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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ELTRAX SYSTEMS, INC.,
ANS ACQUISITION CORPORATION,
ATLANTIC NETWORK SYSTEMS, INC.
AND
XXXXXX X. XXXXXX,
XXXXXXX X. XXXXXXXX
AND B. XXXXXX XXXXXX
OCTOBER 31, 1996
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TABLE OF CONTENTS
Page
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ARTICLE 1. THE MERGER.........................................................1
1.1. The Merger; Surviving Corporation....................................1
1.2. Effective Time.......................................................1
1.3. Conversion of Shares.................................................2
1.4. Closing..............................................................2
1.5. Merger Consideration.................................................2
1.6. Exchange of Acquisition Sub Common Stock.............................3
1.7. Surrender of ANS' Stock Certificates.................................3
1.8. Articles of Incorporation............................................3
1.9. Bylaws...............................................................3
1.10. Directors and Officers..............................................3
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF PARENT...........................4
2.1. Parent's Disclosure Schedule.........................................4
2.2. Organization.........................................................4
2.3. Authority and Validity of Agreement..................................4
2.4. Consents and Approvals...............................................5
2.5. Capitalization.......................................................5
2.6. Commission Reports...................................................5
2.7. No Brokers or Finders................................................6
2.8. Non-Contravention....................................................6
2.9. Loss Contingencies; Other Non-Accrued Liabilities....................6
2.10. Investigations; Litigation..........................................7
2.11. Accuracy of Information.............................................7
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.................7
3.1. Shareholders' Disclosure Schedule....................................7
3.2. Corporate Organization...............................................7
3.3. Capitalization.......................................................8
3.4. Authorization........................................................8
3.5. Non-Contravention....................................................8
3.6. Consents and Approvals...............................................9
3.7. Financial Statements.................................................9
3.8. Loss Contingencies; Other Non-Accrued Liabilities....................9
3.9. Investigations; Litigation..........................................10
3.10. Absence of Certain Changes.........................................10
3.11. Title to Property; Condition.......................................11
3.12. Inventories........................................................11
3.13. Receivables and Payables...........................................11
3.14. Tax Returns........................................................12
3.15. Insurance..........................................................13
3.16. Benefit Plans......................................................14
3.17. Bank Accounts; Powers of Attorney..................................16
3.18. Contracts and Commitments; No Default..............................16
3.19. Orders, Commitments and Returns....................................18
3.20. Labor Matters......................................................18
3.21. Dealers and Suppliers..............................................18
3.22. Licenses and Other Operating Rights................................18
3.23. Compliance with Law................................................19
3.24. Physical Assets of Business........................................19
3.25. Intellectual Property Rights.......................................19
3.26. Business Generally.................................................19
3.27. Hazardous Substances and Hazardous Wastes..........................19
3.28. Brokers............................................................20
3.29. Accuracy of Information............................................20
3.30. Shareholders Representations.......................................21
ARTICLE 4. COVENANTS.........................................................22
4.1. ANS' Agreements as to Specified Matters.............................22
4.2. Conduct of ANS' Business............................................23
4.3. No Solicitation of Alternate Transaction by the
Shareholders or ANS.................................................23
4.4. Full Access to Parent...............................................24
4.5. Confidentiality.....................................................24
4.6. Consummation; Consents; Removal of Objections.......................25
4.7. Further Assurances; Cooperation; Notification.......................25
4.8. Supplements to Shareholders' Disclosure Schedule....................25
4.9. Public Announcements................................................25
4.10. Registration Rights................................................26
4.11. Restrictive Legend.................................................26
4.12. Maintenance of and Access to Books and Records.....................26
4.13. Preparation of Tax Returns.........................................26
4.14. Amendment of Prior Returns; Audit..................................26
4.15. Successors and Assigns.............................................27
4.16. Board Position.....................................................27
4.17. Schedule 13D.......................................................27
4.18. Access to Shareholders.............................................27
4.19. Repayment of ANS Existing Credit Line..............................27
ARTICLE 5. CONDITIONS TO OBLIGATION OF PARENT AND ANS ACQUISITION SUB........28
5.1. Representations and Warranties True.................................28
5.2. Performance.........................................................28
5.3. Required Approvals and Consents.....................................28
5.4. Adverse Changes.....................................................28
5.5. No Proceeding or Litigation.........................................28
5.6. Opinion of Counsel for ANS and Shareholders.........................29
5.7. Legislation.........................................................29
5.8. Acceptance by Counsel to Parent.....................................29
5.9. Certificates........................................................29
5.10. Due Diligence......................................................29
5.11. Escrow Agreement...................................................29
5.12. Employment and Non-Competition Agreements..........................29
5.13. Pooling Advice.....................................................29
ARTICLE 6. CONDITIONS TO THE OBLIGATION OF ANS AND SHAREHOLDERS..............30
6.1. Representations and Warranties True.................................30
6.2. Performance.........................................................30
6.3. Required Approvals and Consents.....................................30
6.4. No Proceeding or Litigation.........................................30
6.5. Certificates........................................................30
6.6. Opinions of Parent Counsel..........................................31
6.7. Escrow Agreement....................................................31
6.8. Acceptance by Counsel to Shareholders...............................31
6.9. Employment and Non-Competition Agreement with Shareholders..........31
6.10. Adverse Changes....................................................31
6.11. Legislation........................................................31
6.12. Due Diligence......................................................31
6.13. Market Price of Parent Common Stock................................31
ARTICLE 7. TERMINATION AND ABANDONMENT.......................................32
7.1. Methods of Termination..............................................32
7.2. Procedure Upon Termination..........................................32
ARTICLE 8. SURVIVAL AND INDEMNIFICATION......................................33
8.1. Survival............................................................33
8.2. Indemnification by Parent...........................................33
8.3. Indemnification by Shareholders.....................................33
8.4. Limitation on Indemnification.......................................33
8.5. Indemnification De Minimis Threshold................................33
8.6. Claims for Indemnification..........................................34
ARTICLE 9. MISCELLANEOUS PROVISIONS..........................................35
9.1. Expenses............................................................35
9.2. Amendment and Modification..........................................36
9.3. Waiver of Compliance; Consents......................................36
9.4. No Third Party Beneficiaries........................................36
9.5. Notices.............................................................36
9.6. Assignment..........................................................37
9.7. Governing Law.......................................................37
9.8. Counterparts........................................................38
9.9. Headings............................................................38
9.10. Entire Agreement...................................................38
9.11. Injunctive Relief..................................................38
9.12. Arbitration........................................................38
9.13. List of Defined Terms..............................................39
9.14. Attorneys Fees.....................................................39
9.15. Knowledge of ANS and Shareholders..................................39
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of October 31, 1996 (the
"Agreement"), is by and among ELTRAX SYSTEMS, INC., a Minnesota corporation (the
"Parent"), ANS ACQUISITION CORPORATION, a North Carolina corporation and a
wholly owned subsidiary of the Parent ("ANS Acquisition Sub"), and ATLANTIC
NETWORK SYSTEMS, INC., a North Carolina corporation ("ANS"), and Xxxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxxxxx and B. Xxxxxx Xxxxxx, the sole shareholders of ANS
(collectively, the "Shareholders").
A. WHEREAS, the Boards of Directors of Parent, ANS Acquisition Sub and
ANS each have approved the merger of ANS Acquisition Sub with and into ANS, upon
the terms and subject to the conditions set forth herein (the "Merger") and deem
it advisable and in the best interests of their respective shareholders that the
foregoing merger be consummated;
B. WHEREAS, for federal income tax purposes, it is intended that the
Merger will qualify as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code");
C. WHEREAS, for accounting purposes, it is intended that the Merger will
be recorded as a pooling of interests within the meaning of Accounting
Principles Board Opinion Xx. 00 ("XXX Xxxxxxx Xx. 00"); and
D. WHEREAS, the parties hereto desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants contained herein, the parties hereto agree as follows:
ARTICLE
1.
THE MERGER
1.1. THE MERGER; SURVIVING CORPORATION.
Subject to the terms and conditions of this Agreement and the articles of
merger attached hereto as Exhibit 1.1 and the plan of merger attached thereto,
to be filed in the State of North Carolina (collectively, the "Plan of Merger"),
at the Effective Time (as defined in Section 1.2 hereof), ANS Acquisition Sub
will be merged with and into ANS, in accordance with the applicable provisions
of the North Carolina Business Corporation Act (the "NCBCA"), whereupon the
separate existence of ANS Acquisition Sub will cease and ANS will continue as
the surviving corporation (the "Surviving Corporation").
1.2. EFFECTIVE TIME.
Simultaneously with the Closing, the parties hereto will effect the Merger
by filing the required number of originals of the articles of merger
(substantially in the form provided for in the Plan of Merger) in accordance
with the applicable provisions of the NCBCA (the "Articles of Merger"). The
Merger will become effective at the time of filing of the Articles of Merger on
October 31, 1996,
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assuming the Articles of Merger are filed on such date. The time when the
Merger will become effective is referred to herein as the "Effective Time."
1.3. CONVERSION OF SHARES.
At the Effective Time:
(a) Each share of common stock of ANS, no par value (the "ANS Common
Stock"), issued and outstanding immediately prior thereto will, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into the right to receive a proportionate part of the Merger
Consideration (as defined in Section 1.5(a) herein).
(b) Each share of common stock of ANS Acquisition Sub, par value $.01
per share (the "ANS Acquisition Sub Common Stock"), issued and outstanding
immediately prior thereto will, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into one share of
the common stock of ANS, no par value (the "Surviving Corporation Common
Stock").
(c) The Shareholders will cease to have any rights as shareholders of
ANS, except such rights, if any, as they may have pursuant to the NCBCA.
1.4. CLOSING.
Unless this Agreement has been terminated and the transactions contemplated
herein have been abandoned pursuant to Article 7 hereof, a Closing (the
"Closing") will be held on October 31, 1996 or on such later date as the parties
may agree in writing, but not later than the "Termination Date," as defined
herein (the "Closing Date"); provided, however, that if any of the conditions
provided for in Articles 5 and 6 hereof have not been satisfied or waived by
such date, then the party to this Agreement which is unable to satisfy such
condition or conditions, despite the good faith reasonable efforts of such
party, will be entitled to postpone the Closing by notice to the other parties
until such condition or conditions have been satisfied (which such notifying
party will seek to cause to happen at the earliest practicable date) but in no
event later than November 30, 1996 (the "Termination Date"). The Closing will
be held at the offices of ANS, 0000 Xxxxxxxxxx Xxxxx, Xxxxxxx, XX 00000, or
such other place as the parties may agree, at 9:00 a.m., local time or such
other time as the parties may agree, at which time and place the documents and
instruments necessary or appropriate to effect the transactions contemplated
herein will be exchanged by the parties. Except as otherwise provided herein,
all actions taken at the Closing will be deemed to be taken simultaneously.
1.5. MERGER CONSIDERATION.
(a) MERGER CONSIDERATION AND NATURE OF PAYMENT. The aggregate
consideration payable to the Shareholders upon consummation of the Merger
and the surrender of all the issued and outstanding shares of capital stock
of ANS (the "Merger Consideration") will be equal to Nine Hundred Fifty
Thousand (950,000) shares of common stock, par value $.01 per share, of
Parent (the "Parent Common Stock"). Each such share of Parent Common Stock
will be fully paid and nonassessable and will be restricted, as defined in
Rule 144 promulgated by the Securities and Exchange Commission (the
"Commission"). The Merger Consideration payable to the Shareholders
hereunder will be allocated among the Shareholders in the manner set forth
in Exhibit 1.5(a) hereof.
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(b) PAYMENT OF MERGER CONSIDERATION. At the Closing upon surrender
of all the issued and outstanding shares of capital stock of ANS, Parent
will issue and deliver to the Shareholders on the Closing Date Nine Hundred
Thousand (900,000) shares of restricted (as defined in Commission Rule 144)
Parent Common Stock, all such consideration to be allocated to the
Shareholders in accordance with Exhibit 1.5(a) hereof. In addition, Parent
will deliver certificates representing Fifty Thousand (50,000) shares of
restricted Parent Common Stock (the "Escrowed Shares"), allocated among the
Shareholders in accordance with Exhibit 1.5(a) hereof, to be placed in
escrow upon and subject to the terms and conditions of the Escrow Agreement
in the form of Exhibit 1.5(b) hereof (the "Escrow Agreement").
1.6. EXCHANGE OF ACQUISITION SUB COMMON STOCK.
From and after the Effective Time, each outstanding certificate previously
representing shares of ANS Acquisition Sub Common Stock will be deemed for all
purposes to evidence ownership of and to represent the number of shares of
Surviving Corporation Common Stock into which such shares of ANS Acquisition Sub
Common Stock have been converted. Promptly after the Effective Time, the
Surviving Corporation will issue to the Parent a stock certificate or
certificates representing such shares of the Surviving Corporation's Common
Stock in exchange for the certificate or certificates which formerly represented
shares of the respective ANS Acquisition Sub Common Stock, which will be
canceled.
1.7. SURRENDER OF ANS' STOCK CERTIFICATES.
(a) At Closing, the Shareholders will deliver the share certificates
representing all of the issued and outstanding shares of capital stock of
ANS, duly endorsed in blank for transfer or with stock transfer power forms
duly executed in blank attached, and the certificates so surrendered will
forthwith be canceled.
(b) The Merger Consideration payable to the Shareholders pursuant to
Section 1.5 hereof, upon delivery to the Shareholders in accordance with
the provisions of this Agreement, will be deemed to have been paid and
issued in full satisfaction of all rights of the Shareholders pertaining to
each of such Shareholders' shares of capital stock of ANS.
1.8. ARTICLES OF INCORPORATION.
The articles of incorporation of ANS as in effect immediately prior to the
Effective Time will be the articles of incorporation of the Surviving
Corporation until further amended in accordance with applicable law.
1.9. BYLAWS.
The bylaws of ANS as in effect immediately prior to the Effective Time will
be the bylaws of the Surviving Corporation until amended or repealed in
accordance with the articles of incorporation of the Surviving Corporation and
applicable law.
1.10. DIRECTORS AND OFFICERS.
Immediately after the Effective Time of the Merger, the directors and
officers of the Surviving Corporation will be as set forth in Exhibit 1.10
attached hereto, and will serve in such capacities until their respective
successors are duly elected and qualified.
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ARTICLE
2.
REPRESENTATIONS AND WARRANTIES
OF THE PARENT
The Parent represents and warrants to the Shareholders as follows:
2.1. PARENT'S DISCLOSURE SCHEDULE.
The Parent's Disclosure Schedule marked as Exhibit 2.1 hereto (the
"Parent's Disclosure Schedule") is divided into sections which correspond to the
Sections of this Article 2. The Parent's Disclosure Schedule is accurate and
complete. For purposes of the Parent's Disclosure Schedule, disclosure in one
Section will not constitute disclosure for purposes of any other Section of this
Agreement.
2.2. ORGANIZATION.
Each of the Parent and the ANS Acquisition Sub is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation and each has all requisite corporate power and authority to
own, lease and operate its respective properties and to carry on its business as
it is now being conducted. ANS Acquisition Sub is a recently-formed North
Carolina corporation that has not conducted, and will not conduct prior to the
Closing, any activities other than those incident to its formation and in
connection with the consummation of the Merger. Each of the Parent and the ANS
Acquisition Sub is duly qualified and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary and where the
failure to qualify could have a material adverse effect on the business, results
of operations or financial condition of the Parent and its subsidiaries taken as
a whole. The Parent has previously delivered to the Shareholders or their
representative, accurate and complete copies of the articles of incorporation
and bylaws, as currently in effect, of each of the Parent and the ANS
Acquisition Sub.
2.3. AUTHORITY AND VALIDITY OF AGREEMENT.
Each of the Parent and the ANS Acquisition Sub has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized and approved by the Boards of Directors of the Parent and the
ANS Acquisition Sub and by the Parent as the sole shareholder of the ANS
Acquisition Sub, and no other corporate proceedings on the part of the Parent or
the ANS Acquisition Sub are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been, and
the Agreements required by Section 6.7 and 6.9 and executed and delivered by ANS
or ANS Acquisition Sub in connection with the Closing will constitute duly and
validly executed and delivered by each of the Parent and the ANS Acquisition Sub
and constitutes, and the Agreements required by Section 6.7 and 6.9 and executed
and delivered by ANS or ANS Acquisition Sub in connection with the Closing will
constitute valid and binding obligations of the Parent and the ANS Acquisition
Sub, enforceable against each of them in accordance with their terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws from time to time in effect which affect
creditors' rights generally.
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2.4. CONSENTS AND APPROVALS.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not: (a) violate any provision of the
articles of incorporation or bylaws of the Parent or the ANS Acquisition Sub;
(b) violate any statute, rule, regulation, order or decree of any public body or
authority by which the Parent or any of its respective properties or assets may
be bound or affected; (c) except for any applicable requirements of the
Securities Act of 1933, as amended and the rules and regulations thereunder (the
"1993 Act") and state securities laws, and the filing and recordation of
appropriate merger documents as required by the NCBCA, require any filing with
or permit, consent or approval of any public body or authority or any other
person or entity; or (d) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any obligation, agreement, commitment or
authorization, to which the Parent or the ANS Acquisition Sub is a party, or by
which either of them or any of their respective properties or assets may be
bound or affected.
2.5. CAPITALIZATION.
The authorized capital stock of the Parent consists of 50,000,000 shares of
Parent Common Stock and 1,000,000 shares of undesignated preferred stock, of
which there are 6,596,813 shares of Parent Common Stock issued and outstanding.
The authorized capital stock of ANS Acquisition Sub consists of 1,000 shares of
ANS Acquisition Sub Common Stock, all of which are issued and outstanding and
owned by the Parent. All shares of Parent Common Stock to be issued and
delivered in the Merger pursuant to Article 1 hereof will be, at the time of
issuance and delivery, validly issued, fully paid, nonassessable and free of
preemptive rights. Except options to purchase 578,840 shares of Parent Common
Stock heretofore granted pursuant to the Parent's 1995 Stock Incentive Plan (the
"1995 Plan") and 1992 Stock Incentive Plan (the "1992 Plan") and currently
outstanding, non-plan options (options granted by the Company not under either
the 1992 Plan or the 1995 Plan) to purchase 45,000 shares of Parent Common Stock
heretofore granted by the Parent and currently outstanding, warrants to purchase
828,452 shares of Parent Common Stock heretofore granted by the Parent and
currently outstanding, there are not any outstanding or authorized
subscriptions, options, warrants, calls, rights, commitments, restrictions,
arrangements or any other agreements of any character that, directly or
indirectly, (a) obligate the Parent to issue any shares of capital stock or any
securities convertible into, or exercisable or exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock, (b) call for or relate
to the sale, pledge, transfer or other disposition or encumbrance by the Parent
of any shares of its capital stock, or (c) relate to the voting or control of
such capital stock.
2.6. COMMISSION REPORTS.
Except as set forth in Section 2.6 of Parent's Disclosure Schedule, Parent
has duly and timely made all required filings with the Commission under the 1933
Act and the Securities Exchange Act of 1934, as amended and the rules and
regulations thereunder, and all of the reports, forms and documents so filed
complied in all material respects with all applicable requirements. Parent has
heretofore delivered to Shareholders accurate and complete copies of the
reports, proxy statements and registration statements listed on Section 2.6 of
Parent's Disclosure Schedule (the "Eltrax Reports") which have been filed with
the Securities and Exchange Commission. None of the Eltrax Reports contained
any untrue statements of a material fact or omitted 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
5
made, not misleading. The consolidated financial statements and schedules of
Parent contained in the Eltrax Reports (or incorporated therein by reference)
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis, except as noted therein, and fairly present the
consolidated financial condition and results of operations of Parent and its
subsidiaries as of the respective dates thereof and for the periods indicated
therein, subject (in the case of interim unaudited financial statements) to
normal year-end audit adjustments, none of which will be material.
2.7. NO BROKERS OR FINDERS.
Neither the Parent nor the ANS Acquisition Sub has employed, engaged, or
retained any broker, investment banker, agent or finder or incurred any
liability for any brokerage or investment banker fees, agents' commissions or
finders' fees in connection with the transactions contemplated hereby.
2.8. NON-CONTRAVENTION.
Neither the execution, delivery and performance of this Agreement nor the
consummation of the transactions contemplated herein will: (i) violate or be in
conflict with any provision of the articles or certificate of incorporation or
bylaws of the Parent or ANS Acquisition Sub; (ii) except for such violations,
conflicts, defaults, accelerations, terminations, cancellations, impositions of
fees or penalties, mortgages, pledges, liens, security interests, encumbrances,
restrictions and charges which would not, individually or in the aggregate, have
a material adverse affect on the business of the Parent taken as a whole (A) be
in conflict with, or constitute a default under, any note, bond, lease,
mortgage, indenture, license, contract, franchise, permit, instrument or other
agreement or obligation to which the Parent or ANS Acquisition Sub is a party or
(B) result in the creation or imposition of any mortgage, lien, security
interest, encumbrance or charge of any kind, upon any property or assets of the
Parent or ANS Acquisition Sub under any contract, agreement or commitment to
which the Parent or ANS Acquisition Sub is a party; or (iii) to the Parent's
knowledge, violate any law, judgment, decree, order, regulation or ordinance or
other similar authoritative matters (sometimes hereinafter separately referred
to as a "Law" and sometimes collectively as "Laws") of any foreign, federal,
state or local governmental or quasi-governmental, administrative, regulatory or
judicial court, department, commission, agency, board, bureau, instrumentality
or other authority (hereinafter sometimes separately referred to as an
"Authority" and sometimes collectively as "Authorities") by which the Parent or
ANS Acquisition Sub is bound or affected.
2.9. LOSS CONTINGENCIES; OTHER NON-ACCRUED LIABILITIES.
Except as described on Section 2.9 of the Parent's Disclosure Schedule, to
the knowledge of Parent, Parent does not have (i) any loss contingencies which
are not required by generally accepted accounting principles to be accrued;
(ii) any loss contingencies involving an unasserted claim or assessment which
are not required by generally accepted accounting principles to be disclosed
because the potential claimants have not manifested to Parent an awareness of a
possible claim or assessment; or (iii) any categories of known liabilities or
obligations (other than non-pension post-retirement medical care, dental care,
life insurance or other benefits) which are not required by generally accepted
accounting principles to be accrued. For purposes of this Agreement, "loss
contingency" will have the meaning accorded to it by generally accepted
accounting principles. Except as set forth on the Parent's Disclosure Schedule,
to the knowledge of Parent, Parent has no liability or obligation of any nature,
asserted or unasserted, accrued, absolute or contingent or otherwise, and
whether due or to become due, that is required to be set forth in accordance
with generally accepted accounting principles that is not reflected or reserved
against on the Company's most recent balance sheet included in the Company's
6
latest audited financial statements filed as part of Amendment No. 1 to its
Current Report on Form 8-K (filed August 5, 1996), except those that may have
been incurred after the date of the Company's most recent balance sheet in the
ordinary course of business and consistent with past practices.
2.10. INVESTIGATIONS; LITIGATION.
Except as set forth in Section 2.10 of the Parent's Disclosure Schedule, to
the Parent's knowledge, there are no claims, actions, suits or proceedings by
any private party or by any governmental body or authority (including any
nongovernmental self-regulatory agency), nor any investigations or reviews by
any federal, state, local or foreign body or authority (including any
nongovernmental self-regulatory agency), against or affecting the Parent, that
are pending or, to the Parent's knowledge threatened, at law or in equity. To
the Parent's knowledge, there is no basis for any such investigation, review,
claim, action, suit or proceeding.
2.11. ACCURACY OF INFORMATION.
After diligent review, no representation or warranty by the Parent in this
Agreement contains or will contain any untrue statement of material fact or
omits or will omit to state any material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading as of the date of the representation or warranty.
ARTICLE
3.
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
Each of the Shareholders, jointly and severally, represent and warrant to
the Parent and to the ANS Acquisition Sub as follows:
3.1. SHAREHOLDERS' DISCLOSURE SCHEDULE.
The Shareholders' Disclosure Schedule marked as Exhibit 3.1 hereto (the
"Shareholders' Disclosure Schedule") is divided into sections which correspond
to the Sections of this Article 3. The Shareholders' Disclosure Schedule is
accurate and complete. For purposes of the Shareholders' Disclosure Schedule,
disclosure in one Section will not constitute disclosure for purposes of any
other Section of this Agreement.
3.2. CORPORATE ORGANIZATION.
ANS is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation, has full corporate power and
authority to carry on its business as it is now being conducted and to own,
lease and operate its properties and assets. ANS has heretofore delivered to
Parent complete and correct copies of its articles or certificate of
incorporation and bylaws, as presently in effect. Except as set forth in
Section 3.2 of the Shareholders' Disclosure Schedule, ANS is duly qualified or
licensed to do business as a foreign corporation and is in good standing in
every jurisdiction in which the character or location of the properties and
assets owned, leased or operated by it or the nature of the business conducted
by it requires such qualification or licensing, except where the failure to be
so qualified, licensed or in good standing in such other jurisdiction could not,
individually or in the aggregate, have a material adverse effect on the business
of ANS taken as a whole. ANS does not,
7
directly or indirectly, own or control or have any capital, equity, partnership,
participation or other interest in any corporation, partnership, joint venture
or other business association or entity.
3.3. CAPITALIZATION.
The authorized capital stock of ANS consists of 100,000 shares of common
stock, no par value, of which 1,000 shares are issued and outstanding. All
issued and outstanding shares of capital stock of ANS are duly authorized,
validly issued, fully paid and nonassessable and are without, and were not
issued in violation of, any preemptive rights. All issued and outstanding
shares of capital stock of ANS are owned (of record and beneficially) solely by
the Shareholders in the exact amounts as shown under Section 3.3 on the
Shareholders' Disclosure Schedule. Except as set forth under Section 3.3 on the
Shareholders' Disclosure Schedule: (i) there are no outstanding options,
warrants, conversion privileges or other rights to purchase or acquire any
shares of capital stock or other equity securities of ANS or any outstanding
securities that are convertible into or exchangeable for such shares, securities
or rights; and (ii) there are no contracts, commitments, understandings,
arrangements or restrictions by which ANS or any of its Shareholders are bound
to issue or acquire any additional shares of its capital stock or other equity
securities or any options, warrants, conversion privileges or other rights to
purchase or acquire any capital stock or other equity securities of ANS or any
securities convertible into or exchangeable for such shares, securities or
rights.
3.4. AUTHORIZATION.
ANS has full corporate power and authority to enter into this Agreement and
to carry out the transactions contemplated herein. Shareholders, and each of
them, have the legal capacity to enter into this Agreement and to carry out the
transactions contemplated herein, including without limitation the legal
capacity to execute, deliver and perform the agreements or contracts, if any,
required by Sections 5.11 and 5.12 to be executed and delivered by either of
them as a condition to the Closing. The Shareholders and the Board of Directors
of ANS have taken all action required by law, the articles or certificate of
incorporation and bylaws of ANS and otherwise to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein. This Agreement has been duly and validly
executed and delivered by ANS, and this Agreement is the valid and binding legal
obligation of ANS, enforceable against ANS in accordance with its terms, subject
to the affect of applicable bankruptcy, reorganization, insolvency, moratorium,
fraudulent conveyance and other laws affecting the rights of creditors generally
or the availability of specific performance, injunctive relief and other
equitable remedies and to general principles of equity (regardless of whether
such principles are considered in a proceeding in equity or at law). This
Agreement has been, and the agreements required by Sections 5.11 and 5.12 hereof
and executed and delivered by the Shareholders in connection with the Closing
will be, duly and validly executed by the Shareholders. This Agreement is, and
the agreements required by Sections 5.11 and 5.12 hereof and executed and
delivered by the Shareholders in connection with the Closing will be, the valid
and binding legal obligation of each of the Shareholders, enforceable against
each of the Shareholders in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws from time to time in effect which affect creditors' rights generally.
3.5. NON-CONTRAVENTION.
Except as set forth on Section 3.5 of the Shareholders' Disclosure
Schedule, neither the execution, delivery and performance of this Agreement nor
the consummation of the transactions contemplated herein will: (i) violate or
be in conflict with any provision of the articles or certificate of
8
incorporation or bylaws of ANS; (ii) except for such violations, conflicts,
defaults, accelerations, terminations, cancellations, impositions of fees or
penalties, mortgages, pledges, liens, security interests, encumbrances,
restrictions and charges which would not, individually or in the aggregate, have
a material adverse affect on the business of ANS taken as a whole (A) be in
conflict with, or constitute a default under, any note, bond, lease, mortgage,
indenture, license, contract, franchise, permit, instrument or other agreement
or obligation to which ANS is a party or (B) result in the creation or
imposition of any mortgage, lien, security interest, encumbrance or charge of
any kind, upon any property or assets of ANS under any contract, agreement or
commitment to which either ANS or any of the Shareholders is a party; or (iii)
to the knowledge of ANS and each of the Shareholders, violate any Law by which
either ANS or any of the Shareholders is bound or affected.
3.6. CONSENTS AND APPROVALS.
Except as set forth on Section 3.6 of the Shareholders' Disclosure
Schedule, with respect to ANS, no consent, approval, order or authorization of
or from, or registration, notification, declaration or filing with (hereinafter
sometimes separately referred to as a "Consent" and sometimes collectively as
"Consents") any individual, governmental or regulatory authority or other person
or entity is required in connection with the execution, delivery or performance
of this Agreement by ANS, or by any of the Shareholders or the consummation by
ANS or any of the Shareholders of the transactions contemplated herein.
3.7. FINANCIAL STATEMENTS.
The Shareholders have furnished to Parent summaries of the unaudited and
reviewed balance sheet and unaudited and reviewed statement of earnings for ANS
as of and for the fiscal years ended December 31, 1993, 1994 and 1995 and for
the six months period ended June 30, 1996 (the "Latest Balance Sheet"), all of
which are attached as Exhibit 3.7 hereto (the "Financial Statements"). Except as
set forth in Section 3.7 of the Shareholders' Disclosure Schedule, the Financial
Statements (which include the Latest Balance Sheet) (i) are in accordance with
the books and records of ANS and have been consistently prepared as of the dates
reflected therein and for all periods reflected therein, (ii) fairly present the
financial position of ANS as of the respective dates thereof, and with respect
to the statements of income for the periods then ended, and (iii) accurately
state the various account balances as of the dates reflected therein and
accurately state the changes in such account balances for the periods reflected
therein. Except as set forth in Section 3.7 of the Shareholders' Disclosure
Schedule, to the knowledge of ANS and each of the Shareholders, ANS has no
liability or obligation of any nature, asserted or unasserted, accrued, absolute
or contingent or otherwise, and whether due or to become due, that is required
to be set forth in accordance with generally accepted accounting principles that
is not reflected or reserved against on the Latest Balance Sheet, except those
that may have been incurred after the date of the Latest Balance Sheet in the
ordinary course of business and consistent with past practices.
3.8. LOSS CONTINGENCIES; OTHER NON-ACCRUED LIABILITIES.
Except as described on Section 3.8 of the Shareholders' Disclosure
Schedule, to the knowledge of ANS and each of the Shareholders, ANS does not
have (i) any loss contingencies which are not required by generally accepted
accounting principles to be accrued; (ii) any loss contingencies involving an
unasserted claim or assessment which are not required by generally accepted
accounting principles to be disclosed because the potential claimants have not
manifested to ANS an awareness of a possible claim or assessment; or (iii) any
categories of known liabilities or obligations (other than non-pension post-
retirement medical care, dental care, life insurance or other benefits) which
are not required by
9
generally accepted accounting principles to be accrued. For purposes of this
Agreement, "loss contingency" will have the meaning accorded to it by generally
accepted accounting principles.
3.9. INVESTIGATIONS; LITIGATION.
There are no claims, actions, suits or proceedings by any private party or
by any governmental body or authority (including any nongovernmental
self-regulatory agency), nor any investigations or reviews by any federal,
state, local or foreign body or authority (including any nongovernmental
self-regulatory agency), against or affecting ANS or any of the Shareholders,
that are pending or, to the knowledge of ANS and any of the Shareholders,
threatened, at law or in equity. To the knowledge of ANS and any of the
Shareholders, there is no basis for any such investigation, review, claim,
action, suit or proceeding.
3.10. ABSENCE OF CERTAIN CHANGES.
Except as set forth in Section 3.10 of the Shareholders' Disclosure
Schedule, except as expressly authorized by this Agreement, and except as is in
the ordinary course of business and consistent with past practice, since
December 31, 1995, ANS has not:
(a) Suffered any adverse change in its condition (financial or
otherwise), working capital, assets, properties, liabilities, obligations,
reserves or businesses, or experienced any event or failed to take any
action which could reasonably be expected to have a material adverse effect
on the business of ANS taken as a whole;
(b) Suffered any loss, damage, destruction or other casualty (whether
or not covered by insurance) or suffered any loss of officers, employees,
dealers, distributors, independent contractors, customers, or suppliers or
other favorable business relationships which could reasonably be expected
to have a material adverse affect on the business of ANS taken as a whole;
(c) Declared, set aside, made or paid any dividend or other
distribution in respect of its capital stock, or purchased or redeemed any
shares of its capital stock;
(d) Issued or sold any shares of its capital stock, or any options,
warrants, conversion, exchange or other rights to purchase or acquire any
such shares or any securities convertible into or exchangeable for such
shares;
(e) Incurred any indebtedness for borrowed money;
(f) Mortgaged, pledged, or subjected to any material lien, lease,
security interest or other charge or encumbrance any of its material
properties or assets, tangible or intangible;
(g) Acquired or disposed of any material assets or properties;
(h) Forgiven or canceled any material debts or claims, or waived any
material rights;
(i) Entered into any material transaction other than in the ordinary
course of business;
10
(j) Granted to any officer or salaried employee or any other employee
any material increase in compensation in any form or made any material
payments for severance or termination pay;
(k) Entered into any material commitment for capital expenditures for
additions to plant, property or equipment; or
(l) Agreed, whether in writing or otherwise, to take any action
described in this Section.
3.11. TITLE TO PROPERTY; CONDITION.
Except as set forth on Schedule 3.11 of the Shareholders' Disclosure
Schedule, ANS has good and merchantable right, title and interest in and to all
of the machinery, equipment, terminals, computers, vehicles, personal property
and all other assets reflected in the Latest Balance Sheet and all of the assets
purchased or otherwise acquired since the date of the Latest Balance Sheet for
ANS (except for such assets as may have been sold or otherwise disposed of in
the ordinary course of business since the date of the most recent balance sheet
included in the Financial Statements), subject to no mortgage, pledge, lien or
security interest of any kind or nature (whether or not of record). All of such
ANS assets are set forth under Section 3.11 of the Shareholders' Disclosure
Schedule. Except as set forth on Section 3.11 of the Shareholders' Disclosure
Schedule, the items of equipment and other personal property of ANS that are
necessary to the conduct of the business of ANS are in good operating condition
and repair and fit for the intended purpose thereof, ordinary wear and tear
excepted, and no material maintenance, replacement or repair has been deferred
or neglected. ANS owns no real property. Section 3.11 of Shareholders'
Disclosure Schedule sets forth a list of all leased real property and includes
the name of the lessor, the monthly rent amount, the duration (including renewal
options) and includes a copy of each of the leases related thereto.
3.12. INVENTORIES.
Except as set forth on Section 3.12 of the Shareholders' Disclosure
Schedule, all inventory of ANS reflected in the Latest Balance Sheet consists of
a quality and quantity usable and salable in the ordinary course of business,
and the present quantities of all inventory of ANS are reasonable in the present
circumstances of the business of ANS as currently conducted, except for items of
obsolete or below standard quality, all of which are immaterial to the overall
financial condition of ANS taken as a whole.
3.13. RECEIVABLES AND PAYABLES.
Except as set forth on Section 3.13 of the Shareholders' Disclosure
Schedule, (i) ANS has good right, title and interest in and to all its accounts
receivable, notes receivable and other receivables reflected in the Latest
Balance Sheet and those acquired and generated since the date of the Latest
Balance Sheet for ANS included in the Financial Statements (except for those
paid since such date); (ii) none of such receivables is subject to any mortgage,
pledge, lien or security interest of any kind or nature (whether or not of
record); (iii) except to the extent of applicable reserves shown in the Latest
Balance Sheet included in the Financial Statements, all of the receivables owing
to ANS constitute valid and enforceable claims arising from bona fide
transactions in the ordinary course of business, and ANS has not received any
written or oral claims or refusals to pay, or granted any rights of set-off,
against any thereof; and (iv) to the knowledge of ANS and each of the
Shareholders, there is no reason why any
11
receivable will not be collected in accordance with its terms, other than for
such receivables which are not in excess of the reserves established therefor
and reflected in the most recent balance sheet for ANS included in the Financial
Statements. Included in the Shareholders' Disclosure Schedule under Section
3.13 is a schedule of the aging of accounts receivable of ANS (by monthly
integrals) as of September 30, 1996 prepared in accordance with generally
accepted accounting procedures consistently applied.
3.14. TAX RETURNS.
For the purposes of this Agreement, the term "TAXES" means all federal,
state, local, foreign and other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, service, service
use, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, real or personal property, windfall profits, customs, duties or other
taxes, fees, assessments, charges or levies of any kind whatever, together with
any interest and any penalties, additions to tax or additional amounts with
respect thereto, and the term "TAX" means any one of the foregoing Taxes. In
addition, the term "TAX RETURNS" means all returns, declarations, reports,
statements and other documents required to be filed with any Authority in
respect of Taxes, and the term "TAX RETURN" means any one of the foregoing Tax
Returns. To the knowledge of ANS and each of the Shareholders, except as set
forth on Section 3.14 of the Shareholders' Disclosure Schedule:
(a) LIABILITY FOR TAXES. ANS and the Shareholders have been
responsible for and will pay all Taxes attributable to or arising from the
business and operations of ANS conducted on or before the Closing Date and
will be responsible for their own income and franchise Taxes, if any,
arising from the transactions contemplated by this Agreement, except as
provided in Sections 4.11 and 8.2(c) hereof.
(b) FILING OF TAX RETURNS. All Tax Returns required to be filed on
or prior to the date hereof by ANS or the Shareholders with respect to
Taxes of ANS have been properly completed and duly filed on a timely basis
and in correct form. As of the time of filing, the foregoing Tax Returns
correctly reflected the facts regarding the income, business, assets,
operations, activities, status or other matters of ANS and the Shareholders
or any other information required to be shown thereon. There is no
material omission, deficiency, error, misstatement or misrepresentation,
whether innocent, intentional or fraudulent, in any Tax Return filed by ANS
or the Shareholders for any period. Any Tax Returns filed after the date
hereof, but on or before the Closing Date, will conform with the provisions
of this Section 3.15(b).
(c) PAYMENT OF TAXES. With respect to all amounts of Taxes imposed
upon ANS or the Shareholders, or for which ANS or the Shareholders are or
could be liable, whether to taxing Authorities (as, for example, under Law)
or to other persons or entities (as, for example, under tax allocation
agreements), with respect to all taxable periods or portions of periods
ending on or before the Closing Date, all applicable Tax Laws and
agreements have been or will be fully complied with, and all such amounts
of Taxes required to be paid by ANS or the Shareholders to taxing
Authorities or others on or before the date hereof have been duly paid or
will be paid on or before the Closing Date; the reserves for all such Taxes
reflected in the Latest Balance Sheet are adequate and there are no liens
for such Taxes upon any property or assets of ANS. ANS have withheld and
remitted all amounts required to be withheld and remitted by it in respect
of Taxes. Except as set forth in Section 3.14(c) of the Shareholders'
Disclosure Schedule, no Shareholder of ANS, which is an S Corporation under
the Code, has since the Latest Balance Sheet received any dividend or other
distribution (whether in cash, stock or property or any
12
combination thereof) in respect of any such Companies capital stock or
equity interest to pay Taxes.
(d) AUDITS AND EXTENSIONS. Except as set forth in Section 3.14(d) of
the Shareholders' Disclosure Schedule, neither the federal Tax Returns of
ANS (and of the Shareholders to the extent the operations of ANS are
reflected in the Shareholders' Tax Returns) nor any state or local or
foreign Tax Return of ANS have been examined by the Internal Revenue
Service or any similar state or local or foreign Authority and, except to
the extent shown therein, all deficiencies asserted as a result of such
examinations have been paid or finally settled and no issue has been raised
by the Internal Revenue Service or any similar state or local or foreign
Authority in any such examination which, by application of similar
principles, reasonably could be expected to result in a proposed deficiency
for any other period not so examined. Except as set forth in the
Shareholders' Disclosure Schedule, all deficiencies and assessments of
Taxes of ANS (or any of the Shareholders' to the extent attributable to the
business or operations of ANS) resulting from an examination of any Tax
Returns by any Authority have been paid and there are no pending
examinations currently being made by any Authority nor has there been any
written or oral notification to ANS or the Shareholders of any intention to
make an examination of any Taxes by any Authority. Except as set forth in
Section 3.14(d) of the Shareholders' Disclosure Schedule, there are no
outstanding agreements or waivers extending the statutory period of
limitations applicable to any Tax Return for any period.
(e) INDEPENDENT CONTRACTORS AND EMPLOYEES. For purposes of computing
Taxes and the filing of Tax Returns, ANS have not failed to treat as
"employees" any individual providing services to ANS who would be
classified as an "employee" under the applicable rules or regulations of
any Authority with respect to such classification.
(f) S CORPORATION ELECTIONS. ANS has had in effect a valid election
under Code Section 1362 to be treated as an "S corporation" for each of
their taxable years since inception. Neither ANS nor any of the
Shareholders have taken any action to revoke that election. Neither ANS
nor any of the Shareholders are aware of any basis or the existence of any
facts that would permit the Internal Revenue Service to revoke that
election for any period prior to the Closing Date. Except as described on
Section 3.14(f) of the Shareholders' Disclosure Schedule, since the
effective date of ANS' election as an S corporation to and including the
Closing Date, ANS will not have incurred or become liable for the payment
of any corporate-level income tax, or any related penalties or interest.
3.15. INSURANCE.
Section 3.15 of the Shareholders' Disclosure Schedule contains an accurate
and complete list of all policies of fire and other casualty, general liability,
theft, life, workers' compensation, health, directors and officers liability,
business interruption and other forms of insurance owned or held by ANS,
specifying the insurer, the policy number, the term of the coverage and, in the
case of any "claims made" coverage, the same information as to predecessor
policies for the previous five years. All present policies are in full force
and effect and all premiums that are due as of the date hereof and as of the
Closing Date with respect thereto have been paid. Neither ANS nor any of the
Shareholders has been denied any form of insurance and no policy of insurance
has been revoked or rescinded during the past three years, except as described
under Section 3.15 on the Shareholders' Disclosure Schedule.
13
3.16. BENEFIT PLANS.
Except as set forth on Section 3.16 the Shareholders' Disclosure Schedule:
(a) Neither ANS, any of the Shareholders nor any other "person"
within the meaning of Section 7701(a)(1) of the Code, that together with
ANS are considered a single employer pursuant to Sections 414(b), (c), (m)
or (o) of the Code or Sections 3(5) or 4001(b)(1) of ERISA (a "ANS
Affiliated Organization") sponsors, maintains, contributes to, is required
to contribute to or has any liability of any nature, whether known or
unknown, direct or indirect, absolute or contingent, with respect to, any
"employee pension benefit plan" ("ANS Pension Plan") as such term is
defined in Section 3(2) of ERISA, including without limitation, any such
plan that is excluded from coverage by Section 4(b)(5) of ERISA or is a
"Multiemployer Plan" within the meaning of Section 3(37) or 4001(a)(3) of
ERISA. Each such ANS Pension Plan has been operated in all material
respects in accordance with its terms and in compliance with the applicable
provisions of ERISA, the Code and all other applicable Law. All Pension
Plans which ANS operates as plans that are intended to qualify under the
provisions of Section 401(a) of the Code satisfy in all material respects
in form and operation the requirements of Section 401(a) and all other
sections of the Code incorporated therein, including without limitation
Sections 401(k) and 401(m) of the Code.
(b) Neither ANS nor any ANS Affiliated Organization has any liability
of any nature, whether known or unknown, direct or indirect, or absolute or
contingent, to any ANS Pension Plan, the Pension Benefit Guaranty
Corporation ("PBGC") or any other person, arising directly or indirectly
under Title IV of ERISA. No "reportable event," within the meaning of
Section 4043(b) of ERISA, has occurred with respect to any ANS Pension
Plan. Neither ANS nor any ANS Affiliated Organization has ceased
operations at any facility or withdrawn from any ANS Pension Plan in a
manner which could subject ANS or ANS Affiliated Organization to liability
under Section 4062(e), 4063 or 4064 of ERISA. Neither ANS nor any ANS
Affiliated Organization maintains, contributes to, has participated in or
agreed to participate in any Multiemployer Plan (either pension or
welfare). Neither ANS nor any ANS Affiliated Organization currently has
any obligation, known or unknown, direct or indirect, absolute or
contingent, to make any withdrawal liability payment to any Multiemployer
Plan. Neither ANS nor any ANS Affiliated Organization has been a party to
a sale of assets to which Section 4204 of ERISA applied with respect to
which it could incur any withdrawal liability (including any contingent or
secondary withdrawal liability) to any Multiemployer Plan. Neither ANS nor
any ANS Affiliated Organization has incurred (or has experienced an event
that will, within the ensuing 12 months, result in) a "complete withdrawal"
or "partial withdrawal," as such terms are defined respectively in Sections
4203 and 4205 of ERISA, with respect to a Multiemployer Plan, and nothing
has occurred that could result in such a complete or partial withdrawal.
(c) Neither ANS nor any ANS Affiliated Organization sponsors,
maintains, contributes to, is required to contribute to or has any
liability of any nature, whether known or unknown, direct or indirect, or
absolute or contingent, with respect to, any "employee welfare benefit
plan" ("ANS Welfare Plan") as such term is defined in Section 3(1) of
ERISA, whether insured or otherwise. Each ANS Welfare Plan has been
operated in all material respects in accordance with its terms and in
compliance with the applicable provisions of ERISA, the Code and all other
applicable Law. Neither ANS nor any ANS Affiliated Organization has
established or contributed to, is required to contribute to or has any
liability of any nature, whether known or unknown, direct or indirect, or
absolute or contingent, with respect to any "voluntary employees'
14
beneficiary association" within the meaning of Section 501(c)(9) of the
Code, "welfare benefit fund" within the meaning of Section 419 of the Code,
"qualified asset account" within the meaning of Section 419 of the Code,
"qualified asset account" within the meaning of Section 419A of the Code or
"multiple employer welfare arrangement" within the meaning of Section 3(40)
or ERISA. No ANS Welfare Plan which is a Multiemployer Plan within the
meaning of Section 3(37) of ERISA imposes any post-withdrawal liability or
contribution obligations upon ANS or ANS Affiliated Organizations. Neither
ANS nor any ANS Affiliated Organization maintains, contributes to or has
any material liability of any nature, whether known or unknown, direct or
indirect, or absolute or contingent, with respect to medical, health, life
or other welfare benefits for present or future terminated employees or
their spouses or dependents other than as required by Part 6 of Subtitle B
of Title I of ERISA or any comparable state law.
(d) Neither ANS nor any ANS Affiliated Organization is a party to,
maintains, contributes to, is required to contribute to or has or could
have any liability of any nature, whether known or unknown, direct or
indirect, or absolute or contingent, with respect to, any bonus plan,
incentive plan, stock plan or any other current or deferred compensation
(other than current salary or wages paid in the form of cash), separation,
retention, severance, paid time off or similar agreement, arrangement or
policy, or any individual employment or consulting or personal service
agreement, other than a ANS Pension Plan or ANS Welfare Plan ("ANS
Compensation Plans"). Each ANS Compensation Plan has been operated in all
material respects in accordance with its terms and in compliance with the
applicable provisions of all applicable Law.
(e) There are no facts or circumstances which could, directly or
indirectly, subject ANS or any ANS Affiliated Organization to any excise
tax or other liability under Chapters 43, 46 or 47 of Subtitle D of the
Code, penalty tax or other liability under Chapter 68 of Subtitle F of the
Code or civil penalty arising under Section 502 of ERISA.
(f) Full payment has been made of all amounts which ANS or any ANS
Affiliated Organization are required, under applicable Law, the terms of
any ANS Pension Plan, ANS Welfare Plan or ANS Compensation Plan, or any
agreement relating to any ANS Pension Plan or ANS Welfare Plan or ANS
Compensation Plan, to have paid as a contribution, premium or other
remittance thereto or benefit thereunder. Each ANS Pension Plan that is
subject to the minimum funding standards of Section 412 of the Code and
Section 302 of ERISA meets those standards and has not incurred any
accumulated funding deficiency within the meaning of Section 412 or 418B of
the Code and no waiver of any minimum funding requirement under Section 412
of the Code has been applied for or obtained with respect to any such ANS
Pension Plan. ANS and each ANS Affiliated Organization have made adequate
provisions for reserves or accruals in accordance with generally accepted
accounting principles to meet contribution, benefit or funding obligations
arising under applicable Law or the terms of any ANS Pension Plan or ANS
Welfare Plan or ANS Compensation Plan or related agreement. There will be
no change on or before Closing in the operation of any ANS Pension Plan,
ANS Welfare Plan or ANS Compensation Plan or any documents with respect
thereto which will result in an increase in the benefit liabilities under
such plans, except as may be required by law.
(g) ANS and each ANS Affiliated Organization have timely complied in
all material respects with all reporting and disclosure obligations with
respect to the ANS Pension Plans, ANS Welfare Plans and ANS Compensation
Plans imposed by Title I of ERISA or other applicable Law.
15
(h) There are no pending or, to the knowledge of the Shareholders and
ANS, threatened audits, investigations, claims, suits, grievances or other
proceedings, and there are no facts that could give rise thereto,
involving, directly or indirectly, any ANS Pension Plan, ANS Welfare Plan
or ANS Compensation Plan, or any rights or benefits thereunder, other than
the ordinary and usual claims for benefits by participants, dependents or
beneficiaries.
(i) The transactions contemplated herein do not result in the
acceleration of accrual, vesting, funding or payment of any contribution or
benefit under any ANS Pension Plan, ANS Welfare Plan or ANS Compensation
Plan. No payment made or to be made to any individual pursuant to any
agreement with ANS or any ANS Affiliated Organization could reasonably be
expected individually or collectively (and assuming that any contingencies
or conditions occur in a manner that maximizes payment) to give rise to a
"parachute payment" within the meaning of Section 280G of the Code.
(j) No action or omission of ANS or any director, officer, employee,
or agent thereof in any way restricts, impairs or prohibits Parent, or ANS
or any successor from amending, merging, or terminating any ANS Pension
Plan, ANS Welfare Plan or ANS Compensation Plan in accordance with the
express terms of any such plan and applicable law.
(k) Section 3.16(k) on the Shareholders' Disclosure Schedule lists
and ANS has delivered to the Parent true and complete copies of (i) all ANS
Pension, ANS Welfare and ANS Compensation Plans and related trust
agreements or other agreements or contracts evidencing any funding vehicle
with respect thereto, (ii) the three most recent annual reports on Treasury
Form 5500, including all schedules and attachments thereto, with respect to
any Plan for which such a report is required, (iii) the three most recent
actuarial reports with respect to any ANS Pension Plan that is a "defined
benefit plan" within the meaning of Section 414(j) of the Code, (iv) the
form of summary plan description, including any summary of material
modifications thereto or other modifications communicated to participants,
currently in effect with respect to each ANS Pension Plan, ANS Welfare Plan
or ANS Compensation Plan, (v) the most recent determination letter with
respect to each ANS Pension Plan intended to qualify under Section 401(a)
of the Code and the full and complete application therefor submitted to the
Internal Revenue Service and (vi) accurate estimates of the withdrawal
liability which would be imposed by any Multiemployer Plan (either pension
or welfare) if ANS and ANS Affiliated Organizations were to withdraw from
the Plan in a complete withdrawal, the date as of which such estimates are
made and the factors used to make such estimates.
3.17. BANK ACCOUNTS; POWERS OF ATTORNEY.
Section 3.17 of the Shareholders' Disclosure Schedule sets forth: (i) the
names of all financial institutions, investment banking and brokerage houses,
and other similar institutions at which ANS maintains accounts, deposits, safe
deposit boxes of any nature, and the names of all persons authorized to draw
thereon or make withdrawals therefrom and a description of such accounts; (ii)
the names of all persons or entities holding general or special powers of
attorney from ANS and copies thereof.
3.18. CONTRACTS AND COMMITMENTS; NO DEFAULT.
(a) Except as set forth on Section 3.18(a) of the Shareholders'
Disclosure Schedule, ANS:
16
1. does not have any written or oral contract, commitment,
agreement or arrangement with any person which (1) requires payments
individually in excess of $10,000 annually or in excess of $20,000
over its term (including without limitation periods covered by any
option to extend or renew by either party) and (2) is not terminable
on thirty (30) days' or less notice without cost or other liability;
2. does not pay any person or entity cash remuneration at the
annual rate (including without limitation guaranteed bonuses) of more
than $10,000 for services rendered as a consultant;
3. is not restricted by agreement from carrying on its business
or any part thereof in any geographical area or from competing in any
line of business with any person or entity;
4. is not subject to any obligation or requirement to provide
funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any person or entity;
5. is not party to any agreement, contract, commitment or loan
requiring payments in excess of $20,000 over its term and not
terminable by ANS on thirty (30) days' or less notice without cost or
liability to which any of its directors, officers or any of the
Shareholders or any "affiliate" or "associate" (as defined in Rule 405
as promulgated under the Securities Act of 1933) thereof is a party;
6. is not subject to any contract, commitment, agreement or
arrangement with any "disqualified individual" (as defined in Section
280G(c) of the Code) which contains any severance or termination pay
liabilities which would result in a disallowance of the deduction for
any "excess parachute payment" (as defined in Section 280G(b)(1) of
the Code) under Section 280G of the Code; and
7. does not have any distributorship, dealer, manufacturer's
representative, franchise or similar sales contract relating to the
payment of a commission by ANS.
(b) True and complete copies (or summaries, in the case of oral
items) of all items disclosed pursuant to Section 3.18(a) have been made
available to Parent and its counsel for review. Except as set forth under
Section 3.18(b) on the Shareholders' Disclosure Schedule, to the knowledge
of ANS and each of the Shareholders, all such items are valid and
enforceable by and against ANS and the Shareholders, as the case may be, in
accordance with their respective terms; neither ANS nor any of the
Shareholders is in breach, violation or default, in any material respect,
in the performance of any of its obligations thereunder, and no facts or
circumstances exist which, whether with the giving of due notice, lapse of
time, or both, would constitute a breach, violation or default, in any
material respect, thereunder or thereof; and, to the knowledge of ANS and
each of the Shareholders, no other parties thereto are in breach, violation
or default, in any material respect, thereunder or thereof, and no facts or
circumstances exist which, whether with the giving of due notice, lapse of
time, or both, would constitute such a breach, violation or default in any
material respect thereunder or thereof.
17
3.19. ORDERS, COMMITMENTS AND RETURNS.
Except as set forth on Section 3.19 of the Shareholders' Disclosure
Schedule and except as are not material to the business of ANS, all accepted and
unfulfilled orders for the sale of products and the performance of services
entered into by ANS and all outstanding contracts or commitments for the
purchase of supplies, materials and services by or from ANS were made in bona
fide transactions in the ordinary course of business. Except as set forth on
Section 3.19 of the Shareholders' Disclosure Schedule, to the knowledge of ANS
and each of the Shareholders, there are no claims against ANS to return products
by reason of alleged over-shipments, defective products or otherwise, or of
products in the hands of customers, retailers or distributors under an
understanding that such products would be returnable.
3.20. LABOR MATTERS.
Section 3.20 of the Shareholders' Disclosure Schedule sets forth a list of
all employees and includes their position, wage and salary information and years
of service with ANS for each person. Except as set forth on Section 3.20 of the
Shareholders' Disclosure Schedule and except as are not material to the business
of ANS: (i) to the knowledge of ANS and each of the Shareholders, ANS is and
has at all times been in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, including without limitation any such laws respecting
employment discrimination and occupational safety and health requirements, and
has not and is not engaged in any unfair labor practice; (ii) there is no unfair
labor practice complaint against either ANS or any of the Shareholders pending
or, to the knowledge of ANS and each of the Shareholders, threatened before the
National Labor Relations Board or any other comparable government authority;
(iii) there is no labor strike, dispute, slowdown or stoppage actually pending
or, to the knowledge of ANS and each of the Shareholders, threatened against or
directly affecting ANS; (iv) no collective bargaining agreement is binding and
in force against either ANS or any of the Shareholders or currently being
negotiated by either ANS or any of the Shareholders; (v) ANS is not delinquent
in payments to any person for any wages, salaries, commissions, bonuses or other
direct or indirect compensation for any services performed by them or amounts
required to be reimbursed to such persons, including without limitation any
amounts due under any Pension Plan, Welfare Plan or Compensation Plan; and (vi)
within the 12 month period prior to the date hereof there has not been any
expression of intention to ANS by any officer or key employee to terminate such
employment.
3.21. DEALERS AND SUPPLIERS.
Except as set forth on Section 3.21 of the Shareholders' Disclosure
Schedule, there has not been in the 12 month period prior to the date hereof any
material adverse change in the business relationship of ANS with any dealer of
or supplier to ANS.
3.22. LICENSES AND OTHER OPERATING RIGHTS.
To the knowledge of ANS and each of the Shareholders, ANS has all material
licenses, permits, approvals and other governmental authorizations necessary to
own its properties and assets and to carry on its business as presently being
conducted (individually and collectively, the "License(s)"). All such Licenses
are listed under Section 3.22 on the Shareholders' Disclosure Schedule and,
except as set forth therein, ANS has complied in all material respects with the
provisions of each License. Each such License is valid and in full force and
effect. Except as set forth on Section 3.22 of the Shareholders' Disclosure
Schedule, the continuation, validity and effectiveness of each such License will
in no way be
18
affected by the consummation of the transactions contemplated by this Agreement.
To the knowledge of ANS and each of the Shareholders, ANS has not breached any
material provision of, nor is in default in any material respect under the terms
of, any such License and no action or proceeding looking to or contemplating the
revocation or suspension of any such License is pending or threatened.
3.23. COMPLIANCE WITH LAW.
Except as set forth on Section 3.23 of the Shareholders' Disclosure
Schedule, and without limiting the scope of any other representations or
warranties contained in this Agreement, but without intending to expand the
scope of such other representations and warranties, to the knowledge of ANS and
each of the Shareholders, the assets, properties, business and operations of ANS
are and have been in compliance in all material respects when taken as a whole
with all laws applicable to the ownership and conduct of their assets,
properties, business and operations.
3.24. PHYSICAL ASSETS OF BUSINESS.
The physical assets owned or leased by ANS constitute all of the physical
assets held for use or used primarily in connection with ANS' business and are
adequate to carry on such business as presently conducted.
3.25. INTELLECTUAL PROPERTY RIGHTS.
ANS owns the industrial and intellectual property rights, including without
limitation the patents, patent applications, patent rights, trademarks,
trademark applications, trade names, service marks, service xxxx applications,
copyrights, computer programs and other computer software, inventions, know-how,
trade secrets, technology, proprietary processes and formulae (collectively,
"Intellectual Property Rights") described on Section 3.25 of the Shareholders'
Disclosure Schedule. Except as set forth on Section 3.25 of the Shareholders'
Disclosure Schedule, the use of all Intellectual Property Rights necessary or
required for the conduct of the businesses of ANS as presently conducted does
not and will not infringe or violate or allegedly infringe or violate the
intellectual property rights of any person or entity. Except as described on
Section 3.25 of the Shareholders' Disclosure Schedule, ANS does not own or use
any Intellectual Property Rights pursuant to any written license agreement or
has not granted any person or entity any rights, pursuant to a written license
agreement or otherwise, to use the Intellectual Property Rights.
3.26. BUSINESS GENERALLY.
To each of the Shareholder's knowledge, except for general economic or
industry trends or events, there has been no event, transaction or information
which has come to the attention of any of the Shareholders which, as it relates
directly to the business of ANS, could, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business of ANS.
3.27. HAZARDOUS SUBSTANCES AND HAZARDOUS WASTES.
Except as set forth on Section 3.27 of the Shareholders' Disclosure
Schedule:
(a) To each of the Shareholder's knowledge, there is not now, nor has
there ever been, any disposal, release or threatened release of Hazardous
Materials (as defined below) on, from or under properties now or ever owned
or leased by or to ANS (the "Properties"). There
19
has not been generated by or on behalf of ANS any Hazardous Material. To
each of the Shareholder's knowledge, no Hazardous Material has been
disposed of or allowed to be disposed of on or off any of the Properties
during the period that ANS owned or leased the property which may give rise
to a clean-up responsibility, personal injury liability or property damage
claim against ANS or ANS being named a potentially responsible party for
any such clean-up costs, personal injuries or property damage or create any
cause of action by any third party against ANS. For purposes of this
subsection, the terms "disposal," "release," and "threatened release" shall
have the definitions assigned thereto by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, and the term
"Hazardous Material" means any hazardous or toxic substance, material or
waste or pollutants, contaminants or asbestos containing material which is
or becomes regulated by any Authority in any jurisdiction in which any of
the Properties is located. The term "Hazardous Material" includes without
limitation any material or substance which is (i) defined as a "hazardous
waste" or a "hazardous substance" under applicable Law, (ii) designated as
a "hazardous substance" pursuant to Section 311 of the Federal Water
Pollution Control Act, (iii) defined as a "hazardous waste" pursuant to
Section 1004 of the Federal Resource Conservation and Recovery Act, or (iv)
defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended.
(b) To each of the Shareholder's knowledge, none of the Properties is
(or, with respect to past Properties and Properties of former subsidiaries,
was at the time of disposition) in violation of any Law (with respect to
past Properties and Properties of former subsidiaries, Laws in effect at
the time of disposition) relating to industrial hygiene or to the
environmental conditions on, under or about such Properties, including
without limitation soil and ground water condition and there are (or at the
time of disposition were) no underground tanks or related piping, conduits
or related structures. During the period that ANS owned or leased the
Properties, neither ANS nor, to the knowledge of each of the Shareholders,
any third party used, generated, manufactured or stored on, under or about
such Properties or transported to or from such Properties any Hazardous
Materials and there has been no litigation brought or threatened against
ANS or any settlements reached by ANS with any third party or third parties
alleging the presence, disposal, release or threatened release of any
Hazardous Materials on, from or under any of such Properties.
3.28. BROKERS.
Neither ANS nor any of its directors, officers or employees has employed
any broker, finder, or financial advisor or incurred any liability for any
brokerage fee or commission, finder's fee or financial advisory fee, in
connection with the transactions contemplated hereby, nor is there any basis
known to either ANS or any of the Shareholders for any such fee or commission to
be claimed by any person or entity.
3.29. ACCURACY OF INFORMATION.
After diligent review, no representation or warranty by either ANS or any
of the Shareholders in this Agreement contains or will contain any untrue
statement of material fact or omits or will omit to state any material fact
necessary in order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading as of the date of the
representation or warranty.
20
3.30. SHAREHOLDERS REPRESENTATIONS.
In addition to the foregoing representations of each of the Shareholders,
each of the Shareholders hereby represents and warrants to Parent as follows,
provided that such representations and warranties are made by each Shareholder
individually and not with respect to any other Shareholder:
(a) The Shareholders have the legal capacity to enter into this
Agreement and to carry out the transactions contemplated herein, including
without limitation the legal capacity to execute, deliver and perform the
agreements or contracts, if any, required by Article 5 hereof to be
executed and delivered by the Shareholders as a condition to the Closing.
The execution, delivery and performance of this Agreement by the
Shareholders and the consummation of the transactions contemplated herein
will not conflict with, or constitute a default under any note, bond,
lease, mortgage, indenture, license, contract, franchise, permit,
instrument or other agreement or obligation to which the Shareholders are
party or violate any law, judgment, decree, order, regulation or ordinance
by or to which the Shareholders are a bound or subject. No consent,
approval, order or authorization of or from, or registration, notification,
declaration or filing with any individual, governmental or regulatory
authority or other person or entity is required to be obtained by the
Shareholders for the Shareholders to surrender the shares of capital stock
of ANS held by the Shareholders.
(b) The Shareholders received the Eltrax Reports and had sufficient
time to review and consider such Eltrax Reports.
(c) The Shareholders are acquiring the shares of Parent's Common
Stock to be acquired by him pursuant to the Merger for such Shareholders'
sole account (and such Shareholders will be the sole beneficial owners
thereof) for the purpose of investment and not with a view to distribution
thereof within the meaning of the 1933 Act, nor with any present intention
of distribution or selling such shares of Parent Common Stock in connection
with any such distribution, and such Shareholders understand that such
shares have not been registered under the Securities Act and therefore
cannot be resold unless they are registered under the 1933 Act or unless an
exemption from registration is available.
(d) Notwithstanding any other provision in this Agreement to the
contrary, each of the Shareholders further agrees that he will not sell,
transfer or otherwise dispose of such shares of Parent Common Stock before
Parent publicly discloses, based on the audited financial statements of the
Parent and the Surviving Corporation on a combined basis, the combined
earnings of Parent and Surviving Corporation which includes at least a
thirty (30) day period of combined operations. Shareholders and Parent
acknowledge and agree that it is anticipated that such first public
disclosure by Parent will be through Parent's filing of its annual report
on Form 10-KSB for the fiscal year ended December 31, 1996, which filing is
due on March 31, 1997.
(e) The Shareholders have been afforded an opportunity to ask
questions of and receive answers from representatives of Parent concerning
the terms and conditions of the transactions contemplated by this Agreement
and to obtain any additional information as such Shareholders have
requested in writing to verify the accuracy of the Eltrax Reports and
copies of any exhibits identified in such documents that such Shareholders
have requested.
21
ARTICLE
4.
COVENANTS
4.1. ANS' AGREEMENTS AS TO SPECIFIED MATTERS.
Except as specifically set forth on the Shareholders' Disclosure Schedule,
and except in the ordinary course of business and consistent with past practice,
and except as may be expressly authorized by this Agreement or otherwise agreed
in writing by Parent, from the date hereof until the Closing, ANS will not:
(a) Amend its articles or certificate of incorporation or bylaws;
(b) Borrow or agree to borrow any funds;
(c) Incur, assume, suffer or become subject to, whether directly or
by way of guarantee or otherwise, any claims, obligations, liabilities or
loss contingencies which, individually or in the aggregate, are material to
the conduct of the businesses of ANS and its Subsidiaries or have or would
have a material adverse effect on the financial condition of ANS and its
Subsidiaries;
(d) Pay, discharge or satisfy any claims, liabilities or obligations;
(e) Permit or allow any of its properties or assets material to the
operation of its businesses to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any kind, except
liens that relate to current taxes and assessments not yet due and payable
or that are being contested in good faith;
(f) Write down the value of any inventory or write off as
uncollectible any notes or accounts receivable or any trade accounts or
trade notes;
(g) Cancel or amend any debts, waive any claims or rights or sell,
transfer or otherwise dispose of any properties or assets, other than for
such debts, claims, rights, properties or assets which, individually or in
the aggregate, are not material to the conduct of its businesses;
(h) License, sell, transfer, pledge, modify, disclose, dispose of or
permit to lapse any right to the use of any intellectual property rights
other than for such intellectual property rights which, individually or in
the aggregate, are not material to the conduct of its businesses;
(i) (A) Terminate, enter into, adopt, institute or otherwise become
subject to or amend in any material respect any collective bargaining
agreement or employment or similar agreement or arrangement with any of its
directors, officers or employees; (B) terminate, enter into, adopt,
institute or otherwise become subject to or amend in any material respect
any Compensation Plan; (C) contribute, set aside for contribution or
authorize the contribution of any amounts for any such Compensation Plan
except as required (and not discretionary) by the terms of such
Compensation Plan; or (D) grant or become obligated to grant any general
increase in the compensation of any directors, officers or employees
(including without limitation any such increase pursuant to any
Compensation Plan);
22
(j) Make or enter into any commitment for capital expenditures for
additions to property, plant or equipment individually in excess of
$5,000.00;
(k) (A) Declare, pay or set aside for payment any dividend or other
distribution in respect of its capital stock or other securities (including
without limitation distributions in redemption or liquidation) or redeem,
purchase or otherwise acquire any shares of its capital stock or other
securities; (B) issue, grant or sell any shares of its capital stock or
equity securities of any class, or any options, warrants, conversion or
other rights to purchase or acquire any such shares or equity securities or
any securities convertible into or exchangeable for such shares or equity
securities, except issuance of ANS Common Stock pursuant to the exercise of
stock options outstanding on the date hereof; (C) become a party to any
merger, exchange, reorganization, recapitalization, liquidation,
dissolution or other similar corporate transaction; or (D) organize any new
subsidiary, acquire any capital stock or other equity securities or other
ownership interest in, or assets of, any person or entity or otherwise make
any investment by purchase of stock or securities, contributions to
capital, property transfer or purchase of any properties or assets of any
person or entity;
(l) Pay, lend or advance any amounts to, or sell, transfer or lease
any properties or assets to, or enter into any agreement or arrangement
with, any director, officer, employee or shareholder;
(m) Terminate, enter into or amend in any material respect any item
identified in Section 3.19 of the Shareholders' Disclosure Schedule, or
take any action or omit to take any action which will cause a breach,
violation or default (however defined) under any such item; or
(n) Agree, whether in writing or otherwise, to take any action
described in this Section.
4.2. CONDUCT OF ANS' BUSINESS.
ANS will maintain its assets and properties and carry on its businesses and
operations only in ordinary course in substantially the same manner as planned
and previously operated; and ANS will use and the Shareholders will cause it to
use its best efforts to preserve intact its business organizations, existing
business relationships (including without limitation its relationships with
officers, employees, dealers, distributors, independent contractors, customers
and suppliers), goodwill and going concern value.
4.3. NO SOLICITATION OF ALTERNATE TRANSACTION BY THE SHAREHOLDERS OR
ANS.
From the execution of this Agreement until the Closing Date or earlier
termination of this Agreement, ANS and the Shareholders will not, and will use
their best efforts to ensure that ANS' directors, officers and employees,
independent contractors, consultants, counsel, accountants, investment advisors
and other representatives and agents will not, directly or indirectly, solicit,
initiate or encourage discussions or negotiations with, provide any nonpublic
information to, or enter into any agreement with, any third party concerning (or
concerning the business of ANS and its Subsidiaries in connection with) any
tender offer (including a self tender offer), exchange offer, merger,
consolidation, sale of substantial assets or of a significant amount of assets,
sale of securities, acquisition of beneficial ownership of or the right to vote
securities representing more than five percent (5%) of the total voting power of
ANS, liquidation, dissolution or similar transactions involving ANS or any
division of ANS (such proposals,
23
announcements or transactions being called herein "Acquisition Proposals").
Notwithstanding the foregoing, it is permissible to (1) communicate with (but
not solicit, initiate, encourage or negotiate with, other than pursuant to
clause (2) of this sentence) any third party; (2) if any third party makes a
Bona Fide Unsolicited Offer, furnish information concerning ANS and its
Subsidiaries or their businesses to, and negotiate with, such third party. For
the purposes of this Section, a "Bona Fide Unsolicited Offer" will mean any
unsolicited written inquiry, proposal or offer respecting a potential
Acquisition Proposal, other than any such inquiry, proposal or offer that, after
due consideration thereof by the Board of Directors of ANS, is expressly
determined by such Board of Directors not to be reasonably likely to result in
the receipt of a consideration superior to the consideration to be paid by
Parent as described herein; and (3) furnish information concerning either ANS
and its Subsidiaries or their businesses to a third party making a Bona Fide
Unsolicited Offer, or from taking any other action, if the Board of Directors of
ANS concludes, after due consideration which will include consultation with
legal counsel, that there is a fiduciary duty to furnish such information or
take such other action. Each of ANS and the Shareholders will promptly inform
Parent of any Bona Fide Unsolicited Offer, including the terms thereof and the
identity of the person or entity making such offer.
4.4. FULL ACCESS TO PARENT.
From the execution of this Agreement until the Closing Date or earlier
termination of this Agreement, ANS and the Shareholders will afford to Parent
and its directors, officers, employees, counsel, accountants, investment
advisors and other authorized representatives and agents free and full access to
the facilities, properties, books and records of ANS and its Subsidiaries in
order that Parent may have full opportunity to make such investigations as it
desires to make of the affairs of ANS and the Shareholders provided, however,
that any such investigation will be conducted in such a manner as not to
interfere unreasonably with business operations; and ANS and its Subsidiaries
will furnish such additional financial and operating data and other information
as Parent, from time to time, reasonably requests, including without limitation
access to the working papers of their independent certified public accountants;
and, provided, further, that any such investigation will not affect or otherwise
diminish or obviate in any respect any of the representations and warranties of
ANS or Shareholders herein.
4.5. CONFIDENTIALITY.
The parties hereto will not use, or permit the use of, any of the
information relating to any other party hereto furnished to it in connection
with the transactions contemplated herein ("Information") in a manner or for a
purpose detrimental to such other party or otherwise than in connection with the
transaction, and that they will not disclose, divulge, provide or make
accessible (collectively, "Disclose"), or permit the Disclosure of, any of the
Information to any person or entity, other than their responsible directors,
officers, employees, investment advisors, accountants, counsel and other
authorized representatives and agents, except as may be required by judicial or
administrative process or, in the opinion of such party's regular counsel, by
other requirements of Law, unless the disclosing party first obtains the prior
written consent of the other parties hereto. The term "Information" as used
herein will not include any information relating to a party which the party
disclosing such information can show: (i) to have been in its possession prior
to its receipt from another party hereto; (ii) to be now or to later become
generally available to the public through no fault of the disclosing party;
(iii) to have been available to the public at the time of its receipt by the
disclosing party; (iv) to have been received separately by the disclosing party
in an unrestricted manner from a person entitled to disclose such information;
or (v) to have been developed independently by the disclosing party without
regard to any information received in connection with this transaction. The
parties hereto also will promptly return to the party from whom originally
received all original and duplicate copies of written materials containing
24
Information should the transactions contemplated herein not occur. This Section
4.5 survives Closing and any termination of this Agreement.
4.6. CONSUMMATION; CONSENTS; REMOVAL OF OBJECTIONS.
Subject to the terms and conditions herein provided, each of the parties
hereto will use its good faith reasonable efforts to take or cause to be taken
such actions and do or cause to be done such things necessary, proper or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable, the transactions contemplated hereby, including without
limitation; (i) obtaining all Consents of any person or entity, whether private
or governmental, required in connection with the consummation of the
transactions contemplated herein; (ii) the removal or satisfaction, if possible,
of any objections to the validity or legality of the transactions contemplated
herein; and (iii) the satisfaction of the conditions to consummation of the
transactions contemplated hereby. Notwithstanding the foregoing, ANS' or the
Shareholders' refusal to provide economic incentives to induce, or to commence
litigation to compel, any of the foregoing will not be deemed a failure of ANS
or the Shareholders to use its good faith reasonable efforts.
4.7. FURTHER ASSURANCES; COOPERATION; NOTIFICATION.
(a) Each party hereto will, before, at and after Closing, execute and
deliver such instruments and take such other actions as the other party or
parties, as the case may be, may reasonably require in order to carry out
the intent of this Agreement.
(b) At all times from the date hereof until the Closing, each party
will promptly notify the other in writing of the occurrence of any event
which it reasonably believes will or may result in a failure by such party
to satisfy the conditions specified in Article 5 and Article 6 hereof.
4.8. SUPPLEMENTS TO SHAREHOLDERS' DISCLOSURE SCHEDULE.
Prior to the Closing, ANS and the Shareholders will supplement or amend the
Shareholders' Disclosure Schedule with respect to any event or development which
is necessary to correct any information on the Shareholders' Disclosure Schedule
or in any representation and warranty of ANS or Shareholders which has been
rendered inaccurate by reason of such event or development. No such supplement
or amendment will be deemed to cure any inaccuracy in any representation and
warranty of ANS or Shareholders for purposes of Section 5.1 hereof. If, however
the Closing occurs, all such supplements or amendments will cure for all
purposes any inaccuracy in any representation and warranty of ANS or
Shareholders which would have existed without such amendment or supplement.
4.9. PUBLIC ANNOUNCEMENTS.
None of the parties hereto will make any public announcement with respect
to the transactions contemplated herein without the prior written consent of the
other parties, which consent will not be unreasonably withheld or delayed;
provided, however, that any of the parties hereto may at any time make any
announcements which are required by applicable Law so long as the party so
required to make an announcement promptly upon learning of such requirement
notifies the other parties of such requirement and discusses with the other
parties in good faith the exact proposed wording of any such announcement.
25
4.10. REGISTRATION RIGHTS.
Parent agrees to provide the Shareholders with the registration rights with
respect to Parent Common Stock they receive as Merger Consideration as set forth
on Exhibit 4.10 hereto.
4.11. RESTRICTIVE LEGEND.
Each of the Shareholders consents to the placing of the following legend on
the certificate or certificates for shares of Parent Common Stock to be issued
to each such Shareholder in connection with the Merger:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE
SECURITIES LAWS AND MAY BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED ONLY IF A REGISTRATION STATEMENT WITH RESPECT TO SUCH
TRANSACTION IS IN EFFECT PURSUANT TO THE PROVISIONS OF SUCH LAWS OR
IF, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER,
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS IS
AVAILABLE.
4.12. MAINTENANCE OF AND ACCESS TO BOOKS AND RECORDS.
For three (3) years after the Closing, the Parent will cause the Surviving
Corporation to maintain all of the financial, accounting, tax and other books
and records of ANS with respect to any period prior to the Closing and to
cooperate with and provide the Shareholders and their authorized representatives
reasonable access to any and all of such records during normal business hours.
4.13. PREPARATION OF TAX RETURNS.
The Parent and the Shareholders will cooperate and jointly prepare and/or
cause ANS to prepare, at the Parent's expense, any and all of ANS' income tax
returns, consents, statements, and/or elections necessary for the period (the
"Interim Period") beginning on January 1, 1996 and ending immediately prior to
the Closing. Any and all such income tax returns for the Interim Period will be
based upon an election by ANS under Section 1377(a)(2) of the Code to have the
rules under Section 1377(a)(1) of the Code apply as if ANS' taxable year
consisted of two taxable years, one of which coincides with the Interim Period
and one of which begins immediately after the Interim Period.
4.14. AMENDMENT OF PRIOR RETURNS; AUDIT.
Unless advised by the Parent's accountants or tax advisers that an
amendment is required under applicable tax laws or regulations, the Surviving
Corporation will not file any amended federal, state, local or other tax return,
or take any other action which would increase the taxable income or tax
liability of any of the Shareholders for any period prior to the Closing without
the written consent of the Shareholders, which consent will not be unreasonably
withheld. In the event of an audit of any of the tax returns of ANS for any
period prior to the Closing, the Parent will provide copies of any and all
notices of such audit and correspondence related to such audit to the
Shareholders, who will have the right to
26
participate in the conduct of the audit, and any appeal or other proceeding
resulting therefrom. Neither the Parent nor the Surviving Corporation will
agree to any assessment, adjustment or other modification of the tax returns or
tax liability of ANS for any period prior to the Closing without the prior
written consent of the Shareholders, which consent will not be unreasonably
withheld.
4.15. SUCCESSORS AND ASSIGNS.
The Parent will not assign or otherwise transfer control of the Surviving
Corporation or approve any liquidation, merger, consolidation, or sale of
substantially all of the assets of the Surviving Corporation, unless the person
or persons acquiring control of the Surviving Corporation, or the
successor-in-interest of the Surviving Corporation in the event of any such
action other than a transfer of the Surviving Corporation's Stock, agrees to the
foregoing covenants set forth in Section 4.12 to 4.15 hereof.
4.16. BOARD POSITION.
Parent agrees to take all necessary action to appoint one of the
Shareholders, as mutually selected by Parent and the Shareholders, to serve on
the Board of Directors of Parent effective the day after Closing.
4.17. SCHEDULE 13D.
The Shareholders will cause to be filed a Schedule 13D with the Commission
in accordance with applicable rules of the Commission, which Schedule 13D will
include disclosure consistent with Section 3.30 hereof and this Agreement.
4.18. ACCESS TO SHAREHOLDERS.
The Parent will immediately provide the Shareholders with copies of all
documents that would constitute Eltrax Reports and that are filed with the
Commission after the date hereof and prior to the Closing. The Parent will
afford the Shareholders an opportunity to ask questions of and receive answers
from representatives of the Parent concerning the terms and conditions of the
transactions contemplated by this Agreement and to obtain any additional
information as such Shareholders may request in writing to verify the accuracy
of the Eltrax Reports and copies of any exhibits identified in such documents
that such Shareholders may request.
4.19. REPAYMENT OF ANS EXISTING CREDIT LINE.
As soon as practicable following Closing, and in any event within one
business day after Closing, Parent will cause to be repaid in its entirety the
full amount outstanding under that certain Loan and Security Agreement dated
July 9, 1993, as amended, by and between ANS and Branch Banking and Trust
Company.
4.20. NO ACTIONS INCONSISTENT WITH POOLING.
Each of the parties to this Agreement agrees that it will take no action
that is inconsistent with pooling of interests accounting treatment under APB
Opinion No.16.
27
ARTICLE
5.
CONDITIONS TO OBLIGATION OF PARENT AND ANS ACQUISITION SUB
Notwithstanding any other provision of this Agreement to the contrary, the
obligation of Parent and ANS Acquisition Sub to effect the transactions
contemplated herein will be subject to the satisfaction at or prior to the
Closing of each of the following conditions:
5.1. REPRESENTATIONS AND WARRANTIES TRUE.
The representations and warranties of ANS and the Shareholders contained in
this Agreement, including without limitation in the Shareholders' Disclosure
Schedule initially delivered to Parent as Exhibit 3.1 (without giving effect to
all supplements and amendments delivered to Parent pursuant to Section 4.8),
will be in all material respects true, complete and accurate as of the date when
made and at and as of the Closing as though such representations and warranties
were made at and as of such time, except for changes specifically permitted or
contemplated by this Agreement, and except insofar as the representations and
warranties relate expressly and solely to a particular date or period, in which
case they will be true and correct in all material respects at the Closing with
respect to such date or period.
5.2. PERFORMANCE.
Each of ANS and the Shareholders will have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by ANS and the
Shareholders on or prior to the Closing.
5.3. REQUIRED APPROVALS AND CONSENTS.
(a) All action required by law and otherwise to be taken by the Board
of Directors of ANS and the Shareholders to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will have been duly and validly taken.
(b) All Consents of or from all Authorities required hereunder to
consummate the transactions contemplated herein, and all Consents of or
from all persons and entities other than Authorities that are identified
under Section 3.6 of the Shareholders' Disclosure Schedule will have been
delivered, made or obtained, and Parent will have received copies thereof.
5.4. ADVERSE CHANGES.
No material adverse change will have occurred in the businesses of ANS.
5.5. NO PROCEEDING OR LITIGATION.
No suit, action, investigation, inquiry or other proceeding by any
Authority or other person or entity will have been instituted or threatened
which questions the validity or legality of the transactions contemplated hereby
or which, if successfully asserted, would individually or in the aggregate
otherwise have a material adverse effect on the conduct of the businesses of
ANS.
28
5.6. OPINION OF COUNSEL FOR ANS AND SHAREHOLDERS.
Parent will have received an opinion of Xxxxxxxxx & Xxxxx, P.L.L.C.,
Raleigh, North Carolina, counsel for ANS and the Shareholders, dated the Closing
Date, substantially in the form and substance set forth as Exhibit 5.6 hereto.
5.7. LEGISLATION.
No Law will have been enacted which prohibits, restricts or delays the
consummation of the transactions contemplated hereby or any of the conditions to
the consummation of such transaction.
5.8. ACCEPTANCE BY COUNSEL TO PARENT.
The form and substance of all legal matters contemplated hereby and of all
papers delivered hereunder will be reasonably acceptable to Xxxxxxxxxxx Xxxxx &
Xxxxxxxx, counsel to Parent.
5.9. CERTIFICATES.
Parent will have received such certificates of ANS officers and of each of
the Shareholders, in a form and substance reasonably satisfactory to Parent,
dated the Closing Date, to evidence compliance with the conditions set forth in
this Article 5 and such other matters as may be reasonably requested by Parent.
5.10 DUE DILIGENCE.
Parent will have received all information requested by it pursuant to
Section 4.4 hereof and will be satisfied with all financial information and with
all other aspects of ANS and that no information acquired during due diligence
could, within the reasonable opinion of Parent, result in a material adverse
change in the business or prospects of ANS following the Closing.
5.11. ESCROW AGREEMENT.
The parties thereto will have executed and delivered the Escrow Agreement.
5.12. EMPLOYMENT AND NON-COMPETITION AGREEMENTS.
Shareholders will have executed and delivered to Parent the employment and
non-competition agreements in the form of agreement included as Exhibit 5.12.
5.13. POOLING ADVICE.
Parent will have received verbal advice from Coopers & Xxxxxxx LLP advising
that the Merger should qualify as a pooling of interests transaction under APB
Opinion No. 16.
29
ARTICLE
6.
CONDITIONS TO THE OBLIGATION OF ANS AND SHAREHOLDERS
Notwithstanding anything in this Agreement to the contrary, the obligation
of ANS and Shareholders to effect the transactions contemplated herein will be
subject to the satisfaction at or prior to the Closing of each of the following
conditions:
6.1. REPRESENTATIONS AND WARRANTIES TRUE.
The representations and warranties of Parent contained in this Agreement
will be in all material respects true, complete and accurate as of the date when
made and at and as of the Closing, as though such representations and warranties
were made at and as of such time, except for changes permitted or contemplated
in this Agreement, and except insofar as the representations and warranties
relate expressly and solely to a particular date or period, in which case they
will be true and correct in all material respects at the Closing with respect to
such date or period.
6.2. PERFORMANCE.
Parent will have performed and complied in all material respects with all
agreements, covenants, obligations and conditions required by this Agreement to
be performed or complied with by Parent at or prior to the Closing.
6.3. REQUIRED APPROVALS AND CONSENTS.
(a) All action required to be taken by Parent to authorize the
execution, delivery and performance of this Agreement by Parent and the
consummation of the transactions contemplated hereby will have been duly
and validly taken.
(b) All Consents of or from all Authorities required hereunder to
consummate the transactions contemplated herein, and all Consents of or
from all persons and entities other than Authorities that are identified
under Section 6.3(b) on the Parent's Disclosure Schedule will have been
delivered, made or obtained, and ANS will have received copies thereof.
6.4. NO PROCEEDING OR LITIGATION.
No suit, action, investigation, inquiry or other proceeding by any
Authority or other person or entity will have been instituted or threatened
which questions the validity or legality of the transactions contemplated hereby
or which, if successfully asserted, would individually or in the aggregate
otherwise have a material adverse effect on the conduct of the business of the
Parent.
6.5. CERTIFICATES.
Parent will have furnished ANS and Shareholders with such certificates of
Parent officers, in a form and substance reasonably acceptable to ANS and
Shareholders, dated the Closing Date, to evidence compliance with the conditions
set forth in this Article 6 and such other matters as may be reasonably
requested by ANS.
30
6.6. OPINIONS OF PARENT COUNSEL.
Parent will have delivered to the Shareholders a legal opinion, and a
separate tax opinion as to the tax-free nature of the Merger, from Xxxxxxxxxxx
Xxxxx & Xxxxxxxx, Minneapolis, Minnesota, counsel to Parent, dated the Closing
Date, in the form and substance set forth as Exhibit 6.6 hereto.
6.7. ESCROW AGREEMENT.
The parties thereto will have executed and delivered the Escrow Agreement
and the appropriate deposit obligations with respect thereto will have been
satisfied.
6.8. ACCEPTANCE BY COUNSEL TO SHAREHOLDERS.
The form and substance of all legal matters contemplated hereby and of all
papers delivered hereunder will be reasonably acceptable to Xxxxxxxxx & Xxxxx,
P.L.L.C., counsel to ANS and Shareholders.
6.9. EMPLOYMENT AND NON-COMPETITION AGREEMENT WITH SHAREHOLDERS.
Parent will have executed and delivered to Shareholders the employment and
non-competition agreements in the form of agreement included as Exhibit 5.12
hereto.
6.10. ADVERSE CHANGES.
No material adverse change will have occurred in the business of Parent
since the date hereof.
6.11. LEGISLATION.
No Law will have been enacted which prohibits, restricts or delays the
consummation of the transaction contemplated hereby or any of the conditions to
the consummation of such transaction.
6.12. DUE DILIGENCE.
The Shareholders will have received all information requested by them
pursuant to Section 4.18 hereof and will be satisfied with all financial
information and with all other aspects of Parent and no other information newly
acquired between the date hereof and the Closing (which information was not made
available to Shareholders prior to the date hereof) could, within the reasonable
opinion of the Shareholders, result in a material adverse change in the business
or prospects of the Parent following the Closing.
6.13. MARKET PRICE OF PARENT COMMON STOCK.
The per share market price of Parent Common Stock will not have closed on a
trading day within seven (7) days prior to the Closing Date below $5.00 per
share as reported by the Nasdaq Stock Market.
31
6.14. LETTER CONCERNING CLOSING ON NEW CREDIT LINE.
Shareholders will have received a letter from State Street Bank and Trust
Company ("State Street"), in form and substance acceptable to the ANS
Shareholders, advising that that certain Revolving Credit Agreement by and among
State Street, Parent and Nordata, Inc. has been closed.
ARTICLE
7.
TERMINATION AND ABANDONMENT
7.1. METHODS OF TERMINATION.
This Agreement may be terminated and the transactions contemplated herein
may be abandoned at any time notwithstanding approval thereof by the
Shareholders, but not later than the Closing:
(a) By mutual written consent of Parent, ANS Acquisition Sub, ANS and
Shareholders; or
(b) By the Parent and the ANS Acquisition Sub on or after the
Termination Date or such later date as may be established pursuant to
Section 1.4, if any of the conditions provided for in Article 5 has not
been satisfied or waived in writing by Parent prior to such date; or
(c) By ANS and Shareholders on or after the Termination Date or such
later date as may be established pursuant to Section 1.4, if any of the
conditions provided for in Article 6 have not been satisfied or waived in
writing by ANS and Shareholders prior to such date;
(d) By the Parent and the ANS Acquisition Sub or ANS and Shareholders
if the Closing has not occurred on or before November 15, 1996; or
(e) By the Parent and the ANS Acquisition Sub at any time prior to
the Closing in the event that the Parent determines that the results of its
investigation and due diligence under Section 5.10 hereof is
unsatisfactory.
7.2. PROCEDURE UPON TERMINATION.
In the event of termination and abandonment pursuant to Section 7.1(a),
written notice thereof will forthwith be given to the other party or parties,
and the provisions of this Agreement (except to the extent provided in
Section 9.1) will terminate, and the transactions contemplated herein will be
abandoned, without further action by any party hereto. If this Agreement is
terminated as provided herein: (i) each party will, upon request, redeliver all
documents, work papers and other material of any other party (and all copies
thereof) relating to the transactions contemplated herein, whether so obtained
before or after the execution hereof, to the party furnishing the same; (ii) the
confidentiality obligations of Section 4.5 will continue to be applicable; and
(iii) except as provided in this Section, no party will have any liability for a
breach of any representation, warranty, agreement, covenant or other provision
of this Agreement, unless such breach was due to a willful or bad faith action
or omission of such party or any representative, agent, employee or independent
contractor thereof.
32
ARTICLE
8.
SURVIVAL AND INDEMNIFICATION
8.1. SURVIVAL.
The representations and warranties of each of the parties hereto will
survive the Closing until six (6) months after the Closing Date.
8.2. INDEMNIFICATION BY PARENT.
Parent agrees to indemnify each of the Shareholders from and against any
and all loss, liability or damage suffered or incurred by it including any and
all costs and expenses, including without limitation reasonable legal fees and
expenses, in connection with enforcing the indemnification rights of
Shareholders pursuant to this Section 8.2 by reason of (i) any untrue
representation of, or breach of warranty by, Parent in any part of this
Agreement, and (ii) any nonfulfillment of any covenant, agreement or undertaking
of Parent in any part of this Agreement which by its terms is to remain in
effect after the Closing and has not been specifically waived in writing at the
Closing by the party or parties hereof entitled to the benefits thereof,
PROVIDED, HOWEVER, that no claim for indemnity may be made pursuant to this
Section six (6) months after the Closing Date.
8.3. INDEMNIFICATION BY SHAREHOLDERS.
The Shareholders jointly and severally agree to indemnify Parent, its
directors, officers, employees and agents, from and against any and all loss,
liability or damage suffered or incurred by it including any and all costs and
expenses, including without limitation reasonable legal fees and expenses, in
connection with enforcing the indemnification rights of ANS pursuant to this
Section 8.3 by reason of (i) any untrue representation of, or breach of warranty
by ANS or any Shareholder in this Agreement, and (ii) any and all loss,
liability or damage suffered or incurred by it by reason of any nonfulfillment
of any covenant, agreement or undertaking of ANS or any Shareholder in this
Agreement which by its terms is to remain in effect after the Closing and has
not been specifically waived in writing at the Closing by the party or parties
hereto entitled to the benefits thereof, PROVIDED, HOWEVER, that no claim for
indemnity may be made pursuant to this Section after six months following the
Closing Date.
8.4. LIMITATION ON INDEMNIFICATION.
Except as provided in Section 8.5(b), the Shareholders' aggregate
indemnification obligations under this Article 8 will be limited to the 50,000
shares of Parent Common Stock that constitute the Escrowed Shares (as defined in
Section 1.5(b) hereof) (the "Indemnification Cap"). The Shareholders will not
be personally liable for any indemnification amount other than on a joint and
several basis to the extent of their interest in the Escrowed Shares.
8.5. INDEMNIFICATION DE MINIMIS THRESHOLD.
(a) Except as expressively provided otherwise herein, and subject to
the provisions of Section 8.5(b), neither of the Shareholders nor the
Parent as the case may be, will be entitled to indemnification under this
Agreement unless the aggregate of all claims with respect to untrue
representations or breaches of warranties hereunder is more than One
Hundred Thousand Dollars ($100,000) (the "Threshold Amount"). When the
aggregate amount of all such indemnification
33
claims hereunder equals or exceeds the Threshold Amount, the Parent or the
Shareholders, as the case may be, will be entitled to full indemnification
of all claims, including the One Hundred Thousand Dollars ($100,000) that
amounted to the Threshold Amount. Once the aggregate amount of all
indemnification claims hereunder equal or exceed the Threshold Amount, the
Shareholders or the Parent, as the case may be, will be entitled to full
indemnification for all claims. The parties hereto agree that the
Threshold Amount is not a deductible amount, nor that the Threshold Amount
will be deemed to be a definition of "material" for any purpose in this
Agreement.
(b) If any of the Shareholders or ANS have breached a representation,
warranty, covenant or agreement, and such breaching party had actual
knowledge of the breach of the representation, warranty, covenant or
agreement herein, or had actual knowledge of the potential or probable
loss, liability or damage (based on actual knowledge of the facts and
circumstances giving rise to such loss, liability or damage) without
disclosing such in the Shareholders' Disclosure Schedule on or prior to the
Closing Date, the Shareholders will jointly and severally promptly pay
Parent the full indemnification claim without regard to the Threshold
Amount set forth in this Section, and without regard to the overall
limitation on amount as set forth in Section 8.4.
8.6. CLAIMS FOR INDEMNIFICATION.
The parties intend that all indemnification claims hereunder be made as
promptly as practicable by the party seeking indemnification (the "Indemnified
Party") and that in the case of Parent all such claims be made pursuant to the
terms and provisions of the Escrow Agreement until and including the Final
Termination Date, as defined in the Escrow Agreement. After the Final
Termination Date, all such claims of Parent, including without limitation
pre-Final Termination Date claims which, on or prior to the Final Termination
Date, were admitted as valid pursuant to Escrow Agreement procedures or are or
become the subject of an arbitration award in favor of the Indemnified Party but
which are not satisfied pursuant to the Escrow Agreement, will be presented to
the Shareholders who, in the case of admitted claims and arbitration awards as
aforesaid, will pay such claims and awards, and, in the case of all other
claims, will proceed according to the remaining terms and provisions of this
Section. Whenever any claim arises for indemnification hereunder (other than a
claim to be submitted pursuant to aforesaid terms and provisions), the
Indemnified Party will promptly notify the party from whom indemnification is
sought (the "Indemnifying Party") of the claim and, when known, the facts
constituting the basis for such claim. In the case of any such claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceedings of a third party (a "Third Party Claim"), the notice to the
Indemnifying Party will specify, if known, the amount or an estimate of the
amount of the liability arising therefrom. The Indemnifying Party shall have
the right to dispute and defend all Third Party Claims and thereafter so defend
and pay any adverse final judgment or award or settlement amount in regard
thereto. Such defense shall be controlled by the Indemnifying Party, and the
cost of such defense shall be borne by the Indemnifying Party, except that the
Indemnitee shall have the right to participate in such defense at its own
expense, and PROVIDED, HOWEVER that the Indemnifying Party must first
acknowledge that the claim is a bona fide indemnification claim under this
Agreement. The Indemnitee shall cooperate in all reasonable respects in the
defense of any such claim, including making personnel, books, and records
relevant to the claim available to the Indemnifying Party, without charge,
except for reasonable out-of-pocket expenses. If the Indemnifying Party fails
to take action within thirty (30) days as set forth above, then the Indemnitee
shall have the right to pay, compromise or defend any Third Party Claim and to
assert the amount of any payment on the Third Party Claim plus the reasonable
expenses of defense or settlement as the claim. The Indemnitee shall also have
the right, exercisable in good faith, to
34
take such action as may be necessary to avoid a default prior to the assumption
of the defense of the Third Party Claim by the Indemnifying Party, and any
reasonable expenses incurred by Indemnitee so acting shall be paid by the
Indemnifying Party. Except as otherwise provided herein, the Indemnified Party
will not settle or compromise any Third Party Claim for which it is entitled to
indemnification hereunder without the prior written consent of the Indemnifying
Party, which will not be unreasonably withheld. If the Indemnifying Party is of
the opinion that the Indemnified Party is not entitled to indemnification, or is
not entitled to indemnification in the amount claimed in such notice, it will
deliver, within ten (10) business days after the receipt of such notice, a
written objection to such claim and written specifications in reasonable detail
of the aspects or details objected to, and the grounds for such objection. If
the Indemnifying Party filed timely written notice of objection to any claim for
indemnification, the validity and amount of such claim will be determined by
arbitration pursuant to Section 9.12 hereof. If timely notice of objection is
not delivered or if a claim by an Indemnified Party is admitted in writing by an
Indemnifying Party or if an arbitration award is made in favor of an Indemnified
Party, the Indemnified Party, as a non-exclusive remedy, will have the right to
set-off the amount of such claim or award against any amount yet owed, whether
due or to become due, by the Indemnified Party or any subsidiary thereof to any
Indemnifying Party by reason of this Agreement or any agreement or arrangement
or contract to be entered into at the Closing.
[This Space Intentionally Left Blank]
ARTICLE
9.
MISCELLANEOUS PROVISIONS
9.1. EXPENSES.
Each of the parties hereto will bear its own costs, fees and expenses in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, including without limitation fees, commissions and expenses
payable to brokers, finders, investment bankers, consultants, exchange or
transfer agents, attorneys, accountants and other professionals, whether or not
the transactions contemplated herein is consummated, and in particular, ANS will
pay all fees and expenses payable to Xxxxxxxxx & Xxxxx PLLC; and Parent will pay
the fees and expenses of Coopers & Xxxxxxx, Xxxxxxxxxxx Xxxxx & Xxxxxxxx and the
escrow agent under the Escrow Agreement.
In addition, in the event that the Merger is not consummated because of
Parent's failure to close even after all conditions to Closing as set forth in
Article 5 (Conditions to Obligations of Parent) hereof have been satisfied,
Parent will promptly pay the Shareholders the sum of Two Hundred Fifty Thousand
Dollars ($250,000) as liquidated damages. In addition, in the event the Merger
is not consummated because of Shareholders' failure to close even after all
conditions to ANS' and Shareholders' obligations
35
have been satisfied as set forth in Article 6 (Conditions to Obligations of ANS
and the Shareholders) hereof, Shareholders will promptly pay Parent the sum of
Two Hundred Fifty Thousand Dollars ($250,000) as liquidated damages. The
parties hereto agree and acknowledge that the aforesaid amounts payable to each
party constitutes liquidated damages and not a penalty and represents the
parties' efforts to reasonably estimate a fair compensation for the foreseeable
losses that might be suffered by Parent in the event the transactions
contemplated herein will not be consummated for any of the above-described
reasons.
9.2. AMENDMENT AND MODIFICATION.
Subject to applicable Law, this Agreement may be amended or modified by the
parties hereto at any time prior to the Closing with respect to any of the terms
contained herein; provided, however, that all such amendments and modifications
must be in writing duly executed by all of the parties hereto.
9.3. WAIVER OF COMPLIANCE; CONSENTS.
Any failure of a party to comply with any obligation, covenant, agreement
or condition herein may be expressly waived in writing by the party entitled
hereby to such compliance, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition will not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. No single or partial exercise of a right or remedy will preclude any
other or further exercise thereof or of any other right or remedy hereunder.
Whenever this Agreement requires or permits the consent by or on behalf of a
party, such consent will be given in writing in the same manner as for waivers
of compliance.
9.4. NO THIRD PARTY BENEFICIARIES.
Nothing in this Agreement will entitle any person or entity (other than a
party hereto and his, her or its respective successors and assigns permitted
hereby) to any claim, cause of action, remedy or right of any kind.
9.5. NOTICES.
All notices, requests, demands and other communications required or
permitted hereunder will be made in writing and will be deemed to have been duly
given and effective: (i) on the date of delivery, if delivered personally;
(ii) on the earlier of the fourth (4th) day after mailing or the date of the
return receipt acknowledgment, if mailed, postage prepaid, by certified or
registered mail, return receipt requested; or (iii) on the date of transmission,
if sent by facsimile, telecopy, telegraph, telex or other similar telegraphic
communications equipment:
If to either ANS or the Shareholders:
To: Atlantic Network Systems
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
36
With a copy to:
Xxxxxxxxx & Xxxxx, P.L.L.C.
0000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: J. Xxxxxx Xxxxx, III, Esq.
Fax: (000) 000-0000
or to such other person or address as either ANS or the Shareholders will
furnish to the other parties hereto in writing in accordance with this Section.
If to Parent or the Acquisition Sub:
To: Eltrax Systems, Inc.
Rush Lake Business Park
0000 Xxx Xxxxxxx 0
Xx. Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxx III
Chief Executive Officer
Fax: 000-000-0000
With a copy to:
Xxxxxxxxxxx Xxxxx & Xxxxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
or to such other person or address as either Parent or the Acquisition Sub will
furnish to the other parties hereto in writing in accordance with this Section.
9.6. ASSIGNMENT.
This Agreement and all of the provisions hereof will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder will be assigned (whether voluntarily, involuntarily,
by operation of law or otherwise) by any of the parties hereto without the prior
written consent of the other parties, provided, however, that Parent may assign
this Agreement upon notice to ANS and each of the Shareholders, in whole or in
any part, and from time to time, to a wholly-owned, direct or indirect,
subsidiary of Parent, if Parent remains bound hereby).
9.7. GOVERNING LAW.
This Agreement and the legal relations among the parties hereto will be
governed by and construed in accordance with the internal substantive laws of
the State of Minnesota (without regard to the laws of conflict that might
otherwise apply) as to all matters, including without limitation matters of
validity, construction, effect, performance and remedies.
37
9.8. COUNTERPARTS.
This Agreement may be executed simultaneously in one or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
9.9. HEADINGS.
The table of contents and the headings of the sections and Sections of this
Agreement are inserted for convenience only and will not constitute a part
hereof.
9.10. ENTIRE AGREEMENT.
The Disclosure Schedules and the exhibits and other writings referred to in
this Agreement and in the Disclosure Schedules or any such exhibit or other
writing are part of this Agreement, together with this Agreement they embody the
entire agreement and understanding of the parties hereto in respect of the
transactions contemplated by this Agreement and together they are referred to
as "this Agreement" or the "Agreement". There are no restrictions, promises,
warranties, agreements, covenants or undertakings, other than those expressly
set forth or referred to in this Agreement. This Agreement supersedes all prior
and contemporaneous oral and written agreements and understandings between the
parties with respect to the transaction or transactions contemplated by this
Agreement (including without limitation the letter of intent dated September 3,
1996 between Parent, ANS, and Shareholders and all amendments and extensions
thereof). Provisions of this Agreement will be interpreted to be valid and
enforceable under applicable Law to the extent that such interpretation does not
materially alter this Agreement; provided, however, that if any such provision
will become invalid or unenforceable under applicable Law such provision will be
stricken to the extent necessary and the remainder of such provisions and the
remainder of this Agreement will continue in full force and effect.
9.11. INJUNCTIVE RELIEF.
It is expressly agreed among the parties hereto that monetary damages would
be inadequate to compensate a party hereto for any breach by any other party of
its covenants and agreements in Sections 4.3 and 4.5 hereof. Accordingly, the
parties agree and acknowledge that any such violation or threatened violation
will cause irreparable injury to the other and that, in addition to any other
remedies which may be available, such party will be entitled to injunctive
relief against the threatened breach of Sections 4.3 and 4.5 hereof or the
continuation of any such breach without the necessity of proving actual damages
and may seek to specifically enforce the terms thereof.
9.12. ARBITRATION.
With the sole exception of the injunctive relief contemplated by
Section 9.11 hereof, any controversy or claim arising out of or relating to this
Agreement, or the making, performance or interpretation hereof, including
without limitation alleged fraudulent inducement hereof, will be settled by
binding arbitration in Minneapolis, Minnesota by a panel of three arbitrators in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. Judgment upon any arbitration award may be entered in any court
having jurisdiction thereof and the parties consent to the jurisdiction of the
courts of the State of Minnesota for this purpose.
38
9.13. LIST OF DEFINED TERMS.
Reference is made to Exhibit 9.13 for a listing and location of terms
defined in this Agreement.
9.14. ATTORNEYS FEES.
If any arbitration, litigation or similar proceedings are brought by any
party to enforce any obligation or to pursue any remedy under this Agreement,
the party prevailing in any such arbitration, litigation or similar proceedings
will be entitled to costs of collection, if any, and reasonable attorneys fees
incurred in connection with such proceedings and in collecting or enforcing any
award granted therein.
9.15. KNOWLEDGE OF ANS AND SHAREHOLDERS.
Where any representation or warranty contained in this Agreement is
expressly qualified by reference to the knowledge of ANS and the Shareholders,
such phrase will include the actual present knowledge of either one or all of
the Shareholders assuming that such Shareholders have made reasonable diligent
inquiry as to the matters that are the subject of the representations and
warranties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PARENT: ANS:
------ ---
Eltrax Systems, Inc. Atlantic Network Systems, Inc.
By: /s/ Xxxx X. Xxxxxxx III By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------- ---------------------------------
Xxxx X. Xxxxxxx III Xxxxxxx X. Xxxxxxxx
Its: Chief Executive Officer Its: President
ANS ACQUISITION SUB: By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
ANS Acquisition Corporation Xxxxxx X. Xxxxxx
Its: Secretary
By: /s/ Clunet X. Xxxxx
---------------------------------
Clunet X. Xxxxx
President
SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ B. Xxxxxx Xxxxxx
------------------------------------
B. Xxxxxx Xxxxxx
39
Exhibit 9.13
LIST OF DEFINED TERMS
TERM PAGE
---- ----
1992 Plan......................................................................5
1993 Act.......................................................................5
1995 Plan......................................................................5
Acquisition Proposals.........................................................24
affiliate.....................................................................17
Agreement..................................................................1, 38
ANS............................................................................1
ANS Acquisition Sub............................................................1
ANS Acquisition Sub Common Stock...............................................2
ANS Affiliated Organization...................................................14
ANS Common Stock...............................................................2
ANS Compensation Plans........................................................15
ANS Pension Plan..............................................................14
ANS Welfare Plan..............................................................14
Articles of Merger.............................................................1
associate.....................................................................17
Authorities....................................................................6
Authority......................................................................6
Bona Fide Unsolicited Offer...................................................24
claims made...................................................................13
Closing........................................................................2
Closing Date...................................................................2
Code...........................................................................1
Commission.....................................................................2
complete withdrawal...........................................................14
Consent........................................................................9
Consents.......................................................................9
defined benefit plan..........................................................16
disposal......................................................................20
disqualified individual.......................................................17
Effective Time.................................................................2
Eltrax Reports.................................................................6
employee......................................................................13
employee pension benefit plan.................................................14
employee welfare benefit plan.................................................14
employees.....................................................................13
Escrow Agreement...............................................................3
Escrowed Shares................................................................3
excess parachute payment......................................................17
Financial Statements...........................................................9
Hazardous Material............................................................20
hazardous substance...........................................................20
hazardous waste...............................................................20
Indemnification Cap...........................................................33
Indemnified Party.............................................................34
Indemnifying Party............................................................34
Information...................................................................24
Intellectual Property Rights..................................................19
Latest Balance Sheet...........................................................9
Laws...........................................................................6
License(s)....................................................................18
x1
loss contingency...........................................................6, 10
material......................................................................33
Merger.........................................................................1
Merger Consideration...........................................................2
Multiemployer Plan............................................................14
multiple employer welfare arrangement.........................................15
NCBCA..........................................................................1
parachute payment.............................................................16
Parent.........................................................................1
Parent Common Stock............................................................2
Parent's Disclosure Schedule...................................................4
partial withdrawal............................................................14
PBGC..........................................................................14
person........................................................................14
Plan of Merger.................................................................1
qualified asset account.......................................................15
release.......................................................................20
reportable event..............................................................14
S corporation.................................................................13
Shareholders...................................................................1
Shareholders' Disclosure Schedule..............................................7
Surviving Corporation..........................................................1
Surviving Corporation Common Stock.............................................2
TAX...........................................................................12
TAX RETURN....................................................................12
TAX RETURNS...................................................................12
TAXES.........................................................................12
Termination Date...............................................................2
Third Party Claim.............................................................34
this Agreement................................................................38
threatened release............................................................20
Threshold Amount..............................................................33
voluntary employees' beneficiary association..................................15
welfare benefit fund..........................................................15
EXHIBITS
Exhibit 1.1 Articles of Merger - ANS Acquisition Sub into ANS
Exhibit 1.5(a) Allocation of Merger Consideration
Exhibit 1.5(b) Escrow Agreement
Exhibit 1.10 List of Directors and Officers of ANS Acquisition Sub
Exhibit 2.1 Parent's Disclosure Schedule
Exhibit 2.5 Parent's Commission Reports
Exhibit 3.1 Shareholders' Disclosure Schedule
Exhibit 3.7 Financial Statements of ANS
Exhibit 4.10 Registration Rights of Shareholders
Exhibit 5.6 Form of Opinion of Counsel for ANS and Shareholders
Exhibit 5.12 Form of Employment and Non-Competition Agreements
Exhibit 6.6 Form of Opinion of Counsel for the Parent and ANS
Acquisition Sub
Exhibit 9.13 List of Defined Terms
Exhibit 1.5(a)
ALLOCATION OF MERGER CONSIDERATION
Xxxxxxx X. Xxxxxxxx 403,750
Xxxxxx X. Xxxxxx 403,750
B. Xxxxxx Xxxxxx 142,500
Exhibit 2.1
PARENT'S DISCLOSURE SCHEDULE
SECTION 2.6
1. Parent filed its Amendment No. 1 to its Current Report on Form 8-K on
August 5, 1996, less than one business day after it was required to be
filed at the SEC. Parent has obtained a telephone advisory clearance from
the Commission Staff, Office of General Counsel, Xx. Xxxxxxx X. Xxxxxx that
Parent is nonetheless eligible to use Form S-3 for resale purposes.
2. On August 15, 1996, Parent filed its Quarterly Report on Form 10-QSB for
the fiscal quarter ended June 30, 1996, which was one day after it was due
to be filed on August 14, 1996. Parent's financial printer filed a Form
12b-25 extension indicating that the delay was due to the printer's XXXXX
difficulties. Parent has been verbally advised by the Commission Staff
that the use of such Form, although technically not appropriate for a
printer's XXXXX problem, would suffice to extend the Form 10-QSB deadline.
SECTION 2.9
Parent anticipates that the Eltrax Health Card System business will incur losses
of approximately $300,000 in the second quarter of 1996, for a six-month
cumulative total through September 30, 1996 of approximately $400,000. Parent
is contemplating selling or discontinuing operations in its Health Card System
business in the immediate future. The potential total costs to terminate this
business line are estimated to be in the range of $30,000 to $50,000.
Exhibit 2.5
PARENT'S COMMISSION REPORTS
ELTRAX REPORTS delivered to Shareholders:
Form 10-QSB's for the Company's fiscal quarters ended as follows:
December 31, 1992
June 30, September 30, and December 31, 1993
June 30, September 30, and December 31, 1994
June 30, September 30, and December 31, 1995
Amendment No. 1 dated June 30, 1995
June 30, 1996
Form 10-KSB's for the Company's fiscal year ended as follows:
March 31, 1993, 1994, 1995 and 1996
Form S-18, with exhibits as filed with the SEC on August 28, 1992
Form 8-K dated May 31, 1995
Amendment No. 1 to Form 8-K/A dated May 31, 1995
Amendment No. 2 to Form 8-K/A dated May 31, 1995
Form 8-K dated January 22, 1996
Form 8-K dated May 17, 1996
Form 8-K/A amending Form 8-K dated May 17, 1996
Schedule 13D dated June 30, 1995
Schedule 13 D dated May 28, 1996
Form 10-C dated May 22, 1996
Proxy Statement for 1994, 1995 and 1996 Annual Shareholders Meetings
Form 8-K filed October 25, 1996
EXHIBIT 3.7
FINANCIAL STATEMENTS OF ANS
