<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DECEMBER 5, 1997
- -------------------------------------------------------------------------------
(Date of earliest event reported)
Miami Computer Supply Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
OHIO 000-21561 31-1001529
- -------------------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4750 HEMPSTEAD STATION DRIVE, DAYTON, OHIO 45429
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(937) 291-8282
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
<PAGE>
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS
On December 5, 1997, Miami Computer Supply Corporation (the "Company"),
through a newly created wholly owned subsidiary established for that purpose,
closed its acquisition of BRITCO, Inc. ("BRITCO") in a merger of BRITCO with
and into the wholly owned subsidiary of the Company. The underlying assets
acquired primarily included cash, accounts receivable and inventories while
the primary liabilities assumed included accounts payable and accrued
liabilities related to the ongoing business. The purchase price for the
acquisition consisted of a non-interest bearing promissory note in the amount
of one million eight hundred thousand dollars ($1,800,000) maturing on
January 2, 1998 and 183,333 shares of Company common stock. The Company will
utilize funds from the Company's existing line of credit with National City
Bank of Dayton, Ohio to pay the promissory note at its maturity.
Other than this transaction, prior to the closing thereof, there was no
material relationship between the Company and BRITCO or its affiliates.
Prior to the date of the acquisition and subsequent thereto, BRITCO was and
is engaged in the distribution of office and computer supplies in the Houston
and San Antonio, Texas area.
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<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
FINANCIAL STATEMENTS AND PRO FORMA DATA:
The audited financial statements of BRITCO as of and for the year ended
April 30, 1997 and the unaudited interim financial statements of BRITCO as of
and for the three month periods ended July 31, 1997 and 1996 required by this
Item are included herein on pages 7 through 12 of this Form 8-K.
The Unaudited Pro Forma Financial Information required by this Item is
included on pages 13 through 17 of this Form 8-K. The Unaudited Pro Forma
Financial Information assume that the acquisition of BRITCO occurred, with
respect to the September 30, 1997 balance sheet information, on September 30,
1997, and with respect to the statement of operations information at the
beginning of each respective period.
The unaudited pro forma balance sheet reflects the allocation of the
purchase price to the estimated fair value of the assets acquired and
liabilities assumed, with the residual being allocated for goodwill. While the
Company will undertake a more in-depth evaluation of the fair value of the net
assets acquired, it is not expected to differ materially from the purchase price
allocation included herein.
The unaudited pro forma statement of operations reflects the effects of the
purchase allocation described above and the resultant amortization and
additional interest expense associated with the cash used to fund the
acquisition, along with other adjustments directly attributable to the
transaction.
EXHIBITS:
Exhibit Number Description
-------------- -----------
2 Agreement and Plan of Reorganization,
dated as of November 26, 1997, by
and between the Company, MCSC Texas
Acquisition Corporation (a wholly
owned subsidiary of the Company),
BRITCO and the named stockholders
of BRITCO.
-3-
<PAGE>
20(i) Press Release issued by the Company on
December 1, 1997 with respect to the
Agreement
20(ii) Press Release issued by the Company on
December 5, 1997 with respect to the
closing.
-4-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MIAMI COMPUTER SUPPLY CORPORATION
Date: December 15, 1997 By: /s/ MICHAEL E. PEPPEL
----------------------------------
Michael E. Peppel
Vice President and
Chief Financial Officer
-5-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Miami Computer Supply Corporation
In our opinion, the accompanying balance sheet and the related statements of
income and retained earnings and of cash flows present fairly, in all
material respects, the financial position of Britco, Inc. at April 30, 1997
and the results of its operations and its cash flows for the year then ended
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Cincinnati, Ohio
October 22, 1997
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<PAGE>
<TABLE>
<CAPTION>
BRITCO, INC.
BALANCE SHEET
- -----------------------------------------------------------------------------------------------------
APRIL 30, JULY 31,
1997 1997
----------- ------------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 386,539 $ 383,716
Accounts receivable net of allowance for doubtful
accounts of $73,472 and $76,608, respectively 1,507,780 2,018,774
Inventory 412,335 448,088
Prepaid expenses 14,662 16,482
Other assets 144,854 63,433
----------- ------------
Total current assets 2,466,170 2,930,493
Property and equipment 12,844 11,938
----------- ------------
Total assets $ 2,479,014 $ 2,942,431
----------- ------------
----------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,463,466 $ 1,914,851
Accrued payroll and related liabilities 52,850 55,100
Accrued income and other tax liabilities 113,668 111,613
Other accrued liabilities 184,656 141,545
----------- ------------
Total liabilities 1,814,640 2,223,109
----------- ------------
Shareholders' equity:
Common stock, par value $1.00 per share, 10,000 shares
authorized, issued and outstanding 10,000 10,000
Paid in capital 5,000 5,000
Retained earnings 649,374 704,322
----------- ------------
Total shareholders' equity 664,374 719,322
----------- ------------
Total liabilities and shareholders' equity $ 2,479,014 $ 2,942,431
----------- ------------
----------- ------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
BRITCO, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
- -------------------------------------------------------------------------------------------------------------
THREE MONTHS THREE MONTHS
YEAR ENDED ENDED ENDED
APRIL 30, JULY 31, JULY 31,
1997 1996 1997
--------------- ----------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Net sales $ 15,721,713 $ 3,468,595 $ 4,452,320
Cost of goods sold (13,705,034) (2,973,936) (3,857,070)
--------------- ----------------- ---------------
Gross margin 2,016,679 494,659 595,250
Selling, general and adminstrative expenses (1,967,488) (441,757) (524,570)
Other (1,086) 942 (2,731)
--------------- ----------------- ---------------
Income before income taxes 48,105 53,844 67,949
Income tax provision (14,613) (11,190) (13,001)
--------------- ----------------- ---------------
Net income 33,492 42,654 54,948
Retained earnings - beginning of period 615,882 615,882 649,374
--------------- ----------------- ---------------
Retained earnings - end of period $ 649,374 $ 658,536 $ 704,322
--------------- ----------------- ---------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
BRITCO, INC.
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------------------------------------
THREE MONTHS THREE MONTHS
YEAR ENDED ENDED ENDED
APRIL 30, JULY 31, JULY 31,
1997 1996 1997
------------ ------------ -------------
(UNAUDITED ) (UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 33,492 $ 42,654 $ 54,948
Adjustment to reconcile net income to net cash flows from
operating activities:
Depreciation and amortization 3,624 905 906
Deferred income taxes (58,492) - -
Changes in assets and liabilities:
Accounts receivable (207,939) 54,057 (510,994)
Inventory 45,742 (50,238) (35,753)
Prepaid expenses and other assets (71,821) (20,933) 79,601
Accounts payable 110,488 (25,464) 451,385
Accrued liabilities 117,475 7,323 (42,916)
------------ ------------ -----------
Net cash flows from operating activities (27,431) 8,304 (2,823)
Cash flows from investing activities:
Additions to property and equipment (10,230) - -
------------ ------------ -----------
Net change in cash and cash equivalents (37,661) 8,304 (2,823)
Cash and cash equivalents at beginning of period 424,200 424,200 386,539
------------ ------------ -----------
Cash and cash equivalents at end of period $ 386,539 $ 432,504 $ 383,716
------------ ------------ -----------
The accompanying notes are an integral part of these financial statements.
</TABLE>
-9-
<PAGE>
BRITCO, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. THE COMPANY
The Company is a distributor of office and computer supplies with
operations in Houston and San Antonio, Texas. The Company provides office
and computer products to a wide variety of customers and no one customer
comprises more than 10% of sales.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
Cash equivalents substantially consist of highly liquid securities with
maturity dates of 90 days or less.
REVENUE RECOGNITION
Revenue is recognized upon shipment of products.
INVENTORY
Inventory consists of office and computer supplies and is stated at the
lower of cost or fair market value. Cost is determined using the average
cost method of inventory valuation.
PROPERTY AND EQUIPMENT
Property and equipment, including leasehold improvements, are stated at
cost less accumulated depreciation and amortization. Depreciation is
computed on the straight-line method. The provision for depreciation is
based on the estimated useful lives of equipment, furniture and fixtures
(three to five years).
INCOME TAXES
The Company records income taxes using the liability method which requires
the recognition of deferred tax assets and liabilities for the expected
tax consequences of events that have been recognized in the Company's
financial statements or tax returns. In estimating future tax
consequences, generally all expected future events other than enactments
or changes in tax law or rates are considered.
CONCENTRATION OF CREDIT RISK AND FINANCIAL INSTRUMENTS
Financial instruments which potentially subject the Company to
concentration of credit risk consist primarily of accounts receivable.
The Company performs ongoing credit evaluations of its customers and
monitors credit risk using policies and procedures which management
considers adequate in the circumstances. The Company generally does not
require collateral for sales on credit.
-10-
<PAGE>
In all material respects, the carrying value of the Company's financial
instruments approximates the fair values.
INTERIM FINANCIAL STATEMENTS
The unaudited financial statements as of and for the three months ended
July 31, 1997 and 1996 have been prepared in accordance with Rule 10-01 of
SEC Regulation S-X. Consequently, these interim financial statements do
not include all the disclosures required under generally accepted
accounting principles. However, in the opinion of the management, the
financial statements presented herein contain all adjustments (consisting
only of normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows of the Company
for the periods indicated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These affect the reported amounts of assets, liabilities,
revenues and expenses during the reporting periods. Actual results could
differ from those estimated.
3. RELATED PARTY TRANSACTIONS
For the year ended April 30, 1997, the Company sold, at cost, goods to
affiliated companies of a shareholder of the Company aggregating $213,379.
Receivables related to these sales were collected prior to April 30, 1997.
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
APRIL 30,
1997
--------------
Furniture and equipment $ 86,183
Leasehold improvements 28,720
--------------
114,903
Less - Accumulated depreciation (102,059)
--------------
$ 12,844
--------------
--------------
The Company operates from leased premises under operating leases expiring
within the next twelve months. Accordingly, future lease commitments are
not material.
-11-
<PAGE>
Management expects these leases will be renewed in the ordinary course of
business. Rental expense for the year ended April 30, 1997 totalled
approximately $64,000.
5. CREDIT AGREEMENT
At April 30, 1997, the Company had an unused credit line with a bank for
$500,000. Interest associated with this line of credit, if utilized, is
at the bank's prime rate. No borrowings occurred on this line of credit
during the year ended April 30, 1997.
6. INCOME TAXES
The provision (benefit) for income taxes consists of federal income taxes.
State taxes are determined on a franchise basis. The provision (benefit)
for income taxes is summarized below:
APRIL 30,
1997
-----------
Current $ 73,105
Deferred (58,492)
-----------
Total $ 14,613
-----------
-----------
The deferred income tax assets and liabilities are as follows:
APRIL 30,
1997
-----------
Deferred income tax assets:
Reserves and accruals not currently
deductible $ 31,476
-----------
-----------
Deferred income tax liabilities:
Depreciation $ 4,367
-----------
-----------
Deferred tax assets and deferred tax liabilities are included in other
assets and accrued income and other tax liabilities, respectively, in the
accompanying balance sheet. The effective tax rate did not differ
materially from the expected statutory rate. Income taxes paid amounted
to $57,935 for the year ended April 30, 1997.
-12-
<PAGE>
MIAMI COMPUTER SUPPLY CORPORATION
UNAUDITED PRO FORMA BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
THE COMPANY BRITCO, INC.
SEPTEMBER 30, SEPTEMBER 30, PRO FORMA
1997 1997 ADJUSTMENTS (1) PRO FORMA
------------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 167 $ 455 $ - $ 622
Accounts receivable 14,679 1,925 - 16,604
Inventory 8,210 407 - 8,617
Prepaid expenses 182 69 - 251
------------- ------------- ----------- ---------
Total current assets 23,238 2,856 - 26,094
Property, plant and equipment 1,495 11 30 c) 1,536
Intangible assets 6,500 - 3,224 c) 9,724
------------- ------------- ----------- ---------
Total assets $31,233 $2,867 $3,254 $37,354
------------- ------------- ----------- ---------
------------- ------------- ----------- ---------
Accounts payable $ 8,373 $1,870 $ - $10,243
Bank line of credit 3,553 - 1,800 b) 5,353
Accrued liabilities 1,442 251 - 1,693
------------- ------------- ----------- ---------
Total current liabilities 13,368 2,121 1,800 17,289
Long-term debt 171 - - 171
Shareholders' equity 17,694 746 1,454 a) 19,894
------------- ------------- ----------- ---------
Total liabilities and shareholders'
equity $31,233 $2,867 $3,254 $37,354
------------- ------------- ----------- ---------
------------- ------------- ----------- ---------
</TABLE>
See notes to unaudited pro forma financial information.
-13-
<PAGE>
MIAMI COMPUTER SUPPLY CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(In thousands except share and per share data)
<TABLE>
<CAPTION>
THE PRO FORMA
COMPANY BRITCO, INC. ADJUSTMENTS PRO FORMA
---------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Net sales $ 63,428 $14,913 $ - $ 78,341
---------- ------------ ----------- ---------
Cost of sales 52,061 12,891 - 64,952
Selling, general and administrative expenses 9,171 1,910 87 2) 11,168
---------- ------------ ----------- ---------
Total operating expenses 61,232 14,801 87 76,120
---------- ------------ ----------- ---------
Operating income 2,196 112 (87) 2,221
Interest expense 312 - 144 3) 456
Other (income) expense 11 (2) - 9
---------- ------------ ----------- ---------
Income before income taxes 1,873 114 (231) 1,756
Provision for income taxes 756 36 (60) 4) 732
---------- ------------ ----------- ---------
Net income $ 1,117 $ 78 $ (171) $ 1,024
---------- ------------ ----------- ---------
Earnings per share $ .44 $ .38
---------- ---------
Average shares outstanding 2,532,399 183,333 5) 2,715,732
---------- ----------- ---------
</TABLE>
See notes to unaudited pro forma financial information.
-14-
<PAGE>
MIAMI COMPUTER SUPPLY CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
(In thousands except share and per share data)
THE PRO FORMA
COMPANY BRITCO, INC. ADJUSTMENTS PRO FORMA
--------- ------------ ---------- ----------
Net sales $ 71,351 $ 12,852 $ - $ 84,203
--------- ------------ ---------- ----------
Cost of sales 58,616 11,027 - 69,643
Selling, general and
administrative expenses 10,122 1,683 65 2) 11,870
--------- ------------ ---------- ----------
Total operating expenses 68,738 12,710 65 81,513
--------- ------------ ---------- ----------
Operating income 2,613 142 (65) 2,690
Interest expense 76 - 108 3) 184
Other (income) expense (30) 8 - (22)
--------- ------------ ---------- ----------
Income before income taxes 2,567 134 (173) 2,528
Provision for income taxes 1,050 52 (45) 4) 1,057
--------- ------------ ---------- ----------
Net income $ 1,517 $ 82 $ (128) $ 1,471
--------- ------------ ---------- ----------
Earnings per share $ .41 $ .38
--------- ----------
Average shares outstanding 3,693,573 137,500 5) 3,831,073
--------- ---------- ----------
See notes to unaudited pro forma financial information.
-15-
<PAGE>
MIAMI COMPUTER SUPPLY CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(In thousands except share and per share data)
THE PRO FORMA
COMPANY BRITCO, INC. ADJUSTMENTS PRO FORMA
--------- ------------ ---------- ----------
Net sales $ 44,070 $ 11,099 $ - $ 55,169
--------- ------------ ---------- ----------
Cost of sales 35,943 9,601 - 45,544
Selling, general and
administrative expenses 6,341 1,421 65 2) 7,827
--------- ------------ ---------- ----------
Total operating expenses 42,284 11,022 65 53,371
--------- ------------ ---------- ----------
Operating income 1,786 77 (65) 1,798
Interest expense 244 - 108 3) 352
Other (income) expense (18) (6) - (24)
--------- ------------ ---------- ----------
Income before income taxes 1,560 83 (173) 1,470
Provision for income taxes 647 23 (45)4) 625
--------- ------------ ---------- ----------
Net income $ 913 $ 60 $ (128) $ 845
--------- ------------ ---------- ----------
Earnings per share $ .38 $ .33
--------- ----------
Average shares outstanding 2,388,000 137,500 5) 2,525,500
--------- ---------- ----------
See notes to unaudited pro forma financial information.
-16-
<PAGE>
MIAMI COMPUTER SUPPLY CORPORATION
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
1) The unaudited pro forma balance sheet has been adjusted to reflect:
a) The issuance of $2.2 million of the Company's common stock,
reduced by the elimination of Britco, Inc.'s stockholders' equity
of $746.
b) The Company's use of $1.8 million under its bank line of credit;
and
c) The allocation of the purchase price to the estimated fair value
of assets acquired and liabilities assumed with the remainder
being allocated to goodwill.
2) To adjust for increased depreciation arising from the step up of property
and equipment to its estimated fair value and to reflect amortization of
goodwill over an estimated useful life of 40 years.
3) To reflect increased interest expense based on the assumed use of the
Company's bank line of credit to fund the cash portion of the purchase
price at 8% per annum.
4) To reflect the tax benefit of increased depreciation and interest expense
at an estimated effective rate of 40%.
5) To reflect the impact of the additional shares issued pursuant to the
transaction and the resultant impact on average shares outstanding.
-17-
<PAGE>
EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
MIAMI COMPUTER SUPPLY CORPORATION,
MCSC TEXAS ACQUISITION CORPORATION,
BRITCO, INC,
GRETCHEN K. FERGUSON AND CHARLES L. FERGUSON
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
MIAMI COMPUTER SUPPLY CORPORATION,
MCSC TEXAS ACQUISITION CORPORATION,
BRITCO, INC.,
GRETCHEN K. FERGUSON
AND
CHARLES L. FERGUSON
DATED: NOVEMBER 26, 1997
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Article 1.0 Certain Definitions........................................ 1
1.1 Certain Definitions........................................ 1
Article 2.0 The Merger................................................. 2
2.1 The Merger................................................. 2
(a) Organization of MTAC................................... 2
(b) Merger of BRITCO and MTAC.............................. 2
(c) Effect................................................. 2
(d) Articles of Incorporation.............................. 2
(e) Capital Stock.......................................... 2
(f) Directors and Officers................................. 2
2.2 Effective Time; Closing.................................... 2
2.3 Treatment of Capital Stock................................. 3
2.4 Stockholder Rights; Stock Transfers........................ 8
2.5 Dissenting Shares.......................................... 8
2.6 Fractional Shares.......................................... 8
2.7 Exchange Procedures........................................ 8
(a) The Exchange........................................... 8
(b) Non-Surrendered Certificates........................... 9
(c) No Dividends........................................... 9
(d) No Obligation to Pay Cash or Issue New MCSC Shares..... 9
2.8 Additional Actions......................................... 9
Article 3.0 Representations and Warranties of BRITCO and
the Stockholders........................................... 10
3.1 Capitalization; Status and Qualification................... 10
(a) Capitalization......................................... 10
(b) Status and Qualification............................... 10
3.2 Authorization; Approval.................................... 10
3.3 Financial Statements....................................... 11
3.4 Undisclosed Liabilities.................................... 12
3.5 Absence of Changes......................................... 12
3.6 Title to Assets............................................ 12
(a) Title.................................................. 12
(b) Condemnation........................................... 13
3.7 Real Property.............................................. 13
3.8 Tangible Personal Property................................. 14
3.9 Intellectual Property...................................... 14
3.10 Litigation; Orders......................................... 15
3.11 Compliance................................................. 15
(a) Compliance (Non-Environmental)......................... 15
(b) Compliance (Environmental)............................. 16
(c) Definitions............................................ 17
3.12 Status of Contracts........................................ 19
(a) Status................................................. 19
(b) Scale.................................................. 20
i
<PAGE>
(c) Normality.............................................. 20
(d) Affiliated Agreements.................................. 20
(e) Power of Attorney...................................... 21
(f) Pension Obligation..................................... 21
3.13 Assets; Inventory.......................................... 21
3.14 Customers and Vendors...................................... 21
3.15 Taxes...................................................... 21
3.16 Employees; Benefit Plans................................... 22
(a) Employees.............................................. 22
(b) Benefit Plans.......................................... 23
3.17 Insurance.................................................. 24
3.18 Subsidiaries; Competing Interests.......................... 24
3.19 No Pending Transactions.................................... 24
3.20 Broker's or Finder's Fees.................................. 25
3.21 Representations Regarding the Common Stock................. 25
3.22 Updating of Schedules...................................... 27
3.23 Ownership of MCSC Common Stock............................. 27
3.24 Transactions with Affiliates............................... 27
3.25 Bank Accounts.............................................. 28
3.26 Correct Information........................................ 28
Article 4.0 Representations and Warranties of MCSC..................... 28
4.1 Structure; Status.......................................... 28
(a) MCSC................................................... 28
(b) MTAC................................................... 29
4.2 Authority; No Conflict..................................... 29
4.3 Broker's or Finder's Fees.................................. 30
4.4 Litigation; Orders......................................... 30
4.5 Authorized MCSC Common Stock............................... 30
4.6 Accuracy and Completeness of Reports....................... 30
Article 5.0 Covenants.................................................. 30
5.1 Covenants of BRITCO........................................ 30
5.2 No Solicitation............................................ 33
5.3 Stockholder Approval....................................... 33
5.4 Access to Information; Confidentiality..................... 34
(a) Access to Information.................................. 34
(b) Confidentiality........................................ 34
5.5 Consents; Efforts to Consummate............................ 35
5.6 Public Announcements....................................... 35
5.7 Indemnification............................................ 35
(a) Indemnification by the Stockholders.................... 35
(b) Indemnification by MCSC................................ 36
(c) Limitations on Indemnification......................... 36
(d) Notice................................................. 37
(e) Defense................................................ 38
(f) Nonexclusive Remedy.................................... 38
5.8 Existence.................................................. 38
5.9 Articles of Merger......................................... 38
5.10 B.B.S.X., Inc.............................................. 38
ii
<PAGE>
Article 6.0 General Matters............................................ 38
6.1 Survival of Representations and Warranties and Related
Agreements................................................ 38
6.2 Covenant Not to Disclose................................... 39
6.3 Non-Interference Agreement................................. 39
6.4 Use of BRITCO's Name....................................... 39
6.5 Benefits Plans and Arrangements............................ 40
(a) Plan Participation..................................... 40
(b) Employment............................................. 40
(c) Employment Agreements.................................. 40
6.6 Failure to Fulfill Conditions.............................. 40
6.7 Common Stock Restrictions.................................. 40
Article 7.0 Conditions to the Obligations of MCSC and MTAC
to Consummate.............................................. 41
7.1 Representations and Warranties............................. 41
7.2 Performance................................................ 41
7.3 Consents and Approvals..................................... 41
7.4 Stockholder Approval....................................... 41
7.5 Delivery of Documents...................................... 41
7.6 No Litigation.............................................. 41
7.7 No Material Adverse Change................................. 42
Article 8.0 Conditions to Obligations of BRITCO
and the Stockholders to Consummate......................... 42
8.1 Representations and Warranties............................. 42
8.2 Performance................................................ 42
8.3 Consents and Approvals..................................... 42
8.4 Officers' Certificate...................................... 42
8.5 Payment of Cash and the New MCSC Shares.................... 42
8.6 Employment Agreements...................................... 42
8.7 No Litigation.............................................. 42
8.8 Delivery of Documents...................................... 43
Article 9.0 Termination................................................ 43
9.1 Termination................................................ 43
9.2 Procedure and Effect of Termination........................ 44
9.3 Payment of Expenses and Termination........................ 44
Article 10.0 Miscellaneous.............................................. 44
10.1 Further Assurances......................................... 44
10.2 Notices.................................................... 44
10.3 Governing Law.............................................. 46
10.4 Severability............................................... 46
10.5 Entire Agreement; Amendment................................ 46
10.6 Assignment, etc............................................ 46
10.7 Counterparts............................................... 47
Signatures ...........................................................
</TABLE>
iii
<PAGE>
Schedules:
<TABLE>
<CAPTION>
<S> <C>
Schedule 3.2........ Third Party Consents
Schedule 3.4........ Undisclosed Liabilities
Schedule 3.5........ Material Changes
Schedule 3.6........ Title to Assets
Schedule 3.7........ Real Property
Schedule 3.8A....... Significant Tangible Personal Property
Schedule 3.8B....... Leased Personal Property
Schedule 3.8C....... Restricted Personal Property
Schedule 3.9........ Intellectual Property
Schedule 3.10....... Litigation
Schedule 3.11A...... Non-Compliance
Schedule 3.11B...... Non-Compliance - Environmental
Schedule 3.12....... Contracts
Schedule 3.13....... Obsolete Inventory
Schedule 3.14....... Customers and Vendors
Schedule 3.15....... Taxes
Schedule 3.16A...... Employees
Schedule 3.16B...... Benefit Plans
Schedule 3.17....... Insurance
Schedule 3.23....... Ownership of MCSC Common Stock
Schedule 3.25....... Bank Accounts
Schedule 4.4........ Litigation
Schedule 5.7........ Vendor Claims
iv
<PAGE>
Exhibits:
Exhibit A........... Employment Agreement of Gretchen K. Ferguson
Exhibit B........... Employment Agreement of Charles L. Ferguson
Exhibit C........... Opinion of William E. York
Exhibit D........... Opinion of Elias, Matz, Tiernan & Herrick L.L.P.
Exhibit E........... Non-Competition and Non-Interference Agreement by
and among B.B.S.X., Inc., MCSC and MTAC
Exhibit F........... Promissory Note
</TABLE>
v
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is entered
into as of November 26, 1997 by and among BRITCO, Inc., Houston, Texas, a
Texas corporation ("BRITCO"), Gretchen K. Ferguson, the President and a
stockholder of BRITCO ("Mrs. Ferguson"), Charles L. Ferguson, the Vice
President and a stockholder of BRITCO ("Mr. Ferguson") (Mrs. and Mr. Ferguson
are hereinafter collectively referred to as the "Stockholders"), Miami
Computer Supply Corporation, Dayton, Ohio, an Ohio corporation ("MCSC") and
MCSC Texas Acquisition Corporation, a Texas corporation in organization
("MTAC") to be wholly owned by MCSC as of the Closing Date (as defined in
Section 2.2) hereof.
WITNESSETH:
WHEREAS, BRITCO is in the business of selling computer-related
supplies and accessories to end-users and to dealers (the "Business"). The
principal office of BRITCO is located at 8179 Almeda Road, Houston, Texas 77054
(the "Premises");
WHEREAS, the Boards of Directors of BRITCO and MCSC have determined
that it is in the best interests of their respective companies and their
shareholders to consummate the business combination transactions provided for
herein, including the merger of BRITCO with and into MTAC (the "Merger"),
subject to the terms and conditions set forth herein;
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby; and
WHEREAS, the parties acknowledge that the Stockholders also own a
company known as "B.B.S.X., Inc." which is not a party to nor subject to the
terms of this Agreement, other than as expressly provided for herein;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE 1.0 CERTAIN DEFINITIONS.
1.1 CERTAIN DEFINITIONS. For purposes of this Agreement,
certain terms are defined throughout the Agreement and shall have the meanings
given therein.
ARTICLE 2.0 THE MERGER.
2.1 THE MERGER
(a) ORGANIZATION OF MTAC. Immediately prior to the
Closing Date (as defined in Section 2.2 hereof), MCSC shall have organized, as
a wholly owned subsidiary, MTAC as a Texas corporation pursuant to Section
3.02, ET SEQ. of the Texas Business Corporation Act (the "TBCA").
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 2
(b) MERGER OF BRITCO AND MTAC. Subject to the terms and
conditions of this Agreement, at the Effective Time (as defined in Section 2.2
hereof), BRITCO shall be merged with and into MTAC in accordance with the
provisions of Section 5.01 ET SEQ. of the TBCA. MTAC shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") of the
Merger, and shall continue its corporate existence under the laws of the State
of Texas as a wholly owned subsidiary of MCSC. The name of the Surviving
Corporation shall be changed to "BRITCO, Inc." promptly following the Merger.
Upon consummation of the Merger, the separate corporate existence of BRITCO
shall terminate.
(c) EFFECT. From and after the Effective Time, the
Merger shall have the effects set forth in Section 5.06 of the TBCA.
(d) ARTICLES OF INCORPORATION. The Articles of
Incorporation and Bylaws of MTAC, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation, respectively, until altered, amended or repealed in
accordance with their terms and applicable law.
(e) CAPITAL STOCK. The authorized capital stock of the
Surviving Corporation shall be as stated in the Articles of Incorporation of
MTAC immediately prior to the Effective Time.
(f) DIRECTORS AND OFFICERS. Except as set forth herein,
the directors and officers of MTAC immediately prior to the Effective Time
shall be the directors and officers of the Surviving Corporation, each of whom
shall hold office in accordance with the Articles of Incorporation and Bylaws
of the Surviving Corporation.
2.2 EFFECTIVE TIME; CLOSING. The Merger shall become effective
upon the occurrence of the filing of Articles of Merger with the Secretary of
State of the State of Texas pursuant to the TBCA, unless a later date and time
is specified as the effective time in such Articles of Merger (the "Effective
Time"). A closing of this Agreement (the "Closing") shall take place
immediately prior to the Effective Time at 11:00 a.m., Houston, Texas Time, on
or after the Business Day following the satisfaction or waiver, to the extent
permitted hereunder, of the conditions to the consummation of the Merger
specified in Articles 7 and 8 of this Agreement (other than the delivery of
certificates, opinions and other instruments and documents to be delivered at
the Closing) (the "Closing Date"), at the offices of William E. York, Esq.,
2000 Smith, Houston, Texas 77002 or at such other place, at such other time, or
on such other date (which date shall not be later than December 12, 1997) as
the parties may mutually agree upon. At the Closing, there shall be delivered
to MCSC, MTAC and BRITCO the opinions, certificates and other documents, as
applicable, required to be delivered under Articles 7 and 8 hereof. Subject to
the fulfillment or waiver at or prior to the Closing of the conditions to its
obligations set forth in Articles 7 and 8, at the Closing each of MTAC and
BRITCO shall execute and deliver Articles of Merger for filing with the
Secretary of State of the State of Texas. For purposes of this Agreement, a
"Business Day" shall be any day that banks in the State of Texas are open for
business.
2.3 TREATMENT OF CAPITAL STOCK. Subject to the provisions of
this Agreement, at the Effective Time, automatically by virtue of the Merger
and without any action on the part of any Stockholder:
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 3
(a) each share of the common stock, no par value per
share, of MTAC (the "MTAC Common Stock") issued and outstanding immediately
prior to the Effective Time shall be unchanged and shall remain issued and
outstanding and owned beneficially and of record by MCSC; and
(b) subject to Sections 2.5, 2.6 and 2.7 hereof, each
share of the common stock, $1.00 par value per share of BRITCO (the "BRITCO
Common Stock") issued and outstanding immediately prior to the Effective Time
shall be exchanged for a non-interest bearing promissory note, which shall be
substantially in the form of EXHIBIT F, attached hereto (the "Promissory
Note"), in the amount of one million eight hundred thousand dollars
($1,800,000.00) and 183,333 (the "New MCSC Shares"), shares of common stock, no
par value per share, of MCSC (the "MCSC Common Stock"), (the Promisory Note and
the New MCSC Shares being collectively referred to herein as the "Purchase
Price"). If the average per share closing price of the MCSC Common Stock, as
quoted by the Nasdaq National Market System, for the period of twenty (20)
trading days ending on the tenth (10th) day prior to the Closing Date (the
"Average Closing Price") is less than $12.00 per share, MCSC will have the
option to either: (A) consummate this Agreement and issue, in lieu of the New
MCSC Shares, such number of shares of MCSC Common Stock as shall equal the
quotient of $2,200,000.00 divided by the Average Closing Price, or (B)
terminate this Agreement and pay to BRITCO the sum of fifty thousand dollars
($50,000.00) as liquidated damages. Upon the election of either option (A) or
(B), above, MCSC must provide written notice of such election to BRITCO. In
the event MCSC elects to terminate this Agreement and pay the liquidated
damages under option (B), above, BRITCO will have the option, exercisable
within ten (10) days after receipt of notice of MCSC's election to terminate,
by written notice to MCSC within such period, to require that MCSC consummate
the Agreement and pay the Purchase Price. If MCSC elects option (B), this
Agreement is terminated pursuant to such election and MCSC makes such payment,
MCSC will have no further obligation or liability to BRITCO, the Stockholders
or any of their associates, affiliates, successors, assigns, heirs or
representatives in connection with this Agreement.
(c) The New MCSC Shares to be received by the Stockholders
of BRITCO will be subject to restrictions on transferability and resale for a
period of 270 days after the Closing Date.
(i) MCSC shall file one registration statement (the
"Demand Registration") for all of the New MCSC Shares to be received by the
Stockholders hereunder on or before the 271st day subsequent to the Closing
Date (the "Registration Deadline"). Notwithstanding the foregoing, however,
should MCSC file a registration statement prior to the Registration Deadline,
whether for a sale of securities for its own account (except in situations
relating to an employee benefit plan or an acquisition of another entity) or
pursuant to a demand for registration by another party (a "Subsequent
Registration Statement"), MCSC shall include, one time only, on a PARI PASSU
basis with the other parties having shares registered, all of the New MCSC
Shares (the "Piggyback Registration"). MCSC shall not be obligated to file a
registration for the New MCSC Shares if counsel to MCSC renders an opinion to
the effect that the registration is not required for the proposed transfer of
the New MCSC Shares, or if the proposed transfer of New MCSC Shares is subject
to an effective registration statement which is current under the Securities
Act of 1933, as amended (the "Securities Act"). MCSC may delay the filing of
the registration statement for the New MCSC Shares not more than 90 days if (A)
MCSC has filed, or
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 4
has taken substantial steps toward filing, a registration statement relating
to the sale of any of MCSC's securities (the "MCSC Securities") in an
underwritten offering and the managing underwriter is of the opinion that the
filing of a registration statement with respect to the Demand or Piggyback
Registration would adversely affect the offering by the MCSC of the MCSC
Securities, or (B) the Board of Directors of MCSC determines in good faith,
by resolution, that the filing of a registration statement, if not so
deferred, would materially and adversely affect a then proposed or pending
financial project, acquisition, merger or other corporate transaction. In
the event that the Demand or Piggyback Registration is an underwritten
offering, if the managing underwriter of such offering advises MCSC and the
Stockholders in writing that in its reasonable opinion the aggregate amount
of New MCSC Shares requested to be included in such offering is more than can
be sold without materially and adversely affecting the success of such
offering, MCSC will include in such registration first, the securities to be
offered by MCSC (if any), and then only such aggregate amount of new MCSC
Shares which in the reasonable opinion of such managing underwriter can be
sold without such material adverse effect, and such securities shall be
allocated among the Stockholders and any other persons or entities having
registration rights pro rata based on the number of shares of MCSC Common
Stock requested to be included in such registration by all such holders. If
any Demand or Piggyback Registration is determined by MCSC, in its sole
discretion, to be in the form of an underwritten offering, MCSC shall select
the investment banker or manager in its sole discretion. If any Demand or
Piggyback Registration is to be underwritten, the Stockholders, in a Demand
Registration (and in a Piggyback Registration if the Stockholders elect to
participate) shall be parties to the underwriting agreement between MCSC and
such underwriters and MCSC and such underwriters may, at their option,
require that the Stockholders make customary representations and warranties
regarding their share ownership and the assets and operations of BRITCO prior
to Closing for the benefit of such underwriters. No Stockholder may
participate in any underwritten Demand or Piggyback Registration unless such
Stockholder (A) agrees to sell its New MCSC Shares on the basis provided in
any underwriting arrangement approved by MCSC, and (B) completes and executes
all questionnaires, powers of attorney, indemnities, securities escrow
agreements, underwriting agreements and other documents required under the
terms of such underwriting, and furnishes to MCSC such information as the
MCSC may reasonably request in writing for inclusion in the registration
statement (and the prospectus included therein).
(ii) Each Stockholder, whether or not such
Stockholder participates in an underwritten registration, agrees, if so
required by the managing underwriter, not to effect any public sale or
distribution of such New MCSC Shares or sales of such shares pursuant to Rule
144, during the seven (7) days prior to and the ninety (90) days after any firm
commitment underwritten registration has become effective or, if the managing
underwriter advises MCSC in writing that, in its opinion, no such public sale
or distribution should be effected for a specified period longer than ninety
(90) days after such underwritten registration in order to complete the sale
and distribution of securities included in such registration and MCSC gives
notice to such shareholder of such advice, during a reasonably longer period
after such underwritten registration but in no event longer than one hundred
twenty (120) days, except as part of such underwritten registration.
(iii) Prior to the filing of a Subsequent
Registration Statement, MCSC shall: (A) give to the Stockholders notice thereof
as soon as practicable; and (B) include in Subsequent Registration Statement
and in any underwriting involved therein, such New MCSC Shares as permitted
herein upon receipt of a request by the Stockholders to do so within ten
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 5
(10) Business Days after they receive notice of such proposed filing,
provided that if at any time after giving such notice, MCSC shall determine
for any reason or for no reason not to register or to delay registration of
the securities to be included in the Subsequent Registration Statement, MCSC
may, at its election, give written notice of such determination to the
Stockholders and, thereupon, (X) in the case of a determination not to
register, MCSC shall be relieved of its obligation to register any of the New
MCSC Shares in connection with such Subsequent Registration Statement, and
(Y) in the case of a delay in registering, shall be permitted to delay
registering all of the Stockholders' New MCSC Shares to be included in the
Subsequent Registration Statement for the same period as the delay in the
registering such other securities. Any delay or determination not to
register pursuant to the immediately foregoing sentence shall not affect
MCSC's obligation to file the Demand Registration as described in Section
2.3(c)(i), above.
(iv) MCSC will pay all reasonable registration
expenses in connection with any Demand or Piggyback Registration, including
without limitation, all registration and filing fees, fees with respect to
filings required to be made with the National Association of Securities
Dealers, fees and expenses of compliance with securities or blue sky laws,
printing expenses, and fees and expenses of counsel for MCSC and of all
independent public accountants of MCSC (including the expenses of any "comfort"
letters or update thereof required by or incident to the foregoing) in
connection with such registration, except that underwriting discounts and
commissions, and transfer taxes, if any relating to the New MCSC Shares shall
not be borne by MCSC.
(v) MCSC shall immediately notify each Stockholder
and any managing underwriter, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the circumstances
under which they were made, and at the request of the Stockholders will
promptly prepare and furnish to Stockholders a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made. Each Stockholder agrees (A) that upon receipt of any notice from MCSC of
the happening of any event of the kind described above, such holder will
forthwith discontinue such holder's disposition of the New MCSC Shares pursuant
to the registration statement relating to such securities until such
Stockholder's receipt of the copies of the supplemented or amended prospectus
contemplated above, and if so directed by MCSC, will deliver to MCSC (at MCSC's
expense) all copies then in such Stockholder's possession of the prospectus
relating to such securities current at the time of receipt of such notice and
(B) that it will immediately notify MCSC, at any time when a prospectus
relating to the registration of such shares is required to be delivered under
the Securities Act, of the happening of any event as a result of which
information previously furnished by such Stockholder to MCSC in writing for
inclusion in such prospectus contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made.
(vi) In the event of any registration of any of the
New
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 6
MCSC Shares under the Securities Act, each Stockholder shall furnish to MCSC
in writing such information and affidavits as MCSC reasonably requests for
use in connection with such registration statement and agrees, jointly and
severally, to indemnify and hold harmless MCSC, its directors, officers, each
underwriter and each controlling person of MCSC, if any, against any losses,
claims, damages or liabilities, joint or several (or actions in respect
thereof), to which MCSC, its directors, officers, such underwriter or
controlling person may be subject under the Securities Act or under any other
statute or at common law, insofar as such losses, claims, damages or
liabilities, joint or several (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement (or alleged untrue statement) of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any selling document or
any amended selling document, or (ii) any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein (in light of the circumstances in which they were
made with respect to any prospectus) not misleading, and shall reimburse
MCSC, its directors, officers, such underwriter and controlling person for
any legal or other expense reasonably incurred by such person in connection
with investigating of defending any such loss, claim, damage, liability or
action; in each case, to the extent, and only to the extent, that each untrue
statement or omission (or alleged untrue statement or omission) is made in
reliance upon information relating to BRITCO or the Stockholders furnished to
MCSC by such Stockholder expressly for use in any registration statement or
prospectus.
(vii) In the event of a Demand or Piggyback
Registration, MCSC shall maintain the effectiveness of such registration for no
more than 15 months.
(viii) For a period beginning on the day after the
Closing Date and ending at midnight on the date which is the 366th day after
the Closing Date, MCSC will, subject to applicable limitations, prohibitions or
restrictions on the redemption of MCSC Common Stock imposed by Ohio corporate
law or federal or state securities laws (a "Limitation"), upon request of the
Stockholders, repurchase one time only a portion or all of the New MCSC Shares
from the Stockholders at a price of $10.00 per share (the "Repurchase Price").
Written notice of such request must be in writing and given to MCSC pursuant to
Section 10.2 hereof no later than the close of business on the 365th day after
the Closing Date. Within fifteen (15) Business Days after receipt of such
written notice of a request for repurchase, MCSC shall notify the Stockholders
in writing of the date upon which MCSC shall repurchase such New MCSC Shares,
which date shall not be more than fifteen (15) Business Days after the date of
the MCSC written notice, or if MCSC shall be unable to repurchase such New MCSC
Shares pursuant to a Limitation, MCSC shall provide therewith an opinion of its
counsel explaining why such repurchase is not capable of being accomplished at
such time. On the day set for the repurchase, MCSC shall pay the Repurchase
Price to the Stockholders in immediately available funds upon receipt of the
certificates representing the New MCSC Shares requested to be repurchased, duly
endorsed or accompanied by stock powers satisfactory to MCSC and such other
documents or instruments of transfer as MCSC may reasonably require. If a
Limitation exists at the time of the repurchase request, MCSC will use its best
efforts to cure the Limitation and the day upon which MCSC shall effect the
repurchase shall be deferred until the day which is fifteen (15) Business Days
after the date that the Limitation is cured.
(d) MCSC reserves the right to alter the structure of this
transaction prior to the Closing Date for tax or other business reasons,
provided, however, that the total consideration to be paid to the Stockholders,
or the tax consequences to the Stockholders is not
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 7
altered, unless such alteration in the Purchase Price or the tax consequences
is approved by BRITCO.
2.4 STOCKHOLDER RIGHTS; STOCK TRANSFERS. At the Effective
Time, the holders of the BRITCO Common Stock shall cease to be and shall have
no rights as a stockholder of BRITCO, other than to receive the consideration
provided under this Article 2.0. After the Effective Time, there shall be no
transfers on the stock transfers books of BRITCO or the Surviving Corporation
of shares of BRITCO Common Stock and if certificates evidencing such shares are
presented for transfer after the Effective Time, they shall be cancelled
without the payment of any consideration by the Surviving Corporation or MCSC.
2.5 DISSENTING SHARES. By virtue of their execution of this
Agreement the Stockholders hereby forever waive any right they may have to
dissent from the Merger and demand payment in cash for the fair value of his
shares of BRITCO Common Stock under Section 5.11 ET SEQ. of the TBCA or any
similar or successor statute, law, rule or regulation and the Stockholders
hereby release MCSC, MTAC and the Surviving Corporation and their successors
and assigns from any obligation to pay such funds to them thereunder.
2.6 FRACTIONAL SHARES. Notwithstanding any other provision
hereof, no fractional shares of MCSC Common Stock shall be issued to the holder
of BRITCO Common Stock. In lieu thereof, the holder of shares of BRITCO Common
Stock entitled to a fraction of a share of MCSC Common Stock shall, at the time
of surrender of the certificate or certificates representing such holder's
shares, receive an amount of cash (without interest) equal to the product
arrived at by multiplying such fraction of a share of MCSC Common Stock by
$10.00. No such holder shall be entitled to dividends, voting rights or any
other rights in respect of any fractional share interest.
2.7 EXCHANGE PROCEDURES.
(a) THE EXCHANGE. On the Closing Date, MCSC shall, upon
the surrender by the Stockholders of the certificates representing 100% of the
issued and outstanding shares of BRITCO Common Stock (the "BRITCO
Certificates") at the Closing Date, issue to the Stockholders the consideration
set forth in Section 2.3(b) consisting of the Promissory Note and New MCSC
Shares.
(b) NON-SURRENDERED CERTIFICATES. Each outstanding
certificate which prior to the Effective Time represented BRITCO Common Stock
and which is not surrendered to MCSC in accordance with the procedures provided
for herein shall, except as otherwise herein provided, until duly surrendered
to MCSC be deemed to evidence the right to receive the consideration set forth
in Section 2.3(b) consisting of the Promissory Note and New MCSC Shares.
(c) NO DIVIDENDS. No holder of a certificate theretofore
representing shares of BRITCO Common Stock shall be entitled to receive any
dividends in respect
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 8
of MCSC Common Stock into which such shares shall have been converted by
virtue of the Merger until the certificate representing such shares is
surrendered in exchange for a certificate or certificates representing whole
shares of MCSC Common Stock (plus cash in lieu of any fractional share
interest). In the event that dividends are declared and paid by MCSC in
respect of MCSC Common Stock after the Effective Time but prior to the
holder's surrender of certificates representing shares of BRITCO Common
Stock, dividends payable to such holder in respect of whole shares of MCSC
Common Stock not then issued shall accrue (without interest). Any such
dividends shall be paid (without interest) upon surrender of the certificates
representing such shares of BRITCO Common Stock.
(d) NO OBLIGATION TO PAY CASH OR ISSUE NEW MCSC SHARES.
MCSC shall not be obligated to pay the cash consideration or deliver a
certificate or certificates representing whole shares of MCSC Common Stock
(plus cash in lieu of any fractional share interest) to which the holder of
BRITCO Common Stock would otherwise be entitled as a result of the Merger until
such holder surrenders the certificate or certificates representing the shares
of BRITCO Common Stock for exchange as provided in this Section 2.7, or, in
default thereof, an appropriate affidavit of loss and indemnity agreement
and/or a bond in an amount as may be reasonably required in each case by MCSC.
2.8 ADDITIONAL ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider that any further assignments or
assurances in law or any other acts are necessary or desirable to (i) vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation its
right, title or interest in, to or under any of the rights, properties or
assets of BRITCO acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger, or (ii) otherwise carry out the
purposes of this Agreement, BRITCO and its proper officers and directors shall
be deemed hereby to have granted to the Surviving Corporation an irrevocable
power of attorney to execute and deliver all such proper deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such rights, properties or assets in the
Surviving Corporation and otherwise to carry out the purposes of this
Agreement; and the proper officers and directors of the Surviving Corporation
are fully authorized in the name of BRITCO or otherwise to take any and all
such action.
ARTICLE 3.0 REPRESENTATIONS AND WARRANTIES OF BRITCO AND THE
STOCKHOLDERS. BRITCO and the Stockholders represent and warrant to MCSC as
follows:
3.1 CAPITALIZATION; STATUS AND QUALIFICATION. (a)
CAPITALIZATION The authorized capital stock of BRITCO consists of ten thousand
(10,000) shares of BRITCO Common Stock. As of the date hereof, ten thousand
(10,000) shares of BRITCO Common Stock are issued and outstanding and six
thousand (6,000) of such shares are owned beneficially and of record by Mrs.
Ferguson and four thousand (4,000) of such shares are owned beneficially and of
record by Mr. Ferguson. All outstanding shares of BRITCO Common Stock have
been duly authorized and validly issued and are fully paid and nonassessable,
and none of the outstanding shares of BRITCO
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 9
Common Stock has been issued in violation of any law, regulation or policy of
any governmental authority, the BRITCO Articles of Incorporation, Bylaws, the
terms of any agreement to which BRITCO or the Stockholders are a party or are
bound or the preemptive rights of any person, firm or entity. There are no
Rights authorized, issued or outstanding with respect to the capital stock of
BRITCO. For purposes of this Agreement, "Rights" shall mean any warrants,
options, rights, convertible or exchangeable securities and other
arrangements or commitments which obligate an entity to issue or dispose of
any of its capital stock or ownership interests.
(b) STATUS AND QUALIFICATION. BRITCO is a corporation which is duly
organized, validly existing and in good standing under the laws of the State of
Texas, has the full power and authority to carry on its business as it is
currently being conducted and to own, lease and operate the property and the
assets that it now owns, leases and operates and to execute, deliver and
perform this Agreement and the transactions contemplated hereby. BRITCO has
qualified as a foreign corporation, is in good standing, has obtained all
licenses, permits or other authorizations and has taken all other actions
required by or under the laws of all jurisdictions and all governmental
regulations where the failure to do so would have a material adverse effect on
the business, condition (financial or otherwise), results of operations, assets
or prospects of BRITCO ("Material Adverse Effect"). BRITCO has heretofore
delivered to MCSC true and complete copies of its Articles of Incorporation,
Bylaws, as amended, as in effect as of the date hereof, and its stock transfer
books.
3.2 AUTHORIZATION; APPROVAL. The Stockholders are adult
residents of the State of Texas and citizens of the United States of America
and are legally competent to execute, deliver and perform this Agreement under
the laws thereof. Each Stockholder has, and at the Closing will have good,
valid and marketable title to the BRITCO Common Stock, free and clear of any
and all mortgages, pledges, security interests, liens, charges, options,
conditional sales agreements, claims, restrictions, covenants, title defects or
other encumbrances or restrictions of any nature ("Liens"), except for
customary securities restrictions on the transfer of privately-held stock.
Other than this Agreement, the BRITCO Common Stock is not subject to any
stockholders' agreement or voting trust agreement or understanding, whether in
writing or oral, including without limitation, any mortgage, indenture, note,
guarantee, lease, license, contract, deed of trust, purchase, sale or other
agreement relating to the BRITCO Common Stock (a "Stock Contract"), including
any Stock Contract restricting or otherwise relating to the voting or
disposition of the BRITCO Common Stock. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby by
BRITCO have been duly and effectively authorized by all necessary action,
corporate or otherwise. This Agreement is a valid, legally binding and
enforceable obligation of BRITCO and the Stockholders, enforceable in
accordance with its terms except to the extent that enforceability may be
limited by bankruptcy, reorganization, insolvency or other laws affecting the
enforcement of creditors' rights generally or the availability of equitable
remedies subject to the discretion of the court. A certified copy of the
resolutions of the Board of Directors of BRITCO has been delivered to MCSC, and
such copies are complete and correct and such resolutions are in full force and
effect on the date hereof and will be in full force and effect on the Closing
Date. The execution, delivery, and performance of this Agreement and the
consummation
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 10
of the transactions contemplated hereby by BRITCO and the Stockholders will
not: (i) except for actions required to be taken by MCSC, require the notice
or filing with, or approval or consent of any governmental or regulatory
body; (ii) except for the consent of the Stockholders of BRITCO, and except
for consents to assignment of the contracts described in SCHEDULE 3.2,
require the approval or consent of any other person or entity; (iii) violate
any provision of such corporation's Articles of Incorporation or By-Laws, as
amended; (iv) violate, conflict with or result in a modification of the
effect of, or otherwise give any other contracting party the right to
terminate, or constitute (or with notice or lapse of time or both,
constitute) a default under, or result in the termination of, or accelerate
the performance required by, or cause the acceleration of the maturity of any
liability or obligation pursuant to, or result in the creation or imposition
of any security interest, lien, charge or other encumbrance or any adverse
claim upon any property or assets of BRITCO, under (a) to the best knowledge
of BRITCO and the Stockholders, any statute or law or any judgment, decree,
order, award, writ, injunction, regulation or rule of any court, arbitrator
or Governmental Authority (as defined in Section 3.10(c)(vii)), or (b) any
note, bond, mortgage, indenture, deed of trust, license, lease, instrument,
contract, commitment, franchise, permit, understanding, arrangement,
agreement or restriction of any kind or character which is not satisfied or
extinguished at or prior to the Closing; or (v) to the best knowledge of
BRITCO and the Stockholders, violate any statute, law or regulation as such
statute, law or regulation relates to BRITCO or its Business.
3.3 FINANCIAL STATEMENTS. BRITCO has delivered to MCSC true,
complete, accurate and correct copies of BRITCO's balance sheets for the years
ended April 30, 1997, 1996 and 1995, and the related statements of income,
retained earnings and cash flows as well as the notes thereto. BRITCO has
delivered to MCSC a true, correct, complete and accurate copy of its balance
sheet and related statements of income, retained earnings, and cash flows for
the five fiscal months ended September 30, 1997 (the "Interim Financial
Statements"). The Annual Financial Statements and Interim Financial Statements
are collectively referred to herein as the "Financial Statements." The
Financial Statements have not been prepared in accordance with generally
accepted accounting principles ("GAAP"), but have been prepared consistent with
BRITCO's customary accounting practices. The Financial Statements present
fairly the financial condition, results of operations, retained earnings and
changes in cash flows of BRITCO at such dates and for such periods in
accordance with BRITCO's customary accounting practices consistently applied
during the periods indicated. Except as described on such Financial Statements
there has been no change by BRITCO in any method of accounting or keeping of
its books of account or accounting practices for the three-year period ended on
April 30, 1997. BRITCO shall continue to provide to MCSC unaudited balance
sheets, statements of income and cash flows within fifteen (15) calendar days
(or as soon thereafter as practicable) after the end of each month prior to the
Closing or termination of this Agreement.
3.4 UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE
3.4, the Stockholders do not know and have no reason to know of any basis for
the assertion against BRITCO of any indebtedness, liability, claim, loss,
damage, deficiency, obligation or responsibility of any nature, whether fixed
or unfixed, due or to become due, liquidated or unliquidated, secured
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AGREEMENT AND PLAN OF REORGANIZATION
PAGE 11
or unsecured, accrued, absolute, contingent or otherwise of BRITCO not fully
reflected in the Financial Statements.
3.5 ABSENCE OF CHANGES. Except as set forth on SCHEDULE 3.5,
since April 30, 1997, there has not been, other than changes in the ordinary
course of business that in the aggregate have not been adverse, (i) any
change which would have a Material Adverse Effect on the financial position,
results of operations, assets, liabilities, net worth, Business or prospects
of BRITCO, or (ii) any other event or condition of any character (whether or
not covered by insurance) that has had or will or is likely to have a
Material Adverse Effect on the properties, Business or prospects of BRITCO or
the financial position, results of operations, or net worth of BRITCO, apart
from events or conditions affecting the economy or the computer supply
industry generally. Since such date, BRITCO has conducted its business only
in the ordinary course and has not acquired or disposed of any material
assets (other than inventory acquired or disposed of in the ordinary course
of business) or engaged in any material transaction.
3.6 TITLE TO ASSETS.
(a) TITLE. Except as set forth on SCHEDULE 3.6, at the
Closing, BRITCO will own and have good and marketable title to all of its
properties and assets, free and clear of restrictions on or conditions to
transfer or assignment, liens, pledges, charges, encumbrances, claims,
easements, security interests, covenants, title defects or objections or
restrictions of any kind, including, without limitation, leases, chattel
mortgages, conditional sales contracts, collateral security arrangements, and
other title or interest retention arrangements or other Liens, except for
Permitted Liens. "Permitted Liens" means (i) liens shown on the balance
sheet in the Financial Statements as securing specified liabilities (with
respect to which no default exists), (ii) liens for current taxes not yet
due, and (iii) minor imperfections of title and encumbrances, if any, which
are not substantial in amount, do not detract from the value of the property
subject thereto or impair the operations of BRITCO and do not preclude or
materially adversely affect the continued use of the property to which they
relate.
(b) CONDEMNATION. BRITCO has not received any notice from
any Governmental Authority having jurisdiction over the Premises or any other
office or warehouse locations of BRITCO (the Premises and such other office
or warehouse locations being collectively referred to herein as the "Extended
Premises") that the Extended Premises are presently the subject of any
condemnation, special assessment or similar charge or proceeding, and, to the
best knowledge of BRITCO and the Stockholders no such condemnation, special
assessment or charge is currently threatened or contemplated.
3.7 REAL PROPERTY. SCHEDULE 3.7 sets forth a list and summary
description of (i) all of the real property which is used in the Business of
BRITCO, including without limitation, all land, buildings and other
structures and improvements and fixtures located on such land (collectively,
the "Real Property"), and a description of each parcel of such land, and (ii)
all leases, subleases or other agreements which allow the use or occupancy of
the Real Property, or any
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AGREEMENT AND PLAN OF REORGANIZATION
PAGE 12
portion thereof, or which give or grant any rights therein (collectively, the
"Real Property Leases"). All of the Real Property Leases, true and correct
copies of which (including all amendments or extensions thereto) have been
delivered to MCSC, are in effect, and BRITCO is not in default thereunder and
BRITCO has not received or sent any notice of any default under or with
respect to any provision thereof. Other than the landlord's consent to
assignment required under the Real Property Leases, there are no approvals or
consents of any persons or entities which are required in order to assign any
Real Property Leases. To the best knowledge of BRITCO and the Stockholders,
the Real Property, or the use thereof, does not violate the material
provisions of any applicable trade, criminal, building code, fire, health or
safety or other governmental ordinances, orders or regulations and BRITCO is
in material compliance with all applicable laws, regulations, ordinances,
orders, rules and restrictions relating to BRITCO's use of the Real Property.
To the best knowledge of BRITCO and the Stockholders, all structures and
improvements located on the Real Property are in workable and useable
condition and repair (excepting ordinary wear and tear) and are suitable for
the uses for which they were intended and are used. To the best knowledge of
BRITCO and the Stockholders, the operations conducted on any of the Real
Property, whether now or in the past, do not violate the rights of any Person
(as defined below) with respect to such property or with respect to any other
property. Neither BRITCO nor the Stockholders have any6 knowledge of and
have not received any notice in regard to the foregoing and is not aware of
any state of facts or situation which, with notice or the passage of time or
otherwise, would constitute such a violation.
3.8 TANGIBLE PERSONAL PROPERTY. SCHEDULE 3.8A lists each item
of tangible personal property (other than inventory) owned by BRITCO having
an initial purchase price in excess of $10,000. SCHEDULE 3.8B lists each
item of tangible personal property leased by BRITCO (other than pursuant to
individual leases having an annual rental of less than $5,000 or which are
terminable by BRITCO within 90 days of the date hereof without penalty) and
each item of personal property having a value of $5,000 or more used by
BRITCO and owned or leased by any individual, partnership, proprietorship,
corporation, limited liability company, joint venture, trust, or other
similar entity or governmental agency or court (a "Person") providing
services to BRITCO (collectively, the "Tangible Personal Property"). The
Tangible Personal Property, together with other tangible personal property
owned or used by BRITCO and owned by Persons providing services to BRITCO
constitutes substantially all of the tangible personal property used in the
operation of the Business of BRITCO and constitutes substantially all
tangible personal property necessary to conduct the Business of BRITCO as
presently conducted by it. Except as set forth on SCHEDULE 3.8C, all the
Tangible Personal Property is located at the Real Property and there is no
material tangible personal property located at the Real Property which is not
owned or leased by BRITCO. Except as set forth in SCHEDULE 3.8C, the Tangible
Personal Property is in all material respects in good working order, ordinary
wear and tear excepted. All leased Tangible Personal Property of BRITCO is
in all material respects in the condition required of such property by the
terms of the lease applicable thereto during the term of the lease and upon
the expiration thereof.
3.9 INTELLECTUAL PROPERTY. SCHEDULE 3.9 contains an accurate
and complete list of all (i) registered and unregistered: trademarks, service
marks, trade names, corporate names,
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AGREEMENT AND PLAN OF REORGANIZATION
PAGE 13
company names, fictitious business names, trade styles, trade dress, logos,
and other source or business identifiers (the "Trademarks"); patents;
copyrights; proprietary formulas, recipes, technology, Business Know-How (as
defined below) and other trade secrets (the "Trade Secrets") used in the
Business of BRITCO as currently conducted, and all registrations and
recordings thereof, all applications for registration pending therefor, all
extensions and renewals thereof, and all proprietary rights therein, in any
jurisdiction in which BRITCO operates or does business, (ii) licenses,
permissions, software and other agreements used in the Business of BRITCO,
and (iii) licenses, permissions, software and other agreements relating to
technology, Business Know-How or processes used in the Business of BRITCO,
which BRITCO is licensed or authorized to use by others, including vehicle
licenses and customary software licenses ((i) - (iii) above collectively
referred to herein as the "Intellectual Property"). "Business Know-How" means
all books, records, technology, formulas, know-how recorded on paper or other
media in the books and records of BRITCO, quality control records, finished
product specifications, packaging supplies specifications, product
registrations, records relating to the adoption and use of the Intellectual
Property (as defined above), marketing plans, sales records and histories,
market research data, promotional advertising and marketing materials, radio,
television and Internet commercials, Internet web sites, print
advertisements, customer lists, label and shipping carton dies, designs,
films, earthwork, photography, mechanical art, color separations, prints,
plates, and graphic materials, permits and licenses, and inventory records,
used in or necessary to conduct the Business as currently conducted. In
regard to the Intellectual Property, and except as set forth on SCHEDULE 3.9,
to the best knowledge of BRITCO and the Stockholders (i) the patents,
Trademarks and the copyrights are valid, subsisting and enforceable, and the
patents, the Trademarks and the copyrights are duly recorded in the name of
BRITCO, and can be recorded in the name of MTAC, (ii) BRITCO has, and after
the Closing MTAC will have, the sole and exclusive ownership and right, free
from any Liens, to use the Intellectual Property and applications therefor
and the full right to use the trade names, assumed names, fictitious names,
technology, know-how and processes referred to in such lists and all trade
secrets used in or necessary to the conduct of the Business of BRITCO, and
(iii) the consummation of the transactions contemplated hereby will not alter
or impair any such rights. Except as set forth on SCHEDULE 3.9, to the best
knowledge of BRITCO and the Stockholders, within the last ten (10) years, no
claims have been asserted by any entity or person with respect to the
ownership, validity, enforceability or use of or challenging or questioning
the validity or effectiveness of any of the Intellectual Property.
Furthermore, the use or other exploitation of such Intellectual Property by
BRITCO does not infringe or dilute the rights of any other entity or person;
and neither BRITCO nor the Stockholders have knowledge of any other entity or
person infringing the rights of BRITCO with respect to such Intellectual
Property.
3.10 LITIGATION; ORDERS. Except as set forth on SCHEDULE 3.10,
there are no claims, actions, suits, proceedings, grievances, arbitrations,
investigations or inquiries pending or, to the best knowledge of BRITCO and
the Stockholders, threatened, at law or in equity or before or by any
federal, state, local, foreign or other governmental department, commission,
board, arbitrator(s), agency, instrumentality or authority by or against
BRITCO or the Stockholders (or any one of them) which: (i) restrain or
prohibit or which may restrain or prohibit, or otherwise affect, the
consummation of the transactions contemplated hereby; (ii) affect or which
may affect
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AGREEMENT AND PLAN OF REORGANIZATION
PAGE 14
BRITCO with respect to the Merger; or (iii) affect or might affect the
Business, operations, condition (financial or otherwise), liabilities,
assets, earnings or prospects of BRITCO. Neither BRITCO nor any of its
property or assets is subject to any judgment, arbitration award, order or
decree. There are no petitions pending by, against or on behalf of BRITCO or
the Stockholders under any applicable bankruptcy or insolvency laws.
3.11 COMPLIANCE.
(a) COMPLIANCE (NON-ENVIRONMENTAL). Except as set forth
in SCHEDULE 3.11A., BRITCO and its respective officers, directors and
employees have all material licenses, permits, approvals and other
authorizations and have made all material filings and registrations that are
necessary in order to enable BRITCO to conduct its Business as it is now
being conducted. BRITCO and its respective officers, directors and, to the
best knowledge of BRITCO and its Stockholders, its employees have materially
complied and are in material compliance with all laws, regulations and
ordinances that are applicable to BRITCO's Business as now being conducted or
are applicable to any of its assets or properties, including, without
limitation, all laws, regulations and ordinances relating to or regulating
the safe and proper conduct of business, consumer protection, trade
practices, franchises, licensing requirements, wage and hour, antitrust,
taxes, currency exchange, equal opportunity, public accommodation and
services, sanitation, fire, zoning, building, labor, occupational health and
safety, pension, securities, trademark or copyright. BRITCO has not received
notification in the last five (5) years of any asserted present or past
failure to so comply; and, to the best knowledge of BRITCO and its
Stockholders, there are no actions threatened or likely to be commenced
against BRITCO alleging any material violation of or non-compliance with any
of such laws, regulations or ordinances. Attached as SCHEDULE 3.11A. are all
reports relating to the Business or the Premises received within the last
three (3) years by BRITCO from any Governmental Authority or from any
consultants regarding compliance with the regulations of the Occupational
Safety and Health Administration, the Equal Employment Opportunity Commission
or the U.S. Department of Labor or any equivalent state agency. To the best
knowledge of BRITCO and its Stockholders, the terms and conditions and
circumstances of the employment of employees of BRITCO, including former and
inactive employees, comply, and at all times have complied, to the extent
material, with applicable laws and regulations (including any federal, state
or local laws relating to taxation, employee benefits, wage-hour, health and
safety, nondiscrimination and labor relations).
(b) COMPLIANCE (ENVIRONMENTAL). Except as set forth in
SCHEDULE 3.11B. (the "Scheduled Conditions"), BRITCO and the Stockholders
represent and warrant to MCSC that:
(i) to the best knowledge of BRITCO and its
Stockholders, BRITCO and the Extended Premises comply in all material
respects with any applicable Environmental Law;
(ii) to the best knowledge of BRITCO and its
Stockholders,
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AGREEMENT AND PLAN OF REORGANIZATION
PAGE 15
BRITCO has obtained all Governmental Approvals required for the operation of
BRITCO at the Extended Premises under any applicable Environmental Law;
(iii) BRITCO has not, and has no knowledge of any
other person who has, caused any Release, threatened Release, or disposal of
any Hazardous Substance at the Extended Premises in any material quantity;
the Extended Premises are not adversely affected by any Release, threatened
Release, or disposal of a Hazardous Substance originating or emanating from
any other property;
(iv) to the best knowledge of BRITCO and its
Stockholders, the Extended Premises do not contain and have not contained
any: (A) underground storage tank, (B) material amounts of
asbestos-containing building material, (C) landfills or dumps, (D) hazardous
waste management facility as defined pursuant to RCRA or any comparable state
law, or (E) site on or nominated for the National Priority List promulgated
pursuant to CERCLA or any state remedial priority list promulgated or
published pursuant to any comparable state law;
(v) BRITCO has used no material quantity of any
Hazardous Substance at the Extended Premises and has conducted no Hazardous
Substance Activity on the Extended Premises;
(vi) to the best knowledge of BRITCO and its
Stockholders, BRITCO has no material liability for remediation, response or
corrective action, natural resource damage, or other harm pursuant to CERCLA,
RCRA, or any comparable state law; BRITCO is not subject to, has no notice or
knowledge of, and, to the best knowledge of BRITCO and its Stockholders is
not required to give any notice of any Environmental Claim involving BRITCO
or the Extended Premises; there are no conditions or occurrences at the
Extended Premises of which BRITCO or its Stockholders are aware which could
form the basis for an Environmental Claim against BRITCO or the Extended
Premises;
(vii) to the best knowledge of BRITCO and its
Stockholders, the Extended Premises are not subject to any, and BRITCO has no
knowledge of any imminent, restriction on the ownership, occupancy, use, or
transferability of the Extended Premises in connection with any (A)
Environmental Law or (B) Release, threatened Release, or (C) disposal of a
Hazardous Substance;
(viii) to the best knowledge of BRITCO and its
Stockholders, there are no conditions or circumstances at the Extended
Premises which pose a risk to the environment or to the health and/or safety
to or of persons; and
(ix) BRITCO has provided or otherwise made available
to MCSC any Environmental Record concerning BRITCO and Extended Premises
which BRITCO possesses or are reasonably available to BRITCO.
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AGREEMENT AND PLAN OF REORGANIZATION
PAGE 16
(c) DEFINITIONS. For purposes of this Agreement, the
following terms as used herein shall have the following meanings:
(i) "CERCLA" shall mean the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
by the Superfund Amendments and Reauthorization Act of 1986, 42 USC 9601 ET
SEQ., and any future amendments.
(ii) "DAMAGES" shall mean all damages, and includes,
without limitation, punitive damages, liabilities, costs, losses, diminutions
in value, fines, penalties, demands, claims, cost recovery actions, lawsuits,
administrative proceedings, orders, response action costs, compliance costs,
investigation expenses, arbitration expenses, consultant fees, attorneys' and
paralegals' fees, and litigation expenses.
(iii) "ENVIRONMENTAL CLAIM" shall mean any
investigation, notice, violation, demand, allegation, action, suit,
injunction, judgment, order, consent decree, penalty, fine, lien, proceeding
or claim in connection with the Extended Premises (whether administrative,
judicial, or private in nature) arising (A) pursuant to, or in connection
with, an actual or alleged violation of, any Environmental Law, (B) in
connection with any Hazardous Substance or actual or alleged Hazardous
Substance Activity, (C) from any abatement, removal, remedial, corrective, or
other response action in connection with a Hazardous Substance, Environmental
Law or other order of a Governmental Authority or (D) from any actual or
alleged damage, injury, threat, or harm to health, safety, natural resources,
or the environment.
(iv) "ENVIRONMENTAL LAW" shall mean any past or
current Legal Requirement pertaining to (A) the protection of health, safety,
and the indoor or outdoor environment, (B) the conservation, management, or
use of natural resources and wildlife, (C) the protection or use of surface
water and groundwater, (D) the management, manufacture, possession, presence,
use, generation, transportation, treatment, storage, disposal, Release,
threatened Release, abatement, removal, remediation or handling of, or
exposure to, any Hazardous Substance or (E) pollution (including any Release
to air, land, surface water, and groundwater), and includes, without
limitation, CERCLA, the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 USC 6901 ET SEQ., Federal Water Pollution Control Act,
as amended by the Clean Water Act of 1977, 33 USC 1251 ET SEQ., Clean Air Act
of 1966, as amended, 42 USC 7401 ET SEQ., Toxic Substances Control Act of
1976, 15 USC 2601 ET SEQ., Hazardous Materials Transportation Act, 49 USC
App. 1801 ET SEQ., Occupational Safety and Health Act of 1970, as amended 29
USC 651 ET SEQ., Oil Pollution Act of 1990, 33 USC 2701 ET SEQ., Emergency
Planning and Community Right-to-Know Act of 1986, 42 USC 11001 ET SEQ.,
National Environmental Policy Act of 1969, 42 USC 4321 ET SEQ., Safe Drinking
Water Act of 1974, as amended, 42 USC 300(f) ET SEQ., and any similar state
law, including but not limited to the Waste Reduction Policy Act of 1991
(Health and Safety Code 361.501-361.510); the Hazardous Substances Spill
Prevention and Control Act (Water Code 26.264); the Clean Air Act Amendments
of 1990 (Health and Safety Code chap. 382); the Water
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AGREEMENT AND PLAN OF REORGANIZATION
PAGE 17
Quality Act (Water Code 26.019); and the Hazard Communication Act (Health and
Safety Code 502.002) and any similar, implementing or successor law, and any
amendment, rule, regulation, order, or directive issued thereunder.
(v) "ENVIRONMENTAL RECORD" shall mean any document,
correspondence, pleading, report, assessment, analytical result, Governmental
Approval, or other record concerning a Hazardous Substance, compliance with
an Environmental Law, and Environmental Claim, or other environmental subject.
(vi) "GOVERNMENTAL APPROVAL" shall mean any permit,
license, variance, certificate, consent, letter, clearance, closure, covenant
not to sue, release, no further action letter, exemption, decision, action or
approval or non-disapproval of a Governmental Authority.
(vii) "GOVERNMENTAL AUTHORITY" shall mean any federal,
state, regional, county, or local person or body having governmental or
quasi-governmental authority or a sub-division thereof.
(viii) "HAZARDOUS SUBSTANCE" shall mean any substance,
chemical, compound, product, solid, gas, liquid, waste, byproduct, pollutant,
contaminant, or material which is classified or regulated as hazardous or
toxic under any Environmental Law, and includes, without limitation,
asbestos, polychlorinated biphenyls, and petroleum (including crude oil or
any fraction thereof).
(ix) "HAZARDOUS SUBSTANCE ACTIVITY" shall mean any
activity, event, or occurrence involving a Hazardous Substance, including,
without limitation, the manufacture, possession, presence, use, generation,
transportation, treatment, storage, disposal, Release, threatened Release,
abatement, removal, remediation, handling of or corrective or response action
to any Hazardous Substance.
(x) "LEGAL REQUIREMENT" shall mean any treaty,
convention, statute, law, regulation, ordinance, Governmental Approval,
injunction, judgment, order, consent decree, or other requirement of any
Governmental Authority.
(xi) "RCRA" shall mean the Solid Waste Disposal Act,
as amended by the Resource Conservation and Recovery Act of 1976 and
Hazardous and Solid Waste Amendments of 1984, 42 USC 6901 ET SEQ., and any
future amendments.
(xii) "RELEASE" shall mean any releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, or disposing into the indoor or outdoor
environment, of any Hazardous Substance, including, without limitation, the
abandonment or discharge of such Hazardous Substances in or from barrels,
drums,
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AGREEMENT AND PLAN OF REORGANIZATION
PAGE 18
containers, tanks, and other receptacles containing or previously containing
any Hazardous Substance.
3.12 STATUS OF CONTRACTS. (a) STATUS. Except as listed on
SCHEDULE 3.12 and except for purchase orders made in the ordinary course of
business, BRITCO is not party to and is not bound by any contract which is
not terminable by BRITCO upon thirty (30) days written notice without
penalty, whether or not in the ordinary course of business, and including,
without limiting the generality of the foregoing, leases, mortgages, union
contracts, employment agreements, pension, retirement or welfare agreements
(whether oral or written, formal or informal or employee benefit plans within
the meaning of the Employment Retirement Security Act of 1975, as amended
("ERISA"), agreements for the sale or distribution of its services or
products, vendor contracts, supply contracts, license agreements, service
agreements and other agreements or instruments. Except as listed on SCHEDULE
3.12, (i) there have been and are no material defaults under any contract to
which BRITCO is a party, nor has any event occurred which, after the giving
of notice or, with the passage of time, or both, would constitute a material
default under any such contract; (ii) all such contracts are valid and
binding and in full force and effect; (iii) BRITCO has complied with the
provisions of its contracts in all material respects; and, (iv) no notice of
a claimed breach has been received by BRITCO. Assuming that BRITCO obtains
the consents described in SCHEDULE 3.2, the Merger and the consummation by
BRITCO of the transactions herein contemplated will not conflict with, or
result in a breach, violation, termination or modification of, any of the
terms of any contract, agreement or other instrument to which BRITCO is a
party or by which BRITCO or any of its properties is or may be bound, or
constitute a default thereunder which would prevent or interfere with the
Merger or the consummation of the transactions herein contemplated.
(b) SCALE. Except as set forth in SCHEDULE 3.12, BRITCO is not
party to or bound by any contract which is material to its Business,
operations, financial condition or prospects or which involves, or is
reasonably likely to involve, the expenditure or receipt by BRITCO after the
date of the balance sheet for the year ended April 30, 1997 in the Financial
Statements of more than $25,000.
(c) NORMALITY. No purchase commitment of BRITCO, or by which BRITCO
is bound, is materially in excess of the normal, ordinary and usual
requirements of the Business or, in the opinion of the Stockholders, is at an
excessive price.
(d) AFFILIATED AGREEMENTS. Except as set forth in SCHEDULE 3.12,
BRITCO is not a party to or bound by (i) any contract (other than this
Agreement) with the Stockholders or former shareholders or any Person known
to BRITCO to be an Affiliate or Associate of a Stockholder or former
shareholder, (ii) any contract with officers, employees, agents, consultants,
advisors, salesmen, sales representatives, distributors or dealers that are
not cancelable by BRITCO at will without liability, penalty or premium, (iii)
any contract providing for the payment of any bonus or commission based on
sales or earnings, (iv) any contract that contains any severance or
termination or change in control pay liability or obligation, (v) any
contract for the purchase or sale of any
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AGREEMENT AND PLAN OF REORGANIZATION
PAGE 19
security (other than this Agreement), (vi) any contract for the borrowing of
money (or guarantee of indebtedness), (vii) any contract for leasing personal
property which requires annual payments in excess of $25,000 or the term of
any of which exceeds one (1) year, (viii) any contract relating to express
product or service warranties, (ix) any contract containing a covenant not to
compete by BRITCO or the Stockholders, (x) any contract granting a Lien,
security interest or other material encumbrance on any property or assets of
BRITCO or on its assets, (xi) any contract providing for exclusive purchases
by or from BRITCO or containing a requirement purchase obligation, (xii) any
contract providing for administration, service, utilization review,
adjustment, claims management or similar functions relating to insurance,
litigation or Plans of BRITCO, or (xiii) any contract for the sale of any of
the assets, property or rights of BRITCO outside of the ordinary course of
business, except as contemplated by this Agreement.
(e) POWER OF ATTORNEY. BRITCO has not given any power of attorney
(whether revocable or irrevocable) to any Person that is or may hereafter be
in force for any purpose whatsoever.
(f) PENSION OBLIGATION. Except as set forth in SCHEDULE 3.16B,
BRITCO is not paying, nor has it any obligation to pay, any pension, deferred
compensation or retirement allowance to any Person.
True, complete and correct copies of each of the contracts set forth in
SCHEDULE 3.12 or expressly referred to in the notes to the Financial
Statements have heretofore been provided to MCSC by BRITCO.
3.13 ASSETS; INVENTORY. The inventory of BRITCO has been
acquired in the ordinary course of business and has been and will be
reflected on the books of BRITCO in accordance with BRITCO's customary
accounting practices, consistently applied. Except as set forth in SCHEDULE
3.13, the inventory as a whole consists of items of a useable quality and is
saleable in the normal course of business without substantial discount other
than discounts in the ordinary course of business. The level of the
inventory as of the Closing Date is reasonable in light of BRITCO's normal
business practices. BRITCO and the Stockholders know of no material adverse
condition affecting BRITCO's ability to obtain inventory in the future in the
quality and quantity as now being obtained.
3.14 CUSTOMERS AND VENDORS. Except as set forth in SCHEDULE
3.14, BRITCO has received no notice that, and neither BRITCO nor any
Stockholder has any knowledge or reason to believe that, any vendor or any
customer of BRITCO which accounted for one percent (1.0%) or more of the
total revenues of BRITCO for the year ended April 30, 1997 does not plan to
continue to do business with MTAC, or plans to reduce its sales to or volume
of orders from MTAC or will not do business on substantially the same terms
and conditions with MTAC subsequent to the Closing Date as such vendor or
customer did with BRITCO before such date. Neither BRITCO nor the
Stockholders will take any action to influence its customers or vendors to
change or reduce their volume of business activity with MTAC after the
Closing Date.
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AGREEMENT AND PLAN OF REORGANIZATION
PAGE 20
3.15 TAXES. Except for Taxes which are being contested in
good faith by appropriate proceedings and are listed on SCHEDULE 3.15 and
except for Taxes which are accrued on the balance sheets which are part of
the Financial Statements and are listed on SCHEDULE 3.15 and except as
otherwise listed on SCHEDULE 3.15, BRITCO has paid all Taxes on the returns
described in the next sentence. Except as set forth on SCHEDULE 3.15, BRITCO
has timely filed all returns, reports and other documents and furnished all
information required or requested by any federal, state or local governmental
agency with respect to its Business or properties (except for tax returns not
yet due), and all such returns, reports and other documents and all such
information are true, correct and complete. No audit of any of the foregoing
of which BRITCO or the Stockholders have knowledge is in progress, and no
extension of time with respect to the date of filing of any of the foregoing
is in force, and no deficiencies or other additions to any of the Taxes,
including any assessments, interest or penalties thereon, accrued for,
applicable to or arising from any period ending on or prior to the date of
this Agreement have been proposed, other than as set forth on SCHEDULE 3.15.
No waiver or agreement by BRITCO is in force for the extension of time for
the assessment or payment of any of the Taxes. For purposes of this
Agreement, "Taxes" means all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise,
property, sales, withholding, social security, occupation, use, service,
service use, value added, license, payroll, franchise, transfer and recording
taxes, fees and charges, including estimated taxes, imposed by the United
States, the State of Texas, any other state, or any taxing authority
(domestic or foreign), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest, fines,
penalties or additional amounts attributable to, or imposed upon, or with
respect to any such taxes, charges, fees, levies or other assessments.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 21
3.16 EMPLOYEES; BENEFIT PLANS.
(a) EMPLOYEES. Listed on SCHEDULE 3.16A are the names
of all officers, directors and employees of BRITCO together with their
respective wage rates and rates of total compensation. BRITCO has paid in
full to its employees, agents and contractors all wages, salaries,
commissions, bonuses and other direct compensation as of the date of this
Agreement and as of the Closing Date due for all services performed by them
except for commissions due and payable in the ordinary course of business.
SCHEDULE 3.16A sets forth a summary of all grievances, claims, actions,
suits, proceedings, arbitrations, investigations or inquiries in connection
with or relating to employment practices of BRITCO under applicable law
instituted or threatened within the past five (5) years or currently pending
by or against BRITCO. BRITCO is not liable for any severance pay or other
payments on account of termination of former employees, nor will any
severance payments or other payments (including unemployment compensation,
"golden parachute" or otherwise) become payable as a consequence of the
transactions contemplated herein. To the best knowledge of BRITCO and the
Stockholders, BRITCO has complied with all applicable federal and state laws
relating to the employment of labor, including the provisions thereof
relating to wages, hours, collective bargaining, discrimination and civil
rights and the withholding and payment of social security and similar taxes
and is not liable for any arrears, wages or any such taxes or penalties for
failure to comply with any of the foregoing. There is no labor strike,
dispute, slowdown, stoppage or lockout pending or threatened against or
affecting BRITCO. No representation question exists respecting the employees
or any strike, work stoppage or other labor difficulty. There are no unfair
labor practice charges, complaints or proceedings pending or threatened
against or involving BRITCO; there are no claims, complaints or proceedings
involving breach of contract, tortious interference with contract rights,
violation of any State's unfair competition or unfair trade practice or trade
secret statute; there is no organizing activity involving BRITCO pending or
threatened by a labor union or group of employees; there are no
representation proceedings pending with the National Labor Relations Board
and no labor organization or group of employees has made a pending demand for
recognition. BRITCO is not subject to any collective bargaining agreement.
Except as set forth in SCHEDULE 3.16A, BRITCO has had no layoffs or recalls
during the past ten (10) years. SCHEDULE 3.16A sets forth the name of each
employee and his or her accrued vacation or leave payments due.
(b) BENEFIT PLANS. As of the Closing Date: (i) all
"employee benefit plans," as defined in Section 3(3) of ERISA including any
"multi-employer plan," as defined in Section 4001(a)(3) of ERISA
("Multi-employer Plan,") or any other employee benefit arrangements or
payroll practices (whether or not qualified for Federal income tax purposes,
whether or not funded, whether formal or informal, whether for the benefit of
a single individual or more than one individual and whether for the benefit
of current or former employees or their beneficiaries), including, without
limitation, severance, pension, retirement, profit sharing, deferred
compensation, stock purchase, stock option, restricted stock, stock
appreciation rights, incentive, bonus or other similar plans,
hospitalization, medical, vision, dental or other health plans, sick leave,
vacation pay, salary continuation for disability, consulting or other
compensation arrangements (the "Plans") maintained, or contributed to, by
BRITCO or any trade or business (whether or not incorporated)
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 22
which is under common control with BRITCO, or is treated as a single employer
under Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986,
as amended ("Code") ("ERISA Affiliate") are set forth on SCHEDULE 3.16B; (ii)
each Plan is in compliance in all material respects with the applicable
provisions of ERISA and the Code, including the filing of reports thereunder,
and with respect to each Plan all required contributions and benefits have
been paid when due in accordance with the provisions of each such Plan and
the applicable provisions of ERISA; (iii) each of the Plans, including
Multi-employer Plans, is subject to Title IV of ERISA and no Plan has been
terminated with any outstanding liability; and (iv) neither BRITCO nor any
ERISA Affiliate has incurred or reasonably expects to incur any partial or
complete withdrawal liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 of ERISA as a result of a complete or partial withdrawal
from a Multi-employer Plan. With respect to all Plans which are pension
plans, as defined in Section 3(2) of ERISA, other than plans intended to be
taxed-qualified under Section 401(a) of the Code, as of the Closing Date, the
present value of the liabilities for participants thereunder using Pension
Benefit Guaranty Corporation interest assumptions does not exceed, as of the
Closing Date, the assets of the Plans. Except as set forth on SCHEDULE
3.16B, as of the Closing Date, no Plan which is a "welfare plan," as defined
in Section 3(1) of ERISA, provides for continuing benefits or coverage for
any participant or beneficiary of a participant after such participant's
termination of employment (except as may be required by Section 490B of the
Code and at the sole expense of the participant or the beneficiary of the
participant). With respect to all Plans which are welfare plans, as defined
in Section 3(1) of ERISA, providing retiree benefits, the present value of
future anticipated expenses pursuant to the latest actuarial projections of
liabilities does not exceed $0. BRITCO and each ERISA Affiliate have
complied with the notice and continuation requirements of Section 4980B of
the Code and the regulations thereunder. The execution and delivery of this
Agreement and the consummation of the transactions thereby will result in the
acceleration of the time of payment or vesting of Plan benefits as set forth
on SCHEDULE 3.16B. SCHEDULE 3.16B also sets forth the administrative costs
due and paid for BRITCO's 401(k) plan as of the Closing Date.
3.17 INSURANCE. SCHEDULE 3.17 sets forth all policies or
binders of fire, liability, worker's compensation, vehicular, disability,
employee liability, business interruption, product liability, health, or
other insurance (including medical self-insurance) held by BRITCO relating
to, on behalf of or covering the Business of BRITCO (specifying the insurer,
the policy number or covering note number with respect to binders, and
describing each pending claim thereunder of more than $5,000.00). Such
policies and binders are in full force and effect. To the best knowledge of
BRITCO and its Stockholders, BRITCO is not in default with respect to any
provision contained in any such policy or binder and has not failed to give
any notice or present any claim under any such policy or binder in due and
timely fashion. Except for claims set forth on SCHEDULE 3.17, there are no
outstanding unpaid claims under any such policy or binder. BRITCO has not
received a notice of cancellation or non-renewal of any such policy or
binder. Neither BRITCO nor any Stockholder has any knowledge of any
inaccuracy in any application for such policies or binders, any failure to
pay premiums when due or any similar state of facts which might form the
basis for termination of any such insurance. SCHEDULE 3.17 also sets forth
BRITCO's loss experience for the last three (3) years relating to product
liability, worker's compensation and
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AGREEMENT AND PLAN OF REORGANIZATION
PAGE 23
property damage and health and medical coverage. SCHEDULE 3.17 sets forth
any medical insurance, hospitalization or long-term disability "run-out" as
of the Closing Date.
3.18 SUBSIDIARIES; COMPETING INTERESTS. BRITCO has no
subsidiaries and is not involved in any joint venture or partnership with any
other entity or Person. Except for B.B.S.X., Inc., neither BRITCO nor the
Stockholders have any interest, directly or indirectly, in any corporation,
partnership, association, proprietorship, or any other entity or business
which is engaged in a similar business, or is a competitor of, or a vendor to
or customer of, BRITCO.
3.19 NO PENDING TRANSACTIONS. Except for the transactions
contemplated by this Agreement, BRITCO is not a party to or bound by or the
subject of any agreement, undertaking or commitment to: (i) merge or
consolidate with, or acquire all or substantially all of the property and
assets of, any other corporation or person which would in any way affect the
Business of BRITCO; or, (ii) sell, lease or exchange all or substantially all
of BRITCO's property and assets to any other corporation or Person or enter
into any other transaction which would in any way materially and adversely
affect the Business of BRITCO or affect the Merger or the transactions
contemplated hereby.
3.20 BROKER'S OR FINDER'S FEES. Except for the fee payable
to Adobe Corporate Capital, LLC ("Adobe"), no agent, broker, person or firm
acting on behalf of BRITCO or the Stockholders is, or will be, entitled to
any commission or broker's or finder's fees from any of the parties hereto in
connection with any of the transactions contemplated herein. The
Stockholders shall pay the fee to Adobe on or prior to the Closing Date and
BRITCO and the Stockholders shall indemnify MCSC from any claim relating
thereto.
3.21 REPRESENTATIONS REGARDING THE COMMON STOCK. The
Stockholders represent, certify and warrant to MCSC that:
(a) they are "accredited investors" as defined by
Regulation D promulgated under the Securities Act;
(b) they have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of
the New MCSC Shares and the Promissory Note, if issued. The Stockholders
have received the MCSC 1996 Annual Report to Stockholders, the proxy
statement for the 1997 Annual Meeting of Stockholders, the Form 10-K for the
year ended December 31, 1996 and the Form 10-Q for the nine months ended
September 30, 1997. The Stockholders recognize that acquisition of the New
MCSC Shares and the Promissory Note involves certain risks and have taken
full cognizance of and understand such risks. In deciding whether to acquire
the New MCSC Shares and the Promissory Note pursuant to this Agreement, the
Stockholders have weighed these risks against any perceived benefits of
owning the New MCSC Shares;
(c) the Stockholders have had the opportunity to perform
such due
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 24
diligence regarding MCSC as they have deemed necessary and to ask questions
of, and receive answers from, management of MCSC and have sought and received
such accounting, legal and tax advice as the Stockholders have considered
necessary to make an informed investment decision with respect to the New
MCSC Shares, and the Promissory Note;
(d) the Stockholders are aware that no federal or state
agency has made any finding or determination as to the fairness of the New
MCSC Shares and the Promissory Note nor has any agency made any
recommendation or endorsement of the New MCSC Shares and the Promissory Note;
(e) during the last five years, neither Stockholder has
been:
(i) convicted of nor pleaded NOLO CONTENDERE to any
felony or misdemeanor in connection with the purchase or sale of any security
or in connection with the making of any false filing with the Securities and
Exchange Commission ("SEC") or any state securities administrator, or of any
felony involving fraud or deceit, including but not limited to, forgery,
embezzlement, obtaining money under false pretenses, larceny, conspiracy to
defraud or theft;
(ii) subject to any order, judgment, or decree of
any court of competent jurisdiction temporarily or preliminary restraining or
enjoining, or are subject to any order, judgment, or decree of any court of
competent jurisdiction, permanently restraining or enjoining that person from
engaging in or continuing any conduct or practice in connection with the
purchase or sale of any security or in connection with the making of any
false filing with the SEC or any state securities administrator;
(iii) subject to a United States Postal Service false
representation order; or
(iv) subject to any state administrative order
entered by a state securities administrator in which fraud or deceit was
found;
(f) the Stockholders are acquiring the New MCSC Shares
and the Promissory Note for their own account and not with a view to resale
or distribution and no agreements, arrangements or understandings exist with
respect to the transfer, sale, voting or disposition of such securities;
(g) the Stockholders understand that stop transfer
instructions relating to the Common Stock and the Promissory Note will be
placed in MCSC's stock register and that the certificates representing New
MCSC Shares will bear legends which shall read:
"The shares of Common Stock [OR THIS PROMISSORY NOTE]
represented by this certificate have been issued pursuant
to a claim
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 25
of exemption from the registration or qualification requirements
of federal and state securities laws and may not be sold or
transferred without registration or qualification or otherwise
except pursuant to an applicable exemption therefrom as evidenced
by an opinion of counsel satisfactory to the issuer hereof."
"Except with the prior written consent of Miami Computer Supply
Corporation, the shares of Common Stock [OR THIS PROMISSORY NOTE]
represented by this certificate may not be sold, pledged,
hypothecated, gifted or otherwise transferred or disposed of until
[THE DATE WHICH IS 270 DAYS AFTER THE CLOSING DATE.]"
(h) the Stockholders realize that (i) the acquisition of
the New MCSC Shares and the Promissory Note is a long-term investment; (ii)
the Stockholders must bear the economic risk of such investment until the
restrictive holding period expires and because the New MCSC Shares and the
Promissory Note have not been registered under the Securities Act or any
similar state law, they cannot be sold unless so registered or an exemption
from registration is available; and
(i) the Stockholders believe that an investment in the
New MCSC Shares and the Promissory Note is suitable for them based upon their
investment objectives and financial needs and the Stockholders have adequate
means of providing for their current financial needs and have no need for
liquidity of their investment with respect to the New MCSC Shares and the
Promissory Note.
3.22 UPDATING OF SCHEDULES. To and including the Closing
Date, BRITCO and the Stockholders shall notify MCSC of any changes, additions
or events which may cause any change in or addition to any Schedules
delivered by them under this Agreement, promptly after the occurrence of same
and no later than the Closing Date by delivery of updates of all Schedules,
including future quarterly and annual Financial Statements. No notification
made pursuant to this Section 3.22 shall be deemed to cure any breach of any
representation or warranty made in this Agreement or any Schedule unless such
breach resulted from circumstances wholly outside of the control of BRITCO or
the Stockholders or unless MCSC shall specifically agree thereto in writing,
nor shall any such notification be considered to constitute or give rise to a
waiver by MCSC of any condition set forth in this Agreement unless
specifically waived in writing by MCSC.
3.23 OWNERSHIP OF MCSC COMMON STOCK. Except as set forth in
SCHEDULE 3.23, as of the date hereof, neither BRITCO nor any Stockholder nor
any of their Affiliates or Associates, (i) beneficially own, directly or
indirectly, or (ii) are parties to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of,
in each case, shares of MCSC Common Stock.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 26
3.24 TRANSACTIONS WITH AFFILIATES. Other than this Agreement,
BRITCO is not bound by or a party to any contract with, does business with or
has any obligations or liabilities to any Stockholder or any Affiliate or
Associate of any Stockholder. As used in this Agreement, an "Affiliate" of,
or a Person "Affiliated" with, a specified person, is a Person that directly,
or indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, the Person specified. Moreover, as used
in this Agreement, the term "Associate" used to indicate a relationship with
any Person, means: (a) any corporation or organization (other than BRITCO) of
which such Person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of any class of equity securities, (b)
any trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar
fiduciary capacity, and (c) any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person or who is a
director or officer of the corporation or organization or any of its parents
or subsidiaries.
3.25 BANK ACCOUNTS. SCHEDULE 3.25 sets forth the names and
locations of all banks or other financial institutions in which BRITCO has an
account or safe deposit box and the names of all Persons authorized to draw
thereon or to have access thereto. At the Closing, BRITCO will deliver to
MCSC copies of all records, including all signature or authorization cards
pertaining to such bank accounts and safe deposit boxes and will assign such
authorization to MTAC or MCSC and provide evidence satisfactory to MCSC that
such assignment will be effective immediately subsequent to the Closing and,
at such time, no Stockholder or Person determined by MTAC or MCSC to be
unauthorized shall have the authority to access such accounts or safe deposit
boxes or draw on such accounts.
3.26 CORRECT INFORMATION. All representations, warranties,
covenants, schedules, exhibits, documents, certificates, reports or
statements furnished or to be furnished to MCSC by or on behalf of BRITCO or
the Stockholders in connection with this Agreement or the transactions
contemplated hereby are true, complete and accurate in all material respects.
Without limiting the specificity of such representations or warranties made
in this Agreement or information furnished pursuant hereto to MCSC, to the
best knowledge of BRITCO and its Stockholders, neither BRITCO nor any of the
Stockholders has failed to disclose to MCSC any facts material to the
Business, operations, condition (financial or otherwise), liabilities,
assets, earnings, working capital or prospects of BRITCO.
ARTICLE 4.0 REPRESENTATIONS AND WARRANTIES OF MCSC.
MCSC hereby represents and warrants to BRITCO as follows:
4.1 STRUCTURE; STATUS.
(a) MCSC.
(i) The authorized capital stock of MCSC consists of
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 27
30,000,000 shares of MCSC Common Stock and 5,000,000 shares of MCSC preferred
stock, no par value par share ("MCSC Preferred Stock"). As of October 8,
1997, there were 4,020,776 shares of MCSC Common Stock issued and
outstanding, and there were no shares of MCSC Preferred Stock issued and
outstanding. All outstanding shares of MCSC Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable, and none
of the outstanding shares of MCSC Common Stock has been issued in violation
of the preemptive rights of any person, firm or entity. As of the date
hereof, there are no Rights authorized, issued or outstanding with respect to
the capital stock of MCSC, except for (A) shares of MCSC Common Stock
issuable pursuant to the MCSC 1996 Stock Option Plan and the MCSC
Non-Employee Directors Stock Option Plan and (B) by virtue of this Agreement
and (C) pursuant to certain agreements to acquire the stock or assets of
other entities.
(ii) MCSC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio, has full
power and authority to carry on its businesses as it is now conducted and to
own, lease and operate the property and assets that it now owns, leases and
operates and to execute and deliver this Agreement and to perform the
transactions contemplated hereby.
(b) MTAC.
(i) At the Closing Date, the authorized capital
stock of MTAC will consist of one thousand (1,000) shares of MTAC common
stock, no par value per share ("MTAC Common Stock"), all of which shares will
be issued and outstanding and owned beneficially and of record by MCSC. At
the Closing Date, all outstanding shares of MTAC Common Stock will have been
duly authorized and validly issued and will be fully paid and non-assessable,
and none of the outstanding shares of MTAC Common Stock will have been issued
in violation of the preemptive rights of any person, firm or entity. As of
the Closing Date, there will be no Rights authorized, issued or outstanding
with respect to the capital stock of MTAC.
(ii) MTAC will, at the Closing Date, be a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas, will have the full power and authority to execute
and deliver this Agreement and to enter into the Merger and perform the
transactions contemplated hereby.
4.2 AUTHORITY; NO CONFLICT. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby by
MCSC and MTAC have been or will be duly and effectively authorized by all
necessary corporate action of MCSC and MTAC, respectively, and this Agreement
is and will be a valid and legally binding obligation of MCSC and MTAC,
respectively, enforceable in accordance with its terms except to the extent
that enforceability may be limited by bankruptcy, reorganization, insolvency
or other laws affecting the enforcement of creditors' rights generally or the
availability of equitable remedies subject to the discretion of the court. A
CERTIFIED copy of the resolutions of the Boards of Directors of MCSC and MTAC
will be delivered to BRITCO, and such copies will be complete and correct and
such
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AGREEMENT AND PLAN OF REORGANIZATION
PAGE 28
resolutions will be in full force and effect on the date thereof. The
execution, delivery, and performance of this Agreement and the consummation
of the transactions contemplated hereby by MCSC and MTAC will not: (i)
require the approval or consent of any governmental or regulatory body,
except for compliance with applicable federal and state ("blue sky")
securities laws in connection with the issuance of the New MCSC Shares
pursuant to this Agreement and the filing of Articles of Merger with the
Secretary of State of the State of Texas pursuant to Section 5.04 of the
TBCA; (ii) require the approval or consent of any other person or entity
except for the approval of the Merger by MCSC as the sole stockholder of
MTAC; (iii) violate any provision of MCSC's or MTAC's Articles of
Incorporation or Bylaws; or (iv) violate any statute, law or regulation as
such statute, law or regulation relates to MCSC or MTAC.
4.3 BROKER'S OR FINDER'S FEES. No agent, broker, person or
firm acting on behalf of MCSC or MTAC is, or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto in
connection with any of the transactions contemplated herein.
4.4 LITIGATION; ORDERS. Except as set forth on SCHEDULE 4.4,
there are no claims, actions, suits, or proceedings, grievances,
arbitrations, investigations or inquiries pending or, to the best knowledge
of MCSC, threatened, at law or in equity or before or by any federal, state,
local, foreign or other governmental department, commission, board,
arbitrator(s), agency, instrumentality or authority by or against MCSC which
restrains or prohibits or which may restrain or prohibit or otherwise affect,
the consummation of the transactions contemplated hereby.
4.5 AUTHORIZED MCSC COMMON STOCK. MCSC has sufficient
authorized shares of common stock in order to issue the MCSC Common Stock to
the Stockholders at the Closing. The MCSC Common Stock to be issued to the
Stockholders pursuant to Section 2.3(b) hereof shall, on the Closing Date, be
duly authorized, validly issued, fully paid and non-assessable and free and
clear of all Liens of MCSC. As of the date hereof and the Closing Date, the
MCSC Common Stock is and will be qualified and listed on the Nasdaq National
Market System and MCSC knows of no restriction on the ability of the MCSC
Common Stock to trade thereon, except for the restrictions set forth herein
and those resulting from applicable law, regulation and the rules of the
Nasdaq.
4.6 ACCURACY AND COMPLETENESS OF REPORTS. MCSC has delivered
a true, correct and complete copy of the annual report submitted to its
shareholders for its fiscal year ended December 31, 1996 ("Annual Report"),
the Proxy Statement for the 1997 Annual Meeting of Stockholders ("Proxy
Statement") and the Form 10-Q for the quarter ended September 30, 1997 ("Form
10-Q"). The Annual Report, Proxy Statement and Form 10-Q do not contain any
untrue statement of a material fact, and do not omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading.
ARTICLE 5.0 COVENANTS.
5.1 COVENANTS OF BRITCO. Except as contemplated by this
Agreement or
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 29
as expressly agreed to in writing by MCSC, during the period from the date of
this Agreement to the Closing Date, BRITCO will conduct its operations
according to its ordinary and usual course of business consistent with past
practice, will use its best efforts to preserve intact its business
organization, to keep available the services of its officers and employees
and to maintain satisfactory relationships with licensors, licensees,
vendors, employees, contractors, distributors, customers and others having
business relationships with it. Without limiting the generality of the
foregoing and except as otherwise expressly provided in this Agreement, prior
to the Closing Date, BRITCO will not, without the prior written consent of
MCSC:
(a) pay any dividends or other distributions (cash or
otherwise) on or redeem or repurchase or otherwise acquire its capital stock,
subdivide or reclassify its shares of capital stock, pay any bonus, increase
the wages or salaries of its employees, increase the fees to its directors,
increase compensation to any consultants or other professionals, commit
itself to any new or renewed collective bargaining agreement or to any
additional pension, profit-sharing, bonus, incentive, deferred compensation,
stock purchase, stock option, stock appreciation right, group insurance,
severance pay, retirement or other compensation or benefit plan, agreement or
arrangement, or to any employment or consulting agreement with or for the
benefit of any person, to amend or make any payment or contribution (other
than in the ordinary course of business and consistent with past practice)
with respect to any of such plans or any of such agreements in existence on
the date hereof except as may be required to comply with applicable law,
notice of which shall be provided to MCSC;
(b) except in the ordinary course of business or as
otherwise contemplated hereby purchase, dispose of, or encumber, or agree to
sell, transfer, mortgage or otherwise dispose of or encumber, any of its
properties or assets or make any capital expenditure in excess of $5,000;
(c) except as otherwise contemplated hereby, enter into
any other agreements, commitments or contracts which, individually or in the
aggregate, are material to BRITCO, except agreements, commitments or
contracts for the purchase, sale or lease of goods or services in the
ordinary course of business, consistent with past practice and not in excess
of current requirements, or otherwise make any material change in the conduct
of its business or operations of BRITCO;
(d) authorize, recommend, propose or announce an
intention to authorize, recommend, propose, or enter into any agreement in
principle or an agreement with respect to any merger, consolidation or
business combination (except for this Agreement), any acquisition of a
material amount of assets or securities, any disposition of a material amount
of assets or securities or any material change in its capitalization, or any
entry into a material contract or any amendment or modification of any
material contract or any release or relinquishment of any material contract
rights not in the ordinary and usual course of business;
(e) incur or guarantee any obligation or liability
(whether absolute,
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 30
accrued, contingent or otherwise and whether due or to become due) material
to BRITCO or pay, discharge or satisfy any Lien or liability (whether
absolute, accrued, contingent or otherwise and whether due or to become due),
other than liabilities shown or the balance sheet as of September 30, 1997 in
the Financial Statements and immaterial liabilities incurred after the date
thereof in the ordinary course of business in normal amounts, and no such
payment, discharge or satisfaction shall be affected other than in accordance
with the ordinary payment terms relating to the liability paid, discharged or
satisfied;
(f) permit or allow its properties or assets, real,
personal or mixed, tangible or intangible, to be mortgaged, pledged or
subjected to any Lien, except for Permitted Liens;
(g) cancel any debts or claims except in the ordinary
course of business and consistent with past practice, or waive any rights of
material value;
(h) permit an Intellectual Property right to lapse;
(i) issue, grant or sell any shares of its capital stock
or any equity interest or security, or issue, grant or sell any security,
option, warrant, call, subscription or other right of any kind, fixed or
contingent, that directly or indirectly calls for the issuance, sale, pledge
or other disposition of any shares of its capital stock or any equity
interest or security;
(j) make any change in any accounting principles,
practices or methods, including their principles, practices or methods
relating to calculation of reserves for receivables;
(k) pay, loan, or advance any amount to or in respect
of, or sell, transfer or lease any property or assets (real, personal or
mixed, tangible or intangible) to, or enter into any transaction with or for
the benefit of, any Stockholder or any of their respective Affiliates or
Associates;
(l) enter into any lease or sub-lease of real property
or material lease of personal property;
(m) terminate or amend, or fail to perform any of its
obligations or cause any breach under, any contract set forth in SCHEDULE
3.12. BRITCO will exercise its commercially reasonable efforts to renew each
of the contracts set forth on SCHEDULE 3.12 which is scheduled to terminate
prior to the Closing Date;
(n) will not permit the insurance referred to in
SCHEDULE 3.17 to lapse, expire, terminate or be cancelled;
(o) violate in any material respect any laws,
regulations, or orders
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 31
applicable to it and its properties, operations, business and employees;
(p) amend its Articles of Incorporation or Bylaws; or
(q) agree to do any of the foregoing.
5.2 NO SOLICITATION. Neither BRITCO nor the Stockholders
shall, and BRITCO and the Stockholders shall use their best efforts to cause
BRITCO's officers, directors, employees, agents, Affiliates and
representatives (including, without limitation, investment bankers, attorneys
and accountants) not to, directly or indirectly, (i) initiate contact with,
solicit or encourage any inquiries or proposals by, or (ii) except as
required by applicable law as advised in writing by counsel reasonably
acceptable to MCSC, enter into any discussions or negotiations with, or
disclose directly or indirectly any information not customarily disclosed
concerning its Business and properties to, or afford any access to its
properties, books and records to, any Person or other entity or group in
connection with any possible proposal (an "Acquisition Proposal") regarding a
sale of BRITCO's capital stock or a merger, consolidation, or sale of all or
a substantial portion of the assets of BRITCO, or any similar transaction.
BRITCO will notify MCSC immediately if any discussions or negotiations are
sought to be initiated, any inquiry or proposal is made, or any such
information is requested, with respect to an Acquisition Proposal or
potential Acquisition Proposal or if any Acquisition Proposal is received or
indicated to be forthcoming. The foregoing restrictions on disclosures shall
not apply to disclosures required to be made by any law, regulation or order
of a court or governmental agency of competent jurisdiction; provided,
however, before any disclosure is made BRITCO shall notify MCSC immediately
of any such request for information and shall take all reasonable action to
support any request or motion MCSC may make for confidential treatment or a
protective order.
5.3 STOCKHOLDER APPROVAL. As soon as practical after the
execution of this Agreement, BRITCO will take all steps necessary to obtain
any other requisite written consent of the Stockholders, for the purpose of
adopting and approving this Agreement, and the Merger and the transactions
contemplated hereby and for such other purposes as may be necessary or
desirable. BRITCO shall provide to its Stockholders certain information
regarding this Agreement, the Merger, the transactions contemplated hereby
and the MCSC Common Stock, which information shall be reasonably satisfactory
to MCSC prior to its dissemination to them. The Board of Directors of BRITCO
has unanimously determined that this Agreement is advisable and in the best
interests of the stockholders of BRITCO and will (i) recommend to the
Stockholders the adoption and approval of this Agreement and the transactions
contemplated hereby and (ii) use their best efforts to obtain the necessary
approvals by the Stockholders of this Agreement, the Merger and the
transactions contemplated hereby. The Stockholders shall, by virtue of their
execution of this Agreement be deemed to have provided their written consent
to the Merger and to have waived any rights they may have under Texas law to
dissent therefrom and to seek the fair value of their shares of BRITCO Common
Stock in cash.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
Page 32
5.4 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) ACCESS TO INFORMATION. Between the date of this
Agreement and the earlier of the Closing Date or the date of the termination
of this Agreement, BRITCO shall provide to MCSC and its representatives full
access to its premises, properties, equipment, books and records as are
related to the Business and shall make its directors, officers, employees and
agents available to confer with MCSC and its representatives; and during such
period, BRITCO shall: (i) disclose and make available to MCSC and its
representatives all documents and records relating to the assets, properties,
operations, obligations and liabilities of BRITCO, including but not limited
to, all books of account (including the general ledger), tax records and
returns, minute books of directors', committees', and stockholders' meetings,
organizational documents, material contracts, customer list and agreements,
filings with and communications from any Governmental Authority, litigation
files, accountants' work papers, plans or records relating to employees and
any other business activities of BRITCO as MCSC or its representatives may
require; and (ii) promptly furnish to MCSC all other information concerning
BRITCO's Business, properties and personnel as MCSC may request. During this
period, MCSC may perform any review, analysis or testing that it, in its sole
discretion, deems appropriate. MCSC will use its best efforts not to unduly
interfere with the business operations of BRITCO during such review.
Throughout this period, BRITCO will cause Mrs. and Mr. Ferguson and one or
more other designated representatives to confer with MCSC's representatives
on a regular and frequent basis and to report the general status of BRITCO's
ongoing condition and operations. In addition, BRITCO will permit MCSC to
communicate with its agents, customers and creditors. BRITCO will
immediately notify MCSC of any material change in the ordinary course of its
business or in the operations of its properties or of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) or the institution, continuation or the threat of
litigation involving BRITCO or its Affiliates or affiliated persons and will
keep MCSC fully informed of such events.
(b) CONFIDENTIALITY. MCSC will hold and will cause its
employees, officers, directors, consultants and advisors to hold in strict
confidence, unless compelled to disclose by judicial or administrative
process and then only with written notice prior to disclosure to BRITCO, all
documents and information concerning BRITCO furnished to MCSC in connection
with the transactions contemplated by this Agreement (except to the extent
that such information can be shown to have been (i) previously known by MCSC
other than through a breach of a confidentiality agreement by a third party;
(ii) in the public domain through no fault of MCSC; or (iii) later lawfully
acquired by MCSC from other sources) (the "Confidential Information") and
will not release or disclose the Confidential Information to any other
person, except its auditors, attorneys, financial advisors and other
consultants and advisors and lending institutions (including banks) or
lending authorities in connection with this Agreement (it being understood
that such persons shall be informed by MCSC of the confidential nature of
such information and shall be directed by MCSC to treat such information
confidentially). If the transactions contemplated by this Agreement are not
consummated, such confidence shall be maintained for a period of one year
from the date of termination of this Agreement, except to the extent the
Confidential Information
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AGREEMENT AND PLAN OF REORGANIZATION
Page 33
comes into the public domain through no fault of MCSC. If requested by
BRITCO, MCSC will return to BRITCO, all physical materials furnished by
BRITCO to MCSC or their respective agents, representatives or advisors and
all copies thereof, in whatever medium, and all materials prepared by MCSC
which evaluate or reflect the Confidential Information. It is understood
that MCSC shall be deemed to have satisfied its obligation to hold the
Confidential Information confidential if it exercises the same care as it
takes to preserve confidentiality for its own similar information. BRITCO
will be entitled to equitable relief in the event of a breach by MCSC of the
provisions contained in this Section 5.4.
5.5 CONSENTS; EFFORTS TO CONSUMMATE. BRITCO and MCSC will
each use their respective best efforts to obtain consents of all third
parties and Governmental Authorities necessary to the consummation of the
transactions contemplated by this Agreement. Each of BRITCO and MCSC agree
to use all reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective, as
soon as practicable after the date of this Agreement and after the Closing
Date thereof, the transactions contemplated by this Agreement, including,
without limitation, using reasonable efforts to lift or rescind any
injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated herein.
5.6 PUBLIC ANNOUNCEMENTS. BRITCO and MCSC will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the Agreement and shall not issue any such press
release or make any such public statement prior to such consultation, except
as may be required by law or judicial or administrative process.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
Page 34
5.7 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE STOCKHOLDERS. The
Stockholders, jointly and severally, agree to indemnify and hold MCSC, and
its respective officers, directors, employees and agents and their respective
heirs, successors and assigns (collectively, the "MCSC Group"), harmless
against, and to reimburse MCSC Group for any Damage or Tax imposed on or
incurred by any of the MCSC Group (a "MCSC Loss") because of or arising from
or related to or in connection with: (i) any breach of any of BRITCO's or
the Stockholders' representations or warranties or any failure to perform or
violation of any agreement or covenant on the part of BRITCO or the
Stockholders under this Agreement or under any other agreement referred to
herein or contemplated hereby to which BRITCO or the Stockholders is a
signatory; (ii) any claims (other than claims by vendors which have been
disclosed by BRITCO as set forth in SCHEDULE 5.7) arising out of, relating to
or in connection with the Business of BRITCO prior to, and including, the
Closing Date (including without limitation any claims relating to the
products sold by BRITCO prior to and including the Closing Date or relating
to the employment practices of BRITCO); (iii) any Damages or Tax caused by
BRITCO resulting from any investigation, suit, action or other proceeding by
or before any Governmental Authority which seeks Damages or Taxes to
restrain, modify, prohibit or revoke, or seeks other relief in connection
with, the consummation of this transaction due to fault or liability of
BRITCO; and (iv) any and all actions, suits, proceedings, demands,
assessments, judgments, out-of-pocket costs and reasonable attorneys' fees
(in preparation, at trial and on appeal) of any nature incident to the
foregoing.
(b) INDEMNIFICATION BY MCSC. MCSC agrees to indemnify
and hold BRITCO and the Stockholders, and BRITCO's respective officers,
directors, employees and agents and their respective heirs, successors and
assigns (collectively, the "BRITCO Group"), harmless against, and to
reimburse BRITCO Group for any Damage or Tax imposed on or incurred by any of
BRITCO Group (a "BRITCO Loss") because of or arising from or related to or in
connection with: (i) any breach of any of MCSC's representations or
warranties or any failure to perform or violation of any agreement or
covenant on the part of MCSC under this Agreement or any other agreement
referred to herein or contemplated hereby; (ii) any claims arising out of, or
relating to or in connection with the business of MTAC or its Affiliates,
successors or assigns subsequent to the Closing Date (including any claims
relating to the sale of the products by MTAC after the Closing Date) except
for claims resulting from the action or non-action of the Stockholders acting
in their capacity as employees of MTAC after the Closing Date; (iii) any
Damage or Tax caused by MCSC resulting from any investigation, suit, action
or other proceeding by or before any Governmental Authority which seeks
Damages or Taxes or to restrain, modify, prohibit or revoke, or seeks other
relief in connection with, the consummation of this transaction due to fault
or liability of MCSC; and (iv) any and all actions, suits, proceedings,
demands, assessments, judgments, out-of-pocket costs and reasonable
attorneys' fees (in preparation, at trial and on appeal) of any nature
incident to the foregoing.
(c) LIMITATIONS ON INDEMNIFICATION. No indemnification
payment shall be made by the Stockholders pursuant to this Agreement, until
the amounts which the MCSC
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
Page 35
Group would otherwise be entitled to receive as indemnification aggregate at
least $50,000.00 and MCSC shall have been unable to recover such amounts from
any applicable insurance MCSC or MTAC may have, at which time MCSC Group
shall be entitled to receive payment of all such amounts in excess of
$50,000.00. No indemnification payment shall be made by MCSC pursuant to
this Agreement, until the amounts which BRITCO Group would otherwise be
entitled to receive as indemnification aggregate at least $50,000.00 and
BRITCO or the Stockholders shall have been unable to recover such amounts
from any applicable insurance BRITCO or the Stockholders may have, at which
time BRITCO Group shall be entitled to receive payment of all such amounts in
excess of $50,000.00.
(d) NOTICE. The indemnified party shall promptly notify
the indemnifying party of any claim that is reasonably likely to give rise to
a claim for indemnification under this Agreement (a "Damage Claim") asserted
by such party or by a third party, stating, to the extent known, with
detailed specificity the nature and basis of the Damage Claim. The failure
to give promptly any such notice shall not relieve the indemnifying party
from any liability hereunder with respect to the subject matter of any Damage
Claim except to the extent that the indemnifying party has actually been
damaged by such failure. If the indemnifying party shall have confirmed in
writing its obligation to indemnify for any liability asserted in any Damage
Claim, the indemnifying party shall have, at its election, the right to
compromise or defend such Damage Claim involving the assertion of liability
by a third party at the indemnifying party's sole expense, through counsel
chosen by it, provided that, in conducting such defense, settlement and
compromise: (i) the indemnifying party shall not permit to exist any lien,
encumbrance or other adverse charge upon any asset or business of the
indemnified party; (ii) the indemnifying party shall cause its counsel to
consult with the indemnified party and, if applicable, the indemnifying
party's counsel and keep them fully advised of the progress of the defense,
settlement and compromise; and (iii) the indemnifying party shall promptly
reimburse the indemnified party for the full amount of any Damages resulting
from such Damage Claim except to the extent otherwise provided herein. If
the indemnifying party is required hereunder or elects to conduct the defense
of such Damage Claim, the indemnified party shall cooperate with the
indemnifying party in connection therewith and shall be entitled to
participate in the defense thereof and to appoint counsel for that purpose,
except that the cost of any such participating counsel shall be solely for
the account of the indemnified party and the indemnifying party shall have no
responsibility therefor unless: (i) the indemnifying party shall have
disputed its potential liability under the alleged Damage Claim or shall not
have notified the indemnified party that it will assume the defense of such
Damage Claim and shall not have designated counsel reasonably acceptable to
the indemnified party within a reasonable time of the notice of such Damage
Claim; or (ii) the named parties to any proceeding with respect to such
Damage Claim (including any impleaded parties) include both the indemnified
party and the indemnifying party and representation of both parties by the
same counsel would be, in the opinion of counsel selected by the indemnifying
party, inappropriate due to actual or potential differing interests between
them. As long as the indemnifying party is contesting any such Damage Claim
in good faith in accordance with the foregoing requirements, the indemnified
party shall not pay or settle any such Damage Claim. Notwithstanding the
foregoing, the indemnified party may pay or settle any such Damage Claim at
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
Page 36
any time, provided that the indemnified party waives any right to indemnity
therefor by the indemnifying party.
(e) DEFENSE. In the event that the indemnifying party
fails within thirty (30) calendar days after the receipt of notice of such
Damage Claim to notify the indemnified party and to confirm in writing its
obligation to indemnify for any liability in such Damage Claim, the
indemnified party shall have the right to defend, settle or compromise the
Damage Claim in its discretion; provided, however, that the indemnifying
party shall have the right to participate in the defense of such Damage Claim
at its own expense. The indemnifying party shall promptly reimburse the
indemnified party for the full amount of any Damages resulting from such
Damage Claim and any defense, settlement or compromise thereof and all
reasonable related costs incurred by the indemnified party, subject to the
limitations set forth in Section 5.7(c).
(f) NONEXCLUSIVE REMEDY. The indemnification provisions
in this Agreement shall not be deemed to preclude the exercise of any other
rights or the pursuit of any other remedies for the breach of this Agreement
or with respect to any misrepresentations or breaches of representations,
warranties or covenants by either BRITCO, on the one hand, or MCSC on the
other hand.
5.8 EXISTENCE. The Stockholders, to the extent within their
control, and BRITCO will take such action as may be necessary to maintain,
preserve, renew and keep in full force and effect BRITCO's existence
(corporate or otherwise), rights and franchises.
5.9 ARTICLES OF MERGER. BRITCO and MTAC shall, on the
Closing Date, execute and file Articles of Merger with the Secretary of State
of the State of Texas to effectuate the Merger and will file Articles of
Amendment to the Articles of Incorporation of MTAC to change the corporate
name of MTAC to "BRITCO, Inc."
5.10 B.B.S.X., INC. The Stockholders covenant and agree that
from and after the Closing Date, and as long as B.B.S.X., Inc. is an
Affiliate of the Stockholders, the business of B.B.S.X., Inc. shall not be
expanded from its present ordinary course of business in a manner that is
competitive with the business of MTAC or MCSC. The Stockholders shall cause
B.B.S.X., Inc. to execute and deliver to MTAC and MCSC a non-competition and
non-interference agreement at Closing on terms substantially as set forth in
EXHIBIT E, attached hereto and made a part hereof. MCSC and MTAC covenant
and agree that B.B.S.X., Inc. may continue its present ordinary course of
business after the Closing Date.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
Page 37
ARTICLE 6.0 GENERAL MATTERS.
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND RELATED
AGREEMENTS. All of the terms, conditions, warranties, representations,
covenants, and agreements contained in or made pursuant to this Agreement
shall survive the Closing for a period of two (2) years after the Effective
Time and the indemnity provisions of Section 5.7(b) shall survive and expire
in accordance with its terms and the indemnity provisions of Section 5.7(a)
shall be valid and effective for a period of one (1) year after the Effective
Time, notwithstanding any investigation made by or knowledge of any of the
parties to this Agreement or any of their respective successors or assigns.
All covenants of the parties that are to be performed after Closing shall
continue and expire in accordance with their respective terms. If at the end
of any of such period or term, a claim has been asserted hereunder and still
is pending or unresolved, such period or term shall continue to survive until
the claim finally is terminated or otherwise resolved.
6.2 COVENANT NOT TO DISCLOSE. The Stockholders hereby
covenant and agree, that as the owners and operators of the Business of
BRITCO, they possess certain data and knowledge of operations of the Business
of BRITCO which are proprietary in nature and confidential. The Stockholders
covenant and agree that they not, and will direct each BRITCO director,
officer, employee or agent not to, at any time after the Closing, reveal,
divulge or make known to any person (other than MCSC) or use for their own
account or for the account of any person, firm, corporation or other
organization, any confidential or proprietary customer list, vendor list,
sales method, record, data, trade secret, pricing policy, bid amount, bid
strategy, rate structure, personnel policy, method or practice of soliciting
or obtaining or doing business by BRITCO or any Business Know-How or other
confidential or proprietary information whatsoever relating to BRITCO or,
whether or not obtained with the knowledge and permission of MCSC (exclusive
of any information which at the time of disclosure is generally available to
and known by the public or information which is required to be disclosed by
administrative or judicial process of an agency or court of competent
jurisdiction, other than as a result of any unauthorized disclosure by BRITCO
or the Stockholders). The Stockholders further covenant and agree that they
shall not divulge any such confidential or proprietary information which they
may acquire during any transition period in which they are employed or assist
or consult with MCSC to facilitate the transfer and the continued success of
the Business of BRITCO, and the Stockholders will hold such confidential and
proprietary information in trust for the sole benefit of MCSC and its
successors and assigns as set forth herein.
6.3 NON-INTERFERENCE AGREEMENT. The Stockholders will not,
at any time after the Closing, directly or indirectly, for whatever reason,
whether for their own account or for the account of any other person, firm,
corporation or other organization: (i) engage in any activity which would
compete with the business of MCSC or the Surviving Corporation in the market
areas in which MCSC and BRITCO now do business for a period of the later of
one (1) year from the Closing Date or the date of termination of their
respective employment agreements; (ii) solicit, employ or otherwise interfere
with any of BRITCO's or MCSC's existing or potential contracts or
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
Page 38
relationships with any customer, affiliate, employee, officer, director,
supplier, vendor or any independent contractor whether the person is employed
by or associated with BRITCO or with MCSC on the Closing Date or at any time
thereafter; or (iii) solicit or otherwise interfere with any existing or
proposed contract between BRITCO or MCSC and any other party whatsoever.
6.4 USE OF BRITCO'S NAME. BRITCO hereby agrees that after
the Closing the Surviving Corporation shall have the right to use BRITCO's
name as its corporate title and MCSC or the Surviving Corporation shall have
the right to use BRITCO's name on products sold by MCSC or the Surviving
Corporation following the Closing Date.
6.5 BENEFIT PLANS AND ARRANGEMENTS
(a) PLAN PARTICIPATION. As soon as administratively
practicable after the Effective Time, MCSC shall take all reasonable action
so that employees of the Surviving Corporation shall be entitled to
participate in the MCSC employee benefit plans of general applicability, and
until such time the employee plans of BRITCO shall remain in effect. For
purposes of determining eligibility to participate in and the vesting of
benefits (but not for purposes of benefit accrual) under the MCSC employee
plans, MCSC shall recognize years of service with BRITCO prior to the
Effective Time.
(b) EMPLOYMENT. All employees of BRITCO as of the
Effective Time may, at the discretion of the Board of Directors of the
Surviving Corporation, become employees of the Surviving Corporation as of
the Effective Time, provided that, except as set forth in Section 6.5(c),
below, neither MCSC nor the Surviving Corporation shall have any obligation
to continue the employment of any such person and nothing contained in this
Agreement shall give any employee of the Surviving Corporation a right to
continuing employment with the Surviving Corporation after the Effective Time.
(c) EMPLOYMENT AGREEMENTS. On the Closing Date, the
Surviving Corporation and each of Mrs. and Mr. Ferguson shall execute an
employment agreement in the form as set forth as EXHIBITS A AND B,
respectively, attached hereto and made a part hereof, which shall commence
upon the Closing Date. Said employment agreement shall be separate and
independent from this Agreement and such employment agreements shall stand
alone and not be connected in its operation or with respect to the rights and
remedies of the parties thereto.
6.6 FAILURE TO FULFILL CONDITIONS. In the event that either
of the parties hereto determines that a condition to its respective
obligations to consummate the transactions contemplated may not be fulfilled
on or prior to the termination of this Agreement, it will promptly notify the
other party. Each party will promptly inform the other party of any facts
applicable to it that would be likely to prevent or materially delay approval
of the Merger by any Governmental Authority or third party or which would
otherwise prevent or materially delay completion of the Merger.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 39
6.7 COMMON STOCK RESTRICTIONS. Except with the prior written
consent of MCSC, the New MCSC Shares to be delivered to the Stockholders at the
Closing shall not be sold, pledged, hypothecated, gifted or otherwise
transferred or disposed of until the date which is 270 days after the Closing
Date and all certificates representing such shares of Common Stock shall
contain a legend to such effect, as set forth in Section 3.21(f).
ARTICLE 7.0 CONDITIONS TO OBLIGATIONS OF MCSC AND MTAC TO
CONSUMMATE.
The obligations of MCSC and MTAC to consummate the Agreement are
subject to the satisfaction or, unless prohibited by law, the waiver by MCSC
and MTAC of each of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of BRITCO and the Stockholders contained herein shall be true,
complete, and accurate in all material respects on the date of this Agreement
and on the Closing Date as though such representations and warranties were made
at and on such date.
7.2 PERFORMANCE. BRITCO and the Stockholders shall have
performed and complied with all agreements, obligations and conditions required
by this Agreement to be so performed or complied with by them at or prior to
the Closing.
7.3 CONSENTS AND APPROVALS. All necessary consents and
approvals of any Governmental Authority or any third party required for
consummation of the transactions contemplated by this Agreement shall have been
obtained.
7.4 STOCKHOLDER APPROVAL. The stockholders of BRITCO shall
have approved the Agreement by the vote required by applicable law after full
disclosure of the terms and conditions of this Agreement and the transactions
contemplated thereby.
7.5 DELIVERY OF DOCUMENTS. At or before the Closing, BRITCO
and the Stockholders shall have executed and delivered to MCSC and MTAC certain
documents, including, but not limited to: (i) a certificate dated the Closing
Date executed by the President and Secretary of BRITCO evidencing compliance
with the conditions set forth in this Article 7; (ii) the surrender by the
Stockholders of the certificates representing 100% of the issued and
outstanding shares of BRITCO Common Stock, duly endorsed in blank (or as
required by MCSC); (iii) the Articles of Merger executed by a duly authorized
officer of BRITCO; (iv) the receipt for the delivery of the New MCSC Shares by
the Stockholders; (v) the opinion of William E. York, Esq., counsel to BRITCO,
addressed to the Board of Directors of MCSC substantially in the form of
EXHIBIT C; and (vi) such other documents as MCSC or its counsel may reasonably
require. All such documents shall be in form and substance satisfactory to
MCSC. BRITCO and the Stockholders agree to use their best efforts to ensure
that the conditions set forth herein are satisfied.
7.6 NO LITIGATION. None of the parties hereto shall be a party
to, or shall
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 40
have received notice of, any suit, claim or proceeding or threatened suit,
claim or proceeding to enjoin or restrain any or all of the transactions
contemplated herein or to nullify or render ineffective all or any part of
such transactions if accomplished or alleging Damages in connection therewith.
7.7 NO MATERIAL CHANGE. No change, event, development or
combination of developments shall have occurred which, individually or in the
aggregate, has resulted in or could reasonably be expected to result in a
material adverse change in the Business, condition (financial or otherwise) or
prospects of BRITCO.
ARTICLE 8.0 CONDITIONS TO OBLIGATIONS OF BRITCO AND THE STOCKHOLDERS
TO CONSUMMATE.
The obligations of BRITCO and the Stockholders to consummate
this Agreement are subject to the satisfaction or, unless prohibited by law,
the waiver by BRITCO and the Stockholders of each of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of MCSC contained herein shall be true, complete, and accurate in
all material respects on the date of this Agreement and on the Closing Date as
though such representations and warranties were made at and on such date.
8.2 PERFORMANCE. MCSC and MTAC shall have performed and
complied with all agreements, obligations and conditions required by this
Agreement to be so performed or complied with by it at or prior to the Closing.
8.3 CONSENTS AND APPROVALS. The sole stockholder of MTAC and,
if necessary, the stockholders of MCSC shall have approved this Agreement in
accordance with applicable law. All necessary consents and approvals of any
Governmental Authority or any third party required for consummation of the
transactions contemplated by this Agreement shall have been obtained.
8.4 OFFICERS' CERTIFICATE. MCSC shall have delivered to BRITCO
a certificate signed by a duly authorized officer, dated the Closing Date,
certifying the fulfillment of the conditions specified in Sections 8.1 and 8.2
of this Agreement.
8.5 PAYMENT OF CASH AND THE NEW MCSC SHARES. Against receipt
of the certificates representing 100% of the issued and outstanding shares of
BRITCO Common Stock, MCSC shall have delivered to the Stockholders on the
Closing Date the Promissory Note and the New MCSC Shares as set forth in
Section 2.3(b) hereof.
8.6 EMPLOYMENT AGREEMENTS. The Surviving Corporation shall
have executed the Employment Agreements at the Closing in the form of EXHIBITS
A AND B, attached
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 41
hereto.
8.7 NO LITIGATION. None of the parties hereto shall be a party
to, or shall have received notice of, any suit, claim or proceeding or
threatened suit, claim or proceeding to enjoin or restrain any or all of the
transactions contemplated herein or to nullify or render ineffective all or any
part of such transactions if accomplished or alleging Damages in connection
therewith.
8.8 DELIVERY OF DOCUMENTS. At or before the Closing, MCSC and
MTAC shall execute and deliver to BRITCO all other documents contemplated by
this Agreement and such other documents as BRITCO or its counsel may reasonably
require. Counsel for MCSC shall have delivered the opinion, addressed to the
Stockholders, on and dated as of, the Closing Date, substantially in the form
of EXHIBIT D.
ARTICLE 9.0 TERMINATION.
9.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date, whether before or after approval by the Stockholders
of BRITCO:
(a) by mutual consent of the Boards of Directors of the
MCSC and BRITCO; or
(b) by either MCSC or BRITCO if, without fault of such
terminating party, the Agreement shall not have been consummated on or before
December 12, 1997, unless extended by mutual written consent; or
(c) by MCSC if any condition to its obligations as set
forth in Article 7.0 shall become incapable of fulfillment or have not been
fulfilled prior to or on the Closing Date and shall not have been waived by
MCSC in writing, or by BRITCO if any of the conditions to the obligations of
BRITCO and the Stockholders set forth in Article 8.0 shall have become
incapable of fulfillment or have not been fulfilled prior to or on the Closing
Date and shall not have been waived by BRITCO in writing; provided that neither
party may terminate this Agreement hereunder if it is in material breach of any
of its representations, warranties, covenants or agreements in this Agreement;
or
(d) by MCSC, pursuant to the terms of Section 2.3(b)
hereof; or
(e) by MCSC, in the event of a material deterioration of
the assets of BRITCO, in MCSC's sole discretion; or
(f) MCSC or BRITCO upon a material breach of a
representation or warranty by the other or the failure to perform any covenant
or agreement contained herein, if such breach or failure to perform shall not
have been cured within fifteen (15) calendar days after receipt
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 42
by the breaching party of notice of such breach from the non-breaching party.
9.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination and abandonment of the Agreement by MCSC or BRITCO pursuant to
Section 9.1, written notice thereof shall forthwith be given to the other and
this Agreement shall terminate and the transactions contemplated hereby shall
be abandoned, without further action by any of the parties hereto, except as
set forth in Section 2.3(b) hereof. In the event MCSC elects to terminate this
Agreement for any reason or purpose other than pursuant to Section 9.1(d)
hereof, MCSC shall not be obligated to pay liquidated damages to BRITCO, the
Stockholders or any Affiliate or Associate, successor, assign, heir or
representative thereof. If this Agreement is terminated as provided herein,
the obligations stated in this Section 9.2 and in Sections 5.4(b), 5.6, and 9.3
shall survive any such termination for the periods therein stated, if any. No
termination of this Agreement under Section 9.1(f) for any reason or in any
manner shall release, or be construed as so releasing, any party hereto from
any liability or damage to the other party hereto arising out of, in connection
with, or otherwise relating to, directly or indirectly, such party's material
breach, such party's material default or such party's failure in performance of
any of its material covenants, agreements, duties or obligations arising
hereunder.
9.3 PAYMENT OF EXPENSES AND TERMINATION. Other than as
expressly provided elsewhere in this Agreement, whether or not the Agreement
shall be consummated, all costs and expenses incurred in connection with this
Agreement will be paid by the party incurring such expenses.
ARTICLE 10.0 MISCELLANEOUS.
10.1 FURTHER ASSURANCES. From time to time, and without
further consideration, each of the parties hereto agrees to execute and deliver
any and all further agreements, documents or instruments necessary to
effectuate this Agreement, the Merger and the transactions referred to herein
or contemplated hereby and to vest good, valid and marketable title to the
assets transferred in connection herewith or reasonably requested by the other
party to perfect or evidence its rights hereunder. Each party will promptly
notify the other party of any information delivered to or obtained by such
party which would prevent the consummation of the transactions contemplated by
this Agreement, or would indicate a breach of the representations, warranties
or covenants of any of the parties to this Agreement.
10.2 NOTICES. Any notices hereunder shall be deemed
sufficiently given by one party to another only if in writing and if and when
delivered or tendered either in person or as of one (1) business day after sent
by recognized overnight service for next day delivery, with all costs prepaid,
or as of five (5) business days after deposit in the United States mail,
registered or certified, with postage prepaid, addressed as follows:
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 43
If to MCSC or MTAC:
Miami Computer Supply Corporation
4750 Hempstead Station Drive
Dayton, Ohio 45492
Attention: Michael E. Peppel, Chief Financial Officer
and a copy to:
Elias, Matz, Tiernan & Herrick L.L.P
734 15th Street, N.W.
12th Floor
Washington, D.C. 20005
Attention: Jeffrey A. Koeppel, Esq.
If to BRITCO:
BRITCO, Inc.
8179 Almeda Road
Houston, Texas 77054
Attn: Gretchen K. Ferguson, President
and a copy to:
William E. York, Esq.
2000 Smith
Houston, Texas 77002
If to the Stockholders:
Mrs. Gretchen K. Ferguson
Mr. Charles L. Ferguson
3604 Cason
Houston, Texas 77005
and a copy to:
William E. York, Esq.
2000 Smith
Houston, Texas 77002
or to such other address as the party addressed shall have previously
designated by written notice to the serving party, given in accordance with
this Section; provided, however, that a notice not given as above shall, if it
is in writing, be deemed given if and when actually received by the party to
whom it is required or permitted to be given.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 44
10.3 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with the laws of the State of Texas.
10.4 SEVERABILITY. Should any term or provision or portion of
such provision of this Agreement be invalid or unenforceable because of the
scope thereof or the period covered thereby or otherwise, such term, provision
or portion of such provision shall be deemed to be reduced and limited to
enable MCSC or BRITCO or the Surviving Corporation to enforce it to the maximum
extent permissible under the laws and public policies applied under the
jurisdiction in which enforcement is sought. If any term or provision of this
Agreement is held or deemed to be invalid or unenforceable, in whole or in
part, by a court of competent jurisdiction, such term or provision shall be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement which shall be construed to preserve to the maximum permissible
extent the intent and purposes of this Agreement. Any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such terms or provisions in any other jurisdiction.
10.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including
the exhibits hereto and the lists, schedules and documents delivered pursuant
hereto) is intended by the parties to and does constitute the entire agreement
of the parties with respect to the transactions contemplated by this Agreement.
This Agreement supersedes any and all prior understandings, written or oral,
between the parties, including the non-binding letter of intent by and among
MCSC and BRITCO dated as of September 12, 1997. If there is any question of
interpretation or if there are or appear to be inconsistencies between this
Agreement and any Schedule or Exhibit hereto the terms of this Agreement shall
govern. This Agreement may not be amended, modified, waived, discharged or
terminated orally, but only by an instrument in writing signed by an authorized
executive officer of the party against which enforcement of the amendment,
modification, waiver, discharge or termination is sought. No waiver of the
breach of any provision or term of this Agreement shall be deemed or construed
to be a waiver of other or subsequent breaches.
10.6 ASSIGNMENT, ETC. Except for the assignment of certain
rights under this Agreement by MCSC to its wholly-owned subsidiary MTAC, the
rights and obligations of any of the parties to this Agreement may not be
assigned without the prior written consent of the other parties to this
Agreement, and any assignment made in violation of the foregoing shall be void
and have no legal effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors, assigns,
heirs, executors and administrators, but nothing herein, express or implied, is
intended to or shall confer any rights, remedies or benefits upon any person
other than the parties hereto. All section headings used herein are for
convenience and ease of reference only and do not constitute part of this
Agreement and shall not be referred to for the purpose of defining,
interpreting, construing or enforcing any of the provisions of this Agreement.
All pronouns and variations thereof shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the identity of the party or parties to
this Agreement may require.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
PAGE 45
10.7 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, MCSC, MTAC, BRITCO and the Stockholders have
caused this Agreement to be duly executed and delivered under seal, by their
respective authorized officers, on the date first above written.
MIAMI COMPUTER SUPPLY CORPORATION
Witness: By: /s/ MICHAEL E. PEPPEL
_____________________ _____________________________
Thomas C. Winstel Michael E. Peppel
Secretary Vice President - Chief Financial Officer
Witness: _____________________ MCSC TEXAS ACQUISITION
CORPORATION
(In Organization)
Witness: _____________________ By: /s/ MICHAEL E. PEPPEL
_____________________________
Michael E. Peppel
Vice President
BRITCO, INC.
Witness: /s/ By: /s/ GRETCHEN K. FERGUSON
_____________________ _____________________________
Gretchen K. Ferguson
President
STOCKHOLDERS:
Witness: /s/ By: /s/ GRETCHEN K. FERGUSON
_____________________ ______________________________
Gretchen K. Ferguson
Witness: /s/ By: /s/ CHARLES L. FERGUSON
_____________________ ______________________________
Charles L. Ferguson
<PAGE>
EXHIBIT 20(i)
PRESS RELEASE DATED DECEMBER 1, 1997
<PAGE>
[LOGO]
FOR IMMEDIATE RELEASE
CONTACT: MICHAEL E. PEPPEL
CHIEF FINANCIAL OFFICER
937-291-8282 EXT. 7708
MIAMI COMPUTER SUPPLY CORPORATION AND BRITCO, INC. ANNOUNCE DEFINITIVE
AGREEMENT
SIXTH FOR MIAMI COMPUTER SUPPLY IN 1997
Dayton, OH -- December 1, 1997 -- Miami Computer Supply Corporation
(NASDAQ: MCSC), a leading supplier of computer supplies and projection
presentation products, today announced that it has signed a definitive merger
agreement with BRITCO, Inc., a $17.0 million (annual revenues) distributor of
computer supply and office automation products headquartered in Houston,
Texas with additional offices in San Antonio, Baytown and Austin, Texas. The
price was not disclosed. The transaction is subject to certain conditions
which must be accomplished before the closing.
"This transaction offers us a substantial and exciting opportunity to
expand our presence into the Texas market. BRITCO brings to the table not
only its highly experienced sales force but also the expert management team
of Gretchen and Charlie Ferguson, who have over 30 years of combined industry
experience and will continue as executive management of BRITCO," said Albert
L. Schwarz, President of Miami Computer Supply.
Michael E. Peppel, Chief Financial Officer of Miami Computer Supply
added, "The BRITCO transaction adds another EPS-accretive entity to the MCSC
fold. Based on our current analysis, we expect BRITCO to add 5% to our
annualized earnings by first quarter 1998. Assuming that the transactions
with BRITCO and Minnesota Western, previously announced, are consummated as
anticipated, we will have developed from a $63 million revenue Company with
118 employees at year end 1996 to a $200 million annualized revenue run rate
with 445 employees in a 12 month period. EPS accretive transactions continue
to be our focus along with internal growth. Also, our people continue to
differentiate our Company in the marketplace."
<PAGE>
[LOGO]
Press Release
Page 2 of 3
"This transaction creates significant advantages and opportunities for
both the employees and customers of BRITCO. MCSC and BRITCO both recognize
that the strength to compete effectively in this industry resides with the
technical knowledge of our sales force in combination with a broad product
line. This deal accomplishes both," stated Charlie Ferguson, Vice President
of BRITCO.
"BRITCO's expertise and product base offers our customers a unique
opportunity to position themselves with a market leader such as MCSi," stated
Gretchen Ferguson, President, BRITCO.
Miami Computer Supply Corporation went public last November. Since the
IPO, Miami Computer Supply will have increased the number of its sales
offices from 20 to 37 and its annual sales from $63 million as of December
31, 1996 to the proforma annualized 12 month run rate of over $200 million
(assuming that the transactions with BRITCO and Minnesota Western, previously
announced, are consummated as anticipated).
Miami Computer Supply Corporation is an end-user distributor of computer
and office automation supplies and accessories, including a line of computer
projection presentation products, principally in the Midwest, Northeast,
Northwest and Southeast regions of the United States and in certain foreign
countries. Miami Computer Supply Corporation distributes over 1,800 different
core products primarily to middle market and smaller companies and to
governmental, educational, and institutional customers, including federal,
state and local governmental agencies, universities and hospitals and, to a
lesser extent, to computer supply dealers. The Company sells primarily
nationally known, name-brand products manufactured by approximately 500
original equipment manufacturers, including Hewlett-Packard, Lexmark, Imation
(formerly a part of 3M), Sony, Canon, Epson, Maxell, Panasonic, NEC, and Ricoh
for computer supplies, and Epson, Proxima and Lightware for projection
presentation products. Additional information regarding the Company can be
obtained at http://www.mcsinet.com.
<PAGE>
[LOGO]
Press Release
Page 3 of 3
This press release contains "forward-looking" information. The matters
discussed in this press release, and, in particular, information regarding
risks and uncertainties include, but are not limited to, general economic
conditions, industry trends, actions of competitors, the Company's ability to
manage its growth, factors relating to its acquisition/merger strategy, actions
of regulatory authorities, restrictions imposed by its debt arrangements,
dependence upon key personnel, dependence upon key suppliers, customer demand,
dependence on its computer systems and other factors. A complete description
of those factors, as well as other factors which could affect the Company's
business, is set forth in the Company's Form 10-K for the year ended December
31, 1996, and its Form 10-Q for the nine months ended September 30, 1997.
-END-
<PAGE>
EXHIBIT 20(ii)
PRESS RELEASE DATED DECEMBER 5, 1997
<PAGE>
FOR IMMEDIATE RELEASE
CONTACT: MICHAEL E. PEPPEL
CHIEF FINANCIAL OFFICER
937-291-8282 EXT. 7708
MIAMI COMPUTER SUPPLY CORPORATION ANNOUNCES COMPLETION OF MERGER
WITH BRITCO, INC.
Dayton, OH -- December 5, 1997 -- Miami Computer Supply Corporation
(NASDAQ: MCSC), a leading supplier of computer supplies and projection
presentation products today reported that it completed the merger with
BRITCO, Inc., a $17.0 million (annual revenues) distributor of computer
supply and office automation products headquartered in Houston, Texas with
additional offices in San Antonio, Baytown and Austin, Texas. Terms were
not announced.
Miami Computer Supply Corporation went public last November. Assuming
that the previously announced Minnesota Western transaction is consummated as
anticipated, Miami Computer Supply will have increased the number of its
sales offices from 20 to 56 and its annual sales from $63 million as of
December 31, 1996 to the proforma annualized 12 month run rate of
approximately $200 million.
Miami Computer Supply Corporation is an end-user distributor of computer
and office automation supplies and accessories, including a line of computer
projection presentation products, principally in the Midwest, Northwest,
Northeast and Southeast regions of the United States and in certain foreign
countries. Miami Computer Supply Corporation distributes over 1,800
different core products primarily to middle market and smaller companies and
to governmental, educational, and institutional customers, including federal,
state and local governmental agencies, universities and hospitals and, to a
lesser extent, to computer supply dealers. The Company sells primarily
nationally known, name-brand products manufactured by approximately 500
original equipment manufacturers, including Hewlett-Packard, Lexmark, Imation
(formerly a part of 3M), Sony, Canon, Epson, Maxell, Panasonic, NEC, and
Ricoh for computer supplies, and Epson, Proxima and Lightware for projection
presentation products. Additional information regarding the Company can be
obtained at http://www.mcsinet.com.
<PAGE>
Press Release
Page 2 of 2
This press release contains "forward-looking" information. The matters
discussed in this press release, and, in particular, information regarding
risks and uncertainties include, but are not limited to, general economic
conditions, industry trends, actions of competitors, the Company's ability to
manage its growth, factors relating to its acquisition/merger strategy,
actions of regulatory authorities, restrictions imposed by its debt
arrangements, dependence upon key personnel, dependence upon key suppliers,
customer demand, dependence on its computer systems and other factors. A
complete description of those factors, as well as other factors which could
affect the Company's business, is set forth in the Company's Form 10-K for
the year ended December 31, 1996, and its Form 10-Q for the nine months ended
September 30, 1997.
--END--
