<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 1995
Commission file number: 1-8306
AIR EXPRESS INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-2074327
(State or Other of Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
120 Tokeneke Road, Darien, Connecticut 06820
(203) 655-7900
(Address of, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
NONE
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 3 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date (applicable only to corporate
registrants).
The number of shares of common stock outstanding as of August 9, 1995 was
18,493,818. (Net of 2,189,330 Treasury Shares)
<PAGE>
AIR EXPRESS INTERNATIONAL CORPORATION
June 1995 Form 10-Q Quarterly Report
Table of Contents
Part I - Financial Information
Page
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as at
June 30, 1995 and December 31, 1994 2
Condensed Consolidated Statements of Operations -
three months and six months ended June 30, 1995
and 1994 3
Consolidated Statements of Cash Flows -
six months ended June 30, 1995 and 1994 4
Notes to Condensed Consolidated Financial
Statements 5
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II - Other Information
Item 1. Legal Proceedings 9
Item 6. Exhibits and Reports on Form 8-K 9
<PAGE>
Page 2
<TABLE>
<CAPTION>
AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
06/30/95 12/31/94
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents .............................. $ 56,379 $ 44,168
Accounts receivable, (less allowance for
doubtful accounts of $3,641 and $3,290) ............... 246,870 206,012
Other current assets ................................... 6,075 2,938
Total current assets ................................ 309,324 253,118
Investment in unconsolidated affiliates .................. 11,465 9,370
Marketable securities .................................... -- 19,961
Property, plant and equipment (less accumulated
depreciation and amortization of $40,896
and $37,057) ........................................... 51,989 39,599
Deposits and other assets ................................ 8,446 6,957
Goodwill (less accumulated amortization
of $7,309 and $6,403) ................................. 78,357 51,929
Total assets ........................................ $ 459,581 $ 380,934
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt ...................... $ 2,575 $ 2,029
Bank overdrafts payable ................................ 243 1,399
Transportation payables ................................ 127,356 101,657
Accounts payable ....................................... 44,460 34,087
Accrued liabilities .................................... 49,021 43,988
Income taxes payable ................................... 11,507 10,991
Total current liabilities ........................... 235,162 194,151
Long-term debt ......................................... 85,735 83,992
Other liabilities ...................................... 3,403 3,441
Total liabilities ................................... 324,300 281,584
Stockholders' Investment:
Capital stock-
Preferred (authorized 1,000,000 shares,
none outstanding) ..................................... -- --
Common, $.01 par value (authorized 40,000,000
shares, issued 20,669,148 and 19,620,526 shares)....... 207 196
Capital surplus ........................................ 66,530 41,998
Cumulative translation adjustments ..................... (10,988) (11,442)
Retained earnings ...................................... 119,646 108,600
175,395 139,352
Less: 2,189,330 and 2,184,208 shares of treasury
stock, at cost ......................................... (40,114) (40,002)
Total stockholders' investment ......................... 135,281 99,350
Total liabilities and stockholders' investment ......... $ 459,581 $ 380,934
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
Page 3
<TABLE>
<CAPTION>
AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except
per share data)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues ....................... $ 304,354 $ 237,999 $ 588,427 $ 442,809
Operating expenses:
Transportation ................ 214,441 167,140 417,700 311,024
Terminal ...................... 47,902 36,667 91,529 70,129
Selling, general and
administrative ............... 28,963 23,975 57,565 45,383
Operating income ............... 13,048 10,217 21,633 16,273
Other income (expense):
Interest expense, net ......... (800) (793) (1,467) (1,712)
Other, net .................. 226 565 612 972
(574) (228) (855) (740)
Income before provision
for income taxes .............. 12,474 9,989 20,778 15,533
Provision for income taxes ..... 4,917 3,840 8,108 5,902
Net income ..................... $ 7,557 $ 6,149 $ 12,670 $ 9,631
Income per common share
Primary ..................... $ .42 $ .35 $ .70 $ .55
Fully diluted ............... $ .39 $ .33 $ .66 $ .53
Weighted average number
of common shares (000):
Primary ..................... 18,144 17,564 17,991 17,528
Fully diluted ............... 21,436 20,864 21,307 20,841
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
Page 4
<TABLE>
<CAPTION>
AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
(Dollars in thousands)
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................. $ 12,670 $ 9,631
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ....................... 3,446 2,811
Amortization of goodwill ............................ 871 605
Deferred income taxes ............................... (560) (141)
Undistributed (earnings) losses of affiliates ....... (624) (357)
Gain on sales of assets, net ........................ (143) (12)
Other, net .......................................... 1,215 (16)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable, net ..... (7,861) (1,836)
Decrease (increase) in other current assets ......... (2,425) (404)
Increase (decrease) in transportation payables ...... (4,026) 2,413
Increase (decrease) in accounts payable ............. 7,402 (5,162)
Increase (decrease) in accrued liabilities .......... (5,013) 1,320
Increase (decrease) in income taxes payable ......... 1,002 77
Increase (decrease) in other liabilities ............ (171) --
Total adjustments .................................. (6,887) (702)
Net cash provided by operating activities ........... 5,783 8,929
Cash flows from investing activities:
Business acquisitions, net of cash acquired ............ 74 (3,946)
Purchase of short-term investments ..................... -- (14,981)
Sale of marketable securities .......................... 19,981 --
Gains (losses) from hedging activities ................. (1,043) (572)
Proceeds from sales of assets .......................... 346 189
Capital expenditures ................................... (12,787) (4,504)
Investment in unconsolidated affiliates ................ (196) --
Net cash (used) provided in investing activities .... 6,375 (23,814)
Cash flows from financing activities:
Net borrowings (repayments) in bank overdrafts
payable .............................................. (1,251) 856
Additions to long-term debt ............................ 3,110 1,070
Payment of long-term debt .............................. (1,360) (771)
Issuance of common stock ............................... 622 491
Payment of cash dividends .............................. (1,398) (1,156)
Purchase of treasury stock ............................. (112) (332)
Net cash (used) provided in financing activities .... (389) 158
Effect of foreign currency exchange rates on cash ........ 442 681
Net increase (decrease) in cash and cash equivalents ..... 12,211 (14,046)
Cash and cash equivalents at beginning of period ......... 44,168 55,063
Cash and cash equivalents at end of period ............... $ 56,379 $ 41,017
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
Page 5
AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. The consolidated balance sheet at June 30, 1995, the consolidated
statements of operations for the three-month and six-month periods ended
June 30, 1995 and 1994, and the consolidated statements of cash flows for
the six-month periods ended June 30, 1995 and 1994 have been prepared by
the Company without audit. In the opinion of management, all adjustments
necessary to present fairly the financial position, results of operations,
and cash flows for the interim periods have been made. Certain items in the
June 30, 1994 financial statements have been reclassified to conform to the
classification of June 30, 1995.
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, have been condensed or omitted. Accordingly, these
condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in
the Company's annual report to stockholders for the year ended December 31,
1994. The results of operations for the three and six month periods ended
June 30, 1995 are not necessarily indicative of the results of operations
expected for the full year ending December 31, 1995.
B. Investments in equity affiliates are recorded using the equity method.
Consolidated net income reflects joint venture profits of $679,000 and
$803,000, respectively, for the quarter and six months ended June 30, 1995,
compared with profits of $361,000 and $411,000, for the quarter and six
months ended June 30, 1994.
C. Interest expense, net is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Interest expense ........... $(1,504) $(1,420) $(2,954) $(2,840)
Interest income ............ 704 627 1,487 1,128
Interest expense, net ...... $ (800) $ (793) $(1,467) $(1,712)
</TABLE>
<PAGE>
Page 6
D. Other income (expense) is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Foreign exchange
gains, net ........ $ 118 $ 572 $ 435 $ 960
Other, net .......... 108 (7) 177 12
$ 226 $ 565 $ 612 $ 972
</TABLE>
E. Acquisitions:
On June 8, 1995, the Company acquired Radix Ventures, Inc. (Radix) for $.5
million in cash and 979,887 of the Company's common shares valued at
approximately $23.9 million. Radix, through its 23 U.S. offices, is a
leading provider of customs brokerage services in the United States.
Additionally, Radix provides both airfreight and ocean freight forwarding
services. For its fiscal year ended July 31, 1994, Radix generated
approximately $65 million in revenues. The acquisition has been accounted
for as a purchase. Accordingly, the purchase price has been allocated on
the basis of the estimated fair market value of the assets acquired and the
liabilities assumed. This allocation has resulted in goodwill of
approximately $25.0 million. Radix's results of operations are included in
the consolidated statement of income from the acquisition date forward.
The following unaudited pro forma summary combines the results of the
Company and Radix's results of operations as if the acquisition occurred as
of January 1, 1994. The pro forma information is provided for informational
purposes only. It is based upon historical information and does not
necessarily reflect the actual results that would have occurred nor is it
necessarily indicative of the future results of operations.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues ............. $317,629 $255,208 $620,463 $477,462
Net income ........... $ 7,628 $ 6,191 $ 12,831 $ 9,539
Income per share:
Primary ............ $ .40 $ .33 $ .68 $ .52
Fully diluted ...... $ .37 $ .32 $ .64 $ .50
</TABLE>
<PAGE>
Page 7
F. Supplemental disclosures of cash flow information:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Interest and income tax paid:
Interest ................... $ 272 $ 155 $ 2,709 $ 2,572
Income taxes ............... 4,591 2,984 7,447 6,049
$ 4,863 $ 3,139 $10,156 $ 8,621
</TABLE>
Non cash investing and financing activities:
In June 1995, as part of the Radix acquisition, the Company issued 979,887
of its common shares valued at approximately $23.9 million. See Note E.
G. Marketable Securities:
During the second quarter of 1995, the Company sold, for a marginal gain,
all of its marketable securities for approximately $19.8 million which
approximated amortized cost. The proceeds from the sale were reinvested in
financial instruments with original maturities of three months or less and
were classified as cash and cash equivalents. The marketable securities
were sold in order to take advantage of the favorable decline in long term
interest rates which occurred during the first six months of 1995.
<PAGE>
Page 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
The following table shows the consolidated revenues and gross profit
attributable to the Company's airfreight and ocean freight activities and the
Company's consolidated expenses for the quarter and six months ended June 30,
1995 and 1994. Revenues from customs brokerage and other related services are
included in airfreight revenues. Gross profit is determined by deducting
transportation expenses from revenues.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Ended June 30, Ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Airfreight ......................... $264,081 $212,150 $514,434 $394,806
Ocean Freight ...................... 40,273 25,849 73,993 48,003
Total ............................ $304,354 $237,999 $588,427 $442,809
Gross Profit:
Airfreight ......................... $ 80,137 $ 64,979 $152,640 $120,663
Ocean freight ...................... 9,776 5,880 18,087 11,122
Total ............................ $ 89,913 $ 70,859 $170,727 $131,785
Expenses:
Terminal ......................... $ 47,902 $ 36,667 $ 91,529 $ 70,129
Selling, general
and administrative ............. 28,963 23,975 57,565 45,383
Total ............................ $ 76,865 $ 60,642 $149,094 $115,512
Operating Income ................... $ 13,048 $ 10,217 $ 21,633 $ 16,273
</TABLE>
Consolidated revenues for the second quarter and six months ended June 30,
1995 increased 27.9% to $304.4 million and 32.9% to $588.4 million,
respectively, over the comparable periods in 1994. Airfreight revenues for the
second quarter and six months increased 24.5% to $264.1 million and 30.3% to
$514.4 million, respectively. The increase in airfreight revenues for both the
quarter and six months was due to increases in shipments and the total weight of
cargo shipped. For the quarter, shipments increased 8.8% and the weight of cargo
shipped increased 22.0% over the second quarter of 1994. For the six month
period, shipments increased 10.0% and the weight of cargo shipped increased
27.0% over the first six months of 1994. Revenues from ocean freight operations
for the second quarter and six months increased 55.8% to $40.3 million and 54.1%
to $74.0 million, respectively. The increase in ocean freight revenues for the
quarter and six months was due to increased shipping volumes. The higher
shipping volumes were attributable to increased economic activity and the
inclusion of shipping volumes of companies acquired subsequent to the second
quarter of 1994.
<PAGE>
Page 9
Gross profit (revenues less transportation expense) for the second quarter
of 1995 increased $19.1 million or 26.9% over the comparable 1994 period to
$89.9 million. For the six months, gross profit increased $38.9 million or 29.5%
over the comparable 1994 period to $170.7 million. Gross margin (gross profit as
a percentage of revenues) decreased 1.0% to 29.5% for the quarter, and 2.7% to
29.0% for the six months when compared to the comparable periods in 1994. The
decrease in gross margin was largely due to the impact of greater weight per
shipment which resulted in lower selling prices per unit of weight, and
competitive pricing pressures. Gross profit from airfreight operations for the
second quarter of 1995 increased $15.2 million or 23.3% over the comparable 1994
period to $80.1 million. For the six months, gross profit increased $32.0
million or 26.5% over the comparable 1994 period to $152.6 million. Gross profit
from ocean freight operations for the second quarter of 1995 increased $3.9
million or 66.3% over the comparable 1994 period to $9.8 million. For the six
months, ocean freight gross profit increased $7.0 million or 62.6% over the
comparable 1994 period to $18.1 million. The higher gross profit for both
airfreight and ocean freight operations was attributable to increased shipping
volumes.
Internal operating expenses (terminal, selling and general and
administrative) increased $16.2 million or 26.8% for the quarter and $33.6
million or 29.1% for the six month period from the comparable periods in 1994.
These increases were mainly attributable to additional expenses incurred in
connection with greater shipping volumes and to the inclusion of expenses of
companies acquired subsequent to the second quarter of 1994. As a percentage of
revenues, internal operating expenses were 25.3% for the quarter and 25.3% for
the six months in 1995 as compared to 25.5% and 26.1%, respectively, for the
comparable periods in 1994. The improvement in both periods resulted from the
greater efficiencies associated with the increase in shipping volumes.
Operating income for the second quarter of 1995 increased $2.8 million or
27.7% over the second quarter of 1994. For the six months, operating income
increased $5.4 million or 32.9% over 1994. The increases in operating income for
the quarter and six months ended June 30, 1995 were negatively impacted by
approximately $2.1 million and $2.8 million, respectively, due to losses
attributable to operations in Germany, South Africa and New Zealand. Turnaround
strategies for these operations have been developed and are being implemented.
Interest expense, net was marginally higher for the second quarter 1995
compared to the comparable period in 1994. For the first six months of 1995,
interest expense, net decreased approximately $.2 million. The decrease was the
result of the higher rate of interest earned by the Company on its invested
funds.
The effective income tax rate for the quarter and six months ended June 30,
1995 was 39.4% and 39.0%, respectively, an increase of approximately 1.0% over
both the second quarter and first six months of 1994. The 1% increase was mainly
due to losses incurred by certain foreign subsidiaries for which there were no
tax benefits available.
<PAGE>
Page 10
Liquidity and Capital Resources
At June 30, 1995, the Company's working capital increased to $74.2 million
from $59.0 million at December 31, 1994. The increase was attributable to the
sale of marketable securities and the subsequent reclassification of the sale
proceeds into cash and cash equivalents. See Note G.
Capital expenditures for the six months ended June 30, 1995 were $12.7
million compared to $4.5 million for the first six months of 1994. This increase
was mainly due to the construction costs for the Company's new warehouse and
distribution facility in Singapore. This facility is scheduled for completion
during the third quarter of 1995.
At June 30, 1995, the Company had available for future borrowings
approximately $18.4 million of its $20.0 million revolving credit facility. The
Company utilized approximately $1.6 million under this facility for letters of
credit issued in connection with its insurance programs. Additionally, the
Company's foreign subsidiaries maintained approximately $13.5 million of
overdraft facilities with various foreign banks of which $.2 million was
utilized.
The Company announced at its Annual Meeting of Shareholders that its Board
of Directors declared a quarterly cash dividend of five cents ($.05) per share,
payable on July 28, 1995 to shareholders of record on July 7, 1995. The
quarterly dividend was increased twenty-five percent (25%) over the existing
dividend paid by the Company. This increase represents the fourth time the Board
of Directors has increased the dividend since the Company reinstated the payment
of dividends in 1991.
Management believes that the Company's available cash and sources of
credit, together with expected future cash generated from operations, will be
sufficient to satisfy its anticipated needs for working capital, capital
expenditures, and future business acquisitions.
PART II - OTHER INFORMATION
Item 1. - Legal Proceedings
The Company believes that there are no legal proceedings, other than ordinary
routine litigation incidental to the business of the Company, to which the
Company or any of its subsidiaries is a party. Management is of the opinion that
the ultimate outcome of existing legal proceedings, if adverse, would not have a
material effect on the Company's consolidated financial position.
<PAGE>
Page 11
Item 6. - Exhibits and Reports on Form 8-K
a) Exhibits:
Exhibit 2 - Agreement and Plan of Reorganization.
Exhibit 11 - Computation of Earnings per Common Share.
Exhibit 27 - Financial Data Schedule.
b) Reports on Form 8-K:
A report on Form 8-K dated June 8, 1995 was filed by the Company
reporting the acquisition of Radix.
A report on Form 8-K/A (Amendment No.1) dated August 8, 1995 was filed
by the Company amending the Company's report on Form 8-K dated June 8,
1995. The amendment was filed to include the pro forma condensed
consolidated statements of operations for both the year ended December
31, 1994 and for the three months ended March 31, 1995 as well as the
pro forma condensed consolidated balance sheet as of March 31, 1995.
<PAGE>
Page 12
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.
Air Express International Corporation
(Registrant)
Date: August 11, 1995 /s/ Dennis M. Dolan
Dennis M. Dolan
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: August 11, 1995 /s/ Walter L. McMaster
Walter L. McMaster
Vice President - Controller
(Principal Accounting Officer)
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
RADIX VENTURES, INC.,
A DELAWARE CORPORATION,
AND
AIR EXPRESS INTERNATIONAL CORPORATION,
A DELAWARE CORPORATION,
AEIC ACQUISITION CORPORATION,
A DELAWARE CORPORATION
AND
THE STOCKHOLDER REPRESENTATIVES
(AS HEREINAFTER DEFINED)
DATED: MAY 3, 1995
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION, dated as of the 3rd day
of May, 1995 (the "AGREEMENT"), by and among Air Express International
Corporation, a Delaware corporation ("AEI"), AEIC Acquisition
Corporation, a Delaware corporation wholly-owned by AEI ("NEWCO"), the
Stockholder Representatives (as hereafter defined) and Radix Ventures,
Inc., a Delaware corporation ("RADIX").
RECITALS:
WHEREAS, AEI, through several direct and indirect subsidiaries,
conducts business primarily as an international air freight forwarder,
and also as an international ocean freight forwarder, customs broker,
and warehouser under the name "Air Express International"; and
WHEREAS, Radix, through certain of its direct and indirect
subsidiaries and their respective branch offices, conducts business
primarily as a customs broker, and also as an international air and
ocean freight forwarder (such collective activities and any other
business activities conducted by Radix and such subsidiaries
constituting the "RADIX BUSINESS") under the name "Radix Group
International"; and
WHEREAS, Radix's authorized capital stock consists of 1,000,000
shares of common stock, $.01 par value per share ("RADIX COMMON STOCK"),
771,500 shares of which are issued and outstanding as of the date hereof
(the "RADIX SHARES"); and
WHEREAS, AEI's authorized capital stock consists of (i)
40,000,000 shares of common stock, par value $.01 per share ("AEI COMMON
STOCK"), 17,481,694 shares of which are issued and outstanding as of the
date hereof (net of 2,187,833 shares of AEI Common Stock held in
treasury), and (ii) 1,000,000 shares of preferred stock, par value $1.00
per share ("AEI PREFERRED STOCK"), no shares of which are issued and
outstanding as of the date hereof; and
<PAGE>
2
WHEREAS, Newco's authorized capital stock consists of 20,000 shares of
common stock, par value $.01 per share (the "NEWCO COMMON STOCK"), 1
share of which is issued and outstanding as of the date hereof (the
"NEWCO SHARE");
WHEREAS, the Boards of Directors of AEI, Newco and Radix have,
prior to the date hereof, determined that it is advisable and in the
best interests of their respective stockholders that AEI and Radix
become affiliated by effecting a merger of Newco with and into Radix
(the "MERGER") subject to the terms and conditions contained herein; and
WHEREAS, the parties hereto have agreed upon the terms and
provisions of such affiliation, and desire herein to provide for certain
undertakings, conditions, representations, warranties and covenants in
connection with the transactions contemplated hereby.
NOW, THEREFORE, for and in consideration of the premises and of
the mutual covenants, representations, warranties and agreements
contained in this Agreement, the parties hereto agree hereby as follows:
ARTICLE I.
MERGER AND AFFILIATION
SECTION 1.1. MERGER. Upon the terms and subject to the
satisfaction of the conditions hereof, the affiliation of the parties
hereto shall be carried out in the following manner: On the date (the
"EFFECTIVE DATE") and at the time (the "EFFECTIVE TIME") that all of the
conditions to the Merger set forth in ARTICLE VI hereof have been
satisfied or waived in accordance with the terms hereof, Newco shall be
merged with and into Radix pursuant to the terms set forth below, with
Radix to be the surviving corporation (sometimes hereinafter referred to
as the "SURVIVING CORPORATION").
SECTION 1.2. CONVERSION OF RADIX SHARES. From and after the
Effective Time and as and when required by the provisions of this
Agreement, AEI shall issue 1,000,000 shares of AEI Common Stock, or pay
cash in lieu of fractional shares of AEI
<PAGE>
3
Common Stock or in respect of Dissenting Shares and Non-Qualified Shares
(as hereafter defined), calculated based on the Market Value (as
hereafter defined), to the record holders of Radix Shares as of the
Effective Time (the "RADIX STOCKHOLDERS"); PROVIDED, HOWEVER, that
110,000 shares of AEI Common Stock otherwise payable in respect of the
Radix Shares, or the cash payable in lieu of such shares that would
otherwise have been paid to Non-Qualified Shareholders, shall be
delivered to Mellon Bank, N.A., as escrow agent (the "ESCROW AGENT") to
be held and disbursed pursuant to the terms of Article II and Article
VIII hereof (such cash and shares being the "ESCROWED PROPERTY"). The
aggregate number of shares of AEI Common Stock, and cash in lieu of
shares to Non-Qualifying Stockholders, payable hereunder is sometimes
herein referred to as the "PURCHASE PRICE"). Approval of this Agreement
by the Radix Stockholders shall constitute approval of the appointment
of Mellon Bank, N.A. as Escrow Agent.
a) The manner of converting the Newco Share and the
Radix Shares shall be as follows:
(i) At the Effective Time, the Newco Share shall be
converted into one (1) share of Radix Common Stock;
(ii) At the Effective Time, by virtue of the Merger
and in accordance with this Agreement, and without any action on the
part of the holders thereof, each of the Radix Shares then issued and
outstanding, other than Dissenting Shares and the Non-Qualified Shares,
shall be converted into and exchanged for 1.2962 shares of AEI Common
Stock; and
(iii) At the Effective Time, certificates evidencing
Radix Shares shall cease to evidence any interest in Radix or the
Surviving Corporation, but shall thereafter evidence only the right of
the holder thereof to receive such shares of AEI Common Stock or cash in
lieu of fractional shares, or in the case of Dissenting Shares or Non-
Qualified Shares, the right to receive cash in accordance with the terms
hereof. Any
<PAGE>
4
Radix Stockholder receiving cash in lieu of fractional shares of AEI
Common Stock shall not be entitled to dividends or other rights in
respect of any such fractional interest.
b) At the Effective Time of the Merger, each of the
Radix Shares held by a stockholder who has not represented in writing to
the reasonable satisfaction of AEI that such stockholder is an
"accredited investor" within the meaning of Regulation D of the
Securities Act of 1933, as amended ("REGULATION D"), or who has not
provided reasonable substantiation to AEI that such stockholder has duly
appointed a "purchaser representative" in accordance with Regulation D,
shall by virtue of the consummation of the Merger and without any action
on the part of such stockholder be converted into the right to receive
an amount of cash equal to the product of (i) the number of shares of
AEI Common Stock into which each of such stockholder's Radix Shares
would otherwise have been converted pursuant to this SECTION 1.2 and
(ii) the Closing Market Value of a share of AEI Common Stock. The Radix
Shares held by any such stockholder are herein referred to as the "NON-
QUALIFIED SHARES" and any such stockholder is herein a "NON-QUALIFIED
STOCKHOLDER".
c) Promptly after the Effective Time, Mellon Securities
Trust Co., as exchange agent appointed by AEI (the "EXCHANGE AGENT"),
shall send or cause to be sent to each holder of record of a certificate
or certificates which as of the Effective Time represented Radix Shares
(the "CERTIFICATES") a form letter of transmittal specifying that
delivery of the Certificates shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and providing instructions to assist
such holder in effecting the surrender of the Certificates. Upon
surrender of a Certificate for cancellation to the Exchange Agent (or a
lost certificate bond in a form reasonably acceptable to the Exchange
Agent), together with such letter of transmittal duly executed, the
holder of such Certificate shall be entitled to receive in exchange
therefor either (i) a certificate representing shares of AEI Common
Stock and any cash in lieu of
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5
fractional shares determined in accordance herewith, less such holder's
pro rata share of the Escrowed Property, or (ii) in the case of Non-
Qualified Shares, cash as determined in accordance with SECTION 2.1(b)
hereof, less such holder's pro rata share of the Escrowed Property and
the Certificate so surrendered shall forthwith be cancelled. All
payments of cash shall be made by check drawn to the order of the
registered holder or other person specified in the letter of transmittal
in accordance with the requirements thereof. Approval of this Agreement
by the stockholders of Radix shall constitute approval of the
appointment of Mellon Securities Trust Co. as Exchange Agent.
d) Until a Certificate is surrendered and exchanged in
accordance herewith, each such outstanding Certificate shall for all
purposes evidence the right to receive the shares of AEI Common Stock
into and for which such Radix Shares have been so converted, and any
cash in lieu of fractional shares, as aforesaid, or the right to receive
cash in respect of Dissenting Shares or Non-Qualified Shares, in either
case subject to the provisions of Article II and Article VIII relative
to the escrow and disbursement of Escrowed Property. Whenever a
dividend is declared by AEI on AEI Common Stock after the Effective
Date, such declaration shall include dividends on all shares of AEI
Common Stock into which Radix Shares shall be converted and exchanged
hereunder; PROVIDED, HOWEVER, that no former stockholder of Radix shall
be entitled to receive his or her distribution of such dividends until
physical exchange of his or her Certificates shall have been effected in
accordance herewith; and PROVIDED, FURTHER, HOWEVER, that dividends paid
in respect of shares of AEI Common Stock constituting a part of the
Escrowed Property shall be paid to the Escrow Agent and held and
disbursed in accordance with the terms of the Escrow Agreement. Upon
physical exchange of his or her Certificates, any such person shall be
entitled to receive from AEI an amount equal to all such dividends
(without interest thereon and less the amount of taxes, if any, which
may have been imposed or paid thereon) declared, and for which payment
has occurred, on the shares represented thereby,
<PAGE>
6
subject to the preceding sentence with respect to Escrowed Property.
The shares of AEI Common Stock into and for which Radix Shares shall
have been converted and exchanged pursuant to this Agreement shall be
entitled to full voting privileges only from and after the surrender of
the Certificates, and, in the case of shares of AEI Common Stock
constituting a part of the Escrowed Property, as provided in the Escrow
Agreement.
e) All rights to receive cash in lieu of fractional share
interests, and all shares of AEI Common Stock into and for which Radix
Shares shall have been converted and exchanged pursuant to this
Agreement, less the related Escrowed Property that may be returned to
AEI in accordance with Article II or Article VIII hereof, shall be
deemed to have been paid or issued, as the case may be, in full
satisfaction of all rights pertaining to such converted and exchanged
Radix Shares.
f) Radix Shares held by stockholders who take all of the
steps required to be taken in order to entitle such stockholders to be
paid the fair value of such shares (the "DISSENTING SHARES") under
Section 262 of the Delaware General Corporation Law (as amended from
time to time, the "DELAWARE ACT") (any such stockholder being a
"DISSENTING STOCKHOLDER"), shall be deemed to have ceased to represent
any interest in Radix at such time as is provided by the Delaware Act
and the stockholders thereof shall be entitled to such rights as are
specified at the time in the Delaware Act; PROVIDED, HOWEVER, that Radix
shall not, except with the prior written consent of AEI, voluntarily
make any payment with respect to, or settle or offer to settle, any
demands for payment relating to Dissenting Shares.
SECTION 1.3. CERTAIN EFFECTS OF THE MERGER. At the Effective
Time of the Merger, the separate existence of Newco shall cease. The
Surviving Corporation shall possess all the rights, privileges, powers
and franchises of a public as well as of a private nature, and shall be
subject to all restrictions, disabilities and duties of Newco and Radix;
and all of the rights, privileges, powers and franchises of Newco and
Radix, and all
<PAGE>
7
of the property, real, personal and mixed, and all debts due to Newco or
Radix on whatever account, as well as for stock subscriptions and all
other things in action or belonging to Newco or Radix shall be vested in
the Surviving Corporation; and all of the property, rights, privileges,
powers and franchises, and all and every other interest shall be
thereafter effectually the property of the Surviving Corporation as they
were of Newco or Radix, and the title to any real estate vested by deed
or otherwise, under the laws of any state, in Newco or Radix, shall not
revert or be in any way impaired by reason of the Merger; but all rights
of creditors and all liens upon any property of Newco or Radix shall be
preserved unimpaired, and all debts, liabilities and duties of Newco and
Radix shall thenceforth attach to the Surviving Corporation, and may be
enforced against the Surviving Corporation to the same extent as if such
debts, liabilities and duties had been incurred or contracted by the
Surviving Corporation. On and after the Effective Date, any action,
suit or proceeding, whether civil, criminal or administrative, pending
by or against either Newco or Radix shall be prosecuted as if the Merger
had not taken place or the Surviving Corporation may be substituted in
any such action, suit or proceeding.
SECTION 1.4. CERTAIN POST-MERGER MATTERS.
a) If at any time the Surviving Corporation shall
consider or be advised that any further assignments, conveyances or
assurances in law are necessary or desirable to vest, perfect or confirm
or record in the Surviving Corporation the title to any property or
rights of Newco or Radix, or otherwise to carry out the provisions
hereof, the persons who are the proper officers and directors of Newco
or Radix immediately prior to the Effective Time (or their successors in
office) shall execute and deliver any and all proper deeds, assignments
and assurances in law, and do all things necessary or proper, to vest,
perfect or confirm title to such property or rights in the Surviving
Corporation and otherwise to carry out the provisions hereof.
<PAGE>
8
b) The Surviving Corporation shall be governed by the
laws of the State of Delaware. The Certificate of Incorporation of
Radix as in effect at the Effective Time of the Merger shall be the
Certificate of Incorporation of the Surviving Corporation and shall
thereafter continue to be the Surviving Corporation's Certificate of
Incorporation until changed as provided therein or under the Delaware
Act. The By-laws of Radix as in effect at the Effective Time of the
Merger shall be the By-laws of the Surviving Corporation and shall
thereafter continue to be the Surviving Corporation's By-laws until
changed as provided therein or under the Delaware Act. The directors
and officers of the Surviving Corporation shall be as set forth in
EXHIBIT A attached hereto. Each such director or officer shall continue
in such office until his or her successor is elected or appointed and
shall have duly qualified or until his or her earlier resignation or
removal, as the case may be, in accordance with the By-laws of the
Surviving Corporation and applicable law.
SECTION 1.5. CERTAIN ACTIONS TO BE TAKEN PRIOR TO OR
CONTEMPORANEOUSLY WITH THE EXECUTION AND DELIVERY OF THIS AGREEMENT.
Prior to or contemporaneously with the execution and delivery
hereof, the parties hereto shall have taken or caused to be taken the
following actions:
a) Radix, as the Surviving Corporation, shall have
executed a Certificate of Merger substantially in the form attached
hereto as EXHIBIT B.
b) Each of AEI and the Indemnitors (as defined therein)
shall have executed and delivered the indemnification agreement in the
form attached hereto as EXHIBIT C (the "INDEMNIFICATION AGREEMENT");
c) Each of Mr. Matthew P. Sheppard and Radix shall have
executed and delivered to AEI an employment agreement in the form
attached hereto as EXHIBIT D (the "SHEPPARD EMPLOYMENT AGREEMENT");
<PAGE>
9
d) Each of Mr. Don S. Friedkin and Radix shall have
executed and delivered to AEI the services agreement in the form
attached hereto as EXHIBIT E (the "SERVICES AGREEMENT");
e) Each of Mr. John Radziwill and Radix shall have
executed and delivered to AEI a Supplemental Agreement in the form
attached hereto as EXHIBIT F (the "RADZIWILL SUPPLEMENTAL AGREEMENT");
f) Each of Mr. Pierre Schoenheimer and Radix shall have
executed and delivered to AEI a Supplemental Agreement in form attached
hereto as EXHIBIT G (the "SCHOENHEIMER SUPPLEMENTAL AGREEMENT");
g) Each of Mr. Matthew Sheppard and Radix shall have
executed and delivered to AEI a Supplemental Agreement in form attached
hereto as EXHIBIT H (the "SHEPPARD SUPPLEMENTAL AGREEMENT");
h) Each of AEI, the Stockholder Representatives (as
hereafter defined) and the Escrow Agent shall have agreed to the form of
an escrow agreement having the normal and customary terms of such an
agreement;
i) AEI shall have received reasonable evidence that the
holders of not less than 87% of the Radix Shares either (a) are
Accredited Investors within the meaning of Rule 501 of Regulation D or
(b) have duly appointed a Purchaser Representative reasonably acceptable
to AEI pursuant to the provisions of Regulation D, which Purchaser
Representative shall have certified to AEI that he has the requisite
knowledge and experience to evaluate the risks and merits of the Merger
as required by Rule 502 of Regulation D;
j) AEI shall have received the opinions of Messrs.
Spitzer & Feldman, P.C., addressed to AEI and dated as of the date
hereof, in such form as is satisfactory to AEI;
<PAGE>
10
k) Radix shall have received the opinion of Messrs.
Cummings & Lockwood, counsel to AEI, addressed to Radix and dated as of
the date hereof, in such form as is reasonably satisfactory to Radix;
l) Radix shall have delivered to AEI, in such form
reasonably satisfactory to AEI, evidence of the approval of the Board of
Directors of Radix of the matters set forth in SECTION 3.34 hereof;
m) Any and all consents, waivers, clearances, approvals
and authorizations from third parties under the Material Contracts
listed on SECTION 3.13 of the Disclosure Schedule (as hereinafter
defined) as being required to be obtained prior to the Merger shall have
been obtained at no cost to Radix and without any adverse effect on the
terms of such contracts;
n) Radix shall have obtained all required licenses,
consents, permits, approvals and authorizations, in form and substance
satisfactory to AEI, necessary to permit Radix to perform its
obligations hereunder and to consummate the transactions contemplated
hereby, including, without limitation, all licenses, consents, permits,
approvals and authorizations of the Regulatory Agencies (as hereinafter
defined), if any, necessary for Radix to continue to conduct Radix's
Business following the Effective Date in a manner which is consistent
with that in which it is presently conducted, subject to no conditions
which in the opinion of AEI imposes any material burden on the conduct
of such business and such licenses, consents, permits, approvals and
authorizations thereby shall have been duly obtained, made or given and
shall be in full force and effect as of the date hereof;
o) Radix shall have delivered a certified copy of a list
of the Radix Stockholders to AEI, which list shall identify their states
of residence, after which delivery there shall be no further transfers
or registration of the Radix Shares on the stock
<PAGE>
11
transfer books of Radix without prompt notice thereof to AEI, and no
issuances of any new shares of Radix.
p) The execution, delivery and performance of this
Agreement shall have been duly adopted and approved by the Board of
Directors of Radix and AEI shall have received a copy of such
resolutions, duly certified by the secretary of Radix;
q) The execution, delivery and performance of this
Agreement shall have been duly adopted and approved by the Board of
Directors of AEI and Radix shall have received a copy of such
resolutions, duly certified by the secretary of AEI;
r) The execution, delivery and performance of this
Agreement shall have been duly adopted and approved by written consent
in accordance with the provisions of Section 228 of the Delaware Act by
the sole holder of the Newco Share, and Radix shall have received a copy
of said consent, duly certified by the secretary of Newco;
s) Radix and AEI shall have mutually agreed upon the
content and timing of a press release or other public statement with
respect to the execution and delivery of this Agreement; and
t) Each of Radix and AEI shall have filed a Notification
under the HSR Act (as hereinafter defined) in respect of the
transactions contemplated hereby.
SECTION 1.6. CERTAIN ACTIONS TO BE TAKEN PRIOR TO THE CLOSING.
a) On or before May 24, 1995 (the "MAILING DATE"), AEI
shall mail by overnight courier or deliver to the Radix Shareholders
identified on SCHEDULE 1.6 hereto (the "IDENTIFIED STOCKHOLDERS") an
Information Statement ("INFORMATION STATEMENT") meeting the requirements
of Rule 506 of Regulation D which Information Statement shall be in
substantially the form previously delivered to such Identified
Stockholders with such updated information as may be required and shall
include as exhibits (1) an opinion of Messrs. Spitzer & Feldman P.C.,
counsel of Radix, as to the tax consequences of the merger to the
holders of the Radix Shares, (2) a fairness opinion of Tucker Anthony to
the
<PAGE>
12
effect that the consideration to be received by the holders of Radix
Shares in the Merger is fair to such holders and (3) an opinion of
Messrs. Cummings & Lockwood as to the legality of the Shares of AEI
Common Stock being issued in the Merger, all substantially in the form
previously contained in such prior Information Statement, provided,
however, that AEI shall have the right to postpone the Mailing Date for
up to 14 days by notice to Radix.
b) Within five (5) business days after the Information
Statement shall have been delivered to the Identified Stockholders,
Radix shall deliver to AEI the written consents of the holders of not
less than eighty-seven percent (87%) of the issued and outstanding Radix
Shares approving the Merger and the other transactions contemplated
hereby in accordance with Section 228 of the Delaware Act, and shall
mail a notice thereof to any Radix Stockholders who did not execute such
written consents, in accordance with such Section 228. Radix shall
deliver an Officer's Certificate to AEI certifying the foregoing
actions, together with an opinion of counsel in form reasonably
satisfactory to AEI with respect to the due approval of the Merger by
the Radix Stockholders..
c) Within one (1) business day after delivery of the
consents set forth in subsection (b) to AEI, AEI shall mail by overnight
courier the Information Statement to the Radix Stockholders, other than
the Identified Stockholders ("REMAINING STOCKHOLDERS").
SECTION 1.7. THE CLOSING.
a) Subject to the satisfaction of the conditions
precedent specified in ARTICLE VI hereof and of the terms and covenants
set forth herein, the consummation of the Merger and the other
transactions contemplated hereby (the "CLOSING") shall take place at the
offices of Cummings & Lockwood, Four Stamford Plaza, Stamford,
Connecticut, at 10:00 a.m., Eastern Standard Time, fourteen (14) days
after the mailing of the Information Statement to the Remaining
Stockholders or, if the waiting period specified in SECTION 6.1(a) shall
not have expired at least two business days prior to such date, then on
<PAGE>
13
the third business day after the expiration of such waiting period or,
if such conditions of Closing have not been satisfied or waived by such
date, at such other time and place and on such other date as AEI and
Radix may reasonably agree upon in writing (the "CLOSING DATE"). At the
Closing, the parties shall exchange the documents and take the actions
contemplated by this SECTION 1.7 and shall cause the filing of the
Certificate of Merger.
b) At the Closing, Radix shall deliver to AEI all other
previously undelivered documents required to be delivered in accordance
with the terms of this Agreement by Radix to AEI at or prior to the
Closing in connection with the consummation of the Merger and the other
transactions contemplated herein.
c) At the Closing, AEI shall deliver to Radix all other
previously undelivered documents required to be delivered in accordance
with the terms of this Agreement by AEI to Radix at or prior to the
Closing in connection with the consummation of the Merger and the other
transactions contemplated herein.
d) At the Closing, AEI shall deliver the Escrowed
Property to the Escrow Agent in accordance with the provisions of
Article II hereof.
e) At the Closing, Radix shall deliver the Officer's
Certificate relating to Seller Expenses and Seller Reimbursable Expenses
as described in SECTION 2.5 hereof.
SECTION 1.8. PAYMENT OF EXPENSES.
a) AEI shall be obligated to pay for any and all fees
and expenses of its counsel and accountants and all other costs and
expenses incurred by it in the preparation, negotiation, execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, including, without limitation, the following costs
and expenses: (i) expenses arising out of its preparation, filing and
prosecution of the Registration Statement (as hereinafter defined) and
all applications for regulatory approval and any appeals therefrom
(including, without limitation, all blue sky fees and expenses); (ii)
<PAGE>
14
legal fees and expenses payable to Cummings & Lockwood; and (iii) fees
and expenses payable to Arthur Andersen LLP ("AEI'S AUDITORS").
b) Radix will pay the expenses incurred on behalf of the
Radix Stockholders in connection with the preparation, negotiation,
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, which expenses ("SELLER EXPENSES")
shall be limited to (i) legal fees and expenses payable to Spitzer &
Feldman, P.C.; (ii) fees and expenses payable to Ernst & Young LLP
("RADIX'S AUDITORS"); (iii) the broker's fee payable to Tucker Anthony
pursuant to SECTION 3.20 hereof; and (iv) the fees and expenses of a
Purchaser's Representative in respect of any of the Radix Stockholders
that are not Accredited Investors within the meaning of Regulation D.
Such Seller Expenses, whether paid or to be paid (including those
incurred during the period between the date hereof and the Closing Date)
shall fully be reflected on the Closing Balance Sheet (as hereinafter
defined).
SECTION 1.9. BNY FACILITY
a) AEI shall notify Radix within five business days
prior to the Closing whether it intends to pay off all amounts
outstanding under that certain Revolving Credit and Security Agreement
dated January 31, 1995, between Radix Group International, Inc. ("RADIX
GROUP") and The Bank of New York Commercial Corporation ("BNY") (the
"BNY FACILITY"). If AEI shall so notify Radix, Radix shall cause BNY to
deliver a pay-off letter at the Closing, which shall specify the dollar
amount required to pay in full all amounts outstanding under the BNY
Facility and, upon payment by such amount by AEI in accordance with the
payment instructions in such pay-off letter, which payment will be made
by AEI at Closing, Radix shall cause BNY to deliver evidence
satisfactory to AEI that such BNY Facility shall have been terminated,
that no liabilities or obligations of Radix remain outstanding
thereunder, and of the release by BNY of all security interests and
other liens and encumbrances in favor of BNY under such facility (the
"BNY LIENS")
<PAGE>
15
(which shall include the delivery of fully executed UCC termination
statements in respect of all recorded security interests.
b) In the event that AEI shall not notify Radix of its
intention to pay off of the BNY Facility in accordance with the
foregoing SECTION 1.9(a), then AEI acknowledges that the BNY Liens and
all of Radix's obligations to BNY under the BNY Facility will remain in
place following the Closing.
ARTICLE II.
ESCROW; ADJUSTMENTS TO PURCHASE PRICE
SECTION 2.1. ESCROW.
a) At the Closing, AEI shall deliver certificates and
cash representing the Escrowed Property to the Escrow Agent, to be held
and disbursed in accordance with the terms hereof. The Escrowed
Property shall be used (i) in the event of a negative adjustment to the
Purchase Price in accordance with SECTION 2.2 hereof, (ii) to indemnify
AEI pursuant to the terms of Article VIII hereof, (iii) to provide for
the payment of Seller Expenses and Seller Reimbursable Expenses pursuant
to SECTION 2.5 hereof, and (iv) pursuant to Exhibit K.
b) Whenever pursuant to this Agreement the Escrow Agent
is required to deliver Escrowed Property to AEI, the Escrow Agent shall
distribute cash plus shares of AEI Common Stock as originally deposited,
with the cash and shares being distributed on a pro-rata basis, based on
their respective representation when deposited in the Escrow. The
number of shares of AEI Common Stock to be delivered shall be determined
on the basis of its Market Value as hereafter defined. By way of
example, if the Escrow Agent were required to deliver Escrowed Property
in respect of a $100,000 claim, and the Market Value of the AEI Common
Stock were $25 per share, with the Escrow consisting
<PAGE>
16
of 90% AEI Common Stock and 10% cash, then the Escrow Agent would
distribute $10,000 in cash and 3,600 shares of AEI Common Stock in
respect of such claim.
c) Upon the termination of the Escrow, any remaining
Escrowed Property shall be delivered as follows: (i) any cash (other
than Dividends and income earned on such dividends, which shall be
distributed in the manner provided in the Escrow Agreement) shall be
distributed to the Non-Qualified Stockholders on a pro-rata basis, based
on the number of Radix Shares held by each Non-Qualified Stockholder as
compared to the number of Radix Shares held by all Non-Qualified
Stockholders; and (ii) shares of AEI Common Stock shall be distributed
to the other Radix Stockholders (except Dissenting Stockholders and Non-
Qualified Stockholders) on a pro-rata basis, based on the number of
Radix Shares held by each such Radix Stockholder as compared to the
number of Radix Shares held by all such other Radix Stockholders (other
than Dissenting Stockholders.)
SECTION 2.2. NEGATIVE ADJUSTMENT TO PURCHASE PRICE. In the
event that Radix's Tangible Net Assets (as hereafter defined) are less
than or equal to $2,970,000, then the Purchase Price shall be reduced by
an amount equal to the amount by which Radix's Tangible Net Assets are
less than $3,300,000, and the Escrow Agent shall deliver Escrowed
Property to AEI in the amount of the deficiency (determined in
accordance with SECTION 2.1(b)).
SECTION 2.3. DEFINITIONS.
a) "MARKET VALUE" means the average closing price of a
share of AEI Common Stock on NASDAQ for the ten (10) consecutive trading
days preceding the date of execution hereof rounded to the nearest whole
cent.
b) Radix's "TANGIBLE NET ASSETS" shall be equal to the
difference between the tangible assets of Radix and its liabilities on a
consolidated basis as of April 30, 1995, in each case as shown on the
Closing Balance Sheet (as hereinafter defined).
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17
The calculation of Tangible Net Assets shall further be subject to the
provisions set forth on EXHIBIT I hereto.
c) "SELLER REIMBURSABLE EXPENSES" means (i) a
termination fee payable to Radix Organizations Inc. ("ROI") in the
amount of $300,000, less the tax benefits attributable thereto, as more
fully described in SECTION 3.27 (the "TERMINATION FEE"); (ii) a
severance payment in the aggregate amount of $200,000, less the tax
benefits attributable thereto, payable to an officer of Radix Group,
which officer is not also a Radix Stockholder, and which shall be paid
in two equal installments on June 1, 1995 and January 1, 1996 (the
"SEVERANCE PAYMENT"); (iii) the Seller Expenses (as defined in SECTION
1.8) in excess of $500,000; (iv) the fees and expenses of Radix's
Auditors in connection with the preparation of the Closing Balance
Sheet; (v) the fees and expenses of the Balance Sheet Arbitrator, to the
extent attributable to the Radix Stockholders pursuant to SECTION
2.5(b), and the fees and expenses of Radix's Auditors in connection with
any Balance Sheet Arbitration, and the legal and accounting fees and
expenses incurred by the Stockholder Representatives on behalf of the
Radix Stockholders in connection with such arbitration and the claims
associated therewith; (vi) the fees and expenses of the member of the
Board of Arbitration appointed by the Stockholder Representatives
pursuant to SECTION 8.8(f), the fees and expenses of the third member of
the Board of Arbitration to the extent attributable to the Radix
Stockholders pursuant to such SECTION 8.8(f), and the legal and
accounting fees and expenses incurred by the Stockholder Representatives
on behalf of the Radix Stockholders in connection with such arbitration
and the claims associated therewith; and (vii) the out-of-pocket
reasonable fees and expenses incurred on behalf of the Radix
Stockholders in connection with the defense of any Third Party Claims
under Section 8.6 hereof.
<PAGE>
18
SECTION 2.4. CALCULATION OF RADIX TANGIBLE NET ASSETS.
a) Messrs. Schoenheimer, Radziwill and Sheppard acting
as Stockholder Representatives in accordance with the terms of SECTION
2.7 hereof, shall cause to be delivered to AEI a consolidated balance
sheet reflecting Radix's Tangible Net Assets as of April 30, 1995,
together with the notes thereto (the "CLOSING BALANCE SHEET"). Ernst &
Young LLP ("RADIX'S AUDITORS") shall, within 90 days of the date of
execution hereof, perform the audit necessary for the Closing Balance
Sheet and complete the Closing Balance Sheet. The Closing Balance Sheet
shall be prepared in good faith, consistent with the representations and
warranties set forth in SECTION 3.7 and SECTION 3.23 hereof, and in
accordance with GAAP, except for the specific criteria identified on
EXHIBIT I attached hereto and made a part hereof, and shall be audited
by Radix's Auditors. It is understood that the Closing Balance Sheet
may exclude transportation liabilities and other accounts payable older
than six (6) months as of the date of the Closing Balance Sheet. It is
further agreed that, subsequent to agreement on the Closing Balance
Sheet, that any liabilities determined to be due and payable to a Radix
supplier, vendor or any other party older than six (6) months as of the
date of the Closing Balance Sheet are to be subsequently reflected as a
liability on the Closing Balance Sheet. In the event that Radix's
Tangible Net Assets as reflected thereon are less than $2,970,000,
unless AEI shall dispute such calculation in accordance with SECTION
2.4(b) hereof, then the Stockholder Representatives and AEI shall
jointly notify the Escrow Agent of the amount of the Escrowed Property
required to be delivered by SECTION 2.2 hereof, and the Escrow Agent
shall promptly deliver such Escrowed Property to AEI. Any Escrowed
Property remaining in the escrow shall continued to be held in escrow in
accordance with the terms and conditions hereof. In the event that the
Escrowed Property shall not be sufficient to satisfy any deficiency of
Radix's Tangible Net Assets in accordance with SECTION 2.2 hereof, then,
in accordance with the terms of the Indemnification Agreement, AEI shall
have an immediate claim
<PAGE>
19
against the Indemnitors, jointly and severally, for the dollar amount of
any such deficiency (subject to the limitations set forth therein). No
other Radix Stockholder shall have any liability to AEI or the
Indemnitors in respect of such deficiency.
b) Disputes with respect to the Closing Balance Sheet
shall be resolved as follows:
(i) AEI shall have fifteen (15) days after its
receipt of the Closing Balance Sheet (the "DISPUTE PERIOD"), to dispute
any of the elements of or amounts reflected in the Closing Balance Sheet
(a "BALANCE SHEET DISPUTE"). If AEI has a Balance Sheet Dispute, AEI
shall deliver to the Stockholder Representatives written notice (a
"BALANCE SHEET DISPUTE NOTICE") within the Dispute Period, with a copy
to the Escrow Agent, setting forth in reasonable detail a description of
the Balance Sheet Dispute. Within ten (10) days after AEI's delivery of
any such Balance Sheet Dispute Notice, AEI and the Stockholder
Representatives shall meet at a mutually acceptable time and place and
thereafter as often as such parties reasonably deem necessary and shall,
in good faith, cooperate in an attempt to resolve such Balance Sheet
Dispute and agree in writing upon an appropriate adjustment to Radix's
Tangible Net Assets as reflected in the Closing Balance Sheet. Without
limiting the generality of the foregoing, in connection with any such
Balance Sheet Dispute, each of the parties hereto, as the case may be,
agrees to furnish the other parties hereto and their respective
accountants and agents with full access to all relevant working papers,
books, records, financial data and other documentation used in the
calculation of Radix's Tangible Net Assets.
(ii) If any Balance Sheet Dispute is not finally
resolved within twenty (20) business days after AEI shall have delivered
a Balance Sheet Dispute Notice, as aforesaid, or if the parties shall
fail to meet within ten (10) days after AEI's delivery of any such
Balance Sheet Dispute Notice, then the Balance Sheet Dispute shall be
referred to an independent "big six" certified public accounting firm
(the "BALANCE SHEET
<PAGE>
20
ARBITRATOR"), other than Radix's Auditors and Arthur Andersen LLP, for
resolution in accordance with the terms hereof (the BALANCE SHEET
ARBITRATION"), and in any event as soon as practicable. AEI and the
Stockholder Representatives shall select the Balance Sheet Arbitrator by
mutual written agreement, which firm shall not be then rendering (and
during the preceding ten (10) year period shall not have rendered)
services to any party hereto, or Radix or any affiliate of any of them,
nor shall such firm then have or have had during the past ten (10) years
any other business or financial relationship with the parties hereto, or
any affiliate of any of them. Upon the request of the Balance Sheet
Arbitrator, each party hereto agrees to enter into an arbitration
agreement providing reasonable protection to the Balance Sheet
Arbitrator, in such form as may be mutually acceptable to the Balance
Sheet Arbitrator and the parties hereto.
(iii) The Balance Sheet Arbitrator shall hold a
hearing within thirty (30) days of the submission of the Balance Sheet
Dispute for arbitration (the BALANCE SHEET HEARING") and shall render a
decision within thirty (30) days of the conclusion of such hearing. In
preparation for their respective presentations at such Balance Sheet
Hearing, AEI and the Stockholder Representatives may depose such
directors, officers, employees or agents of AEI or Radix, the Radix
Subsidiaries or Radix's respective outside accountants or advisors, and
any third parties, as such parties deem reasonably necessary for such
preparation. Each party hereto may file with the Balance Sheet
Arbitrator such briefs, affidavits and supporting documents as they deem
appropriate. The Stockholder Representatives shall afford the Balance
Sheet Arbitrator with the same access as AEI to any documentation used
in the calculation of Radix's Tangible Net Assets. Any decision made by
the Balance Sheet Arbitrator within the scope of its authority shall be
final, nonappealable and binding upon the parties hereto.
(iv) The Balance Sheet Arbitrator shall only be
authorized on any one issue to decide in favor of and choose the
position of either AEI or the Stock-
<PAGE>
21
holder Representatives or to decide upon a compromise position between
the respective positions asserted by the parties hereto at the Balance
Sheet Hearing. The Balance Sheet Arbitrator shall base its decision
solely upon the presentations of the parties hereto at the Balance Sheet
Hearing, the agreed treatment set forth herein (including as to the
matters set forth on Exhibit I) and any materials made available under
clauses (iii) or (v) of this SECTION 2.4(b) and not upon independent
review. The Balance Sheet Arbitrator shall not place any reliance in
reaching its determination in respect of any disputed item that such
item was treated in a particular manner in a balance sheet previously
certified by Radix's Auditors, nor will the Balance Sheet Arbitrator
apply any test of consistency (other than depreciation of fixed assets)
between previously certified balance sheets and the Closing Balance
Sheet; PROVIDED, HOWEVER, that the Balance Sheet Arbitrator shall in all
cases be obligated to give effect to the treatment of a disputed item in
a prior balance sheet provided that such treatment was in accordance
with GAAP, to otherwise adhere to GAAP and to give effect to the
criteria established on EXHIBIT I.
(v) The Balance Sheet Arbitrator's decision
regarding its final resolution of any Balance Sheet Dispute (the
"BALANCE SHEET ARBITRATOR'S DECISION") shall be in writing, shall set
forth the calculations made in reaching its decision, shall describe the
manner in which such calculations were made and shall include a
representation that the manner so used was in accordance with GAAP and
the specific terms of this Agreement relative to the calculation of
Radix's Tangible Net Assets. The Balance Sheet Arbitrator's Decision
shall specifically set forth the amount of any Escrowed Property
required to be distributed to AEI pursuant to SECTION 2.2 hereof. If
the Balance Sheet Arbitrator determines that the value of Radix's
Tangible Net Assets requires a distribution of Escrowed Property in
accordance with SECTION 2.2 hereof, then such Escrowed Property shall be
distributed by the Escrow Agent promptly after receipt by the Escrow
Agent of a copy of the Balance Sheet Arbitrator's Decision.
<PAGE>
22
(vi) Any such Balance Sheet Arbitration shall take
place in New York, New York, unless the parties hereto shall mutually
agree on another location. The Balance Sheet Arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sections 1
through 16, and judgment upon the award of the Balance Sheet Arbitrator
may be entered by any court having jurisdiction thereof.
(vii) The fees and expenses of the Balance Sheet
Arbitrator shall be borne (A) by the Radix Stockholders in the event
that AEI's calculation of Radix's Tangible Net Assets was closer in
dollar amounts to the Balance Sheet Arbitrator's determination than was
the Indemnitors' calculation thereof, and (B) by AEI in the event that
the Stockholders Representatives' calculation of Radix's Tangible Net
Assets was closer in dollar amounts to the Balance Sheet Arbitrator's
determination than was AEI's calculation thereof. Each of the parties
hereto shall bear their own costs and expenses related to any such
Balance Sheet Arbitration, provided, however, that the expenses of the
Radix Stockholders may be paid in accordance with the provisions of
SECTION 2.5 hereof.
SECTION 2.5. PAYMENT OF SELLER EXPENSES AND SELLER
REIMBURSABLE EXPENSES.
a) At the Closing, Radix shall deliver an Officer's
Certificate itemizing all Seller Expenses, duly certified by the
President or the Chief Financial Officer of the Company. AEI shall be
entitled to retain such amount of Escrowed Property that would otherwise
be delivered into escrow as shall be equal to the Seller Expenses in
excess of such $500,000. In the event that there shall be additional
Seller Expenses not reflected on such Officer's Certificate, then AEI
shall be entitled to receive such amount of Escrowed Property from the
escrow, and the Escrow Agent shall deliver such amount of Escrowed
Property to AEI.
b) At the Closing, Radix shall pay the Termination Fee,
and AEI shall be entitled to retain such amount of Escrowed Property
that would otherwise be
<PAGE>
23
delivered into escrow as shall be equal to the amount thereof, net of
any tax benefit (which amount, net of any tax benefit, is $180,000).
c) AEI shall cause Radix Group to pay the Severance
Payments on the date when due. AEI shall be entitled to retain such
amount of Escrowed Property that would otherwise be delivered into
escrow as shall be equal to the aggregate amount of such payments, net
of any tax benefit (which amount, net of any tax benefit, is $120,000).
d) At such time as all Balance Sheet Disputes shall have
finally been resolved, or if there none, within twenty (20) days after
the delivery of the Closing Balance Sheet, the Stockholder
Representatives shall deliver a Stockholders' Representative
Certificate, itemizing all Seller Reimbursable Expenses incurred in
connection with the preparation of the Closing Balance Sheet and
resolution of all Balance Sheet Disputes, if any, sworn to by two of the
three Stockholder Representatives. Radix shall pay the amounts shown
thereon, by ordinary check drawn to the parties to whom such expenses
are owed, on behalf of the Radix Stockholders. AEI shall deliver a copy
of such Stockholders' Representative Certificate to the Escrow Agent,
who shall cause AEI to be reimbursed for the amounts so paid by
delivering to AEI such amount of Escrowed Property as shall be equal to
the amounts paid by AEI on behalf of the Radix Stockholders.
e) At such time as any dispute submitted to arbitration
pursuant to SECTION 8.8 shall have finally been resolved, the
Stockholder Representatives shall deliver a Stockholder Representative's
Certificate itemizing all Seller Reimbursable Expenses incurred in
connection with the resolution thereof, sworn to by two of the three
Stockholder Representatives. Radix shall pay the amounts shown thereon,
by ordinary check drawn to the party to whom such expenses are owed, on
behalf of the Radix Stockholders. AEI shall deliver a copy of such
Stockholders' Representative Certificate to the Escrow Agent, who shall
cause AEI to be reimbursed for the amounts so paid by delivering to AEI
<PAGE>
24
such amount of Escrowed Property as shall be equal to the amounts paid
by AEI on behalf of the Radix Stockholders.
f) The parties agree that AEI is not an obligor with
respect to such Seller Reimbursable Expenses, and the persons to whom
such expenses are owed are not third party beneficiaries of the
agreement by AEI to pay such expenses in accordance with the terms of
this SECTION 2.5.
SECTION 2.6. STOCKHOLDER REPRESENTATIVES.
a) Each Radix Stockholder that elects not to become a
Dissenting Stockholder hereby appoints Messrs. John Radziwill, Pierre L.
Schoenheimer and Matthew P. Sheppard (hereinafter referred to as the
"STOCKHOLDER REPRESENTATIVES") as the attorney-in-fact of such Radix
Stockholder, with full power and authority, including, without
limitation, power of substitution, acting in the name of and for and on
behalf of such Radix Stockholder to amend or waive any provision of this
Agreement, to terminate this Agreement, and to execute the Escrow
Agreement with such amendments thereto as are appropriate in the sole
and absolute discretion of the Stockholder Representatives, and to do
all other things and to take all other action under or related to this
Agreement or the Escrow Agreement which, in the sole and absolute
discretion of the Stockholder Representatives, they may consider
necessary or proper to carry out the terms hereof and to resolve any
dispute with AEI over any aspect of the Merger Agreement or the Escrow
Agreement (including, without limitation, as to any adjustment to
Radix's Tangible Net Assets, as to the distribution of the Escrowed
Property or as to the resolution of any indemnification obligations
under Article VIII hereof) and on behalf of each such Radix Stockholder
to enter into any agreement, instrument or other document to effectuate
any of the foregoing, which shall have the effect of binding each such
Radix Stockholder as if such Radix Stockholder had personally entered
into such agreement, instrument or document. This appointment and power
of attorney shall be deemed as coupled with an interest and all
<PAGE>
25
authority conferred hereby shall be irrevocable and shall not be subject
to termination by operation of law, whether by the death, incapacity or
bankruptcy of any Radix Stockholder, or the occurrence of any other
event or events and the Stockholder Representatives may not terminate
this power of attorney with respect to any Radix Stockholder or such
Radix Stockholder's successors or assigns without the prior written
consent of AEI.
b) Each Radix Stockholder agrees that the Stockholder
Representatives shall have no liability except for willful misconduct or
bad faith hereunder or under the Escrow Agreement, and that the
Stockholder Representatives shall be entitled to be indemnified and held
harmless for any Losses (as hereinafter defined) incurred by them as a
result of the performance of their obligations as Stockholder
Representatives, provided that (i) such Losses shall not be as a result
of willful misconduct or bad faith and (ii) the sole source for such
indemnification shall be any Escrowed Property that would otherwise be
available for release to the Radix Stockholders at the expiration of the
escrow period pursuant to the terms of the Escrow Agreement.
c) The Stockholder Representatives shall act on behalf
of the Stockholders pursuant hereto by the written approval of two of
the three Stockholder Representatives or their duly appointed
successors. Upon the death, disability or resignation of any of the
Stockholder Representatives (or any of their respective successors), a
successor shall be appointed by the mutual written agreement of the
remaining Stockholder Representatives. The Stockholder Representatives
shall promptly notify the Radix Stockholders and AEI in writing of any
such appointment of a successor Stockholder Representative. In the
event that the Stockholder Representatives are then unable to reach
agreement on the appointment of a successor Stockholder Representative,
the Radix Stockholders shall by a majority vote appoint a successor
Stockholder Representative.
<PAGE>
26
ARTICLE III.
REPRESENTATIONS AND WARRANTIES AS TO RADIX
Radix hereby represents and warrants to AEI, as of the date
hereof (except as to any representation or warranty which specifically
relates to another date), as follows:
SECTION 3.1. INVESTMENTS; ORGANIZATION AND QUALIFICATION.
a) Set forth on SECTION 3.1(a) of the disclosure
schedule attached hereto and made a part hereof (the "DISCLOSURE
SCHEDULE"), is a list of all corporations, limited liability companies,
partnerships, joint ventures and other business enterprises or entities
in which Radix owns, directly or indirectly, more than fifty percent
(50%) of the outstanding capital stock, partnership interests or other
ownership interests, as the case may be (the "RADIX SUBSIDIARIES") which
list shows for each of the Radix Subsidiaries (i) the number of shares
authorized for each class of capital stock, (ii) the number of shares
outstanding for each such class and (iii) the recordholder(s) thereof.
SECTION 3.1(a) of the Disclosure Schedule also sets forth (i) a list of
all corporations, limited liability companies, partnerships, joint
ventures and other business enterprises or entities in which Radix owns,
directly or indirectly, less than or equal to fifty percent (50%) of the
outstanding capital stock, partnership interests or other ownership
interests, as the case may be, and (ii) a list of all of Radix's equity
investments, direct or indirect, in any person, corporation, limited
liability company, partnership, joint venture or other business
enterprise or entity.
b) Each of Radix and the Radix Subsidiaries is a
corporation, limited liability company, partnership or other entity, as
the case may be, duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, with all
requisite power and authority and legal right to own, operate and lease
its properties and assets, as the case may be, and to carry on Radix's
Business as it is now being conducted. Each of Radix and the Radix
Subsidiaries is qualified or licensed to do business and is in good
standing in each jurisdiction in which the ownership or leasing of
property
<PAGE>
27
by it or the conduct of Radix's Business requires such licensing or
qualification, except in such jurisdictions where the failure to so
qualify would not have a material adverse effect on the respective
business, revenues, financial condition, results of operations,
properties, assets or prospects of Radix and the Radix Subsidiaries,
taken as a whole, or on the respective business, revenues, financial
condition, results of operations, properties, assets or prospects of
Radix Group (a "MATERIAL ADVERSE EFFECT").
c) Radix has delivered to AEI complete and correct
copies of: (i) Articles of Incorporation and By-laws for Radix and each
of the Radix Subsidiaries that is organized as a corporation, and (ii)
all organizational documents relating to each of the Radix Subsidiaries
that is not organized as a corporation, including, without limitation,
operating agreements, certificates of limited partnership or formation,
partnership agreements and joint venture agreements (the "OTHER
ORGANIZATIONAL DOCUMENTS").
SECTION 3.2. AUTHORIZATION. Radix has full corporate power,
authority and legal right to execute and deliver and to perform its
obligations under this Agreement. The execution and delivery of this
Agreement by Radix and the performance by Radix of its obligations
hereunder have been duly authorized by Radix's Board of Directors and
stockholders. No other action on the part of Radix is necessary to
authorize the execution and delivery of this Agreement or the
performance of its obligations hereunder. This Agreement has been duly
and validly executed and delivered by Radix and constitutes a legal,
valid and binding obligation of Radix, enforceable against Radix in
accordance with its terms, except to the extent that such enforcement
may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and remedies generally.
SECTION 3.3. NO VIOLATION. Neither the execution and delivery
of this Agreement by Radix and the performance by Radix of its
obligations hereunder, nor the consummation of the Merger, will:
<PAGE>
28
a) violate or result in any breach of any provision of
the Certificate of Incorporation, By-laws or Other Organizational
Documents of Radix or any of the Radix Subsidiaries;
b) except as set forth in SECTION 3.3(b) of the
Disclosure Schedule, violate, conflict with or result in a violation or
breach of, or constitute a default (with or without due notice or lapse
of time or both) under, or permit the termination of, or require the
consent of any other party to, or result in the acceleration of, or
entitle any party to accelerate (whether as a result of a change in
control of Radix or otherwise) any obligation, or result in the loss of
any benefit, or give rise to the creation of any options, pledges,
security interests, liens, mortgages, claims, debts, charges, voting
agreements, voting trusts or other encumbrances or restrictions on
transfer of any kind whatsoever (collectively, the "ENCUMBRANCES",
provided that such term shall not include the BNY Liens upon any of the
respective properties or assets of Radix or any of the Radix
Subsidiaries under any of the terms, conditions or provisions of any
contract, agreement or arrangement to which Radix or any of the Radix
Subsidiaries is a party, whether written or oral, and which would have a
Material Adverse Effect; nor
c) violate any order, writ, judgment, injunction,
decree, statute, law, rule, regulation or ordinance of any court or
governmental, quasi-governmental or regulatory department, body, agency,
commission, instrumentality or authority (a "GOVERNMENTAL AUTHORITY")
applicable to Radix or any of the Radix Subsidiaries or any of their
respective properties or assets.
SECTION 3.4. CAPITALIZATION OF RADIX. The authorized capital
stock of Radix consists of 1,000,000 shares of Radix Common Stock, par
value $.01 per share. As of the date hereof, there were issued and
outstanding 771,500 shares of Radix Common Stock. The Radix Shares
constitute all of the issued and outstanding shares of Radix Common
Stock. The Radix Shares have been duly authorized, validly issued and
are fully
<PAGE>
29
paid and nonassessable, with no personal liability attaching to the
ownership thereof, and are owned free and clear of all Encumbrances.
Except as set forth in SECTION 3.4 of the Disclosure Schedule, there are
no options, warrants, calls, subscriptions, conversion or other rights,
agreements or commitments obligating Radix to issue any additional
shares of capital stock of Radix or any other securities convertible
into, exchangeable for or evidencing the right to subscribe for or
otherwise acquire any shares of capital stock of Radix.
SECTION 3.5. OWNERSHIP OF THE RADIX SUBSIDIARIES' CAPITAL
STOCK. Except as set forth in SECTION 3.5 of the Disclosure Schedule,
all of the outstanding shares of capital stock, partnership interests or
other ownership interests, as the case may be, of each of the Radix
Subsidiaries are beneficially owned by Radix, directly or indirectly,
and have been duly authorized, validly issued and are fully paid and
nonassessable, with no personal liability attaching to the ownership
thereof, and are owned free and clear of all Encumbrances. There are no
options, warrants, calls, subscriptions, conversion or other rights,
agreements or commitments obligating any of the Radix Subsidiaries to
issue any additional shares of capital stock, partnership interests or
other ownership interests of any such Radix Subsidiary or any other
securities convertible into, exchangeable for or evidencing the right to
subscribe for or otherwise acquire any shares of such capital stock,
partnership interests or other ownership interests.
SECTION 3.6. CONSENTS AND APPROVALS. Other than the consents
and approvals of or filings or registrations with the Governmental
Authorities listed on SECTION 3.6 of the Disclosure Schedule and taking
into consideration the execution, delivery and performance of the
Services Agreement and the Radziwill Supplemental Agreement, no filing
or registration with, no notice to and no permit, authorization, consent
or approval of any Governmental Authorities, including, without
limitation, the Regulatory Agencies (as defined in SECTION 3.29 hereof)
is necessary for the execution and delivery of this Agreement and the
consummation of the Merger or to enable Radix and the Radix Subsidiaries
to
<PAGE>
30
continue to conduct Radix's Business after the Closing in a manner which
is consistent with that in which it is presently conducted.
SECTION 3.7. FINANCIAL STATEMENTS.
a) Radix has delivered to AEI the Consolidated Balance
Sheets of Radix and the Radix Subsidiaries as of January 31, 1995 (the
"JANUARY 31, 1995 BALANCE SHEET"), October 31, 1994, July 31, 1994, 1993
and 1992, and the related Consolidated Statements of Income and Retained
Earnings and the Consolidated Statements of Cash Flows for the periods
then ended, together with the notes thereto and, in the case of the
statements for July 31, 1994, 1993 and 1992, in each case certified by
Radix's Auditors (sometimes hereinafter collectively referred to as the
"FINANCIAL STATEMENTS"). Such Balance Sheets, including, without
limitation, the notes thereto, are true and correct in all material
respects, have been prepared in accordance with generally accepted
accounting principles ("GAAP"), and except as set forth in Section 3.7
of the Disclosure Schedule, such accounting principles have been
consistently followed throughout the periods indicated. Such Financial
Statements fairly present the financial condition of Radix and the Radix
Subsidiaries as of the dates thereof. The related Consolidated
Statements of Income and Cash Flows fairly present the results of the
operations and cash flow of Radix and the Radix Subsidiaries for the
periods indicated.
b) The balance sheet reflecting the Company's Tangible
Net Assets (as hereinafter defined) as of April 30, 1995, together with
the notes thereto, (the "CLOSING BALANCE SHEET"), when delivered, will
be true and correct in all material respects, will have been prepared in
accordance with GAAP and shall fairly present the financial condition of
Radix and the Radix Subsidiaries, including, without limitation, Radix's
Tangible Net Assets, as of the date thereof. Radix's "TANGIBLE NET
ASSETS" shall be equal to the difference between the tangible assets of
Radix and its liabilities on a consolidated basis as of such date, in
each case as shown on the Closing Balance Sheet and in accordance with
<PAGE>
31
Exhibit I. For the purposes of this SECTION 3.7(b), AEI agrees and
acknowledges that in the event of a breach of this representation, any
recovery by AEI in respect of a deficiency in Tangible Net Assets
pursuant to SECTION 2 of the Indemnification Agreement shall be an
offset against any other damages for breach of this representation (so
that AEI shall be precluded from recovering double damages for any such
breach).
SECTION 3.8. ABSENCE OF UNDISCLOSED LIABILITIES. At January
31, 1995 (the "BALANCE SHEET DATE"), neither Radix nor any Radix
Subsidiary had any liability (whether accrued, absolute, contingent or
otherwise, and whether then due or to become due), nor any loss
contingency, except as reflected on the January 31, 1995 Balance Sheet,
which would be required to be included therein in accordance with GAAP,
consistently applied with prior periods, and Radix has no knowledge of
any valid basis for the assertion of any of the foregoing.
SECTION 3.9. ABSENCE OF CERTAIN CHANGES. Except as disclosed
in SECTION 3.9 of the Disclosure Schedule, since the Balance Sheet Date,
Radix and the Radix Subsidiaries have conducted their respective
businesses only in the ordinary and usual course, and, without limiting
the generality of the foregoing, since the Balance Sheet Date there has
not been:
a) any event, change or condition of any character in or
on the business, properties, assets, financial condition, results of
operations or prospects of Radix and the Radix Subsidiaries which,
individually or in the aggregate, have or could be expected to have a
Material Adverse Effect;
b) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to the equity interests of Radix or any Radix Subsidiary, except
as shall have been fully paid or distributed prior to April 30, 1995,
and which payment or distribution is fully reflected on the Closing
Balance Sheet, or any split, combination or reclassification of such
equity interests;
<PAGE>
32
c) any sale, lease, license, encumbrance or other
transfer or disposition of any material assets or properties of Radix or
any Radix Subsidiary (either singly or in the aggregate);
d) any forgiveness or cancellation of any debts or
claims, or, except in the ordinary course, any discharge or satisfaction
of any lien, charge or other Encumbrance or payment of any liability or
obligation;
e) any material change in the credit practices of Radix
or any Radix Subsidiary or any creation or assumption of indebtedness
for money borrowed, or any making of loans, advances or capital
contributions;
f) (i) any material increase in the rate or terms of
compensation (including termination and severance pay) payable or to
become payable by Radix or any of the Radix Subsidiaries to their
respective directors, officers, employees or agents, or any increase in
the rate or terms of any bonus, insurance, pension or other Employee
Plan (as hereinafter defined), or any program or arrangement made to,
for or with any such directors, officers, employees or agents, or (ii)
any entry by Radix or any Radix Subsidiary into any employment,
compensation, severance or termination agreement providing for payments
after April 30, 1995 with any such person;
g) any entry into any Material Contract (as defined in
SECTION 3.13 hereof) by Radix or any Radix Subsidiary;
h) any material damage, destruction or loss to the
properties or assets owned, leased or used by Radix or any Radix
Subsidiary, whether or not covered by insurance, which could reasonably
be expected to have a Material Adverse Effect;
i) any material change by Radix or any Radix Subsidiary
in its respective financial or tax accounting principles or methods;
<PAGE>
33
j) any acquisition (by merger, consolidation or
acquisition of stock or assets) of any corporation, limited liability
company, partnership or other business enterprise or division or
significant assets thereof;
k) any failure to maintain the books, accounts and
records of Radix and the Radix Subsidiaries in the usual, regular and
ordinary manner on a basis consistent with prior years and in accordance
with GAAP;
l) any change made or authorized in the respective
Articles of Incorporation, By-laws or Other Organizational Documents of
Radix or the Radix Subsidiaries; or
m) any purchase, redemption, issue, sale, pledge,
Encumbrance or other acquisition or disposition by Radix or any Radix
Subsidiary of any shares of capital stock or other equity securities,
partnership interests or other ownership interests of Radix or any Radix
Subsidiary, or the grant of any options, warrants or other rights to
purchase, or convert any obligation into, shares of capital stock,
partnership interests or other ownership interests or any evidence of
indebtedness or other securities of Radix or any Radix Subsidiary.
SECTION 3.10. LITIGATION. Except as set forth in SECTION 3.10
of the Disclosure Schedule, there is no action, suit, inquiry, judicial
or administrative proceeding, arbitration or investigation pending or,
to the best of Radix's knowledge, threatened against Radix or any of the
Radix Subsidiaries, or any of their properties, assets or rights, before
any court, arbitrator or administrative or Governmental Authority, nor
is there any judgment, decree, injunction, rule or order of any court,
Governmental Authority or arbitrator outstanding against, and
unsatisfied by, Radix or any of the Radix Subsidiaries (any of the
foregoing being herein referred to as "EXISTING LITIGATION"), nor does
Radix know of any fact, event or condition for the assertion of any such
action, suit, inquiry, judicial or admin-
<PAGE>
34
istrative proceeding, arbitration or investigation, which, if determined
adversely to Radix, could reasonably be expected to have a Material
Adverse Effect.
SECTION 3.11. TITLE TO ASSETS. Radix has good and marketable
title or valid and binding leases (in the case of properties and assets
not owned but used by Radix or the Radix Subsidiaries), as the case may
be, to all of the properties and assets used by Radix and the Radix
Subsidiaries in the conduct of Radix's Business or reflected in the
Financial Statements or the Closing Balance Sheet as owned or leased by
Radix or the Radix Subsidiaries, free and clear of any and all
Encumbrances. SECTION 3.11 of the Disclosure Schedule lists all of such
properties and assets that are individually or in the aggregate material
to the conduct of the Radix Business by Radix or any Radix Subsidiary
and which are not owned by Radix or the Radix Subsidiary, as the case
may be.
SECTION 3.12. CONDITION OF PROPERTY. All of the properties
and assets used by Radix and the Radix Subsidiaries in the conduct of
Radix's Business or reflected in the Financial Statements or Closing
Balance Sheet as owned by Radix or any Radix Subsidiary are, in all
material respects, in operating condition and repair in accordance with
industry practice (subject only to ordinary wear and tear). Radix has
no knowledge that such properties and assets will not be in all material
respects adequate for AEI to operate Radix's Business after the Closing
Date as heretofore conducted.
SECTION 3.13. CONTRACTS.
a) SECTION 3.13(a) of the Disclosure Schedule sets forth
a list of all of contracts, agreements or arrangements, whether written
or oral, to which Radix or the Radix Subsidiaries are a party or by
which Radix or the Radix Subsidiaries or their respective properties or
assets are bound that individually or as a group are material to the
conduct of Radix's Business (the "MATERIAL CONTRACTS"). The Material
Contracts also include contracts, commitments and agreements to purchase
capital equipment, noncompetition agreements, guarantees, loan or other
financing agreements, and employment, collective
<PAGE>
35
bargaining, consulting, distribution, agency and sales representative
agreements. The Material Contracts were negotiated at arms' length and
in good faith on the part of Radix or the Radix Subsidiaries, as the
case may be.
b) Neither Radix nor any Radix Subsidiary is in default
with respect to any obligation to be performed under any Material
Contract which default could reasonably be expected to have a Material
Adverse Effect.
c) Radix has no knowledge of any default under any
Material Contract by any third party, nor is Radix aware of any fact,
condition or event, including, without limitation, the execution,
delivery and performance of this Agreement and the consummation of the
Merger, that could reasonably be expected to result in the termination
of any Material Contract. To the best knowledge of Radix, there exists
no event, occurrence, condition or act which, with the giving of notice
or the lapse of time, would become a default by Radix, any Radix
Subsidiary or any third party under any Material Contract the result of
which could reasonably be expected to have a Material Adverse Effect.
Anything herein to the contrary notwithstanding, AEI acknowledges that
parties to agency agreements may seek to terminate their agency
agreements as a result of the consummation of the transactions
contemplated hereby.
d) Except as set forth in SECTION 3.13(d) of the
Disclosure Schedule, no consent by, notice to or approval from any third
party is required under any of the Material Contracts as a result of or
in connection with the execution, delivery or performance of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby and such Material Contracts shall continue in full
force and effect after the consummation of the Merger and the other
transactions contemplated hereby.
e) Except as set forth in SECTION 3.13(e) of the
Disclosure Schedule, neither Radix nor any of the Radix Subsidiaries is
a party to or bound by any contract for the employment (including as a
consultant) of any director, officer, employee
<PAGE>
36
or agent of Radix or any Radix Subsidiary (including, without
limitation, collective bargaining agreements) and no present or former
director, officer, employee or agent of Radix or any Radix Subsidiary,
is or would be eligible to receive, or has received, as a result of the
consummation of the Merger or any of the other transactions contemplated
hereby, any severance pay, lump-sum or other similar payment,
compensation or other remuneration from Radix or any Radix Subsidiary,
except pursuant to the agreements included as Exhibits hereto under
Section 1.5 hereof.
SECTION 3.14. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
AND OTHER EMPLOYMENT MATTERS.
a) Except as otherwise disclosed on SECTION 3.14(a) of
the Disclosure Schedule, neither Radix nor any of the Radix Subsidiaries
has established, maintains or contributes to, or has any obligation to
contribute to, or has any liability with respect to, any plan, program,
arrangement, agreement or commitment which is an employment, consulting
or deferred compensation agreement, or an executive compensation,
incentive bonus or other bonus, employee pension, profit-sharing,
savings, retirement, stock option, stock purchase, severance pay, life,
health, disability or accident insurance or vacation, plan, program,
arrangement, agreement or commitment, including, without limitation, any
"employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
(individually, an "EMPLOYEE PLAN", and collectively, the "EMPLOYEE
PLANS"). Each such Employee Plan is identified in SECTION 3.14(a) of
the Disclosure Schedule, to the extent applicable, as one or more of the
following: an "EMPLOYEE PENSION BENEFIT PLAN" (as defined in Section
3(2) of ERISA), a "DEFINED BENEFIT PLAN" (as defined in Section 414 of
the Internal Revenue Code of 1986 (the "CODE")), an "EMPLOYEE WELFARE
BENEFIT PLAN" (as defined in Section 3(1) of ERISA), a plan intended to
be qualified under Section 401 of the Code or as an agreement, plan,
program or arrangement providing for payments contingent, in whole or in
part, on a change in con-
<PAGE>
37
trol of Radix or any of the Radix Subsidiaries. No Employee Plan is a
multiemployer plan or a multiple employer plan.
b) With respect to each employee benefit plan
(including, without limitation, the Employee Plans) that is subject to
the provisions of Title IV of ERISA and with respect to which Radix or
any of the Radix Subsidiaries may, directly or indirectly, incur any
liability:
(i) no such plan has been terminated so as to
result, directly or indirectly, in any liability, contingent or
otherwise, of Radix or any of the Radix Subsidiaries under Title IV of
ERISA;
(ii) no complete or partial withdrawal from such
plan has been made by Radix or any of the Radix Subsidiaries, or by any
other person, so as to result in a liability of Radix or any of the
Radix Subsidiaries, whether such liability is contingent or otherwise,
except as otherwise reflected in the Financial Statements of Radix or
any of Radix Subsidiaries;
(iii) no proceeding has been initiated by any person
or Governmental Authority (including, without limitation, the Pension
Benefit Guaranty Corporation (the "PBGC")) to terminate any such plan;
(iv) no condition or event currently exists or
currently is expected to occur that could result, directly or
indirectly, in any liability of Radix or any of the Radix Subsidiaries
under Title IV of ERISA, whether to the PBGC or otherwise (except for
required premium payments under Title IV of ERISA, which payments have
been or will be made when due) on account of the termination of any such
plan;
(v) if any such plan were to be terminated as of the
date hereof or as of the Effective Date, none of Radix, any of the Radix
Subsidiaries, nor AEI would incur any liability under Title IV of ERISA;
<PAGE>
38
(vi) no "REPORTABLE EVENT" (as defined in Section
4043 of ERISA) has occurred with respect to any such plan; and
(vii) no such plan which is subject to Section 302
of ERISA or Section 412 of the Code has incurred any "ACCUMULATED
FUNDING DEFICIENCY" (as defined in Section 302 of ERISA and Section 412
of the Code, respectively), whether or not waived.
c) No event has occurred in connection with which Radix
or any of the Radix Subsidiaries or any Employee Plan, directly or
indirectly, could be subject to any liability under ERISA, the Code or
any other law, rule, regulation or governmental order applicable to any
Employee Plan, including, without limitation, Sections 404, 405, 406,
407, 408, 409, 501(i) and 502 (1) of ERISA, and Section 4975 of the
Code, or under any agreement, instrument, statute, rule of law or
regulation pursuant to or under which Radix or any of the Radix
Subsidiaries has agreed to indemnify or is required to indemnify any
person against liability incurred under, or for a violation or failure
to satisfy the requirements of, any such agreement, instrument, statute,
rule of law or regulation, other than the obligation to pay benefits or
plan expenses in accordance with the terms of any Employee Plan and any
applicable trust thereunder.
d) With respect to each Employee Plan, (i) all payments
due from Radix and each of the Radix Subsidiaries to date have been made
when due, and all amounts properly accrued to date or as of April 30,
1995 as liabilities of Radix and such Radix Subsidiary which have not
been paid have been or will be properly recorded in the Financial
Statements of Radix and the Radix Subsidiaries, as the case may be; (ii)
Radix and each of the Radix Subsidiaries have complied with, and each
Employee Plan is in compliance in all material respects with, all
applicable statutes, laws, rules and regulations, including, without
limitation, ERISA and the Code to the extent applicable; (iii) each
Employee Plan which is an "EMPLOYEE PENSION BENEFIT PLAN" (as defined in
Section 3(2) of
<PAGE>
39
ERISA) and intended to qualify under Section 401 of the Code has
received or applied for a favorable determination letter from the
Internal Revenue Service with respect to such qualification, its related
trust (if any) has been determined to be exempt from taxation under
Section 501(a) of the Code, and nothing has occurred since the date of
such determination letter that has adversely affected or is likely to
adversely affect such qualification or exemption; (iv) each Employee
Plan which is an "EMPLOYEE WELFARE BENEFIT PLAN" (as defined in Section
3(1) of ERISA) and its related trust (if any) is in compliance in all
material respects with all applicable requirements of the Code for
obtaining the tax benefits the Code permits and for which any such trust
is intended to qualify with respect to any Employee Plan; and (v) there
are no actions, suits, proceedings or claims pending or, to the best
knowledge of Radix, threatened with respect to any Employee Plan or
against the assets of such Employee Plan or against any trust
established to fund the benefits under any Employee Plan.
e) All obligations of Radix and the Radix Subsidiaries,
whether arising by operation of law, by contract or by past custom, for
payments to trusts or other funds or to any Governmental Authority or to
any individual, director, officer, employee or agent (or his or her
heirs, legatees or legal representatives) with respect to unemployment
compensation or Social Security benefits (or similar benefits under
foreign laws, rules and regulations), or for vacation or holiday pay,
bonuses and other forms of compensation, which are payable to its
directors, officers, employees or agents, have been paid when due.
f) No Employee Plan provides benefits, including,
without limitation, death or medical benefits (whether or not insured)
with respect to current or former directors, officers, employees or
agents of Radix or any of the Radix Subsidiaries beyond their retirement
or other termination of service.
g) The consummation of the transactions contemplated by
this Agreement will not result (either alone or in conjunction with any
other event) in the pay-
<PAGE>
40
ment or series of payments by Radix or any Radix Subsidiary or AEI to
any person of an "EXCESS PARACHUTE PAYMENT" within the meaning of
Section 280G of the Code.
h) The consummation of the transactions contemplated by
this Agreement will not (i) entitle any current or former director,
officer, employee or agent of Radix or any of the Radix Subsidiaries to
severance pay, unemployment compensation or any other payment, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due to any such current or former director, officer,
employee or agent, under any Employee Plan or otherwise result in any
liability for benefits with respect to any Employee Plan. Without
limiting the generality of the foregoing, neither Radix nor any officer
or director thereof has had any discussions with any employee of Radix
or Radix Group regarding severance payments, nor has any such officer or
director had any other discussion with such employees in respect of any
other type of payment or consideration payable as a result of the change
in control of Radix being effected by the Merger, except for discussions
with those employees identified on SCHEDULE 8.2(a)(iv).
i) There has been delivered to AEI, with respect to each
Employee Plan:
(i) a copy of the annual report, if required to be
prepared under ERISA, and all other required reports and supporting
schedules filed with any Governmental Authority in respect of such
Employee Plan for the three (3) most recent years prior to the date
hereof;
(ii) a copy of each Summary Plan Description,
together with each Summary of Material Modifications, required under
ERISA with respect to such Employee Plan, all material employee
communications relating to such Employee Plan, and, unless the Employee
Plan is embodied entirely in an insurance policy to which Radix or one
of the Radix Subsidiaries is a party, a true and complete copy of such
Plan;
<PAGE>
41
(iii) if the Employee Plan is funded through a trust
or any third party funding vehicle (other than an insurance policy), a
copy of the trust or other funding agreement and the latest financial
statements thereof; and
(iv) the most recent determination letter received
from the Internal Revenue Service with respect to each Employee Plan
that is intended to be a "QUALIFIED" plan under Section 401 of the Code
or in connection with which a trust that is intended to be exempt from
tax under Section 501 of the Code is maintained.
j) With respect to each Employee Plan that is funded
wholly or partially through an insurance policy, all premiums required
to have been paid to date under such insurance policy have been paid,
all premiums required to be paid under such insurance policy through
April 30, 1995 will have been paid or accrued on or before April 30,
1995 and, as of April 30, 1995, there will be no liability of Radix or
any of the Radix Subsidiaries or AEI under any such insurance policy or
ancillary agreement with respect to such insurance policy in the nature
of a retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
occurring on or prior to April 30, 1995.
k) Neither Radix nor any of the Radix Subsidiaries has
any announced plan or legally binding commitment to create any
additional Employee Plans, or to amend or modify any existing Employee
Plan, other than amendments required by applicable law which do not
increase the cost to Radix or the Radix Subsidiaries of maintaining such
Employee Plan.
l) With respect to any employee benefit plans, programs,
arrangements, agreements or commitments that are not United States
Employee Plans (each a "FOREIGN BENEFIT PLAN"), (i) each Foreign Benefit
Plan has been administered in all respects in compliance with its terms
and the requirements of all applicable laws, rules, regulations and
ordinances; (ii) each Foreign Benefit Plan has been maintained and
funded all respects
<PAGE>
42
in accordance with its terms and the requirements of all applicable
laws, rules, regulations and ordinances; (iii) all contributions and
other payments required to be made by Radix or any Radix Subsidiary to
any Foreign Benefit Plan with respect to any period ending on or before
April 30, 1995 have been made or reserves adequate for such
contributions or other payments have been or shall be set aside therefor
and, to the extent made or reserved for the period prior to April 30,
1995, have been reflected in the Closing Balance Sheet in accordance
with GAAP; (iv) there are no actions, suits or proceedings pending or,
to the best knowledge of Radix, threatened by any Governmental Authority
or any participant or beneficiary, with respect to any Foreign Benefit
Plan; and (v) there are no unfunded liabilities with respect to each
Foreign Benefit Plan.
m) Neither Radix nor any of the Radix Subsidiaries has
received a written notification informing such party that it has
violated any provision of federal, state, local or foreign law or any
governmental rule or regulation, or any order, ruling, decree, judgment
or arbitration award of any court, arbitrator or any Governmental
Authority regarding the terms and conditions of employment of employees,
former employees or prospective employees or other labor related
matters, including, without limitation, laws, rules, regulations,
orders, rulings, decrees, judgments and arbitration awards relating to
discrimination, fair labor standards and occupational health and safety,
wrongful discharge or violation of the personal rights of employees,
former employees or prospective employees which, taken alone or together
with any such violation or violations of Radix or any of the Radix
Subsidiaries, could have a Material Adverse Effect, nor does Radix have
knowledge of any such violation, and nor do the general practices of
Radix and the Radix Subsidiaries, taken individually or in the
aggregate, violate such laws, rules, regulations or orders.
n) Except as disclosed in SECTION 3.14(n) of the
Disclosure Statement, there is no petition, charge, claim or other
complaint against Radix or any of the Radix Subsidiaries pending before
the National Labor Relations Board, any Governmental
<PAGE>
43
Authority or any comparable organization, domestic or foreign,
including, without limitation, any such claims brought by any workers'
counsel or trade union.
o) There is no labor strike, formal dispute, formal
grievance, lockout or work stoppage pending or threatened against or
affecting Radix or any of the Radix Subsidiaries.
p) Neither Radix nor any of the Radix Subsidiaries has
experienced any material work stoppage in the last five (5) year period.
q) To the best knowledge of Radix, no present or former
director, officer, employee or agent of Radix or any Radix Subsidiary
has any uninsured claim against Radix or any Radix Subsidiary (whether
under federal, state, local or foreign law), under any employment
agreement or otherwise, on account of or for: (i) overtime pay, other
than overtime pay for the current payroll period; (ii) wages or salary
for any period other than the current payroll period; (iii) vacation,
time off or pay in lieu of vacation or time off, other than vacation or
time off (or pay in lieu thereof) earned in respect of the current
fiscal or calendar year and which amount is in excess of $25,000 in the
aggregate for all officers, employees and agents of Radix or any Radix
Subsidiary; or (iv) any violation of any statute, ordinance or
regulation relating to payment of wages and fringe benefits, minimum
wages or maximum work hours.
r) SECTION 3.14(r) of the Disclosure Schedule lists all
current employees of Radix and the Radix Subsidiaries (the "RADIX
EMPLOYEES"), other than employees who regularly work less than thirty
(30) hours per week for Radix or the Radix Subsidiaries (the "PART-TIME
EMPLOYEES") or who are employed by Radix solely with respect to a
specific project ("PROJECT EMPLOYEES"), which list includes the base
salary and job title of each such Radix Employee and the commission,
vacation, severance, bonus and other Employee Plans, in which each such
Radix Employee is eligible to participate as of the date hereof, or will
be eligible to participate on the Closing Date, whether pursuant to
<PAGE>
44
any Employee Plan or any individual contractual or other arrangement
between or among such Radix Employee on the one hand, and Radix or any
of the Radix Subsidiaries, on the other hand.
s) Except as set forth in Section 3.14(s) of the
Disclosure Schedule, as of the date hereof no Part-Time Employee or
Project Employee is entitled to participate in or receive any payments
or benefits under any Employee Plan.
t) SECTION 3.14(t) of the Disclosure Schedule lists all
of the Part-Time Employees, Project Employees and individual sales
representatives or independent contractors providing services to or
otherwise engaged by Radix or a Radix Subsidiary, and collectively all
current plans, agreements, arrangements, contracts and policies of Radix
and of each Radix Subsidiary with respect to the compensation or
remuneration of all such Part-Time Employees, Project Employees,
individual sales representatives and independent contractors, which list
also includes the services, fees and commission rates of such individual
sales representatives. Anything herein to the contrary notwithstanding,
such SECTION 3.14(t) of the DISCLOSURE SCHEDULE shall not be required to
list any person or arrangement that can be terminated on less than
thirty (30) days' notice without penalty or other payment.
SECTION 3.15. ENVIRONMENTAL MATTERS.
a) Except as set forth in SECTION 3.15(a) of the
Disclosure Schedule, Radix and the Radix Subsidiaries are in compliance
with all applicable Environmental Laws (as defined in EXHIBIT J), which
compliance includes, but is not limited to, the possession by Radix and
the Radix Subsidiaries of all permits and other authorizations and
approvals of Governmental Authorities required under all Environmental
Laws, and compliance with the terms and conditions thereof, except to
the extent that any failure in compliance would not have a Material
Adverse Effect. Radix and the Radix Subsidiaries are in compliance with
all Environmental Laws in respect of the proper handling and dis-
<PAGE>
45
posal by Radix or any Radix Subsidiary of all Materials of Environmental
Concern (as defined in EXHIBIT J), except to the extent that any failure
in compliance would not have a Material Adverse Effect. Except as set
forth in SECTION 3.15(a) of the Disclosure Schedule, neither Radix nor
any Radix Subsidiary (nor any predecessor to Radix or a Radix
Subsidiary) has, within the past five (5) years, received any written
communication from a Governmental Authority, citizens group, or
director, officer, employee or agent, alleging that Radix or any Radix
Subsidiary is not in compliance with or has violated any Environmental
Laws. All permits and other authorizations and approvals of
Governmental Authorities currently held by Radix or any of the Radix
Subsidiaries pursuant to the Environmental Laws are identified in
SECTION 3.15(b) of the Disclosure Schedule. Neither Radix nor any of
the Radix Subsidiaries have had any environmental audits, assessments
and similar reports prepared for Radix or the Radix Subsidiaries with
respect to any parcel of real property owned, leased, subleased or used
by Radix or any of the Radix Subsidiaries pursuant to the Real Estate
Leases (as hereinafter defined) or otherwise.
b) Except as set forth in SECTION 3.15(a) of the
Disclosure Schedule, there is no Environmental Claim (as defined in
EXHIBIT J) pending or, to the best knowledge of Radix, threatened
against Radix or any Radix Subsidiary or pending or, to the best
knowledge of Radix, threatened against any person or entity whose
liability for any Environmental Claim Radix or any Radix Subsidiary has
or may have retained or assumed either contractually, by operation of
law or otherwise.
c) Except as set forth in SECTION 3.15(a) of the
Disclosure Schedule, to the best knowledge of Radix there are no past or
present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission,
discharge, presence or disposal of any Materials of Environmental
Concern, that could reasonably form the basis of any Environmental Claim
against Radix or any Radix Subsidiary or against any person or entity
whose liability for any Environmental Claim
<PAGE>
46
Radix or any Radix Subsidiary has or may have retained or assumed either
contractually, by operation of law or otherwise.
SECTION 3.16. TAXES.
a) Except as set forth in SECTION 3.16(a) of the
Disclosure Schedule, Radix and the Radix Subsidiaries have during the
previous six (6) year period:
(i) taking into consideration all applicable and
permissible extension periods properly obtained, timely filed or caused
to be filed with appropriate Governmental Authorities all Federal,
state, local and foreign returns (the "TAX RETURNS") for Taxes (as
hereinafter defined) required to be filed by each of them (including,
without limitation, estimated tax returns, employer's withholding tax
returns, other withholding tax returns and Federal Unemployment Tax Act
returns);
(ii) made available to AEI for review complete and
accurate copies of such Tax Returns; and
(iii) have paid or caused to be paid, or have made
adequate provision or set up an adequate accrual or reserve for the
payment of, all Taxes required to be paid in respect of the periods for
which such Tax Returns are due, and will establish an adequate accrual
or reserve for the payment of all Taxes payable in respect of the
period, including portions thereof, subsequent to the last of said
periods required to be so accrued or reserved up to and including the
Effective Date.
b) There are included in each of the balance sheets
contained in the Radix Reports (as hereinafter defined) adequate
provisions for the payment of all unpaid Taxes of Radix and the Radix
Subsidiaries, including, without limitation, interest and penalties (if
any) for the periods then ended and all periods prior thereto. Except
as set forth in SECTION 3.16(b) of the Disclosure Schedule, neither
Radix nor any Radix Subsidiary is a party to any action, suit or
proceeding by any Governmental Authority for the assessment or
collection of Taxes, nor has any claim or assessment for collection of
Taxes
<PAGE>
47
been asserted against any of them, and there is no audit examination,
deficiency or refund litigation or matter in controversy with respect to
any Taxes that might result in a determination the effect of which could
cause a Material Adverse Effect. No claim by any taxing department
Governmental Authority is pending in any jurisdiction where Radix or any
Radix Subsidiary does not file Tax Returns to the effect that Radix or
any Radix Subsidiary is or may be subject to taxation by that
jurisdiction.
c) All Taxes, interest, additions and penalties due with
respect to completed and settled examinations or concluded litigation
have been paid; and neither Radix nor any of the Radix Subsidiaries has
executed an extension or waiver of any statute of limitations on the
assessment or collection of any Tax due that is currently in effect.
For these purposes, the Taxes attributable to the period including the
Effective Date should be determined as if the taxable year of Radix and
the Radix Subsidiaries ended on the Effective Date.
d) The Tax Returns are complete and accurate in all
material respects and the calculations and deductions set forth therein
have been made, in all respects, in compliance with all applicable Tax
statutes, laws, rules and regulations. The federal, state, local and
foreign income Tax Returns that include Radix or any of the Radix
Subsidiaries were last audited by the Internal Revenue Service or by
comparable state, local or foreign Governmental Authorities on the dates
set forth in SCHEDULE 3.16(d) of the Disclosure Schedule.
e) For the purposes of this SECTION 3.16, the term "TAX"
shall include all taxes, charges, withholdings, fees, levies, penalties,
additions, interest or other assessments imposed by any United States
Federal, state or local and foreign or other taxing department or
Governmental Authority on Radix or any of the Radix Subsidiaries
(including, without limitation, as a result of being a member of an
affiliated, combined or unitary group or as a result of any obligation
arising out of an agreement to indemnify any
<PAGE>
48
other person), and including, but not limited to, those related to
income, gross receipts, gross income, sales, use, excise, occupation,
services, leasing, valuation, transfer, license, customs duties or
franchise.
SECTION 3.17. COMPLIANCE WITH APPLICABLE LAWS; PERMITS AND
LICENSES.
a) Except as set forth in SECTION 3.17(a) of the
Disclosure Schedule, Radix and each of the Radix Subsidiaries holds, and
at all relevant times has held, all material licenses, franchises,
permits, consents and authorizations necessary for the lawful conduct of
Radix's Business and Radix's Business is not being and has not, during
the relevant statute of limitations period, been conducted in violation
of any provision of any federal, state, local or foreign statute, law,
ordinance, rule, regulation, judgment, decree, order, concession, grant,
franchise, permit, consent or license or other authorization or approval
of a Governmental Authority applicable to Radix or any Radix Subsidiary,
which, singly or in the aggregate, could have a Material Adverse Effect.
b) Other than routine notices from US Customs delivered
in the ordinary course of business and except as set forth in SECTION
3.17(b) of the Disclosure Schedule, neither Radix nor any Radix
Subsidiary has received any notification of any failure by Radix or any
Radix Subsidiary to comply with any such federal, state, local or
foreign statute, law, ordinance, rule, regulation, judgment, decree,
order, concession, grant, franchise, permit, consent or license or other
authorization or approval of a Governmental Authority applicable to
Radix or any Radix Subsidiary, which, singly or in the aggregate, could
have a Material Adverse Effect.
c) Radix and the Radix Subsidiaries have all of the
licenses, franchises, permits, consents and authorizations reasonably
necessary for the lawful conduct of Radix's Business. Each of the
licenses, franchises, permits, consents and authorizations reasonably
necessary for the lawful conduct of Radix's Business has been properly
<PAGE>
49
obtained and lawfully issued and, assuming due performance of the
Services Agreement and the Radziwill Supplemental Agreement, will not be
adversely impacted in any manner by the consummation of the Merger and
the other transactions contemplated hereby. SECTION 3.17 of the
Disclosure Schedule sets forth a list of all of the licenses,
franchises, permits, consents and authorizations issued to Radix and the
Radix Subsidiaries by the US Customs and the FMC (each as hereinafter
defined).
SECTION 3.18. RADIX REPORTS. In the last six (6) year period,
Radix has timely filed all reports and other documents required to be
filed by it under the Securities Exchange Act of 1934, as amended (the
"1934 ACT"), and the Securities Act of 1933, as amended (the "1933
ACT"). Radix's Annual Reports on Form 10-K for the last six (6) fiscal
years ended July 31, its Quarterly Reports on Form 10-Q for the periods
ended October 31, 1994 and January 31, 1995 (collectively, the "RADIX
REPORTS"), as of their respective dates, complied as to form in all
material respects with the published rules and regulations of the
Securities and Exchange Commission (the "SEC") with respect thereto, and
did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. Except for the Radix Reports and Form
10-Qs for prior periods, since July 31, 1990, and as of the date hereof,
Radix has not filed any other reports or other documents with the SEC.
The financial statements of Radix or the Radix Subsidiaries, as the case
may be, in or incorporated by reference in the Radix Reports, including,
without limitation, any related notes and schedules, complied as to form
in all material respects on the dates thereof with the then applicable
accounting requirements and published rules and regulations of the SEC.
Radix has previously delivered to AEI a true and correct copy of a
letter dated March 31, 1995, from the SEC containing comments on its
Annual Report on Form 10K for 1994, which is the only communication
between the SEC and Radix on this subject.
<PAGE>
50
SECTION 3.19. ABSENCE OF QUESTIONABLE PAYMENTS. Neither Radix,
nor any Radix Subsidiary, nor, to the best of Radix's knowledge, any
directors, officers, employees or agents thereof, in their capacity as
such, nor any other person acting on their behalf:
(i) has made any unlawful political contributions;
(ii) has received any payments, services or gratuities which
were not legal to receive or which Radix or any Radix Subsidiary or such
persons should have known were not legal for the payor or the provider
to make or provide; or
(iii) has made any unlawful payments or given or agreed to
give any gift or similar benefit of more than nominal value to
governmental officials in their individual capacities for the purpose of
assisting Radix or the Radix Subsidiaries in securing or retaining any
business opportunity, contract, permit or license or in conducting its
usual and customary operations or in clearing the shipment of goods
through customs in any country.
SECTION 3.20. FEES, COMMISSIONS AND OTHER PAYMENTS. Neither
Radix nor any of the Radix Subsidiaries, nor any of their directors,
officers, employees or agents has employed any investment banker,
broker, finder or intermediary, and no fee or other commission is owed
to any third party, in connection with the transactions contemplated
hereby, except that Tucker Anthony, upon consummation of the Merger,
shall be entitled to receive from Radix a cash payment equal to 2% of
the consideration to be exchanged in the Merger. The amounts payable to
Tucker Anthony with respect to the consummation of the Merger and the
other transactions contemplated hereby are the sole legal responsibility
of Radix; provided, however, that AEI has agreed that payment thereof
may be made in accordance with SECTION 2.5 hereof.
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51
SECTION 3.21. PROPRIETARY RIGHTS.
a) Set forth in SECTION 3.21(a) of the Disclosure
Schedule is a list of all patents, copyrights, trademarks and trade
names in which Radix or any Radix Subsidiary has proprietary rights
(hereinafter referred to as the "PROPRIETARY RIGHTS").
b) The use of the Proprietary Rights does not infringe
upon the rights of any other person or entity, whether or not
registered, patented or copyrighted. Neither Radix nor any Radix
Subsidiary has received any notice of a claim of such infringement nor
were any such claims the subject of any action, suit or proceeding
involving Radix or any Radix Subsidiary.
c) Neither Radix nor any Radix Subsidiary has knowledge
of any infringement or improper use by any third party of the
Proprietary Rights, nor has Radix or any Radix Subsidiary instituted any
action, suit or proceeding in which an act constituting an infringement
of any of the Proprietary Rights was alleged to have been committed by a
third party.
d) There are no licenses, sublicenses or agreements
relating to (i) the use by third parties of the Proprietary Rights or
(ii) the use by Radix or any Radix Subsidiary of the Proprietary Rights
and there is no prior right of any other party or other impediment which
would invalidate or adversely affect any of the Proprietary Rights.
e) SECTION 3.21(e) of the Disclosure Schedule identifies
(i) all of the software and computer databases (excluding non-
proprietary software of general application available generally through
retail outlets, which in any event is being transferred as part of the
Merger) (collectively, the "COMPUTER SYSTEMS") that are material to the
conduct of Radix's Business and which are used by Radix and any of the
Radix Subsidiaries in the conduct of their respective businesses, (ii)
whether such Computer Systems are owned or licensed by Radix or any of
the Radix Subsidiaries and, (iii) if licensed, the name of such
licensor. Radix and each of the Radix Subsidiaries have all
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52
legal right to use the Computer Systems as they are currently being
used, and will continue to have the legal right to use the Computer
Systems in this manner following the consummation of the Merger and the
other transactions contemplated hereby. The use of the Computer Systems
does not infringe upon the rights of any other person or entity, nor has
Radix nor any Radix Subsidiary received any notice of a claim of such
infringement or relating to the improper use of the Computer Systems.
Except as set forth in SECTION 3.21(e) of the Disclosure Schedule, there
are no material licenses, sublicenses or other agreements relating to
the use of the Computer Systems by Radix, the Radix Subsidiaries or
third parties. AEI and Radix Group have contemporaneously herewith
entered into an agreement with ASA, a software vendor to Radix Group.
EXHIBIT K annexed hereto sets forth certain agreements of the parties
hereto with regard to the post-Effective Date relationship with such
vendor.
SECTION 3.22. NON-COMPETE AGREEMENTS. Except as set forth in
SECTION 3.22 of the Disclosure Schedule, no agreement, understanding or
arrangement, whether oral or written, restricts the ability of Radix or
any of the Radix Subsidiaries to own, possess or use its respective
assets or properties or conduct business or operations in any geographic
area or region.
SECTION 3.23. ACCOUNTS RECEIVABLE; PAYABLES.
a) Except as set forth in SECTION 3.23(a) of the
Disclosure Schedule, all outstanding accounts and notes receivable
reflected on the January 31, 1995 Balance Sheet, and that will be
reflected on the Closing Balance Sheet, are due and valid claims against
account debtors for goods or services delivered or rendered, and the
best of Radix's knowledge, are not subject to any defenses, offsets or
counterclaims, except as specifically reserved against in such balance
sheets and except offsets against accounts payable in the same or
greater dollar amount also set forth in such balance sheets. The
reserves reflected in the January 31, 1995 Balance Sheet and as will be
reflected in the
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53
Closing Balance Sheet reflect Radix's historical bad debt experience.
Except as set forth in SECTION 3.23(a) of the Disclosure Schedule, all
accounts receivable arose in the ordinary course of business. No
accounts receivable are subject to prior assignment or other
Encumbrance. Except as reflected in such balance sheets and except as
set forth in SECTION 3.23(a) of the DISCLOSURE SCHEDULE, neither Radix
nor any Radix Subsidiary has incurred any liabilities to customers for
discounts, returns, promotional allowances or otherwise.
b) Except as set forth in SECTION 3.23(b) of the
Disclosure Schedule, all obligations of Radix or any Radix Subsidiary
for money owed, whether in respect of the payment for goods and
services, pursuant to financing arrangements or otherwise, have been
fully reflected in the Closing Balance Sheet. All such payables arose
in the ordinary course of business.
SECTION 3.24. BANK ACCOUNTS. SECTION 3.24 of the Disclosure
Schedule sets forth the names and locations of all banks, trust
companies, savings and loan associations and other financial
institutions at which Radix or any Radix Subsidiary maintains an
account, deposit, safe deposit box, lock box or line of credit or other
loan facility relationship or account of any nature and the names of all
persons authorized to draw thereon, make withdrawals therefrom or have
access thereto. SECTION 3.24 of the Disclosure Schedule sets forth an
accurate and complete list of all certificates of deposit, debt or
equity securities and other investments owned, beneficially or of
record, by Radix or any Radix Subsidiary (the "INVESTMENTS"). Radix and
the Radix Subsidiaries have good and marketable title to all of the
Investments, free and clear of all Encumbrances.
SECTION 3.25. INSURANCE. SECTION 3.25 of the Disclosure
Schedule sets forth an accurate, correct and complete list and summary
description (including the name of the insurer, name, address and
telephone number of the insurance broker or agent, type of coverage,
premium, policy number, limits of liability for personal injury and
property damage and expiration date) of all binders, policies of
insurance, self insurance programs
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54
or fidelity bonds, other than bonds for excise taxes and custom duties
and Federal Maritime Commission bonds, Interstate Commerce Commission
bonds and a Pension Benefit Guaranty bond, provided in the ordinary
course of business (collectively the "INSURANCE POLICIES") maintained by
Radix or any of the Radix Subsidiaries or in which Radix or any of the
Radix Subsidiaries is a named insured. All of the Insurance Policies
have been issued under valid policies or binders for the benefit of
Radix or the Radix Subsidiaries. All of the Insurance Policies are
currently valid, issued, outstanding and enforceable and each of the
Insurance Policies are scheduled to remain in full force and effect at
least through the respective expiration dates set forth in SECTION 3.25
of the Disclosure Schedule. There are no pending or asserted claims
against any Insurance Policy as to which any insurer has denied
liability, and there are no claims under any Insurance Policy that have
been disallowed or, to the best knowledge of Radix, improperly filed.
If Radix or any Radix Subsidiary receives, prior to the Closing Date,
any notice of cancellation or other termination of any such Insurance
Policies, Radix or the Radix Subsidiaries, as the case may be, shall
replace or cause to be replaced such Insurance Policies with policies of
insurance providing substantially the same coverage not later than a
date prior to the effective date of any such cancellation or other
termination.
SECTION 3.26. OWNED REAL ESTATE. Except as set forth in
SECTION 3.26 of the Disclosure Schedule, Radix and the Radix
Subsidiaries do not own any real property or hold any option, whether
written or oral, to acquire real property or any interest therein.
SECTION 3.27. REAL ESTATE LEASES; ELIMINATED EXPENSES.
a) SECTION 3.27(a) of the Disclosure Schedule sets forth
an accurate, correct and complete list of all real property leased,
subleased, occupied or used by Radix or any Radix Subsidiary (the
"LEASED REAL ESTATE"), including, without limitation, identification of
the lease or sublease (whether oral or written), monthly base rent
payments and street address (as amended from time to time, the "REAL
ESTATE LEASES"),
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55
true and correct copies of which have heretofore been provided to AEI by
Radix or, in the case of oral Real Estate Leases, the material terms of
which have been summarized in a writing and delivered to AEI. Radix has
delivered to AEI accurate, correct and complete copies of each Real
Estate Lease. Radix shall not have any liability in respect of any
discrepancy between the terms of such leases shown on SCHEDULE 3.27(b)
and the full text of the Real Estate Lease, provided, however, that such
discrepancy results from an error made in good faith by Radix in
preparing the related schedule. Radix and the Radix Subsidiaries have
all licenses, certificates of occupancy, permits, consents and
authorizations required to occupy and utilize the Leased Real Estate for
the purposes for which they are currently being occupied and used and
Radix and the Radix Subsidiaries comply in all respects with such
licenses, certificates of occupancy, permits, consents and
authorizations, except for those which the failure to obtain or comply
with would not give rise to a Material Adverse Effect .
b) Radix's occupation and use of the premises, equipment
and personnel at 230 Park Avenue, New York, New York ("RADIX'S
HEADQUARTERS"), and all of the expenses of any nature whatsoever
associated therewith (including, without limitation, allocation of rent,
salaries, equipment leases, taxes and utilities) (collectively, the
"HEADQUARTERS EXPENSES") are immediately terminable by Radix, without
any notice period, cancellation penalty, or any liability whatsoever to
Radix, the Radix Subsidiaries or AEI arising out of any such
termination. Radix's Headquarters Expenses, together with the
professional fees arising out of services provided by legal and
financial professionals in connection with Radix's status as a reporting
company under the 1934 Act and the other fees identified on SCHEDULE
3.27(b) of the DISCLOSURE SCHEDULE (collectively, the "SCHEDULED FEES"),
have totaled at least $1,000,000 per year during each of Radix's fiscal
year ended July 31, 1994 and as estimated for Radix's fiscal year ending
July 31, 1995. There is no arrangement or agreement obligating Radix or
any Radix Subsidiary to
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56
continue to incur such Scheduled Fees with the providers thereof
following the Closing Date. Upon termination of such occupation and use
of Radix's Headquarters, Radix will immediately be relieved of all
obligations related to such Headquarters Expenses. The elimination of
such Headquarter Expenses and the Scheduled Fees shall result in an
annual expense reduction of at least $1,000,000; PROVIDED, HOWEVER, that
the parties hereto recognize that such savings do not reflect the fact
that AEI may have to incur similar expenditures with third parties
following the termination of the Headquarter Expenses and the Scheduled
Fees. Radix has heretofore delivered to AEI a written summary of the
arrangement with ROI pursuant to which Radix occupies and uses Radix's
Headquarters. Notwithstanding the foregoing, it is understood that
Radix and/or the Radix Stockholders shall incur similar fees following
the Closing which may be payable by Radix or out of the Escrowed
Property in accordance with Section 1.8 and Article VIII hereof.
c) Included in the Headquarter Expenses are the payments
for management, sales and other services rendered to Radix by Radix
Organization, Inc., a Delaware corporation ("ROI") (the "MANAGEMENT
AGREEMENT"), which agreement is more fully described in the Information
Statement. Radix is obligated to pay a termination fee in the amount of
$300,000 in respect of such Management Agreement as a result of the
cancellation thereof in connection with the consummation of the Merger
(the "TERMINATION FEE").
SECTION 3.28. TRANSACTIONS WITH INSIDERS. Except as set forth
in the January 31, 1995 Balance Sheet, and in SECTION 3.28 of the
Disclosure Schedule, and except with respect to the Real Estate Lease
covering Radix's Headquarters and equity interests constituting less
than 5% of the capital stock of any publicly traded corporation, no
Insider (as hereinafter defined): (i) owns, directly or indirectly, any
debt, equity or other interest or investment in any corporation,
association or other entity which is a competitor, lessor, lessee,
customer, supplier or advertiser of Radix or any Radix Subsidiary, or
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57
otherwise has a business relationship with Radix or any Radix
Subsidiary; (ii) has pending or threatened any action, suit, proceeding
or other claim against or owes any amount to, or is owed any amount by,
Radix or any Radix Subsidiary, other than for amounts accrued in the
ordinary course of employment; (iii) has any interest in or owns any
property or right used in the conduct of the operations of Radix'
Business; (iv) has lent or advanced any money to, or borrowed any money
from, or guaranteed or otherwise become liable for any indebtedness or
other obligations of Radix or any Radix Subsidiary, which loans, debts
or guarantees are now outstanding or will be outstanding on the Closing
Date; or (v) is a party to any contract, lease, agreement, arrangement
or commitment, whether oral or written, concerning the operations of
Radix's Business. The term "INSIDER" shall mean any director or officer
of Radix or any Radix Subsidiary or any member of the immediate family
of any such person or any corporation, partnership, trust or other
entity in which any such director, officer or family member has a five
percent (5%) or greater interest or is a director or officer thereof.
The term "INSIDER" shall also include any entity which controls, or is
controlled by, or is under common control with any of the individuals or
entities described in the preceding sentence.
SECTION 3.29. REGULATORY REPORTS. Radix and each of the Radix
Subsidiaries have filed all material reports, registrations and
statements, together with any amendments required to be made with
respect thereto, that they were required to file in the last six (6)
year period with any federal, state, local or foreign Governmental
Authority, including, without limitation, (i) the United States Customs
Service (the "US CUSTOMS"), (ii) the United States Department of the
Treasury (the "US TREASURY"), (iii) the Federal Maritime Commission (the
"FMC"), (iv) the International Air Transport Association (the "IATA"),
(v) the Interstate Commerce Commission (the "ICC"), and (vi) any state
or other regulatory department or authority with jurisdiction over
Radix's Business (the "STATE REGULATORS") (together with US Customs, US
Treasury, FMC, IATA and ICC hereinafter
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58
sometimes collectively referred to as the "REGULATORY AGENCIES"), and
have paid all fees or assessments due and payable in connection
therewith. Except for normal examinations conducted by the applicable
Regulatory Agency in the regular course of Radix's Business, to the best
knowledge of Radix no Regulatory Agency has initiated any proceeding or
investigation into the business or operations of Radix or any of the
Radix Subsidiaries in the last six (6) year period. There is no
unresolved violation or exception by any Regulatory Agency with respect
to any report or statement relating to an examination of Radix or any of
the Radix Subsidiaries the result of which could reasonably be expected
to have a Material Adverse Effect.
SECTION 3.30. AGREEMENTS WITH REGULATORY AGENCIES. Except as
set forth in SECTION 3.30 of the Disclosure Schedule, neither Radix nor
any of the Radix Subsidiaries is subject to any cease-and-desist or
other order issued by, or a party to any written agreement or memorandum
of understanding with, any Regulatory Agency the result of which could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.31. CUSTOMERS OF RADIX. SECTION 3.31 of the
Disclosure Schedule contains an accurate and complete list of fifty-two
large customers of Radix during the last twelve months (the "KEY
CUSTOMERS"), which list includes the twenty-five largest customers of
Radix during such period. Radix's relationship with the Key Customers
and its other customers and accounts is good and Radix does not know of
any fact, condition or event (including, without limitation, the
consummation of the Merger and the other transactions contemplated
hereby) which would adversely affect the relationship of Radix with its
customers generally or with any Key Customer identified in SECTION 3.31
of the Disclosure Schedule. Notwithstanding the foregoing, AEI
acknowledges that relationships between Radix and its independent agents
may be adversely affected by the consummation of the Merger.
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59
SECTION 3.32. POWERS OF ATTORNEY; GUARANTIES. Other
than sub-powers of attorney given by Radix or the Radix Subsidiaries
to licensed customs brokers and Radix Group employees in the ordinary
course of business in respect of the clearance of customer goods
through customs, neither Radix nor any Radix Subsidiary has any power
of attorney, revocable or irrevocable, which remains outstanding as of
the date hereof or will be outstanding as of the Closing Date, and was
given by Radix or any Radix Subsidiary to any person, firm, organization
or other entity for any purpose whatsoever, nor does there exist any
obligation or liability, either actual, accrued, accruing or contingent,
as guarantor, surety, co-signer, endorser, co-maker or indemnitor in
respect of the obligation of any person, firm, organization or other
entity, except guaranties by Radix of obligations of the Radix
Subsidiaries identified on SECTION 3.32 of the Disclosure Schedule.
SECTION 3.33. ABSENCE OF REGISTRATION. Radix is not and has
not been in the past two years registered pursuant to the 1934 Act, and
was not required during such period, and is not currently required, to
be registered under the 1934 Act. Radix is not subject to the proxy
rules of Section 14(a) of the 1934 Act, the information statement rules
of Section 14(c) of the 1934 Act, or the tender offer rules of Section
14(d) of the 1934 Act, or the Williams Act (Section 13(d) and (e) of the
1934 Act).
SECTION 3.34. ROI ARRANGEMENT. The payment of the Termination
Fee has been approved by a majority of the disinterested members of the
Board of Directors of Radix in accordance with Section 144 of the
Delaware Act.
SECTION 3.35. HANJIN CONTRACT. By April 30, 1995, Radix,
through its subsidiary United Star Line, Inc. ("UNITED") or otherwise
will have fulfilled at least 11/12th of the minimum required number of
FEUs under the Service Contract between United and Hanjin Shipping
Company, Ltd., dated May 25, 1994, absent which the amount of any
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60
penalty up to $500 per unfulfilled FEUs during the period ended April
30, 1995 shall be deemed a Loss hereunder to the extent actually billed
to and paid by Radix.
SECTION 3.36. RADIX STOCKHOLDERS; ACCREDITED INVESTOR STATUS.
The number of beneficial owners of Radix Shares not constituting
Accredited Investors within the meaning of Rule 501 of Regulation D
under the 1933 Act is less than 35 and the balance of the beneficial
owners of Radix Shares constitute Accredited Investors within the
meaning of Rule 501 of Regulation D.
SECTION 3.37. DISCLOSURE. No representation or warranty as to
Radix or any of the Radix Subsidiaries contained in this Agreement and
no statement contained in the Disclosure Schedule or any document,
instrument or agreement delivered pursuant hereto or in connection
herewith contains any untrue statement of a material fact, or, to the
best knowledge of Radix, omits to state any material fact necessary, in
light of the circumstances under which it was made, in order to make the
statement herein or therein not misleading.
SECTION 3.38. KNOWLEDGE OF RADIX, ETC. Radix does not have
knowledge of any event, fact, condition, circumstance or other matter
concerning Radix or the Radix Subsidiaries which constitutes a breach of
any representation, warranty or covenant in this Agreement, or any
document, instrument or agreement delivered pursuant hereto or in
connection herewith which is not properly disclosed herein, therein or
in the Disclosure Schedule. To the extent that Radix represents and
warrants itself to have had knowledge or belief as to any event, fact,
condition, circumstance or other matter set forth in this Agreement,
"KNOWLEDGE" or "BELIEF" shall mean the knowledge or belief of the
directors and executive officers of Radix and the Radix Subsidiaries,
including, without limitation, Messrs. John Radziwill, Pierre L.
Schoenheimer, Matthew P. Sheppard, Don S. Friedkin and Michael Simpson.
<PAGE>
61
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF AEI
AEI, for itself and on behalf of Newco, hereby represents and
warrants to Radix, as of the date hereof (except as to any
representation or warranty which specifically relates to an earlier
date), as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION. Each of AEI and
Newco is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization,
with all requisite power and authority to own, operate and lease its
respective properties and assets and to carry on its respective business
as it is now being conducted, and is qualified or licensed to do
business and is in good standing in each jurisdiction in which the
ownership or leasing of property by it or the conduct of its respective
business requires such licensing or qualification, except in such
jurisdictions where the failure to so qualify would not have a material
adverse effect on the respective business, revenues, financial
condition, properties, assets or prospects of AEI or Newco, taken as a
whole. AEI has delivered to Radix complete and correct copies of AEI's
and Newco's respective Certificate of Incorporation and By-laws.
SECTION 4.2. AUTHORIZATION. Each of AEI and Newco has the
full corporate power and authority to execute and deliver this Agreement
and to consummate the Merger and the other transactions contemplated
hereby. Other than the consent of the Board of Directors of AEI and of
the Board of Directors and sole stockholder of Newco, no corporate
proceeding on the part of AEI or Newco is necessary to authorize the
execution and delivery of this Agreement or to consummate the Merger and
the other transactions contemplated hereby, which consents have
heretofore been obtained. This Agreement has been duly and validly
executed and delivered by each of AEI and Newco and constitutes the
legal, valid and binding obligation of each of AEI and Newco,
enforceable against such respective parties in accordance with its
terms, except to the
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62
extent that such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and remedies
generally.
SECTION 4.3. NO VIOLATION. Neither the execution and delivery
of this Agreement by AEI or Newco, nor the performance by AEI or Newco
of their respective obligations hereunder, will:
a) violate or result in any material breach of any
provision of the respective Certificate of Incorporation or By-laws of
AEI or Newco;
b) violate any order, writ, judgment, injunction,
decree, statute, rule or regulation of any court or Governmental
Authority applicable to AEI or Newco or their respective properties or
assets, the effect of which would have a material adverse effect on the
respective business, revenues, financial condition, properties, assets
or prospects of AEI or Newco, taken as a whole.
SECTION 4.4. CAPITALIZATION OF AEI. The authorized capital
stock of AEI consists of (i) 40,000,000 shares of AEI Common Stock, par
value $.01 per share; and (ii) 1,000,000 shares of AEI Preferred Stock,
par value $1.00 per share. As of March 27, 1995, there were issued and
outstanding (i) 17,481,694 shares of AEI Common Stock (net of 2,187,833
shares of AEI Common Stock held in treasury); and (ii) no shares of AEI
Preferred Stock. The shares of AEI Common Stock to be issued to the
holders of Radix Shares upon consummation of the Merger, subject to the
terms and conditions of this Agreement, will upon such issuance be duly
authorized, validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, and will be free
and clear of all Encumbrances, except as may arise from any action taken
by holders of Radix Shares or as otherwise specified in this Agreement.
SECTION 4.5. CONSENTS AND APPROVALS. Other than: (i) consents
and approvals of or filings or registrations with the Federal Trade
Commission ("FTC") and the
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Department of Justice ("DOJ") pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR ACT"); (ii) requirements of
federal and state securities laws including, without limitation, the
delivery of an information statement (the "INFORMATION STATEMENT") to
the stockholders of AEI in compliance with Regulation D ; or (iii) as
set forth in SECTION 3.5 of the Disclosure Schedule, to the best
knowledge of AEI, no filing or registration with, no notice to and no
permit, authorization, consent or approval of any third party or any
public or Governmental Authority is necessary for the consummation by
AEI and Newco, as the case may be, of the Merger and the other
transactions contemplated hereby.
SECTION 4.6. ABSENCE OF UNDISCLOSED LIABILITIES. As of the
date hereof AEI has no liabilities (whether accrued, absolute,
contingent, or otherwise, and whether due or to become due), nor any
loss contingency, except as reflected in AEI's financial statements or
disclosed in the AEI Reports (as hereafter defined) which would be
required to be included in such financial statements in accordance with
GAAP, and AEI has no knowledge of any valid basis for the assertion of
any of the foregoing.
SECTION 4.7. AEI REPORTS. AEI has timely filed (i) a copy of
its 1994 Annual Report to Stockholders ("AEI'S ANNUAL REPORT"); (ii) a
copy of its Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 ("AEI'S 10-K"); (iii) a copy of the Proxy Statement
for its annual meeting held on June 23, 1994 ("AEI'S PROXY STATEMENT")
(AEI's Annual Report, AEI's 10-K, and AEI's Proxy Statement are
sometimes hereinafter collectively referred to as the "AEI REPORTS").
The AEI Reports, as of their respective dates, complied as to form in
all material respects with the published rules and regulations of the
SEC with respect thereto and, to the best knowledge of AEI, did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. Except for AEI Reports, and
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64
an amendment on Form 10-K/A filed in respect of AEI's 10-K, since
December 31, 1994, and as of the date hereof, AEI has not filed any
other reports or other documents with the SEC. The financial statements
of AEI in or incorporated by reference in AEI Reports, including any
related notes and schedules, complied as to form in all material
respects on the dates thereof with the then applicable accounting
requirements and published rules and regulations of the SEC. There have
been not material adverse changes in the business of AEI and its
subsidiaries as a whole since the date of AEI's 10-K for the year ended
December 31, 1994.
SECTION 4.8. BROKERS' FEES AND COMMISSIONS. Neither AEI nor,
to the best knowledge of AEI, any of its shareholders, directors,
officers, employees or agents has employed any investment banker,
broker, finder or intermediary, and no fee or other commission is owed
to any such third party in connection with the transactions contemplated
hereby.
SECTION 4.9. DISCLOSURE. No representation or warranty as to
AEI or Newco contained in this Agreement and no statement made by AEI in
the Disclosure Schedule contains any untrue statement of a material
fact, or, to the best knowledge of AEI, omits to state any material fact
necessary, in light of the circumstances under which it was made, in
order to make the statement herein or therein not misleading.
SECTION 4.10. KNOWLEDGE OF AEI, ETC. AEI has no knowledge of
any event, fact, condition, circumstance or other matter concerning AEI
which constitutes a material breach of any representation, warranty or
covenant contained in this Agreement, or any document, instrument or
agreement delivered pursuant hereto or in connection herewith which is
not properly disclosed herein, therein or in the Disclosure Schedule.
To the extent that AEI represents and warrants itself to have had
knowledge or belief as to any event, fact, condition, circumstance or
other matter set forth in this Agreement,
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"KNOWLEDGE" or "BELIEF" shall mean the knowledge or belief of AEI's
Chairman, Chief Executive Officer, Chief Financial Officer or General
Counsel.
ARTICLE V.
COVENANTS
SECTION 5.1. CONDUCT OF RADIX'S BUSINESS PENDING THE MERGER.
a) Radix hereby agrees to fully cooperate with AEI and
its officers and agents during the period between the execution of this
Agreement and the Closing so as to ensure a smooth transition following
the consummation of the transactions contemplated hereby. Without
limiting the generality of the foregoing, AEI shall be permitted to
participate in presentations to clients and prospective clients during
the period prior to the Closing, and to participate in presentations to
employees relative to the Merger.
b) Additionally, during the period prior to Closing,
Radix agrees as to itself and the Radix Subsidiaries that, except as
expressly contemplated or permitted by this Agreement or to the extent
that AEI shall otherwise consent in writing, Radix and the Radix
Subsidiaries shall scrupulously carry on their respective businesses in
the usual, regular and ordinary course in substantially the same manner
as heretofore conducted and consistent with past practice, except to the
extent directed otherwise by AEI. Without limiting the generality of
the foregoing, during the period prior to Closing, and except as
expressly contemplated or permitted by this Agreement, Radix will not,
and will cause each of the Radix Subsidiaries not to, without the prior
written consent of AEI, take any of the following actions:
(i) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to the equity interests of Radix or the Radix Subsidiaries,
except as shall have been fully paid or distributed prior to April 30,
1995, and which payment or distribution is fully reflected on
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66
the Closing Balance Sheet or any split, combination or reclassification
of such equity interests;
(ii) any sale, lease, license, encumbrance or other
transfer or disposition of any material assets or properties of Radix or
any Radix Subsidiary (either singly or in the aggregate);
(iii) any forgiveness or cancellation of any debts
or claims, or, except in the ordinary course of business, any discharge
or satisfaction of any lien, charge or other Encumbrance or payment of
any liability or obligation;
(iv) any material change in the credit practices of
Radix or any Radix Subsidiary or any creation or assumption of
indebtedness for money borrowed, or any making of loans, advances or
capital contributions, except for such advances as are made pursuant to
the specific terms of the BNY facility;
(v) except in ordinary course of business,
consistent with past practice, (A) any increase in the rate or terms of
compensation (including termination and severance pay) payable or to
become payable by Radix or any of the Radix Subsidiaries to their
respective directors, officers, employees or agents, or any increase in
the rate or terms of any bonus, insurance, pension or other Employee
Plan, or any program or arrangement made to, for or with any such
directors, officers, employees or agents, or (B) any entry by Radix or
any Radix Subsidiary into any employment, compensation, severance or
termination agreement with any such person;
(vi) any entry into any Material Contract (as
defined in SECTION 3.13 hereof) by Radix or any Radix Subsidiary;
(vii) any change by Radix or any Radix Subsidiary in
its respective financial or tax accounting principles or methods;
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(viii) any acquisition (by merger, consolidation or
acquisition of stock or assets) of any corporation, limited liability
company, partnership or other business enterprise or division or
significant assets thereof;
(ix) any failure to maintain the books, accounts and
records of Radix and the Radix Subsidiaries in the usual, regular and
ordinary manner on a basis consistent with prior years and in accordance
with GAAP;
(x) any change made or authorized in the respective
Articles of Incorporation, By-laws or Other Organizational Documents of
Radix or the Radix Subsidiaries; or
(xi) any purchase, redemption, issue, sale, pledge,
encumbrance or other acquisition or disposition by Radix or any Radix
Subsidiary of any shares of capital stock or other equity securities,
partnership interests or other ownership interests of Radix or any Radix
Subsidiary, or the grant of any options, warrants or other rights to
purchase, or convert any obligation into, shares of capital stock,
partnership interests or other ownership interests or any evidence of
indebtedness or other securities of Radix or any Radix Subsidiary.
SECTION 5.2. ACCESS TO INFORMATION. During the period prior
to Closing, at reasonable times without causing unreasonable disruption
to Radix's Business, Radix will give AEI and its authorized
representatives full access to all personnel, offices and other
facilities, and to all books and records of Radix and the Radix
Subsidiaries.
SECTION 5.3. MAINTENANCE OF EMPLOYEE AND KEY CUSTOMER
RELATIONS. During the period prior to Closing, Radix shall use its best
efforts to retain the services and goodwill of Radix Employees and to
maintain the goodwill of the Key Customers and its customers generally,
and shall not take, nor permit any Radix Subsidiary nor any director,
officer, employee, agent or independent contractor of Radix or the Radix
Subsidiaries to take, any action (i) with respect to any Radix Employee,
which action is intended, or a
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likely effect of which would be, to solicit, entice, persuade or induce
such employee to terminate its employment with Radix or any of the Radix
Subsidiaries at any time, whether before or after the Effective Date, or
to decline to accept employment with AEI on or after the Effective Date,
and (ii) with respect to any Key Customer, or its customers generally,
which action is intended, or a likely effect of which would be, to cause
such Key Customer or its customers generally, to terminate or
substantially diminish their business dealings with Radix or any Radix
Subsidiary.
SECTION 5.4. ALL REASONABLE EFFORTS. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do,
or cause to be done as promptly as practicable, all things necessary,
proper and advisable under applicable laws and regulations to consummate
and make effective the transactions contemplated by this Agreement,
including, without limitation, fulfillment of the conditions set forth
in ARTICLE V hereof. If at any time after the Closing any further
action is necessary or desirable to consummate the Merger or carry out
the purposes of this Agreement, including, without limitation, the
execution of additional agreements, documents, certificates and
instruments, the proper officers and directors of AEI and Radix shall
take all such necessary action.
SECTION 5.5. CONSENTS AND APPROVALS. To the extent not
heretofore completed or obtained, the parties hereto each will cooperate
with one another and use all reasonable efforts to prepare all necessary
documentation (including, without limitation, furnishing all information
required under the HSR Act), to effect promptly all necessary filings
and to obtain all necessary permits, consents, approvals, orders and
authorizations of or any exemptions by, all third parties and
Governmental Authorities necessary to consummate the Merger and the
other transactions contemplated hereby. Each party hereto will keep the
other parties hereto apprised of the status of any inquiries made of
such party
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69
by the FTC, the DOJ, or any other Governmental Authority or members of
their respective staffs with respect to this Agreement or the
transactions contemplated hereby or thereby.
SECTION 5.6. OTHER PUBLIC ANNOUNCEMENTS. Following the
execution and delivery hereof, AEI and Radix will consult with each
other and will mutually agree upon the content and timing of any press
releases or other public statements with respect to the transactions
contemplated by this Agreement and shall not issue any such press
release or make any such public statement prior to such consultation and
agreement, except as may be required by applicable law or based upon the
advice of counsel that such disclosure would be prudent under applicable
securities laws.
SECTION 5.7. REGISTRATION OF AEI COMMON STOCK.
a) REGISTRATION. AEI agrees to use its best efforts to
file with the SEC as soon as practicable, taking into consideration the
availability of timely financial statements of AEI, and to cause to
become effective as soon as practicable after the Effective Date a
Registration Statement on Form S-3 under the 1933 Act (the "REGISTRATION
STATEMENT") covering the AEI Common Stock to be received by holders of
Radix Shares, and shall use all reasonable efforts to make all proper
filings under any applicable state securities laws. The Registration
Statement will comply in all material respects with the rules and
regulations of the SEC. AEI shall keep the Registration Statement
effective for a minimum of two (2) years following its initial effective
date.
b) INDEMNIFICATION BY AEI. AEI hereby indemnifies, to
the extent permitted by law, each Radix Stockholder, any officers and
directors of a Radix Stockholder, and any person who controls such Radix
Stockholder (within the meaning of the 1933 Act), against all losses,
claims, damages, liabilities and expenses arising out of or resulting
from any untrue or alleged untrue statement of a material fact contained
in any registration statement, prospectus or preliminary prospectus or
any amendment or supplement thereto or any omission or alleged omission
to state therein a material fact
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required to be stated therein or necessary to make the statements
therein not misleading and will reimburse any such indemnified party for
any legal or other expenses reasonably incurred by such indemnified
party in investigating or defending any such claim; except insofar as
the same are caused by or contained in any information furnished in
writing to AEI by any Radix Stockholder expressly for use therein or by
any such Radix Stockholder's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements
thereto.
c) INDEMNIFICATION BY THE RADIX STOCKHOLDERS. In
connection with any registration statement in which a Radix Stockholder
is participating, each such Radix Stockholder will furnish to AEI in
writing such information as is reasonably requested by AEI for use in
such registration statement or prospectus and will indemnify, to the
extent permitted by law, AEI, its directors and officers and each person
who controls AEI (within the meaning of the 1933 Act) against any
losses, claims, damages, liabilities and expenses arising out of or
resulting from any untrue or alleged untrue statement of a material fact
or any omission or alleged omission of a material fact required to be
stated in the registration statement or prospectus or any amendment
thereof or supplement thereto or necessary to make the statements
therein not misleading, but only to the extent that such untrue
statement or omission or such alleged untrue statement or alleged
omission is contained in information so furnished in writing by such
Radix Stockholder specifically for use in preparation of the
registration statement.
d) PROCEDURES AS TO INDEMNIFICATION RELATIVE TO
REGISTRATION. Any person entitled to indemnification hereunder shall
(i) give prompt notice to the indemnifying party of any claim with
respect to which it may seek indemnification and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume to defense of such claim
with counsel reasonable satisfactory
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to the indemnified party. If such defense is assumed, the indemnifying
party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably
withheld). An indemnifying party who is not entitled, or elects not, to
assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties
with respect to such claim.
e) CONTRIBUTION. If for any reason the foregoing
indemnity is unavailable, or is insufficient to hold harmless an
indemnified party, then the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of the claim
in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party on the one hand and the indemnified
party on the other hand. If, however, the allocation provided in the
immediately preceding sentence is not permitted by applicable law, or if
the indemnified party shall have failed to give the notice required by
clause (d) above, then each indemnifying party shall contribute to the
amounts paid or payable by such indemnified party in such proportion as
is appropriate to reflect not only the benefits but also the relative
fault of the indemnifying party and the indemnified party as well as any
other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount payable in respect of
any claim shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending such claim.
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f) PREPARATION AND FILING OF AMENDMENTS AND SUPPLEMENTS.
AEI agrees it will prepare and file with the Securities and Exchange
Commission such amendments and supplements to such Registration
Statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of
not less than two years or until the shares of AEI Common Stock included
therein have been sold.
g) COPIES OF DOCUMENTS. AEI agrees it will furnish to
each Radix Stockholder such number of copies of such Registration
Statement, each amendment and supplement thereto and the prospectus
included in such Registration Statement (including each preliminary
prospectus), and such other documents as such Radix Stockholder may
reasonably request in order to facilitate the disposition of the AEI
Common Stock included therein owned by such Radix Stockholder.
h) NOTIFICATION OF EFFECTIVENESS; AMENDMENTS. AEI
agrees it will notify each Radix Stockholder at any time when a
prospectus relating to the AEI Common Stock included therein is required
to be delivered under the 1933 Act within the period that AEI is
required to keep the registration statement effective of the happening
of any event as a result of which the prospectus included in such
registration statement as theretofore amended or supplemented contains
an untrue statement of a material fact or omits any material fact
necessary to make the statements therein not misleading, and AEI will
prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such AEI Common Stock, such
prospectus will not contain an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein
not misleading.
i) LISTING. AEI will cause all of the AEI Common Stock
included in the Registration Statement to be listed or included on
NASDAQ or such other
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73
securities exchanges on which the AEIC Common Stock as a class is then
listed or included.
j) TRANSFER AGENT. AEI will provide a transfer agent
and registrar for all of the AEI Common Stock included in the
Registration Statement such Registrable Securities not later than the
effective date of such registration statement.
k) REGISTRATION EXPENSES. AEI will pay all Registration
Expenses incurred in connection with a registration of the AEIC Common
Stock pursuant to this SECTION 5.7, whether or not such Registration
Statement shall become effective; provided that each Radix Stockholder
shall pay all underwriting discounts, commissions and transfer taxes, if
any, relating to the sale or disposition of such Stockholder's AEIC
Common Stock pursuant to the Registration Statement. As used herein,
"REGISTRATION EXPENSES" means any and all reasonable and customary
expenses incident to performance of or compliance with the registration
rights set forth herein, including, without limitation, (i) all SEC and
stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all printing, messenger and delivery
expenses, and (iii) the reasonable fees and disbursements of counsel for
AEI and AEI's independent public accountants. AEI shall not be
obligated to incur any fees, costs or expenses relating to the use by
any Radix Stockholder of an underwriter in disposing of their shares of
AEIC Common Stock, including fees, costs and expenses of such
underwriter or their counsel, or fees, costs and expenses associated
with compliance with state securities laws, it being agreed that AEI's
obligations relate only to the initial shelf registration of the AEIC
Common Stock and the maintenance thereof in accordance with the terms
hereof.
l) SPECIFIC PERFORMANCE. AEI acknowledges that there is
no adequate remedy at law for failure by it to comply with the
provisions of this SECTION 5.7 and that such failure would not be
adequately compensable in damages, and therefore agrees that its
agreements contained in this SECTION 5.7 may be specifically enforced.
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SECTION 5.8. RADIX NAME. AEI agrees not to oppose,
challenge or otherwise attempt to prohibit any Insider of Radix or
ROI from using the name "RADIX" in connection with any business not
in any manner, directly or indirectly, related to, connected with
or similar to the business of delivering cargo and other goods,
arranging such delivery, providing customs brokerage services in
connection with such delivery, storing cargo and other goods and
any other activity or business related thereto. AEI further agrees
on its behalf and on behalf of Radix that it will limit its use of
the name "RADIX" to the conduct of a business or businesses that are
related to, connected with or similar to the business currently
conducted by AEI or to the Radix Business.
ARTICLE VI.
CONDITIONS PRECEDENT TO THE MERGER
SECTION 6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS UNDER THIS
AGREEMENT. The respective obligations of each party under ARTICLE I of
this Agreement to cause the Merger to be consummated shall be subject to
the satisfaction, or to the waiver by the parties hereto, at or prior to
the Closing (if prior to the Closing, as designated below) of each of
the following conditions precedent:
a) Any waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated.
b) The Merger shall have been approved by the Identified
Stockholders within the time periods specified in Section 1.6(b) hereof.
c) No injunction, restraining order or other ruling or
order issued by any court of competent jurisdiction or Governmental
Authority or other law, rule, regulation, legal restraint or prohibition
preventing the consummation of the Merger and the other transactions
contemplated hereby shall be in effect as of or shall have commenced on
or prior to the Closing Date, and no action, suit or proceeding brought
by
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any Governmental Authority shall be pending or threatened as of the
Closing Date which seeks any injunction, restraining order or other
order which would prohibit the consummation of the Merger and the other
transactions contemplated hereby or materially impair the ability of AEI
to own and operate Radix's Business as contemplated hereby after the
Closing.
SECTION 6.2. CONDITIONS TO THE OBLIGATIONS OF AEI UNDER THIS
AGREEMENT. The obligations of AEI under ARTICLE I of this Agreement to
cause the Merger to be consummated shall be further conditioned on the
issuance of the AEI Shares pursuant to this Agreement being exempt from
the registration requirements of the 1933 Act. If such condition shall
not be satisfied, then AEI agrees that it shall promptly prepare and
file a Registration Statement covering the AEI Common Stock to be issued
in the Merger with the SEC and take all other appropriate actions so as
to give effect to the intentions of the parties hereto in respect of the
consummation of the Merger, and the parties agree that the Merger shall
thereafter be consummated at the earliest practicable date following the
effectiveness of such Registration Statement.
SECTION 6.3. LIMITATION OF REMEDY. Each party hereby confirms
that the sole remedy of any party for breach of the covenants,
representations and warranties of the other party made herein during the
period prior to the date of Closing shall be to seek indemnification or
such other remedies as are available hereunder in respect of such
breach, but not to terminate or cancel this Agreement; PROVIDED,
HOWEVER, that AEI shall be entitled to terminate this Agreement and
avail itself of all legal remedies in the event of an intentional breach
of any covenant made by Radix herein, the result of which shall
materially change the fundamental economics of the transaction for AEI.
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ARTICLE VII.
ABANDONMENT
In the event that Radix, on the one hand, or AEI and Newco, on
the other hand, willfully fails to consummate the Merger following
satisfaction of all of the conditions set forth in ARTICLE V hereof, the
other party shall have the right to pursue all available remedies at law
or in equity, including, without limitation, instituting legal
proceedings to obtain damages for any such breach, enforcing the
specific performance of this Agreement or enjoining any further breach
of this Agreement. Such remedies may be exercised cumulatively or in
conjunction with all other rights and remedies provided by law.
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.1. SURVIVAL. All representations, warranties,
covenants and agreements contained in this Agreement, and in any
certificate, schedule, document or other writing delivered pursuant
hereto or in connection with the transactions contemplated hereby in all
cases shall be deemed to have been relied upon by the parties hereto,
and shall survive the Closing; provided that any such representations,
warranties, covenants and agreements shall be fully effective and
enforceable only for a period of eighteen (18) months after the Closing
Date, and shall thereafter be of no further force or effect, except that
the representations and warranties set forth in SECTION 3.15
(Environmental) shall survive for a period of five (5) years and the
representations and warranties set forth in SECTION 3.16 (Taxes) shall
survive for a period of three (3) years or, if Radix shall agree to an
extension of the statute of limitations at the request of any taxing
authority, for a period of five (5) years. Additionally, the parties
agree that the indemnification obligations set
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forth in this Article VIII shall survive with respect to the Existing
Litigation and to claims made within the applicable survival period
until finally determined in accordance with the terms hereof. The
representations, warranties, covenants and agreements contained in this
Agreement or any certificate, schedule, document or other writing
delivered pursuant hereto shall not be affected by any investigation,
verification or examination by any party hereto or by any person acting
on behalf of any such party.
SECTION 8.2. INDEMNIFICATION OF AEI.
a) Each Radix Stockholder, other than Dissenting
Stockholders, jointly and severally, agrees to indemnify, defend and
save AEI and its directors, officers, employees, owners, agents and
affiliates and their successors and assigns or heirs and personal
representatives, as the case may be (each an "AEI INDEMNIFIED PARTY"),
forever harmless from and against, and to promptly pay to an AEI
Indemnified Party or reimburse an AEI Indemnified Party for any and all
losses, damages, expenses (including, without limitation, court costs,
amounts paid in settlement, judgments, reasonable attorneys' fees or
other expenses, including, without limitation, those arising out of the
enforcement of this Agreement), suits, actions, claims, deficiencies,
liabilities or obligations, net in any case of any tax benefit
attributable thereto (for these purposes, based on the combined
effective tax rate then in effect), and in any case subject to the
limitations of SECTION 8.3(c) (collectively, the "LOSSES;" for purposes
hereof, any Losses incurred by Radix or any Radix Subsidiary shall be
considered as Losses to an AEI Indemnified Party), sustained or incurred
by such AEI Indemnified Party relating to, caused by or resulting from:
(i) any misrepresentation or breach of warranty of
Radix contained in this Merger Agreement, or any failure of Radix or a
Radix Stockholder to fulfill or satisfy any covenant or agreement
contained herein or in any certificate, schedule, document or other
writing delivered by the Radix Stockholders or by Radix pursuant to
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this Merger Agreement, as the case may be, in any such case for Losses
relating to the survival periods specified in SECTION 8.1 hereof;
(ii) any liability of Radix for Taxes for any period
prior to the Closing, except to the extent that the same have been
reserved against in the Closing Balance Sheet (including, without
limitation, any such liability for interest or penalties and whether
arising upon audit or otherwise).
(iii) any Existing Litigation relating to the period
prior to the Closing, whether or not disclosed on SCHEDULE 3.10 or
SCHEDULE 3.14 or elsewhere; and
(iv) any claim made by the persons identified on
SCHEDULE 8.2(a)(iv) hereof within eighteen (18) months of the date
hereof, in any case to the extent such claim alleges that commitments or
assurances were given to such person by any officer or director of Radix
or Radix Group relating to the terms and conditions of their employment
following the Merger (including as to any severance, bonuses or similar
payments) (the "EMPLOYEE CLAIMS").
b) The parties agree that the Tangible Net Assets shall
be adjusted from time to time during the applicable survival periods to
reflect such Losses and any other actual experience and transactions
after the Closing Balance Sheet date (except that Accounts Receivable
will not be adjusted except to the extent of a breach of the
representations contained in SECTION 3.23). For purposes of such
adjustments, the amount of any transportation liabilities and other
accounts payable or credit balances as they become more than six (6)
months old as to which there is no reasonable anticipation that payment
will be required shall thereupon be deducted from liabilities in
determining the Tangible Net Assets, provided, however that any payable
to a Radix supplier, vendor, customer or any other party shall be added
back to liabilities when determined to be due and payable.
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c) At such time as the Tangible Net Assets shall be less
than $2,970,000, then AEI shall have the right to claim from the Radix
Stockholders the difference between adjusted Tangible Net Assets and
$3,300,000. For purposes of subsequent claims, any prior reimbursement
shall be taken into account.
d) Anything to the foregoing notwithstanding, the Radix
Stockholders shall fully indemnify any AEI Indemnified Party for Losses
relating to the Employee Claims, net of any tax benefit, without regard
to any threshold, PROVIDED, however, (a) that the amount payable in
respect of such Losses shall be reduced by the amount of any severance
payment made or offered to be made by AEI and/or Radix following the
Closing and (b) the amount of any payment for such Losses shall not be
included in the calculation of Losses or Tangible Net Assets for
purposes of the preceding sentence. AEI agrees that it will in good
faith make a determination as to severance payments for such individuals
in accordance with its practices for similarly situation employees.
SECTION 8.3. INDEMNIFICATION OF RADIX STOCKHOLDERS. AEI
agrees to indemnify, defend and save each Radix Stockholder (other than
Dissenting Stockholders and Non-Qualified Stockholders) and their
respective legal representatives, heirs, successors, assigns, agents and
affiliates (each, a "RADIX INDEMNIFIED PARTY") forever harmless from and
against, and to promptly pay to such Radix Indemnified Party or
reimburse such Radix Indemnified Party for, any and all Losses, net in
any case of any tax benefit attributable thereto, sustained or incurred
by such Radix Indemnified Party relating to, caused by or resulting from
any misrepresentation or material breach of warranty of AEI contained in
this Merger Agreement, or material failure to fulfill or satisfy any
covenant or agreement contained herein or in any certificate, schedule,
document or other writing delivered by AEI pursuant to this Merger
Agreement, as the case may be, in any such case for Losses relating to
the survival periods specified in Section 8.1 hereof.
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SECTION 8.4. LIMITATIONS ON INDEMNIFICATION. The maximum
liability of the Radix Stockholders under this Merger Agreement for all
Losses shall be the value of any Escrowed Property remaining after any
adjustment to the Purchase Price in accordance with Article II hereof, and
such remaining Escrowed Property shall be the sole source of indemnification
by the Radix Stockholders hereunder; PROVIDED, HOWEVER, that the
Indemnitors have assumed the obligation to indemnify any AEI Indemnified
Party for Losses in excess of the value of such Escrowed Property, as
more specifically set forth in the Indemnification Agreement. The
maximum liability of AEI for all Losses shall be equal to one-half times
the sum of the Market Value of the shares of AEI Common Stock payable to
the Radix Stockholders pursuant to this Merger Agreement, plus the cash
payable to Non-Qualified Stockholders, in each case as adjusted pursuant
to Article II hereof.
SECTION 8.5. REPRESENTATION BY STOCKHOLDER REPRESENTATIVES.
Pursuant to the terms of SECTION 2.6 hereof, the Stockholder
Representatives shall act on behalf of the Radix Stockholders in
connection with the settlement, compromise, arbitration and disposition
of any claim of indemnification brought under this Article VIII, any
disbursement of Escrowed Property relating thereto, and in connection
with any other matter relating to the provisions of this Article VIII.
SECTION 8.6. INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS
AGAINST INDEMNIFIED PARTIES.
(i) In the event that subsequent to the Closing any
AEI Indemnified Party or Radix Indemnified Party (each, an "INDEMNIFIED
PARTY") receives notice of the assertion of any claim (including an
Employee Claim) or of the commencement of any action, suit or proceeding
by any entity who is not a party to this Agreement (including, without
limitation, any Governmental Authority) (a "THIRD PARTY CLAIM," which
term shall also encompass all Existing Litigation as defined in SECTION
3.10)
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against such Indemnified Party, with respect to which AEI or the
Indemnitors, as the case may be (the "INDEMNIFYING PARTY"), may be
required to provide indemnification under this Agreement, the
Indemnified Party shall promptly give written notice, together with a
statement of any available information regarding such claim
(collectively, the "THIRD PARTY INDEMNIFICATION NOTICE"), to the
Indemnifying Party within thirty (30) days after learning of such claim
(or within such shorter time as may be necessary to give the
Indemnifying Party a reasonable opportunity to respond to such claim).
The Indemnifying Party shall have the right, upon delivering written
notice to the Indemnified Party (the "DEFENSE NOTICE") within thirty
(30) days after receipt from an Indemnified Party of a Third Party
Indemnification Notice, to conduct, at the Indemnifying Party's sole
cost and expense, the defense against such Third Party Claim in the
Indemnifying Party's own name, or, if necessary, in the name of the
Indemnified Party; PROVIDED, HOWEVER, that the Indemnified Party shall
have the right to reasonably approve the defense counsel representing
the Indemnifying Party, and in the event that the Indemnifying Party and
the Indemnified Party cannot agree upon such counsel within ten (10)
days after the Defense Notice is provided, then the Indemnifying Party
shall propose an alternate defense counsel, which shall be subject again
to the Indemnified Party's reasonable approval in accordance with the
terms hereof. In the case of all Existing Litigation, the Radix
Stockholders, as the Indemnifying Party, shall be considered as having
given a Defense Notice with respect thereto, and AEI, as the Indemnified
Party, agrees that the defense counsel currently conducting the defense
is approved. AEI agrees to cause Radix to notify such counsel following
the Closing that the defense of such Existing Litigation is being
conducted by the Stockholder Representatives in accordance with the
terms thereof.
(ii) In the event that the Indemnifying Party shall
fail to give the Defense Notice within the time and as prescribed by
SECTION 8.6(i) hereof, then in any such event the Indemnified Party
shall have the right to conduct such defense in good
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faith with counsel reasonably acceptable to the Indemnifying Party, but
the Indemnified Party shall be prohibited from compromising or settling
any such claim without the prior written consent of the Indemnifying
Party. If the Indemnified Party fails to diligently defend such claim
with counsel reasonably satisfactory to the Indemnifying Party, or
settles any such claim without the Indemnifying Party's prior written
consent or otherwise breaches this Article VIII, the Indemnified Party
will be liable for all costs, expenses, settlement amounts or other
Losses paid or incurred in connection therewith and the Indemnifying
Party shall have no obligation to indemnify the Indemnified Party with
respect to such claim.
(iii) In the event that the Indemnifying Party does
deliver a Defense Notice and thereby elects to conduct the defense of
the subject Third Party Claim, the Indemnified Party will cooperate with
and make available to the Indemnifying Party such assistance and
materials as the Indemnifying Party may reasonably request, all at the
sole cost and expense of the Indemnifying Party. Regardless of which
party defends such claim, the other party hereto shall have the right at
its own cost and expense to participate in the defense of any Third
Party Claim assisted by counsel of its own choosing. Without the prior
written consent of the Indemnified Party, the Indemnifying Party will
not enter into any settlement of any Third Party Claim if pursuant to or
as a result of such settlement, such settlement would lead to liability
or create any financial or other obligation on the part of the
Indemnified Party for which the Indemnified Party is not entitled to
indemnification hereunder. If a firm decision is made to settle a Third
Party Claim, which offer the Indemnifying Party is permitted to settle
under this SECTION 8.6(III), and the Indemnifying Party desires to
accept and agree to such offer, the Indemnifying Party will give at
least five (5) days' prior written notice to the Indemnified Party to
that effect, setting forth in reasonable detail the terms and conditions
of any such settlement (the "SETTLEMENT NOTICE"). If the Indemnified
Party objects to such firm offer within ten
<PAGE>
83
(10) calendar days after its receipt of such Settlement Notice, the
Indemnified Party may continue to contest or defend such Third Party
Claim and, in such event, the maximum liability of the Indemnifying
Party as to such Third Party Claim will not exceed the amount of such
settlement offer described in the Settlement Notice, plus costs and
expenses paid or incurred by the Indemnified Party up to the point such
Settlement Notice had been delivered. If an Indemnified Party settles
any Third Party Claim without the prior written consent of the
Indemnifying Party, the Indemnifying Party shall have no obligation to
indemnify the Indemnified Party under this Article VIII with respect to
such Third Party Claim.
(iv) Any judgment entered or settlement agreed upon
in the manner provided herein shall be binding upon the Indemnifying
Party, and shall be conclusively deemed to be an obligation with respect
to which the Indemnified Party is entitled to prompt indemnification
hereunder, subject to the Indemnifying Party's right to appeal an
appealable judgment or order. To the extent that the consent or
approval of either the Indemnifying Party or the Indemnified Party is
required in this SECTION 8.6, any such consent or approval shall not be
unreasonably withheld and will be deemed given in the absence of a
written response within ten (10) days of any request therefor. Upon
submission to the Escrow Agent of a copy of any such settlement
agreement, or of such a judgment, together with an opinion of counsel
that all appeals have been taken or the time for taking appeals has
expired, then Escrow Agent shall promptly distribute to AEI such amount
of Escrowed Property as shall be equal to the amount of such judgment or
settlement, plus all other Losses incurred in respect thereof, as set
forth in an Officer's Certificate duly acknowledged by an officer of
AEI.
(v) Any failure by an Indemnified Party to give a
timely, complete or accurate Third Party Indemnification Notice as
provided in this SECTION 8.6 will not affect the rights or obligations
of any party hereunder except and only to the extent
<PAGE>
84
that, as a result of such failure, any party entitled to receive such
Third Party Indemnification Notice was deprived of its right to recover
any payment under its applicable insurance coverage or was otherwise
materially adversely affected or damaged as a result of such failure to
give a timely, complete and accurate Third Party Indemnification Notice.
SECTION 8.7. NOTICE OF CLAIMS. In the case of a claim for
indemnification under either SECTION 8.2 or SECTION 8.3 hereof, upon
determination by an AEI Indemnified Party or a Radix Indemnified Party,
as the case may be, that it has a claim for indemnification, the
Indemnified Party shall deliver notice of such claim to the Indemnifying
Party, setting forth in reasonable detail the basis and amount of such
claim for indemnification (each, an "INDEMNIFICATION NOTICE") and, with
respect to a claim for indemnification under SECTION 8.2 hereof, an AEI
Indemnified Party shall deliver a copy of the Indemnification Notice to
the Escrow Agent. Upon the Indemnification Notice having been given to
the Indemnifying Party, the Indemnifying Party shall have thirty (30)
days in which to notify the Indemnified Party in writing (the
"INDEMNIFICATION DISPUTE NOTICE") that the basis of or the amount of the
claim for indemnification is in dispute, setting forth in reasonable
detail the grounds of such dispute, with a copy to the Escrow Agent in
case of a claim under SECTION 8.2 hereof. In the event that an
Indemnification Dispute Notice is not given to the Indemnified Party
within the required thirty (30) day period the Indemnifying Party shall
be obligated to pay to the Indemnified Party the amount set forth in the
Indemnification Notice within sixty (60) days after the date that the
Indemnification Notice had been given to the Indemnifying Party and, in
the case of a claim under SECTION 8.2 hereof, the Escrow Agent shall
satisfy such obligation out of the Escrowed Property in accordance with
the terms of the Escrow Agreement.
In the event that an Indemnification Dispute Notice is timely
given to an Indemnified Party, the parties hereto shall have thirty (30)
days to resolve any such
<PAGE>
85
dispute. If such dispute is a claim brought by AEI, and the parties
shall resolve such dispute, they shall submit a Notice of Settlement to
the Escrow Agent specifying the amount of Escrowed Property to be
delivered to AEI in respect thereof, and the Escrow Agent shall promptly
deliver such Escrowed Property to AEI. In the event that such dispute
is not resolved by such parties within such period, the parties hereto
shall resolve such dispute in accordance with the provisions of SECTION
8.8 hereof.
SECTION 8.8. ARBITRATION. If any claim, controversy or
dispute shall arise between AEI and the Stockholder Representatives on
behalf of the Radix Stockholders in connection with this Agreement, such
claim, controversy or dispute shall be resolved by final, non-appealable
and binding arbitration as follows:
a) Any dispute submitted to arbitration pursuant to this
SECTION 8.8 shall be finally and conclusively determined by the decision
of a board of arbitration consisting of three (3) members (the "BOARD OF
ARBITRATION"), selected as hereinafter provided. AEI and the
Stockholder Representatives shall each select one (1) member of the
Board of Arbitration and the third member of the Board of Arbitration
shall be selected by mutual agreement of the two previously selected
members, or if such previously selected members fail to reach agreement
on such third member within twenty (20) days after the date by which the
first two members are both selected, such third member shall thereafter
be selected by the American Arbitration Association upon application
made to it for such purpose by the two previously selected members. If
either party hereto, as the case may be, refuses, neglects or otherwise
fails to appoint its respective member of the Board of Arbitration
within thirty (30) days after its receipt of written notice from the
other party requesting it to do so, such requesting party may appoint
the two initial members of the Board of Arbitration who shall then
proceed to appoint the third member in accordance with the terms hereof.
<PAGE>
86
b) The Board of Arbitration shall hold a hearing (the
"ARBITRATION HEARING") within thirty (30) days of the date that all of
the members of the Board of Arbitration have been appointed, which
hearing shall be held in New York, New York or such other place as the
parties hereto may agree upon. Testimony shall be taken at the Hearing.
In the event that either party hereto fails to appear at the Arbitration
Hearing or otherwise breaches this SECTION 8.8, the Arbitration Hearing
shall nevertheless proceed on an expedited basis. The Arbitration
Hearing shall be governed by the United States Arbitration Act, 9 U.S.C.
Sections 1 through 16.
c) In preparation for their respective presentations at
any such Arbitration Hearing, AEI and the Stockholder Representatives
may conduct discovery, including, without limitation, deposing and
obtaining documents from such directors, officers, employees or agents
of AEIC, Radix, the Radix Subsidiaries or their outside accountants or
advisors, and any third parties, as such parties deem reasonably
necessary for such preparation; provided that any such discovery shall
be completed on an expedited basis so as not to delay the conduct of the
Arbitration Hearing in accordance with the provisions hereof; and
provided further that the Arbitrator shall have the right to impose
reasonable limitations on such discovery if a party is found to be going
beyond the scope of the matter relating to the Arbitration Hearing.
Each party hereto may file with the Board of Arbitration such briefs,
affidavits and supporting documents as each party hereto may deem
appropriate provided, however, that the Board of Arbitration has the
option to require in person testimony in respect of any proffered
affidavit if the Board of Arbitration believes that such testimony would
be preferable under the circumstances, and such in person testimony
shall then be required except in respect of witnesses that are not
available without undue expense, inconvenience or whose absence is
otherwise reasonably explained.
<PAGE>
87
d) The Board of Arbitration shall reach and render a
decision (the "ARBITRATION DECISION") in writing (concurred in by a
majority of the members of the Board of Arbitration), which writing
shall set forth any calculations made in reaching the Arbitration
Decision, shall describe the manner in which any such calculations were
made and shall include a representation that the manner so used was in
accordance with the specific terms of this Agreement; PROVIDED, HOWEVER,
that the Board of Arbitration may adopt and follow such rules and
procedures as a majority of the members of the Board of Arbitration
deems necessary or appropriate so long as such rules and procedures
conform to the terms and conditions hereof. The Arbitration Decision
shall specifically set forth the number of any Escrowed Property
required to be distributed to AEI pursuant to this ARTICLE VIII, if any,
and the Escrow Agent shall deliver such Escrowed Property to AEI
promptly after receipt by the Escrow Agent of a copy of the Arbitration
Decision. To the extent practical, any Arbitration Decision of the
Board of Arbitration shall be rendered no more than thirty (30) days
following the conclusion of any Arbitration Hearing. Notwithstanding
the foregoing, the Board of Arbitration shall only be authorized on any
one issue to decide in favor of and choose the position of either AEI or
the Stockholder Representatives or to decide upon a compromise position
between the respective positions asserted by the parties hereto at the
Arbitration Hearing. The Board of Arbitration shall base any
Arbitration Decision solely upon the presentations of the parties hereto
at the Arbitration Hearing, the agreed treatment in respect of certain
accounting issues set forth in Exhibit I and any materials made
available under SECTION 8.7(c) hereof and not upon independent review.
The Balance Sheet Arbitrator shall not place any reliance in reaching
its determination in respect of any disputed item that such item was
treated in a particular manner in a balance sheet previously certified
by Radix's Auditors, nor will the Balance Sheet Arbitrator apply any
test of consistency (other than depreciation of fixed assets) between
previously certified balance sheets and the Closing Balance Sheet;
PROVIDED,
<PAGE>
88
HOWEVER, that the Balance Sheet Arbitrator shall in all cases be
obligated to give effect to the treatment of a disputed item in a prior
balance sheet provided that such treatment was in accordance with GAAP,
to otherwise adhere to GAAP and to give effect to the criteria
established on EXHIBIT I.
e) The Board of Arbitration shall cause any Arbitration
Decision to be delivered to each party to the arbitration within five
(5) days of reaching such decision. Any Arbitration Decision made by
the Board of Arbitration within the scope of its authority (either prior
to or after the expiration of such thirty (30) day period) shall be
final, non-appealable, binding and conclusive on each party to the
arbitration and entitled to be enforced to the fullest extent permitted
by law and entered in any court of competent jurisdiction. The Board of
Arbitration shall be permitted to award damages to the extent that such
damages constitute a "Loss" as defined in Article VIII, and none other.
f) Each party to any such Arbitration Hearing shall bear
its own costs and expenses in relation thereto, including, but not
limited to, such party's attorneys' fees, if any, and the expenses and
fees of the member of the Board of Arbitration appointed by such
respective party; PROVIDED, HOWEVER, that the expenses and fees of the
third member of the Board of Arbitration and any other expenses of the
Board of Arbitration not capable of being attributed to any one member
appointed by the parties hereto shall be borne in equal parts by AEI and
the Radix Stockholders and PROVIDED, FURTHER, that the expenses of Radix
Stockholders shall be paid in accordance with the provisions of SECTION
2.5 hereof.
g) The procedures specified in this Article VIII shall
be the sole and exclusive procedures for the resolution of disputes
between the parties arising out of or related to this Agreement;
PROVIDED, HOWEVER, that a party, without prejudice to the above
procedures, may file a complaint in a court of competent jurisdiction
for statue of limitations or venue reasons or to seek a preliminary
injunction or other provisional judicial re-
<PAGE>
89
lief, if in such party's sole discretion such action is necessary to
avoid irreparable damage or to preserve the status quo. Despite the
taking of any such action, the parties hereto shall continue to
participate in good faith in the procedures specified in this Article
VIII, without, however, waiving any matter to be determined in such
action or proceeding. All applicable statutes of limitation and
defenses based upon the passage of time shall be tolled while the
procedures specified in this Article VIII are pending. The parties
hereto agree to take such action, if any, as may be required to
effectuate such tolling.
SECTION 8.9. DISBURSAL OF REMAINING ESCROWED PROPERTY. The
Escrow Agent shall deliver to the Transfer Agent, to be distributed to
the Radix Stockholders in accordance with their pro rata interest in the
Escrowed Property, any Escrowed Property remaining in escrow after the
expiration of Five Hundred Forty (540) days following the Closing,
PROVIDED, HOWEVER, that (i) the Escrow Agent shall first have delivered
all Escrowed Property payable to AEI in respect of Seller Expenses and
Seller Reimbursable Expenses under SECTION 2.5, and made any delivery as
required by Exhibit K and (ii) the Escrow Agent retain in escrow
Escrowed Property (i) equal to the aggregate amount of any outstanding
Dispute relating to the Purchase Price pursuant to Article II and (ii)
equal to the aggregate amount of all outstanding claims for
indemnification asserted by the AEI Indemnified parties in accordance
with this Section VIII, in either case until such Dispute or claims are
finally determined in accordance herewith whereupon any remaining
Escrowed Property shall be distributed to AEI and/or the Radix
Stockholders in accordance with the terms hereof and of the Escrow
Agreement.
ARTICLE IX.
MISCELLANEOUS PROVISIONS
SECTION 9.1. AMENDMENT AND MODIFICATION; WAIVER OF COMPLIANCE.
None of AEI, Newco, Radix or the Stockholder Representatives shall be
deemed as a con-
<PAGE>
90
sequence of any act, delay, failure, omission, forbearance or other
indulgence granted from time to time by such party: (i) to have waived,
or to be estopped from exercising, any of its rights or remedies under
this Agreement; or (ii) to have modified, changed, amended, terminated,
rescinded, or superseded any of the terms of this Agreement, unless such
waiver, modification, amendment, change, termination, rescission, or
suppression is set forth in writing and signed by the party to be bound
thereby; PROVIDED, HOWEVER, that in the event of any such modification,
change or amendment occurring after the approval and adoption of this
Agreement by the Radix Stockholders, Newco or AEI, as the case may be,
after any such stockholder approval any such modification, change or
amendment shall be subject to the further approval of such stockholders
if such further approval is required under the Delaware Act or under any
other applicable laws. No single or partial exercise by AEI, Newco,
Radix or the Stockholder Representatives, on the other hand, of any
right or remedy will preclude any other right or remedy, and a waiver
expressly made in writing on one occasion will be effective only in that
specific instance and only for the precise purpose for which given, and
will not be construed as a consent to or a waiver of any right or remedy
on any future occasion or a waiver of any right or remedy against any
other party.
SECTION 9.2. VALIDITY. If any provision of this Agreement or
the application of any such provision to any party hereto or any
circumstances relating hereto shall be determined by any court of
competent jurisdiction to be invalid and unenforceable to any extent,
the remainder of this Agreement or the application of such provision to
such party or circumstances, other than those to which it is so
determined to be invalid and unenforceable, shall not be affected
thereby, and each provision hereof shall be validated and shall be
enforced to the fullest extent permitted by law.
SECTION 9.3. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, ex-
<PAGE>
91
pressed or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.4. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given upon the earlier
to occur of delivery thereof if by hand or upon receipt if sent by mail
(registered or certified mail, postage prepaid, return receipt
requested) or on the second next business day after deposit if sent by a
recognized overnight delivery service or upon transmission if sent by
telecopy or facsimile transmission (in each case with receipt verified)
as follows:
(a) If to AEI or Newco:
Air Express International Corporation
120 Tokeneke Road
Darien, Connecticut 06820
Attention: Messrs. Hendrik J. Hartong, Jr.
and Guenter Rohrmann
Facsimile Number: (203) 655-5734
With a copy to:
Katherine P. Burgeson, Esq.
Cummings & Lockwood
Four Stamford Plaza
107 Elm Street
Stamford, Connecticut 06904-0120
Facsimile Number: (203) 351-4499
(b) if to Radix:
Radix Ventures, Inc.
230 Park Avenue
New York, New York 10169
Attention: Messrs. John Radziwill and
Pierre L. Schoenheimer
Facsimile Number: (212) 557-4770
<PAGE>
92
With a copy to:
Leonard Lichter, Esq.
Spitzer & Feldman, P.C.
405 Park Avenue
New York, New York 10022-4405
Facsimile Number: (212) 838-7472
(c) If to the Stockholder Representatives:
Mr. Pierre Schoenheimer
Mr. John Radziwill
Mr. Matthew Sheppard
c/o Radix Organization Inc.
230 Park Avenue
New York, New York 10169
Facsimile Number: (212) 557-4770
With a copy to:
Leonard Lichter, Esq.
Spitzer & Feldman, P.C.
405 Park Avenue
New York, New York 10022-4405
Facsimile Number: (212) 838-7472
;provided that each of the parties hereto shall promptly notify the
other parties hereto of any change of address, which address shall
become such party's address for the purposes of this SECTION 9.5.
SECTION 9.5. GOVERNING LAW; CONSENT TO JURISDICTION. This
Agreement shall be governed by and construed in accordance with the laws
of the State of Connecticut, without regard to the conflicts-of-laws
principles thereof. AEI and each of the Stockholder Representatives
hereby irrevocably (a) submits to the exclusive jurisdiction of, and
agrees that any action, suit or other proceeding may be brought in, any
federal court in the State of New York, and in the courts of the State
of New York, for the purpose of any such suit, action or other
proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby, to the extent such suit, action or
proceeding is permitted in accordance with Article VIII hereof (a
"PERMITTED ACTION"); provided, however, that
<PAGE>
93
such a Permitted Action may also be brought in federal court or state
court, or the foreign equivalent, in any state or jurisdiction where any
such party has its principal residence or, in the case of AEI, where it
has its chief executive offices, and such parties agree to submit to the
jurisdiction of such other courts in connection with a Permitted Action,
(b) waives to the extent not prohibited by applicable law, rule or
regulation, and agrees not to assert, by way of motion, as a defense or
otherwise, in any such Permitted Action, any claim that any such person
is not subject personally to the jurisdiction of the aforementioned
courts, that its property is exempt or immune from attachment or
execution, that any such Permitted Action brought in one of the
aforementioned courts is brought in an inconvenient forum, that the
venue of any such Permitted Action brought in one of the aforementioned
courts is improper, or that this Agreement, or the transactions
contemplated hereby (including any determination pursuant to Article
VIII) may not be enforced in or by such court, and (c) consents to
service of process in any such Permitted Action by registered or
certified mail. Nothing herein shall affect the right to serve process
in any other manner permitted by law. Notwithstanding the above, any
final judgment rendered in connection with any such Permitted Action
shall be conclusive against AEI or the Radix Representatives (both
individually and in their representative capacity), as the case may be,
and any such final judgment in respect of a Permitted Action, and any
award of the Balance Sheet Arbitrator or the Board of Arbitrators may be
enforced against such party in any other jurisdiction by suit on a
judgment or in any other manner provided by applicable law, and, with
respect to such an action, each of the parties hereto expressly submits
to the personal jurisdiction of such courts, and waives to the extent
not prohibited by applicable law, rule or regulation, and agrees not to
assert, by way of motion, as a defense or otherwise, in any such
Permitted Action, any claim that any such person is not subject
personally to the jurisdiction of the aforementioned courts, that its
property is exempt or immune from attachment or execution, that any such
Permitted Action brought in one of the aforementioned courts is brought
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94
in an inconvenient forum, that the venue of any such Permitted Action
brought in one of the aforementioned courts is improper, or that this
Agreement, or the transactions contemplated hereby (including any
determination pursuant to Article VIII) may not be enforced in or by
such court .
SECTION 9.6. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same agreement.
SECTION 9.7. HEADINGS. The article and section headings
contained in this Agreement are solely for the purpose of reference, are
not part of the agreement or understanding of the parties hereto and
shall not affect in any way the meaning or interpretation of this
Agreement.
SECTION 9.8. ENTIRE AGREEMENT. This Agreement, the Disclosure
Schedule and the other documents and instruments referred to herein,
including, without limitation, the Indemnification Agreement and the
other agreements included in or contemplated by the exhibits hereto (the
"OTHER AGREEMENTS") embody the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein or
therein. There are no agreements, representations, warranties or
covenants other than those expressly set forth or referred to herein or
therein. This Agreement, the Disclosure Schedule and the Other
Agreements supersede all prior agreements and understandings between the
parties hereto, whether written or oral, with respect to such subject
matter contained herein and therein. Disclosure of any event, fact,
condition, circumstance or other matter in the Disclosure Schedule shall
be deemed to qualify all representations, warranties, and covenants
pertaining thereto in this Agreement and any document, instrument or
agreement delivered pursuant hereto or thereto or in connection herewith
or therewith; provided that there shall be a specific cross reference to
any other representation, warranty or covenant pertaining thereto.
<PAGE>
95
SECTION 9.9. ASSIGNMENT. This Agreement shall not be assigned
by operation of law or otherwise, except that this Agreement may be
assigned by AEI to an affiliated corporation or other affiliated entity;
provided, however, that notwithstanding any such assignment, AEI shall
remain primarily liable for the performance hereof. Upon any such
assignment, such affiliate shall become a party to this Agreement and
all references herein to AEI shall refer to such affiliate; PROVIDED,
HOWEVER, that the shares to be delivered in the Merger shall remain
shares of AEI. Subject to the foregoing, this Agreement will be binding
upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns.
SECTION 9.10. CUMULATIVE RIGHTS. Each and every right granted
to either party hereunder or under any or any certificate, schedule,
document or other writing delivered by Radix or AEI prior to the Closing
pursuant hereto or in connection herewith, or allowed it by any laws,
rules or regulations shall be cumulative and may be exercised from time
to time.
<PAGE>
96
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed on its behalf by its duly authorized officers or
representatives, as the case may be, all as of the day and year first
above written.
RADIX VENTURES, INC.
By: /S/JOHN RADZIWILL
-------------------------
Name: John Radziwill
Title: President
STOCKHOLDER REPRESENTATIVES:
/S/PIERRE L. SCHOENHEIMER
---------------------------
Pierre L. Schoenheimer
/S/JOHN RADZIWILL
---------------------------
John Radziwill
/S/M.P. SHEPPARD
---------------------------
Matthew Sheppard
AIR EXPRESS INTERNATIONAL CORPORATION
By: /S/HENDRIK J. HARTONG, JR.
---------------------------
Hendrik J. Hartong, Jr.
Chairman
AEIC ACQUISITION CORPORATION
By: /S/HENDRIK J. HARTONG, JR.
---------------------------
Hendrik J. Hartong, Jr.
President
<PAGE>
EXHIBIT A
DIRECTORS AND OFFICERS OF
SURVIVING CORPORATION
DIRECTORS
Hendrik J. Hartong, Jr.
Guenter Rohrmann
OFFICERS
Hendrik J. Hartong, Jr., Chairman
Guenter Rohrmann, President and Chief Executive Officer
Dennis M. Dolan, Vice President and Treasurer
Daniel J. McCauley, Vice President, General Counsel and Secretary
-i-
<PAGE>
EXHIBIT B
CERTIFICATE OF MERGER
PURSUANT TO SECTION 251
OF THE
DELAWARE GENERAL CORPORATION LAW
MERGING
AEIC ACQUISITION CORPORATION,
a Delaware corporation,
WITH AND INTO
RADIX VENTURES, INC.,
a Delaware corporation
Radix Ventures, Inc., a corporation organized and existing
under the laws of Delaware ("RADIX"), DOES HEREBY CERTIFY THAT:
FIRST: The name and state of incorporation of each of the
constituent corporations participating in the merger herein are:
(i) Radix Ventures, Inc., incorporated on November 12, 1986,
pursuant to the General Corporation Law of the State of Delaware; and
(ii) AEIC Acquisition Corporation ("AEIC ACQUISITION"),
incorporated on April 27, 1995, pursuant to the General Corporation Law
of the State of Delaware (Radix and AEIC Acquisition are sometimes
hereinafter collectively referred to as the "MERGING CORPORATIONS").
SECOND: An agreement of merger by and among the Merging
Corporations and Air Express International Corporation, a Delaware
corporation (the
<PAGE>
2
"AGREEMENT OF MERGER") has been approved, adopted, certified, executed
and acknowledged by each of the Merging Corporations in accordance with
the requirements of Section 251 of the General Corporation Law of the
State of Delaware.
THIRD: The name of the surviving corporation in the merger
herein certified shall be Radix Ventures, Inc., which corporation will
continue its existence as said surviving corporation (the "SURVIVING
CORPORATION") upon the effective date of said merger pursuant to the
provisions of the General Corporation Law of the State of Delaware.
FOURTH: The Certificate of Incorporation of Radix shall be the
Certificate of Incorporation of the Surviving Corporation.
FIFTH: The executed Agreement of Merger is on file at the
principal place of business of the Surviving Corporation, the address of
which is:
Radix Ventures, Inc.
c/o Air Express International Corporation
120 Tokeneke Road
Darien, Connecticut 06820
SIXTH: A copy of the aforesaid Agreement of Merger will be
furnished by the Surviving Corporation, on request and without cost, to
any stockholder of any of the Merging Corporations.
IN WITNESS WHEREOF, said Radix Ventures, Inc., a Delaware
corporation, has caused this Certificate to be signed by John Radziwill,
its President, as of this ___ day of _____, 1995.
RADIX VENTURES, INC.
By____________________________
John Radziwill
President
<PAGE>
EXHIBIT C
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT (this "AGREEMENT"), dated as of May
1, 1995, by and between Messrs. John Radziwill ("RADZIWILL"), Pierre L.
Schoenheimer ("SCHOENHEIMER") and Matthew P. Sheppard ("SHEPPARD")
(Radziwill, Schoenheimer and Sheppard are sometimes hereinafter
collectively referred to as the "INDEMNITORS"), and Air Express
International Corporation, a Delaware corporation ("AEI"). Capitalized
terms used herein are used as defined in that certain Agreement and
Plan of Reorganization, dated as of the date hereof (the "MERGER
AGREEMENT"), by and among Radix Ventures, Inc., a Delaware corporation,
AEI, and AEIC Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of AEI, unless otherwise defined herein.
RECITALS:
WHEREAS, Schoenheimer is the owner, either of record or
beneficially, of 210,502 Radix Shares, Radziwill is the owner, either
of record or beneficially, of 210,102 Radix Shares, and Sheppard is the
owner, either of record or beneficially, of 77,000 Radix Shares; and
WHEREAS, pursuant to the terms and conditions of the Merger
Agreement, AEI intends to acquire Radix by merging Newco with and into
Radix (the "MERGER") and converting all of the Outstanding Radix Shares
(other than Dissenting Shares and Non-Qualified Shares) as of the date
of such Merger into up to 1,000,000 shares of the common stock, par
value $.01 per share, of AEI (the "AEI COMMON STOCK"); and
WHEREAS, in connection with the consummation of the Merger,
110,000 Shares of AEI Common Stock (the "ESCROWED PROPERTY") are being
delivered to the Escrow Agent to hold pursuant to the terms of the
Merger Agreement and the Escrow Agreement;
WHEREAS, the Escrowed Property is to be used, among other
things, as security for any deficiency in the Tangible Net Assets of
the Company under Article II of the Merger Agreement, and in respect of
the indemnification obligations set forth in Article VIII of the Merger
Agreement;
WHEREAS, the Indemnitors have agreed that they will jointly
and severally indemnify the AEI Indemnified Parties for certain Losses
and deficiency in
<PAGE>
2
Tangible Net Assets to the extent that AEI shall not have been fully
reimbursed therefor out of the Escrowed Property, and in respect of
certain other Losses, in each case in accordance with the terms and
subject to the limitations hereof;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties herein contained, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
SECTION 1. INDEMNIFICATION.
Each Indemnitor, jointly and severally, agrees to indemnify,
defend and save each AEI Indemnified Party, harmless from and against,
and to promptly pay to an AEI Indemnified Party or reimburse an AEI
Indemnified Party for any and all losses, damages, expenses (including,
without limitation, court costs, amounts paid in settlement, judgments,
reasonable attorneys' fees or other expenses, including, without
limitation, those arising out of the enforcement of this Agreement),
suits, actions, claims, deficiencies, liabilities or obligations
sustained or incurred by such AEI Indemnified Party relating to, caused
by or resulting from:
(a) any insufficiency in the Market Value of the
Escrowed Property to satisfy any deficiency in Radix's Tangible Net
Assets as provided in Section 2.2 of the Merger Agreement;
(b) any insufficiency in the Market Value (as defined in
Section 2.3 of the Merger Agreement) of the Escrowed Property to fully
compensate any AEI Indemnified Party for all indemnifiable Losses and
deficiency in Tangible Net Assets under Section 8.2 of the Merger
Agreement;
(c) any Losses incurred by any AEI Indemnified Party
arising out of, related to or in connection with the payment of the
Termination Fee pursuant to the Merger Agreement; and
(d) any Losses incurred by any AEI Indemnified Party in
respect of any suits, actions or claims relating to the establishment
of the escrow fund and the disbursement of the Escrowed Property in
accordance with the provisions of the Merger Agreement and the Escrow
Agreement.
SECTION 2. INDEMNIFICATION CEILINGS; SURVIVAL. The maximum
liability of each individual Indemnitor for all Losses or other claims
hereunder shall be equal to one-half of the Market Value of the shares
of AEI Common Stock issued to such individual Indemnitor pursuant to
the Merger Agreement, as adjusted pursuant to Section 2.2 of the Merger
Agreement. The liability of the Indemnitors hereunder shall be subject
to the same limitations on the survival period in which any claim for
Losses
<PAGE>
3
may be brought as contained in Article VIII of the Merger Agreement
and, specifically, Section 8.1 thereof.
SECTION 3. INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS
AGAINST INDEMNIFIED PARTIES.
(a) In the event that subsequent to the Closing any AEI
Indemnified Party receives notice of the assertion of any claim or of
the commencement of any action, suit or proceeding by any entity who is
not a party to this Agreement (including, without limitation, any
Governmental Authority) (a "THIRD PARTY CLAIM") against such AEI
Indemnified Party, with respect to which the Indemnitors (the
"INDEMNIFYING PARTY"), are required to provide indemnification under
this Agreement, the AEI Indemnified Party shall promptly give written
notice, together with a statement of any available information
regarding such claim (collectively, the "THIRD PARTY INDEMNIFICATION
NOTICE"), to the Indemnifying Party within thirty (30) days after
learning of such claim (or within such shorter time as may be necessary
to give the Indemnifying Party a reasonable opportunity to respond to
such claim). The Indemnifying Party shall have the right, upon
delivering written notice to the AEI Indemnified Party (the "DEFENSE
NOTICE") within thirty (30) days after receipt from an AEI Indemnified
Party of a Third Party Indemnification Notice, to conduct, at the
Indemnifying Party's sole cost and expense, the defense against such
Third Party Claim in the Indemnifying Party's own name, or, if
necessary, in the name of the AEI Indemnified Party; PROVIDED, HOWEVER,
that the AEI Indemnified Party shall have the right to approve the
defense counsel representing the Indemnifying Party, which right shall
be exercised reasonably, and in the event that the Indemnifying Party
and the AEI Indemnified Party cannot agree upon such counsel within ten
(10) days after the Defense Notice is provided, then the Indemnifying
Party shall propose an alternate defense counsel, which shall be
subject again to the AEI Indemnified Party's approval in accordance
with the terms hereof.
(b) In the event that the Indemnifying Party shall fail
to give the Defense Notice within the time and as prescribed by this
Section, then in any such event the AEI Indemnified Party shall have
the right to conduct such defense in good faith with counsel reasonably
acceptable to the Indemnifying Party, but the AEI Indemnified Party
shall be prohibited from compromising or settling any such claim
without the prior written consent of the Indemnifying Party. If the
AEI Indemnified Party fails to diligently defend such claim with
counsel reasonably satisfactory to the Indemnifying Party, or settles
any such claim without the Indemnifying Party's prior written consent
or otherwise breaches this Section 3, the AEI Indemnified Party will be
liable for all costs, expenses, settlement amounts or other Losses paid
or incurred in connection therewith and the Indemnifying Party shall
have no obligation to indemnify the AEI Indemnified Party with respect
to such claim.
<PAGE>
4
(c) In the event that the Indemnifying Party does
deliver a Defense Notice and thereby elects to conduct the defense of
the subject Third Party Claim, the AEI Indemnified Party will cooperate
with and make available to the Indemnifying Party such assistance and
materials as the Indemnifying Party may reasonably request, and the
Indemnifying Party shall be responsible for all out-of-pocket costs and
expenses of the Indemnifying Party in connection therewith. Regardless
of which party defends such claim, the other party hereto shall have
the right at its own cost and expense to participate in the defense of
any Third Party Claim assisted by counsel of its own choosing. Without
the prior written consent of the AEI Indemnified Party, the
Indemnifying Party will not enter into any settlement of any Third
Party Claim if pursuant to or as a result of such settlement, such
settlement would lead to liability or create any financial or other
obligation on the part of the AEI Indemnified Party for which the AEI
Indemnified Party is not entitled to indemnification hereunder. If a
firm decision is made to settle a Third Party Claim, which offer the
Indemnifying Party is permitted to settle under this Section 3, and the
Indemnifying Party desires to accept and agree to such offer, the
Indemnifying Party will give at least five (5) days' prior written
notice to the AEI Indemnified Party to that effect, setting forth in
reasonable detail the terms and conditions of any such settlement (the
"SETTLEMENT NOTICE"). If the AEI Indemnified Party objects to such
firm offer within ten (10) calendar days after its receipt of such
Settlement Notice, the AEI Indemnified Party may continue to contest or
defend such Third Party Claim and, in such event, the maximum liability
of the Indemnifying Party as to such Third Party Claim will not exceed
the amount of such settlement offer described in the Settlement Notice,
plus costs and expenses paid or incurred by the AEI Indemnified Party
up to the point such Settlement Notice had been delivered. If an AEI
Indemnified Party settles any Third Party Claim without the prior
written consent of the Indemnifying Party, the Indemnifying Party shall
have no obligation to indemnify the AEI Indemnified Party under this
Section with respect to such Third Party Claim.
(d) Any judgment entered or settlement agreed upon in
the manner provided herein shall be binding upon the Indemnifying
Party, and shall be conclusively deemed to be an obligation with
respect to which the AEI Indemnified Party is entitled to prompt
indemnification hereunder, subject to the Indemnifying Party's right to
appeal an appealable judgment or order. To the extent that the consent
or approval of either the Indemnifying Party or the AEI Indemnified
Party is required in this Section, any such consent or approval shall
not be unreasonably withheld and will be deemed given in the absence of
a written response within ten (10) days of any request therefor.
(e) Any failure by an AEI Indemnified Party to give a
timely, complete or accurate Third Party Indemnification Notice as
provided in this Section 3 will not affect the rights or obligations of
any party hereunder except and only to the
<PAGE>
5
extent that, as a result of such failure, any party entitled to receive
such Third Party Indemnification Notice was deprived of its right to
recover any payment under its applicable insurance coverage or was
otherwise materially adversely affected or damaged as a result of such
failure to give a timely, complete and accurate Third Party
Indemnification Notice.
SECTION 4. NOTICE OF CLAIMS. In the case of a claim for
indemnification under this Agreement, upon determination by an AEI
Indemnified Party that it has a claim for indemnification, such AEI
Indemnified Party shall deliver notice of such claim to the
Indemnifying Party, setting forth in reasonable detail the basis and
amount of such claim for indemnification (each, an "INDEMNIFICATION
NOTICE"). Upon the Indemnification Notice having been given to the
Indemnifying Party, the Indemnifying Party shall have thirty (30) days
in which to notify the AEI Indemnified Party in writing (the
"INDEMNIFICATION DISPUTE NOTICE") that the basis of or the amount of
the claim for indemnification is in dispute, setting forth in
reasonable detail the grounds of such dispute. In the event that an
Indemnification Dispute Notice is not given to the AEI Indemnified
Party within the required thirty (30) day period the Indemnifying Party
shall be obligated to pay to the AEI Indemnified Party the amount set
forth in the Indemnification Notice within sixty (60) days after the
date that the Indemnification Notice had been given to the Indemnifying
Party.
In the event that an Indemnification Dispute Notice is timely
given to AEI, the parties hereto shall have thirty (30) days to resolve
any such dispute. In the event that such dispute is not resolved by
such parties within such period, the parties hereto shall resolve such
dispute in accordance with the provisions of Section 5 hereof.
SECTION 5. BINDING EFFECT; ARBITRATION.
The agreement of the Stockholder Representatives, or the
findings of the Balance Sheet Arbitrator or the Board of Arbitration,
in respect of any liability to an AEI Indemnified Party under the
Merger Agreement, shall be binding and conclusive with respect to the
liability of the Indemnitors hereunder to the extent that such
agreement or finding is made in respect of a claim, controversy or
dispute under the Merger Agreement. With respect to any claim,
controversy or dispute between any AEI Indemnified Party that has not
finally been determined under the Merger Agreement, but for which an
AEI Indemnified Party may be entitled to indemnification hereunder,
then such claim, controversy or dispute shall be resolved by final,
non-appealable and binding arbitration as follows:
(a) Any dispute submitted to arbitration pursuant to
this Section 5 shall be finally and conclusively determined by the
decision of a board of arbitration consisting of three (3) members (the
"BOARD OF ARBITRATION"), selected as
<PAGE>
6
hereinafter provided. AEI and the Indemnitors shall each select one
(1) member of the Board of Arbitration and the third member of the
Board of Arbitration shall be selected by mutual agreement of the two
previously selected members, or if such previously selected members
fail to reach agreement on such third member within twenty (20) days
after the date by which the first two members are both selected, such
third member shall thereafter be selected by the American Arbitration
Association upon application made to it for such purpose by the two
previously selected members. If either party hereto, as the case may
be, refuses, neglects or otherwise fails to appoint its respective
member of the Board of Arbitration within thirty (30) days after its
receipt of written notice from the other party requesting it to do so,
such requesting party may appoint the two initial members of the Board
of Arbitration who shall then proceed to appoint the third member in
accordance with the terms hereof.
(b) The Board of Arbitration shall hold a hearing (the
"ARBITRATION HEARING") within thirty (30) days of the date that all of
the members of the Board of Arbitration have been appointed, which
hearing shall be held in New York, New York or such other place as the
parties hereto may agree upon. In the event that either party hereto
fails to appear at the Arbitration Hearing or otherwise breaches this
Section 5, the Arbitration Hearing shall nevertheless proceed on an
expedited basis. The Arbitration Hearing shall be governed by the
United States Arbitration Act, 9 U.S.C. Sections 1 through 16.
(c) In preparation for their respective presentations at
any such Arbitration Hearing, AEI and the Indemnitors may conduct
discovery, including, without limitation, deposing and obtaining
documents from such directors, officers, employees or agents of Radix,
the Radix Subsidiaries or Radix's respective outside accountants or
advisors, and any third parties, as such parties deem reasonably
necessary for such preparation; provided that any such discovery shall
be completed on an expedited basis so as not to delay the conduct of
the Arbitration Hearing in accordance with the provisions hereof. Each
party hereto may file with the Board of Arbitration such briefs,
affidavits and supporting documents as each party hereto may deem
appropriate.
(d) The Board of Arbitration shall reach and render a
decision (the "ARBITRATION DECISION") in writing (concurred in by a
majority of the members of the Board of Arbitration), which writing
shall set forth any calculations made in reaching the Arbitration
Decision, shall describe the manner in which any such calculations were
made and shall include a representation that the manner so used was in
accordance with the specific terms of this Agreement; PROVIDED,
HOWEVER, that the Board of Arbitration may adopt and follow such rules
and procedures as a majority of the members of the Board of Arbitration
deems necessary or appropriate so long as such
<PAGE>
7
rules and procedures conform to the terms and conditions hereof. The
Arbitration Decision shall specifically set forth the number of any
Escrowed Property required to be distributed to AEI pursuant to this
SECTION 5, if any. To the extent practical, any Arbitration Decision
of the Board of Arbitration shall be rendered no more than thirty (30)
days following the commencement of any Arbitration Hearing.
(e) Notwithstanding the foregoing, the Board of
Arbitration shall only be authorized on any one issue to decide in
favor of and choose the position of either AEI or the Indemnitors or to
decide upon a compromise position between the respective positions
asserted by the parties hereto at the Arbitration Hearing. The Board
of Arbitration shall base any Arbitration Decision solely upon the
presentations of the parties hereto at the Arbitration Hearing and any
materials made available under SECTION 5.7(c) hereof and not upon
independent review.
(f) The Board of Arbitration shall cause any Arbitration
Decision to be delivered to each party to the arbitration within five
(5) days of reaching such decision. Any Arbitration Decision made by
the Board of Arbitration within the scope of its authority (either
prior to or after the expiration of such thirty (30) day period) shall
be final, non-appealable, binding and conclusive on each party to the
arbitration and entitled to be enforced to the fullest extent permitted
by law and entered in any court of competent jurisdiction. The Board
of Arbitration shall be permitted to award damages in excess of
compensatory damages and pre-award interest to the extent such damages
constitute a "Loss" as defined herein or in the Merger Agreement.
(g) Each party to the Arbitration Hearing shall bear its
own costs and expenses in relation thereto, including, but not limited
to, such party's attorneys' fees, if any, and the expenses and fees of
the member of the Board of Arbitration appointed by such respective
party; PROVIDED, HOWEVER, that the expenses and fees of the third
member of the Board of Arbitration and any other expenses of the Board
of Arbitration not capable of being attributed to any one member
appointed by the parties hereto shall be borne in equal parts by AEI,
on the other hand and the Indemnitors, on the other hand.
(h) The procedures specified in this Section 5 shall be
the sole and exclusive procedures for the resolution of disputes
between the parties existing out of or related to this Agreement;
PROVIDED, HOWEVER, that a party, without prejudice to the above
procedures, may file a complaint for statue of limitations or venue
reasons or to seek a preliminary injunction or other provisional
judicial relief, if in its sole judgment such action is necessary to
avoid irreparable damage or to preserve the status quo. Despite the
taking of any such action, the parties hereto shall continue to
participate in good faith in the procedures specified in this Section
5. All applicable statutes of limitation and defenses based upon the
passage of time shall be tolled while
<PAGE>
8
the procedures specified in this SECTION 5 are pending. The parties
hereto agree to take such action, if any, to effectuate such tolling.
SECTION 6. MISCELLANEOUS.
(a) MODIFICATION; WAIVER; DISCHARGE. Except as
otherwise set forth herein, no waiver, amendment, modification,
discharge or cancellation of any term or condition of this Agreement
shall be effective unless executed in writing by the party charged
therewith. No written waiver shall excuse the performance of any act
other than those specifically referred to therein. The waiver by any
party hereto of a breach of any provision of this Agreement by the
other party hereto shall not operate or be construed as a waiver of any
other breach or provision of this Agreement.
(b) NOTICES. All notices, requests, demands,
instructions and other communications provided for hereunder shall be
in writing and shall be deemed given or delivered to each party hereto
when delivered by hand or mailed by overnight courier or sent by
facsimile transmission, in each case with receipt verified, or by
registered or certified mail, return receipt requested, addressed or
sent as follows:
IF TO AEI:
Air Express International Corporation
120 Tokeneke Road
Darien, Connecticut 06820
Attention: Messrs. Hendrik J. Hartong, Jr. and
Guenter Rohrmann
Facsimile Number: (203) 655-5734
With a copy to:
Katherine P. Burgeson, Esq.
Cummings & Lockwood
Four Stamford Plaza
107 Elm Street
Stamford, CT 06904
Facsimile Number (203) 351-4499
<PAGE>
9
IF TO THE INDEMNITOR REPRESENTATIVES:
Mr. Pierre Schoenheimer
Mr. John Radziwill
Mr. Matthew Sheppard
c/o Radix Organization Inc.
230 Park Avenue
New York, NY 10169
Facsimile Number: (212) 557-4770
With a copy to:
Leonard Lichter, Esq.
Spitzer & Feldman, P.C.
405 Park Avenue
New York, New York 10022-4405
Facsimile Number: (212) 838-7472
or at such other address or facsimile number as either party may
specify by notice to the other party given as aforesaid.
(c) ENTIRE AGREEMENT. This Agreement, together with the
Merger Agreement and the Escrow Agreement, constitutes the entire
agreement and understanding between AEI and the Indemnitors relating to
the matters set forth herein or therein and supersedes, terminates and
cancels any prior written or oral, express or implied agreements,
understandings, arrangements, covenants, communications, negotiations,
commitments and representations or warranties by any party hereto or
any director, officer, employee, agent or affiliate of any party
hereto. This Agreement is not being executed by the parties hereto in
reliance upon any representation or warranty not expressly set forth
herein.
(d) ASSIGNMENT. This Agreement may not be assigned,
sold, transferred, pledged or hypothecated by the Indemnitors, but may
freely be assigned, sold, transferred, pledged or hypothecated by AEI,
and will inure to the benefit of and be binding upon any such successor
or assign.
(e) COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original
but all of which together shall constitute one and the same instrument.
(f) SEVERABILITY. Any provision of this Agreement which
is held invalid, illegal, prohibited or unenforceable by a court of
competent jurisdiction
<PAGE>
10
hereof in any such jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality, prohibition
or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity of enforceability
of such provision in any other jurisdiction, and the remainder of this
Agreement, disregarding such invalid, illegal, prohibited or
unenforceable portion, shall continue in full force and effect as
though such invalid, illegal, prohibited or unenforceable portion had
not been contained therein.
(g) HEADINGS. The headings contained in this Agreement
are for convenience of reference only, and shall not limit or otherwise
affect the meaning hereof.
(h) GOVERNING LAW; JURISDICTION. This Agreement shall
be governed by and construed in accordance with the laws of the State
of Connecticut, without regard to the conflicts-of-laws principles
thereof. Each of the Indemnitors hereby irrevocably (a) submits to the
non-exclusive jurisdiction of, and agrees that any action, suit or
other proceeding may be brought in, any federal court in the State of
Connecticut or New York, and in the courts of the State of New York,
for the purpose of any such suit, action or other proceeding arising
out of or based upon this Agreement or the transactions contemplated
hereby, to the extent such suit, action or proceeding is permitted in
accordance with Section 5 hereof (a "PERMITTED ACTION"), (b) waives to
the extent not prohibited by applicable law, rule or regulation, and
agrees not to assert, by way of motion, as a defense or otherwise, in
any such Permitted Action, claim that such Indemnitor is not subject
personally to the jurisdiction of the aforementioned courts, that its
property is exempt or immune from attachment or execution, that any
such Permitted Action brought in one of the aforementioned courts is
brought in an inconvenient forum, that the venue of any such Permitted
Action brought in one of the aforementioned courts is improper, or that
this Agreement, or the transactions contemplated hereby (including any
determination pursuant to this Agreement) may not be enforced in or by
such court, and (c) consents to service of process in any such
Permitted Action by registered or certified mail. Nothing herein shall
affect the right to serve process in any other manner permitted by law
nor shall limit the right of any AEI Indemnified Party to bring a
Permitted Action or other proceeding against any or all of the
Indemnitors in the courts of any other jurisdiction. Further, each
Indemnitor agrees that any final judgment rendered in connection with
any such Permitted Action shall be conclusive and may be enforced
against such party in any other jurisdiction, whether in the United
States or abroad, by suit on a judgment or in any other manner provided
by applicable law.
<PAGE>
11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
AIR EXPRESS INTERNATIONAL
CORPORATION
By:_______________________________
Hendrik J. Hartong, Jr.
Chairman
___________________________________
John Radziwill, Individually
___________________________________
Pierre L. Schoenheimer, Individually
___________________________________
Matthew P. Sheppard, Individually
<PAGE>
EXHIBIT D
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of May, 1995, by and between
AIREXPRESS INTERNATIONAL USA, INC., a Delaware corporation, having its
offices at 120 Tokeneke Road, Darien, Connecticut 06820, hereinafter
referred to as "AEI," and MATTHEW SHEPPARD, residing at 28641 Crescent
Ridge Road, Rancho Palos Verdes, California 90274, hereinafter referred
to as "Employee".
W I T N E S S E T H :
WHEREAS, the parties desire to enter into an Agreement covering
terms and conditions relating to the employment of Employee by AEI; and
WHEREAS, Employee represents and warrants to AEI that Employee
is not bound by any agreement which would, in any way, prevent or
restrict Employee from entering into this Agreement or carrying out the
obligations thereof.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants contained herein, the parties hereto agree as follows:
1. TERM. AEI hereby employs Employee, and Employee hereby
accepts such employment upon the terms and conditions set forth herein.
The initial term of employment hereunder shall be for a period of one
(1) year commencing on the "Effective Date" (as defined in the Agreement
and Plan of Reorganization by and among Radix Ventures, Inc., Air
Express International Corporation, AEIC Acquisition Corporation and
Shareholder Representatives of even date herewith) and shall continue
thereafter, until terminated as hereinafter provided.
Page 1 of 7
<PAGE>
2. DUTIES, RESPONSIBILITIES AND SERVICES. Employee initially
shall serve AEI in the position of Vice President, located at the Company's
offices in Darien, Connecticut, or the offices of Radix Ventures, Inc.
at Los Angeles, California, as directed by AEI, or in such other equal
executive position or location as shall mutually be agreed from time to
time by the parties.
3. COMPENSATION. As compensation for all services to be
rendered hereunder, AEI shall pay Employee a gross base salary of One
Hundred Eighty-Nine thousand Six Hundred Dollars ($189,600) in equal
semi-monthly installments. It is understood and agreed that all
payments to Employee hereunder are subject to applicable withholding,
Social Security or similar taxes.
4. OTHER COMPENSATION.
(a) BENEFITS. Employee shall participate in such
benefits as are offered or provided to employees of AEI in accordance
with the terms and conditions of AEI's benefit plans.
(b) DISCRETIONARY BONUS. For each full or part calendar
year of the Term of this Agreement, the Employee's performance shall be
reviewed and a determination made by the Board of Directors regarding
the payment of a discretionary performance-related incentive bonus to
the Employee.
(c) STOCK OPTION. Employee shall be granted, on the
Effective Date or promptly thereafter, an option to purchase fifteen
thousand (15,000) shares of AEIC stock under and pursuant to the terms
of the AEIC 1991 Incentive Stock Option Plan.
Page 2 of 7
<PAGE>
(d) APARTMENT EXPENSES. For and during a period of three
hundred sixty (360) days following the commencement of the Term of this
Agreement, AEI shall reimburse such expenses which do not exceed Fifteen
Thousand Dollars ($15,000) that the Employee incurs in connection with
the Employee's lease and occupancy of an apartment in the New York City
area.
(e) TRAVEL. For and during a period of three hundred
sixty (360) days following the commencement of the Term of this
Agreement, AEI will provide Employee with Round Trip air transportation
for non-business-related travel between New York, New York and Los
Angeles, California or such other city in the U.S. at which Employee may
be providing services and Los Angeles, California. Such air
transportation shall be provided for a maximum of two (2) Round Trips
each calendar month. All other expenses related to the foregoing non-
business-related travel, i.e., parking, tolls, meals, etc. shall be paid
by Employee.
(f) CAR ALLOWANCE. AEI shall pay Employee Five Hundred
Dollars ($500.00) per month, which shall be accepted by Employee in full
payment of all costs associated with the ownership, use and operation by
Employee of Employee's car in the performance of Employee's duties.
(g) BUSINESS EXPENSES. AEI shall, in accordance with
AEI's policies and guidelines, reimburse Employee for all reasonable
business-related expenses incurred by Employee in the performance of
Employee's duties.
(h) VACATION. Employee shall be entitled to fifteen (15)
working days paid vacation during each calendar year of this Agreement
which shall be prorated for part calendar years, to be
Page 3 of 7
<PAGE>
taken at such time as the Board of Directors shall consider convenient,
having regard to the requirements of AEI's business. Vacation days
cannot be deferred from one calendar year to the next and no additional
compensation shall be paid hereunder for vacation days not taken in the
calendar year during which they are accrued.
5. TERMINATION OF AGREEMENT. The term of this Agreement is
subject to the following:
(a) This Agreement shall terminate on Employee's death.
(b) This Agreement shall terminate if Employee is unable
by reason of any incapacity to carry out or to perform Employee's duties
hereunder for a continuous period of ninety (90) days.
(c) This Agreement may be terminated by AEI if the Board
of Directors determines that Employee has refused, after ten (10) days'
notice, to carry out or to perform the duties required hereunder or
otherwise breached any provision of this Agreement and has, after notice
and opportunity to cure, failed to cure such breach, or violated any
statutory or common law duty to AEI.
(d) Employee may terminate this Agreement at any time
after May 1, 1996 upon thirty (30) days' prior written notice to AEI.
The date of notice will be deemed to be the date of mailing of said
notice. If Employee terminates this Agreement as provided in this
Article 5(d), Employee agrees that Employee will not directly or
indirectly render any service whether for compensation or otherwise of a
business or professional nature to any person or entity that in any
manner competes with AEI or its affiliates for a period of twelve (12)
months following the date this Agreement is terminated.
Page 4 of 7
<PAGE>
(e) AEI may terminate this Agreement at any time on notice to
the Employee. In such event, AEI shall pay compensation and provide
benefits as provided in this Agreement to Employee for the greater of
the balance of the Term of this Agreement or a period of six (6) months.
In the event Employee directly or indirectly renders any service,
whether for compensation or otherwise, of a business or professional
nature to any person or entity that in any manner competes with AEI or
its affiliates following receipt of AEI's notice of termination as
aforesaid, AEI shall have no obligation to pay compensation or provide
benefits to Employee as hereinabove provided.
6. COMPETITION WITH AEI.
Employee covenants and agrees with AEI that during the term of
this Agreement:
(a) Employee will devote Employee's entire time and
efforts to the provision of services to AEI as herein provided; and
(b) Employee shall not directly or indirectly render any
service of a business or professional nature to any other person or
entity whether for compensation or otherwise.
7. CONFIDENTIAL INFORMATION AND RELATED MATTERS.
(a) Except as required by Employee's duties hereunder,
Employee agrees that Employee will not directly or indirectly use,
publish, disseminate or otherwise disclose any confidential information
of AEI or any affiliate. The term "confidential information" means
information of whatever kind or nature disclosed
Page 5 of 7
<PAGE>
to or known by Employee as a consequence of or through employment by AEI
about AEI's or any affiliate's services, products, or operations.
(b) Employee agrees that all records and other materials
relating in any manner whatsoever to AEI's customers or AEI's business,
whether prepared by Employee or otherwise, shall be and remain the
exclusive property of AEI. All such records, materials and other
property belonging to AEI shall be returned by Employee to AEI on
termination of employment.
8. WAIVERS AND MODIFICATIONS. No waiver by either party of a
breach by the other of any provision hereof shall operate as waiver of a
later or other breach or as a waiver of any other provision of this
Agreement. This Agreement sets forth all of the terms of the agreement
and understanding between the parties hereto and supersedes all other
agreements or understandings with respect to the matters set forth
herein and may only be waived or amended by an instrument in writing
signed by both parties.
9. NOTICES. Notices hereunder shall be deemed duly given when
made in writing and sent by registered mail to the Employee or the
President of AEI, as the case may be, at the addresses hereinabove set
forth. AEI or Employee may at any time by notice designate a different
address in writing to which notices may be sent, in which case such
different address shall be used.
10. ASSIGNMENT. AEI may assign this Agreement to any
affiliate or successor.
Page 6 of 7
<PAGE>
11. APPLICABLE LAW. In the event either party to this
Agreement brings a legal suit to enforce any provision of this
Agreement, such legal suit must be brought and heard in a Court
located in the State of Connecticut, applying the law of Connecticut.
All costs and expenses incurred by the prevailing party in such
legal suit shall be reimbursed by the non-prevailing party.
12. MISCELLANEOUS. Headings in this Agreement are for
reference purposes only and shall not limit or otherwise affect the
meaning hereof. If any provision of this Agreement shall be declared
void or unenforceable by any Court or administrative body, such
provision shall be deemed to have been severed from the remainder of
this Agreement, and such remainder of this Agreement shall continue in
all respects valid and enforceable.
IN WITNESS HEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
AIR EXPRESS INTERNATIONAL USA, INC.
By /S/------------------------------
/S/-----------------------------------
MATTHEW SHEPPARD, EMPLOYEE
Page 7 of 7
<PAGE>
EXHIBIT E
SERVICES AGREEMENT
This Services Agreement, dated as of the 1st day of May, 1995
(the "AGREEMENT"), by and among Radix Ventures, Inc., a Delaware
corporation ("RADIX"), Air Express International Corporation, a Delaware
corporation ("AEI"), and Don Friedkin ("FRIEDKIN").
RECITALS:
WHEREAS, Air Express International Corporation ("AEI") is to
acquire Radix pursuant to the terms and conditions set forth in a
certain Agreement and Plan of Reorganization, dated as of the date
hereof (the "MERGER AGREEMENT"), by and among Radix, AEI, and AEIC
Acquisition Corporation, a Delaware corporation and a wholly-owned
subsidiary of AEI ("NEWCO"), with AEI acquiring Radix by merging Newco
with and into Radix (the "MERGER") and converting all of the issued and
outstanding common stock of Radix (other than Dissenting Shares and Non-
Qualified Shares) as of the date of such Merger into up to 1,000,000
shares of the common stock of AEI (the "AEI COMMON STOCK"); and
WHEREAS, Friedkin is a stockholder of Radix, and will be
receiving shares of AEI Common Stock in the Merger;
WHEREAS, Radix, AEI and Friedkin desire to enter into this
Agreement in order to preserve the Customs licenses and permits of
Radix's wholly-owned subsidiary, Radix Group International, Inc.
("RGI"), during the period following the Merger;
WHEREAS, the execution and delivery of this Services Agreement
is a condition precedent to the obligations of AEI to execute and
deliver the Merger Agreement;
WHEREAS, capitalized terms used but not defined herein shall
have the respective meanings ascribed to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the terms and covenants of
this Agreement, and other good and valuable consideration, the parties
hereto agree as follows:
<PAGE>
2
1. SERVICE AS QUALIFYING INDIVIDUAL. For a period of ninety
days following the Closing, Friedkin agrees that he will serve as the
qualifying individual in respect of the customs licenses and permits for
RGI. Friedkin agrees that he will extend his service as such for a
reasonable period thereafter if requested by AEI. AEI agrees that
Friedkin will be paid $5,000 per month for such service (pro-rated for
any partial month), and that he will be entitled to medical insurance
(including dental, if any) during the period of such service. AEI
further agrees that it will indemnify and hold Friedkin harmless from
and against any liabilities incurred by him as a result of maintaining
such license and acting on behalf of Radix in this capacity for the
period following the Closing.
2. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original for all
purposes, but which together shall constitute but one and the same
instrument and shall be binding upon the parties hereto and their
permitted successors, transferees and assigns. Counterparts of this
Agreement may be executed and delivered by facsimile transmission.
3. GOVERNING LAW. This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of
Connecticut, without regard to the conflicts of laws principles thereof.
<PAGE>
3
4. LEGAL EFFECT. This Agreement shall have no legal force or
effect until the Effective Time of the Merger, whereupon this Agreement
shall become simultaneously effective.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized signatories, in
counterparts or otherwise, all as of the day and year first written
above.
RADIX VENTURES, INC.
By:--------------------------------
Name:
Title:
AIR EXPRESS INTERNATIONAL
CORPORATION
By:--------------------------------
Hendrik J. Hartong, Jr.
Chairman
-----------------------------------
Don Friedkin
<PAGE>
EXHIBIT F
SUPPLEMENTAL AGREEMENT
This Supplemental Agreement, dated as of the 1st day of May,
1995 (the "AGREEMENT"), by and among Radix Ventures, Inc., a Delaware
corporation ("RADIX"), Air Express International Corporation, a Delaware
corporation ("AEI"), and John Radziwill ("RADZIWILL").
RECITALS:
WHEREAS, AEI is to acquire Radix pursuant to the terms and
conditions set forth in a certain Agreement and Plan of Reorganization,
dated as of the date hereof (the "MERGER AGREEMENT"), by and among
Radix, AEI, and AEIC Acquisition Corporation, a Delaware corporation and
a wholly-owned subsidiary of AEI ("NEWCO"), with AEI acquiring Radix by
merging Newco with and into Radix (the "MERGER") and converting all of
the issued and outstanding common stock of Radix (other than Dissenting
Shares and Non-Qualified Shares) as of the date of such Merger into
1,000,000 shares of the common stock of AEI (the "AEI COMMON STOCK");
and
WHEREAS, Radziwill is a stockholder of Radix, and will be
receiving shares of AEI Common Stock in the Merger;
WHEREAS, Radix, AEI and Radziwill desire to enter into this
Agreement in order (i) to provide for a severance period for Radziwill,
and a related period in which Radziwill agrees that he will not compete
with the business of Radix or AEI, (ii) to provide the terms upon which
Radziwill will be nominated to serve on AEI's Board of Directors, and
(iii) to contractually restrict Radziwill from transferring more than a
certain percentage of the AEI Common Stock which Radziwill receives in
connection with the Merger for a two year period following the Effective
Date;
WHEREAS, the execution and delivery of this Supplemental
Agreement is a condition precedent to the obligations of AEI to execute
and deliver the Merger Agreement;
WHEREAS, capitalized terms used but not defined herein shall
have the respective meanings ascribed to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the terms and covenants of
this Agreement, and other good and valuable consideration, the parties
hereto agree as follows:
<PAGE>
2
ARTICLE I.
SEVERANCE
SECTION 1.1. SEVERANCE FEE. Radix hereby agrees to pay
severance to Radziwill in the amount of $10,000 per month for each
month, pro-rated for the first month, from the Effective Date through
and including the month of December, 1996 (the "SEVERANCE PERIOD").
Such payment shall be made no later than the 15th of each month during
the Severance Period. In connection with such severance payments, Radix
shall withhold any applicable payroll taxes as required by law. AEI
hereby guaranties that such payments will be made timely by Radix to
Radziwill.
SECTION 1.2. ASSISTANCE.
(a) From time to time during the Severance Period,
Radziwill agrees to make himself available by telephone to Radix, at
such time or times as shall be convenient to Radziwill, to facilitate
Radix's operations subsequent to the Merger; provided, however, that
nothing herein shall commit Radziwill to any specified schedule, or to
provide any minimum level of advice.
(b) Radziwill agrees that he will provide reasonable
assistance in connection with maintaining relationships with Radix's
agent in France and Radix's French customers, and that in connection
therewith, upon reasonable notice and at such time as shall be mutually
satisfactory, Radziwill agrees that he will travel to France for in
person meetings with such agent and customers. AEI and/or Radix shall
promptly reimburse Radziwill for all reasonable expenses incurred by him
in connection with rendering such assistance.
SECTION 1.3. SERVICE AS QUALIFYING INDIVIDUAL. During the
Severance Period, Radziwill agrees that he will serve as the qualifying
officer in respect of Federal Maritime Commission license or permit of
Radix Group International, Inc. ("RGI"), a wholly owned subsidiary of
Radix. Radix and AEI each agree that, within a reasonable period of
time following the Effective Date, they will replace Radziwill in that
capacity with another officer of RGI. AEI agrees that it will indemnify
and hold Radziwill harmless from and against any liabilities incurred by
him as a result of maintaining such license and acting on behalf of RGI
in this capacity for the period following the Closing.
SECTION 1.4. FRINGE BENEFITS. During the Severance Period,
subject to satisfying any general applicable eligibility requirements,
Radziwill shall be entitled to participate in such employee medical (and
dental, if any) insurance plan as is generally made available by Radix
to its employees, as such plan may be amended from time to time in the
sole and absolute discretion of Radix. Radix and Radziwill acknowledge
and agree that Radix shall have no obligation to provide Radziwill with
any other employee benefit plan or arrangement, regardless of the
employee plans or arrangements that Radix makes available to its
employees.
<PAGE>
3
ARTICLE II.
NOMINATION TO BOARD
AEI agrees that, following the Closing, it will take
appropriate action to increase the size of its Board of Directors and to
appoint Radziwill to fill the vacancy resulting from such increase, and
that it will thereafter nominate Radziwill to serve on AEI's Board of
Directors at the1996 AEI annual shareholder meeting. After the 1996 AEI
annual shareholder meeting, AEI shall have no further obligation to
nominate Radziwill to serve on AEI's Board of Directors. Radziwill
shall be provided such compensation and perquisites for his service on
the Board as shall be made available to other non-Executive directors
(including indemnification for service as a Board member), and shall
undertake to advise the Chairman and members of management as to the
business and affairs of AEI in such manner as is ordinarily expected of
non-Executive directors. AEI shall have no liability to Radziwill in
the event that the Stockholders of AEI fail to elect Radziwill to AEI's
Board of Directors despite such nomination by AEI. AEI agrees, however,
that it will recommend and fully support the nomination of Radziwill in
any proxy materials or other communications to Stockholders. Radziwill
shall be free to resign from the Board of Directors at any time. The
obligation of AEI to nominate Radziwill to the Board of Directors shall
terminate in the event that Radziwill shall have engaged in any of the
activities that are enumerated in Rule 401(f) of Regulation S-X
promulgated by the Securities and Exchange Commission, or in the event
of any breach by Radziwill of its non-compete obligations hereunder.
AEI will not remove Radziwill from the Board except for cause.
ARTICLE III.
RESTRICTION ON TRANSFER OF SHARES
SECTION 3.1. RESTRICTIONS AS TO SHARES. Radziwill hereby
agrees that he will not sell, pledge, assign or otherwise transfer
("Transfer") more than one-third of the AEI Common Stock received by him
in connection with the Merger for a period of twelve months following
the Effective Date (the remaining two-third of the shares is herein
referred to as the "RESTRICTED SHARES"). Thereafter, this contractual
restriction on Transfer will terminate as to one-half of the Restricted
Shares, on the first anniversary date hereof and as to the remaining
Restricted Shares on the second anniversary of the date hereof.
Notwithstanding the foregoing, Radziwill acknowledges and agrees that,
in connection with similar restrictions on the Transfer of AEI Common
Stock that were agreed to by Radix and AEI with each of Pierre L.
Schoenheimer ("SCHOENHEIMER") and Matthew P. Sheppard ("SHEPPARD")
(Radziwill, Schoenheimer and Sheppard are sometimes hereinafter
collectively referred to as the "MAJORITY STOCKHOLDERS"), the Majority
Stockholders may agree in writing among themselves to allow one or two
of them to Transfer more than the allowable percentage of AEI Common
Stock in any of the two (2) years following the Effective Date, as long
as the aggregate number of shares Transferred through any such year does
not exceed the collective number of shares of AEI Common Stock that the
Majority Stockholders, in the aggregate, are allowed to Transferred
through such year;
<PAGE>
4
PROVIDED, HOWEVER, that the Majority Stockholders shall provide a copy
of such written agreement to Radix and AEI before any one of the
Majority Stockholders Transfers more than the allowable number of shares
of AEI Common Stock that such Indemnitor is allowed to Transfer through
the subject year.
SECTION 3.2. STOCK CERTIFICATE LEGENDS. Radziwill, Radix and
AEI each hereby acknowledge and agree that stop-transfer instructions
will be given to AEI's transfer agent with respect to the Restricted
Shares issued to Radziwill pursuant to the Merger Agreement and that a
legend will be placed on the certificates representing such shares
substantially in the following form:
"The shares of stock represented by this share
certificate are subject to the terms and restrictions
and other provisions contained in a Supplemental
Agreement, dated May 1, 1995, by and among Radix
Ventures, Inc., Air Express International Corporation
and [name]. A copy of such Agreement has been filed
with the Secretary of the issuer and may be inspected
at the issuer's offices."
AEI agrees that it will cause such stop-transfer instructions to be
released and new certificates without such legends to be issued with
respect to shares as to which the restrictions have lapsed, and in
respect of shares which Radziwill may otherwise be entitled to Transfer
as a result of an agreement with the other Majority Stockholders as
permitted above.
ARTICLE IV.
NON-COMPETITION
SECTION 4.1. NON-COMPETITION. For a two year period following
the Effective Date of the Merger, Radziwill agrees that he will not
engage, directly or indirectly, whether alone or in conjunction with any
person, corporation, partnership or other business enterprise, in North
America or Europe in any Competitive Activity (as hereinafter defined).
For purposes of this Section 4.1, "COMPETITIVE ACTIVITY" shall mean (i)
activity consisting of Radziwill's participating in the management of,
owning more than 5% of the combined equity interest of, having a
material interest in, or his acting as a principal, consultant or agent
for or director, officer or employee of, any business operation of any
person, corporation, partnership or other business enterprise if such
business operation is then in direct competition with the business
operations of Radix or any subsidiaries, divisions or affiliates of
Radix as conducted on the Effective Date, which include, without
limitation, the businesses of customs brokerage, international air and
ocean freight forwarding and warehousing ancillary to such other
business; (ii) the solicitation or inducement of any director, officer,
employee, agent or independent contractor of AEI, Radix or any
subsidiary, division or affiliate thereof to leave his or her employment
with the Company, Radix or any subsidiary, division or affiliate thereof
or the hiring of any such director, officer, employee, agent or
independent contractor, or (iii) the request or advice to any client to
withdraw, curtail or cancel its business with AEI, Radix
<PAGE>
5
or any subsidiary, division or affiliate thereof. For purposes hereof,
Radix Organization, Inc., shall not be deemed to be an affiliate,
independent contractor or agent of Radix.
SECTION 4.2. CONFIDENTIALITY. Radziwill acknowledges that,
either during or after the Severance Period, he will not, except as may
otherwise be required by law, directly or indirectly, disclose or make
available to any person, corporation, partnership or other business
enterprise for any reason or purpose whatsoever, or use or cause to be
used in any manner adverse to the interests of Radix or any subsidiary,
division or affiliate thereof, any Confidential Information (as
hereinafter defined) PROVIDED, HOWEVER, that Radziwill shall not be
obligated to treat as confidential any Confidential Information that (i)
was publicly known at the time of disclosure to Radziwill, (ii) becomes
publicly known or available thereafter other than by any means in
violation of this Agreement, (iii) is lawfully disclosed to Radziwill by
a third party or (iv) is required by law, regulation or court order to
be disclosed.
As used in this Agreement the term "CONFIDENTIAL INFORMATION"
means: information disclosed to Radziwill or known by Radziwill as a
direct consequence of or through his direct relationship with the Radix
or any subsidiary, division or affiliate thereof, not generally known in
the industries or businesses in which they operate concerning such
parties' respective clients, customers, employees and suppliers or lists
thereof, advertising and marketing data and methods, business methods,
organization, procedures, finances, information regarding the skills,
abilities or compensation of such parties' respective directors,
officers, employees, agents and independent contractors, trade secrets,
trademarks and other intellectual property rights, product and service
lines and any related or other technical, corporate or trade
information.
SECTION 4.3. INJUNCTIVE RELIEF. In the event that either
party breaches any of the terms set forth herein, the other party shall
be entitled to institute legal proceedings to obtain damages for any
such breach, or to enforce the specific performance of this Agreement by
the breaching party and to enjoin the breaching party from any further
violation of the terms herein and to exercise such remedies cumulatively
or in conjunction with all other rights and remedies provided by law.
Each party acknowledges, however, that the remedies at law for any
breach by him of the provisions herein may be inadequate and that the
other party shall be entitled to injunctive relief against such party in
the event of any such breach.
ARTICLE V.
MISCELLANEOUS
Section 5.1. NO CONFLICT. AEI and Radix each hereby
acknowledge that Radziwill shall be acting from time to time in his
capacity as Stockholder Representative pursuant to the terms of the
Merger Agreement and nothing herein or as a result of his service as a
director of AEI shall be deemed to limit or otherwise restrict his
ability to act in that capacity.
<PAGE>
6
SECTION 5.2. VALIDITY. In the event that any provision of
this Agreement is held invalid or unenforceable by a court having
competent jurisdiction hereof, the invalidity of unenforceability of any
such provision shall not effect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect; PROVIDED, that if any one or more of the terms contained in
Sections 4 hereof shall for any reason be held by a court having
competent jurisdiction hereof to be excessively broad with regard to
time, duration, geographic scope or activity or for any other reason,
such invalidity or unenforceability shall attach only to the particular
aspect of such provision held invalid or unenforceable as applied and
shall not affect or render invalid or unenforceable any other provision
of this Agreement or the enforcement of such provision in any other
jurisdiction or circumstances and such term shall not be deleted but
shall be reformed and construed by any court having competent
jurisdiction hereof in a manner to enable this Agreement and such term
to be enforced to the fullest extent permitted by applicable law.
SECTION 5.3. ASSIGNMENT. Radix and AEI may assign or transfer
this Agreement and their respective rights and obligations hereunder to
an affiliate or successor without the prior written consent of Radziwill
(provided, however, that AEI may not assign its obligation to nominate
Radziwill to its Board of Directors, and no such assignment shall
release Radix or AEI of their respective obligations hereunder or
adversely affect the benefits to which Radziwill is entitled pursuant to
Section 1.4, above). Any assignment or transfer of the rights and
obligations of Radziwill hereunder shall not be effected without the
prior written consent of Radix and AEI. All of the terms and conditions
of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors, transferees
and assigns.
SECTION 5.4. WAIVER OR MODIFICATION. No waiver, modification,
release, or cancellation of this Agreement or any portion of this
Agreement shall be binding unless evidenced by a writing executed by
Radix, AEI and Radziwill or an authorized representative thereof with
the same formality of this Agreement. The waiver by any party hereto of
a breach or any provision of this Agreement shall not operate or be
construed as a waiver of any other breach or provision of this
Agreement.
SECTION 5.5. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original for all
purposes, but which together shall constitute but one and the same
instrument and shall be binding upon the parties hereto and their
permitted successors, transferees and assigns. Counterparts of this
Agreement may be executed and delivered by facsimile transmission.
SECTION 5.6 GOVERNING LAW. This Agreement shall be governed
by, construed, and enforced in accordance with the laws of the State of
Connecticut, without regard to the conflicts of laws principles thereof.
Each party agrees to submit to the jurisdiction of any Federal Court
sitting in the State of New York, or any state court sitting in the
State of New York, in respect of any claims brought hereunder. Each
party agrees that such jurisdiction shall be the exclusive jurisdiction
for any such claim except that (i) any final judgment rendered by any
such court may be enforced in any other jurisdiction
<PAGE>
7
by suit on a judgment or in any other manner provided by applicable law
and (ii) and any such claim may be brought in federal court or state
court, or the foreign equivalent, in any state or jurisdiction where any
such party has its principal residence or, in the case of AEI, where it
has its chief executive offices, and such parties agree to submit to the
jurisdiction of such other courts in connection with any action
maintained hereunder.
<PAGE>
8
SECTION 5.7. LEGAL EFFECT. This Agreement shall have no legal
force or effect until the Effective Time of the Merger, whereupon this
Agreement shall become simultaneously effective.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized signatories, in
counterparts or otherwise, all as of the day and year first written
above.
RADIX VENTURES, INC.
By:------------------------------------
Name:
Title:
AIR EXPRESS INTERNATIONAL
CORPORATION
By:------------------------------------
Hendrik J. Hartong, Jr.
Chairman
---------------------------------------
John Radziwill, Individually
<PAGE>
EXHIBIT G
SUPPLEMENTAL AGREEMENT
This Supplemental Agreement, dated as of the 1st day of May,
1995 (the "AGREEMENT"), by and among Radix Ventures, Inc., a Delaware
corporation ("RADIX"), Air Express International Corporation, a Delaware
corporation ("AEI"), and Pierre L. Schoenheimer ("SCHOENHEIMER").
RECITALS:
WHEREAS, AEI is to acquire Radix pursuant to the terms and
conditions set forth in a certain Agreement and Plan of Reorganization,
dated as of the date hereof (the "MERGER AGREEMENT"), by and among
Radix, AEI, and AEIC Acquisition Corporation, a Delaware corporation and
a wholly-owned subsidiary of AEI ("NEWCO"), with AEI acquiring Radix by
merging Newco with and into Radix (the "MERGER") and converting all of
the issued and outstanding common stock of Radix (other than Dissenting
Shares and Non-Qualified Shares) as of the date of such Merger into up
to 1,000,000 shares of the common stock of AEI (the "AEI COMMON STOCK");
and
WHEREAS, Schoenheimer is a stockholder of Radix, and will be
receiving shares of AEI Common Stock in the Merger;
WHEREAS, Radix, AEI and Schoenheimer desire to enter into this
Agreement in order (i) to provide for a severance period for
Schoenheimer, and a related period in which Schoenheimer agrees that he
will not compete with the business of Radix or AEI, and (ii) to
contractually restrict Schoenheimer from transferring more than a
certain percentage of the AEI Common Stock which Schoenheimer receives
in connection with the Merger for a two year period following the
Effective Date;
WHEREAS, the execution and delivery of this Supplemental
Agreement is a condition precedent to the obligations of AEI to execute
and deliver the Merger Agreement;
WHEREAS, capitalized terms used but not defined herein shall
have the respective meanings ascribed to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the terms and covenants of this
Agreement, and other good and valuable consideration, the parties hereto
agree as follows:
<PAGE>
2
ARTICLE I.
SEVERANCE
SECTION 1.1. SEVERANCE FEE. Radix hereby agrees to pay
severance to Schoenheimer in the amount of $10,000 per month for each
month, pro-rated for the first month, from the Effective Date through
and including the month of December, 1996 (the "SEVERANCE PERIOD").
Such payment shall be made no later than the 15th of each month during
the Severance Period. In connection with such severance payments, Radix
shall withhold any applicable payroll taxes as required by law. AEI
hereby guaranties that such payments will be made timely by Radix to
Schoenheimer.
SECTION 1.2. TELEPHONIC ADVICE. From time to time during the
Severance Period, Schoenheimer agrees to make himself available by
telephone to Radix, at such time or times as shall be convenient to
Schoenheimer, to facilitate Radix's operations subsequent to the Merger;
provided, however, that nothing herein shall commit Schoenheimer to any
specified schedule, or to provide any minimum level of advice.
SECTION 1.3. FRINGE BENEFITS. During the Severance Period,
subject to satisfying any general applicable eligibility requirements,
Schoenheimer shall be entitled to participate in such employee medical
(and dental, if any) insurance plan as is generally made available by
Radix to its employees, as such plan may be amended from time to time in
the sole and absolute discretion of Radix. Radix and Schoenheimer
acknowledge and agree that Radix shall have no obligation to provide
Schoenheimer with any other employee benefit plan or arrangement,
regardless of the employee plans or arrangements that Radix makes
available to its employees.
ARTICLE II.
RESTRICTION ON TRANSFER OF SHARES
SECTION 2.1. RESTRICTIONS AS TO SHARES. Schoenheimer hereby
agrees that he will not sell, pledge, assign or otherwise transfer
("Transfer") more than one-third of the AEI Common Stock received by him
in connection with the Merger for a period of twelve months following
the Effective Date (the remaining two-third of the shares is herein
referred to as the "RESTRICTED SHARES"). Thereafter, this contractual
restriction on Transfer will terminate as to one-half of the Restricted
Shares, on the first anniversary date hereof and as to the remaining
Restricted Shares on the second anniversary of the date hereof.
Notwithstanding the foregoing, Schoenheimer acknowledges and agrees
that, in connection with similar restrictions on the Transfer of AEI
Common Stock that were agreed to by Radix and AEI with each of John
Radziwill ("RADZIWILL") and Matthew P. Sheppard ("SHEPPARD")
(Schoenheimer, Radziwill and Sheppard are sometimes hereinafter
<PAGE>
3
collectively referred to as the "MAJORITY STOCKHOLDERS"), the Majority
Stockholders may agree in writing among themselves to allow one or two
of them to Transfer more than the allowable percentage of AEI Common
Stock in any of the two (2) years following the Effective Date, as long
as the aggregate number of shares Transferred through any such year does
not exceed the collective number of shares of AEI Common Stock that the
Majority Stockholders, in the aggregate, are allowed to Transfer through
such year; PROVIDED, HOWEVER, that the Majority Stockholders shall
provide a copy of such written agreement to Radix and AEI before any one
of the Majority Stockholders Transfers more than the allowable number of
shares of AEI Common Stock that such Indemnitor is allowed to Transfer
through the subject year.
SECTION 2.2. STOCK CERTIFICATE LEGENDS. Schoenheimer, Radix
and AEI each hereby acknowledge and agree that stop-transfer
instructions will be given to AEI's transfer agent with respect to the
Restricted Shares issued to Schoenheimer pursuant to the Merger
Agreement and that a legend will be placed on the certificates
representing such shares substantially in the following form:
"The shares of stock represented by this share
certificate are subject to the terms and restrictions
and other provisions contained in a Supplemental
Agreement, dated May 1, 1995, by and among Radix
Ventures, Inc., Air Express International Corporation
and [name]. A copy of such Agreement has been filed
with the Secretary of the issuer and may be inspected
at the issuer's offices."
AEI agrees that it will cause such stop-transfer instructions to be
released and new certificates without such legends to be issued with
respect to shares as to which the restrictions have lapsed, and in
respect of shares which Schoenheimer may otherwise be entitled to
transfer as a result of an agreement with the other Majority
Stockholders as permitted above.
ARTICLE III.
NON-COMPETITION
SECTION 3.1. NON-COMPETITION. For a two year period following
the Effective Date of the Merger, Schoenheimer agrees that he will not
engage, directly or indirectly, whether alone or in conjunction with any
person, corporation, partnership or other business enterprise, in North
America or Europe in any Competitive Activity (as hereinafter defined).
For purposes of this Section 4.1, "COMPETITIVE ACTIVITY" shall mean (i)
activity consisting of Schoenheimer's participating in the management
of, owning more than 5% of the combined equity interest of, having a
material interest in, or his acting as a
<PAGE>
4
principal, consultant or agent for or director, officer or employee of,
any business operation of any person, corporation, partnership or other
business enterprise if such business operation is then in direct
competition with the business operations of Radix or any subsidiaries,
divisions or affiliates of Radix as conducted on the Effective Date,
which include, without limitation, the businesses of customs brokerage,
international air and ocean freight forwarding and warehousing ancillary
to such other business; (ii) the solicitation or inducement of any
director, officer, employee, agent or independent contractor of AEI,
Radix or any subsidiary, division or affiliate thereof to leave his or
her employment with the Company, Radix or any subsidiary, division or
affiliate thereof or the hiring of any such director, officer, employee,
agent or independent contractor, or (iii) the request or advice to any
client to withdraw, curtail or cancel its business with AEI, Radix or
any subsidiary, division or affiliate thereof. For purposes hereof,
Radix Organization, Inc. shall not be deemed to be an affiliate,
independent contractor or agent of Radix.
SECTION 3.2. CONFIDENTIALITY. Schoenheimer acknowledges that,
either during or after the Severance Period, he will not, except as may
otherwise be required by law, directly or indirectly, disclose or make
available to any person, corporation, partnership or other business
enterprise for any reason or purpose whatsoever, or use or cause to be
used in any manner adverse to the interests of Radix or any subsidiary,
division or affiliate thereof, any Confidential Information (as
hereinafter defined) PROVIDED, HOWEVER, that Schoenheimer shall not be
obligated to treat as confidential any Confidential Information that (i)
was publicly known at the time of disclosure to Schoenheimer, (ii)
becomes publicly known or available thereafter other than by any means
in violation of this Agreement, (iii) is lawfully disclosed to
Schoenheimer by a third party or (iv) is required by law, regulation or
court order to be disclosed.
As used in this Agreement the term "CONFIDENTIAL INFORMATION"
means: information disclosed to Schoenheimer or known by Schoenheimer as
a direct consequence of or through his direct relationship with the
Radix or any subsidiary, division or affiliate thereof, not generally
known in the industries or businesses in which they operate concerning
such parties' respective clients, customers, employees and suppliers or
lists thereof, advertising and marketing data and methods, business
methods, organization, procedures, finances, information regarding the
skills, abilities or compensation of such parties' respective directors,
officers, employees, agents and independent contractors, trade secrets,
trademarks and other intellectual property rights, product and service
lines and any related or other technical, corporate or trade
information.
SECTION 3.3. INJUNCTIVE RELIEF. In the event that either
party breaches any of the terms set forth herein, the other party shall
be entitled to institute legal proceedings to obtain damages for any
such breach, or to enforce the specific performance of this Agreement by
the breaching party and to enjoin the breaching party from any further
violation of the terms herein and to exercise such remedies cumulatively
or in conjunction
<PAGE>
5
with all other rights and remedies provided by law. Each party
acknowledges, however, that the remedies at law for any breach by him of
the provisions herein may be inadequate and that the other party shall
be entitled to injunctive relief against such party in the event of any
such breach.
ARTICLE IV.
MISCELLANEOUS
Section 4.1. NO CONFLICT. AEI and Radix each hereby
acknowledge that Schoenheimer shall be acting from time to time in his
capacity as Stockholder Representative pursuant to the terms of the
Merger Agreement and nothing herein shall be deemed to limit or
otherwise restrict his ability to act in that capacity.
SECTION 4.2. VALIDITY. In the event that any provision of
this Agreement is held invalid or unenforceable by a court having
competent jurisdiction hereof, the invalidity of unenforceability of any
such provision shall not effect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect; PROVIDED, that if any one or more of the terms contained in
Sections 4 hereof shall for any reason be held by a court having
competent jurisdiction hereof to be excessively broad with regard to
time, duration, geographic scope or activity or for any other reason,
such invalidity or unenforceability shall attach only to the particular
aspect of such provision held invalid or unenforceable as applied and
shall not affect or render invalid or unenforceable any other provision
of this Agreement or the enforcement of such provision in any other
jurisdiction or circumstances and such term shall not be deleted but
shall be reformed and construed by any court having competent
jurisdiction hereof in a manner to enable this Agreement and such term
to be enforced to the fullest extent permitted by applicable law.
SECTION 4.3. ASSIGNMENT. Radix and AEI may assign or transfer
this Agreement and their respective rights and obligations hereunder to
an affiliate or successor without the prior written consent of
Schoenheimer (provided, however, that AEI may not assign its obligation
to nominate Schoenheimer to its Board of Directors, and no such
assignment shall release Radix or AEI of their respective obligations
hereunder or adversely affect the benefits to which Schoenheimer is
entitled pursuant to Section 1.4 above). Any assignment or transfer of
the rights and obligations of Schoenheimer hereunder shall not be
effected without the prior written consent of Radix and AEI. All of the
terms and conditions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective permitted
successors, transferees and assigns.
SECTION 4.4. WAIVER OR MODIFICATION. No waiver, modification,
release, or cancellation of this Agreement or any portion of this
Agreement shall be binding unless
<PAGE>
6
evidenced by a writing executed by Radix, AEI and Schoenheimer or an
authorized representative thereof with the same formality of this
Agreement. The waiver by any party hereto of a breach or any provision
of this Agreement shall not operate or be construed as a waiver of any
other breach or provision of this Agreement.
SECTION 4.5. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original for all
purposes, but which together shall constitute but one and the same
instrument and shall be binding upon the parties hereto and their
permitted successors, transferees and assigns. Counterparts of this
Agreement may be executed and delivered by facsimile transmission.
SECTION 4.6. GOVERNING LAW. This Agreement shall be governed
by, construed, and enforced in accordance with the laws of the State of
Connecticut, without regard to the conflicts of laws principles thereof.
Each party agrees to submit to the jurisdiction of any Federal Court
sitting in the State of New York, or any state court sitting in the
State of New York, in respect of any claims brought hereunder. Each
party agrees that such jurisdiction shall be the exclusive jurisdiction
for any such claim except that (i) any final judgment rendered by any
such court may be enforced in any other jurisdiction by suit on a
judgment or in any other manner provided by applicable law and (ii) and
any such claim may be brought in federal court or state court, or the
foreign equivalent, in any state or jurisdiction where any such party
has its principal residence or, in the case of AEI, where it has its
chief executive offices, and such parties agree to submit to the
jurisdiction of such other courts in connection with any action
maintained hereunder.
<PAGE>
7
SECTION 4.7. LEGAL EFFECT. This Agreement shall have no legal
force or effect until the Effective Time of the Merger, whereupon this
Agreement shall become simultaneously effective.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized signatories, in
counterparts or otherwise, all as of the day and year first written
above.
RADIX VENTURES, INC.
By:------------------------------------
Name:
Title:
AIR EXPRESS INTERNATIONAL
CORPORATION
By:------------------------------------
Hendrik J. Hartong, Jr.
Chairman
--------------------------------------
Pierre L. Schoenheimer, Individually
<PAGE>
EXHIBIT H
SUPPLEMENTAL AGREEMENT
This Supplemental Agreement, dated as of the 1st day of May,
1995 (the "AGREEMENT"), by and among Radix Ventures, Inc., a Delaware
corporation ("RADIX"), Air Express International Corporation, a Delaware
corporation ("AEI"), and Matthew P. Sheppard ("SHEPPARD").
RECITALS:
WHEREAS, AEI is to acquire Radix pursuant to the terms and
conditions set forth in a certain Agreement and Plan of Reorganization,
dated as of the date hereof (the "MERGER AGREEMENT"), by and among
Radix, AEI, and AEIC Acquisition Corporation, a Delaware corporation and
a wholly-owned subsidiary of AEI ("NEWCO"), with AEI acquiring Radix by
merging Newco with and into Radix (the "MERGER") and converting all of
the issued and outstanding common stock of Radix (other than Dissenting
Shares and Non-Qualified Shares) as of the date of such Merger into up
to 1,000,000 shares of the common stock of AEI (the "AEI COMMON STOCK");
and
WHEREAS, Sheppard is a stockholder of Radix, and will be
receiving shares of AEI Common Stock in the Merger;
WHEREAS, Radix, AEI and Sheppard desire to enter into this
Agreement in order to contractually restrict Sheppard from transferring
more than a certain percentage of the AEI Common Stock which Sheppard
receives in connection with the Merger for a two year period following
the Effective Date;
WHEREAS, the execution and delivery of this Supplemental
Agreement is a condition precedent to the obligations of AEI to execute
and deliver the Merger Agreement;
WHEREAS, capitalized terms used but not defined herein shall
have the respective meanings ascribed to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the terms and covenants of this
Agreement, and other good and valuable consideration, the parties hereto
agree as follows:
<PAGE>
2
ARTICLE I.
RESTRICTION ON TRANSFER OF SHARES
Section 1.1. RESTRICTIONS ON TRANSFER. Sheppard hereby
agrees that he will not sell, pledge, assign or otherwise transfer
("Transfer") more than one-third of the AEI Common Stock received by him
in connection with the Merger for a period of twelve months following
the Effective Date (the remaining two third of the shares is herein
referred to as the "RESTRICTED SHARES"). Thereafter, this contractual
restriction on Transfer will terminate as to one-half of the Restricted
Shares, on the first anniversary date hereof and as to the remaining
Restricted Shares on the second anniversary of the date hereof.
Notwithstanding the foregoing, Sheppard acknowledges and agrees that, in
connection with similar restrictions on the Transfer of AEI Common Stock
that were agreed to by Radix and AEI with each of Pierre L. Schoenheimer
("SCHOENHEIMER"), John Radziwill ("RADZIWILL") and Sheppard
(Schoenheimer, Radziwill and Sheppard are sometimes hereinafter
collectively referred to as the "MAJORITY STOCKHOLDERS"), the Majority
Stockholders may agree in writing among themselves to allow one or two
of them to Transfer more than the allowable percentage of AEI Common
Stock in any of the two (2) years following the Effective Date, as long
as the aggregate number of shares Transferred through any such year does
not exceed the collective number of shares of AEI Common Stock that the
Majority Stockholders, in the aggregate, are allowed to Transfer through
such year; PROVIDED, HOWEVER, that the Majority Stockholders shall
provide a copy of such written agreement to Radix and AEI before any one
of the Majority Stockholders Transfers more than the allowable number of
shares of AEI Common Stock that such Indemnitor is allowed to Transfer
through the subject year.
SECTION 1.2. STOCK CERTIFICATE LEGENDS. Sheppard, Radix and
AEI each hereby acknowledge and agree that stop-transfer instructions
will be given to AEI's transfer agent with respect to the Restricted
Shares issued to Sheppard pursuant to the Merger Agreement and that a
legend will be placed on the certificates representing such shares
substantially in the following form:
"The shares of stock represented by this share
certificate are subject to the terms and restrictions
and other provisions contained in a Supplemental
Agreement, dated May 1, 1995, by and among Radix
Ventures, Inc., Air Express International Corporation
and [name]. A copy of such Agreement has been filed
with the Secretary of the issuer and may be inspected
at the issuer's offices."
AEI agrees that it will cause such stop-transfer instructions to be
released and new certificates without such legends to be issued with
respect to shares as to which the restrictions have lapsed, and in
respect of shares which Sheppard may otherwise be entitled
<PAGE>
3
to transfer as a result of an agreement with the other Majority
Stockholders as permitted above.
ARTICLE II.
MISCELLANEOUS
Section 2.1. NO CONFLICT. AEI and Radix each hereby
acknowledge that Sheppard shall be acting from time to time in his
capacity as Stockholder Representative pursuant to the terms of the
Merger Agreement and nothing herein or as a result of his service as an
officer and employee of Radix following the Merger shall be deemed to
limit or otherwise restrict his ability to act in that capacity.
SECTION 2.2. VALIDITY. In the event that any provision of
this Agreement is held invalid or unenforceable by a court having
competent jurisdiction hereof, the invalidity of unenforceability of any
such provision shall not effect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect.
SECTION 2.3. WAIVER OR MODIFICATION. No waiver, modification,
release, or cancellation of this Agreement or any portion of this
Agreement shall be binding unless evidenced by a writing executed by
Radix, AEI and Sheppard or an authorized representative thereof with the
same formality of this Agreement. The waiver by any party hereto of a
breach or any provision of this Agreement shall not operate or be
construed as a waiver of any other breach or provision of this
Agreement.
SECTION 2.4. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original for all
purposes, but which together shall constitute but one and the same
instrument and shall be binding upon the parties hereto and their
permitted successors, transferees and assigns. Counterparts of this
Agreement may be executed and delivered by facsimile transmission.
SECTION 2.5. GOVERNING LAW. This Agreement shall be governed
by, construed, and enforced in accordance with the laws of the State of
Connecticut, without regard to the conflicts of laws principles thereof.
Each party agrees to submit to the jurisdiction of any Federal Court
sitting in the State of New York, or any state court sitting in the
State of New York, in respect of any claims brought hereunder. Each
party agrees that such jurisdiction shall be the exclusive jurisdiction
for any such claim except that (i) any final judgment rendered by any
such court may be enforced in any other jurisdiction by suit on a
judgment or in any other manner provided by applicable law and (ii) and
any such claim may be brought in federal court or state court, or the
foreign equivalent, in any state or jurisdiction where any such party
has its principal residence or, in the case of AEI, where it has its
chief executive offices, and such parties agree to submit to the
jurisdiction of such other courts in connection with any action
maintained hereunder.
<PAGE>
4
SECTION 2.6. LEGAL EFFECT. This Agreement shall have no legal
force or effect until the Effective Time of the Merger, whereupon this
Agreement shall become simultaneously effective.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized signatories, in
counterparts or otherwise, all as of the day and year first written
above.
RADIX VENTURES, INC.
By:------------------------------------
Name:
Title:
AIR EXPRESS INTERNATIONAL
CORPORATION
By:------------------------------------
Hendrik J. Hartong, Jr.
Chairman
------------------------------------
Matthew P. Sheppard, Individually
<PAGE>
EXHIBIT I
CALCULATION OF TANGIBLE NET ASSETS
1. AEI agrees with Radix accounting treatment of the Flagship
acquisition as reflected on the January 31, 1995 Balance Sheet and
Income Statement.
2. AEI agrees that software capitalized and included in property,
plant and equipment and/or other assets as of January 31, 1995 and
subsequent additions and/or deletions and amortization to the
Closing Balance Sheet date is a tangible asset.
3. Whether paid or not paid, the termination fee of $300,000 payable
to ROI, net of tax benefits, the $200,000 severance payment to a
Radix officer, net of tax benefits, the amounts expended in
connection with Section 1.3(c) (iv), (v), (vi) and (viii) net of any
tax benefits, and the payment of all Seller Expenses on a before and
after tax basis, are to be reflected as a liability on the Closing
Balance Sheet.
4. The tangible net assets reflected on the Closing Balance Sheet
(after the recording of all liabilities in No. 3 above) are to be
increased by the after tax amount of the $300,000 termination fee,
the $200,000 severance payment, the amounts expended in connection
with Section 2.3(c)(iv), (v), (vi) and (vii) net of any tax
benefits, and the before tax amount of seller expenses in excess of
$500,000.
5. Capitalized expenses associated with the Bank of New York credit
facility shall be charged, net of tax benefits, if any, to Radix's
shareholders' equity on the Closing Balance Sheet.
<PAGE>
EXHIBIT J
ENVIRONMENTAL LAWS
"ENVIRONMENTAL LAWS" shall mean
a) The Comprehensive Environmental Response, Compensation
and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act (42 U.S.C. [section] 8601 et seq.) ("CERCLA") and/or
the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act (42 U.S.C. [section] 6901 et seq.) ("RCRA") and/or the
Toxic Substances Control Act (15 U.S.C. [section] 2601 et seq.) ("TSCA")
and/or the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
[section] 136 et seq.) ("FIFRA") and/or the Clean Air Act (42 U.S.C.
[section] 7401 et seq.) ("CAA") and/or the Federal Water Pollution
Control Act (33 U.S.C. [section] 1251 et seq.) ("FWPCA") and/or the Safe
Drinking Water Act (42 U.S.C. [section] 300f et seq.) ("SDWA"); and
b) All applicable present statutes, laws, regulations,
rules, ordinances, codes, licenses, permits, guidelines, standards,
orders, requirements, approvals, plans, authorizations, concessions,
franchises, and similar items of all governmental agencies, departments,
commissions, boards, bureaus and instrumentalities of the United States,
any foreign country, or any state and political subdivision thereof, and
all applicable judicial, administrative, and regulatory decrees,
judgments, and orders relating to pollution and/or the protection of
human health and/or the environment, including, without limitation:
(i) those pertaining to reporting, licensing, permitting,
investigating, and remediating emissions, discharges, releases, or
threatened releases of Materials of Environmental Concern (as
hereinafter defined), whether solid, liquid, or gaseous in nature, into
the air, surface water, groundwater, or land, or relating to the
manufacture, processing, distribution, use, generation, treatment,
removal, storage, disposal,
<PAGE>
2
transport, or handling of Materials of Environmental Concern, whether
solid, liquid or gaseous in nature; and
(ii) those pertaining to the protection of the health and
safety of employees or the public.
"MATERIALS OF ENVIRONMENTAL CONCERN" means any substance:
a) the presence of which requires investigation or
remediation under any Environmental Laws; or
b) which is defined as a "hazardous waste," "hazardous
substance," "hazardous material," toxic substance, pollutant or
contaminant under any Environmental Laws; or
c) which is identified under any Environmental Laws as
toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and is or becomes
restricted or regulated by any governmental, quasi-governmental or
regulatory authority, agency, department, commission, board, agency or
instrumentality of the United States, any foreign country or any state
or any political subdivision thereof.
"ENVIRONMENTAL CLAIM" means any claim, order,
investigation, action, suit, proceeding, injunction, demand or violation
of any Environmental Laws, including, without limitation, any claim,
order, investigation, action, suit, proceeding, injunction, demand or
violation for health effects to persons, property damage and/or damage
to natural resources brought by any governmental, quasi-governmental or
regulatory authority, agency, department, commission, board, agency or
instrumentality of the United States, any foreign country or any state
or any political subdivision thereof, or from any director, officer,
employee, agent, contractor or any other private or third party, and any
notice,
<PAGE>
3
whether oral or written, advising the Company of any of the foregoing or
of any fact, event or condition which could reasonably be the basis for
the assertion of any of the foregoing.
<PAGE>
EXHIBIT K
The following shall apply with regard to the relationship
between Radix Group & AEI, on the one hand (collectively "RGI/AEI") and
ASA, on the other after the Effective Date:
1. RGI/AEI shall use reasonable best efforts to
continue to work with ASA relating to the software
usage and, particularly, the interfacing between the
Radix Group System and the AEI System.
2. In the event of any significant problem with ASA,
as part of its continuing activities for RGI/AEI, AEI
management will promptly involve Matthew Sheppard and
Pierre Schoenheimer ("S&S") in discussions with ASA
relating to those problems. A "significant problem"
shall be deemed to have occurred with ASA under this
Agreement, upon RGI/AEI giving written notice to ASA
with respect to the occurrence of any two documented
instances of problems that have not been resolved in
a timely manner, including, without limitation, the
following:
i). the failure of ASA to remedy a defect or
malfunction in the software or documentation,
and to provide RGI/AEI with corrected copies of
same, within three (3) days of receipt of
written notice of such a defect or malfunction
from RGI/AEI;
ii). the failure of ASA to respond within three
(3) days to a written request from RGI/AEI for
support in connection with the use and operation
of the software or any problems therewith;
iii).the failure of ASA to upgrade the software
or documentation within three (3) days of
receipt of a written request from RGI/AEI for
such an upgrade;
<PAGE>
2
iv). the failure of ASA to provide RGI/AEI with
copies of any upgrades or enhancements to the
software or documentation which increases the
speed, efficiency or ease of operation of the
software, or adds additional capabilities to or
otherwise improves the functions of the
software, within three (3) days of ASA's
generating for or providing to any customer said
upgraded software or documentation.
3. If AEI within the first six months after the
Effective Date, has a significant problems with ASA
which remains unresolved with the above period, it
will notify S&S thereof in writing, stating the
significant problem. S&S will then have 10 days to
attempt to resolve the significant problem to the
reasonable satisfaction of AEI.
4. If S&S are unable to resolve such issues within
said periods, RGI/AEI may exercise its right to
acquire the Source Code from ASA for $250,000 (or
less) and, provided such payment is made within 6
months of the Effective Date, such amount net of the
estimated future tax benefit of the amortization of
such amount will be paid to AEI by distribution to
AEI of Escrowed Property in such amount from the
escrow.
5. In the event that either Mr. Schoenheimer or Mr.
Sheppard shall not be available to act in this
capacity, then John Radziwill shall act in such
party's stead.
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11
AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(Unaudited)
(In thousands, except
per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Primary:
Net income applicable to
common shares ......................... $ 7,557 $ 6,149 $12,670 $ 9,631
Weighted average of common
shares outstanding ................. 17,739 17,376 17,615 17,357
Common shares issuable on
exercise of stock options .......... 405 188 376 171
Average common shares out-
standing ........................... 18,144 17,564 17,991 17,528
Earnings per common share ........... $ .42 $ .35 $ .70 $ .55
Fully diluted:
Weighted average of common
shares outstanding ................. 17,739 17,376 17,615 17,357
Common shares issuable on
exercise of stock options .......... 405 196 400 192
Common shares issuable upon
assumed conversion of subor-
dinated debentures ................. 3,292 3,292 3,292 3,292
Average common shares out-
standing ........................... 21,436 20,864 21,307 20,841
Earnings per common share ........... $ .39 $ .33 $ .66 $ .53
<FN>
Primary earnings per share are computed by dividing net income by the weighted
average common and common equivalent shares outstanding during the period. Fully
diluted earnings per share have been calculated assuming the conversion of the
subordinated debentures and the elimination of the associated interest expense,
net of tax. For the quarters ended June 30, 1995 and 1994, the interest
elimination was $.73 million. For the six months ended June 30, 1995 and 1994,
the interest elimination was $1.46 million.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 56,379
<SECURITIES> 0
<RECEIVABLES> 250,511
<ALLOWANCES> 3,641
<INVENTORY> 0
<CURRENT-ASSETS> 309,324
<PP&E> 92,885
<DEPRECIATION> 40,896
<TOTAL-ASSETS> 459,134
<CURRENT-LIABILITIES> 235,118
<BONDS> 85,735
<COMMON> 207
0
0
<OTHER-SE> 186,220
<TOTAL-LIABILITY-AND-EQUITY> 459,134
<SALES> 0
<TOTAL-REVENUES> 588,427
<CGS> 0
<TOTAL-COSTS> 417,700
<OTHER-EXPENSES> 91,529
<LOSS-PROVISION> 550
<INTEREST-EXPENSE> 2,954
<INCOME-PRETAX> 20,778
<INCOME-TAX> 8,108
<INCOME-CONTINUING> 12,670
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,670
<EPS-PRIMARY> .70
<EPS-DILUTED> .66
</TABLE>
