subsection, a "Welfare Plan"), (i) each such Welfare Plan for which
contributions are claimed as deductions under any provision of the Code is in
material compliance with all applicable requirements pertaining to such
deduction, (ii) with respect to any welfare benefit fund (within the meaning of
Section 419 of the Code) related to such a Welfare Plan, there is no
disqualified benefit (within the meaning of Section 4976(b) of the Code) that
would result in the imposition of a tax under Section 4976(a) of the Code, (iii)
any American Benefit Plan that is a group health plan (within the meaning of
Section 4980B(g)(2) of the Code) complies, and in each and every case has
complied, with all of the material requirements of Section 4980B of the Code,
ERISA, Title XXII of the Public Health Service Act and the applicable provisions
of the Social Security Act, (iv) such Welfare Plan may be amended or terminated
at any time on or after the Closing Date, and (v) there are no benefits to be
provided to retirees under a group health plan that are subject to disclosure
under Financial Accounting Standards Board No. 106.
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(i) Except as set forth on Schedule 3.19, as of the Closing Date, there
will be no contract, agreement, plan or arrangement covering any person that
provides for the payment of an amount that would not be deductible to NPSC by
reason of Section 280G or any other provision of the Code.
3.20. Environmental Matters. American is in material compliance with all
local, state and Federal environmental statutes, laws, rules, regulations and
permits, including but not limited to CERCLA and the Toxic Substances Control
Act, 15 U.S.C. 2601 et seq. American has not, nor to the best of American'
knowledge have other parties, used, stored, disposed of or permitted any
"hazardous substance" (as defined in CERCLA), petroleum hydrocarbon,
polychlorinated biphenyl, asbestos or radioactive material (collectively,
"Hazardous Substances") to remain at, on, in or under any of the real property
owned or leased by American (including, without limitation, the buildings or
structures thereon) (the "Real Property"). American has not, nor to the best of
American' knowledge have other parties, installed, used, or disposed of any
asbestos or asbestos-containing material on, in or under any of the Real
Property. American has not, nor to the best of American' knowledge have other
parties, installed or used underground storage tanks in or under any of the Real
Property. American has provided NPSC with copies of all complaints, citations,
orders, reports, written data, notices or other communications sent or received
by it with respect to any local, state or Federal environmental law, ordinance,
rule or regulation as any of them relate to American.
3.21. American Information. The written information with respect to
American and its officers, directors, and affiliates which shall have been
supplied by American (or any of its accountants, counsel or other authorized
representatives) specifically for use in soliciting the Shareholder Approval, or
which shall be contained in the Registration Statement, will not, on the date
the Proxy Statement is first mailed to shareholders of American or on the date
of the Shareholders' Meeting, contain any untrue statement of a material fact,
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
3.22. Securities Reports. Except as set forth on Schedule 3.22, during the
last two years, American has filed on a timely basis all securities-related
reports, registrations, and statements, together with any amendments, required
by applicable regulatory authorities, all of which, as of their respective
dates, were in compliance in all material respects with the applicable rules and
regulations.
SECTION 4. REPRESENTATIONS AND WARRANTIES BY NPSC
NPSC hereby represents and warrants to American the following matters
on and as of the date of this Reorganization Agreement and at the Effective
Time; provided, however, that before any breach of or inaccuracy in any of the
representations or warranties given in this Section 4 shall be actionable or
shall constitute grounds for termination of or failure to perform under the
terms of this Reorganization Agreement by American, such breach or inaccuracy
must have had a Material Adverse Effect.
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4.1. Organization, Good Standing and Conduct of Business. NPSC is a
corporation, duly organized, validly existing and in good standing under the
laws of South Carolina, and has full power and authority and all Authorizations
necessary to own all of its properties and assets and to carry on its business
as it is presently being conducted, and is properly licensed, qualified and in
good standing as a foreign corporation in all jurisdictions wherein the
character of the properties or the nature of the business transacted by NPSC
makes such license or qualification necessary. At Closing, Interim will (i) be a
direct subsidiary of NPSC, duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, and (ii) have full power
and authority and all Authorizations necessary to own all of its properties and
assets and to carry on its business as it is then being conducted and to
consummate the transactions contemplated herein.
4.2. Subsidiaries.. NPSC neither owns nor controls five percent (5%) or
more of the outstanding equity securities, either directly or indirectly, of any
Person.
4.3. Corporate Authority. The execution, delivery and performance of this
Reorganization Agreement have been duly authorized by the Board of Directors of
NPSC. No further corporate acts or proceedings on the part of NPSC are required
or necessary to authorize this Reorganization Agreement or the Merger.
4.4. Binding Effect. When executed, this Reorganization Agreement will
constitute the valid and legally binding obligation of NPSC, enforceable against
NPSC in accordance with its terms, subject to (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect or the relief of debtors generally and (ii) general principles of equity.
Each document and instrument contemplated by this Reorganization Agreement, when
executed and delivered by NPSC in accordance with the provisions hereof, shall
be duly authorized, executed and delivered by NPSC and enforceable against NPSC
in accordance with its terms, subject to the exceptions in the previous
sentence.
4.5. Capitalization of NPSC. The authorized capital stock of NPSC consists
solely of (i) 50,000,000 authorized shares of common stock ($.01 par value per
share), of which 15,283,295 shares were issued and outstanding as of the date
hereof and (ii) 20,00,00 shares of blank check preferred stock, none of which is
outstanding. All of the issued and outstanding shares of NPSC are validly issued
and fully paid and nonassessable. Except as otherwise set forth on Schedule 4.5,
there are no outstanding Rights or any outstanding securities or other
instruments convertible into shares of any class of capital stock of NPSC, or
pursuant to which NPSC is or may become obligated to issue any shares of its
capital stock. The NPSC Common Stock to be issued in connection with this
Reorganization Agreement and the Merger will, when issued, (i) be validly
issued, fully paid and nonassessable, (ii) have been issued pursuant to an
effective registration statement, and (iii) have been properly registered for
trading on the Nasdaq Over-the-Counter Bulletin Board.
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4.6. Compliance with Laws; Absence of Defaults. NPSC is not in default
under, or in violation of, any provision of its Articles of Incorporation or
Bylaws. NPSC is not in default under, or in violation of, any material agreement
to which NPSC is a party. NPSC is not in violation of any applicable law, rule
or regulation the effect of which would have a Material Adverse Effect on NPSC
or its business operations or prospects.
4.7. Non-Contravention and Defaults; No Liens. Neither the execution or
delivery of this Reorganization Agreement, nor the fulfillment of, or compliance
with, the terms and provisions hereof, will (i) result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in a
violation of, termination of or acceleration of the performance provided by the
terms of, any material agreement to which NPSC is a party or by which it may be
bound, (ii) violate any provision of any law, rule or regulation, (iii) result
in the creation or imposition of any Lien on any asset of NPSC, or (iv) violate
any provisions of NPSC's Articles of Incorporation or Bylaws. To the best of
NPSC's knowledge, no other party to any material agreement to which NPSC is a
party is in default thereunder or in breach of any provision thereof. To the
best of NPSC's knowledge, there exists no condition or event which, after notice
or lapse of time or both, would constitute a default by any party to any such
agreement.
4.8. Necessary Approvals. NPSC has obtained all certificates of authority,
licenses, permits, franchises, registrations of foreign ownership or other
regulatory approvals in every jurisdiction necessary for the continuing conduct
of its business and ownership of its assets. Except for those which may be
renewed or extended in the ordinary course of business, no such certificate,
license, permit, franchise, registration or other approval is about to expire or
lapse, has been threatened to be revoked or has otherwise become restricted by
its terms which would, upon such expiration, lapse, revocation or restriction,
have a Material Adverse Effect. Further, there is no basis for any such
expiration, lapse, revocation, threat of revocation or restriction. Except for
any necessary regulatory approvals (including the filing with the SEC of the
Registration Statement and filings with blue sky authorities), no consent,
approval, Authorization, registration, or filing with or by any governmental
authority, foreign or domestic, is required on the part of NPSC in connection
with the execution and delivery of this Reorganization Agreement or the
consummation by NPSC of the transactions contemplated hereby. Except for
regulatory approvals referenced above, NPSC is not required to procure the
approval of any Person in order to prevent the termination of any right,
privilege, license or contract of NPSC as a result of this Reorganization
Agreement.
4.9. Financial Statements. The financial statements of NPSC at and for each
of the fiscal years ended December 31, 1998 and 1999 and at and for the eight
months ended August 31, 2000 (the "NPSC Financial Statements") all of which have
been provided to American, are true, correct and complete in all material
respects and present fairly, in conformity with GAAP, the financial position of
NPSC at the dates indicated and the results of its operations for each of the
periods indicated. The books and records of NPSC have been kept, and will be
kept to the Closing Date, in reasonable detail, and will fairly and accurately
reflect in all material respects to the Closing Date, the transactions of NPSC.
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4.10. Undisclosed Liabilities. Except for the liabilities which are
disclosed in the NPSC Financial Statements or as set forth on Schedule 4.10,
NPSC has no material liabilities or material obligations of any nature, whether
absolute, accrued, contingent or otherwise, and whether due or to become due.
Since December 31, 1999, there has been no (i) Material Adverse Event with
respect to NPSC, or (ii) any incurrence by or subjection of NPSC to any
obligation or liability (whether fixed, accrued or contingent) or commitment
material to NPSC not referred to in this Reorganization Agreement, except such
obligations or liabilities as were or may be incurred in the ordinary course of
business and which are reflected on the NPSC Financial Statements at and for the
periods subsequent to December 31, 1999.
4.11. Litigation. Except as set forth on Schedule 4.11, there are no
claims, actions, suits or proceedings pending or threatened against or, to its
knowledge, affecting NPSC at law or in equity, before or by any Federal, state,
municipal, administrative or other court, governmental department, commission,
board, or agency, an adverse determination of which could have a Material
Adverse Effect, and NPSC knows of no basis for any of the foregoing.
4.12. Tax Returns. NPSC files its income tax returns and maintains its tax
books and records on the basis of a taxable year ending December 31. NPSC has
duly filed all tax reports and returns required to be filed by any Federal,
state and local taxing authorities (including, without limitation, those due in
respect of its properties, income, franchises, licenses, sales, payrolls, and
trusts established by NPSC) through the date hereof, and NPSC has duly paid all
taxes with respect to the periods covered thereby and has established adequate
reserves in accordance with GAAP for the payment of all income, franchises,
property, sales, employment or other taxes anticipated to be payable after the
date hereof. NPSC is not delinquent in the payment of any taxes, assessments or
governmental charges and no deficiencies have been asserted or assessed, which
have not been paid or for which adequate reserves have not been established and
which are not being contested in good faith. All tax information reported by
NPSC to Federal and state authorities and other Persons has been accurately and
timely reported, except such as will not have a Material Adverse Effect.
4.13. Reports. NPSC has duly made all reports and filings required to be
made pursuant to applicable law.
4.14. Brokers. Except for its agreement with Xxxxx Xxxxxxx (a copy of which
has been provided to American), NPSC has not incurred any liability for any
commission or fee in the nature of a finder's, originator's or broker's fee in
connection with the transaction contemplated herein.
4.15. Contracts and Commitments. Schedule 4.15 attached hereto sets forth
each contract or other commitment of NPSC which requires an aggregate payment by
NPSC after the date hereof of more than $50,000, and any other contract or
commitment that in the opinion of NPSC management Materially Adversely Effects
the business of NPSC.
17
4.16. Employee Benefit Plans and Contracts. (a) Schedule 4.16 contains a
complete list of all NPSC Benefit Plans. NPSC has delivered to American (i)
accurate and complete copies of all NPSC Benefit Plan documents and all other
material documents relating thereto, including all summary plan descriptions,
summary annual reports and insurance contracts, (ii) accurate and complete
detailed summaries of all unwritten NPSC Benefit Plans, (iii) accurate and
complete copies of the most recent financial statements and actuarial reports
with respect to all NPSC Benefit Plans for which financial statements or
actuarial reports are required or have been prepared, (iv) accurate and complete
copies of all annual reports for all NPSC Benefit Plans (for which annual
reports are required) prepared within the last two years, and (v) accurate and
complete copies of determination letters from the IRS for any NPSC Benefit Plan
maintained or intended to be maintained under Section 401(a) of the Code. Any
NPSC Benefit Plan providing benefits that are funded through a policy of
insurance is indicated by the word "insured" placed by the listing of the NPSC
Benefit Plan on Schedule 4.16.
(b) All NPSC Benefit Plans conform in all material respects to, and are
being administered and operated in material compliance with, all applicable
requirements of ERISA and the Code. All returns, reports and disclosure
statements required to be filed or delivered under ERISA and the Code with
respect to all NPSC Benefit Plans have been filed or delivered. There have not
been any "prohibited transactions," as such term is defined in Section 4975 of
the Code or Section 406 of ERISA, involving any of the NPSC Benefit Plans that
could subject NPSC to any material penalty or tax imposed under the Code or
ERISA.
(c) Except as set forth on Schedule 4.16, any NPSC Benefit Plan that is
intended to be qualified under Section 401(a) of the Code and exempt from tax
under Section 501(a) of the Code has been determined by the IRS to be so
qualified, and such determination is current, remains in effect and has not been
revoked. Nothing has occurred since the date of any such determination that is
reasonably likely to affect adversely such qualification or exemption, or result
in the imposition of excise taxes or income taxes on unrelated business income
under the Code or ERISA with respect to any NPSC Benefit Plan.
(d) NPSC adequately reserved for all liabilities accrued prior to the
Effective Time under NPSC' nonqualified retirement or deferred compensation
plans.
(e) Except as set forth on Schedule 4.16, NPSC has no current or
contingent obligation to contribute to any multiemployer plan (as defined in
Section 3(37) of ERISA). NPSC has no liability with respect to any employee
benefit plan (as defined in Section 3(3) of ERISA) other than with respect to
the NPSC Benefit Plans.
18
(f) There are no pending or threatened claims by or on behalf of any
NPSC Benefit Plan, or by or on behalf of any individual participants or
beneficiaries of any NPSC Benefit Plan, alleging any breach of fiduciary duty on
the part of NPSC or any of its officers, directors or employees under ERISA, the
Code or any applicable regulations, or claiming benefit payments other than
those made in the ordinary operation of such plans. The NPSC Benefit Plans are
not the subject of any investigation, audit or action by the IRS, the Department
of Labor or the PBGC. NPSC has made all required contributions under the NPSC
Benefit Plans, including the payment of any premiums payable to the PBGC and
other insurance premiums. There is no underfunding liability for any NPSC
Benefit Plan that is subject to the funding requirements of Section 412 of the
Code.
(g) NPSC does not maintain any defined benefit plan, and neither has
incurred, nor has any reason to expect that it will incur, any liability to the
PBGC or otherwise under Title 4 or ERISA (including early withdrawal liability)
or under the Code with respect to any such plan. No NPSC Benefit Plan has been
subject to a reportable event for which notice would be required to be filed
with the PBGC, and no proceeding by the PBGC to terminate any NPSC Benefit Plan
has been instituted or threatened.
(h) With respect to any NPSC Benefit Plan that is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) (in this subsection,
a "Welfare Plan"), (i) each such Welfare Plan for which contributions are
claimed as deductions under any provision of the Code is in material compliance
with all applicable requirements pertaining to such deduction, (ii) with respect
to any welfare benefit fund (within the meaning of Section 419 of the Code)
related to such a Welfare Plan, there is no disqualified benefit (within the
meaning of Section 4976(b) of the Code) that would result in the imposition of a
tax under Section 4976(a) of the Code, (iii) any NPSC Benefit Plan that is a
group health plan (within the meaning of Section 4980B(g)(2) of the Code)
complies, and in each and every case has complied, with all of the material
requirements of Section 4980B of the Code, ERISA, Title XXII of the Public
Health Service Act and the applicable provisions of the Social Security Act,
(iv) such Welfare Plan may be amended or terminated at any time on or after the
Closing Date, and (v) there are no benefits to be provided to retirees under a
group health plan that are subject to disclosure under Financial Accounting
Standards Board No. 106.
(i) Except as set forth on Schedule 4.16, as of the Closing Date, there
will be no contract, agreement, plan or arrangement covering any person that
provides for the payment of an amount that would not be deductible to American
by reason of Section 280G or any other provision of the Code.
4.17. Environmental Matters. NPSC is in material compliance with all local,
state and Federal environmental statutes, laws, rules, regulations and permits,
including but not limited to CERCLA and the Toxic Substances Control Act, 15
U.S.C. 2601 et seq. NPSC has not, nor to the best of NPSC' knowledge have other
parties, used, stored, disposed of or permitted any "hazardous substance" (as
defined in CERCLA), petroleum hydrocarbon, polychlorinated biphenyl, asbestos or
radioactive material (collectively, "Hazardous Substances") to remain at, on, in
19
or under any of the real property owned or leased by NPSC (including, without
limitation, the buildings or structures thereon) (the "Real Property"). NPSC has
not, nor to the best of NPSC' knowledge have other parties, installed, used, or
disposed of any asbestos or asbestos-containing material on, in or under any of
the Real Property. NPSC has not, nor to the best of NPSC' knowledge have other
parties, installed or used underground storage tanks in or under any of the Real
Property. NPSC has provided American with copies of all complaints, citations,
orders, reports, written data, notices or other communications sent or received
by it with respect to any local, state or Federal environmental law, ordinance,
rule or regulation as any of them relate to NPSC.
4.18. NPSC Information. The written information with respect to NPSC and
its officers, directors, and affiliates which shall have been supplied by NPSC
(or any of its accountants, counsel or other authorized representatives)
specifically for use in soliciting the Shareholder Approval, or which shall be
contained in the Registration Statement, will not, on the date the Proxy
Statement is first mailed to shareholders of American or on the date of the
Shareholders' Meeting, or in the case of the Registration Statement, at the time
it becomes effective, contain any untrue statement of a material fact, or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
SECTION 5. CONDUCT OF BUSINESS PENDING CLOSING
5.1. Conduct of American Pending Closing. During the period commencing on
the date hereof and continuing until the Closing Date, American covenants and
agrees to the following (except to the extent that NPSC shall otherwise
expressly consent in writing, which consent shall not be unreasonably delayed or
withheld); provided, however, that any breach of or inaccuracy in any of the
covenants given in this Section 5.1 must have a Material Adverse Effect before
such breach shall be actionable or shall constitute grounds for termination or
failure to perform under this Reorganization Agreement.
(a) American will carry on its business only in the ordinary
course in substantially the same manner as heretofore conducted and, to
the extent consistent with such business, will use all reasonable
efforts to preserve intact its business organization and goodwill,
maintain the services of its present officers and employees and
preserve its relationships with customers, suppliers and others having
business dealings with American.
(b) American will not amend its Certificate of Incorporation
or Bylaws as in effect on the date hereof, except as may be required by
applicable law or regulation.
20
(c) American will not issue, grant, pledge or sell, or
authorize the issuance of, reclassify or redeem, purchase or otherwise
acquire, any shares of its capital stock of any class or Rights to
acquire any such shares or any shares (except for the issuance of
common stock in connection with the exercise or conversion of Rights
set forth in Schedule 3.5, in accordance with the terms thereof as they
currently exist); nor will it enter into any arrangement or contract
with respect to the issuance of any such shares or other Rights to
acquire shares; nor will it declare, set aside or pay any dividends of
any type or make any other change in its equity capital structure.
(d) American will promptly advise NPSC in writing of any
change in the business of American which has, or may reasonably be
expected to have, a Material Adverse Effect.
(e) American will not take, agree to take, or knowingly permit
to be taken (except as may be required by applicable law or regulation)
any action or do or knowingly permit to be done anything in the conduct
of the business of American, or otherwise, which would be contrary to
or in breach of any of the terms or provisions of this Reorganization
Agreement, or which would cause any of the representations of American
contained herein to be or become untrue in any material respect.
(f) American will not incur any indebtedness for borrowed
money, issue or sell any debt securities, or assume or otherwise become
liable, whether directly, contingently or otherwise, for the obligation
of any other party, other than in the ordinary course of business.
(g) Except for expenses attendant to the Merger and current
contractual obligations, American will not incur any expense in an
amount in excess of $25,000 after the execution of this Reorganization
Agreement without the prior written consent of NPSC.
(h) American will not grant any executive officers any
increase in compensation (except in the ordinary course of business in
accordance with past practice and only upon prior notice to NPSC), or
enter into any employment agreement with any executive officer without
the consent of NPSC except as may be required under employment or
termination agreements in effect on the date hereof which have been
previously disclosed to NPSC in writing.
(i) American will not acquire or agree to acquire by merging
or consolidating with, purchasing substantially all of the assets of or
otherwise, any business or any corporation, partnership, association or
other business organization or division thereof.
(j) American shall not impose, or permit or suffer the
imposition of any Liens (except in the ordinary course of business) on
any of its assets, other than Liens on such assets that, individually
or in the aggregate, are not material to the business, properties or
operations of American.
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5.2. Conduct of NPSC Pending Closing. During the period commencing on the
date hereof and continuing until the Closing Date, NPSC covenants and agrees to
the following (except to the extent that American shall otherwise expressly
consent in writing, which consent shall not be unreasonably delayed or
withheld); provided, however, that any breach of or inaccuracy in any of the
covenants given in this Section 5.2 must have a Material Adverse Effect before
such breach shall be actionable or shall constitute grounds for termination or
failure to perform under this Reorganization Agreement.
(a) NPSC shall carry on its business in substantially the same
manner as heretofore conducted.
(b) NPSC will not amend its Articles of Incorporation or
Bylaws as in effect on the date hereof in any manner that would
adversely affect the American shareholders in any material respect.
(c) NPSC will not issue, grant, pledge or sell, or authorize
the issuance of, reclassify or redeem, purchase or otherwise acquire,
any shares of its capital stock of any class or Rights to acquire any
such shares or any shares (except for the issuance of common stock in
connection with the exercise or conversion of Rights set forth in
Schedule 4.5, in accordance with the terms thereof as they currently
exist); nor will it enter into any arrangement or contract with respect
to the issuance of any such shares or other Rights to acquire shares;
nor will it declare, set aside or pay any dividends of any type or make
any other change in its equity capital structure.
(d) NPSC will promptly advise American orally and in writing
of any change in its business which is or may reasonably be expected to
be materially adverse to NPSC.
(e) NPSC will not take, agree to take, or knowingly permit to
be taken any action or do or knowingly permit to be done anything in
the conduct of its business or otherwise, which would be contrary to or
in breach of any of the terms or provisions of this Reorganization
Agreement, or which would cause any of the representations of NPSC
contained herein to be or become untrue in any material respect.
SECTION 6. COVENANTS OF THE PARTIES
6.1. Access to Properties and Records. Between the date of this
Reorganization Agreement and the Closing Date, the parties will provide to each
other and to their respective accountants, counsel and other authorized
representatives reasonable access, during reasonable business hours and upon
reasonable notice, to their respective premises, properties, contracts,
commitments, books, records and other information and will cause their
respective officers to furnish to the other party and its authorized
representatives such financial, technical and operating data and other
information pertaining to their respective businesses, as the parties shall from
time to time reasonably request.
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6.2. Confidentiality. Each party will and will cause its employees and
agents to hold in strict confidence, unless disclosure is compelled by judicial
or administrative process, or in the opinion of its counsel, by other
requirements of law, all Confidential Information and will not disclose the same
to any Person. The party gaining access to such Confidential Information shall
exercise the same degree of care with respect thereto that any such party uses
to preserve and safeguard its own confidential proprietary information.
Confidential Information shall be used only for the purpose of and in connection
with consummating the transaction contemplated herein. If this Reorganization
Agreement is terminated, each party hereto will promptly return all documents
received by it from each other party containing Confidential Information. Each
party will and will cause its employees and agents to hold in strict confidence,
unless disclosure is compelled by judicial or administrative process, or in the
opinion of its counsel, by other requirements of law, the status of the Merger.
Each party shall coordinate with the other parties, any public statements
regarding the Merger.
6.3. Cooperation. Each party shall use its respective, reasonable best
efforts to take any and all necessary or appropriate actions, and to use its
reasonable best efforts to cause its officers, directors, employees, agents, and
representatives to use their reasonable best efforts and to take all steps in
good faith within their power, to cause to be fulfilled those of the conditions
precedent to its obligations to consummate the Merger which are dependent upon
its or their actions, including but not limited to (i) requesting the delivery
of appropriate opinions and letters from its counsel and (ii) obtaining any
consents, approvals, or waivers required to be obtained from other parties.
6.4. Affiliates' Letters. American shall deliver to NPSC a letter
identifying all Persons who are, at the time the Merger is submitted to a vote
of the shareholders of American, "affiliates" of American for purposes of Rule
145 of the General Rules and Regulations under the Securities Act. American
shall use its reasonable best efforts to cause each Person who is identified as
an "affiliate" in the letter referred to above to deliver to NPSC on or prior to
the Effective Time a written agreement, in form reasonably satisfactory to NPSC,
that such Person shall not sell, pledge, transfer or otherwise dispose of any
capital stock of American or any NPSC Common Stock owned by such person or to be
received by such person as part of the consideration except in compliance with
the applicable provisions of the Securities Act.
6.5. Listing of NPSC Common Stock. NPSC shall cause the shares of NPSC
Common Stock to be issued in the transactions contemplated by this
Reorganization Agreement to be approved for quotation on the Nasdaq
Over-the-Counter Bulletin Board, subject to official notice of issuance, prior
to the Effective Time.
6.6. Reserved.
6.7. Tax Treatment. American and NPSC shall each take such acts within
their power as may be reasonably necessary to cause the Merger to qualify as a
"reorganization" within the meaning of Section 368(a) of the Code, except to the
extent such performance or failure would be prohibited by law or regulation.
23
6.8. Expenses. Except to the extent expressly provided otherwise herein,
the parties shall pay their own fees and expenses (including legal and
accounting fees) incurred in connection with the Merger.
6.9. Material Events. At all times prior to the Closing Date, each party
shall promptly notify the other party in writing of the occurrence of any event
which will or may result in a breach of any covenant, representation or warranty
in this Reorganization Agreement, or the failure to satisfy the conditions
specified in Section 7 or Section 8 of this Reorganization Agreement or other
material developments relevant to the consummation of the Merger, and shall use
its reasonable best efforts to prevent or promptly to remedy the same.
6.10. Public Announcements. At all times until after the Closing Date,
neither American nor NPSC shall issue or permit any of its respective
subsidiaries, affiliates, officers, directors or employees to issue any press
release or other information to the press with respect to this Reorganization
Agreement, without the express prior consent of the other party, except as may
be required by law or the policies of the Nasdaq Stock Market. The parties shall
cooperate to prepare a joint press release with respect to the transactions
contemplated herein.
6.11. Updating of Schedules. American and NPSC shall, at the Effective
Time, prepare and deliver to each other such supplements to the schedules
attached hereto as may be necessary or appropriate to ensure the accuracy and
completeness of the information required to be disclosed in such schedules at
all times prior to the Effective Time, provided that the furnishing of any such
supplement to such Schedules shall not modify, limit, or otherwise affect any
representations or warranties of American or NPSC contained herein or any right
of American or NPSC to terminate this Reorganization Agreement. American and
NPSC shall provide to each other drafts of such supplemental Schedules at least
three (3) business days prior to the Closing Date.
6.12. Employee Matters. (a) NPSC and American agree to cooperate and use
reasonable efforts to develop staffing plans which will result in the retention
of as many American managers and employees as is practical (as determined by
NPSC). NPSC agrees that American employees shall also be eligible for
consideration for any other available positions for which they are qualified at
NPSC and its subsidiaries. NPSC agrees that those former American employees who
are employed by NPSC or its subsidiaries immediately following the Closing Date:
(i) will be eligible to participate in NPSC Benefit Plans; and (ii) will receive
past service credit for eligibility and vesting (but not benefit accrual)
purposes under NPSC qualified retirement plans for years of service with
American. NPSC agrees that American may elect to fully vest its employees under
some or all American Benefit Plans prior to consummation of the Merger. Any
American Benefit Plans that are intended to be qualified under Section 401(a) of
the Code and exempt from tax under Section 501(a) of the Code will be terminated
by proper action of the Board of Directors of American prior to the Effective
Time. From and after the Effective Time, NPSC agrees to provide credit for
service as required by the Health Insurance Portability and Accountability Act
of 1996, as amended, for purposes of determining any preexisting condition
exclusion that may apply to an employee of American who becomes covered by a
medical plan sponsored by NPSC.
24
6.13. Agreements with American Officer. Upon closing, NPSC shall cause
American to enter into an employment agreement with Xxxx Xxxxxxxxxx
substantially in the form set forth on Appendix B (the "Employment Agreement").
6.14. Prohibited Actions. (a) Except as expressly provided in this
Reorganization Agreement, as agreed to by NPSC or as required by applicable law,
rules or regulations (including the fiduciary duties of the American directors
under applicable law), during the period from the date of this Reorganization
Agreement to the Effective Time, American shall (i) take no action which would
adversely affect or delay the ability of the parties hereto to obtain any
necessary regulatory approvals or authorizations required for the transactions
contemplated hereby or to perform its covenants and agreements on a timely basis
under this Reorganization Agreement and (ii) take no action that could
reasonably be expected to have a Material Adverse Effect on American.
(b) Except as expressly provided in this Reorganization Agreement, as
agreed to by American or as required by applicable law, rules or regulations,
during the period from the date of this Reorganization Agreement to the
Effective Time, NPSC shall, and shall cause its subsidiaries to, (i) take no
action which would adversely affect or delay the ability of the parties hereto
to obtain any necessary Regulatory Approvals or Authorizations required for the
transactions contemplated hereby or to perform its covenants and agreements on a
timely basis under this Reorganization Agreement and (ii) take no action that
could reasonably be expected to have a Material Adverse Effect on NPSC.
SECTION 7. CONDITIONS TO NPSC'S OBLIGATIONS TO CLOSE
The obligations of NPSC to consummate the transactions contemplated in
this Reorganization Agreement are subject to the satisfaction of the following
conditions at or before the Closing Date:
7.1. Performance of Acts and Representations by American. Each of the acts
and undertakings of American to be performed on or before the Closing Date
pursuant to the terms of this Reorganization Agreement shall have been duly
authorized and duly performed, and each of the representations and warranties of
American set forth in this Reorganization Agreement shall be true in all
material respects on the Closing Date, except as to transactions contemplated by
this Reorganization Agreement or representations which are as of a specific
date.
7.2. Opinion of Counsel for American. American shall have furnished NPSC
with an opinion of its counsel, dated as of the Closing Date, and in form and
substance reasonably satisfactory to NPSC and its counsel, to the effect that,
except as disclosed herein: (i) American is duly organized, validly existing and
in good standing under the laws of the State of Delaware; (ii) the consummation
of the transactions contemplated by this Reorganization Agreement will not (A)
violate any provision of American' Certificate of Incorporation or Bylaws, as
applicable, (B) violate any provision of, result in the termination of, or
result in the acceleration of any obligation under, any agreement listed on
25
Schedule 3.18 or any order, arbitration award, judgment or decree known to
counsel to which American is a party, or by which it is bound, except as such
would not, in the aggregate, have a Material Adverse Effect, except as disclosed
on schedules to the Reorganization Agreement, or (C) violate or conflict with
any other restriction of any kind or character of which such counsel has
knowledge and to which American is subject; (iii) all of the shares of American
Common Stock are validly authorized and issued, fully paid and non-assessable;
(iv) American has the legal right and power, and all authorizations and
approvals required by law, to enter into this Reorganization Agreement, and to
consummate the transactions contemplated herein and all applicable regulatory
waiting periods have passed; (v) other than filings and registrations required
under applicable law to be made by NPSC, all filings and registrations with, and
notifications to, all Federal and state authorities required on the part of
American for the consummation of the Merger have been made; (vi) American has
full corporate power and authority to enter into this Reorganization Agreement,
and this Reorganization Agreement has been duly authorized, executed and
delivered by American and constitutes a valid and legally binding obligation of
American enforceable against American in accordance with its terms, except as
such enforceability may be limited by (x) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect or
the relief of debtors generally and (z) general principles of equity; (vii) to
the best knowledge of such counsel, no material suit or proceeding is pending or
threatened against American or other parties which would have a Material Adverse
Effect on American' business or properties or its ability to make the
representations and warranties and perform the obligations set forth herein.
7.3. Conduct of Business. There shall have been no Material Adverse Event
with respect to American from the date hereof through the Closing Date.
7.4. Consents. All regulatory approvals and other authorizations necessary,
in the reasonable opinion of counsel for NPSC, to the consummation of the
transactions contemplated hereby shall have been obtained, and no governmental
agency or department or judicial authority shall have issued any order, writ,
injunction or decree prohibiting the consummation of the transactions
contemplated hereby. regulatory approvals shall have been obtained without the
imposition of any condition or requirement that, in the reasonable judgment of
NPSC, renders the consummation of this transaction unduly burdensome (excluding
conditions or requirements that are typically imposed in transactions of the
type contemplated herein).
7.5. Certificates. NPSC shall have been furnished with such certificates of
officers of American, in form and substance reasonably satisfactory to NPSC,
dated as of the Closing Date, certifying to such matters as NPSC may reasonably
request, including but not limited to the fulfillment of the conditions
specified in this Section 7.
7.6. Shareholder Approval. The Shareholder Approval shall have been
obtained.
26
7.7. Securities Laws. The Registration Statement shall have been declared
effective. No order suspending the sale of the shares of NPSC Common Stock in
any jurisdiction shall have been issued, and no proceedings for that purpose
shall have been instituted.
7.8. Employment Agreement. The Employment Agreement shall have been
executed.
7.9. Limit on Dissent. The holders of 5% or more of the American Common
Stock outstanding at the time of the Shareholders' Meeting shall not have
dissented to the Merger by demanding payment for fair value of their shares in
the manner provided by applicable law.
7.10. Pooling-of-Interests. NPSC shall have received reasonable assurance
from its independent certified public accountants that the Merger will qualify
for pooling-of-interests accounting treatment under general accepted accounting
practices.]
7.11. Debt Outstanding.. At Closing, the total debt (whether liquidated,
contingent or otherwise) of American shall not exceed $250,000.
7.12. Due Diligence.. NPSC shall have completed a due diligence
investigation of American, which shall be satisfactory in all respects to NPSC
in its sole discretion. Unless an objection is raised under this Section 7.12 on
or before October 31, 2000, this condition to closing will be deemed to have
been met.
SECTION 8. CONDITIONS TO THE OBLIGATION OF AMERICAN TO CLOSE
The obligation of American to consummate the transactions contemplated
in this Reorganization Agreement is subject to the satisfaction of the following
conditions at or before the Closing Date:
8.1. Performance of Acts and Representations by NPSC. Each of the acts and
undertakings of NPSC to be performed on or before the Closing Date pursuant to
the terms of this Reorganization Agreement shall have been duly authorized and
duly performed, and each of the representations and warranties of NPSC set forth
in this Reorganization Agreement shall be true in all material respects on the
Closing Date, except as to transactions contemplated by this Reorganization
Agreement or representations which are as of a specific date.
8.2. Opinion of Counsel for NPSCC. NPSC shall have furnished American with
an opinion of its counsel, dated as of the Closing Date, and in form and
substance reasonably satisfactory to American and its counsel, to the effect
that, except as disclosed herein: (i) NPSC and Interim are duly organized,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation; (ii) the consummation of the transactions
contemplated by this Reorganization Agreement will not (A) violate any provision
of NPSC's or Interim's Articles of Incorporation, Bylaws or other charter
documents, (B) violate any provision of, result in the termination of, or result
in the acceleration of any obligation under, any mortgage, lien, lease,
franchise, license, permit, agreement, instrument, order, arbitration award,
judgment or decree known to counsel to which NPSC is a party, or by which it is
bound, except as such would not, in the aggregate, have a Material Adverse
27
Effect on the business or financial condition of NPSC, or (C) violate or
conflict with any other restriction of any kind or character of which such
counsel has knowledge and to which NPSC is subject; (iii) all of the shares of
NPSC Common Stock to be issued in connection with the Merger will be, when
issued, validly authorized and issued, fully paid and non-assessable; (iv) NPSC
has the legal right and power, and all authorizations and approvals required by
law, to enter into this Reorganization Agreement, and to consummate the
transactions contemplated herein and all applicable regulatory waiting periods
have passed, and Interim has the legal right and power, and all authorizations
and approvals required by law, to enter into the Plan of Merger, and to
consummate the transactions contemplated therein; (v) all filings and
registrations with, and notifications to, all Federal and state authorities
required on the part of NPSC and Interim for the consummation of the Merger have
been made; (vi) NPSC has full corporate power and authority to enter into this
Reorganization Agreement, and this Reorganization Agreement has been duly
authorized, executed and delivered by NPSC and constitutes a valid and legally
binding obligation of NPSC enforceable against NPSC in accordance with its
terms, except as such enforceability may be limited by (x) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect or the relief of debtors generally and (z) general
principles of equity; (vii) to the best knowledge of such counsel, no material
suit or proceeding is pending or threatened against NPSC or other parties which
would have a Material Adverse Effect on NPSC's business or properties or its
abilities to make the representations and warranties and perform the obligations
set forth herein, and (viii) the Registration Statement became effective on
[date] and no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and no proceedings for that
purpose have been instituted or are pending under the Securities Act.
8.3. Conduct of Business. There shall have been no Material Adverse Event
with respect to NPSC from the date hereof through the Closing Date.
8.4. Consents. All regulatory approvals or other authorizations necessary,
in the reasonable opinion of counsel for American, to the consummation of the
transactions contemplated hereby shall have been obtained, and no governmental
agency or department or judicial authority shall have issued any order, writ,
injunction or decree prohibiting the consummation of the transactions
contemplated hereby. Approvals of all applicable regulatory agencies shall have
been obtained without the imposition of any condition or requirements that, in
the reasonable judgment of American, renders the consummation of this
transaction unduly burdensome (excluding conditions or requirements that are
typically imposed in transactions of the type contemplated herein).
8.5. Certificates. American shall have been furnished with such
certificates of officers of NPSC, in form and substance reasonably satisfactory
to American, dated as of the Closing Date, certifying to such matters as
American may reasonably request, including but not limited to the fulfillment of
the conditions specified in this Section 8.
28
8.6. Shareholder Approval. The Shareholder Approval shall have been
obtained.
8.7. Securities Laws. The Registration Statement shall have been declared
effective. No order suspending the sale of the shares of NPSC Common Stock in
any jurisdiction shall have been issued, and no proceedings for that purpose
shall have been instituted.
8.8. Employment Agreement. The Employment Agreement shall have been
executed.
SECTION 9. TERMINATION
9.1. Termination. This Reorganization Agreement may be terminated at any
time prior to the Closing Date:
(a) by mutual consent of the parties;
(b) by either NPSC or American, at that party's option, (A) if
a permanent injunction or other order (including any order denying any
required regulatory consent or approval) shall have been issued by any
Federal or state court of competent jurisdiction in the United States
or by any United States Federal or state governmental or regulatory
body, which order prevents the consummation of the transactions
contemplated herein, or (B) if the Shareholder Approval is not received
at the Shareholders' Meeting;
(c) by either NPSC or American if the other party (or any of
its subsidiaries) has failed to comply with the agreements or fulfill
the conditions contained herein, provided, however, that any such
failure of compliance or fulfillment must result in a Material Adverse
Event and the breaching party must be given notice of the failure to
comply and a reasonable period of time to cure;
(d) by either NPSC or American as set forth in Section 2.2
hereof.
SECTION 10. INDEMNIFICATION
10.1. Information for Application and Statements. Each of NPSC and American
represents and warrants that all information concerning it which is or will be
included in any statement and application made to any governmental agency
(including the Registration Statement) in connection with the transactions
contemplated by the Agreement shall be true and correct in all material respects
and shall not omit any material fact required to be stated therein or necessary
to make the statements made, in light of the circumstances under which they were
29
made, not misleading. Each of NPSC and American so representing and warranting,
will indemnify and hold harmless the other, each of its directors and officers,
who controls the other within the meaning of the Securities Act, from and
against any and all losses, claims, damages, expenses or liabilities to which
any of them may become subject under applicable laws and rules and regulations
thereunder and will reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any actions
whether or not resulting in liability, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any such
application or statement or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary in order to make the statements therein not misleading, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing by the representing and
warranting party expressly for use therein. Each of NPSC and American agrees, at
any time upon the request of the other, to furnish to the other a written letter
or statement confirming the accuracy of the information contained in any proxy
statement, registration statement, report or other application or statement, or
in any draft of any such document, and confirming that the information contained
in such document or draft was furnished expressly for use therein or, if such is
not the case, indicating the inaccuracies contained in such document or draft or
indicating the information not furnished expressly for use therein. The
indemnity agreement contained in this Section 10 shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
the other party.
10.2. Arbitration. Any controversy or claim (including without limit those
arising under or conferred by statutes) arising under or in relation to this
Agreement, or the breach thereof, or the relations between the parties shall be
finally settled by arbitration by a panel of three arbitrators (unless the
amount in dispute is less than $25,000 in which case there shall be only one
arbitrator) in the Dallas, Texas, administered by the American Arbitration
Association, except as specified otherwise in this Agreement, under its then
applicable Commercial Arbitration Rules and judgment on the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction thereof.
arbitration. Any filing fee shall be paid by the party filing the claim. Each
party shall be responsible for that party's own costs and expenses for
arbitration. Expenses for witnesses for either side are to be borne by the party
producing the witnesses. All administrative fees for the arbitration and
compensation expenses of the arbitrator shall be borne equally by the parties.
The arbitrator's authority shall be limited to the resolution of the legal
dispute between the parties. The arbitrator shall be bound by and shall apply
the applicable law, including allocations of burdens of proof as well as
substantive law. There shall not be any limit on the remedies available in the
arbitration which would be prohibited by applicable law regarding the limitation
of remedies available in arbitration or which would render the obligation to
arbitrate unenforceable. But, to the extent permitted by applicable law and to
30
the extent that limitations can be established without impairing the
enforceability of the obligation to arbitrate, the parties agree to the
following limitation on the remedies that can be awarded by the arbitrators: the
arbitrators shall have no power to extend this Agreement beyond its termination
date, nor to order reinstatement or other continuation of the parties'
relationship after termination, nor to award punitive, consequential, multiple,
incidental or any other damages in excess of the economic damages actually
sustained by the claimant. In no case shall the arbitrator have the authority to
enlarge substantive rights or remedies available under existing law.
SECTION 11. MISCELLANEOUS
11.1. Reliance. Notwithstanding any investigation made by or on behalf of
the parties, whether before or after the Closing Date, the parties shall be
entitled to rely upon the representations and warranties given or made by the
other party(ies) herein.
11.2. Entire Agreement. This Reorganization Agreement, including any
schedules, exhibits, lists and other documents referred to herein which form a
part hereof, contains the entire agreement of the parties with respect to the
subject matter contained herein and there are no agreements, warranties,
covenants or undertakings other than those expressly set forth herein.
11.3. Binding Agreement. This Reorganization Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that the Agreement shall not be
assigned by any of the parties hereto without the prior written consent of the
other parties hereto.
11.4. Notices. Any notice given hereunder shall be in writing and shall be
deemed delivered and received upon reasonable proof of receipt. Unless written
designation of a different address is filed with each of the other parties
hereto, notice shall be transmitted to the following addresses:
For NPSC: Xxxxxxx Xxxxxxxxx
National Paintball Supply Co., Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Fax: 000-000-0000
Copy to: Xxxxxxx X. Xxxxxxxx, Xx.
Wyche, Burgess, Xxxxxxx & Xxxxxx, P.A.
Xxxx Xxxxxx Xxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Fax: 000-000-0000
31
For American: American Inflatables, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
Copies to: ----------------------
----------------------
----------------------
Fax: -----------------
11.5. Counterparts. This Reorganization Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
11.6. Headings. The section and paragraph headings contained in this
Reorganization Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretations of this Reorganization Agreement.
11.7. Law Governing. This Reorganization Agreement shall be governed by and
construed in accordance with the laws of the State of South Carolina.
11.8. Amendment. This Reorganization Agreement may not be amended except by
an instrument in writing signed on behalf of all of the parties.
11.9. Waiver. Any term, provision or condition of this Reorganization
Agreement (other than that required by law) may be waived in writing at any time
by the party which is entitled to the benefits thereof.
END OF PAGE
32
IN WITNESS WHEREOF, this Reorganization Agreement has been duly entered
as of the date first written above.
WITNESS:
NATIONAL PAINTBALL SUPPLY CO., INC.
------------------------- By: --------------------------------
-------------------------
AMERICAN INFLATABLES, INC.
------------------------- By: -------------------------------
-------------------------
33
Appendix A
PLAN OF MERGER OF NPSC INTERIM, INC.
WITH AND INTO AMERICAN INFLATABLES, INC.
Pursuant to this Plan of Merger (the "Plan of Merger"), NPSC Interim, Inc.,
a wholly-owned subsidiary of NPSC, shall be merged with and into American
Inflatables, Inc.
ARTICLE I. DEFINITIONS
The capitalized terms set forth below shall have the indicated meanings.
Defined terms used herein, and not otherwise defined herein, shall have the
meanings ascribed to such terms in the Reorganization Agreement.
1.1. "Articles of Merger" shall mean the Articles of Merger to be executed
by Interim and American in a form appropriate for filing with the with the
appropriate regulatory authorities and/or state agencies or offices relating to
the effective consummation of the Merger.
1.2. "NPSC" shall mean National Paintball Supply Co., Inc., a South
Carolina corporation headquartered in Greenville, South Carolina.
1.3. "NPSC Common Stock" shall mean the common stock, no par value per
share, of NPSC.
1.4. "American" shall mean American Inflatables, Inc., a Delaware
corporation headquartered in Costa Mesa, California.
1.5. "American Common Stock" shall mean the common stock, par value $___.00
per share, of American.
1.6. "Conversion Ratio" shall mean the number of shares of NPSC Common
Stock issuable in exchange for one share of American Common Stock, as calculated
pursuant to Section 3.1 hereof.
1.7. "Effective Time" shall mean the date and time which the Merger becomes
effective as more particularly set forth in Section 2.2 hereof. Subject to the
terms and conditions hereof, the Effective Time shall be such time on such date
as NPSC shall notify American in writing not less than five days prior thereto,
which date shall not be more than 30 days after all conditions have been
satisfied or waived in writing.
1.8. "Interim" shall mean NPSC Interim, Inc., a wholly-owned banking
subsidiary of NPSC.
1.9. "Merger" shall mean the merger of Interim with and into American, as
more particularly set forth herein and in the Reorganization Agreement.
A-1
1.10. "Person". Person shall mean an individual, a partnership, a
corporation, a commercial bank, an industrial bank, a savings association, a
savings bank, a limited liability company, an association, a joint stock
company, a trust, a business trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
1.11. "Reorganization Agreement" shall mean the Reorganization Agreement
between NPSC and American dated as of the date hereof, to which this Plan of
Merger is attached as Appendix A.
1.12. "Rights". Rights shall mean warrants, calls, commitments, options,
rights (whether stock appreciation rights, conversion rights, exchange rights,
profit participation rights, or otherwise), securities or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, and other arrangements or commitments which obligate a
Person to issue, otherwise cause to become outstanding, sell, transfer, pledge,
or otherwise dispose of any of its capital stock or other ownership interests,
or any voting rights thereof or therein, or to pay monetary sums by reference to
the existence or market valuation, or in lieu and place, of any of its capital
stock or ownership interests therein.
1.13. "Shareholder Approvals" shall mean, as the context may require, the
duly authorized written consent of NPSC to the Merger; and the approval of the
Merger by the requisite vote of the shareholders of American at the
Shareholders' Meeting.
1.14. "Shareholders' Meeting" shall mean the meeting of the shareholders of
American at which the Merger shall be voted upon.
1.15. "Surviving Corporation" shall mean American after consummation of the
Merger.
ARTICLE II. THE MERGER
2.1. Merger. At the Effective Time, subject to the terms and conditions of
the Reorganization Agreement and this Plan of Merger, Interim shall merge with
and into American, the separate existence of Interim shall cease, and American
(the "Surviving Corporation") shall survive and the name of the Surviving
Corporation shall be "American Inflatables, Inc.." By virtue of the Merger and
without any action on the part of the holders thereof, each of the shares of
American Common Stock issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive the Merger Consideration
referenced in Article III below. Each of the shares of Interim capital stock
outstanding immediately prior to the Effective Time shall be canceled.
2.2. Effective Time. The Merger shall become effective on the date and at
the time specified in the Articles of Merger, and in the form to be filed with
the Delaware and South Carolina Secretaries of State.
A-2
2.3. Articles of Incorporation and Bylaws. The Articles of Incorporation of
American as in effect at the Effective Time shall be and remain the articles of
incorporation of the Surviving Corporation. The Bylaws of American, as in effect
at the Effective Time, shall continue in full force and effect as the bylaws of
the Surviving Corporation until otherwise amended as provided by law or by such
bylaws.
2.4. Properties and Liabilities of American and Interim; Management. At the
Effective Time, the separate existence and corporate organization of Interim
shall cease, and American shall thereupon and thereafter, to the extent
consistent with applicable law and with its Articles of Incorporation and the
changes, if any, provided by the Merger, possess all the rights, privileges,
immunities, liabilities and franchises, of a public as well as a private nature,
of Interim without further act or deed.
ARTICLE III. MERGER CONSIDERATION
3.1. Merger Consideration. In connection with the Merger, each share of
American Common Stock issued and outstanding immediately prior to the Effective
Time, shall, by virtue of the Merger and without any action on the part of the
holder thereof, be exchanged for and converted into one-half (1/2) share of NPSC
Common Stock (such ratio being hereinafter referred to as the "Conversion
Ratio").
3.2. Interim Common Stock. Upon consummation of the Merger, all shares of
Interim shall convert into 100 shares American Common Stock.
3.3. Authorized or Treasury Shares. Any and all shares of American Common
Stock held as treasury shares by American or authorized but unissued shares
shall be canceled and retired at the Effective Time, and no consideration shall
be issued or given in exchange therefor.
3.4. Fractional Shares. No fractional shares of NPSC Common Stock will be
issued as a result of the Merger. Shares issuable shall be rounded up to next
whole share.
3.5. Equitable Adjustments. In the event of any change in the outstanding
NPSC Common Stock by reason of a stock dividend, stock split, stock
consolidation, recapitalization, reorganization, merger, split up or the like,
the Conversion Ratio and all stock prices set forth in this Article III shall be
appropriately adjusted so as to preserve, but not increase, the benefits of this
Plan of Merger to the holders of American Common Stock.
3.6. Transfers. At the Effective Time, the stock transfer books of American
shall be closed and no transfer of American Common Stock shall thereafter be
made or recognized. Any other provision of this Plan of Merger notwithstanding,
none of the parties to the Reorganization Agreement or any affiliate of the
foregoing shall be liable to a holder of American Common Stock for any amount
paid or property delivered in good faith to a public official pursuant to any
applicable abandoned property, escheat, or similar law.
A-3
3.7. Dissenters Rights. All shares of American shall be converted into
shares of NPSC Common Stock as provided herein. Shares that otherwise would have
been issued to American shareholders, but for the exercise and perfection of
dissenters rights, shall not be issued.
ARTICLE IV. EXCHANGE OF COMMON STOCK CERTIFICATES
4.1. Issuance of NPSC Certificates; Cash for Fractional Shares. As soon as
practicable after the Effective Time (but in no event more than five days after
the Effective Time), NPSC or its transfer agent (in such capacity, the "Exchange
Agent") shall mail, or cause to be mailed, and otherwise make available to each
record holder of American Common Stock, a form of the letter of transmittal and
instructions for use in effecting surrender and exchange of certificates which
immediately before the Effective Time represented shares of American Common
Stock ("Certificates") for payment therefor. Upon receipt of such notice and
transmittal form, each holder of Certificates at the Effective Time shall
surrender the Certificate or Certificates to the Exchange Agent, and shall
promptly upon surrender receive in exchange therefor the Merger Consideration
provided in Article I2 of this Plan of Merger. If any portion of the payment to
be made upon surrender and exchange of a Certificate is to be paid to a person
other than the person in whose name the Certificate is registered, it shall be a
condition of such payment that the Certificate shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay in advance any transfer or other taxes or establish to the
satisfaction of NPSC that no such tax is applicable. Upon surrender, each
Certificate shall be canceled. In addition, Certificates surrendered for
exchange by any person constituting an affiliate of American for purposes of
Rule 145(c) under the Securities Act of 1933, as amended (the "Securities Act"),
shall not be exchanged for certificates representing shares of NPSC Common Stock
until NPSC has received the written agreement from such person as provided for
in Section 6.4 of the Reorganization Agreement. Adequate provisions shall be
made to permit Certificates to be surrendered and exchanged in person not later
than the business day following the Effective Time.
4.2. Authorized Withholdings. NPSC shall not be obligated to deliver the
consideration to which any former holder of American Common Stock is entitled as
a result of the Merger until such holder surrenders his or her Certificate or
Certificates representing the shares of American Common Stock for exchange as
provided in this Article IV, or, in default thereof, an appropriate affidavit of
loss and indemnity agreement and/or a bond as may be reasonably required in each
case by NPSC or American. In addition, no dividend or other distribution payable
to the holders of record of NPSC Common Stock as of any time subsequent to the
Effective Time shall be paid to the holder of any Certificate representing
shares of American Common Stock issued and outstanding at the Effective Time
until such holder surrenders such Certificate for exchange as provided in
Section 3.1 above. However, upon surrender of the American Common Stock
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Certificate both the NPSC Common Stock certificate, together with all such
withheld dividends or other distributions and any withheld cash payments in
respect of fractional share interest, but without any obligation for payment of
interest by such withholding, shall be delivered and paid with respect to each
share represented by such Certificate.
4.3. Limited Rights of Former American Shareholders. After the Effective
Time, each outstanding Certificate representing shares of American Common Stock
prior to the Effective Time shall be deemed for all corporate purposes (other
than voting and the payment of dividends and other distributions to which the
former shareholder of American Common Stock may be entitled) to evidence only
the right of the holder thereof to surrender such Certificate and receive the
requisite number of shares of NPSC Common Stock in exchange therefor (and cash
in lieu of fractional shares) as provided in this Plan of Merger.
ARTICLE V. STOCK OPTIONS AND OTHER RIGHTS
5.1. Options. Rights to purchase American Common Stock set forth on
Schedule 3.5 to the Reorganization Agreement shall be converted into the right
to purchase NPSC Common Stock based on the Conversion Ratio (i.e, a number of
shares of NPSC Common Stock equal to the number of shares of American Common
Stock subject to the Right multiplied by the Conversion Ratio, and with an
exercise price equal to the quotient obtained by dividing the stated exercise
price of the Right by the Conversion Ratio), subject in all cases to the
termination and other provisions of agreements associated with such Rights.
ARTICLE VI. MISCELLANEOUS
6.1. Conditions Precedent. Consummation of the Merger is conditioned upon
the fulfillment of the conditions precedent set forth in Section V2 and Section
V2I of the Reorganization Agreement, subject to waiver of any such conditions,
if appropriate, as provided thereunder.
6.2. Termination. This Plan of Merger may be terminated at any time prior
to the Effective Time as provided in Section 9 of the Reorganization Agreement.
6.3. Amendments. To the extent permitted by law, this Plan of Merger may be
amended by a subsequent writing signed by all of the parties to the
Reorganization Agreement upon the approval of the board of directors of both of
the parties thereto; provided, however, that this Plan of Merger may not be
amended after the Shareholders' Meeting except in accordance with applicable
law.
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