-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NbIVGjV9DllEeDJrfJVGJVHdLP+FMJJ9BaV/2S0xxQ8jhsmqBWX7Pe8hKkr109E4 T+sAPKy9YyiY4Juj8eJWXw== 0000897101-96-000383.txt : 19960613 0000897101-96-000383.hdr.sgml : 19960613 ACCESSION NUMBER: 0000897101-96-000383 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19960610 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ELTRAX SYSTEMS INC CENTRAL INDEX KEY: 0000797448 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 411484525 STATE OF INCORPORATION: MN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-46107 FILM NUMBER: 96578970 BUSINESS ADDRESS: STREET 1: RUSH LAKE BUSINESS PARK STREET 2: 1775 OLD HGWY 8 STE 111 CITY: ST PAUL STATE: MN ZIP: 55112 BUSINESS PHONE: 6126338373 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NORTON HOWARD B ET AL CENTRAL INDEX KEY: 0001015573 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 27126 PASEO ESPADA STREET 2: SUITE 1602 CITY: SAN JUAN CAPISTRANO STATE: CA ZIP: 92675 MAIL ADDRESS: STREET 1: C/O DATATECH STREET 2: 27126 PASEO ESPADA SUITE 1602 CITY: SAN JUAN CAISTRANO STATE: CA ZIP: 92675 SC 13D 1 IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS SCHEDULE 13D IS BEING FILED IN PAPER PURSUANT TO A CONTINUING HARDSHIP EXEMPTION. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 ELTRAX SYSTEMS, INC. (Name of Issuer) COMMON STOCK, $.01 PAR VALUE PER SHARE (Title of Class of Securities) 290375 10 4 (CUSIP Number) Howard B. Norton c/o DATATECH 27126 Paseo Espada, Suite 1602 San Juan Capistrano, California 92675 (714) 493-2028 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 17, 1996 (Date of Event which Required Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box: |_| Check the following box if a fee is being paid with this statement: |X| SCHEDULE 13D CUSIP No. 290375 10 4 - -------------------------------------------------------------------------------- 1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Howard B. Norton - -------------------------------------------------------------------------------- 2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3) SEC USE ONLY - -------------------------------------------------------------------------------- 4) SOURCE OF FUNDS 00 - -------------------------------------------------------------------------------- 5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_| - -------------------------------------------------------------------------------- 6) CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- 7) SOLE VOTING POWER -0- NUMBER OF SHARES BENEFICIALLY 8) SHARED VOTING POWER OWNED BY EACH REPORTING PERSON 1,983,000 WITH (SEE ITEM 5) 9) SOLE DISPOSITIVE POWER -0- 10) SHARED DISPOSITIVE POWER 1,983,000 - -------------------------------------------------------------------------------- 11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,983,000 - -------------------------------------------------------------------------------- 12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 30.5% - -------------------------------------------------------------------------------- 14) TYPE OF REPORTING PERSON IN SCHEDULE 13D CUSIP No. 290375 10 4 - -------------------------------------------------------------------------------- 1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Ruby Lee Norton - -------------------------------------------------------------------------------- 2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3) SEC USE ONLY - -------------------------------------------------------------------------------- 4) SOURCE OF FUNDS 00 - -------------------------------------------------------------------------------- 5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_| - -------------------------------------------------------------------------------- 6) CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- 7) SOLE VOTING POWER -0- NUMBER OF SHARES BENEFICIALLY 8) SHARED VOTING POWER OWNED BY EACH REPORTING PERSON 1,983,000 WITH (SEE ITEM 5) 9) SOLE DISPOSITIVE POWER -0- 10) SHARED DISPOSITIVE POWER 1,983,000 - -------------------------------------------------------------------------------- 11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,983,000 - -------------------------------------------------------------------------------- 12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 30.5% - -------------------------------------------------------------------------------- 14) TYPE OF REPORTING PERSON IN SCHEDULE 13D Item 1. Security and Issuer. This Statement on Schedule 13D (the "Statement") relates to the Common Stock, $.01 par value (the "Common Stock"), of Eltrax Systems, Inc., a Minnesota corporation (the "Issuer"). The principal executive offices of the Issuer are located at Rush Lake Business Park, 1775 Old Highway 8, St. Paul, Minnesota 55112. Item 2. Identity and Background. (a)-(c) This Statement is being filed on behalf of Howard B. and Ruby Lee Norton (the "Reporting Persons" or individually the "Reporting Person") with respect to their acquisition of One Million Nine Hundred Eighty-Three Thousand (1,983,000) shares (the "Acquired Shares") of Common Stock from the Issuer in connection with the acquisition by the Issuer from the Reporting Persons on May 17, 1996 of all of the outstanding shares of common stock of Nordata, Inc., a California Corporation ("Nordata") and Rudata, Inc., a California corporation ("Rudata" and together with Nordata, the "Acquired Companies"). The names, addresses, principal occupation and/or nature of business of each Reporting Person are: 1. Name: Howard B. Norton Address: c/o DATATECH 27126 Paseo Espada, Suite 1602 San Juan Capistrano, California 92675 Principal Occupation: President DATATECH 27126 Paseo Espada, Suite 1602 San Juan Capistrano, California 92675 2. Name: Ruby Lee Norton Address: c/o DATATECH 27126 Paseo Espada, Suite 1602 San Juan Capistrano, California 92675 Principal Occupation: Secretary DATATECH 27126 Paseo Espada, Suite 1602 San Juan Capistrano, California 92675 (d)-(e) During the last five years, none of the Reporting Persons have been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) nor have any been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws or finding any violation with respect to such laws. (f) Each of the Reporting Persons is a citizen of the United States. Item 3. Source and Amount of Funds or Other Consideration. The source and the amount of funds for the acquisition of shares of Eltrax Common Stock is hereafter described. All of the shares of Acquired Stock acquired by the Reporting Persons were issued on May 17, 1996, by the Issuer in connection with the merger of a wholly-owned subsidiary of the Issuer, Datatech Acquisition Corporation into Nordata pursuant to the terms of that certain Agreement and Plan of Merger dated May 14, 1996, between the Issuer, two wholly-owned subsidiaries of the Issuer, Datatech Acquisition Corporation, a Minnesota corporation ("Datatech Acquisition Corp.") and Rudata Acquisition Corporation, a Minnesota corporation ("Rudata Acquisition Corp."), Nordata, Rudata, and the Reporting Persons (as amended by the parties on May 17, 1996, the "Definitive Merger Agreement"). Under the terms of the Definitive Merger Agreement, all of the previously outstanding shares of Nordata were canceled in exchange for the issuance of the Acquired Shares to the Reporting Persons. All of the Acquired Shares are held as personal assets of the Reporting Persons. Item 4. Purpose of Transaction. On March 19, 1996, the Issuer, Howard B. Norton, Ruby Lee Norton, Nordata and Rudata signed a letter agreement that contemplated the acquisition of all of the outstanding Common Stock of Rudata and Nordata in exchange for the issuance of 2,045,000 shares of Eltrax Common Stock and $830,000, subject to definitive documentation and closing. The Definitive Merger Agreement was executed on May 14, 1996, and amended on May 17, 1996 in connection with the closing (the "Closing") of the transaction on May 17, 1996. Pursuant to the terms of the Definitive Merger Agreement, 1,983,000 shares of Eltrax were issued to Howard B. and Ruby Lee Norton, as community property, at the Closing in connection with the merger of Datatech Acquisition Corp. with and into Nordata and $1,016,000 was paid to the Reporting Persons in connection with the merger of Rudata Acquisition Corp. with and into Rudata. The 1,983,000 shares of Eltrax Common Stock issued in connection with the merger represented approximately 30.5% of the outstanding shares of Common Stock of the Issuer after the Closing and approximately 43.5% of such outstanding Common Stock of the Issuer prior to the Closing, without giving effect to outstanding options and warrants, and 25.2% and 33.7%, respectively, after giving effect to all outanding options and warrants. Of the 1,983,000 shares of Eltrax Common Stock issued to the Reporting Persons, 450,000 shares (the "Escrowed Shares") were issued in the name of Emseg & Co., as Escrow Agent under the terms of that certain Escrow Agreement between the Issuer, the Reporting Persons, and Norwest Bank Minnesota, National Association, the terms of which provide for the release of the Escrowed Shares to the Reporting Persons on May 17, 1998, subject to certain claims and conditions. All of the Acquired Shares issued to the Reporting Persons in connection with the Merger are "restricted stock," as defined in the rules promulgated under the Securities Act of 1933, as amended, and have certain Form S-3 demand registration rights, and "piggyback" registration rights. All expenses of such registration will be borne by the Issuer. The Issuer agreed to elect Howard B. Norton to the Issuer's Board of Directors. Pursuant to the terms of that certain Agreement dated as of May 17, 1996 by and between the Issuer, the Reporting Persons and William P. O'Reilly, Clunet R. Lewis, and Mack V. Traynor, III (collectively, the "Eltrax Principals"): (a) the Reporting Persons have the right from September 1, 1996 to May 31, 1998 to request the assistance of the Issuer in effecting a private sale of a portion (the "Assistance Portion") of the Acquired Shares (the Assistance Portion of the Acquired Shares subject to the foregoing is equal to the lesser of 1,000,000 shares or shares with $4,000,000 in value); (b) prior to the sale of the Assistance Portion of the Acquired Shares or the registration of all of the Acquired Shares for sale in accordance with the Securities Act of 1933, the Reporting Persons have the right to participate in any private placement transaction undertaken by the Issuer (other than pursuant to the exercise of outstanding options, warrants and other pre-existing rights to purchase Eltrax Common Stock or under the Eltrax 1995 Stock Incentive Plan), and (c) the Eltrax Principals are restricted from selling any of their shares of Eltrax Common Stock until the Eltrax Principals have arranged for the sale by the Reporting Persons of the Assistance Portion of the Acquired Shares; provided, however, that the foregoing restriction shall lapse on December 31, 1996, if the Reporting Persons have not notified Eltrax and the Eltrax Principals of their request for assistance pursuant to clause (a) above by December 31, 1996. In addition to the foregoing, Nordata, Inc., now a wholly owned subsidiary of the Issuer, entered into an Employment and NonCompetition Agreement with each of Howard B. and Ruby Lee Norton, the terms of which generally provides for the employment by Nordata of Howard B. and Ruby Lee Norton for a period of five years from May 17, 1996. In addition, the Employment and NonCompetition Agreement of Howard B. Norton provides for the payment of certain incentive payments to Howard B. Norton based upon the performance of Nordata, Inc. Except as disclosed in this Item 4, no Reporting Person has any current plans or proposals which relate to or would result in any of the events described in Items (a) through (j) of Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer. (a)-(b) The following table sets forth information regarding the beneficial ownership of the Common Stock and Common Stock Equivalents of the Issuer as of June 30, 1995, unless otherwise noted, by each Reporting Person. /// /// /// Shares of Common Stock (or Common Name Stock Equivalents) Beneficially Owned(1)(2) - ---- ------------------------------------------- Percent of Amount Class(3)(4) ------ ----------- Howard B. Norton 1,983,000 30.5% and Ruby Lee Norton as community Property(2) (c) Other than as described in Item 4 above, during the past 60 days, the Reporting Persons have not effected any other transactions in any shares of Eltrax stock. (d)-(e) Items 5(d) and (e) are inapplicable to the Reporting Persons. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. For additional information on contracts, arrangements, understandings or relationship with respect to securities of the Issuer, see Item 4 above. - -------- (1) Shares not outstanding but deemed beneficially owned by virtue of the right of a person to acquire them within 60 days, whether by the exercise of options or warrants, are deemed outstanding in determining the amount and percent owned by such person or group. (2) All of the shares shown are held by Howard B. and Ruby Lee Norton, as Community Property, and the Reporting Persons share voting and investment power with respect to such shares. (3) For purposes of calculating the percent of class for each person or group, all rights to acquire Common Stock within 60 days, whether by the exercise of options or warrants, are deemed outstanding for such person or group. Such rights to acquire Common Stock are not, however, deemed to be outstanding for the purpose of computing the percentage of the class by any other person or group. (4) For purposes of calculating the percent of class for each person or group on a fully diluted basis, all outstanding Preferred Stock is deemed to have been converted into Common Stock. Rights to acquire Common Stock within 60 days, other than the conversion of Preferred Stock into Common Stock, are deemed outstanding for each person or group, but are not deemed to be outstanding for the purpose of computing the percentage of the class on a fully diluted basis by any other person or group. Item 7. Material to be Filed as Exhibits. Exhibit 1 Letter Agreement between Eltrax Systems, Inc., Nordata, Inc., Rudata, Inc., Howard B. and Ruby Lee Norton and Garte Torre Global Capital Markets dated March 19, 1996. Exhibit 2 Agreement and Plan of Merger by and among Eltrax Systems, Inc., Datatech Acquisition Corporation, Rudata Acquisition Corporation, Nordata, Inc., Rudata, Inc., and Howard B. and Ruby Lee Norton dated May 14, 1996, as amended by the First Amendment to Agreement and Plan of Merger dated May 17, 1996. Exhibit 3 Escrow Agreement between Eltrax Systems, Inc., Howard B. and Ruby Lee Norton, and Norwest Bank Minnesota, National Association dated May 17, 1996. Exhibit 4 Agreement between Eltrax Systems, Inc., Clunet R. Lewis, William P. O'Reilly, and Mack V. Traynor, III, and Howard B. and Ruby Lee Norton dated May 17, 1996. Exhibit 5 Employment and Non-Competition Agreement between Nordata, Inc. and Howard B. Norton dated May 17, 1996. Exhibit 6 Employment and Non-Competition Agreement between Nordata, Inc. and Ruby Lee Norton dated May 17, 1996. SIGNATURE After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned certify that the information set forth in this Statement is true, complete and correct. Date: May 28, 1996 /s/ HOWARD B. NORTON HOWARD B. NORTON /s/ RUBY LEE NORTON RUBY LEE NORTON EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE 1 Letter Agreement between Eltrax Systems, Inc., Nordata, Inc., Rudata, Inc., Howard B. 011 and Ruby Lee Norton and Garte Torre Global Capital Markets dated March 19, 1996. 2 Agreement and Plan of Merger by and among Eltrax Systems, Inc., Datatech Acquisition 016 Corporation, Rudata Acquisition Corporation, Nordata, Inc., Rudata, Inc., and Howard B. and Ruby Lee Norton, dated May 14, 1996, as amended by the First Amendment to Agreement and Plan of Merger, dated May 17, 1996. 3 Escrow Agreement between Eltrax Systems, Inc., Howard B. and Ruby Lee Norton, and 078 Norwest Bank Minnesota, National Association dated May 17, 1996. 4 Agreement between Eltrax Systems, Inc., Clunet R. Lewis, William P. O'Reilly, and 086 Mack V. Traynor, III, and Howard B. and Ruby Lee Norton dated May 17, 1996. 5 Employment and Non-Competition Agreement between Nordata, Inc. and Howard B. Norton 093 dated May 17, 1996. 6 Employment and Non-Competition Agreement between Nordata, Inc. and Ruby Lee Norton 103 dated May 17, 1996.
EX-1 2 Mr. and Mrs. Howard Norton Datatech 27126 Paseo Espada, Suite 1602 San Juan Capistrano, CA 92675 Mr. Harvey Garte Mr. Richard R. Torte Garte Torte Global Capital Markets 19200 Von Karman, Suite 525 Irvine, CA 92715 Re: Proposed Acquisition of Datatech Dear Howard, Ruby, Harvey, and Richard: We are pleased to submit the following offer for Eltrax to acquire all of the issued and outstanding stock of Nordata, Inc. and Rudata, Inc. dba Datatech (and hereinafter referred to as "Datatech"). This offer is based on our understanding that Howard & Ruby are the only shareholders of 100% of the issued and outstanding stock of both companies. Eltrax proposes to acquire Datatech on the following terms and conditions: 1. Eltrax will acquire Datatech by a merger of Datatech and Datatech Acquiring Corp., a wholly-owned subsidiary of Eltrax, in a transaction qualifying under I.R.C. Section 368, with the following merger consideration to the Nortons: a) 2,045,000 shares of E1trax; and b) $830,000 of cash at closing. 2. The Nortons shall have the right to demand registration of their shares on two occasions. Upon such demand, as soon as feasible under SEC rules, Eltrax will, at Eltrax's cost, file a registration statement with the SEC for the resale of the Nortons' shares, and Eltrax will maintain the registration statement effective until such shares are sold. In addition, the Nortons shall have piggyback registration rights to include all or any portion of their shares in any registration statement filed by Eltrax. Such piggyback registration rights shall provide that any reduction in the number of shares offered, at the request of underwriters, shall be pro-rata among all shareholders desiring to sell their shares pursuant to such registration statement. 3. Eltrax will extend its ISO (Incentive Stock Option) Plan to cover all employees of Datatech. 4. The following are conditions to closing, unless waived by Eltrax and the Nortons: a) appropriate due diligence by Extrax and the Nortons, not to exceed 60 days; b) completion and execution of necessary and appropriate definitive agreements and other transaction documents, containing such provisions and terms and conditions as are mutually agreeable to all parties. All parties agree to use their good faith efforts to complete such documents within the next 30 days; c) closing on or before May 31, 1996; d) the execution of mutually agreeable 5 year employment and 2 year noncompete agreements between Datatech and the Nortons, which employment agreements will provide for Howard and Ruby Norton to be paid annual base salaries of One Hundred Fifty Thousand ($150,000) and One Hundred Thousand ($100,000) Dollars, respectively, plus the following incentive compensation payable to Howard: i) year 1 - 10% of Datatech pretax, net income from Datatech operations, in excess of $1.5 million ii) year 2 - 10% of Datatech pretax, net income from Datatech operations, in excess of $1.75 million iii) year 3 - 10% of Datatech pretax, net income from Datatech operations, in excess of $2.0 million iv) year 4 - 10% of Datatech pretax, net income from Datatech operations, in excess of $2.25 million v) year 5 - 10% of Datatech pretax, net income from Datatech operations, in excess of $2.5 million. In computing pretax net income, Howard Norton's bonus will not be used in the calculation. 5. During the period between the execution of this Letter of Intent and the closing, Nortons and Datatech agree as follows: a) Datatech will continue to be operated in a manner consistent with the current operations of Datatech; b) there will be no changes in the capital structure of Datatech, other than in the ordinary course of business; c) there will be no discussions with any third parties regarding a sale of Datatech or any interest in Datatech; d) the Nortons and Datatech will fully cooperate with Eltrax in the Eltrax due diligence efforts and will make the Datatech staff, attorney and accountants available to Eltrax. 6. During the period between the execution of this Letter of Intent and the closing, Eltrax agrees as follows: a) Eltrax will continue to be operated in a manner consistent with the current operations of Eltrax; b) there will be no changes in the capital structure of Eltrax, other than in the ordinary course of business; c) Eltrax will full cooperate with the Nortons in their due diligence efforts and will make the Eltrax staff, attorneys and accountants available to the Nortons. 7. Upon consummation of this merger, Eltrax (or its subsidiary) will be responsible for payment of the broker's fee due to Garte Torre Global. It is agreed that this fee will be $160,000 cash plus 5,000 shares of Eltrax common stock at closing and 80,000 shares of Eltrax common stock to be issued on January 2, 1997, all of which will be privately placed to Garte Torte Global (or, alternatively, at the election of Harvey and Richard, 42,500 shares will be privately placed to each of Harvey and Richard). These 85,000 shares will have full piggyback registration rights with any registration statement filed by Eltrax pursuant to paragraph 2 of this letter. If they cannot be piggybacked, Garte Torte shall have the right to demand registration of their shares. Upon such demand, as soon as feasible under SEC rules, Eltrax will, at Eltrax's cost, file a registration statement with the SEC for the resale of the Garte Torte's shares, and Eltrax will maintain the registration statement effective until such shares are sold. 8. Eltrax has reviewed the financial statements of Datatech and is aware of a cash to accrual change in accounting required. Eltrax will be responsible for the payment of any income tax liabilities, including penalties and interest, of Datatech for 1995 taxable income and for taxable income resulting from the change in accounting method from cash basis to accrual basis (however, the Nortons will be responsible for the payment of any penalties resulting from Datatech's failure to pay the 1995 income tax due at the time that extensions for the 1995 returns were filed). Furthermore, Eltrax will indemnify the Nortons for any income tax liabilities, including penalties and interest, resulting from any pass through taxable income from Rudata, due to the change in accounting method from cash basis to accrual basis, up to the amount of the C corp income tax on such taxable income if it had been taxable after closing. 9. Eltrax will indemnify the Nortons with respect to any claims against the Nortons based on Federal or State securities laws, resulting from or related to any press release, statement or regulatory filing related to the transaction described in this letter, other than claims which are based on actual misconduct by the Nortons. 10. Upon closing, the Board of Directors of Eltrax shall appoint Howard Norton as one of the members of the Board of Directors of Eltrax, and give him the title of President and CEO of Datatech and Ruby Norton the title of Vice President of Datatech. 11. Closing of this transaction will occur at a date and time set by Eltrax, on or before May 31, 1996. Time is of the essence. If the transaction does not close on or before May 31, 1996, this agreement shall terminate, except paragraphs 9, 12 and 14. 12. The Nortons and Eltrax shall pay their own expenses, including attorney and accounting fees, associated with this transaction, except as provided in paragraph 7. 13. Datatech and Eltrax will notify each other of any press releases or other public comments regarding this transaction and will provide a reasonable opportunity to comment prior to release. 14. The terms of the Confidentiality Agreement dated January 29, 1996, between Garte Torte Global and Eltrax shall remain in effect. Eltrax System, Inc. By: /s/ Mack V. Traynor, III Mack V. Traynor, III President and CEO Agreement and Acknowledgment Nordata, Inc. By: /s/ Howard Norton Howard Norton, President Rudata, Inc. By: /s/ Ruby Norton Ruby Norton, President /s/ Howard Norton Howard Norton, Individually /s/ Ruby Norton Ruby Norton, Individually Garte Torre Global Market By: Harvey Garte EX-2 3 AGREEMENT AND PLAN OF MERGER by and among ELTRAX SYSTEMS, INC., DATATECH ACQUISITION CORPORATION, RUDATA ACQUISITION CORPORATION, NORDATA, INC., RUDATA, INC. AND HOWARD B. AND RUBY LEE NORTON May 14, 1996 TABLE OF CONTENTS Page ARTICLE 1 THE MERGER.............................................. 1 1.1 The Merger; Surviving Corporations...................... 1 1.2 Effective Time.......................................... 2 1.3 Conversion of Shares.................................... 2 1.4 Closing................................................. 2 1.5 Merger Consideration.................................... 3 1.6 Exchange of Acquisition Sub Common Stock................ 3 1.7 Surrender of Companies' Stock Certificates.............. 4 1.8 Articles of Incorporation............................... 4 1.9 Bylaws.................................................. 4 1.10 Directors and Officers.................................. 4 ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE PARENT AND ACQUISITION SUB....................... 4 2.1 Parent's Disclosure Schedule............................ 4 2.2 Organization............................................ 4 2.3 Authority and Validity of Agreement..................... 5 2.4 Consents and Approvals.................................. 5 2.5 Capitalization.......................................... 5 2.6 Commission Reports...................................... 6 2.7 No Brokers or Finders................................... 6 2.8 Non-Contravention....................................... 6 2.9 Loss Contingencies; Other Non-Accrued Liabilities....... 7 2.10 Investigations; Litigation.............................. 7 2.11 Absence of Certain Changes.............................. 7 2.12 Title to Property; Condition............................ 8 2.13 Tax Returns............................................. 8 2.14 Insurance............................................... 9 2.15 Benefit Plans........................................... 9 2.16 Contracts and Commitments; No Default................... 12 2.17 Compliance with Law..................................... 13 2.18 Accuracy of Information................................. 13 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS..................................... 14 3.1 Shareholders' Disclosure Schedule....................... 14 3.2 Corporate Organization.................................. 14 3.3 Capitalization.......................................... 14 3.4 Authorization........................................... 15 3.5 Non-Contravention....................................... 15 3.6 Consents and Approvals.................................. 15 3.7 Financial Statements.................................... 16 3.8 Loss Contingencies; Other Non-Accrued Liabilities....... 16 3.9 Investigations; Litigation.............................. 16 3.10 Absence of Certain Changes.............................. 17 3.11 Title to Property; Condition............................ 17 3.12 Inventories............................................. 18 3.13 Receivables and Payables................................ 18 3.14 Tax Returns............................................. 18 3.15 Insurance............................................... 20 3.16 Benefit Plans........................................... 20 3.17 Bank Accounts; Powers of Attorney....................... 23 3.18 Contracts and Commitments; No Default................... 23 3.19 Orders, Commitments and Returns......................... 24 3.20 Labor Matters........................................... 25 3.21 Dealers and Suppliers................................... 25 3.22 Licenses and Other Operating Rights..................... 25 3.23 Compliance with Law..................................... 25 3.24 Physical Assets of Business............................. 26 3.25 Brokers................................................. 26 3.26 Accuracy of Information................................. 26 3.27 Shareholders Representations............................ 26 ARTICLE 4 COVENANTS............................................... 27 4.1 Companies' Agreements as to Specified Matters........... 27 4.2 Conduct of the Companies' Business...................... 28 4.3 No Solicitation of Alternate Transaction by the Shareholders or Companies............................... 29 4.4 Full Access to Parent................................... 29 4.5 Confidentiality......................................... 30 4.6 Consummation; Consents; Removal of Objections........... 30 4.7 Further Assurances; Cooperation; Notification........... 30 4.8 Supplements to Disclosure Schedule...................... 30 4.9 Public Announcements.................................... 31 4.10 Broker Fee Arrangements................................. 31 4.11 Tax Liability of Surviving Corporations................. 31 4.12 Registration Rights..................................... 31 4.13 Employment Terms for Employees of Surviving Corporation. 31 4.14 Restrictive Legend...................................... 31 4.15 Maintenance of and Access to Books and Records.......... 32 4.16 Preparation of Tax Returns.............................. 32 4.17 Amendment of Prior Returns; Audit....................... 32 4.18 Successors and Assigns.................................. 32 4.19 Loans to Shareholders................................... 33 4.20 Schedule 13D............................................ 33 4.21 Divestment of Interest.................................. 33 ARTICLE 5 CONDITIONS TO OBLIGATION OF PARENT...................... 33 5.1 Representations and Warranties True..................... 33 5.2 Performance............................................. 33 5.3 Required Approvals and Consents......................... 33 5.4 Adverse Changes......................................... 34 5.5 No Proceeding or Litigation............................. 34 5.6 Opinion of Counsel for the Companies and Shareholders... 34 5.7 Legislation............................................. 34 5.8 Acceptance by Counsel to Parent......................... 34 5.9 Certificates............................................ 34 5.10 Due Diligence........................................... 34 5.11 Escrow Agreement........................................ 34 5.12 Employment and Noncompete Agreements.................... 34 5.13 Divestiture of Interest................................. 34 ARTICLE 6 CONDITIONS TO THE OBLIGATION OF THE COMPANIES AND SHAREHOLDERS............................................ 35 6.1 Representations and Warranties True..................... 35 6.2 Performance............................................. 35 6.3 Required Approvals and Consents......................... 35 6.4 No Proceeding or Litigation............................. 35 6.5 Certificates............................................ 35 6.6 Opinion of Parent Counsel............................... 35 6.7 Escrow Agreement........................................ 35 6.8 Acceptance by Counsel to Shareholders................... 36 6.9 Employment and Noncompete Agreement with Shareholders... 36 6.10 Adverse Changes......................................... 36 6.11 Legislation............................................. 36 6.12 Assistance Agreement.................................... 36 ARTICLE 7 TERMINATION AND ABANDONMENT............................. 36 7.1 Methods of Termination.................................. 36 7.2 Procedure Upon Termination.............................. 37 ARTICLE 8 SURVIVAL AND INDEMNIFICATION............................ 37 8.1 Survival................................................ 37 8.2 Indemnification by Parent............................... 37 8.3 Indemnification by Shareholders......................... 37 8.4 Indemnification by Shareholders -- Other................ 38 8.5 Limitation on Indemnification........................... 38 8.6 Indemnification De Minimis Threshold.................... 38 8.7 Claims for Indemnification.............................. 39 ARTICLE 9 MISCELLANEOUS PROVISIONS................................ 40 9.1 Expenses................................................ 40 9.2 Amendment and Modification.............................. 40 9.3 Waiver of Compliance; Consents.......................... 40 9.4 No Third Party Beneficiaries............................ 40 9.5 Notices................................................. 41 9.6 Assignment.............................................. 42 9.7 Governing Law........................................... 42 9.8 Counterparts............................................ 42 9.9 Headings................................................ 42 9.10 Entire Agreement........................................ 42 9.11 Injunctive Relief....................................... 42 9.12 Arbitration............................................. 43 9.13 List of Defined Terms................................... 43 9.14 Attorneys Fees.......................................... 43 9.15 Knowledge of the Companies and Shareholders............. 43
EXHIBITS Exhibit 1.1(a) Articles of Merger - Datatech Acquisition Sub into Nordata - Minnesota Exhibit 1.1(b) Articles of Merger - Rudata Acquisition Sub into Rudata - Minnesota Exhibit 1.1(c) Agreement of Merger - Datatech Acquisition Sub into Nordata - California Exhibit 1.1(d) Agreement of Merger - Rudata Acquisition Sub into Rudata - California Exhibit 1.5(a) Allocation of Merger Consideration Exhibit 1.5(b) Escrow Agreement Exhibit 1.10 List of Directors and Officers of Acquisition Subs Exhibit 2.1 Parent's Disclosure Schedule Exhibit 2.5 Parent's Commission Reports Exhibit 3.1 Shareholders' Disclosure Schedule Exhibit 3.7 Financial Statements of the Companies Exhibit 4.10 Broker Fee Arrangements Exhibit 4.12 Registration Rights of Shareholders Exhibit 5.6 Form of Opinion of Counsel for the Companies and Shareholders Exhibit 5.12 Form of Employment and Noncompete Agreements Exhibit 6.6 Form of Opinion of Counsel for the Parent and Acquisition Subs Exhibit 9.13 List of Defined Terms
AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER, dated as of May 14, 1996 (the "Agreement"), is by and among ELTRAX SYSTEMS, INC., a Minnesota corporation (the "Parent"), DATATECH ACQUISITION CORPORATION, a Minnesota corporation and a wholly owned subsidiary of the Parent ("Datatech Acquisition Sub"), RUDATA ACQUISITION CORPORATION, a Minnesota corporation and a wholly owned subsidiary of the Parent ("Rudata Acquisition Sub") (Datatech Acquisition Sub and Rudata Acquisition Sub are herein after referred to collectively as the "Acquisition Subs") and NORDATA, INC., a California corporation ("Nordata"), Rudata, Inc., a California corporation ("Rudata") and Howard B. and Ruby Lee Norton, the sole shareholders of Nordata and Rudata (individually, a "Shareholder" and collectively, the "Shareholders"). Nordata and Rudata are sometimes hereinafter referred to as the "Companies." The Companies and Acquisition Subs are sometimes hereinafter referred to as the "Constituent Corporations." A. WHEREAS, the Boards of Directors of Parent, Datatech Acquisition Sub and Nordata each have approved the merger of Datatech Acquisition Sub with and into Nordata, upon the terms and subject to the conditions set forth herein and deem it advisable and in the best interests of their respective shareholders that the foregoing merger be consummated; B. WHEREAS, the Boards of Directors of Parent, Rudata Acquisition Sub and Rudata each have approved the merger of Rudata Acquisition Sub with and into Rudata, upon the terms and subject to the conditions set forth herein and deem it advisable and in the best interests of their respective shareholders that the merger described in this paragraph B be consummated (the merger described in paragraph A above and the merger described in this paragraph B are hereinafter referred to collectively as the "Merger"); C. WHEREAS, for federal income tax purposes, it is intended that the Merger will qualify as a reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code") by reason of Section 368(a)(2)(E) of the Code; and D. WHEREAS, the parties hereto desire to make certain representations, warranties and agreements in connection with the Merger and also to prescribe various conditions to the Merger. NOW, THEREFORE, in consideration of the mutual representations, warranties and covenants contained herein, the parties hereto agree as follows: ARTICLE 1 THE MERGER 1.1 The Merger; Surviving Corporations. Subject to the terms and conditions of this Agreement and the articles of merger attached hereto as Exhibit 1.1(a) and 1.1(b) to be filed in the State of Minnesota and the agreements of merger attached hereto as Exhibit 1.1(c) and 1.1(d) to be filed in the State of California(collectively the "Plan of Merger"), at the Effective Time (as defined in Section 1.2 hereof), Datatech Acquisition Sub will be merged with and into Nordata and Rudata Acquisition Sub will be merged with and into Rudata, in accordance with the applicable provisions of the Minnesota Business Corporation Act (the "MBCA") and the California General Corporation Law (the "CGCL"), whereupon the separate existence of Datatech Acquisition Sub and Rudata Acquisition Sub will cease and Nordata and Rudata will continue as the surviving corporations (collectively the "Surviving Corporations"). 1.2 Effective Time. Simultaneously with the Closing, the parties hereto will effect the Merger by filing the required number of originals of articles of merger (substantially in the form provided for in the Plan of Merger) in accordance with the applicable provisions of the MBCA and the CGCL (the "Articles of Merger"). The Merger will become effective at the time of filing of the Articles of Merger. The time when the Merger will become effective is referred to herein as the "Effective Time." 1.3 Conversion of Shares. At the Effective Time: (a) Each share of common stock of Nordata, no par value (the "Nordata Common Stock"), issued and outstanding immediately prior thereto (except for shares referred to in Section 1.3(c) hereof) will, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive a proportionate part of the Merger Consideration (as defined in Section 1.5(a) herein). Each share of common stock of Rudata, no par value (the "Rudata Common Stock"), issued and outstanding immediately prior thereto (except for shares referred to in Section 1.3(c)) hereof, will, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive a proportionate part of the Merger Consideration (as defined in Section 1.5(a) herein). (b) Each share of common stock of Datatech Acquisition Sub, par value $.01 per share (the "Datatech Acquisition Sub Common Stock"), issued and outstanding immediately prior thereto will, by virtue of the Merger and without any action on the part of the holder thereof, be converted into one share of the common stock of Nordata, no par value (the "Nordata Surviving Corporation Common Stock"). (c) Each share of common stock of Rudata Acquisition Sub, par value $.01 per share (the "Rudata Acquisition Sub Common Stock"), issued and outstanding immediately prior thereto, will, by virtue of the Merger and without any action on the part of the holder thereof, be converted into one share of the common stock of Rudata, par value $.01 per share (the "Rudata Surviving Corporation Common Stock"). (d) The Shareholders of Nordata Common Stock and Rudata Common Stock will cease to have any rights as shareholders of the Companies, except such rights, if any, as they may have pursuant to the MBCA and the CGCL. 1.4 Closing. Unless this Agreement has been terminated and the transactions contemplated herein have been abandoned pursuant to Article 7 hereof, a closing (the "Closing") will be held on or before May 22, 1996 (the "Closing Date"); provided, however, that if any of the conditions provided for in Articles 5 and 6 hereof have not been satisfied or waived by such date, then the party to this Agreement which is unable to satisfy such condition or conditions, despite the best efforts of such party, will be entitled to postpone the Closing by notice to the other parties until such condition or conditions have been satisfied (which such notifying party will seek to cause to happen at the earliest practicable date) but in no event later than May 30, 1996 (the "Termination Date"). The Closing will be held at the offices of Brown & Streza, 7700 Irvine Center Drive, Suite 900, Irvine, CA 92718 or such other place as the parties may agree, at 9:00 a.m., local time or such other time as the parties may agree, at which time and place the documents and instruments necessary or appropriate to effect the transactions contemplated herein will be exchanged by the parties. 1.5 Merger Consideration. (a) Merger Consideration and Nature of Payment. The aggregate consideration payable to the Shareholders upon consummation of the Merger and the surrender of all the issued and outstanding shares of capital stock of each of the Companies (the "Merger Consideration") will be equal to One Million Nine Hundred Eighty Three Thousand (1,983,000) shares of common stock, par value $.01 per share, of Parent (the "Parent Common Stock"), and One Million Sixteen Thousand Dollars ($1,016,000). Each such share of Parent Common Stock will be fully paid and nonassessable and will be restricted, as defined in Rule 144 promulgated by the Securities and Exchange Commission (the "Commission"). The Merger Consideration payable to the Shareholders hereunder will be allocated among the Shareholders in the manner set forth in Exhibit 1.5(a) hereof. If the allocation of the Merger Consideration is not completed on the date of execution of this Agreement, the parties agree that such allocation will be prepared by Parent and its certifying independent accountant in such a manner that will preserve the tax free nature of the exchange of stock in the transactions contemplated by this Agreement (other than with respect to the cash portion of the Merger Consideration). (b) Payment of Merger Consideration. At the Closing upon surrender of all the issued and outstanding shares of capital stock of each of the Companies, Parent will pay to the Shareholders the aggregate sum of One Million Sixteen Thousand Dollars ($1,016,000) and will deliver to the Shareholders on the Closing Date One Million Five Hundred Thirty-Three Thousand (1,533,000) shares of restricted (as defined in Commission Rule 144) Parent Common Stock, all such consideration to be allocated to the Shareholders in accordance with Exhibit 1.5(a) hereof. In addition, Parent will deliver certificates representing Four Hundred Fifty Thousand (450,000) shares of Parent Common Stock (the "Escrowed Shares"), allocated between the Shareholders in accordance with Exhibit 1.5(a) hereof, to be placed in escrow subject to the terms and conditions of the Escrow Agreement in the form of Exhibit 1.5(b) hereof (the "Escrow Agreement"). The Escrowed Shares will be held as a source of funds for the indemnification obligations of the Shareholders set forth in Article 8 hereof. 1.6 Exchange of Acquisition Sub Common Stock. From and after the Effective Time, each outstanding certificate previously representing shares of Datatech Acquisition Sub Common Stock will be deemed for all purposes to evidence ownership of and to represent the number of shares of Nordata Surviving Corporation Common Stock into which such shares of Datatech Acquisition Sub Common Stock have been converted. From and after the Effective Time, each outstanding certificate previously representing shares of Rudata Acquisition Sub Common Stock will be deemed for all purposes to evidence ownership of and to represent the number of shares of Rudata Surviving Corporation Common Stock into which such shares of Rudata Acquisition Sub Common Stock have been converted. Promptly after the Effective Time, each of the Surviving Corporations will issue to the Parent a stock certificate or certificates representing such shares of the Surviving Corporations' Common Stock in exchange for the certificate or certificates which formerly represented shares of the respective Acquisition Sub Common Stock, which will be cancelled. 1.7 Surrender of Companies' Stock Certificates. (a) At Closing, the Shareholders will deliver the share certificates representing all of the issued and outstanding shares of capital stock of each of the Companies, and the certificates so surrendered will forthwith be cancelled. (b) The Merger Consideration payable to the Shareholders pursuant to Section 1.5 hereof will be deemed to have been paid and issued in full satisfaction of all rights of the Shareholders pertaining to each of such Shareholder's shares of capital stock of each of the Companies. 1.8 Articles of Incorporation. The articles of incorporation of Nordata and Rudata as in effect immediately prior to the Effective Time will be the articles of incorporation of the respective Surviving Corporations until further amended in accordance with applicable law. 1.9 Bylaws. The bylaws of Nordata and Rudata as in effect immediately prior to the Effective Time will be the bylaws of the respective Surviving Corporations until amended or repealed in accordance with the articles of incorporation of the respective Surviving Corporations and applicable law. 1.10 Directors and Officers. Immediately after the Effective Time of the Merger, the directors and officers of the respective Surviving Corporations will be as set forth in Exhibit 1.10 attached hereto, and will serve in such capacities until their respective successors are duly elected and qualified. ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE PARENT AND ACQUISITION SUBS The Parent and Acquisition Subs jointly and severally represent and warrant to the Shareholders as follows: 2.1 Parent's Disclosure Schedule. The Parent's Disclosure Schedule marked as Exhibit 2.1 hereto (the "Parent's Disclosure Schedule") is divided into sections which correspond to the Sections of this Article 2. The Parent's Disclosure Schedule is accurate and complete. For purposes of the Parent's Disclosure Schedule, disclosure in one Section will constitute disclosure for purposes of any other Section of this Agreement. 2.2 Organization. Each of the Parent and the Acquisition Subs is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and each has all requisite corporate power and authority to own, lease and operate its respective properties and to carry on its business as now being conducted. Each of the Parent and the Acquisition Subs is duly qualified and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary and where the failure to qualify could have a material adverse effect on the business, results of operations or financial condition of the Parent and its subsidiaries taken as a whole. The Parent has previously delivered to the Shareholders or their representative, accurate and complete copies of the articles of incorporation and bylaws, as currently in effect, of each of the Parent and each of the Acquisition Subs. 2.3 Authority and Validity of Agreement. Each of the Parent and the Acquisition Subs has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized and approved by the Boards of Directors of the Parent and the Acquisition Subs and by the Parent as the sole shareholder of the Acquisition Subs, and no other corporate proceedings on the part of the Parent or the Acquisition Subs are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by each of the Parent and the Acquisition Subs and constitutes a valid and binding obligation of the Parent and the Acquisition Subs, enforceable against each of them in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws from time to time in effect which affect creditors' rights generally. 2.4 Consents and Approvals. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not: (a) violate any provision of the articles of incorporation or bylaws of the Parent or the Acquisition Subs; (b) violate any statute, rule, regulation, order or decree of any public body or authority by which the Parent or any of its respective properties or assets may be bound or affected; (c) except for any applicable requirements of the Securities Act of 1933, as amended (the "1933 Act") and state securities laws, and the filing and recordation of appropriate merger documents as required by the MBCA and the CGCL (as the case may be), require any filing with or permit, consent or approval of any public body or authority or any other person or entity; or (d) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any obligation, agreement, commitment or authorization, to which the Parent or any is a party, or by which any of them or any of their respective properties or assets may be bound or affected. 2.5 Capitalization. The authorized capital stock of the Parent consists of 8,000,000 shares of Parent Common Stock and 1,000,000 shares of undesignated preferred stock, of which there are 4,498,563 shares of Parent Common Stock and 4,000 shares of Series A Preferred Stock issued and outstanding (which shares of Series A Preferred Stock are convertible into 40,000 shares of Parent Common Stock). The authorized capital stock of Datatech Acquisition Sub consists of 1,000 shares of Datatech Acquisition Sub Common Stock, all of which are issued and outstanding and owned by the Parent. The authorized Stock of Rudata Acquisition Sub consists of 1,000 shares of Rudata Acquisition Sub Common Stock, all of which are issued and outstanding and owned by the Parent. All shares of Parent Common Stock to be issued and delivered in the Merger pursuant to Article 1 hereof will be, at the time of issuance and delivery, validly issued, fully paid, nonassessable and free of preemptive rights. Except options to purchase 499,090 shares of Parent Common Stock heretofore granted pursuant to the Parent's 1995 Stock Incentive Plan (the "1995 Plan") and 1992 Stock Incentive Plan (the "1992 Plan") and currently outstanding, non-plan options (options granted by the Company not under either the 1992 Plan or the 1995 Plan) to purchase 45,000 shares of Parent Common Stock heretofore granted by the Parent and currently outstanding, warrants to purchase 819,497 shares of Parent Common Stock heretofore granted by the Parent and currently outstanding, there are not any outstanding or authorized subscriptions, options, warrants, calls, rights, commitments, restrictions, arrangements or any other agreements of any character that, directly or indirectly, (a) obligate the Parent to issue any shares of capital stock or any securities convertible into, or exercisable or exchangeable for, or evidencing the right to subscribe for, any shares of capital stock, (b) call for or relate to the sale, pledge, transfer or other disposition or encumbrance by the Parent of any shares of its capital stock, or (c) relate to the voting or control of such capital stock. 2.6 Commission Reports. Parent has duly and timely made all required filings with the Commission under the Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended, and all of the reports, forms and documents so filed complied in all material respects with all applicable requirements. Parent has heretofore delivered to Shareholders and the Companies accurate and complete copies of the reports, proxy statements and registration statements listed on Exhibit 2.5 hereto which have been filed with the Securities and Exchange Commission. To the knowledge of Parent, none of such reports, proxy statements or registration statements contained any untrue statements of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. To the knowledge of Parent, the consolidated financial statements and schedules of Parent contained in such public reports (or incorporated therein by reference) were prepared in accordance with generally accepted accounting principles applied on a consistent basis, except as noted therein, and fairly present the consolidated financial condition and results of operations of Parent and its subsidiaries as at the respective dates thereof and for the periods indicated therein, subject (in the case of interim unaudited financial statements) to normal year-end audit adjustments, none of which will be material. 2.7 No Brokers or Finders. Except with respect to the Broker Fee Agreement dated as of May 17, 1996 by and among Parent, Garte Torre Global Capital Markets and Harvey Garte and Richard M. Torre, neither the Parent nor any Acquisition Sub has employed any broker, agent or finder or incurred any liability for any brokerage fees, agents' commissions or finders' fees in connection with the transactions contemplated hereby. 2.8 Non-Contravention. Neither the execution, delivery and performance of this Agreement nor the consummation of the transactions contemplated herein will: (i) violate or be in conflict with any provision of the articles or certificate of incorporation or bylaws of the Parent; (ii) except for such violations, conflicts, defaults, accelerations, terminations, cancellations, impositions of fees or penalties, mortgages, pledges, liens, security interests, encumbrances, restrictions and charges which would not, individually or in the aggregate, have a material adverse affect on the business of the Parent taken as a whole (A) be in conflict with, or constitute a default under, any note, bond, lease, mortgage, indenture, license, contract, franchise, permit, instrument or other agreement or obligation to which the Parent is a party or (B) result in the creation or imposition of any mortgage, lien, security interest, encumbrance or charge of any kind, upon any property or assets of the Parent under any contract, agreement or commitment to which the Parent is a party; or (iii) to the Parent's knowledge, violate any law, judgement, decree, order, regulation or ordinance or other similar authoritative matters of any foreign, federal, state or local governmental or quasi-governmental, administrative, regulatory or judicial court, department, commission, agency, board, bureau, instrumentality or other authority (hereinafter sometimes separately referred to as an "Authority" and sometimes collectively as "Authorities") (sometimes hereinafter separately referred to as a "Law" and sometimes collectively as "Laws") by which the Parent is bound or affected. 2.9 Loss Contingencies; Other Non-Accrued Liabilities. Except as described on the Parent's Disclosure Schedule, to the Parent's knowledge, Parent does not have (i) any loss contingencies which are not required by generally accepted accounting principles to be accrued; (ii) any loss contingencies involving an unasserted claim or assessment which are not required by generally accepted accounting principles to be disclosed because the potential claimants have not manifested to Parent an awareness of a possible claim or assessment; or (iii) any categories of known liabilities or obligations (other than non-pension post-retirement medical care, dental care, life insurance or other benefits) which are not required by generally accepted accounting principles to be accrued. For purposes of this Agreement, "loss contingency" will have the meaning accorded to it by generally accepted accounting principles. 2.10 Investigations; Litigation. Except as set forth in the Parent's Disclosure Schedule, to the Parent's knowledge, there are no claims, actions, suits or proceedings by any private party or by any governmental body or authority (including any nongovernmental self-regulatory agency), nor any investigations or reviews by any federal, state, local or foreign body or authority (including any nongovernmental self-regulatory agency), against or affecting the Parent, that are pending or, to the Parent's knowledge threatened, at law or in equity. To the Parent's knowledge, there is no basis for any such investigation, review, claim, action, suit or proceeding. 2.11 Absence of Certain Changes. Except as set forth on the Parent's Disclosure Schedule, except as expressly authorized by this Agreement, and except as is in the ordinary course of business and consistent with past practice, since December 31, 1995, Parent has not: (a) Suffered any adverse change in its condition (financial or otherwise), working capital, assets, properties, liabilities, obligations, reserves or businesses, or experienced any event or failed to take any action which could reasonably be expected to have a material adverse effect on the business of the Parent; (b) Suffered any loss, damage, destruction or other casualty (whether or not covered by insurance) or suffered any loss of officers, employees, dealers, distributors, independent contractors, customers, or suppliers or other favorable business relationships which could reasonably be expected to have a material adverse affect on the business of the Parent; (c) Declared, set aside, made or paid any dividend or other distribution in respect of its capital stock, or purchased or redeemed any shares of its capital stock; (d) Except in accordance with the Parent's 1995 Plan or pursuant to the exercise of outstanding warrants or options previously granted by Parent, issued or sold any shares of its capital stock, or any options, warrants, conversion, exchange or other rights to purchase or acquire any such shares or any securities convertible into or exchangeable for such shares; (e) Incurred any indebtedness for borrowed money; (f) Mortgaged, pledged, or subjected to any material lien, lease, security interest or other charge or encumbrance any of its properties or assets, tangible or intangible; (g) Acquired or disposed of any material assets or properties; (h) Forgiven or cancelled any material debts or claims, or waived any material rights; (i) Entered into any material transaction other than in the ordinary course of business; (j) Granted to any officer or salaried employee or any other employee any material increase in compensation in any form or made any material payments for severance or termination pay; (k) Entered into any material commitment for capital expenditures for additions to plant, property or equipment; or (l) Agreed, whether in writing or otherwise, to take any action described in this Section. 2.12 Title to Property; Condition. Except as set forth on the Parent's Disclosure Schedule, Parent has good and merchantable right, title and interest in and to all of the machinery, equipment, terminals, computers, vehicles, personal property and all other assets reflected in the Parent's balance sheet as of December 31, 1995 included in the Parent's unaudited financial statements included in the Parent's most recent Form 10-QSB for the quarter ended December 31, 1995 ("Parent's Latest Balance Sheet") and all of the assets purchased or otherwise acquired since the date of Parent's Latest Balance Sheet (except for such assets as may have been sold or otherwise disposed of in the ordinary course of business since the date of Parent's Latest Balance Sheet), subject to no mortgage, pledge, lien or security interest of any kind or nature (whether or not of record). Except as set forth on the Parent's Disclosure Schedule, the items of equipment and other personal property of Parent that are necessary to the conduct of the business of Parent is in good operating condition and repair and fit for the intended purpose thereof, ordinary wear and tear excepted, and no material maintenance, replacement or repair has been deferred or neglected. 2.13 Tax Returns. For purposes of this Agreement, the term "Taxes" means all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, real or personal property, windfall profits, customs, duties or other taxes, fees, assessments, charges or levies of any kind whatever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto, and the term "Tax" means any one of the foregoing Taxes. In addition, the term "Tax Returns" means all returns, declarations, reports, statements and other documents required to be filed with any Authority in respect of Taxes, and the term "Tax Return" means any one of the foregoing Tax Returns. Except as set forth on the Parent's Disclosure Schedule, to the knowledge of Parent: (a) LIABILITY FOR TAXES. Parent has been responsible for and will pay all Taxes attributable to or arising from the business and operations of Parent conducted on or before the Closing Date. (b) FILING OF TAX RETURNS. All Tax Returns required to be filed on or prior to the date hereof by Parent with respect to Taxes of Parent have been properly completed and duly filed on a timely basis and in correct form. As of the time of filing, the foregoing Tax Returns correctly reflected the facts regarding the income, business, assets, operations, activities, status or other matters of Parent or any other information required to be shown thereon. There is no material omission, deficiency, error, misstatement or misrepresentation, whether innocent, intentional or fraudulent, in any Tax Return filed by the Parent for any period. (c) PAYMENT OF TAXES. With respect to all amounts of Taxes imposed upon the Parent, or for which Parent is or could be liable, whether to taxing Authorities (as, for example, under Law) or to other persons or entities (as, for example, under tax allocation agreements), with respect to all taxable periods or portions of periods ending on or before the Closing Date, all applicable Tax Laws and agreements have been or will be fully complied with, and all such amounts of Taxes required to be paid by Parent to taxing Authorities or others on or before the date hereof have been duly paid or will be paid on or before the Closing Date; the reserves for all such Taxes reflected in the Parent's Latest Balance Sheet are adequate and there are no liens for such Taxes upon any property or assets of the Parent. Parent withheld and remitted all amounts required to be withheld and remitted by it in respect of Taxes. (d) AUDITS AND EXTENSIONS. Neither the federal Tax Returns of the Parent nor any state or local or foreign Tax Return of the Parent has been examined by the Internal Revenue Service or any similar state or local or foreign Authority. There are no outstanding agreements or waivers extending the statutory period of limitations applicable to any Tax Return for any period. (e) INDEPENDENT CONTRACTORS AND EMPLOYEES. For purposes of computing Taxes and the filing of Tax Returns, Parent has not failed to treat as "employees" any individual providing services to Parent who would be classified as an "employee" under the applicable rules or regulations of any Authority with respect to such classification. 2.14 Insurance. Parent maintains adequate insurance policies covering fire and other casualty, general liability, theft, life, workers' compensation, health, directors and officers liability, business interruption and other forms of insurance owned or held by Parent. All present policies are in full force and effect and all premiums with respect thereto have been paid. Parent has not been denied any form of insurance and no policy of insurance has been revoked or rescinded during the past three years. 2.15 Benefit Plans. Except as set forth on the Parent's Disclosure Schedule: (a) Neither the Parent nor any other "person" within the meaning of Section 7701(a)(1) of the Code, that together with the Companies are considered a single employer pursuant to Sections 414(b), (c), (m) or (o) of the Code or Sections 3(5) or 4001(b)(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") (an "Affiliated Organization") sponsors, maintains, contributes to, is required to contribute to or has any liability of any nature, whether known or unknown, direct or indirect, absolute or contingent, with respect to, any "employee pension benefit plan" ("Pension Plan") as such term is defined in Section 3(2) of ERISA, including without limitation, any such plan that is excluded from coverage by Section 4(b)(5) of ERISA or is a "Multiemployer Plan" within the meaning of Section 3(37) or 4001(a)(3) of ERISA. Each such Pension Plan has been operated in all material respects in accordance with its terms and in material compliance with the applicable provisions of ERISA, the Code and all other applicable Law. All Pension Plans which the Companies operate as plans that are intended to qualify under the provisions of Section 401(a) of the Code materially satisfy in all material respects in form and operation the requirements of Section 401(a) and all other sections of the Code incorporated therein, including without limitation Sections 401(k) and 401(m) of the Code. (b) Neither the Parent nor any Affiliated Organization has any liability of any nature, whether known or unknown, direct or indirect, or absolute or contingent, to any Pension Plan, the Pension Benefit Guaranty Corporation ("PBGC") or any other person, arising directly or indirectly under Title IV of ERISA. No "reportable event," within the meaning of Section 4043(b) of ERISA, has occurred with respect to any Pension Plan. Neither of the Parent nor any Affiliated Organization has ceased operations at any facility or withdrawn from any Pension Plan in a manner which could subject the Affiliated Companies or Affiliated Organization to liability under Section 4062(e), 4063 or 4064 of ERISA. Neither the Parent nor any Affiliated Organization maintains, contributes to, has participated in or agreed to participate in any Multiemployer Plan (either pension or welfare). Neither the Parent nor any Affiliated Organization currently has any obligation, known or unknown, direct or indirect, absolute or contingent, to make any withdrawal liability payment to any Multiemployer Plan. Neither the Parent nor any Affiliated Organization has been a party to a sale of assets to which Section 4204 of ERISA applied with respect to which it could incur any withdrawal liability (including any contingent or secondary withdrawal liability) to any Multiemployer Plan. Neither the Parent nor any Affiliated Organization has incurred (or has experienced an event that will, within the ensuing 12 months, result in) a "complete withdrawal" or "partial withdrawal," as such terms are defined respectively in Sections 4203 and 4205 of ERISA, with respect to a Multiemployer Plan, and nothing has occurred that could to result in such a complete or partial withdrawal. (c) Neither the Parent nor any Affiliated Organization sponsors, maintains, contributes to, is required to contribute to or has any liability of any nature, whether known or unknown, direct or indirect, or absolute or contingent, with respect to, any "employee welfare benefit plan" ("Welfare Plan") as such term is defined in Section 3(1) of ERISA, whether insured or otherwise. Each Welfare Plan has been operated in all material respects in accordance with its terms and in material compliance with the applicable provisions of ERISA, the Code and all other applicable Law. Neither the Parent nor any Affiliated Organization has established or contributed to, is required to contribute to or has any liability of any nature, whether known or unknown, direct or indirect, or absolute or contingent, with respect to any "voluntary employees' beneficiary association" within the meaning of Section 501(c)(9) of the Code, "welfare benefit fund" within the meaning of Section 419 of the Code, "qualified asset account" within the meaning of Section 419A of the Code or "multiple employer welfare arrangement" within the meaning of Section 3(40) or ERISA. No Welfare Plan which is a Multiemployer Plan within the meaning of Section 3(37) of ERISA imposes any post-withdrawal liability or contribution obligations upon the Companies or Affiliated Organizations. Neither the Parent nor any Affiliated Organization maintains, contributes to or has any material liability of any nature, whether known or unknown, direct or indirect, or absolute or contingent, with respect to medical, health, life or other welfare benefits for present or future terminated employees or their spouses or dependents other than as required by Part 6 of Subtitle B of Title I of ERISA or any comparable state law. (d) Neither the Parent nor any Affiliated Organization is a party to, maintains, contributes to, is required to contribute to or has or could have any liability of any nature, whether known or unknown, direct or indirect, or absolute or contingent, with respect to, any bonus plan, incentive plan, stock plan or any other current or deferred compensation (other than current salary or wages paid in the form of cash), separation, retention, severance, paid time off or similar agreement, arrangement or policy, or any individual employment or consulting or personal service agreement, other than a Pension Plan or Welfare Plan ("Compensation Plans"). Each Compensation Plan has been operated in all material respects in accordance with its terms and in compliance with the applicable provisions of all applicable Law. (e) There are no facts or circumstances which could, directly or indirectly, subject the Companies or any Affiliated Organization to any excise tax or other liability under Chapters 43, 46 or 47 of Subtitle D of the Code, penalty tax or other liability under Chapter 68 of Subtitle F of the Code or civil penalty arising under Section 502 of ERISA. (f) Full payment has been made of all amounts which the Parent or any Affiliated Organization are required, under applicable Law, the terms of any Pension Plan, Welfare Plan or Compensation Plan, or any agreement relating to any Pension Plan or Welfare Plan or Compensation Plan, to have paid as a contribution, premium or other remittance thereto or benefit thereunder. Each Pension Plan that is subject to the minimum funding standards of Section 412 of the Code and Section 302 of ERISA meets those standards and has not incurred any accumulated funding deficiency within the meaning of Section 412 or 418B of the Code and no waiver of any minimum funding requirement under Section 412 of the Code has been applied for or obtained with respect to any such Pension Plan. The Parent and each Affiliated Organization have made adequate provisions for reserves or accruals in accordance with generally accepted accounting principles to meet contribution, benefit or funding obligations arising under applicable Law or the terms of any Pension Plan or Welfare Plan or Compensation Plan or related agreement. There will be no change on or before Closing in the operation of any Pension Plan, Welfare Plan or Compensation Plan or any documents with respect thereto which will result in an increase in the benefit liabilities under such plans, except as may be required by law. (g) The Parent and each Affiliated Organization have timely complied in all material respects with all reporting and disclosure obligations with respect to the Pension Plans, Welfare Plans and Compensation Plans imposed by Title I of ERISA or other applicable Law. (h) There are no pending or, to the knowledge of the Parent, threatened audits, investigations, claims, suits, grievances or other proceedings, and there are no facts that could give rise thereto, involving, directly or indirectly, any Pension Plan, Welfare Plan or Compensation Plan, or any rights or benefits thereunder, other than the ordinary and usual claims for benefits by participants, dependents or beneficiaries. (i) The transactions contemplated herein do not result in the acceleration of accrual, vesting, funding or payment of any contribution or benefit under any Pension Plan, Welfare Plan or Compensation Plan. No payment made or to be made to any individual pursuant to any agreement with the Parent or any Affiliated Organization could reasonably be expected individually or collectively (and assuming that any contingencies or conditions occur in a manner that maximizes payment) to give rise to a "parachute payment" within the meaning of Section 280G of the Code. (j) No action or omission of any of the Parent or any director, officer, employee, or agent thereof in any way restricts, impairs or prohibits Parent, or any successor from amending, merging, or terminating any Pension Plan, Welfare Plan or Compensation Plan in accordance with the express terms of any such plan and applicable law. (k) Section 2.15(k) on the Disclosure Schedule lists and the Parent has delivered to Shareholders true and complete copies of (i) all Pension, Welfare and Compensation Plans and related trust agreements or other agreements or contracts evidencing any funding vehicle with respect thereto, (ii) the three most recent annual reports on Treasury Form 5500, including all schedules and attachments thereto, with respect to any Plan for which such a report is required, (iii) the three most recent actuarial reports with respect to any Pension Plan that is a "defined benefit plan" within the meaning of Section 414(j) of the Code, (iv) the form of summary plan description, including any summary of material modifications thereto or other modifications communicated to participants, currently in effect with respect to each Pension Plan, Welfare Plan or Compensation Plan, (v) the most recent determination letter with respect to each Pension Plan intended to qualify under Section 401(a) of the Code and the full and complete application therefor submitted to the Internal Revenue Service and (vi) accurate estimates of the withdrawal liability which would be imposed by any Multiemployer Plan (either pension or welfare) if the Companies and Affiliated Organizations were to withdraw from the Plan in a complete withdrawal, the date as of which such estimates are made and the factors used to make such estimates. 2.16 Contracts and Commitments; No Default. (a) Except as set forth on the Parent's Disclosure Schedule and except as otherwise has been filed with the Commission, Parent: 1. does not have any written or oral contract, commitment, agreement or arrangement with any person which is required to be disclosed or filed as an exhibit pursuant to Regulation S-B promulgated by the Commission; 2. does not pay any person or entity for services rendered as an employee or consultant cash remuneration in such amounts or upon such terms which are required to be disclosed or which require any agreement to be filed as an exhibit pursuant to Regulation S-B promulgated by the Commission; 3. is not restricted by agreement from carrying on its business or any part thereof in any geographical area or from competing in any line of business with any person or entity; 4. is not subject to any obligation or requirement to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any person or entity; 5. is not party to any agreement, contract, commitment or loan which is required to be disclosed or filed as an exhibit pursuant to Regulation S-B promulgated by the Commission, to which any of its directors, officers or any of the shareholders or any "affiliate" or "associate" (as defined in Rule 405 as promulgated under the Securities Act of 1933) thereof is a party; 6. is not subject to any contract, commitment, agreement or arrangement with any "disqualified individual" (as defined in Section 280G(c) of the Code) which contains any severance or termination pay liabilities which would result in a disallowance of the deduction for any "excess parachute payment" (as defined in Section 280G(b)(1) of the Code) under Section 280G of the Code; and 7. does not have any distributorship, dealer, manufacturer's representative, franchise or similar sales contract relating to the payment of a commission. (b) True and complete copies (or summaries, in the case of oral items) of all items disclosed pursuant to Section 2.16(a) have been made available to Shareholders and its counsel for review. Except as set forth on the Parent's Disclosure Schedule, all such items are valid and enforceable by and against the Parent in accordance with their respective terms; the Parent is not in breach, violation or default, in any material respect, in the performance of any of its obligations thereunder, and no facts or circumstances exist which, whether with the giving of due notice, lapse of time, or both, would constitute a breach, violation or default, in any material respect, thereunder or thereof; and, to the knowledge of the Parent no other parties thereto are in breach, violation or default, in any material respect, thereunder or thereof, and no facts or circumstances exist which, whether with the giving of due notice, lapse of time, or both, would constitute such a breach, violation or default in any material respect thereunder or thereof. 2.17 Compliance with Law. Except as set forth on the Parent's Disclosure Schedule, and without limiting the scope of any other representations or warranties contained in this Agreement, but without intending to expand the scope of such other representations and warranties, to the knowledge of Parent, the assets, properties, business and operations of the Parent are and have been in compliance in all material respects when taken as a whole with all laws applicable to the ownership and conduct of their assets, properties, business and operations. 2.18 Accuracy of Information. To the knowledge of Parent, after diligent review, no representation or warranty by the Parent in this Agreement contains or will contain any untrue statement of material fact or omits or will omit to state any material fact necessary in order to make the statements herein or therein, in light of the circumstances under which they were made, not misleading as of the date of the representation or warranty. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS Each of the Shareholders, jointly and severally, represent and warrant to the Parent and the Acquisition Subs as follows: 3.1 Shareholders' Disclosure Schedule. The Shareholders' Disclosure Schedule marked as Exhibit 3.1 hereto (the "Shareholders' Disclosure Schedule") is divided into sections which correspond to the Sections of this Article 3. The Shareholders' Disclosure Schedule is accurate and complete. For purposes of the Shareholders' Disclosure Schedule, disclosure in one Section will constitute disclosure for purposes of any other Section of this Agreement. 3.2 Corporate Organization. Each of the Companies is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, has full corporate power and authority to carry on its business as it is now being conducted and to own, lease and operate its properties and assets. Each of the Companies has heretofore delivered to Parent complete and correct copies of its articles or certificate of incorporation and bylaws, as presently in effect. Each of the Companies is duly qualified or licensed to do business as a foreign corporation and is in good standing in every jurisdiction in which the character or location of the properties and assets owned, leased or operated by it or the nature of the business conducted by it requires such qualification or licensing, except where the failure to be so qualified, licensed or in good standing in such other jurisdiction could not, individually or in the aggregate, have a material adverse effect on the business of the Companies taken as a whole. Shareholders have previously delivered to the Parent accurate and complete copies of the articles of incorporation and bylaws of the Companies, as currently in effect. The Companies do not, directly or indirectly, own or control or have any capital, equity, partnership, participation or other interest in any corporation, partnership, joint venture or other business association or entity. 3.3 Capitalization. The authorized capital stock of Nordata consists of 1,000 shares of common stock, no par value, of which 1,000 shares are issued and outstanding. The authorized capital stock of Rudata consists of 1,000,000 shares of common stock, no par value, of which 20,000 shares are issued and outstanding. All issued and outstanding shares of capital stock of each of the Companies are duly authorized, validly issued, fully paid and nonassessable and are without, and were not issued in violation of, any preemptive rights. All issued and outstanding shares of capital stock of each of the Companies are owned solely by the Shareholders in the exact amounts as shown on the Shareholders' Disclosure Schedule. Except as set forth under Section 3.3 on the Shareholders' Disclosure Schedule: (i) there are no outstanding options, warrants, conversion privileges or other rights to purchase or acquire any shares of capital stock or other equity securities of either of the Companies or any outstanding securities that are convertible into or exchangeable for such shares, securities or rights; and (ii) there are no contracts, commitments, understandings, arrangements or restrictions by which either of the Companies is bound to issue or acquire any additional shares of its capital stock or other equity securities or any options, warrants, conversion privileges or other rights to purchase or acquire any capital stock or other equity securities of either of the Companies or any securities convertible into or exchangeable for such shares, securities or rights. 3.4 Authorization. Each of the Companies has full corporate power and authority to enter into this Agreement and to carry out the transactions contemplated herein. Shareholders, and each of them, have the legal capacity to enter into this Agreement and to carry out the transactions contemplated herein, including without limitation the legal capacity to execute, deliver and perform the agreements or contracts, if any, required by Sections 5.11 and 5.12 to be executed and delivered by either of them as a condition to the Closing. The Shareholders and the Board of Directors of each of the Companies have taken all action required by law, the articles or certificate of incorporation and bylaws of each of the Companies and otherwise to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein. This Agreement has been duly and validly executed and delivered by each of the Companies, and this Agreement is the valid and binding legal obligation of each of the Companies, enforceable against each of the Companies in accordance with its terms, subject to the affect of applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance and other laws affecting the rights of creditors generally or the availability of specific performance, injunctive relief and other equitable remedies and to general principles of equity (regardless of whether such principles are considered in a proceeding in equity or at law). This Agreement has been duly and validly executed by the Shareholders. This Agreement is the valid and binding legal obligation of each of the Shareholders, enforceable against each of the Shareholders in accordance with its terms. 3.5 Non-Contravention. Except as set forth on the Shareholders' Disclosure Schedule, neither the execution, delivery and performance of this Agreement nor the consummation of the transactions contemplated herein will: (i) violate or be in conflict with any provision of the articles or certificate of incorporation or bylaws or either of the Companies; (ii) except for such violations, conflicts, defaults, accelerations, terminations, cancellations, impositions of fees or penalties, mortgages, pledges, liens, security interests, encumbrances, restrictions and charges which would not, individually or in the aggregate, have a material adverse affect on the business of the Companies taken as a whole (A) be in conflict with, or constitute a default under, any note, bond, lease, mortgage, indenture, license, contract, franchise, permit, instrument or other agreement or obligation to which either of the Companies is a party or (B) result in the creation or imposition of any mortgage, lien, security interest, encumbrance or charge of any kind, upon any property or assets of either of the Companies under any contract, agreement or commitment to which either of the Companies or either of the Shareholders is a party; or (iii) to the knowledge of each of the Companies and the Shareholders, violate any law, judgement, decree, order, regulation or ordinance or other similar authoritative matters of any foreign, federal, state or local governmental or quasi-governmental, administrative, regulatory or judicial court, department, commission, agency, board, bureau, instrumentality or other authority (hereinafter sometimes separately referred to as an "Authority" and sometimes collectively as "Authorities") (sometimes hereinafter separately referred to as a "Law" and sometimes collectively as "Laws") by which either of the Companies or either of the Shareholders is bound or affected. 3.6 Consents and Approvals. Except as set forth on the Shareholders' Disclosure Schedule, with respect to each of the Companies, no consent, approval, order or authorization of or from, or registration, notification, declaration or filing with (hereinafter sometimes separately referred to as a "Consent" and sometimes collectively as "Consents") any individual, governmental or regulatory authority or other person or entity is required in connection with the execution, delivery or performance of this Agreement by either of the Companies or by either of the Shareholders or the consummation by either of the Companies or either of the Shareholders of the transactions contemplated herein. 3.7 Financial Statements. The Shareholders have furnished to Parent summaries of the unaudited combined balance sheet and unaudited combined statement of income for the Companies on a combined basis as of and for each of the fiscal years ended December 31, 1991, 1992, 1993 and 1994, which are attached hereto as Exhibits 3.7 (the "Financial Statements"). The Shareholders have delivered to Parent an unaudited balance sheet for the Companies on a combined basis as of February 29, 1996, which unaudited balance sheet is attached hereto as a part of Exhibit 3.7 referred to herein as the "Latest Balance Sheet." Except as disclosed therein, the Financial Statements (i) are in accordance with the books and records of the respective Companies and have been consistently prepared as of the dates reflected therein and for all periods reflected therein, (ii) fairly present the financial position of the respective Companies as of the respective dates thereof, and with respect to the statements of income for the periods then ended, and (iii) accurately state the various account balances as of the dates reflected therein and accurately state the changes in such account balances for the periods reflected therein. Except as set forth on the Shareholders' Disclosure Schedule, to the knowledge of the Shareholders and each of the Companies, neither of the Companies has any liability or obligation of any nature, asserted or unasserted, accrued, absolute or contingent or otherwise, and whether due or to become due, that is required to be set forth in accordance with generally accepted accounting principles that is not reflected or reserved against on the most recent balance sheet for such Companies included in the Financial Statements, except those that may have been incurred after the date of the most recent balance sheet of the Companies included in the Financial Statements in the ordinary course of business and consistent with past practices. 3.8 Loss Contingencies; Other Non-Accrued Liabilities. Except as described on the Shareholders' Disclosure Schedule, to the knowledge of the Shareholders and each of the Companies, neither of the Companies has (i) any loss contingencies which are not required by generally accepted accounting principles to be accrued; (ii) any loss contingencies involving an unasserted claim or assessment which are not required by generally accepted accounting principles to be disclosed because the potential claimants have not manifested to Companies an awareness of a possible claim or assessment; or (iii) any categories of known liabilities or obligations (other than non-pension post-retirement medical care, dental care, life insurance or other benefits) which are not required by generally accepted accounting principles to be accrued. For purposes of this Agreement, "loss contingency" will have the meaning accorded to it by generally accepted accounting principles. 3.9 Investigations; Litigation. To the knowledge of each of the Companies and the Shareholders, there are no claims, actions, suits or proceedings by any private party or by any governmental body or authority (including any nongovernmental self-regulatory agency), nor any investigations or reviews by any federal, state, local or foreign body or authority (including any nongovernmental self-regulatory agency), against or affecting either of the Companies or the Shareholders, that are pending or, to the knowledge of the Companies and the Shareholders, threatened, at law or in equity. To the best of the knowledge of the Companies and the Shareholders, there is no basis for any such investigation, review, claim, action, suit or proceeding. 3.10 Absence of Certain Changes. Except as set forth on the Shareholders' Disclosure Schedule, except as expressly authorized by this Agreement, and except as is in the ordinary course of business and consistent with past practice, since December 31, 1995, each of the Companies has not: (a) Suffered any adverse change in its condition (financial or otherwise), working capital, assets, properties, liabilities, obligations, reserves or businesses, or experienced any event or failed to take any action which could reasonably be expected to have a material adverse effect on the business of the Companies taken as a whole; (b) Suffered any loss, damage, destruction or other casualty (whether or not covered by insurance) or suffered any loss of officers, employees, dealers, distributors, independent contractors, customers, or suppliers or other favorable business relationships which could reasonably be expected to have a material adverse affect on the business of the Companies taken as a whole; (c) Declared, set aside, made or paid any dividend or other distribution in respect of its capital stock, or purchased or redeemed any shares of its capital stock; (d) Issued or sold any shares of its capital stock, or any options, warrants, conversion, exchange or other rights to purchase or acquire any such shares or any securities convertible into or exchangeable for such shares; (e) Incurred any indebtedness for borrowed money; (f) Mortgaged, pledged, or subjected to any material lien, lease, security interest or other charge or encumbrance any of its properties or assets, tangible or intangible; (g) Acquired or disposed of any material assets or properties; (h) Forgiven or cancelled any material debts or claims, or waived any material rights; (i) Entered into any material transaction other than in the ordinary course of business; (j) Granted to any officer or salaried employee or any other employee any material increase in compensation in any form or made any material payments for severance or termination pay; (k) Entered into any material commitment for capital expenditures for additions to plant, property or equipment; or (l) Agreed, whether in writing or otherwise, to take any action described in this Section. 3.11 Title to Property; Condition. Except as set forth on the Shareholders' Disclosure Schedule, each of the Companies has good and merchantable right, title and interest in and to all of the machinery, equipment, terminals, computers, vehicles, personal property and all other assets reflected in the Latest Balance Sheet for each such Companies included in the Financial Statements and all of the assets purchased or otherwise acquired since the date of the Latest Balance Sheet for each such Companies (except for such assets as may have been sold or otherwise disposed of in the ordinary course of business since the date of the most recent balance sheet included in the Financial Statements), subject to no mortgage, pledge, lien or security interest of any kind or nature (whether or not of record). Except as set forth on the Shareholders' Disclosure Schedule, the items of equipment and other personal property of each of the Companies that are necessary to the conduct of the business of each of the Companies are in good operating condition and repair and fit for the intended purpose thereof, ordinary wear and tear excepted, and no material maintenance, replacement or repair has been deferred or neglected. 3.12 Inventories. Except as set forth on the Shareholders' Disclosure Schedule, all inventory or each of the Companies reflected in the Latest Balance Sheet consists of a quality and quantity usable and salable in the ordinary course of business, and the present quantities of all inventory of each of the Companies are reasonable in the present circumstances of the business of each of the Companies as currently conducted, except for items of obsolete or below standard quality, all of which are immaterial to the overall financial condition of the Company taken as a whole. 3.13 Receivables and Payables. Except as set forth on the Shareholders' Disclosure Schedule, (i) each of the Companies has good right, title and interest in and to all its accounts receivable, notes receivable and other receivables reflected in the Latest Balance Sheet for such Companies and those acquired and generated since the date of the Latest Balance Sheet for such Companies included in the Financial Statements (except for those paid since such date); (ii) none of such receivables is subject to any mortgage, pledge, lien or security interest of any kind or nature (whether or not of record); (iii) except to the extent of applicable reserves shown in the Latest Balance Sheet for such Companies included in the Financial Statements, all of the receivables owing to each of the Companies constitute valid and enforceable claims arising from bona fide transactions in the ordinary course of business, and neither of the Companies has received any written or oral claims or refusals to pay, or granted any rights of set-off, against any thereof; and (iv) to the knowledge of each of the Companies and the Shareholders, there is no reason why any receivable will not be collected in accordance with its terms, other than for such receivables which are not in excess of the reserves established therefor and reflected in the most recent balance sheet for such Companies included in the Financial Statements. Included in the Shareholders' Disclosure Schedule is a schedule of the aging of accounts receivable of each of the Companies (by monthly integrals) as of March 31, 1996 prepared in accordance with generally accepted accounting procedures consistently applied. 3.14 Tax Returns. To the knowledge of each of the Companies and the Shareholders, except as set forth on the Shareholders' Disclosure Schedule: (a) LIABILITY FOR TAXES. The Companies and the Shareholders have been responsible for and will pay all Taxes attributable to or arising from the business and operations of the Companies conducted on or before the Closing Date and will be responsible for their own income and franchise Taxes, if any, arising from the transactions contemplated by this Agreement, except as provided in Sections 4.11 and 8.2(c) hereof. (b) FILING OF TAX RETURNS. All Tax Returns required to be filed on or prior to the date hereof by the Companies or the Shareholders with respect to Taxes of the Companies have been properly completed and duly filed on a timely basis and in correct form. As of the time of filing, the foregoing Tax Returns correctly reflected the facts regarding the income, business, assets, operations, activities, status or other matters of the Companies and the Shareholders or any other information required to be shown thereon. There is no material omission, deficiency, error, misstatement or misrepresentation, whether innocent, intentional or fraudulent, in any Tax Return filed by the Companies or the Shareholders for any period. Any Tax Returns filed after the date hereof, but on or before the Closing Date, will conform with the provisions of this Section 3.15(b). (c) PAYMENT OF TAXES. With respect to all amounts of Taxes imposed upon the Companies or the Shareholders, or for which the Companies or the Shareholders are or could be liable, whether to taxing Authorities (as, for example, under Law) or to other persons or entities (as, for example, under tax allocation agreements), with respect to all taxable periods or portions of periods ending on or before the Closing Date, all applicable Tax Laws and agreements have been or will be fully complied with, and all such amounts of Taxes required to be paid by the Companies or the Shareholders to taxing Authorities or others on or before the date hereof have been duly paid or will be paid on or before the Closing Date; the reserves for all such Taxes reflected in the Latest Balance Sheet are adequate and there are no liens for such Taxes upon any property or assets of the Companies. The Companies have withheld and remitted all amounts required to be withheld and remitted by it in respect of Taxes. No Shareholder of any of the Companies which is an S Corporation under the Code has since the Latest Balance Sheet received any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any such Companies capital stock or equity interest to pay Taxes. (d) AUDITS AND EXTENSIONS. Except as set forth in the Shareholders' Disclosure Schedule, neither the federal Tax Returns of the Companies (and of the Shareholders to the extent the operations of the Companies are reflected in the Shareholders' Tax Returns) nor any state or local or foreign Tax Return of the Companies have been examined by the Internal Revenue Service or any similar state or local or foreign Authority and, except to the extent shown therein, all deficiencies asserted as a result of such examinations have been paid or finally settled and no issue has been raised by the Internal Revenue Service or any similar state or local or foreign Authority in any such examination which, by application of similar principles, reasonably could be expected to result in a proposed deficiency for any other period not so examined. Except as set forth in the Shareholders' Disclosure Schedule, all deficiencies and assessments of Taxes of the Companies (or any of the Shareholders' to the extent attributable to the business or operations of the Companies) resulting from an examination of any Tax Returns by any Authority have been paid and there are no pending examinations currently being made by any Authority nor has there been any written or oral notification to the Companies or the Shareholders of any intention to make an examination of any Taxes by any Authority. Except as set forth in the Shareholders' Disclosure Schedule, there are no outstanding agreements or waivers extending the statutory period of limitations applicable to any Tax Return for any period. (e) INDEPENDENT CONTRACTORS AND EMPLOYEES. For purposes of computing Taxes and the filing of Tax Returns, the Companies have not failed to treat as "employees" any individual providing services to the Companies who would be classified as an "employee" under the applicable rules or regulations of any Authority with respect to such classification. (f) S CORPORATION ELECTIONS. Rudata has had in effect a valid election under Code Section 1362 to be treated as an "S corporation" for each of their taxable years since inception. Neither the Companies nor either of the Shareholders have taken any action to revoke that election. Neither the Companies nor the Shareholders are aware of any basis or the existence of any facts that would permit the Internal Revenue Service to revoke that election for any period prior to the Closing Date. Except as described on the Shareholders' Disclosure Schedule, since the effective date of Rudata's election as an S corporation to and including the Closing Date, the Companies will not have incurred or become liable for the payment of any corporate-level income tax, or any related penalties or interest. 3.15 Insurance. Section 3.16 of the Shareholders' Disclosure Schedule contains an accurate and complete list of all policies of fire and other casualty, general liability, theft, life, workers' compensation, health, directors and officers liability, business interruption and other forms of insurance owned or held by each of the Companies, specifying the insurer, the policy number, the term of the coverage and, in the case of any "claims made" coverage, the same information as to predecessor policies for the previous five years. All present policies are in full force and effect and all premiums with respect thereto have been paid. Neither of the Companies has been denied any form of insurance and no policy of insurance has been revoked or rescinded during the past three years, except as described under Section 3.15 on the Shareholders' Disclosure Schedule. 3.16 Benefit Plans. Except as set forth on the Shareholders' Disclosure Schedule: (a) Neither the Companies, Shareholders nor any other "person" within the meaning of Section 7701(a)(1) of the Code, that together with the Companies are considered a single employer pursuant to Sections 414(b), (c), (m) or (o) of the Code or Sections 3(5) or 4001(b)(1) of ERISA (a "Datatech Affiliated Organization") sponsors, maintains, contributes to, is required to contribute to or has any liability of any nature, whether known or unknown, direct or indirect, absolute or contingent, with respect to, any "employee pension benefit plan" ("Datatech Pension Plan") as such term is defined in Section 3(2) of ERISA, including without limitation, any such plan that is excluded from coverage by Section 4(b)(5) of ERISA or is a "Multiemployer Plan" within the meaning of Section 3(37) or 4001(a)(3) of ERISA. Each such Datatech Pension Plan has been operated in all material respects in accordance with its terms and in compliance with the applicable provisions of ERISA, the Code and all other applicable Law. All Pension Plans which the Companies operate as plans that are intended to qualify under the provisions of Section 401(a) of the Code satisfy in all material respects in form and operation the requirements of Section 401(a) and all other sections of the Code incorporated therein, including without limitation Sections 401(k) and 401(m) of the Code. (b) Neither the Companies nor any Datatech Affiliated Organization has any liability of any nature, whether known or unknown, direct or indirect, or absolute or contingent, to any Datatech Pension Plan, the Pension Benefit Guaranty Corporation ("PBGC") or any other person, arising directly or indirectly under Title IV of ERISA. No "reportable event," within the meaning of Section 4043(b) of ERISA, has occurred with respect to any Datatech Pension Plan. Neither any of the Companies nor any Datatech Affiliated Organization has ceased operations at any facility or withdrawn from any Datatech Pension Plan in a manner which could subject the Companies or Datatech Affiliated Organization to liability under Section 4062(e), 4063 or 4064 of ERISA. Neither any of the Companies nor any Datatech Affiliated Organization maintains, contributes to, has participated in or agreed to participate in any Multiemployer Plan (either pension or welfare). Neither any of the Companies nor any Datatech Affiliated Organization currently has any obligation, known or unknown, direct or indirect, absolute or contingent, to make any withdrawal liability payment to any Multiemployer Plan. Neither the Companies nor any Datatech Affiliated Organization has been a party to a sale of assets to which Section 4204 of ERISA applied with respect to which it could incur any withdrawal liability (including any contingent or secondary withdrawal liability) to any Multiemployer Plan. Neither the Companies nor any Datatech Affiliated Organization has incurred (or has experienced an event that will, within the ensuing 12 months, result in) a "complete withdrawal" or "partial withdrawal," as such terms are defined respectively in Sections 4203 and 4205 of ERISA, with respect to a Multiemployer Plan, and nothing has occurred that could result in such a complete or partial withdrawal. (c) Neither the Companies nor any Datatech Affiliated Organization sponsors, maintains, contributes to, is required to contribute to or has any liability of any nature, whether known or unknown, direct or indirect, or absolute or contingent, with respect to, any "employee welfare benefit plan" ("Datatech Welfare Plan") as such term is defined in Section 3(1) of ERISA, whether insured or otherwise. Each Datatech Welfare Plan has been operated in all material respects in accordance with its terms and in compliance with the applicable provisions of ERISA, the Code and all other applicable Law. Neither the Companies nor any Datatech Affiliated Organization has established or contributed to, is required to contribute to or has any liability of any nature, whether known or unknown, direct or indirect, or absolute or contingent, with respect to any "voluntary employees' beneficiary association" within the meaning of Section 501(c)(9) of the Code, "welfare benefit fund" within the meaning of Section 419 of the Code, "qualified asset account" within the meaning of Section 419 of the Code, "qualified asset account" within the meaning of Section 419A of the Code or "multiple employer welfare arrangement" within the meaning of Section 3(40) or ERISA. No Datatech Welfare Plan which is a Multiemployer Plan within the meaning of Section 3(37) of ERISA imposes any post-withdrawal liability or contribution obligations upon the Companies or Datatech Affiliated Organizations. Neither the Companies nor any Datatech Affiliated Organization maintains, contributes to or has any material liability of any nature, whether known or unknown, direct or indirect, or absolute or contingent, with respect to medical, health, life or other welfare benefits for present or future terminated employees or their spouses or dependents other than as required by Part 6 of Subtitle B of Title I of ERISA or any comparable state law. (d) Neither the Companies nor any Datatech Affiliated Organization is a party to, maintains, contributes to, is required to contribute to or has or could have any liability of any nature, whether known or unknown, direct or indirect, or absolute or contingent, with respect to, any bonus plan, incentive plan, stock plan or any other current or deferred compensation (other than current salary or wages paid in the form of cash), separation, retention, severance, paid time off or similar agreement, arrangement or policy, or any individual employment or consulting or personal service agreement, other than a Datatech Pension Plan or Datatech Welfare Plan ("Datatech Compensation Plans"). Each Datatech Compensation Plan has been operated in all material respects in accordance with its terms and in compliance with the applicable provisions of all applicable Law. (e) There are no facts or circumstances which could, directly or indirectly, subject the Companies or any Datatech Affiliated Organization to any excise tax or other liability under Chapters 43, 46 or 47 of Subtitle D of the Code, penalty tax or other liability under Chapter 68 of Subtitle F of the Code or civil penalty arising under Section 502 of ERISA. (f) Full payment has been made of all amounts which the Companies or any Datatech Affiliated Organization are required, under applicable Law, the terms of any Datatech Pension Plan, Datatech Welfare Plan or Datatech Compensation Plan, or any agreement relating to any Datatech Pension Plan or Datatech Welfare Plan or Datatech Compensation Plan, to have paid as a contribution, premium or other remittance thereto or benefit thereunder. Each Datatech Pension Plan that is subject to the minimum funding standards of Section 412 of the Code and Section 302 of ERISA meets those standards and has not incurred any accumulated funding deficiency within the meaning of Section 412 or 418B of the Code and no waiver of any minimum funding requirement under Section 412 of the Code has been applied for or obtained with respect to any such Datatech Pension Plan. The Companies and each Datatech Affiliated Organization have made adequate provisions for reserves or accruals in accordance with generally accepted accounting principles to meet contribution, benefit or funding obligations arising under applicable Law or the terms of any Datatech Pension Plan or Datatech Welfare Plan or Datatech Compensation Plan or related agreement. There will be no change on or before Closing in the operation of any Datatech Pension Plan, Datatech Welfare Plan or Datatech Compensation Plan or any documents with respect thereto which will result in an increase in the benefit liabilities under such plans, except as may be required by law. (g) The Companies and each Datatech Affiliated Organization have timely complied in all material respects with all reporting and disclosure obligations with respect to the Datatech Pension Plans, Datatech Welfare Plans and Datatech Compensation Plans imposed by Title I of ERISA or other applicable Law. (h) There are no pending or, to the knowledge of the Shareholders and the Companies, threatened audits, investigations, claims, suits, grievances or other proceedings, and there are no facts that could give rise thereto, involving, directly or indirectly, any Datatech Pension Plan, Datatech Welfare Plan or Datatech Compensation Plan, or any rights or benefits thereunder, other than the ordinary and usual claims for benefits by participants, dependents or beneficiaries. (i) The transactions contemplated herein do not result in the acceleration of accrual, vesting, funding or payment of any contribution or benefit under any Datatech Pension Plan, Datatech Welfare Plan or Datatech Compensation Plan. No payment made or to be made to any individual pursuant to any agreement with any of the Companies or any Datatech Affiliated Organization could reasonably be expected individually or collectively (and assuming that any contingencies or conditions occur in a manner that maximizes payment) to give rise to a "parachute payment" within the meaning of Section 280G of the Code. (j) No action or omission of any of the Companies or any director, officer, employee, or agent thereof in any way restricts, impairs or prohibits Parent, or any of the Companies or any successor from amending, merging, or terminating any Datatech Pension Plan, Datatech Welfare Plan or Datatech Compensation Plan in accordance with the express terms of any such plan and applicable law. (k) Section 3.16(k) on the Shareholders' Disclosure Schedule lists and the Companies have delivered to the Parent true and complete copies of (i) all Datatech Pension, Datatech Welfare and Datatech Compensation Plans and related trust agreements or other agreements or contracts evidencing any funding vehicle with respect thereto, (ii) the three most recent annual reports on Treasury Form 5500, including all schedules and attachments thereto, with respect to any Plan for which such a report is required, (iii) the three most recent actuarial reports with respect to any Datatech Pension Plan that is a "defined benefit plan" within the meaning of Section 414(j) of the Code, (iv) the form of summary plan description, including any summary of material modifications thereto or other modifications communicated to participants, currently in effect with respect to each Datatech Pension Plan, Datatech Welfare Plan or Datatech Compensation Plan, (v) the most recent determination letter with respect to each Datatech Pension Plan intended to qualify under Section 401(a) of the Code and the full and complete application therefor submitted to the Internal Revenue Service and (vi) accurate estimates of the withdrawal liability which would be imposed by any Multiemployer Plan (either pension or welfare) if the Companies and Datatech Affiliated Organizations were to withdraw from the Plan in a complete withdrawal, the date as of which such estimates are made and the factors used to make such estimates. 3.17 Bank Accounts; Powers of Attorney. Section 3.17 of the Shareholders' Disclosure Schedule sets forth: (i) the names of all financial institutions, investment banking and brokerage houses, and other similar institutions at which the Companies and its Subsidiaries maintain accounts, deposits, safe deposit boxes of any nature, and the names of all persons authorized to draw thereon or make withdrawals therefrom; (ii) the terms and conditions thereof and any limitations or restrictions as to use, withdrawal or otherwise; and (iii) the names of all persons or entities holding general or special powers of attorney from each of the Companies and a summary of the terms thereof. 3.18 Contracts and Commitments; No Default. (a) Except as set forth on the Shareholders' Disclosure Schedule, neither of the Companies: 1. has any written or oral contract, commitment, agreement or arrangement with any person which (1) requires payments individually in excess of $10,000 annually or in excess of $20,000 over its term (including without limitation periods covered by any option to extend or renew by either party) and (2) is not terminable on thirty (30) days' or less notice without cost or other liability; 2. pays any person or entity cash remuneration at the annual rate (including without limitation guaranteed bonuses) of more than $10,000 for services rendered as an employee or consultant; 3. is restricted by agreement from carrying on its business or any part thereof in any geographical area or from competing in any line of business with any person or entity; 4. is subject to any obligation or requirement to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any person or entity; 5. is party to any agreement, contract, commitment or loan requiring payments in excess of $20,000 over its term and not terminable by the Companies on thirty (30) days' or less notice without cost or liability to which any of its directors, officers or any of the Shareholders or any "affiliate" or "associate" (as defined in Rule 405 as promulgated under the Securities Act of 1933) thereof is a party; 6. is subject to any contract, commitment, agreement or arrangement with any "disqualified individual" (as defined in Section 280G(c) of the Code) which contains any severance or termination pay liabilities which would result in a disallowance of the deduction for any "excess parachute payment" (as defined in Section 280G(b)(1) of the Code) under Section 280G of the Code; and 7. has any distributorship, dealer, manufacturer's representative, franchise or similar sales contract relating to the payment of a commission. (b) True and complete copies (or summaries, in the case of oral items) of all items disclosed pursuant to Section 3.18(a) have been made available to Parent and its counsel for review. Except as set forth under Section 3.18 on the Shareholders' Disclosure Schedule, to the knowledge of each of the Companies and the Shareholders, all such items are valid and enforceable by and against the respective Companies and the Shareholders, as the case may be, in accordance with their respective terms; neither of the Companies is in breach, violation or default, in any material respect, in the performance of any of its obligations thereunder, and no facts or circumstances exist which, whether with the giving of due notice, lapse of time, or both, would constitute a breach, violation or default, in any material respect, thereunder or thereof; and, to the knowledge of each of the Companies and the Shareholders, no other parties thereto are in breach, violation or default, in any material respect, thereunder or thereof, and no facts or circumstances exist which, whether with the giving of due notice, lapse of time, or both, would constitute such a breach, violation or default in any material respect thereunder or thereof. 3.19 Orders, Commitments and Returns. Except as set forth on the Shareholders' Disclosure Schedule and except as are not material to the business of the Companies taken as a whole, all accepted and unfulfilled orders for the sale of products and the performance of services entered into by each of the Companies and all outstanding contracts or commitments for the purchase of supplies, materials and services by or from the Companies were made in bona fide transactions in the ordinary course of business. Except as set forth on the Shareholders' Disclosure Schedule and except as are not material to the business of the Companies taken as a whole, to the knowledge of each of the Companies and the Shareholders, there are no claims against either of the Companies to return products by reason of alleged over-shipments, defective products or otherwise, or of products in the hands of customers, retailers or distributors under an understanding that such products would be returnable. 3.20 Labor Matters. Except as set forth on the Shareholders' Disclosure Schedule and except as are not material to the business of the Companies taken as a whole: (i) to the knowledge of each of the Companies and the Shareholders, each of the Companies is and has at all times been in compliance with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, including without limitation any such laws respecting employment discrimination and occupational safety and health requirements, and has not and is not engaged in any unfair labor practice; (ii) there is no unfair labor practice complaint against either of the Companies or the Shareholders pending or, to either of the knowledge of the Shareholders or the Companies, threatened before the National Labor Relations Board or any other comparable government authority; (iii) there is no labor strike, dispute, slowdown or stoppage actually pending or, to either of the Companies' or the Shareholders' knowledge, threatened against or directly affecting either of the Companies; (iv) no collective bargaining agreement is binding and in force against either of the Companies or the Shareholders or currently being negotiated by either of the Companies or the Shareholders; (v) neither of the Companies is delinquent in payments to any person for any wages, salaries, commissions, bonuses or other direct or indirect compensation for any services performed by them or amounts required to be reimbursed to such persons, including without limitation any amounts due under any Pension Plan, Welfare Plan or Compensation Plan; and (vi) within the 12 month period prior to the date hereof there has not been any expression of intention to either of the Companies by any officer or key employee to terminate such employment. 3.21 Dealers and Suppliers. Except as set forth on the Shareholders' Disclosure Schedule, there has not been in the 12 month period prior to the date hereof any material adverse change in the business relationship of either of the Companies with any dealer or supplier to either of the Companies. 3.22 Licenses and Other Operating Rights. To the knowledge of each of the Companies and the Shareholders, each of the Companies has all material licenses, permits, approvals and other governmental authorizations necessary to own its properties and assets and to carry on its business as presently being conducted (individually and collectively, the "License(s)"). All such Licenses are listed under Section 3.22 on the Shareholders' Disclosure Schedule and, except as set forth therein, each of the Companies has complied in all material respects with the provisions of each License. Each such License is valid and in full force and effect. Except as set forth on the Shareholders' Disclosure Schedule, the continuation, validity and effectiveness of each such License will in no way be affected by the consummation of the transactions contemplated by this Agreement. To the knowledge of each of the Companies and the Shareholders, neither of the Companies has breached any material provision of, nor is in default in any material respect under the terms of, any such License and no action or proceeding looking to or contemplating the revocation or suspension of any such License is pending or threatened. 3.23 Compliance with Law. Except as set forth on the Shareholders' Disclosure Schedule, and without limiting the scope of any other representations or warranties contained in this Agreement, but without intending to expand the scope of such other representations and warranties, to the knowledge of each of the Companies and the Shareholders, the assets, properties, business and operations of each of the Companies are and have been in compliance in all material respects when taken as a whole with all laws applicable to the ownership and conduct of their assets, properties, business and operations. 3.24 Physical Assets of Business. The physical assets owned or leased by each of the respective Companies constitute all of the physical assets held for use or used primarily in connection with such Company's business and are adequate to carry on such business as presently conducted and as contemplated by such Company to be conducted. 3.25 Brokers. Except as set forth on the Shareholders' Disclosure Schedule, neither of the Companies nor any of their respective directors, officer or employees has employed any broker, finder, or financial advisor or incurred any liability for any brokerage fee or commission, finder's fee or financial advisory fee, in connection with the transactions contemplated hereby, nor is there any basis known to either of the Companies for any such fee or commission to be claimed by any person or entity. 3.26 Accuracy of Information. To the best of the knowledge of the Companies and the Shareholders, after diligent review, no representation or warranty by either of the Companies in this Agreement contains or will contain any untrue statement of material fact or omits or will omit to state any material fact necessary in order to make the statements herein or therein, in light of the circumstances under which they were made, not misleading as of the date of the representation or warranty. 3.27 Shareholders Representations. In addition to the foregoing representations of each of the Shareholders, each of the Shareholders hereby represents and warrants to Parent as follows, provided that such representations and warranties are made by each Shareholder individually and not with respect to any other Shareholder: (a) The Shareholders have the legal capacity to enter into this Agreement and to carry out the transactions contemplated herein, including without limitation the legal capacity to execute, deliver and perform the agreements or contracts, if any, required by Article 5 hereof to be executed and delivered by the Shareholders as a condition to the Closing. The execution, delivery and performance of this Agreement by the Shareholders and the consummation of the transactions contemplated herein will not conflict with, or constitute a default under any note, bond, lease, mortgage, indenture, license, contract, franchise, permit, instrument or other agreement or obligation to which the Shareholders are party or violate any law, judgment, decree, order, regulation or ordinance by or to which the Shareholders are a bound or subject. No consent, approval, order or authorization of or from, or registration, notification, declaration or filing with any individual, governmental or regulatory authority or other person or entity is required to be obtained by the Shareholders for the Shareholders to surrender the shares of capital stock of the Companies held by the Shareholders. (b) The Shareholders received the documents and information as filed with the Commission as set forth on Exhibit 2.5 and had sufficient time to review and consider such documents and information (all of the foregoing documents and reports being hereinafter referred to as the "Eltrax Reports"). (c) The Shareholders are acquiring the shares of Parent's Common Stock to be acquired by him or her pursuant to the Merger for such Shareholders' sole account (and such Shareholders will be the sole beneficial owners thereof) for the purpose of investment and not with a view to distribution thereof within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), nor with any present intention of distribution or selling such shares of Parent Common Stock in connection with any such distribution, and such Shareholders understand that such shares have not been registered under the Securities Act and therefore cannot be resold unless they are registered under the Securities Act or unless an exemption from registration is available. (d) The Shareholders have been afforded an opportunity to ask questions of and receive answers from representatives of Parent concerning the terms and conditions of the transactions contemplated by this Agreement and to obtain any additional information as such Shareholders have requested in writing to verify the accuracy of the Eltrax Reports and copies of any exhibits identified in such documents that such Shareholders have requested. ARTICLE 4 COVENANTS 4.1 Companies' Agreements as to Specified Matters. Except as specifically set forth on the Disclosure Schedule, and except in the ordinary course of business and consistent with past practice, and except as may be expressly authorized by this Agreement or otherwise agreed in writing by Parent, from the date hereof until the Closing, neither of the Companies will: (a) Amend its articles or certificate of incorporation or bylaws; (b) Borrow or agree to borrow any funds; (c) Incur, assume, suffer or become subject to, whether directly or by way of guarantee or otherwise, any claims, obligations, liabilities or loss contingencies which, individually or in the aggregate, are material to the conduct of the businesses of the Companies and its Subsidiaries or have or would have a material adverse effect on the financial condition of the Companies and its Subsidiaries; (d) Pay, discharge or satisfy any claims, liabilities or obligations; (e) Permit or allow any of its properties or assets material to the operation of its businesses to be subjected to any mortgage, pledge, lien, security interest, encumbrance, restriction or charge of any kind, except liens that relate to current taxes and assessments not yet due and payable or that are being contested in good faith; (f) Write down the value of any inventory or write off as uncollectible any notes or accounts receivable or any trade accounts or trade notes; (g) Cancel or amend any debts, waive any claims or rights or sell, transfer or otherwise dispose of any properties or assets, other than for such debts, claims, rights, properties or assets which, individually or in the aggregate, are not material to the conduct of its businesses; (h) License, sell, transfer, pledge, modify, disclose, dispose of or permit to lapse any right to the use of any intellectual property rights other than for such intellectual property rights which, individually or in the aggregate, are not material to the conduct of its businesses; (i) (A) Terminate, enter into, adopt, institute or otherwise become subject to or amend in any material respect any collective bargaining agreement or employment or similar agreement or arrangement with any of its directors, officers or employees; (B) terminate, enter into, adopt, institute or otherwise become subject to or amend in any material respect any Compensation Plan; (C) contribute, set aside for contribution or authorize the contribution of any amounts for any such Compensation Plan except as required (and not discretionary) by the terms of such Compensation Plan; or (D) grant or become obligated to grant any general increase in the compensation of any directors, officers or employees (including without limitation any such increase pursuant to any Compensation Plan); (j) Make or enter into any commitment for capital expenditures for additions to property, plant or equipment individually in excess of $5,000.00; (k) (A) Declare, pay or set aside for payment any dividend or other distribution in respect of its capital stock or other securities (including without limitation distributions in redemption or liquidation) or redeem, purchase or otherwise acquire any shares of its capital stock or other securities; (B) issue, grant or sell any shares of its capital stock or equity securities of any class, or any options, warrants, conversion or other rights to purchase or acquire any such shares or equity securities or any securities convertible into or exchangeable for such shares or equity securities, except issuance of the Companies Common Stock pursuant to the exercise of stock options outstanding on the date hereof; (C) become a party to any merger, exchange, reorganization, recapitalization, liquidation, dissolution or other similar corporate transaction; or (D) organize any new subsidiary, acquire any capital stock or other equity securities or other ownership interest in, or assets of, any person or entity or otherwise make any investment by purchase of stock or securities, contributions to capital, property transfer or purchase of any properties or assets of any person or entity; (l) Pay, lend or advance any amounts to, or sell, transfer or lease any properties or assets to, or enter into any agreement or arrangement with, any director, officer, employee or shareholder; (m) Terminate, enter into or amend in any material respect any item identified in Section 3.19 of the Disclosure Schedule, or take any action or omit to take any action which will cause a breach, violation or default (however defined) under any such item; or (n) Agree, whether in writing or otherwise, to take any action described in this Section. 4.2 Conduct of the Companies' Business. Each of the Companies will maintain its assets and properties and carry on its businesses and operations only in ordinary course in substantially the same manner as planned and previously operated; and each of the Companies will use and cause it to use its best efforts to preserve intact its business organizations, existing business relationships (including without limitation its relationships with officers, employees, dealers, distributors, independent contractors, customers and suppliers), goodwill and going concern value. 4.3 No Solicitation of Alternate Transaction by the Shareholders or Companies. From the execution of this Agreement until the Closing Date or earlier termination of this Agreement, Companies and Shareholders will not, and will use their best efforts to ensure that the Companies' directors, officers and employees, independent contractors, consultants, counsel, accountants, investment advisors and other representatives and agents will not, directly or indirectly, solicit, initiate or encourage discussions or negotiations with, provide any nonpublic information to, or enter into any agreement with, any third party concerning (or concerning the business of the Companies and its Subsidiaries in connection with) any tender offer (including a self tender offer), exchange offer, merger, consolidation, sale of substantial assets or of a significant amount of assets, sale of securities, acquisition of beneficial ownership of or the right to vote securities representing more than five percent (5%) of the total voting power of either of the Companies, liquidation, dissolution or similar transactions involving either of the Companies or any division or Subsidiary of the Companies (such proposals, announcements or transactions being called herein "Acquisition Proposals"). Notwithstanding the foregoing, it is permissible to (1) communicate with (but not solicit, initiate, encourage or negotiate with, other than pursuant to clause (2) of this sentence) any third party; (2) if any third party makes a Bona Fide Unsolicited Offer, furnish information concerning either of the Companies and its Subsidiaries or their businesses to, and negotiate with, such third party. For the purposes of this Section, a "Bona Fide Unsolicited Offer" will mean any unsolicited written inquiry, proposal or offer respecting a potential Acquisition Proposal, other than any such inquiry, proposal or offer that, after due consideration thereof by the Board of Directors of the Companies, is expressly determined by such Board of Directors not to be reasonably likely to result in the receipt of a consideration superior to the consideration to be paid by Parent as described herein; and (3) furnish information concerning either of the Companies and its Subsidiaries or their businesses to a third party making a Bona Fide Unsolicited Offer, or from taking any other action, if the Board of Directors of the Companies concludes, after due consideration which will include consultation with legal counsel, that there is a fiduciary duty to furnish such information or take such other action. Each of the Companies and the Shareholders will promptly inform Parent of any Bona Fide Unsolicited Offer, including the terms thereof and the identity of the person or entity making such offer. 4.4 Full Access to Parent. From the execution of this Agreement until the Closing Date or earlier termination of this Agreement, each of the Companies and the Shareholders will afford to Parent and its directors, officers, employees, counsel, accountants, investment advisors and other authorized representatives and agents free and full access to the facilities, properties, books and records of the Companies and its Subsidiaries in order that Parent may have full opportunity to make such investigations as it desires to make of the affairs of each of the Companies and the Shareholders provided, however, that any such investigation will be conducted in such a manner as not to interfere unreasonably with business operations; and each of the Companies and its Subsidiaries will furnish such additional financial and operating data and other information as Parent, from time to time, reasonably requests, including without limitation access to the working papers of their independent certified public accountants; and, provided, further, that any such investigation will not affect or otherwise diminish or obviate in any respect any of the representations and warranties of the Companies or Shareholders herein. 4.5 Confidentiality. The parties hereto will not use, or permit the use of, any of the information relating to any other party hereto furnished to it in connection with the transactions contemplated herein ("Information") in a manner or for a purpose detrimental to such other party or otherwise than in connection with the transaction, and that they will not disclose, divulge, provide or make accessible (collectively, "Disclose"), or permit the Disclosure of, any of the Information to any person or entity, other than their responsible directors, officers, employees, investment advisors, accountants, counsel and other authorized representatives and agents, except as may be required by judicial or administrative process or, in the opinion of such party's regular counsel, by other requirements of Law, unless the disclosing party first obtains the prior written consent of the other parties hereto. The term "Information" as used herein will not include any information relating to a party which the party disclosing such information can show: (i) to have been in its possession prior to its receipt from another party hereto; (ii) to be now or to later become generally available to the public through no fault of the disclosing party; (iii) to have been available to the public at the time of its receipt by the disclosing party; (iv) to have been received separately by the disclosing party in an unrestricted manner from a person entitled to disclose such information; or (v) to have been developed independently by the disclosing party without regard to any information received in connection with this transaction. The parties hereto also will promptly return to the party from whom originally received all original and duplicate copies of written materials containing Information should the transactions contemplated herein not occur. A party hereto will be deemed to have satisfied its obligations to hold the Information confidential if it exercises the same care as it takes with respect to its own similar information. This Section 4.5 survives Closing and any termination of this Agreement. 4.6 Consummation; Consents; Removal of Objections. Subject to the terms and conditions herein provided, each of the parties hereto will use its best efforts to take or cause to be taken all actions and do or cause to be done all things necessary, proper or advisable under applicable Laws to consummate and make effective, as soon as reasonably practicable, the transactions contemplated hereby, including without limitation; (i) obtaining all Consents of any person or entity, whether private or governmental, required in connection with the consummation of the transactions contemplated herein; (ii) the removal or satisfaction, if possible, of any objections to the validity or legality of the transactions contemplated herein; and (iii) the satisfaction of the conditions to consummation of the transactions contemplated hereby. 4.7 Further Assurances; Cooperation; Notification. (a) Each party hereto will, before, at and after Closing, execute and deliver such instruments and take such other actions as the other party or parties, as the case may be, may reasonably require in order to carry out the intent of this Agreement. (b) At all times from the date hereof until the Closing, each party will promptly notify the other in writing of the occurrence of any event which it reasonably believes will or may result in a failure by such party to satisfy the conditions specified in Article 5 and Article 6 hereof. 4.8 Supplements to Disclosure Schedule. Prior to the Closing, each of the Companies and the Shareholders will supplement or amend the Disclosure Schedule with respect to any event or development which is necessary to correct any information under Section 4.8 on the Disclosure Schedule or in any representation and warranty of the Companies or Shareholders which has been rendered inaccurate by reason of such event or development. 4.9 Public Announcements. None of the parties hereto will make any public announcement with respect to the transactions contemplated herein without the prior written consent of the other parties, which consent will not be unreasonably withheld or delayed; provided, however, that any of the parties hereto may at any time make any announcements which are required by applicable Law so long as the party so required to make an announcement promptly upon learning of such requirement notifies the other parties of such requirement and discusses with the other parties in good faith the exact proposed wording of any such announcement. 4.10 Broker Fee Arrangements. Upon consummation of the Merger, the Parent (or any of its subsidiaries) will be responsible for payment of the broker's fee due to Garte Torre Global Capital Markets ("GTG") in accordance with the agreement between Parent and GTG attached hereto as Exhibit 4.10. 4.11 Tax Liability of Surviving Corporations. Subject to Section 8.3(b) hereof, Parent acknowledges that Nordata, as a Surviving Corporation, will be responsible for the payment of any income tax liabilities, including penalties and interest, for its 1995 taxable income, and for its taxable income resulting from the change in accounting method from cash basis to accrual basis (the "Accounting Method Change"). Parent and Shareholders agree to attempt to obtain the consent of the relevant IRS district director to permit the filing of a Form 3115 with the appropriate Authorities promptly after the Closing Date to effectuate the Accounting Method Change. In the event such IRS district director's consent is not timely obtained, Parent and Shareholders agree to take such other steps or file such other documents as required by any Authority to effectuate the Accounting Method Change. 4.12 Registration Rights. Parent agrees to provide the Shareholders with the registration rights with respect to Parent Common Stock they receive as Merger Consideration as set forth on Exhibit 4.12 hereto. 4.13 Employment Terms for Employees of Surviving Corporation. All of the employees of the respective Surviving Corporations that are retained by Parent following the Closing Date will be entitled to participate in Parent's 1995 Incentive Stock Option Plan in accordance with the terms and conditions of such Plan as and to the extent that other similarly situated employees of Parent are eligible to participate in such Plans. 4.14 Restrictive Legend. Each of the Shareholders consents to the placing of the following legend on the certificate or certificates for shares of Parent Common Stock to be issued to each such Shareholder in connection with the Merger: THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS AND MAY BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED ONLY IF A REGISTRATION STATEMENT WITH RESPECT TO SUCH TRANSACTION IS IN EFFECT PURSUANT TO THE PROVISIONS OF SUCH LAWS OR IF, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER, AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS IS AVAILABLE. 4.15 Maintenance of and Access to Books and Records. For three (3) years after the Closing, the Parent will cause the Surviving Corporations to maintain all of the financial, accounting, tax and other books and records of the Companies with respect to any period prior to the Closing and to cooperate with and provide the Shareholders and their authorized representatives reasonable access to any and all of such records during normal business hours. 4.16 Preparation of Tax Returns. The Parent and the Shareholders will cooperate and jointly prepare and/or cause Rudata to prepare, at the Parent's expense, any and all of Rudata's income tax returns, consents, statements, and/or elections necessary for the period (the "Interim Period") beginning on January 1, 1996 and ending immediately prior to the Closing. Any and all such income tax returns for the Interim Period will be based upon an election by Rudata under Section 1377(a)(2) of the Code to have the rules under Section 1377(a)(1) of the Code apply as if Rudata's taxable year consisted of two taxable years, one of which coincides with the Interim Period and one of which begins immediately after the Interim Period. 4.17 Amendment of Prior Returns; Audit. Unless advised by the Parent's accountants or tax advisers that an amendment is required under applicable tax laws or regulations, neither of the Surviving Corporations will file any amended federal, state, local or other tax return, or take any other action which would increase the taxable income or tax liability of any of the Shareholders for any period prior to the Closing without the written consent of the Shareholders, which consent will not be unreasonably withheld. In the event of an audit of any of the tax returns of any of the Companies for any period prior to the Closing, the Parent will provide copies of any and all notices of such audit and correspondence related to such audit to the Shareholders, who will have the right to participate in the conduct of the audit, and any appeal or other proceeding resulting therefrom. Neither the Parent nor either of the Surviving Corporations will agree to any assessment, adjustment or other modification of the tax returns or tax liability of either of the Companies for any period prior to the Closing without the prior written consent of the Shareholders, which consent will not be unreasonably withheld. 4.18 Successors and Assigns. The Parent will not assign or otherwise transfer control of either Surviving Corporation or approve any liquidation, merger, consolidation, or sale of substantially all of the assets of the Surviving Corporation, unless the person or persons acquiring control of such acquiring Corporation, or the successor-in-interest of the Surviving Corporation in the event of any such action other than a transfer of the Surviving Corporation's Stock, agrees to the foregoing covenants set forth in Section 4.15 to 4.18 hereof. 4.19 Loans to Shareholders. Parent acknowledges that the Companies have made loans in the aggregate amount of approximately $186,000 to the Shareholders (the "Loans"). Simultaneously upon the Closing, the Shareholders jointly and severally agree to repay the Loans by paying $186,000 cash to the Companies. 4.20 Schedule 13D. The Shareholders will cause to be filed a Schedule 13D with the Commission in accordance with applicable rules of the Commission, which Schedule 13D will include disclosure consistent with Section 3.27 hereof and this Agreement. 4.21 Divestment of Interest. The Shareholders will cause to occur a divestiture of all Shareholders' and the Companies' beneficial ownership in, and any interest as a debt or equity holder of, TechLine prior to the Closing Date. ARTICLE 5 CONDITIONS TO OBLIGATION OF PARENT Notwithstanding any other provision of this Agreement to the contrary, the obligation of Parent to effect the transactions contemplated herein will be subject to the satisfaction at or prior to the Closing of each of the following conditions: 5.1 Representations and Warranties True. The representations and warranties of the Companies and the Shareholders contained in this Agreement, including without limitation in the Disclosure Schedule initially delivered to Parent as Exhibit 3.1 (and not including any changes or additions delivered to Parent pursuant to Section 4.8), will be in all material respects true, complete and accurate as of the date when made and at and as of the Closing as though such representations and warranties were made at and as of such time, except for changes specifically permitted or contemplated by this Agreement, and except insofar as the representations and warranties relate expressly and solely to a particular date or period, in which case they will be true and correct in all material respects at the Closing with respect to such date or period. 5.2 Performance. Each of the Companies and the Shareholders will have performed and complied in all material respects with all agreements, covenants, obligations and conditions required by this Agreement to be performed or complied with by the Companies and the Shareholders on or prior to the Closing. 5.3 Required Approvals and Consents. (a) All action required by law and otherwise to be taken by the Board of Directors of the Companies and the shareholders of the Companies to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will have been duly and validly taken. (b) All Consents of or from all Authorities required hereunder to consummate the transactions contemplated herein, and all Consents of or from all persons and entities other than Authorities that are identified under Section 5.3 on the Disclosure Schedule will have been delivered, made or obtained, and Parent will have received copies thereof. 5.4 Adverse Changes. No material adverse change will have occurred in the businesses of the Companies. 5.5 No Proceeding or Litigation. No suit, action, investigation, inquiry or other proceeding by any Authority or other person or entity will have been instituted or threatened which questions the validity or legality of the transactions contemplated hereby or which, if successfully asserted, would individually or in the aggregate otherwise have a material adverse effect on the conduct of the businesses of the Companies. 5.6 Opinion of Counsel for the Companies and Shareholders. Parent will have received an opinion of Brown & Streza, Irvine, California, counsel for the Companies and the Shareholders, dated the Closing Date, substantially in the form and substance set forth as Exhibit 5.6 hereto. 5.7 Legislation. No Law will have been enacted which prohibits, restricts or delays the consummation of the transactions contemplated hereby or any of the conditions to the consummation of such transaction. 5.8 Acceptance by Counsel to Parent. The form and substance of all legal matters contemplated hereby and of all papers delivered hereunder will be reasonably acceptable to Oppenheimer Wolff & Donnelly, counsel to Parent. 5.9 Certificates. Parent will have received such certificates of the Companies' officers and of each of the Shareholders, in a form and substance reasonably satisfactory to Parent, dated the Closing Date, to evidence compliance with the conditions set forth in this Article 5 and such other matters as may be reasonably requested by Parent. 5.10 Due Diligence. Parent will have received all information requested by it pursuant to Section 4.4 hereof and will be satisfied with all financial information and with all other aspects of the Companies and that no information acquired during due diligence could result in a material adverse change in the business or prospects of the Companies following the Closing. 5.11 Escrow Agreement. The parties thereto will have executed and delivered the Escrow Agreement. 5.12 Employment and Noncompete Agreements. Shareholders will have executed and delivered to Parent the employment and noncompete agreements in the form of agreement included as Exhibit 5.12. 5.13 Divestiture of Interest. Shareholders will have executed and delivered to Parent copies of all documents needed to divest the Shareholders and the Companies of any and all interest in the equity or debt of TechLine. ARTICLE 6 CONDITIONS TO THE OBLIGATION OF THE COMPANIES AND SHAREHOLDERS Notwithstanding anything in this Agreement to the contrary, the obligation of the Companies and Shareholders to effect the transactions contemplated herein will be subject to the satisfaction at or prior to the Closing of each of the following conditions: 6.1 Representations and Warranties True. The representations and warranties of Parent contained in this Agreement will be in all material respects true, complete and accurate as of the date when made and at and as of the Closing, as though such representations and warranties were made at and as of such time, except for changes permitted or contemplated in this Agreement, and except insofar as the representations and warranties relate expressly and solely to a particular date or period, in which case they will be true and correct in all material respects at the Closing with respect to such date or period. 6.2 Performance. Parent will have performed and complied in all material respects with all agreements, covenants, obligations and conditions required by this Agreement to be performed or complied with by Parent at or prior to the Closing. 6.3 Required Approvals and Consents. (a) All action required to be taken by Parent to authorize the execution, delivery and performance of this Agreement by Parent and the consummation of the transactions contemplated hereby will have been duly and validly taken. (b) All Consents of or from all Authorities required hereunder to consummate the transactions contemplated herein, and all Consents of or from all persons and entities other than Authorities that are identified under Section 6.3(b) on the Disclosure Schedule will have been delivered, made or obtained, and the Companies will have received copies thereof. 6.4 No Proceeding or Litigation. No suit, action, investigation, inquiry or other proceeding by any Authority or other person or entity will have been instituted or threatened which questions the validity or legality of the transactions contemplated hereby or which, if successfully asserted, would individually or in the aggregate otherwise have a material adverse effect on the conduct of the business of the Parent. 6.5 Certificates. Parent will have furnished the Companies and Shareholders with such certificates of the Companies officers, in a form and substance reasonably acceptable to Companies and Shareholders, dated the Closing Date, to evidence compliance with the conditions set forth in this Article 6 and such other matters as may be reasonably requested by Companies. 6.6 Opinion of Parent Counsel. Parent will have delivered to the Companies and the Shareholders an opinion from Oppenheimer Wolff & Donnelly, Minneapolis, Minnesota, counsel to Parent, dated the Closing Date, in the form and substance set forth as Exhibit 6.6 hereto. 6.7 Escrow Agreement. The parties thereto will have executed and delivered the Escrow Agreement and the appropriate deposit obligations with respect thereto will have been satisfied. 6.8 Acceptance by Counsel to Shareholders. The form and substance of all legal matters contemplated hereby and of all papers delivered hereunder will be reasonably acceptable to Brown & Streza, counsel to the Companies and Shareholders. 6.9 Employment and Noncompete Agreement with Shareholders. Parent will have executed and delivered to Shareholders the employment and noncompete agreements in the form of agreement included as Exhibit 5.12. 6.10 Adverse Changes. No material adverse change will have occurred in the business of Parent since the date hereof. 6.11 Legislation. No Law will have been enacted which prohibits, restricts or delays the consummation of the transaction contemplated hereby or any of the conditions to the consummation of such transaction. 6.12 Assistance Agreement. Parent and the Eltrax Principals will have executed and delivered to Shareholders the Agreement to be dated the closing date among Parent, Shareholders and the Eltrax Principals concerning the assistance by Parent and the Eltrax Principals with a possible private placement. ARTICLE 7 TERMINATION AND ABANDONMENT 7.1 Methods of Termination. This Agreement may be terminated and the transactions contemplated herein may be abandoned at any time notwithstanding approval thereof by the Shareholders, but not later than the Closing: (a) By mutual written consent of Parent, Acquisition Subs, Companies and Shareholders; or (b) By Parent and Acquisition Subs on or after the Termination Date or such later date as may be established pursuant to Section 1.4, if any of the conditions provided for in Article 5 has not been satisfied or waived in writing by Parent prior to such date; or (c) By the Companies and Shareholders on or after the Termination Date or such later date as may be established pursuant to Section 1.4, if any of the conditions provided for in Article 6 have not been satisfied or waived in writing by the Companies and Shareholders prior to such date; (d) By Parent and Acquisition Subs or the Companies and Shareholders if the Closing has not occurred on or before May 30, 1996; or (e) By the Parent and Acquisitions Subs at any time prior to the Closing in the event that the Parent determines that the results of its investigation and due diligence under Section 5.10 hereof is unsatisfactory. 7.2 Procedure Upon Termination. In the event of termination and abandonment pursuant to Section 7.1(a), written notice thereof will forthwith be given to the other party or parties, and the provisions of this Agreement (except to the extent provided in Section 9.1) will terminate, and the transactions contemplated herein will be abandoned, without further action by any party hereto. If this Agreement is terminated as provided herein: (i) each party will, upon request, redeliver all documents, work papers and other material of any other party (and all copies thereof) relating to the transactions contemplated herein, whether so obtained before or after the execution hereof, to the party furnishing the same; (ii) the confidentiality obligations of Section 4.5 will continue to be applicable; and (iii) except as provided in this Section, no party will have any liability for a breach of any representation, warranty, agreement, covenant or other provision of this Agreement, unless such breach was due to a willful or bad faith action or omission of such party or any representative, agent, employee or independent contractor thereof. ARTICLE 8 SURVIVAL AND INDEMNIFICATION 8.1 Survival. The representations and warranties of each of the parties hereto will survive the Closing until the second anniversary of the Closing Date. 8.2 Indemnification by Parent. (a) Parent agrees to indemnify each of the Shareholders from and against any and all loss, liability or damage suffered or incurred by it including any and all costs and expenses, including without limitation legal fees and expenses, in connection with enforcing the indemnification rights of Shareholders pursuant to this Section 8.2 by reason of (i) any untrue representation of, or breach of warranty by, Parent in any part of this Agreement, provided, however, that no claim for indemnity may be made pursuant to this Section after the second anniversary of the Closing Date; and (ii) any nonfulfillment of any covenant, agreement or undertaking of Parent in any part of this Agreement which by its terms is to remain in effect after the Closing and has not been specifically waived in writing at the Closing by the party or parties hereof entitled to the benefits thereof; (b) Parent agrees to indemnify the Shareholders from and against any and all loss, liability or damage suffered or incurred by them with respect to any claims against the Shareholders based on violations of federal or state securities laws resulting from or related to any press release, statement or regulatory filing related to the Merger, other than claims that are based on (i) Shareholders' intentional or negligent misstatement or omission of material facts concerning the Companies, the Companies' financial condition and business prospects, (ii) breaches of any of Shareholders' representations, warranties, covenants or agreements in this Agreement, and (iii) the actual misconduct by the Shareholders; (c) Parent agrees to indemnify each of the Shareholders from and against any income tax liabilities, including penalties, interest and actual tax liability, but excluding any other consequential damages, loss or liability, resulting directly from any pass through taxable income from Rudata resulting directly from the Accounting Method Change, up to but not exceeding the amount of the tax liability that Rudata would have incurred if it were a C corporation income taxpayer on the taxable income if it had been taxable after Closing, on a combined basis with Nordata without giving effect to the surtax exemption, provided, however that Parent's indemnification obligation pursuant to this Section 8.2(c) shall be limited to the actual tax liability, including penalties and interest, if any, that would have been assessed if Rudata had filed a Form 3115 requesting a change in accounting method and such request on Form 3115 had been approved prior to the receipt of the IRS Correspondence (as defined in Section 8.3(b)(ii)). 8.3 Indemnification by Shareholders. (a) Untrue Representation or Breach of Warranty. Each Shareholder, jointly and severally, agrees to indemnify Parent, its directors, officers, employees and agents, from and against any and all loss, liability or damage suffered or incurred by it by reason of any untrue representation of, or breach of warranty by Companies or any Shareholder in this Agreement, provided, however, that no claim for indemnity may be made pursuant to this Section after the second anniversary of the Closing Date. (b) Tax Liability. Each Shareholder, jointly and severally, hereby agrees to reimburse Nordata for each of the following: (i) Any penalties or interest assessed against Nordata by any Authority resulting from Nordata's failure to timely pay its 1995 income tax liability; (ii) With respect to any income tax liability assessed against Nordata as a result of the Accounting Method Change (the "Accounting Change Tax Liaiblity"), any penalties or interest assessed against Nordata by any Authority which would not otherwise have been assessed by such Authority had Nordata filed a Form 3115 requesting a change of accounting method and such request on Form 3115 had been approved by such Authority prior to Nordata's receipt of the correspondence from the Internal Revenue Service dated April 25, 1996 (the "IRS Correspondence"); and (iii) In the event that Nordata is required to pay the Accounting Change Tax Liability in a manner that is less favorable to Nordata than would have been available to Nordata had it filed a Form 3115 requesting a change of accounting method and had such request been approved prior to receipt of the IRS Correspondence, the cost to Nordata of the loss of the use of the money to pay the Accounting Change Tax Liability using an interest rate equal to the interest rate applicable to underpayments of federal income tax. 8.4 Indemnification by Shareholders -- Other. Each Shareholder, jointly and severally, agrees to indemnify Parent, its directors, officers, employees and agents from and against: (i) any and all loss, liability or damage suffered or incurred by it by reason of any nonfulfillment of any covenant, agreement or undertaking of the Companies or any Shareholder in this Agreement which by its terms is to remain in effect after the Closing and has not been specifically waived in writing at the Closing by the party or parties hereto entitled to the benefits thereof; and (ii) any and all costs and expenses, including without limitation legal fees and expenses, in connection with enforcing the indemnification rights of Parent pursuant to Sections 8.3 and 8.4. 8.5 Limitation on Indemnification. Except as provided in Sections 8.3(b) and 8.6(b), the Shareholders' indemnification obligations under this Article 8 will be limited to Five Million Dollars ($5,000,000). 8.6 Indemnification De Minimis Threshold. (a) Except as expressively provided otherwise herein, and subject to the provisions of Section 8.6(b), neither of the Shareholders nor the Parent as the case may be, will be entitled to indemnification under this Agreement unless the aggregate of all claims with respect to untrue representations or breaches of warranties hereunder is more than Two Hundred Fifty Thousand Dollars ($250,000)(the "Threshold Amount"). When the aggregate amount of all such indemnification claims hereunder equals or exceeds the Threshold Amount, the Parent or the Shareholders, as the case may be, will be entitled to full indemnification of all claims, including the Two Hundred Fifty Thousand Dollars ($250,000) that amounted to the Threshold Amount. Once the aggregate indemnification claims hereunder equal or exceed the Threshold Amount, the Shareholders or the Parent, as the case may be, will be entitled to full indemnification for all claims. The parties hereto agree that the Threshold Amount is not a deductible amount, nor that the Threshold Amount will be deemed to be a definition of "material" for any purpose in this Agreement. The parties hereto acknowledge and agree that any claims made or reimbursement paid pursuant to Section 8.3(b) shall not count towards the Threshold Amount. (b) If either of the Shareholders or the Companies have breached a representation, warranty, covenant or agreement, and such breaching party had actual knowledge of the breach of the representation, warranty, covenant or agreement herein, or had actual knowledge of the potential or probable loss, liability or damage (based on actual knowledge of the facts and circumstances giving rise to such loss, liability or damage) without disclosing such in the Disclosure Schedule on or prior to the Closing Date, the Shareholders will jointly and severally promptly pay Parent the full indemnification claim without regard to the Threshold Amount set forth in this Section, and without regard to the overall limitation on amount as set forth in Section 8.5. 8.7 Claims for Indemnification. The parties intend that all indemnification claims hereunder be made as promptly as practicable by the party seeking indemnification (the "Indemnified Party") and that in the case of Parent all such claims be made pursuant to the terms and provisions of the Escrow Agreement until and including the Termination Date, as defined in the Escrow Agreement. After the Termination Date all such claims of Parent, including without limitation pre-Termination Date claims which, on or prior to the Termination Date, were admitted as valid pursuant to Escrow Agreement procedures or are or become the subject of an arbitration award in favor of the Indemnified Party but which are not satisfied pursuant to the Escrow Agreement, will be presented to the Shareholders who, in the case of admitted claims and arbitration awards as aforesaid, will pay such claims and awards, and, in the case of all other claims, will proceed according to the remaining terms and provisions of this Section. Whenever any claim arises for indemnification hereunder (other than a claim to be submitted pursuant to aforesaid terms and provisions), the Indemnified Party will promptly notify the party from whom indemnification is sought (the "Indemnifying Party") of the claim and, when known, the facts constituting the basis for such claim. In the case of any such claim for indemnification hereunder resulting from or in connection with any claim or legal proceedings of a third party, the notice to the Indemnifying Party will specify, if known, the amount or an estimate of the amount of the liability arising therefrom. The Indemnified Party will not settle or compromise any claim by a third party for which it is entitled to indemnification hereunder without the prior written consent of the Indemnifying Party, which will not be unreasonably withheld. If the Indemnifying Party is of the opinion that the Indemnified Party is not entitled to indemnification, or is not entitled to indemnification in the amount claimed in such notice, it will deliver, within ten (10) business days after the receipt of such notice, a written objection to such claim and written specifications in reasonable detail of the aspects or details objected to, and the grounds for such objection. If the Indemnifying Party filed timely written notice of objection to any claim for indemnification, the validity and amount of such claim will be determined by arbitration pursuant to Section 9.12 hereof. If timely notice of objection is not delivered or if a claim by an Indemnified Party is admitted in writing by an Indemnifying Party or if an arbitration award is made in favor of an Indemnified Party, the Indemnified Party, as a non-exclusive remedy, will have the right to set-off the amount of such claim or award against any amount yet owed, whether due or to become due, by the Indemnified Party or any subsidiary thereof to any Indemnifying Party by reason of this Agreement or any agreement or arrangement or contract to be entered into at the Closing. 8.8 Payment of Indemnification Claims by Shareholders. It is the intention of the parties that Parent's indemnification claims shall be first satisfied by the Shareholders jointly and severally out of the Escrowed Shares. With respect to indemnification claims pursuant to Sections 8.3(a) or 8.4, the parties agree that the maximum number of Escrowed Shares available to satisfy Parent's indemnification claims will be Two Hundred Fifty Thousand (250,000). To the extent that such indemnification claim exceeds the value of Two Hundred Fifty Thousand (250,000) Escrowed Shares, Parent shall seek payment directly from Shareholders, who will be jointly and severally liable therefor. With respect to reimbursement claims pursuant to Section 8.3(b), the parties agree that the maximum number of Escrow Shares available to satisfy Parent's reimbursement claims will be Two Hundred Thousand (200,000) (the "Tax Escrow Shares"). To the extent that such reimbursement claim exceeds the value of Two Hundred Thousand (200,000) Escrowed Shares, Parent shall seek payment directly from Shareholders, who will be jointly and severally liable therefor. Upon final resolution of Shareholders' reimbursement obligations pursuant to Section 8.3(b), Parent, on the one hand, and Shareholders, on the other hand, agree to issue a joint written instruction to the Escrow Agent to distribute any remaining Tax Escrow Shares to the Shareholders in accordance with the Escrow Agreement. ARTICLE 9 MISCELLANEOUS PROVISIONS 9.1 Expenses. Each of the parties hereto will bear its own costs, fees and expenses in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including without limitation fees, commissions and expenses payable to brokers, finders, investment bankers, consultants, exchange or transfer agents, attorneys, accountants and other professionals, whether or not the transactions contemplated herein is consummated, and in particular, Shareholders agree to pay all fees and expenses payable to Brown & Streza law firm, and to Allen Matkins Leck Gamble & Mallory law firm; and Parent will pay the fees and expenses of Coopers & Lybrand and Oppenheimer Wolff & Donnelly; provided, however, that Parent on the one hand, and Shareholders, on the other, will each bear one-half (1/2) of all fees and expenses of any escrow agent. In addition, in the event that the Merger is not consummated even after all conditions to Closing as set forth in Article 5 (Conditions to Obligations of Parent) hereof have been satisfied, Parent will promptly pay the Shareholders the sum of Two Hundred Fifty Thousand Dollars ($250,000) as liquidated damages. In addition, in the event the Merger is not consummated even after all conditions to the Companies' and Shareholders' obligations have been satisfied as set forth in Article 6 (Conditions to Obligations of the Companies and the Shareholders) hereof, Shareholders will promptly pay Parent the sum of Two Hundred Fifty Thousand Dollars ($250,000) as liquidated damages. The parties hereto agree and acknowledge that the aforesaid amounts payable to each party constitutes liquidated damages and not a penalty and represents the parties' efforts to reasonably estimate a fair compensation for the foreseeable losses that might be suffered by Parent in the event the transactions contemplated herein will not be consummated for any of the above-described reasons. 9.2 Amendment and Modification. Subject to applicable Law, this Agreement may be amended or modified by the parties hereto at any time prior to the Closing with respect to any of the terms contained herein; provided, however, that all such amendments and modifications must be in writing duly executed by all of the parties hereto. 9.3 Waiver of Compliance; Consents. Any failure of a party to comply with any obligation, covenant, agreement or condition herein may be expressly waived in writing by the party entitled hereby to such compliance, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition will not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. No single or partial exercise of a right or remedy will preclude any other or further exercise thereof or of any other right or remedy hereunder. Whenever this Agreement requires or permits the consent by or on behalf of a party, such consent will be given in writing in the same manner as for waivers of compliance. 9.4 No Third Party Beneficiaries. Nothing in this Agreement will entitle any person or entity (other than a party hereto and his, her or its respective successors and assigns permitted hereby) to any claim, cause of action, remedy or right of any kind. 9.5 Notices. All notices, requests, demands and other communications required or permitted hereunder will be made in writing and will be deemed to have been duly given and effective: (i) on the date of delivery, if delivered personally; (ii) on the earlier of the fourth (4th) day after mailing or the date of the return receipt acknowledgement, if mailed, postage prepaid, by certified or registered mail, return receipt requested; or (iii) on the date of transmission, if sent by facsimile, telecopy, telegraph, telex or other similar telegraphic communications equipment: If to either of the Companies or the Shareholders: To: Datatech 27126 Paseo Espada, Suite 1602 San Juan Capistrano, CA 92675 Attention: Howard B. and Ruby Lee Norton Fax: (714) 493-1840 With a copy to: Brown and Streza 7700 Irvine Center Drive, Suite 900 Irvine, CA 92718 Attn: Richard E. Streza, Esq. Fax: (714) 453-2916 or to such other person or address as either of the Companies will furnish to the other parties hereto in writing in accordance with this Section. If to Parent or either of the Acquisition Subs: To: Eltrax Systems, Inc. Rush Lake Business Park 1775 Old Highway 8 St. Paul, MN 55112 Attn: Mack V. Traynor III Chief Executive Officer Fax: 612-633-8372 With a copy to: Oppenheimer Wolff & Donnelly 45 South Seventh Street Suite 3400 Minneapolis, MN 55402 Attn: Thomas R. Marek, Esq. Fax: 612-344-9376 or to such other person or address as Parent or either of the Acquisition Subs will furnish to the other parties hereto in writing in accordance with this Section. 9.6 Assignment. This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder will be assigned (whether voluntarily, involuntarily, by operation of law or otherwise) by any of the parties hereto without the prior written consent of the other parties, provided, however, that Parent may assign this Agreement, in whole or in any part, and from time to time, to a wholly-owned, direct or indirect, subsidiary of Parent, if Parent remains bound hereby). 9.7 Governing Law. This Agreement and the legal relations among the parties hereto will be governed by and construed in accordance with the internal substantive laws of the State of Minnesota (without regard to the laws of conflict that might otherwise apply) as to all matters, including without limitation matters of validity, construction, effect, performance and remedies. 9.8 Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. 9.9 Headings. The table of contents and the headings of the sections and Sections of this Agreement are inserted for convenience only and will not constitute a part hereof. 9.10 Entire Agreement. The Disclosure Schedule and the exhibits and other writings referred to in this Agreement and in the Disclosure Schedule or any such exhibit or other writing are part of this Agreement, together with this Agreement they embody the entire agreement and understanding of the parties hereto in respect of the transactions contemplated by this Agreement and together they are referred to as "this Agreement" or the "Agreement". There are no restrictions, promises, warranties, agreements, covenants or undertakings, other than those expressly set forth or referred to in this Agreement. This Agreement supersedes all prior and contemporaneous oral and written agreements and understandings between the parties with respect to the transaction or transactions contemplated by this Agreement (including without limitation the letter of intent dated March 19, 1996 between Parent and Shareholders and all amendments and extensions thereof). Provisions of this Agreement will be interpreted to be valid and enforceable under applicable Law to the extent that such interpretation does not materially alter this Agreement; provided, however, that if any such provision will become invalid or unenforceable under applicable Law such provision will be stricken to the extent necessary and the remainder of such provisions and the remainder of this Agreement will continue in full force and effect. 9.11 Injunctive Relief. It is expressly agreed among the parties hereto that monetary damages would be inadequate to compensate a party hereto for any breach by any other party of its covenants and agreements in Sections 4.3 and 4.5 hereof. Accordingly, the parties agree and acknowledge that any such violation or threatened violation will cause irreparable injury to the other and that, in addition to any other remedies which may be available, such party will be entitled to injunctive relief against the threatened breach of Sections 4.3 and 4.5 hereof or the continuation of any such breach without the necessity of proving actual damages and may seek to specifically enforce the terms thereof. 9.12 Arbitration. With the sole exception of the injunctive relief contemplated by Section 9.11 hereof, any controversy or claim arising out of or relating to this Agreement, or the making, performance or interpretation hereof, including without limitation alleged fraudulent inducement hereof, will be settled by binding arbitration in Minneapolis, Minnesota by a panel of three arbitrators in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Judgment upon any arbitration award may be entered in any court having jurisdiction thereof and the parties consent to the jurisdiction of the courts of the State of Minnesota for this purpose. 9.13 List of Defined Terms. Reference is made to Exhibit 9.13 for a listing and location of terms defined in this Agreement. 9.14 Attorneys Fees. If any arbitration, litigation or similar proceedings are brought by any party to enforce any obligation or to pursue any remedy under this Agreement, the party prevailing in any such arbitration, litigation or similar proceedings will be entitled to costs of collection, if any, and reasonable attorneys fees incurred in connection with such proceedings and in collecting or enforcing any award granted therein. 9.15 Knowledge of the Companies and Shareholders. Where any representation or warranty contained in this Agreement is expressly qualified by reference to the knowledge of each of the Companies and the Shareholders, such phrase will include the actual present knowledge of either one or both of the Shareholders assuming that such Shareholders have made reasonable diligent inquiry as to the matters that are the subject of the representations and warranties. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. PARENT: COMPANIES: Eltrax Systems, Inc. Nordata, Inc. By: /s/ By: /s/ Mack V. Traynor III Howard B. Norton Its: Chief Executive Officer Its: President ACQUISITION SUBS: By: /s/ Datatech Acquisition Corporation Ruby Lee Norton Its: Secretary By: /s/ Mack V. Traynor III Rudata, Inc. Its: President By: /s/ Ruby Lee Norton Rudata Acquisition Corporation Its: President By: /s/ Mack V. Traynor III By: /s/ Its: President Howard B. Norton Its: Secretary SHAREHOLDERS: /s/ Howard B. Norton /s/ Ruby Lee Norton EXHIBITS OMITTED WITH THE EXCEPTION OF EXHIBIT 4.12 (ATTACHED HERETO) Exhibit 4.12 REGISTRATION RIGHTS OF SHAREHOLDERS (i) Shelf Registration. Upon the written demand of the Shareholders, and as soon as feasible under the rules of the Securities and Exchange Commission (the "Commission"), Parent will prepare and file a registration statement under the Securities Act covering all of the shares of Parent Common Stock issued to the Shareholders as Merger Consideration under this Agreement (the "Shares") and not theretofore sold, will provide copies of such registration statement, including all amendments thereto, to the Shareholders, and will use its reasonable efforts to cause such registration statement to become effective as soon as feasible under Commission rules. Such registration statement will be on Form S-3 (or if Form S-3 is unavailable to Parent, on Form SB-1 or SB-2). Parent will maintain the effectiveness of such registration statement pursuant to Commission Rule 415 until all such shares are sold, provided however, that if the Shareholders jointly have previously sold at least one million (1,000,000) of the Shares, whether pursuant to a registration statement or otherwise, Parent shall have no obligation to keep such registration statement effective after the remaining shares of Parent Common Stock held by Shareholders and registered thereunder are eligible for resale pursuant to Commission Rule 144. If the effectiveness of such registration statement lapses for any reason other than a reason attributable to the Shareholders, subject to the proviso in the immediately preceding sentence, Shareholders will be entitled to one (and only one) additional written demand registration right on the same basis as provided above in this Section (i). (ii) Incidental Registration. Until three (3) years after the Closing Date, whenever Parent proposes to file a registration statement at any time and from time to time, if such registration statement would permit the inclusion of shares to be sold on behalf of a selling Shareholder pursuant to the rules of the Commission, it will, prior to such filing, give written notice to the Shareholders holding Shares issued hereunder of its intention to do so and, upon the written request of any of the Shareholders given within twenty (20) days after Parent provides such notice (which request will state the intended method of disposition of the shares), Parent will use its reasonable efforts to cause all such Shares which Parent has been requested by such Shareholders to register to be included in such registration statement to the extent necessary to permit their sale or other disposition in accordance with the intended methods of distribution specified in the request of such Shareholders; provided, that Parent will have the right to postpone or withdraw any registration effected pursuant to this Section (ii) without obligation to any of the Shareholders. In connection with any offering under this Section (ii) involving an underwriting, Parent will not be required to include any shares in such underwriting unless the Shareholders accept the terms of the underwriting as agreed upon between Parent and the underwriters selected by it and applicable to all other sellers of the shares, and then only in such quantity as will not, in the reasonable opinion of the underwriters, jeopardize the success of the offering by the Companies. If in the reasonable opinion of the managing underwriter the registration of all, or part of, the shares which the Shareholders have requested to be included would materially and adversely affect such public offering, then Parent will be required to include in the underwriting only that number of shares, if any, which the managing underwriter reasonably believes may be sold without causing such adverse effect. If the number of shares to be included in the underwriting in accordance with the foregoing is less than the total number of shares which the Shareholders have requested to be included, then the Shareholders who have requested registration and other holders of shares of Parent Common Stock entitled to include shares of Common Stock in such registration will participate in the underwriting pro rata based upon the number of shares each such Shareholder has requested to be included in such registration. (iii) Registration Procedures. If and whenever Parent is required by the provisions of this Exhibit 4.12 to effect the registration of Shares under the Securities Act, Parent will: (A) prepare and file with the Commission a registration statement with respect to such securities (each of the Shareholders holding Shares participating in such registration hereby agreeing to furnish Parent, with fifteen (15) days following a request by Parent, with such information concerning such security holder to be included in such registration statement as may be reasonably requested by Parent), and with respect to registrations under Section (i), use its reasonable efforts to cause such registration statement to become and remain effective until such Shares are sold; provided, however, that if the Shareholders jointly have previously sold at least one million (1,000,000) of the Shares, whether pursuant to a registration statement or otherwise, Parent shall have no obligation to keep such registration statement effective after the remaining Shares are eligible for sale pursuant to Commission Rule 144; (B) with respect to registrations under Section (i), prepare and file with the Commission such amendments to such registration statement and supplements to the prospectus contained therein as may be necessary to keep such registration statement effective until such Shares are sold; provided, however, that if the Shareholders jointly have previously sold at least one million (1,000,000) of the Shares, whether pursuant to a registration statement or otherwise, Parent shall have no obligation to keep such registration statement effective after the remaining Shares held by Shareholders and registered thereunder are eligible for sale pursuant to Commission Rule 144; (C) furnish to the Shareholders participating in such registration such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such Shareholders may reasonably request in order to facilitate the public offering of such securities; (D) use its reasonable efforts to register or qualify the securities covered by such registration statement under such state securities or blue sky laws of such jurisdictions as such participating Shareholders may reasonably request in writing within twenty (20) days following the original filing of such registration statement, except that Parent will not for any purpose be required to qualify to do business as a foreign corporation in any jurisdiction wherein it is not so qualified; (E) notify the Shareholders participating in such registration, promptly after it will receive notice thereof, of the time when such registration statement has become effective or a supplement to any prospectus forming a part of such registration statement has been filed; (F) notify the Shareholders participating in such registration promptly of any request by the Commission for the amending or supplementing of such registration statement or prospectus or for additional information; (G) prepare and file with the Commission, promptly upon the reasonable request of the Shareholders participating in such registration, any amendments or supplements to such registration statement or prospectus which, in the opinion of counsel for such holders (and concurred in by counsel for Parent), is required under the Securities Act or the rules and regulations thereunder in connection with the distribution of the Shares by such Shareholder; (H) prepare and promptly file with the Commission and promptly notify the Shareholders participating in such registration of the filing of such amendment or supplement to such registration statement or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such securities is required to be delivered under the Securities Act, any event has occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading; and (I) advise such Shareholders, promptly after Eltrax receives notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for that purpose and promptly use its reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued. (iv) Expenses. With respect to each registration, including registrations pursuant to Form S-3, requested pursuant to this Exhibit 4.12, Parent will bear the following fees, costs and expenses: all registration, filing and NASD or exchange listing fees, printing expenses, fees and disbursements of counsel and accountants (including the expense of any special audits incident to or required by any such registration) for Parent, all internal Parent expenses, and all legal fees and disbursements and other expenses of complying with state securities or blue sky laws of any jurisdictions in which the securities to be offered are to be registered or qualified. Fees and disbursements of counsel and accountants for the selling Shareholders, underwriting discounts and commissions and transfer taxes relating to the shares included in the offering by the selling Shareholders, and any other expenses directly incurred by the selling Shareholders not expressly included above, will be borne by the selling Shareholders. (v) Indemnification. In the event of any registration of any Shares under the Securities Act pursuant to this Agreement, Parent will indemnify and hold harmless the seller of such shares, each underwriter of such shares, and each other person, if any, who controls such seller or underwriter within the meaning of the Securities Act or the Exchange Act against any losses, claims, damages or liabilities, joint or several, to which such seller, underwriter or controlling person may become subject under the Securities Act, the Exchange Act, state securities or blue sky laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such shares were registered under the Securities Act, any preliminary prospectus or final prospectus contained in the registration statement, or any amendment or supplement to such registration statement, or arise out of or are based upon the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and Parent will reimburse such seller, underwriter and each such controlling person for any legal or any other expenses reasonably incurred by such seller, underwriter or controlling person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that Parent will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any untrue statement or omission made in such registration statement, preliminary prospectus or prospectus, or any such amendment or supplement, in reliance upon and in conformity with information furnished to Parent, in writing, by or on behalf of such seller, underwriter or controlling person specifically for use in the preparation thereof. In the event of any registration of any shares of Parent Common Stock under the Securities Act pursuant to this Agreement, each seller of shares, severally and not jointly, will indemnify and hold harmless Parent, each of its directors and officers and each underwriter (if any) and each person, if any, who controls Parent or any such underwriter within the meaning of the Securities Act or the Exchange Act against any losses, claims, damages or liabilities, joint or several, to which Parent, such directors and officers, underwriter or controlling person may become subject under the Securities Act, Exchange Act, state securities or blue sky laws or otherwise insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement under which such shares were registered under the Securities Act, any preliminary prospectus or final prospectus contained in the registration statement, or any amendment or supplement to the registration statement, or arise out of or are based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to Parent by or on behalf of such seller, specifically for use in connection with the preparation of such registration statement, prospectus, amendment or supplement. Each party entitled to indemnification under this Section (v) (the "Indemnifying Party") will give notice to the party required to provide indemnficiation (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and will permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided, that counsel for the Indemnifying Party, who will conduct the defense of such claim or litigation, will be approved by the Indemnified Party (whose approval will not be unreasonably withheld); and, provided, further, that the failure of any Indemnified Party to give notice as provided herein will not relieve the Indemnifying Party of its obligations under this Section (v). The Indemnified Party may participate in such defense at such party's expense; provided, however, that the Indemnifying Party will pay such expense if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between the Indemnified Party and any other party represented by such counsel in such proceeding. No Indemnifying Party, in the defense of any such claim or litigation will, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation, and no Indemnified Party will consent to entry of any judgment or settle such claim or litigation without the prior written consent of the Indemnifying Party. (vi) Restriction on Resale of Parent Common Stock. Notwithstanding any other provision of this Agreement, from and until three (3) years after the Closing Date, the Shareholders hereunder jointly and severally agree that during any thirty (30) day period, such Shareholders collectively will not sell more than ninety thousand (90,000) Shares beneficially owned by or controlled by such person; provided that the foregoing restrictions will not apply to: (A) any private resale of Shares by the Shareholders in an amount permitted under and in accordance with the terms of that certain Agreement to be dated the Closing Date by and among the Parent, the Shareholders and the Eltrax principals, (B) any private resale of Shares by the Shareholders which Shares are registered under an effective registration statement, so long as all purchaser(s) of such Shares collectively first agree to enter into written agreements reasonably acceptable to Parent under which such purchasers agree to be subject to the resale volume restriction set forth in this Section (vi), or (C) any shares of Parent Common Stock acquired by the Shareholders other than pursuant to this Agreement. (vii) Granting of Registration Rights. Until three (3) years after the Closing Date, prior to the registration of the Shares or in the event of such registration, during any time when the Shares may not be sold pursuant to a then-effective registration statement, Parent will not, without the prior written consent of the Shareholders, which consent can not be unreasonably withheld: (a) only with respect to the first one million (1,000,000) of the Shares and until such one million (1,000,000) Shares are sold, grant to any owner of securities of the Parent registration rights involving an underwriting, if such rights have priority over or are on parity with the rights granted to the Shareholders pursuant to this Agreement in terms of the number of Shares which such holders may include in any registration, the rights of such holders to demand registration of the Shares held by them at the time requested by them, or in any other material respect; (b) grant to any of the Eltrax Principals registration rights involving an underwriting, if such rights give priority over the rights granted to the Shareholders pursuant to this Agreement in terms of the number of Shares which such holders may include in any registration, the rights of such holders to demand registration of the Shares held by them at the time requested by them, or in any other material respect. (viii) Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may permit the sale of restricted securities (as that term is used in Rule 144 under the 1933 Act) to the public without registration, the Parent agrees to: (a) use its reasonable efforts to make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act at all times; (b) use its reasonable efforts to file with the Commission in a timely manner all reports and other documents required by the Company under the Securities Act and the Exchange Act; and (c) so long as a Shareholder owns any Shares, furnish to such Shareholder upon request a written statement by the Parent as to its compliance with the reporting requirements of Rule 144 and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Parent and such other reports and documents so filed as such Shareholder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Shareholder to sell any Shares without registration. (ix) Listing Application. The Company will, at its expense, include all of the Shares owned by the Shareholders in any listing application on any national securities exchange on which any shares of any class of its common stock are listed in accordance with applicable rules of such exchange. (x) Assignment. The Shareholders will be entitled to assign all or any portion of their rights, benefits and obligations hereunder with respect to any Shares that may be transferred to any person or entity that acquires the Shares from such Shareholder, without the prior consent of Parent or any other party and such person or entity will be entitled to all of the rights and benefits (to the extent assigned) of the Shareholders hereunder with respect to the Shares so acquired, provided that (i) any such party agrees in writing to be bound by all the terms hereof, and (ii) the Shareholders will notify Parent in writing of any such assignment within five (5) business days of any such assignment. FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER This FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER, dated as of May 17, 1996 (the "First Amendment"), is by and among ELTRAX SYSTEMS, INC., a Minnesota corporation, DATATECH ACQUISITION CORPORATION, a Minnesota corporation and a wholly-owned subsidiary of the Parent, RUDATA ACQUISITION CORPORATION, a Minnesota corporation and a wholly-owned subsidiary of the Parent, NORDATA, INC., a California corporation ("Rudata"), and HOWARD B. and RUBY LEE NORTON, the sole shareholders of Nordata and Rudata. R E C I T A L S : A. WHEREAS, the parties hereto have entered into an Agreement and Plan of Merger dated as of May 14, 1996 (the "Agreement"); B. WHEREAS, the parties desire to amend certain terms, conditions and covenants of the Agreement; and C. WHEREAS, the parties acknowledge and agree that the merger of Rudata Acquisition Sub and Rudata will not qualify as a reorganization within the meaning of Section 368 of the Code. NOW, THEREFORE, in consideration of the covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: A G R E E M E N T : ARTICLE I AMENDMENTS TO AGREEMENT 1.1 Amendment to Section 4.21. Section 4.21 of the Agreement is restated as follows: "4.21 Divestment of Interest. The Shareholders will cause to occur a divestiture of all of the Shareholders' and the Companies' beneficial ownership in, and any interest as a debt or equity holder of, TechLine within ten (10) days of the Closing Date." 1.2 Amendment to Article 4. Article 4 of the Agreement is amended to add the following new Section 4.22: "4.22. Section 338(h)(10) Election. Shareholders agree to cooperate with and join Parent in the making of an election pursuant to Section 338(h)(10) of the Code with respect to the merger of Rudata, if, in its sole discretion, Parent desires to make such an election. If, as a direct result of making an election pursuant to Section 338(h)(10) of the Code, the Shareholders incur a federal or state income tax liability that is greater than such Shareholders' income tax liability if no such election had been made, Parent agrees to pay Shareholders an amount equal to any such additional income tax liability. Such payment shall be grossed up for any federal or state income tax that may result from such payment so that on an after-tax basis the Shareholders are made whole." 1.3 Amendment to Section 5.13. Section 5.13 of the Agreement is amended by deleting such section in its entirety. ARTICLE II MISCELLANEOUS PROVISIONS 2.1 Incorporation by Reference. Article 9 of the Agreement is incorporated herein by reference. 2.2 Capitalized Terms. Capitalized terms used herein and not otherwise defined have the meaning set forth in the Agreement. IN WITNESS WHEREOF, the parties have caused this First Amendment to be duly executed as of the day and year first above written. PARENT: COMPANIES: Eltrax Systems, Inc. Nordata, Inc. By: /s/ Mack V. Traynor, III By: /s/ Howard B. Norton Mack V. Traynor, III Howard B. Norton Its: Chief Executive Officer Its: President ACQUISITION SUBS: By: /s/ Ruby Lee Norton Ruby Lee Norton Datatech Acquisition Corporation Its: Secretary By: /s/ Mack V. Traynor, III Rudata, Inc. Mack V. Traynor, III Its: President By: /s/ Ruby Lee Norton Ruby Lee Norton Rudata Acquisition Corporation Its: President By: /s/ Mack V. Traynor, III By: /s/ Howard B. Norton Mack V. Traynor, III Howard B. Norton Its: President Its: Secretary EX-3 4 ESCROW AGREEMENT THIS ESCROW AGREEMENT ("Escrow Agreement") is made and entered into as of May 17, 1996 by and among Eltrax Systems, Inc., a Minnesota corporation ("Purchaser"), Howard B. and Ruby Lee Norton (the "Shareholders"), and Norwest Bank Minnesota, National Association, a national banking association, as escrow agent (the "Escrow Agent"). A. Purchaser, two subsidiaries of Purchaser, Datatech Acquisition Corporation and Rudata Acquisition Corporation ("Acquisition Subs"), Nordata, Inc. and Rudata, Inc. ("Companies") and Shareholders have entered into an Agreement and Plan of Merger dated as of May 14, 1996 (the "Merger Agreement") pursuant to which the Acquisition Subs will merge with and into the Companies, with the Companies to survive the merger as wholly-owned subsidiaries of Purchasers. B. Pursuant to the terms of the Merger Agreement, Purchaser is to deposit 450,000 shares of its Common Stock ("Purchaser's Common Stock") with the Escrow Agent (with the certificate for such shares being registered in the name of the Escrow Agent or its nominee) at the Closing, as defined in the Merger Agreement. Accordingly, for the purpose of establishing the terms and provisions of escrow for the aforesaid shares and cash, the parties hereto agree as follows: 1. Escrow Deposit. The Escrow Agent hereby acknowledges receipt of a certificate for 450,000 shares of Purchaser's Common Stock (collectively, the "Escrow Deposit"). The Escrow Agent is directed to hold, deal with and dispose of the Escrow Deposit as hereinafter set forth, and agrees not to commingle the Escrow Deposit with any other securities or funds held by the Escrow Agent. At any time within ten (10) days of receiving a Shareholders' Notice (as defined below), or at any other time on no more than two occasions during each calendar year, Shareholders have the right to jointly notify the Escrow Agent and the Purchaser that Shareholders wish to substitute cash in lieu of shares of Purchaser's Common Stock held as the Escrow Deposit on the basis of $3.00 cash for each one share of Purchaser's Common Stock to be so substituted (the "Substituted Shares"). As soon as practicable upon receipt of such notice and the correct cash amount from Shareholders, the Escrow Agent shall cancel the stock certificate then representing Purchaser's Common Stock as the Escrow Deposit and shall prepare new stock certificates representing the appropriate number of shares of Purchaser's Common Stock. The Escrow Agent shall deliver the certificates representing the Substituted Shares in accordance with the joint instructions of the Shareholders, and will retain as the Escrow Deposit the stock certificates representing the remaining shares of Parent Common Stock together with the cash received for the Substituted Shares pursuant to the terms of this Agreement. 2. Charges Against Escrow Deposit. The Escrow Deposit has been made for the purpose of securing and providing a nonexclusive source for satisfying the indemnification obligations of Shareholders to Purchaser pursuant to Article 8 of the Merger Agreement. The Escrow Deposit is not intended to limit or defeat the ability of Purchaser to seek indemnification directly from the Shareholders in the event the Escrow Deposit is insufficient in size or terminates or expires before all claims are made or satisfied. In the event that, and from time to time as, Purchaser determines that amounts are chargeable or can be reserved against the Escrow Deposit pursuant to the aforesaid subsections of the Merger Agreement, Purchaser ("Claimant") will provide a notice to the Escrow Agent, in substantially the form attached hereto as Exhibit 1, of such charge or reserve (a "Claim") against the Escrow Fund, stating the amount thereof and a brief description of the facts upon which the claim is based. The Escrow Agent will promptly deliver a copy of such notice to the Shareholders (the "Shareholder's Notice"). Unless it receives prior notice from the Shareholders pursuant to Section 3 below, the Escrow Agent will deliver to Claimant out of the Escrow Fund that number of shares of Purchaser's Common Stock, valued at $3.00 per share (hereinafter called the "Market Price") (but rounding such amount so as to avoid a fractional share), or, at the option of the Shareholders acting jointly, cash in lieu of that number of Shares of Purchaser's Common Stock (valued at the Market Price) equal to the amount of such Claim, or in the case of a Claim for the establishment of a reserve, the Escrow Agent will establish, by bookkeeping entry, such reserve using the same valuation approach. To the extent that any Claim is paid to Claimant after any record date for any dividend or distribution on the shares held in the Escrow Fund, which record date is after the date of this Agreement, the amount of such dividend(s) or distribution(s) relating to the shares to be transferred to Claimant as aforesaid will also be delivered at the same time. A Claim ultimately paid from a reserve will likewise include such dividends and distributions, determined in the same manner. If only part of a Claim is disputed pursuant to Section 3 below, the Escrow Agent will promptly pay to the Purchaser the undisputed portion of such Claim. 3. Dispute of Claim Against Escrow Deposit. (a) The Shareholders will have the right to dispute any Claim against the Escrow Deposit within the ten (10) business day period following delivery to the Shareholders of a Shareholder's Notice by delivering to the Escrow Agent written notice in substantially the form attached hereto as Exhibit 2 (an "Objection Notice") that the Shareholders dispute the matter(s) set forth in such Claim notice either with respect to the validity or the amount of the Claim (or both). Such notice will include the basis, with reasonable specificity, of the objection. The Escrow Agent will promptly furnish Purchaser with a copy of any Objection Notice. (b) Upon receipt of an Objection Notice from the Shareholders, the Escrow Agent will set aside in a separate fund (a "Dispute Fund") the number of shares that it would have delivered to Claimant or established as a reserve had such Objection Notice not been received. The Escrow Agent will take no action with respect to the Dispute Fund, except upon receipt of joint written instructions from Purchaser and the Shareholders in substantially the form attached hereto as Exhibit 3. Upon such notice, the Escrow Agent will promptly follow the instructions therein. (c) If the amount necessary to satisfy any Disputed Claim, as ultimately determined via joint written instructions pursuant to Section 3(b) above, is in excess of the amount held in the Dispute Fund with respect thereto, valued at Market Price, an additional amount necessary to satisfy such Claim will be delivered from the Escrow Fund to Claimant, valued at Market Price, together with applicable dividends and distributions, or will be established as a reserve to be administered according to the written instructions, as the case may be. (d) If an Objection Notice is timely delivered by the Shareholders, the objections which are described in such notice will be resolved by arbitration pursuant to Section 9.12 of the Merger Agreement. 4. Termination; Release of Escrow Fund. The Escrow Fund will terminate on the second anniversary of the date of this Agreement (the "Termination Date"). The Escrow Agent will, on the business day next succeeding the Termination Date, deliver to the Shareholders in accordance with their instructions, the shares of Purchaser's Common Stock and cash remaining in the Escrow Fund (and applicable dividends and distributions) then held by it hereunder, provided, however, that any unpaid amounts with respect to which the Escrow Agent will have been given notice of a Claim (whether or not yet reserved against) on or prior to such date and any amounts then being held in a Dispute Fund (with all claims described in Claims notices received during the last ten (10) business days ending on and including the Termination Date being deemed to be held in a Dispute Fund) will continue to be held hereunder by the Escrow Agent, and this Escrow Agreement will continue in full force and effect until each existing dispute with respect thereto has been resolved and each contingency applicable to each reserve has been satisfied and joint written instructions are given pursuant to Section 3(b) above (which instructions will include, without limitation, a direction to deliver shares to the Exchange Agent). 5. Investments; Entitlement to Investment Earnings. All cash deposited in the Escrow Fund and all cash distributions received on the deposited shares will be invested and reinvested by the Escrow Agent in the Norwest Funds, Ready Cash Investment Fund (Institutional Shares). After payment of the fees and disbursements of the Escrow Agent from investment earnings, the balance of such earnings, if any, will be disbursed to the Shareholders at the same time as the final distribution made pursuant to Section 4 above. 6. Investment of Share Escrow Fund. The Escrow Agent will hold the shares deposited in the Escrow Fund as such and will have no duty with respect to reinvestment thereof, regardless of an increase or a decrease in the market value thereof. 7. Designated Officers. The Shareholders and Purchaser will from time to time each provide the Escrow Agent with a written notice, which will be signed, in the case of the Shareholders, by the Shareholders, who will be the sole agent of each of the Shareholders and the only person who may act for the Shareholders in connection with this Escrow Agreement, and in the case of Purchaser, by the person, identified below in this section, and will contain (a) the name(s) of any substitute or additional person(s) who are authorized to execute any written notice, instruction or certificate to the Escrow Agent required or permitted by the terms of this Escrow Agreement, and (b) specimen signature(s) of such authorized persons. The initial Shareholders and the initial agent of Purchaser and their respective signatures are set forth below. Each notice, instruction or other certificate required or permitted by the terms hereof will be in writing and will be communicated by registered or certified mail, return receipt requested, or telecopier, to the parties hereto at the respective addresses shown below, or at such other address as any such party may designate by notice given to the other parties: (i) if to the Shareholders, to: with a copy to: Datatech Brown and Streza 27126 Paseo Espada, Suite 1602 7700 Irvine Center Drive, Suite 900 San Juan Capistrano, CA 92675 Irvine, CA 92718 Attn: Howard and Ruby Norton Attn: Richard E. Streza, Esq. Fax: 714/493-1840 Fax: 714/453-2916 (ii) if to Purchaser, to: with a copy to: Eltrax Systems, Inc. Oppenheimer Wolff & Donnelly Rush Lake Business Park Plaza VII, Suite 3400 1775 Old Highway 8 45 South Seventh Street St. Paul, MN 55112 Minneapolis, MN 55402-1609 Attn: Mack V. Traynor, III Attn: Thomas R. Marek, Esq. Chief Executive Officer Fax: 612/344-9376 Fax: 612/633-8372 (iii) if to the Escrow Agent, to: Norwest Bank Minnesota, National Association 6th and Marquette Minneapolis, MN 55479-0069 Attn: Michelle Healy Fax: 612/667-9825 All notices, instructions or certificates given hereunder to the Escrow Agent will be deemed delivered and to be effective only upon receipt by the Escrow Agent. All notices given hereunder by the Escrow Agent will be effective and deemed delivered and received three (3) calendar days after mailing by the Escrow Agent. The Escrow Agent is not obligated to take any action with respect to any request or demand of the Shareholders or Purchaser unless in the form required hereunder and properly signed. 8. Regarding the Escrow Agent. In consideration of the acceptance by the Escrow Agent of its duties hereunder, it is agreed by all parties hereto that: (a) The Escrow Agent's duties and responsibilities will be limited to those expressly set forth in this Escrow Agreement, and it will not be subject to, or obliged to recognize, any other agreement between the parties hereto even though reference thereto may be made herein. (b) The Escrow Agent is authorized, in its reasonable discretion, to disregard any and all notices or instructions given by any of the parties hereto or by any other person, firm or corporation, except only (i) such notices or instructions as are herein specifically provided for, and (ii) orders or process of any court with jurisdiction. If any property subject hereto is at any time attached, garnished or levied upon or under any court order or in case the payment, assignment, transfer, conveyance or delivery of any such property is stayed or enjoined by any court order, or in case any order, judgment or decree is made or entered by any court affecting such property or any part thereof, then, and in any of such events, the Escrow Agent is authorized, in its sole discretion, to rely upon and comply with any such order, writ, judgment or decree which it is advised by legal counsel of its own choosing is binding upon it; and if it complies with any such order, writ, judgment or decree it will not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance even though such order, writ, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated. (c) The Escrow Agent will not be personally liable for any act taken or omitted hereunder if taken or omitted by it in good faith. In taking any action whatsoever hereunder, the Escrow Agent will be protected in relying upon any notice, paper or other document reasonably believed by it to be genuine, or upon any evidence reasonably deemed by it to be sufficient. The Escrow Agent may consult with counsel in connection with its duties hereunder and will be fully protected in any act taken, suffered or permitted by it in good faith in accordance with the advice of counsel. It will also be fully protected in relying upon any written notice, demand, certificate or document which it in good faith believes to be genuine. The Escrow Agent will not be responsible for the sufficiently or accuracy of the form, execution, validity or genuineness of documents now or hereafter deposited hereunder, nor will it be responsible or liable in any respect on account of the identity, authority or rights of the persons executing and delivering or purporting to execute or deliver any such document. (d) If the Escrow Agent believes it to be reasonably necessary to consult with counsel concerning any of its duties in connection with this Escrow Agreement, or in case it becomes involved in litigation on account of being Escrow Agent hereunder or on account of having received property subject hereto, then in either case, the Escrow Agent's costs, expenses, and reasonable attorneys' fees will be paid as set forth in subparagraph (e). (e) The Escrow Agent will be entitled to a $1,000 acceptance fee and a $1,000 annual administration fee, which two amounts, plus all reasonable expenses of the Escrow Agent as shown on Exhibit 4 hereof, will be invoiced to and paid by Purchaser to the extent there are not sufficient investment earnings to apply for the purpose of making such payment, which application Purchaser and Shareholders hereby authorize. (f) The Escrow Agent may at any time resign by giving thirty days written notice of resignation to Purchaser and to Shareholders. In such event Purchaser and the Shareholders will appoint a successor escrow agent to be effective on the effective date of the aforesaid resignation. All right, title and interest to the Escrow Deposit and to the dividends and distributions and the investment earnings with respect thereto will be transferred to the successor agent and this Escrow Agreement will be assigned to such successor, and the resigning Escrow Agent will thereupon be released from further obligations hereunder. 9. Governing Agreement; Amendments. The Escrow Agent hereby acknowledges receipt of a copy of the Merger Agreement, but except for reference thereto for definitions of certain words and terms not defined herein, the Escrow Agent is not charged with any duty or obligation arising under the Merger Agreement and the responsibilities and duties of the Escrow Agent will be governed by this Escrow Agreement. As between the Escrow Agent, on the one hand, and the other parties hereto, on the other hand, this Escrow Agreement constitutes the entire agreement with respect to the subject matter herein. As between the other parties hereto, this Escrow Agreement will govern to the extent of any conflict between it and the Merger Agreement or any other agreement or writing. No change in, addition to, or waiver of the terms and conditions hereof will be binding upon any of the parties hereto unless approved in writing by the other parties hereto. 10. Binding Effect. This Escrow Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors, assigns and legal representatives. Except with respect to such successions contemplated in the Merger Agreement, or otherwise as contemplated in this Escrow Agreement, no party hereto may assign any of its rights, interests or obligations hereunder. 11. Applicable Law. This Escrow Agreement will be governed by and construed in accordance with the laws of the State of Minnesota. 12. Counterparts and Definitions. This Escrow Agreement may be executed in one or more counterparts, each of which is an original but all of which together will constitute one and the same instrument. Terms not otherwise defined herein will have the meaning given to them in the Merger Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be duly executed. PURCHASER: ESCROW AGENT: Eltrax Systems, Inc. Norwest Bank Minnesota, National Association, as Escrow Agent By: /s/ By: /s/ Title: Title: SHAREHOLDERS: /s/ Howard B. Norton /s/ Ruby Lee Norton [date] FORM OF NOTICE OF CLAIM FOR INDEMNITY Norwest Bank Minnesota, National Association, as Escrow Agent 6th and Marquestte Minneapolis, MN 55479-0069 Attn: Michelle Healy Re: [identify Escrow Agreement] In accordance with the referenced Escrow Agreement, you are hereby instructed to pay to the Purchaser the amount of $____________ by reason of the following claim: This claim is based on the following facts: [stating the amount thereof and a statement of the facts constituting the basis of the claim and including copies of all information and documentation relating to the claim (including invoices and bills substantiating the Claim amount to the extent such exist)] You hereby are directed to furnish a copy of this Notice to Shareholders. [Purchaser] By Title: [Escrow Exhibit 2] [date] FORM OF OBJECTION NOTICE Norwest Bank Minnesota, National Association, as Escrow Agent 6th and Marquestte Minneapolis, MN 55479-0069 Attn: Michelle Healy Re: [Identify Escrow Agreement] You hereby are notified that Shareholders dispute the Claim for Indemnity set out in the Notice of Claim for Indemnity of Purchaser dated ____________ ("Claim"). The basis for disputing such Claims is: [insert a paragraph stating with reasonable specificity the basis for the objection and the amount in dispute and not in dispute, if any] You hereby are directed to furnish a copy of this Objection Notice to Purchaser. SHAREHOLDERS [Escrow Exhibit 3] [date] FORM OF JOINT INSTRUCTIONS FOR DISPUTE RESOLUTION Norwest Bank Minnesota, National Association, as Escrow Agent 6th and Marquestte Minneapolis, MN 55479-0069 Attn: Michelle Healy Re: [Identify Escrow Agreement] You hereby are authorized and instructed to take the following action with respect to the Dispute Fund that was created by reason of Purchaser's Notice of Claim Indemnity dated ______________ and Shareholders' Objection Notice dated ____________ Objection Notice dated ____________: [instructions for treatment of the Dispute Fund] [describe any applicable arbitration award] [Purchaser] By: Title SHAREHOLDERS EX-4 5 AGREEMENT THIS AGREEMENT, dated as of May 17, 1996 (the "Agreement"), is by and among ELTRAX SYSTEMS, INC., a Minnesota corporation ("Eltrax" or the "Company"), William P. O'Reilly, Clunet R. Lewis and Mack V. Traynor, III (collectively referred to herein as the "Eltrax Principals") and Howard B. and Ruby Lee Norton (collectively, the "Nortons"). A. WHEREAS, Eltrax has agreed to acquire in two merger transactions all of the issued and outstanding capital stock of Nordata, Inc., a California corporation and Rudata, Inc., a California corporation, which are wholly owned by the Nortons, and the Nortons have agreed to sell Nordata and Rudata to Eltrax (the foregoing transactions are hereinafter referred to collectively as the "Merger"); B. WHEREAS, Eltrax has also agreed that, if so requested by the Nortons, Eltrax will assist the Nortons to effectuate a private resale of Eltrax Common Stock which the Nortons receive as consideration in the Merger (the "Eltrax Common Stock"). C. WHEREAS, the parties hereto desire to make certain representations and agreements to each other in connection with these agreements. NOW, THEREFORE, in consideration of the mutual representations and covenants contained herein, the parties hereto agree as follows: ARTICLE 1 ASSISTANCE OF ELTRAX 1.1 Assistance of Eltrax. At any time after September 1, 1996 and continuing until May 31, 1998, the Nortons have the right to request the assistance of Eltrax to effect a private sale of a portion of the Nortons' shares of Eltrax Common Stock. This private sale will be for the lesser of One Million (1,000,000) shares of Eltrax Common Stock held by the Nortons or such number of shares of Eltrax Common Stock having a then current market value of Four Million Dollars ($4,000,000) (gross sales price before commissions, expenses and other costs of sale). Upon such written request of the Nortons, Eltrax will use its reasonable efforts to assist the Nortons in such private sale, but Eltrax will in no way guarantee the success of such sale or the sale price, nor will Eltrax be obligated to incur any costs in this effort. The Nortons will use their reasonable efforts to cooperate with Eltrax in preparing any appropriate disclosure documents. 1.2 Legal Opinion. Prior to any such transfer or sale of Eltrax Common Stock by the Nortons in a private sale transaction as contemplated by this Agreement, the Nortons shall cause their legal counsel to deliver an opinion to Eltrax, which opinion shall be acceptable to Eltrax and its legal counsel, to the effect that such sale transaction is an exempt transaction under applicable federal and state securities laws and would not cause Eltrax to be in violation of any such securities laws. 1.3 Co-Sale Right. If at any time before the Nortons have sold their first One Million shares of Eltrax Common Stock or all shares owned by the Nortons have been registered under the Securities Act of 1933, as amended, Eltrax undertakes to issue and sell Eltrax Common Stock in a private placement (other than pursuant to the exercise of outstanding options, warrants and other pre-existing rights to purchase Eltrax Common Stock and other than under the Eltrax 1995 Stock Incentive Plan), the Nortons shall have the right, but not the obligation, to participate in such private placement transaction upon the same terms and conditions applicable to Eltrax and in an amount of shares not to exceed the lesser of fifty percent (50%) of the Eltrax shares so placed or the same number of shares as provided in Section 1.1 hereof. ARTICLE 2 COVENANT OF ELTRAX PRINCIPALS 2.1 Subject to this Section 2.1, each of the Eltrax Principals agrees not to sell any of his shares of Eltrax common stock until the Nortons have completed the sales of their Eltrax Common Stock in accordance with Section 1.1 hereof. This sale restriction will automatically be satisfied and will terminate on the earlier of: (a) when the Eltrax Principals have arranged for the private sale of an amount of shares of Eltrax common stock held by the Nortons equal to the lesser of one million (1,000,000) shares or such number of shares having a then current market value of Four Million Dollars ($4,000,000) (gross sales price before commissions, expenses and other costs of sale), except if such sale does not close for any reason other than the Norton's unwillingness to consummate the transaction at a time when such purchaser(s) is ready, willing and able to consummate the transaction, or (b) December 31, 1996 if, by such date, the Nortons have not notified Eltrax and the Eltrax Principals with a bona fide request for the assistance of the Eltrax Principals to effectuate the Nortons' private sale of shares of Eltrax Common Stock in accordance with the terms of this Agreement. ARTICLE 3 MISCELLANEOUS PROVISIONS 3.1 Expenses. Each of the parties hereto shall bear its own costs, fees and expenses in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including without limitation fees, commissions and expenses payable to brokers, finders, investment bankers, consultants, exchange or transfer agents, attorneys, accountants and other professionals, whether or not the transactions contemplated herein is consummated. 3.2 Amendment and Modification. Subject to applicable law, this Agreement may be amended or modified by the parties hereto at any time prior to the Closing with respect to any of the terms contained herein; provided, however, that all such amendments and modifications must be in writing duly executed by all of the parties hereto. 3.3 Waiver of Compliance; Consents. Any failure of a party to comply with any obligation, covenant, agreement or condition herein may be expressly waived in writing by the party entitled hereby to such compliance, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. No single or partial exercise of a right or remedy shall preclude any other or further exercise thereof or of any other right or remedy hereunder. Whenever this Agreement requires or permits the consent by or on behalf of a party, such consent shall be given in writing in the same manner as for waivers of compliance. 3.4 No Third Party Beneficiaries. Nothing in this Agreement shall entitle any person or entity (other than a party hereto and his, her or its respective successors and assigns permitted hereby) to any claim, cause of action, remedy or right of any kind. 3.5 Notices. All notices, requests, demands and other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given and effective: (i) on the date of delivery, if delivered personally; (ii) on the earlier of the fourth (4th) day after mailing or the date of the return receipt acknowledgement, if mailed, postage prepaid, by certified or registered mail, return receipt requested; or (iii) on the date of transmission, if sent by facsimile, telecopy, telegraph, telex or other similar telegraphic communications equipment: If to the Nortons: To: Howard and Ruby Norton c/o Datatech 27126 Paseo Espada, Suite 1602 San Juan Capistrano, CA 92675 Fax: (714) 493-1840 With a copy to: Brown and Streza 7700 Irvine Center Drive, Suite 900 Irvine, CA 92718 Attn: Richard E. Streza, Esq. Fax: (714) 453-2916 or to such other person or address as either of the Companies shall furnish to the other parties hereto in writing in accordance with this Section. If to Eltrax: To: Eltrax Systems, Inc. Rush Lake Business Park 1775 Old Highway 8 St. Paul, MN 55112 Attn: Mack V. Traynor III Chief Executive Officer Fax: (612) 633-8372 With a copy to: Oppenheimer Wolff & Donnelly 45 South Seventh Street Suite 3400 Minneapolis, MN 55402 Attn: Thomas R. Marek, Esq. Fax: (612) 344-9376 or to such other person or address as Eltrax or either of the Acquisition Subs shall furnish to the other parties hereto in writing in accordance with this Section. 3.6 Governing Law. This Agreement and the legal relations among the parties hereto shall be governed by and construed in accordance with the internal substantive laws of the State of Minnesota (without regard to the laws of conflict that might otherwise apply) as to all matters, including without limitation matters of validity, construction, effect, performance and remedies. 3.7 Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 3.8 Headings. The table of contents and the headings of the sections and Sections of this Agreement are inserted for convenience only and shall not constitute a part hereof. 3.9 Entire Agreement. This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the arrangements concerning the Nortons' potential sale of Eltrax Common Stock contemplated by this Agreement. There are no restrictions, promises, warranties, agreements, covenants or undertakings, other than those expressly set forth or referred to in this Agreement. This Agreement supersedes all prior and contemporaneous oral and written agreements and understandings between the parties with respect to the transaction or transactions contemplated by this Agreement (including without limitation the letter dated March 19, 1996, between the Eltrax Principals and Shareholders and all amendments and extensions thereof). Provisions of this Agreement shall be interpreted to be valid and enforceable under applicable Law to the extent that such interpretation does not materially alter this Agreement; provided, however, that if any such provision shall become invalid or unenforceable under applicable Law such provision shall be stricken to the extent necessary and the remainder of such provisions and the remainder of this Agreement shall continue in full force and effect. 3.10 Injunctive Relief. It is expressly agreed among the parties hereto that monetary damages would be inadequate to compensate a party hereto for any breach by any other party of its covenants and agreements in this Agreement. Accordingly, the parties agree and acknowledge that any such violation or threatened violation shall cause irreparable injury to the other and that, in addition to any other remedies which may be available, such party shall be entitled to injunctive relief against the threatened breach of this Agreement or the continuation of any such breach without the necessity of proving actual damages and may seek to specifically enforce the terms thereof. 3.11 Arbitration. With the sole exception of the injunctive relief contemplated by Section 3.11, any controversy or claim arising out of or relating to this Agreement, or the making, performance or interpretation hereof, including without limitation alleged fraudulent inducement hereof, shall be settled by binding arbitration in Minneapolis, Minnesota by a panel of three arbitrators in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Judgment upon any arbitration award may be entered in any court having jurisdiction thereof and the parties consent to the jurisdiction of the courts of the State of Minnesota for this purpose. 3.12 Attorneys Fees. If any arbitration, litigation or similar proceedings are brought by any party to enforce any obligation or to pursue any remedy under this Agreement, the party prevailing in any such arbitration, litigation or similar proceedings shall be entitled to costs of collection, if any, and reasonable attorneys fees incurred in connection with such proceedings and in collecting or enforcing any award granted therein. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. Eltrax Systems, Inc. By: /s/ Its: President and CEO /s/ William P. O'Reilly /s/ Clunet R. Lewis /s/ Mack V. Traynor, III /s/ Howard B. Norton /s/ Ruby Lee Norton EX-5 6 EMPLOYMENT AND NONCOMPETITION AGREEMENT THIS AGREEMENT is dated May 17, 1996, and is between NORDATA, INC., a California corporation ("Nordata") and HOWARD B. NORTON, an individual residing in the State of California (the "Employee"). RECITALS A. Nordata wishes to continue the services of the Employee for at least the duration of this Agreement, and the Employee wishes to provide his services for such period. B. Nordata desires reasonable protection of its confidential business and technical information. C. On May 17, 1996, Eltrax Systems, Inc. acquired in a merger Nordata, Inc. and Rudata, Inc., which together constitute Datatech from Employee and Employee's spouse in exchange for Eltrax Systems, Inc. common stock and cash, the receipt and sufficiency of which is hereby acknowledged. D. Nordata desires assurance that the Employee will not compete with it for a reasonable period of time after termination of employment, and Employee is willing to refrain from such competition. E. Employee desires to be assured of a minimum Base Salary from Nordata for Employee's services for the term of this Agreement (unless earlier terminated), and to have the opportunity to earn certain incentive payments provided for herein. NOW, THEREFORE, in consideration of Employee's acceptance of and continuance in Nordata's employment for the term of this Agreement and the parties' agreement to be bound by the terms contained herein, the parties agree as follows: ARTICLE I DEFINITIONS For purposes of this Agreement, the following terms have the following meanings: 1.01 "BASE SALARY" shall mean regular cash compensation paid on a periodic basis exclusive of benefits, bonuses and incentive payments. 1.02 "COMMITTEE" shall mean a committee of the Board of Directors of Eltrax consisting solely of directors who are not employees of Eltrax. 1.03 "COMPANY" shall mean Nordata, Inc., a California corporation. 1.04 "CONFIDENTIAL INFORMATION" shall mean information or material which is not generally available to or used by others, or the utility or value of which is not generally known or recognized as standard practice, whether or not the underlying details are in the public domain, including: (a) information or material relating to the Company, and its businesses as conducted or anticipated to be conducted, business plans, operations, past, current or anticipated software, products or services, customers or prospective customers, or research, engineering, development, manufacturing, purchasing, accounting, or marketing activities; (b) information or material relating to the Company's inventions, improvements, discoveries, "know-how," technological developments, or unpublished writings or other works of authorship, or to the materials, apparatus, processes, formulae, plans or methods used in the development, manufacture or marketing of the Company's software, products or services; (c) information which when received is marked as "proprietary," "private," or "confidential"; (d) trade secrets; (e) software in various stages of development, including computer programs in source code and binary code form, software designs, specifications, programming aids (including "library subroutines" and productivity tools), programming languages, interfaces, visual displays, technical documentation, user manuals, data files and databases; and (f) any similar information of the type described above which the Company obtained from another party and which the Company treats as or designates as being proprietary, private or confidential, whether or not owned or developed by the Company. Notwithstanding the foregoing, "Confidential Information" does not include any information which is properly published or in the public domain; provided, however, that information which is published by or with the aid of Employee outside the scope of employment or contrary to the requirements of this Agreement will not be considered to have been properly published, and therefore will not be in the public domain for purposes of this Agreement. 1.05 "DATATECH" shall mean the business formerly owned by Employee and operated under Nordata, Inc. and Rudata, Inc., and as such business will be operated by Nordata. 1.06 "DISABILITY" shall mean the inability, as reasonably determined by the Company, of Employee to perform his duties under this Agreement because of illness or incapacity for a continuous period of six (6) months. In the event that Employee objects that the Company has not reasonably determined Employee's inability to perform his duties, the issue shall be determined by three physicians, one selected by the Company, one by Employee, and the third selected by the first two. The majority opinion of the three physicians shall be final and binding on the Company and Employee. 1.07 "ELTRAX" shall mean Eltrax Systems, Inc., a Minnesota corporation, and shall include its Subsidiaries and successors in interest. 1.08 "PLAN" shall mean any profit sharing, pension, life insurance, accident insurance, disability insurance, health insurance, hospitalization, medical reimbursement or other employee benefit plan including, without limitation, the Company's 401(K) Plan. 1.09 "SUBSIDIARY" shall mean: (a) any corporation at least a majority of whose securities having ordinary voting power for the election of directors (other than securities having such power only by reason of the occurrence of a contingency) is at the time owned by the Company and/or one or more Subsidiaries thereof; and (b) any division or business unit (or portion thereof) of the Company or a corporation described in clause (a) of this Section 1.08. ARTICLE II EMPLOYMENT, DUTIES AND TERM 2.01 EMPLOYMENT, POSITION. Upon the terms and conditions set forth in this Agreement, Company hereby employs Employee, and Employee accepts such employment. During the term of this Agreement, Employee shall serve as President of Nordata. Termination of this Agreement prior to the end of the term stated in Section 2.03 by either party shall also terminate Employee's employment by the Company. 2.02 DUTIES. (a) Employee shall devote his full-time and reasonable best efforts to the Company and to fulfilling the duties of his position which shall include such duties with respect to Datatech and the Company as may from time to time be assigned to him by the Eltrax Chief Executive Officer and the Eltrax Board of Directors, provided that such duties are reasonably consistent with Employee's education, experience and background. (b) Employee shall operate the business of Datatech in the best interests of the Company and its shareholders. (c) Employee shall comply with the Company's policies and procedures to the extent they are not inconsistent with this Agreement in which case the provisions of this Agreement prevail. In addition, Employee shall comply with the Company's policies on employee conduct and business ethics. 2.03 TERM. The term of this Agreement shall commence May 17, 1996 and shall terminate on May 16, 2001 (the "Base Term"), unless earlier terminated pursuant to Article IV of this Agreement. Commencing May 17, 2001 and on each May 17 thereafter, the term of Employee's employment hereunder shall be automatically extended for one (1) additional year unless on or before the January 31 immediately preceding any such May 1 either party gives written notice to the other of the cessation of further extensions, in which case no further automatic extensions shall occur. ARTICLE III BASE COMPENSATION, EXPENSES, AND BENEFITS 3.01 BASE SALARY. For all services rendered under this Agreement during the term of Employee's employment, the Company shall pay, in accordance with Nordata's usual pay practices, Employee a Base Salary at an annual rate of One Hundred Seventy-Five Thousand Dollars ($175,000). 3.02 BONUS. In addition to other compensation to be paid under this Article III, the Company shall pay Employee a cash bonus payable by June 30, 1997 in an amount equal to 10% of the Company's net earnings before income taxes from Datatech's operations for the fiscal year ending March 31, 1997 in excess of $1,500,000; a cash bonus payable by June 30, 1998 in an amount equal to 10% of the Company's net earnings before income taxes from Datatech's operations for the fiscal year ending March 31, 1998 in excess of $1,750,000; a cash bonus payable by June 30, 1999 in an amount equal to 10% of the Company's net earnings before income taxes from Datatech's operations for the fiscal year ending March 31, 1999 in excess of $2,000,000; a cash bonus payable by June 30, 2000 in an amount equal to 10% of the Company's net earnings before income taxes from Datatech's operations for the fiscal year ending March 31, 2000 in excess of $2,250,000; and a cash bonus payable by June 30, 2001 in an amount equal to 10% of the Company's net earnings before income taxes from Datatech's operations for the fiscal year ending March 31, 2001 in excess of $2,500,000. In computing net earnings before income taxes from Datatech's operations, the bonus payable to Employee pursuant to this Section 3.02 of this Agreement will not be used in the calculation. 3.03 BENEFITS. In addition to other compensation to be paid under this Article III, Employee shall be entitled to participate in all benefit Plans available to all full-time, eligible employees currently maintained or hereafter established by the Company generally, in accordance with the terms and conditions of such Plans. 3.04 AUTOMOBILE. In addition to payment of compensation under this Article III, the Company will provide Employee with the use of the leased automobile he was using immediately prior to the date of this Agreement. ARTICLE IV EARLY TERMINATION 4.01 EARLY TERMINATION. Subject to Article III and the respective continuing obligations of the parties pursuant to Articles V, VI, VII and IX, this Article sets forth the terms for early termination of this Agreement. 4.02 TERMINATION FOR CAUSE. The Company may terminate this Agreement and Employee's employment immediately for cause. For the purpose hereof, "cause" means (1) fraud, (2) theft or embezzlement of the Company's assets, (3) willful violation of law constituting a felony, (4) the continued failure by Employee to perform his duties as reasonably assigned to Employee pursuant to Section 2.02 of Article II of this Agreement for a period of 60 days after a written demand for such performance, which written demand specifically identifies the manner in which it is alleged Employee has not satisfactorily performed such duties. At any time during the 60 day "cure" period described in clause (4) above, at Employee's request the Eltrax Chief Executive Officer, together with at least one member of the Committee, shall meet in person to discuss the alleged performance deficiencies. In the event of termination for cause pursuant to this Section 4.02, Employee shall be paid at the usual rate of Employee's annual Base Salary through the date of termination specified in any notice of termination and any amounts to which the Executive is entitled under any Plan in accordance with the terms of such Plan. 4.03 TERMINATION WITHOUT CAUSE. Either Employee or the Company may terminate this Agreement and Employee's employment without cause on seventy-five (75) days' written notice. In the event of termination of this Agreement and of Employee's employment pursuant to this Section 4.03, compensation shall be paid as follows: (a) if the termination is by Employee, Employee shall be paid at the usual rate of his annual Base Salary through the date of termination specified in such notice (but not to exceed sixty (60) days from the date of such notice); (b) if the termination is by the Company, Employee shall be paid at the usual rate of his annual Base Salary through the Base Term. 4.04 TERMINATION IN THE EVENT OF DEATH OR DISABILITY. This Agreement and Employee's employment shall terminate in the event of death or Disability of Employee. (a) In the event of Employee's death, Base Salary shall be terminated as of the end of the month in which death occurs. In such case, Employee (or his estate) will be paid a pro-rata portion of any Bonus to which Employee may be entitled in accordance with Section 3.02. (b) In the event of Disability, Base Salary shall be terminated as of the end of the month in which the last day of the six-month period of Employee's inability to perform his duties occurs. 4.05 ENTIRE TERMINATION PAYMENT. The compensation provided for in Articles III and IV for early termination of this Agreement shall constitute Employee's sole remedy for such termination. Employee shall not be entitled to any other termination or severance payment which may be payable to Employee under any other agreement between Employee and the Company or any policy of the Company. This Section 4.05 shall not have any effect on distributions to which Employee may be entitled at termination from any tax-qualified Plan or any other Plan (other than a severance payment or similar Plan). ARTICLE VI CONFIDENTIALITY, DISCLOSURE AND ASSIGNMENT 5.01 CONFIDENTIALITY. Employee will not, during the term or after the termination or expiration of this Agreement, publish, disclose, or utilize in any manner any Confidential Information obtained while employed by the Company. If Employee leaves the employ of the Company, Employee will not, without its prior written consent, retain or take away any drawing, writing or other record in any form containing any Confidential Information. 5.02 BUSINESS CONDUCT AND ETHICS. During the term of employment with the Company, Employee will engage in no activity or employment which may conflict with the interest of the Company, and will comply with the Company's policies and guidelines pertaining to business conduct and ethics. 5.03 DISCLOSURE. Employee will disclose promptly in writing to the Company all inventions, discoveries, software, writings and other works of authorship which are conceived, made, discovered, or written jointly or singly on the Company's business time or on Employee's own time during the term of the Agreement, provided the invention, improvement, discovery, software, writing or other work of authorship is capable of being used by the Company or their respective affiliates in the normal course of business, and all such inventions, improvements, discoveries, software, writings and other works of authorship shall belong solely to the Company. 5.04 INSTRUMENTS OF ASSIGNMENT. Employee will sign and execute all instruments of assignment and other papers to evidence vestiture of Employee's entire right, title and interest in such inventions, improvements, discoveries, software, writings or other works of authorship in the Company, at the request and the expense of the Company, and Employee will do all acts and sign all instruments of assignment and other papers the Company may reasonably request relating to applications for patents, patents, copyrights, and the enforcement and protection thereof. If Employee is needed, at any time, to give testimony, evidence, or opinions in any litigation or proceeding involving any patents or copyrights or applications for patents or copyrights, both domestic and foreign, relating to inventions, improvements, discoveries, software, writings or other works of authorship conceived, developed or reduced to practice by Employee, Employee agrees to do so, and if Employee leaves the employ of the Company, the Company shall pay Employee at a rate mutually agreeable to Employee and the Company, plus reasonable traveling or other expenses. 5.05 SURVIVAL. The obligations of this Article V shall survive the expiration or termination of this Agreement. ARTICLE VI NON-COMPETITION 6.01 NON-COMPETITION. Employee agrees that for a period of two (2) years following termination of employment with the Company for any reason, or if termination occurs any time after May 16, 2001 for a period of time through May 16, 2003 but in any case not less than a six (6) months period, Employee will not directly or indirectly, alone or as a partner, officer, director, shareholder or employee of any other firm or entity, engage in any commercial activity in competition with any part of the Company's business which was under Employee's management or supervision at any time during the term of this Agreement or any part of the Company's business with respect to which Employee has Confidential Information as governed by Article V of this Agreement. For purposes of this Section 6.01, "shareholder" shall not include beneficial ownership of less than five percent (5%) of the combined voting power of all issued and outstanding voting securities of a publicly held corporation whose voting stock is traded in a public market. Also for purposes of this Section 6.01, "the Company's business" shall include businesses conducted by the Company, any Subsidiary of the Company and any affiliate of the Company and any partnership or joint venture. 6.02 EFFECT OF TERMINATION. In the event Employee's employment terminates for any reason, no additional compensation shall be paid for the non-competition obligation. 6.03 SURVIVAL. The obligations of this Article VI shall survive the expiration or termination of this Agreement. ARTICLE VII CHANGE OF OWNERSHIP OF THE BUSINESS 7.01 EFFECT. In the event that substantially all of the assets of the Company are sold (other than as a result of the sale of the stock of the Company) to a person or entity which is not an affiliate of the Company: (a) If Employee gives his written consent to the assignment of this Agreement to the purchaser (and such assignment is accepted), this Agreement shall remain in full force and effect between Employee and the assignee. (b) If such assignment is not accepted by the purchaser, then this Agreement shall be deemed to have been terminated by the Company without cause pursuant to Article IV; and (c) If a proposed assignment is accepted by the purchaser, but Employee does not provide his written consent to such assignment (unless such consent is withheld because the purchaser does not have creditworthiness reasonably equivalent to the Company's and the Company does not agree to guarantee the purchaser's performance of the Company's payment obligations hereunder), this Agreement shall be deemed terminated for cause pursuant to Article IV. ARTICLE VIII GENERAL PROVISIONS 8.01 NO ADEQUATE REMEDY. The parties declare that it is impossible to measure in money the damages which will accrue to either party by reason of a failure to perform any of the obligations under this Agreement. Therefore, if either party shall institute any action or proceeding to enforce the provisions hereof, such party against whom such action or proceeding is brought hereby waives the claim or defense that such party has an adequate remedy at law, and such party shall not urge in any such action or proceeding the claim or defense that such party has an adequate remedy at law. 8.02 SUCCESSORS AND ASSIGNS. Except as otherwise provided in Article VII, this Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company whether by way of merger, consolidation, operation of law, assignment, purchase or other acquisition of substantially all of the assets or business of the Company, and any such successor or assign shall absolutely and unconditionally assume all of the Company's obligations hereunder. 8.03 NOTICES. All notices, requests and demands given to or made pursuant hereto shall, except as otherwise specified herein, be in writing and be delivered or mailed to any such party at its address which: (a) In the case of the Company shall be: Nordata, Inc. c/o Eltrax Systems, Inc. Rush Lake Business Park 1775 Old Highway 8 St. Paul, MN 55112 Attn: Chief Executive Officer (b) In the case of Employee shall be: Howard B. Norton Any party may, by notice hereunder, designate a changed address. Any notice, if mailed properly addressed, postage prepaid, registered or certified mail, shall be deemed dispatched on the registered date or that stamped on the certified mail receipt, and shall be deemed received within the second business day thereafter or when it is actually received, whichever is sooner. 8.04 CAPTIONS. The various headings or captions in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement. 8.05 GOVERNING LAW. The validity, construction and performance of this Agreement shall be governed by the laws of the State of Minnesota without giving effect to the conflict of laws principles thereof. The parties hereto expressly recognize and agree that the implementation of this Governing Law provision is essential in light of the fact that the Company's corporate headquarters and its principal executive offices are located within the State of Minnesota, and there is a critical need for uniformity in the interpretation and enforcement of the employment agreements between the Company and its key employees. 8.06 CONSTRUCTION. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement. 8.07 WAIVERS. No failure on the part of either party to exercise, and no delay in exercising, any right or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy granted hereby or by any related document or by law. 8.08 MODIFICATION. This Agreement may not be and shall not be modified or amended except by written instrument signed by the parties hereto. 8.09 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding between the parties hereto in reference to all the matters herein agreed upon and supersedes all prior or contemporaneous agreements, understandings and negotiations with respect to the subject matter hereof. 8.10 ATTORNEYS' FEES. In the event there is litigation between the parties hereto with respect to their rights and obligations under this Agreement, the prevailing party in any such litigation shall be entitled to recover from the opposing party all reasonable attorneys' fees and expenses (including fees of accountants) incurred by the prevailing party in connection with such proceeding. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. EMPLOYEE NORDATA, INC. /s/ By /s/ Howard B. Norton Its Secretary EX-6 7 EMPLOYMENT AND NONCOMPETITION AGREEMENT THIS AGREEMENT is dated May 17, 1996, and is between NORDATA, INC., a California corporation ("Nordata") and RUBY LEE NORTON, an individual residing in the State of California (the "Employee"). RECITALS A. Nordata wishes to continue the services of the Employee for at least the duration of this Agreement, and the Employee wishes to provide her services for such period. B. Nordata desires reasonable protection of its confidential business and technical information. C. On May 17, 1996, Eltrax System, Inc. acquired in a merger Nordata, Inc. and Rudata, Inc. which together constitute Datatech from Employee and Employee's spouse in exchange for Eltrax Systems, Inc. common stock and cash, the receipt and sufficiency of which is hereby acknowledged. D. Nordata desires assurance that the Employee will not compete with it for a reasonable period of time after termination of employment, and Employee is willing to refrain from such competition. E. Employee desires to be assured of a minimum Base Salary from Nordata for Employee's services for the term of this Agreement (unless earlier terminated), and to have the opportunity to earn certain incentive payments provided for herein. NOW, THEREFORE, in consideration of Employee's acceptance of and continuance in Nordata's employment for the term of this Agreement and the parties' agreement to be bound by the terms contained herein, the parties agree as follows: ARTICLE I DEFINITIONS For purposes of this Agreement, the following terms have the following meanings: 1.01 "BASE SALARY" shall mean regular cash compensation paid on a periodic basis exclusive of benefits, bonuses and incentive payments. 1.02 "COMMITTEE" shall mean a committee of the Board of Directors of Eltrax consisting solely of directors who are not employees of Eltrax. 1.03 "COMPANY" shall mean Nordata, Inc., a California corporation. 1.04 "CONFIDENTIAL INFORMATION" shall mean information or material which is not generally available to or used by others, or the utility or value of which is not generally known or recognized as standard practice, whether or not the underlying details are in the public domain, including: (a) information or material relating to the Company, and its businesses as conducted or anticipated to be conducted, business plans, operations, past, current or anticipated software, products or services, customers or prospective customers, or research, engineering, development, manufacturing, purchasing, accounting, or marketing activities; (b) information or material relating to the Company's inventions, improvements, discoveries, "know-how," technological developments, or unpublished writings or other works of authorship, or to the materials, apparatus, processes, formulae, plans or methods used in the development, manufacture or marketing of the Company's software, products or services; (c) information which when received is marked as "proprietary," "private," or "confidential"; (d) trade secrets; (e) software in various stages of development, including computer programs in source code and binary code form, software designs, specifications, programming aids (including "library subroutines" and productivity tools), programming languages, interfaces, visual displays, technical documentation, user manuals, data files and databases; and (f) any similar information of the type described above which the Company obtained from another party and which the Company treats as or designates as being proprietary, private or confidential, whether or not owned or developed by the Company. Notwithstanding the foregoing, "Confidential Information" does not include any information which is properly published or in the public domain; provided, however, that information which is published by or with the aid of Employee outside the scope of employment or contrary to the requirements of this Agreement will not be considered to have been properly published, and therefore will not be in the public domain for purposes of this Agreement. 1.05 "DATATECH" shall mean the business formerly owned by Employee and operated under Nordata, Inc. and Rudata, Inc., and as such business will be operated by Nordata. 1.06 "DISABILITY" shall mean the inability, as reasonably determined by the Company, of Employee to perform her duties under this Agreement because of illness or incapacity for a continuous period of six (6) months. In the event that Employee objects that the Company has not reasonably determined Employee's inability to perform her duties, the issue shall be determined by three physicians, one selected by the Company, one by Employee, and the third selected by the first two. The majority opinion of the three physicians shall be final and binding on the Company and Employee. 1.07 "ELTRAX" shall mean Eltrax Systems, Inc., a Minnesota corporation, and shall include its Subsidiaries and successors in interest. 1.08 "PLAN" shall mean any profit sharing, pension, life insurance, accident insurance, disability insurance, health insurance, hospitalization, medical reimbursement or other employee benefit plan including, without limitation, the Company's 401(K) Plan. 1.09 "SUBSIDIARY" shall mean: (a) any corporation at least a majority of whose securities having ordinary voting power for the election of directors (other than securities having such power only by reason of the occurrence of a contingency) is at the time owned by the Company and/or one or more Subsidiaries thereof; and (b) any division or business unit (or portion thereof) of the Company or a corporation described in clause (a) of this Section 1.08. ARTICLE II EMPLOYMENT, DUTIES AND TERM 2.01 EMPLOYMENT, POSITION. Upon the terms and conditions set forth in this Agreement, Company hereby employs Employee, and Employee accepts such employment. During the term of this Agreement, Employee shall serve as Vice President/Treasurer of Nordata. Termination of this Agreement prior to the end of the term stated in Section 2.03 by either party shall also terminate Employee's employment by the Company. 2.02 DUTIES. (a) Employee shall devote her full-time and reasonable best efforts to the Company and to fulfilling the duties of her position which shall include such duties with respect to Datatech and the Company as may from time to time be assigned to her by the Eltrax Chief Executive Officer and the Eltrax Board of Directors, provided that such duties are reasonably consistent with Employee's education, experience and background. (b) Employee shall operate the business of Datatech in the best interests of the Company and its shareholders. (c) Employee shall comply with the Company's policies and procedures to the extent they are not inconsistent with this Agreement in which case the provisions of this Agreement prevail. In addition, Employee shall comply with the Company's policies on employee conduct and business ethics. 2.03 TERM. The term of this Agreement shall commence May 17, 1996 and shall terminate on May 16, 2001 (the "Base Term"), unless earlier terminated pursuant to Article IV of this Agreement. Commencing May 17, 2001 and on each May 16 thereafter, the term of Employee's employment hereunder shall be automatically extended for one (1) additional year unless on or before the January 31 immediately preceding any such May 1 either party gives written notice to the other of the cessation of further extensions, in which case no further automatic extensions shall occur. ARTICLE III BASE COMPENSATION, EXPENSES, AND BENEFITS 3.01 BASE SALARY. For all services rendered under this Agreement during the term of Employee's employment, the Company shall pay Employee in accordance with Nordata's usual pay practices, a Base Salary at an annual rate of Seventy-Five Thousand Dollars ($75,000). 3.02 BENEFITS. In addition to other compensation to be paid under this Article III, Employee shall be entitled to participate in all benefit Plans available to all full-time, eligible employees currently maintained or hereafter established by the Company generally, in accordance with the terms and conditions of such Plans. 3.03 AUTOMOBILE. In addition to payment of compensation under this Article III, the Company will provide Employee with the use of the leased automobile she used immediately prior to the date of this Agreement. ARTICLE IV EARLY TERMINATION 4.01 EARLY TERMINATION. Subject to Article III and the respective continuing obligations of the parties pursuant to Articles V, VI, VII and IX, this Article sets forth the terms for early termination of this Agreement. 4.02 TERMINATION FOR CAUSE. The Company may terminate this Agreement and Employee's employment immediately for cause. For the purpose hereof, "cause" means (1) fraud, (2) theft or embezzlement of the Company's assets, (3) willful violation of law constituting a felony, (4) the continued failure by Employee to perform her duties as reasonably assigned to Employee pursuant to Section 2.02 of Article II of this Agreement for a period of 60 days after a written demand for such performance, which written demand specifically identifies the manner in which it is alleged Employee has not satisfactorily performed such duties. At any time during the 60 day "cure" period described in clause (4) above, at Employee's request the Eltrax Chief Executive Officer, together with at least one member of the Committee, shall meet in person to discuss the alleged performance deficiencies. In the event of termination for cause pursuant to this Section 4.02, Employee shall be paid at the usual rate of Employee's annual Base Salary through the date of termination specified in any notice of termination and any amounts to which the Executive is entitled under any Plan in accordance with the terms of such Plan. 4.03 TERMINATION WITHOUT CAUSE. Either Employee or the Company may terminate this Agreement and Employee's employment without cause on seventy-five (75) days' written notice. In the event of termination of this Agreement and of Employee's employment pursuant to this Section 4.03, compensation shall be paid as follows: (a) if the termination is by Employee, Employee shall be paid at the usual rate of her annual Base Salary through the date of termination specified in such notice (but not to exceed sixty (60) days from the date of such notice); (b) if the termination is by the Company, Employee shall be paid at the usual rate of her annual Base Salary through the Base Term. 4.04 TERMINATION IN THE EVENT OF DEATH OR DISABILITY. This Agreement and Employee's employment shall terminate in the event of death or Disability of Employee. (a) In the event of Employee's death, Base Salary shall be terminated as of the end of the month in which death occurs. (b) In the event of Disability, Base Salary shall be terminated as of the end of the month in which the last day of the six-month period of Employee's inability to perform her duties occurs. 4.05 ENTIRE TERMINATION PAYMENT. The compensation provided for in Articles III and IV for early termination of this Agreement shall constitute Employee's sole remedy for such termination. Employee shall not be entitled to any other termination or severance payment which may be payable to Employee under any other agreement between Employee and the Company or any policy of the Company. This Section 4.05 shall not have any effect on distributions to which Employee may be entitled at termination from any tax-qualified Plan or any other Plan (other than a severance payment or similar Plan). ARTICLE VI CONFIDENTIALITY, DISCLOSURE AND ASSIGNMENT 5.01 CONFIDENTIALITY. Employee will not, during the term or after the termination or expiration of this Agreement, publish, disclose, or utilize in any manner any Confidential Information obtained while employed by the Company. If Employee leaves the employ of the Company, Employee will not, without its prior written consent, retain or take away any drawing, writing or other record in any form containing any Confidential Information. 5.02 BUSINESS CONDUCT AND ETHICS. During the term of employment with the Company, Employee will engage in no activity or employment which may conflict with the interest of the Company, and will comply with the Company's policies and guidelines pertaining to business conduct and ethics. 5.03 DISCLOSURE. Employee will disclose promptly in writing to the Company all inventions, discoveries, software, writings and other works of authorship which are conceived, made, discovered, or written jointly or singly on the Company's business time or on Employee's own time, during the term of this Agreement, provided the invention, improvement, discovery, software, writing or other work of authorship is capable of being used by the Company or their respective affiliates in the normal course of business, and all such inventions, improvements, discoveries, software, writings and other works of authorship shall belong solely to the Company. 5.04 INSTRUMENTS OF ASSIGNMENT. Employee will sign and execute all instruments of assignment and other papers to evidence vestiture of Employee's entire right, title and interest in such inventions, improvements, discoveries, software, writings or other works of authorship in the Company, at the request and the expense of the Company, and Employee will do all acts and sign all instruments of assignment and other papers the Company may reasonably request relating to applications for patents, patents, copyrights, and the enforcement and protection thereof. If Employee is needed, at any time, to give testimony, evidence, or opinions in any litigation or proceeding involving any patents or copyrights or applications for patents or copyrights, both domestic and foreign, relating to inventions, improvements, discoveries, software, writings or other works of authorship conceived, developed or reduced to practice by Employee, Employee agrees to do so, and if Employee leaves the employ of the Company, the Company shall pay Employee at a rate mutually agreeable to Employee and the Company, plus reasonable traveling or other expenses. 5.05 SURVIVAL. The obligations of this Article V shall survive the expiration or termination of this Agreement. ARTICLE VI NON-COMPETITION 6.01 NON-COMPETITION. Employee agrees that for a period of two (2) years following termination of employment with the Company for any reason, or if termination occurs any time after May 16, 2001 for a period of time through May 16, 2003 but in any case not less than a six (6) month period, Employee will not directly or indirectly, alone or as a partner, officer, director, shareholder or employee of any other firm or entity, engage in any commercial activity in competition with any part of the Company's business which was under Employee's management or supervision at any time during the term of this Agreement or any part of the Company's business with respect to which Employee has Confidential Information as governed by Article V of this Agreement. For purposes of this Section 6.01, "shareholder" shall not include beneficial ownership of less than five percent (5%) of the combined voting power of all issued and outstanding voting securities of a publicly held corporation whose voting stock is traded in a public market. Also for purposes of this Section 6.01, "the Company's business" shall include businesses conducted by the Company, any Subsidiary of the Company and any affiliate of the Company and any partnership or joint venture. 6.02 EFFECT OF TERMINATION. In the event Employee's employment terminates for any reason, no additional compensation shall be paid for the non-competition obligation. 6.03 SURVIVAL. The obligations of this Article VI shall survive the expiration or termination of this Agreement. ARTICLE VII CHANGE OF OWNERSHIP OF THE BUSINESS 7.01 EFFECT. In the event that substantially all of the assets of the Company are sold (other than as a result of the sale of the stock of the Company) to a person or entity which is not an affiliate of the Company: (a) If Employee gives her written consent to the assignment of this Agreement to the purchaser (and such assignment is accepted), this Agreement shall remain in full force and effect between Employee and the assignee. (b) If such assignment is not accepted by the purchaser, then this Agreement shall be deemed to have been terminated by the Company without cause pursuant to Article IV; and (c) If a proposed assignment is accepted by the purchaser, but Employee does not provide her written consent to such assignment (unless such consent is withheld because the purchaser does not have creditworthiness reasonably equivalent to the Company's and the Company does not agree to guarantee the purchaser's performance of the Company's payment obligations hereunder), this Agreement shall be deemed terminated for cause pursuant to Article IV. ARTICLE VIII GENERAL PROVISIONS 8.01 NO ADEQUATE REMEDY. The parties declare that it is impossible to measure in money the damages which will accrue to either party by reason of a failure to perform any of the obligations under this Agreement. Therefore, if either party shall institute any action or proceeding to enforce the provisions hereof, such party against whom such action or proceeding is brought hereby waives the claim or defense that such party has an adequate remedy at law, and such party shall not urge in any such action or proceeding the claim or defense that such party has an adequate remedy at law. 8.02 SUCCESSORS AND ASSIGNS. Except as otherwise provided in Article VII, this Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company whether by way of merger, consolidation, operation of law, assignment, purchase or other acquisition of substantially all of the assets or business of the Company, and any such successor or assign shall absolutely and unconditionally assume all of the Company's obligations hereunder. 8.03 NOTICES. All notices, requests and demands given to or made pursuant hereto shall, except as otherwise specified herein, be in writing and be delivered or mailed to any such party at its address which: (a) In the case of the Company shall be: Nordata, Inc. c/o Eltrax Systems, Inc. Rush Lake Business Park 1775 Old Highway 8 St. Paul, MN 55112 Attn: Chief Executive Officer (b) In the case of Employee shall be: Ruby Lee Norton Any party may, by notice hereunder, designate a changed address. Any notice, if mailed properly addressed, postage prepaid, registered or certified mail, shall be deemed dispatched on the registered date or that stamped on the certified mail receipt, and shall be deemed received within the second business day thereafter or when it is actually received, whichever is sooner. 8.04 CAPTIONS. The various headings or captions in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement. 8.05 GOVERNING LAW. The validity, construction and performance of this Agreement shall be governed by the laws of the State of Minnesota without giving effect to the conflict of laws principles thereof. The parties hereto expressly recognize and agree that the implementation of this Governing Law provision is essential in light of the fact that the Company's corporate headquarters and its principal executive offices are located within the State of Minnesota, and there is a critical need for uniformity in the interpretation and enforcement of the employment agreements between the Company and its key employees. 8.06 CONSTRUCTION. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement. 8.07 WAIVERS. No failure on the part of either party to exercise, and no delay in exercising, any right or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy granted hereby or by any related document or by law. 8.08 MODIFICATION. This Agreement may not be and shall not be modified or amended except by written instrument signed by the parties hereto. 8.09 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding between the parties hereto in reference to all the matters herein agreed upon and supersedes all prior or contemporaneous agreements, understandings and negotiations with respect to the subject matter hereof. 8.10 ATTORNEYS' FEES. In the event there is litigation between the parties hereto with respect to their rights and obligations under this Agreement, the prevailing party in any such litigation shall be entitled to recover from the opposing party all reasonable attorneys' fees and expenses (including fees of accountants) incurred by the prevailing party in connection with such proceeding. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. EMPLOYEE NORDATA, INC. /s/ By /s/ Ruby Lee Norton Its Secretary -----END PRIVACY-ENHANCED MESSAGE-----