Exhibit 2.4
STOCK PURCHASE AGREEMENT
DLS LEASING, INC.
DATED: JULY 23, 1999
TABLE OF CONTENTS
1. DEFINITIONS............................................................1
2. SALE AND TRANSFER OF SHARES; CLOSING...................................3
2.1 SHARES.............................................................3
2.2 PURCHASE PRICE.....................................................4
2.3 CLOSING............................................................4
2.4 CLOSING OBLIGATIONS. AT THE CLOSING:..............................4
3. REPRESENTATIONS AND WARRANTIES OF SELLER...............................4
3.1 ORGANIZATION AND GOOD STANDING.....................................4
3.2 AUTHORITY; NO CONFLICT.............................................5
3.3 CAPITALIZATION.....................................................6
3.4 FINANCIAL STATEMENTS...............................................6
3.5 BOOKS AND RECORDS..................................................7
3.6 TITLE TO PROPERTIES; ENCUMBRANCES..................................7
3.7 CONDITION AND SUFFICIENCY OF ASSETS................................7
3.8 ACCOUNTS RECEIVABLE................................................7
3.9 NO UNDISCLOSED LIABILITIES.........................................8
3.10 TAXES..............................................................8
3.11 NO MATERIAL ADVERSE CHANGE.........................................9
3.12 EMPLOYEE BENEFITS..................................................9
3.13 COMPLIANCE.........................................................9
3.14 LITIGATION.........................................................10
3.15 ABSENCE OF CHANGES.................................................10
3.16 CONTRACTS; NO DEFAULTS.............................................11
3.17 INSURANCE..........................................................12
3.18 ENVIRONMENTAL MATTERS..............................................12
3.19 EMPLOYEES; INDEPENDENT CONTRACTORS.................................13
3.20 LABOR RELATIONS; COMPLIANCE........................................14
3.21 INTELLECTUAL PROPERTY..............................................14
3.22 RELATIONSHIPS WITH RELATED PERSONS.................................15
3.23 BROKERS OR FINDERS.................................................15
3.24 DISCLOSURE.........................................................15
3.25 TAX REPRESENTATIONS................................................16
3.26 DISTRIBUTIONS......................................................16
4. REPRESENTATIONS AND WARRANTIES OF TGI..................................16
4.1 ORGANIZATION AND GOOD STANDING.....................................16
4.2 AUTHORITY; NO CONFLICT.............................................16
4.3 CERTAIN PROCEEDINGS................................................17
4.4 SECURITIES COMPLIANCE..............................................17
5. COVENANTS..............................................................17
5.1 ACCESS AND INVESTIGATION...........................................17
5.2 OPERATION OF THE BUSINESS OF THE COMPANY...........................17
5.3 NEGATIVE COVENANT..................................................18
5.4 NOTIFICATION.......................................................18
5.5 PAYMENT OF INDEBTEDNESS/RELATED PARTY TRANSACTIONS.................18
5.6 NO NEGOTIATION.....................................................18
5.7 BEST EFFORTS.......................................................19
5.8 ASSET SALE.........................................................19
5.9 DISTRIBUTION.......................................................19
6. CONDITIONS PRECEDENT TO TGI'S OBLIGATION TO CLOSE......................19
6.1 ACCURACY OF REPRESENTATIONS........................................19
6.2 SELLER'S PERFORMANCE...............................................19
6.3 CONSENTS...........................................................19
6.4 ADDITIONAL DOCUMENTS...............................................19
6.5 NO PROCEEDINGS.....................................................20
6.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS................20
6.7 SATISFACTORY DUE DILIGENCE.........................................20
6.8 ACQUISITION OF BESTWAY TRUCKING, INC...............................20
7. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE...................20
7.1 ACCURACY OF REPRESENTATIONS........................................21
7.2 TGI'S PERFORMANCE..................................................21
7.3 NO PROCEEDINGS.....................................................21
7.4 CONSENTS...........................................................21
7.5 PURCHASE OF BESTWAY TRUCKING, INC..................................21
7.6 PERSONAL GUARANTEES RELEASE........................................21
8. TERMINATION............................................................21
8.1 TERMINATION EVENTS.................................................21
8.2 EFFECT OF TERMINATION..............................................22
9. INDEMNIFICATION; REMEDIES..............................................22
9.1 SURVIVAL...........................................................22
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER...................22
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY TGI......................24
9.4 ESCROW.............................................................24
9.5 PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS.................24
9.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS........................26
9.7 TIME LIMITATIONS...................................................26
9.8 LIMITATION.........................................................26
10. GENERAL PROVISIONS.....................................................26
10.1 EXPENSES...........................................................26
10.2 PUBLIC ANNOUNCEMENTS...............................................26
10.3 NOTICES............................................................27
10.4 JURISDICTION; SERVICE OF PROCESS...................................27
10.5 FURTHER ASSURANCES.................................................28
10.6 WAIVER.............................................................28
10.7 ENTIRE AGREEMENT AND MODIFICATION..................................28
10.8 DISCLOSURE LETTER..................................................28
10.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.................28
10.10 SEVERABILITY.......................................................29
10.11 SECTION HEADINGS, CONSTRUCTION.....................................29
10.12 TIME OF ESSENCE....................................................29
10.13 GOVERNING LAW......................................................29
10.14 COUNTERPARTS.......................................................29
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of July 23,
1999, by and between Transit Group, Inc., a Florida corporation ("TGI") and
David L. Summitt, a resident of the State of Indiana ("Seller"). TGI and the
Seller are sometimes referred to herein individually as a "Party," and
collectively as the "Parties."
RECITALS
A. TGI desires to purchase and Seller desires to sell 100 shares of
common stock representing all of the outstanding shares of common stock, of DLS
Leasing, Inc., an Indiana corporation, (the "Company") as more fully provided
for in Article 2 of this Agreement (the "Stock Purchase").
B. Simultaneous with the closing of the Stock Purchase, TGI will
acquire all of the issued and outstanding stock of Bestway Trucking, Inc.
pursuant to the provisions of an Agreement and Plan of Reorganization by and
between Bestway Trucking, Inc., TGI and the Seller of even date herewith (the
"Agreement and Plan of Reorganization").
C. Upon the closing of the Stock Purchase, all of the outstanding
capital stock of the Company will be owned by TGI.
D. Seller is the sole shareholder of the Company.
AGREEMENT
For and in consideration of the above premises and the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Agreement" --this Agreement together with all Schedules and Exhibits
hereto.
"Balance Sheet"--as defined in Section 3.4.
"Closing"--as defined in Section 2.3.
"Closing Date"--the date and time as of which the Closing actually
takes place.
"Company"--collectively the Company identified in the Recitals to this
Agreement.
"Company's Disclosure Letter"--the disclosure letter delivered by
Seller to TGI concurrently with the execution and delivery of this Agreement.
"Computer Devices"--as defined in Section 3.21(c).
"Contemplated Transactions"--all of the transactions contemplated by
this Agreement, including:
(i) the purchase and sale of the Shares;
(j) the execution, delivery, and performance of the Noncompetition
Agreements, and the Escrow Agreement as such terms are defined
in the Agreement and Plan of Reorganization; and
(k) the performance by TGI, the Company and Seller of their
respective covenants and obligations under this Agreement.
"Damages"--as defined in Section 9.2.
"Environmental Law"--any law or regulation that materially requires
or relates to:
(p) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or
other prohibitions and of the commencements of activities,
such as resource extraction or construction, that could have
significant impact on the environment;
(q) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the
environment;
(r) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or
other potentially harmful substances;
(s) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or
prevention; or
(t) making responsible parties pay private parties, or groups of
them, for damages done to their health or the environment, or
permitting self-appointed representatives of the public
interest to recover for injuries done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974, as
amended, and regulations and rules issued pursuant to that act.
"Escrow Agreement" --as defined in the Agreement and Plan of
Reorganization.
"Facility" -- as defined in Section 3.18.
"GAAP"--generally accepted United States accounting principles, applied
on a basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4 were prepared.
"Hazardous Materials"--any waste or other substance that, as of the
date of this Agreement, is listed, defined, designated, or classified as
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any applicable Environmental Law, including petroleum and all
derivatives thereof or synthetic substitutes therefor and asbestos or
asbestos-containing materials.
"Noncompetition Agreements"--as defined in the Agreement and Plan of
Reorganization.
"Occupational Safety and Health Law"--any law or regulation designed to
provide safe and healthy working conditions and to reduce occupational safety
and health hazards, and any program whose direct purpose is to provide safe and
healthful working conditions.
"Purchase Price"--as defined in Section 2.2 hereof.
"Securities Act"--the Securities Act of 1933, as amended, and the
regulations and rules issued pursuant to that act, as in effect on the date
hereof.
"Seller"--as defined in the first paragraph of this Agreement.
"Shares"--as defined in Section 3.3.
"Stock Purchase"--as defined in the Recitals hereto.
"Subsidiary" or "Subsidiaries"--means any company, entity, partnership
or joint venture in which the Company owns an equity or other ownership
interest.
"Year 2000 Problem"--as defined in Section 3.21(c).
2. SALE AND TRANSFER OF SHARES; CLOSING.
2.1 SHARES.
Subject to the terms and conditions of this Agreement, at the Closing, Seller
will sell and transfer the Shares to TGI, and TGI will purchase the Shares from
Seller, free and clear of all liens, claims and encumbrances whatsoever.
2.2 PURCHASE PRICE.
The purchase price for the Shares will be an amount equal to $4,739,999, to be
paid by wire transfer (the "Purchase Price") at closing.
2.3 CLOSING.
The consummation of the Stock Purchase provided for in this Agreement (the
"Closing") will take place at the offices of Womble Carlyle Sandridge & Rice,
PLLC, Suite 3500, One Atlantic Center, 1201 West Peachtree Street, Atlanta,
Georgia 30309, at 10:00 a.m. (local time) on the later of (i) July 31, 1999;
(ii) the fifth business day following satisfaction of the conditions set forth
in Sections 6.3, 7.4 and 7.6 hereof; or (iii) at such time and place as the
parties may agree.
2.4 CLOSING OBLIGATIONS. AT THE CLOSING:
(a) Seller will deliver to TGI:
(i) certificates representing the Shares, duly endorsed for transfer to TGI (or
accompanied by duly executed stock powers), with signatures guaranteed by a
commercial bank;
(ii) releases and resignations from the officers and directors of the Company
duly executed by such parties; and
(iii) a certificate executed by the Seller certifying to TGI that the Seller's
representations and warranties in this Agreement were accurate in all respects
as of the date of this Agreement and are accurate in all respects as of the
Closing Date as if made on the Closing Date.
(b) TGI will deliver to Seller:
(i) the Purchase Price by wire transfer to the Seller; and
(ii) a certificate executed by TGI to the effect that the TGI's representations
and warranties in this Agreement were accurate in all respects as of the date of
this Agreement and are accurate in all respects as of the Closing Date as if
made on the Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
The Seller represents and warrants to TGI as follows:
3.1 ORGANIZATION AND GOOD STANDING.
(a) Part 3.1 of the Company's Disclosure Letter contains a statement of the
Company's jurisdiction of incorporation, a list of all other jurisdictions in
which it is authorized to do business, and its capitalization (including the
identity of each stockholder and the number of shares held by each). The Company
is duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under its contracts. The Company is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification, except for those jurisdictions where the failure to be so
qualified will not have a material adverse effect on the Company or require
material expense to qualify due to failure of the Company to previously do so.
(b) Seller has delivered to TGI copies of the Articles of Incorporation and
Bylaws of the Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding obligation of
Seller enforceable against Seller in accordance with its terms. Upon the
execution and delivery by Seller of this Agreement and the Escrow Agreement
(collectively, the "Seller's Closing Documents"), the Seller's
- ---------------------------- Closing Documents will constitute the legal, valid,
and binding obligations of Seller, enforceable against him in accordance with
their respective terms. Each of the Seller and the Company has the absolute and
unrestricted right, power, authority and capacity to execute and deliver this
Agreement and the Seller's Closing Documents and to perform their respective
obligations under this Agreement and the Seller's Closing Documents.
(b) Except as set forth in Part 3.2 of the Company's Disclosure Letter, neither
the execution and delivery of this Agreement nor the consummation or performance
of any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time): (i) contravene, conflict with, or result in a
violation of (A) any provision of the Articles of Incorporation or Bylaws of the
Company; or (B) any resolution adopted by the board of directors or the
stockholders of the Company; or (C) any of the terms or requirements of, or give
any governmental body the right to revoke, withdraw, suspend, cancel, terminate,
or modify, any permit or authorization that is held by the Company or that
otherwise relates to the business of, or any of the assets owned or used by, the
Company; or (D) any provision of, or give any person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify any contract to which the
Company is bound; or
(ii) result in the imposition or creation of any lien, claim or encumbrance upon
or with respect to any of the assets owned or used by the Company. (c) Except as
set forth in Part 3.2 of the Company's Disclosure Letter, neither Seller nor the
Company is or will be required to give any notice to or obtain any consent from
any person in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated Transactions.
3.3 CAPITALIZATION.
The authorized equity securities of the Company consist of 1,000 shares of
common stock, no par value per share, of which 100 shares are issued and
outstanding (the "Shares"). Seller is currently and will be on the Closing Date
the sole record and beneficial owner and holder of the Shares, free and clear of
all liens, claims or encumbrances, and the Shares were acquired by Seller free
of any preemptive rights or rights of first refusal. With the exception of the
Shares (which are owned by Seller), on the Closing Date there will be no other
outstanding equity securities or other securities of the Company. No legend or
other reference to any purported encumbrance appears upon any certificate
representing equity securities of the Company, including, without limitation,
any options, warrants, convertible securities or other rights or agreements to
acquire any securities of the Company. All of the outstanding equity securities
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable. As of the Closing Date, there will be no contracts relating
to the issuance, sale or transfer of any equity securities or other securities
of the Company, and any such agreements in effect on the date hereof are set
forth on Part 3.3 of the Company's Disclosure Letter. None of the outstanding
equity securities or other securities of the Company was issued in violation of
the Securities Act or any other law or regulation. The Company does not own and
Subsidiaries, nor does it own or have any contract to acquire, any equity
securities or other securities of any person or any direct or indirect equity or
ownership interest in any other business.
3.4 FINANCIAL STATEMENTS.
Seller has delivered to TGI: (a) audited balance sheets of the Company as at
its fiscal year end for the year 1998, and the related audited statements of
income, changes in stockholders' equity, and cash flow for the fiscal year then
ended, and (b) unaudited balance sheets of the Company as at its fiscal year end
for the years 1995, 1996 and 1997, and the related unaudited statements of
income, changes in stockholders' equity, and cash flow for the fiscal years then
ended, and (c) the unaudited balance sheet of the Company as of June 30, 1999
(the "Balance Sheet") and income statements for the six (6) month period then
ended. Such financial statements and the notes thereto fairly present in all
material respects the financial condition and the results of operations, changes
in stockholders' equity and cash flow of the Company at the respective dates of
and for the periods referred to in such financial statements, all in accordance
with GAAP (except with respect to unaudited statements as indicated in the notes
thereto and as set forth on Part 3.4 of the Company's Disclosure Letter),
consistently applied throughout the periods 1992 through 1997, with changes in
accounting methods for depreciation in fiscal 1997 and salvage value in fiscal
1998 as indicated in the notes thereto, and subject, in the case of the interim
statements, to normal year-end adjustments.
3.5 BOOKS AND RECORDS.
The books of account, minute books, stock record books and other records of
the Company, all of which have been made available to TGI, are complete and
correct and have been maintained in all material respects in accordance with
applicable law. The minute books of the Company contain accurate and complete
records of all meetings of, and corporate actions taken by, the stockholders,
the Board of Directors and committees of the Board of Directors of the Company,
and no formal meeting of any such stockholders, Board of Directors or committee
has been held for which minutes have not been prepared and are not contained in
such minute books.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES.
Part 3.6 of the Company's Disclosure Letter contains a complete and accurate
list of all material items of personal property owned by the Company. Except for
liens set forth on Part 3.6, or as otherwise reflected on the Balance Sheet, the
Company owns good and marketable title to the properties and assets located in
the facilities owned or operated by the Company or reflected as owned in the
books and records of the Company, including all of the properties and assets
reflected in the Balance Sheet, and all of the properties and assets purchased
or otherwise acquired by the Company since the date of the Balance Sheet. The
Company does not own any real property. All material properties and assets
reflected in the Balance Sheet are owned free and clear of all liens, claims or
encumbrances, except all security interests shown on the Balance Sheet as
securing specified liabilities or obligations, with respect to which no default
(or event that, with notice or lapse of time or both, would constitute a
default) exists, and as set forth on Part 3.6 of the Company's Disclosure
Letter.
3.7 CONDITION AND SUFFICIENCY OF ASSETS.
The buildings, plants, structures, and equipment owned or leased by the
Company are structurally sound, are in good operating condition and repair
(normal wear and tear excepted) and are adequate for the uses to which they are
being put, have been maintained in the ordinary course and are not in need of
extraordinary repairs. In Seller's judgment, the building, plants, structures,
and equipment owned or leased by the Company are sufficient for the continued
conduct of the Company's businesses after the Closing in substantially the same
manner as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE.
All accounts receivable of the Company as of the Closing Date represent or
will represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business. Unless paid prior to the
Closing Date, the accounts receivable are or will be as of the Closing Date
current and at least 95% collectible; however, no reserve is reflected on the
Balance Sheet. To the best of the Company's knowledge, there is no contest,
claim, or right of set-off relating to the amount or validity of such accounts
receivable. The parties agree that in the event the Seller is required to
reimburse TGI or the Company for an uncollected receivable due to a breach of
this representation and warranty, the amount of such receivable paid by the
Seller will be assigned to the Seller for collection and receipt.
3.9 NO UNDISCLOSED LIABILITIES.
Except as set forth in Part 3.9 of the Company's Disclosure Letter, the
Company has no liabilities or obligations of any nature except for liabilities
or obligations reflected or reserved against in the Balance Sheet and
nonmaterial current liabilities incurred in the ordinary course of business
since the date thereof.
3.10 TAXES.
(a) To the best of the Company's knowledge, the Company has filed or caused to
be filed on a timely basis all tax returns that are or were required to be filed
by or with respect to it. The Company has paid, or made provision for the
payment of, all taxes that have or may have become due, as reflected on the
returns filed by the Company, for all periods prior to and through Closing. To
the best of the Company's knowledge, all tax returns filed by the Company are
true, correct and complete in all material respects. All references in this
Section 3.10 to "taxes" and "tax returns" shall include all federal, state,
local and foreign taxes required to be paid and tax returns, reports and
statements required to be filed by the Company.
(b) Except as disclosed on Part 3.10(b) of the Company Disclosure Letter, no
United States, federal or state income, sales, use, fuel or other tax returns of
the Company have been audited by the IRS or relevant state tax authorities
during the past seven years. Except as disclosed on Part 3.10 of the Company's
Disclosure Letter, neither Seller nor the Company, has given or been requested
to give waivers or extensions (or is or would be subject to a waiver or
extension given by any other person) of any statute of limitations relating to
the payment of taxes of the Company. (c) The charges, accruals, and reserves
with respect to taxes on the books of the Company are adequate (determined in
accordance with GAAP) and are at least equal to the Company's liability for
taxes. The Company has not received notice of any proposed tax assessment
against the Company. (d) Except as set forth on Part 3.10(a) of the Company's
Disclosure Letter, proper and accurate amounts have been withheld by Company
from its employees for all periods through the Closing Date in compliance with
the tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings due and payable have
been timely paid to the respective governmental agencies. Except as disclosed in
Part 3.10 of the Company's Disclosure Letter, the Company has not executed or
filed with the IRS or any other governmental authority any agreement or other
document extending, or having the effect of extending the period for assessment
or collection of any taxes.
3.11 NO MATERIAL ADVERSE CHANGE.
With the exception of matters disclosed in the Balance Sheet, since December
31, 1998, there has not been any material adverse change in the business,
operations, properties, prospects, assets, or condition of the Company, and, to
the Company's knowledge, no event has occurred or circumstance exists that could
reasonably be expected to result in such a material adverse change.
3.12 EMPLOYEE BENEFITS.
Part 3.12 of the Company's Disclosure Letter contains a list of all pension,
retirement, disability, medical, dental or other health plans, life insurance or
other death benefit plans, profit sharing, deferred compensation agreements,
stock, option, bonus or other incentive plans, vacation, sick, holiday or other
paid leave plans, severance plans or other similar employee benefit plans
maintained by the Company (the "Plans"), including, without limitation, all
"employee benefit plans" as defined in Section 3(3) of ERISA. Except for 401-(k)
contributions for the current month that are paid monthly by the Company but are
not accrued on the Balance Sheet, all contributions due from the Company with
respect to any of the Plans have been made or accrued on the Balance Sheet, and
no further contributions will be due or will have accrued thereunder as of the
Closing. Each of the Plans, and its operation and administration, is, in all
material respects, in compliance with all applicable, federal, state, local and
other governmental laws and ordinances, orders, rules and regulations, including
the requirements of ERISA and the Internal Revenue Code. All such Plans that are
"employee pension benefit plans" (as defined in Section 3(2) of ERISA) which are
intended to qualify under I.R.C. Section 401(a)(8) have received favorable
determination letters that such plans satisfy all qualification requirements. In
addition, the Company has not been a participant in any "prohibited
transaction," within the meaning of Section 406 of ERISA, with respect to an
employee pension benefit plan (as defined in Section 3(2) of ERISA) which the
Company sponsors as employer or in which the Company participates as an
employer, which was not otherwise exempt pursuant to Section 408 of ERISA
(including any individual exemption granted under Section 408(a) of ERISA), or
which could reasonably be expected to result in an excise tax.
3.13 COMPLIANCE.
(a) The Company is and has conducted its business and the ownership and use
of its assets in substantial compliance with all applicable laws
throughout the period of all applicable statutes of limitation.
(b) Part 3.13 of the Company's Disclosure Letter contains a complete and
accurate list of each permit or governmental consent or authorization that is
held by the Company or that otherwise relates to the business of, or to any of
the assets owned or used by, the Company. Each such permit or governmental
consent or authorization is valid and in full force and effect and constitutes
all of the governmental authorizations necessary to permit the Company to
lawfully conduct and operate its business in the manner currently conducted.
3.14 LITIGATION.
(a) Except as set forth in Part 3.14 of the Company's Disclosure Letter, there
is no pending or to the knowledge of the Seller, threatened action, claim,
arbitration, audit, hearing, investigation, litigation or suit (whether civil,
criminal, administrative, investigative, or informal) by or against the Company
or that relates to or may materially affect the business of, or any of the
assets owned or used by, the Company; or that challenges, or that may have the
effect of preventing, delaying, making illegal or enjoining, any of the
Contemplated Transactions. The Company has not received notice of any vehicle
accident involving any employees, contractors or vehicles of the Company which
could reasonably be expected to result in a claim or action against the Company
and which is not set forth on Part 3.14.
(b) Except as set forth on Part 3.14 of the Company's Disclosure Letter, there
is no order or court decision to which the Company, the Seller, any director or
officer of the Company, or any of the assets owned or used by the Company, is
subject. 33.15 ABSENCE OF CHANGES.
Except as set forth in Part 3.15 of the Company's Disclosure Letter, since
December 31, 1998 (except as disclosed in the Balance Sheet), the Company has
conducted its business only in the ordinary course and there has not been any:
(a) change in its authorized or issued capital stock; grant of any stock option
or right to purchase shares of capital stock of the Company; issuance of any
security convertible into such capital stock; grant of any purchase, redemption
or stock retirement rights, or any acquisition by the Company of any shares of
its capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
(b) amendment to the Articles of Incorporation or Bylaws of the Company ;
(c) payment or increase by the Company of any bonuses, salaries or other
compensation to any stockholder, director, officer or employee (except normal
raises in the ordinary course of business consistent with past practices), or
entry into any employment, severance, or similar contract with any director,
officer or employee; (d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement or other employee benefit plan for or with any employees of
the Company; (e) material damage to or destruction or loss of any material asset
or property of the Company, whether or not covered by insurance; (f) entry into,
termination of, or receipt of notice of termination of any material contract or
any contract or transaction involving a total remaining commitment by or to the
Company of at least $50,000; (g) sale, lease, or other disposition of any
material asset or property of the Company, or mortgage, pledge, or imposition of
any lien or other encumbrance on any material asset or property of the Company;
(h) material change in the accounting methods used by the Company; or (i)
agreement, whether oral or written, by the Company to do any of the foregoing.
3.16 CONTRACTS; NO DEFAULTS.
(a) Part 3.16 of the Company's Disclosure Letter contains a complete and
accurate list, and Seller has delivered to TGI true and complete
copies, of:
(i) each contract that involves performance of services or
delivery of goods or materials by or to the Company of an
amount or value in excess of $25,000 in the aggregate or which
is not terminable by the Company without penalty or premium
upon 60 days' or less notice;
(ii) each lease, license, installment and conditional sales agreement, and other
contract affecting the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or personal property; (iii) each
agreement evidencing or relating to any indebtedness or capital lease of the
Company; (iv) each joint venture, partnership, and other contract involving a
sharing of profits, losses, costs, or liabilities by the Company with any other
person; (v) each contract containing covenants that purport to restrict the
business activity of the Company; (vi) each power of attorney that is currently
effective and outstanding; and (vii) each written warranty, guaranty, and or
other similar undertaking by the Company. (b) Each contract identified or
required to be identified in Part 3.16 of the Company's Disclosure Letter is in
full force and effect and is valid and enforceable in accordance with its terms.
The Company is, and at all times has been, in compliance with all material terms
and requirements of each contract. Each third party to any contract with the
Company is, and at all times has been, in compliance with all material terms and
requirements of such contract. The Company has not given nor received notice
from any other person regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any contract, and no default or event
of default has occurred thereunder.
3.17 INSURANCE.
(a) Set forth on Part 3.17 of the Company's Disclosure Letter is a true and
complete list and description of all insurance policies to which the Company is
a party or under which the Company is or has been covered at any time within the
three (3) years preceding the date of this Agreement, and all pending
applications for policies of insurance, including the premium paid, coverage
amounts, deductible, and risks insured.
(b) All policies to which the Company is a party or that provide coverage to
either Seller, the Company, or any director or officer of the Company (i) are
valid, outstanding, and enforceable; (ii) are issued by an insurer that is
financially sound and reputable; (iii) in the Seller's judgment, provide
adequate insurance coverage for the assets and the operations of the Company for
all risks normally insured against in the Company's industry; (iv) may be
continued in full force and effect following the consummation of the
Contemplated Transactions; and (v) except as set forth in Part 3.17(b) of the
Company's Disclosure Letter, do not provide for any retrospective premium
adjustment or other experienced-based liability on the part of the Company. (c)
Except as set forth on Part 3.17, neither Seller nor the Company has received
(i) any refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (ii) any notice of cancellation or any other
indication that any insurance policy is no longer in full force or effect or
will not be renewed or that the issuer of any policy is not willing or able to
perform its obligations thereunder. (d) The Company has paid all premiums due,
and has otherwise performed all of its obligations, under each policy to which
it is a party or that provides coverage to it. The Company has given notice to
the insurer of all known claims that may be insured thereby.
3.18 ENVIRONMENTAL MATTERS.
(a) The Company is, and at all times has been, in material compliance with, and
has not been and is not currently in violation of or liable under, any
applicable Environmental Law. All real property owned, leased or otherwise
operated by the Company (each, a "Facility") is free of contamination from
- -------- any Hazardous Material which may result in material liability under any
Environmental Law. Seller has no reasonable basis to expect, nor has Seller or
the Company received, any actual or threatened order, notice, or other
communication from (i) any governmental body or private citizen, or (ii) the
current or prior owner or operator of any facilities owned or leased by the
Company , of any actual or potential violation or failure to comply with any
Environmental Law. To the best of the Company's knowledge, neither Company has
caused or suffered to occur any release, spill, migration, leakage, discharge,
spillage, uncontrolled loss, seepage, or filtration of Hazardous Material at or
from any Facility.
(b) All above or underground storage tanks, landfills, land deposits, or dumps
present on or at any Facility or, to the knowledge of the Seller, at any
adjoining property, or incorporated into any structure therein or thereon are
listed on the Phase I Environmental Audits referenced on Part 3.18 of the
Company's Disclosure Letter and are to the best of the Company's knowledge in
full compliance with all Environmental Laws. The Company has not transported
Hazardous Materials except in the ordinary course of its business in compliance
with applicable law. (c) Seller has delivered to TGI true and complete copies
and results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by Seller or, the Company pertaining to Hazardous Materials in, on, or
under the facilities owned or leased by the Company.
3.19 EMPLOYEES; INDEPENDENT CONTRACTORS.
(a) Part 3.19 of the Company's Disclosure Letter contains a complete and
accurate list of (i) each employee or director of the Company, including each
employee on leave of absence or layoff status, his or her job title, and current
compensation; and (ii) each independent contractor of the Company, the type of
services he or she provides and his current compensation.
(b) To the Company's knowledge, no employee nor independent contractor of the
Company is a party to, or is otherwise bound by, any agreement or arrangement,
including any confidentiality, noncompetition or proprietary rights agreement,
between such employee and any other person that in any way adversely affects or
will affect (i) the performance of his duties to the Company, or (ii) the
ability of the Company to conduct its business. (c) All persons rendering
services to the Company have been properly characterized and treated as either
employees or independent contractors, and the Company has not received notice
of, nor does Seller reasonably believe that, such treatment will be challenged
by the IRS or otherwise.
3.20 LABOR RELATIONS; COMPLIANCE.
(a) The Company has not been nor is it now a party to any collective bargaining
or other labor contract. There is not presently pending or existing, and to the
Company's knowledge there is not threatened, (a) any strike, slowdown,
picketing, work stoppage, or employee grievance process, (b) any proceeding
against or affecting the Company relating to the alleged violation of any
applicable law pertaining to labor relations or employment matters, including
any charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any comparable
governmental body, organizational activity, or other labor or employment dispute
against or affecting the Company, or (c) any application for certification of a
collective bargaining agent. There is no lockout of any employees by the
Company, and no such action is contemplated by the Company. Except as set forth
on Part 3.20(a) of the Company's Disclosure Letter, the Company has
substantially complied in all respects with applicable legal requirements
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health, and plant
closing.
(b) The Company is, and at all times has been, in compliance with, and has not
been and is not in violation of or liable under, any applicable Occupational
Safety and Health Law. Seller has no basis to expect, nor has Seller or the
Company received, any actual or threatened order, notice, or other communication
from any person of any actual or potential violation or failure to comply with
any Occupational Safety and Health Law.
3.21 INTELLECTUAL PROPERTY.
(a) Intellectual Property Assets. The term "Intellectual Property Assets"
includes:
(i) the Company's name, all fictional business names, trade names, registered
and unregistered trademarks, service marks, and applications;
(ii) all patents, patent applications, inventions and discoveries that may be
patentable; (iii) all copyrights in both published works and unpublished works;
and (iv) all know-how, trade secrets, confidential information, customer lists,
software, technical information, data, process technology, plans, drawings and
blue prints owned, used, or licensed by the Company. (b) The Intellectual
Property Assets [other than items listed under subsection 3.21(a)(iv)] are
listed on Part 3.21 of the Disclosure Letter. The Company owns all right, title
and interest in and to each of the Intellectual Property Assets, free and clear
of all liens, security interests, charges, encumbrances, equities and other
adverse claims, and has the right to use without payment to a third party all of
the Intellectual Property Assets except as listed on Part 3.21.
(c) All of the computer software, computer hardware, other computer and
microprocessor-based equipment and all other equipment which performs or is or
may be required to perform functions involving dates or the computation of
dates, or containing date related data, owned, licensed, or used by the Company
which are material to the operations of the Company or would require material
expense to repair or replace (collectively the "Computer Devices") will not
suffer a Year 2000 Problem (as defined below). For the purposes of this Section
3.21(c), "Year 2000 Problem" shall mean any failure of a Computer Device to: (a)
store all date-related information and process all data interfaces involving
dates in a manner that unambiguously identifies the century, for all date values
before, during or after January 1, 2000; (b) calculate, sort, report and
otherwise materially operate correctly and in a consistent manner and without
interruption regardless whether the date on which the Computer Device is
operated or executed is before, during or after January 1, 2000; (c) report and
display all dates with a four-digit date so that the century is unambiguously
identified; and (d) handle all leap years, including but not limited to the year
2000 leap year, correctly. 33.22 RELATIONSHIPS WITH RELATED PERSONS.
Except as set forth on Part 3.22 of the Company's Disclosure Letter, neither
Seller nor any related person or affiliate of Seller or of the Company has, or
has had, any interest in any property used in the Company's business. Except as
set forth on Part 3.22 of the Company's Disclosure Letter, neither Seller nor
any related person or affiliate of Seller or of the Company is, or has owned,
directly or indirectly, an equity interest or any other financial or profit
interest in, an entity that has (i) had business dealings or a material
financial interest in any transaction with the Company; or (ii) engaged in
competition with the Company with respect to any line of the products or
services of the Company. Neither Seller nor any related person or affiliate of
Seller or of the Company is a party to any contract with the Company. All
transactions or agreements set forth on Part 3.22 of the Company's Disclosure
Letter are on arms length terms no less favorable to the Company than
independently obtained.
3.23 BROKERS OR FINDERS.
Except as set forth on Part 3.23 of the Company's Disclosure Letter, neither
the Company, Seller nor their respective agents have incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
3.24 DISCLOSURE.
No representation or warranty of Seller in this Agreement and no statement in
the Company's Disclosure Letter omits to state a material fact necessary to make
the statements herein or therein, in light of the circumstances in which they
were made, not misleading. There is no fact known to Seller that has specific
application to any Seller, or the Company (other than general economic or
industry conditions) and that materially adversely affects or, as far as either
Seller can reasonably foresee, materially threatens, the assets, business,
prospects, financial condition, or results of operations of the Company that has
not been set forth in this Agreement or the Disclosure Letter.
3.25 TAX REPRESENTATIONS.
The liabilities of the Company were incurred by the Company in the ordinary
course of business. Through the Closing Date, the Company will not discontinue
any of its historic businesses nor has it discontinued any of its historic
businesses within the period beginning twelve months prior to the date hereof.
The Company and the Seller will each pay their own expenses in connection with
the Stock Purchase. Dividends the Company has paid (or may pay) in anticipation
of the Stock Purchase will be regular and normal distributions made in
accordance with the Company's past practices. At all times during the five year
period ending on the Closing Date, the fair market value of all of the Company's
real property interests has been less than fifty percent (50%) of the total fair
market value of all the assets used in the Company's trade or business,
including any real property owned by the Company which is not used in its trade
or business.
3.26 DISTRIBUTIONS.
The Company will continue to be solvent and able to pay its debts as they
become due immediately following the asset sale and the distribution described
in Section 5.8 hereof.
4. REPRESENTATIONS AND WARRANTIES OF TGI
TGI represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING.
TGI is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Florida.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid and binding obligation of
TGI, enforceable against TGI in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by TGI nor the
consummation or performance of any of the Contemplated Transactions by TGI will
give any person the right to prevent, delay or otherwise interfere with any of
the Contemplated Transactions pursuant to: (i) any provision of TGI's Articles
of Incorporation or Bylaws;
(ii) any resolution adopted by the board of directors or the stockholders of
TGI; (iii) any legal requirement or order to which TGI may be subject; or (iv)
any contract to which TGI is a party or by which TGI may be bound.
(c) TGI will not be required to obtain any consent from any person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions,
except as set forth on Schedule 4.2 hereto.
4.3 CERTAIN PROCEEDINGS.
There is no pending proceeding that has been commenced against TGI that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise enjoining, any of the Contemplated Transactions.
4.4 SECURITIES COMPLIANCE.
TGI has made all securities filings required as a "reporting company" under
the Exchange Act of 1934, as amended. Upon completion of the Stock Purchase, the
TGI Common Stock to be issued to the Seller in connection with the Stock
Purchase will be fully paid and nonassessable.
5. COVENANTS
5.1 ACCESS AND INVESTIGATION.
Between the date of this Agreement and the Closing Date, Seller will, and will
cause the Company, and its representatives to, (a) afford TGI and its
representatives and prospective lenders and their representatives (collectively,
"TGI's Advisors") reasonable access during normal business hours to the
Company's personnel, properties, contracts, books and records, and other
documents and data, (b) furnish TGI and TGI's Advisors with copies of all such
contracts, books and records, and other existing documents and data as TGI may
reasonably request, and (c) furnish TGI and TGI's Advisors with such additional
financial, operating, and other data and information as TGI may reasonably
request.
5.2 OPERATION OF THE BUSINESS OF THE COMPANY.
Between the date of this Agreement and the Closing Date, Seller will, and will
cause the Company to: (a) conduct its business only in the ordinary course; and
(b) use its best efforts to preserve intact the current business organization of
the Company and keep available the services of its current officers, employees,
and agents, and maintain the relations and good will with its suppliers,
customers, landlords, creditors, employees, agents, and others having business
relationships with the Company.
5.3 NEGATIVE COVENANT.
Except as otherwise expressly permitted by this Agreement, between the date of
this Agreement and the Closing Date, Seller will not, and will cause the Company
not to, without the prior written consent of TGI, take any affirmative action,
or fail to take any reasonable action within their or its control, as a result
of which any of the changes or events listed in Section 3.15 is likely to occur.
5.4 NOTIFICATION.
(a) Between the date of this Agreement and the Closing Date, Seller will
promptly notify TGI in writing if Seller or the Company becomes aware of any
fact or condition that causes or constitutes a breach of Seller's
representations and warranties as of the date of this Agreement, or if Seller or
the Company becomes aware of the occurrence after the date of this Agreement of
any fact or condition that would cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition.
(b) Between the date of this Agreement and the Closing Date, TGI will promptly
notify the Company in writing if TGI becomes aware of any fact or condition that
causes or constitutes a breach of any of TGI's representations and warranties as
of the date of this Agreement, or if TGI becomes aware of the occurrence after
the date of this Agreement of any fact or condition that would cause or
constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition.
5.5 PAYMENT OF INDEBTEDNESS/RELATED PARTY TRANSACTIONS.
Except as expressly provided in Section 5.9 or on Schedule 5.5 hereto, Seller
will cause all indebtedness owed to the Company by the Seller or any related
person of the Seller to be paid in full at Closing. The Seller agrees that, the
Company shall have no obligation to continue any arrangement with any affiliate
of Seller set forth on Part 3.22 of the Company's Disclosure Letter or to
continue to include any such parties as additional insureds on the Company's
insurance policies.
5.6 NO NEGOTIATION.
Until such time, if any, as this Agreement is terminated pursuant to Section
8, Seller will not, and will cause the Company and its representatives not to,
directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public information
to, or consider the merits of any unsolicited inquiries or proposals from, any
person (other than TGI) relating to any transaction involving the sale of the
business or assets of the Company, or any of the capital stock of the Company,
or any stock purchase, consolidation, business combination, or similar
transaction involving the Company.
5.7 BEST EFFORTS.
Between the date of this Agreement and the Closing Date, Seller will use his
best efforts to cause the conditions in Section 6 to be satisfied, and TGI will
use its best efforts to cause the conditions in Section 7 to be satisfied.
5.8 ASSET SALE.
Prior to the Closing, the Company will sell good and marketable title, free
and clear of all liens, to certain trailers to Bestway Trucking, Inc. as listed
on Schedule 5.8 for an aggregate purchase price of $2,010,000, payable with a
promissory note bearing no interest which shall be on terms satisfactory to TGI.
Such note will be distributed by the Company to Seller prior to the Closing and
such note will be paid in full on the Closing Date.
5.9 DISTRIBUTION.
Prior to Closing, the Company intends to distribute to the Seller (i) the
$1,401,637 receivable owed by the Seller to the Company (ii) one Lexus
automobile and (iii) cash in the amount of $869,846.32. All other indebtedness
of Seller to the Company will be repaid by the Seller at the Closing. All taxes
due from the Company or otherwise as a result of the distribution set forth in
this Section 5.9 shall be borne by and shall be the exclusive responsibility of
the Seller.
6. CONDITIONS PRECEDENT TO TGI'S OBLIGATION TO CLOSE
TGI's obligation to consummate the Stock Purchase and to take the other
actions required to be taken by TGI at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by TGI, in whole or in part):
6.1 ACCURACY OF REPRESENTATIONS.
All of Seller's representations and warranties in this Agreement must have
been accurate in all material respects as of the date of this Agreement and as
of the Closing Date as if made on the Closing Date.
6.2 SELLER'S PERFORMANCE.
All of the covenants and obligations that the Company and the Seller are
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing must have been duly performed and complied with in all respects.
6.3 CONSENTS.
Each of the consents identified in Part 3.2 of the Company's Disclosure Letter
hereto must have been obtained and must be in full force and effect.
6.4 ADDITIONAL DOCUMENTS.
Each of the following documents must have been delivered to TGI:
(a) an opinion of counsel to the Company and the Seller, dated the Closing Date,
in form acceptable to TGI; and
(b) such other documents as TGI may reasonably request (i) evidencing the
accuracy of any of Seller's representations and warranties; (ii) evidencing the
performance by either Seller of, or the compliance by either Seller with, any
covenant or obligation required to be performed or complied with by such Seller;
(iii) evidencing the satisfaction of any condition referred to in this Section
6; or (iv) otherwise facilitating the consummation or performance of any of the
Contemplated Transactions. 36.5 NO PROCEEDINGS.
Since the date of this Agreement, there must not have been commenced or
threatened against TGI, Seller, or the Company , or against any person
affiliated with TGI, Seller, or the Company, any proceeding (a) involving any
challenge to, or seeking damages or other relief in connection with, any of the
Contemplated Transactions, or (b) that could reasonably be expected to have the
effect of preventing, delaying or making illegal, any of the Contemplated
Transactions.
6.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS.
There must not have been made or threatened by any person any claim asserting
that such person (a) is the holder or the beneficial owner of, or has the right
to acquire or to obtain beneficial ownership of, any stock of, or any other
voting, equity, or ownership interest in, the Company , or (b) is entitled to
all or any portion of the stock purchase consideration.
6.7 SATISFACTORY DUE DILIGENCE.
TGI shall have completed its investigation of the Company's assets, business
and financial condition and shall be satisfied with the results thereof in its
sole discretion.
6.8 ACQUISITION OF BESTWAY TRUCKING, INC.
Simultaneously herewith, TGI and the Seller have entered into the Agreement
and Plan of Reorganization. All of the conditions precedent to TGI's obligation
to close such transaction shall have been satisfied as of the Closing Date.
7. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The Company's obligation to consummate the Stock Purchase and to take
the other actions required to be taken by the Company or the Seller at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by the Company, in whole or
in part):
7.1 ACCURACY OF REPRESENTATIONS.
All of TGI's representations and warranties in this Agreement must have been
accurate in all material respects as of the date of this Agreement and must be
accurate in all respects as of the Closing Date as if made on the Closing Date.
7.2 TGI'S PERFORMANCE.
All of the covenants and obligations that TGI is required to perform or to
comply with pursuant to this Agreement at or prior to the Closing must have been
performed and complied with in all respects.
7.3 NO PROCEEDINGS.
Since the date of this Agreement, there must not have been commenced or
threatened against TGI, Seller, the Company, or against any person affiliated
with TGI, Seller, or the Company, any proceeding (a) involving any challenge to,
or seeking damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing, delaying, or making
illegal, any of the Contemplated Transactions.
7.4 CONSENTS.
Each of the consents identified in Schedule 4.2 hereto must have been obtained
and be in full force and effect.
7.5 PURCHASE OF BESTWAY TRUCKING, INC.
Simultaneously herewith, TGI and the Seller have entered into the Agreement
and Plan of Reorganization. All of the conditions precedent to Seller's
obligation to close such transaction shall have been satisfied as of the Closing
Date.
7.6 PERSONAL GUARANTEES RELEASE.
The personal guarantees provided by the Seller to a third party with respect
to any debt or obligation of the Company shall have been released prior to
Closing.
8. TERMINATION
8.1 TERMINATION EVENTS.
This Agreement may, by notice given prior to or at the Closing, be terminated:
(a) by either TGI or the Seller if a material breach of any provision of
this Agreement has been committed by the other party and such breach
has not been waived;
(b) by:
(i) TGI if any of the conditions in Section 6 has not been
satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the
failure of TGI to comply with its obligations under this
Agreement) and TGI has not waived such condition on or before
the Closing Date; or
(ii) Seller, if any of the conditions in Section 7 has not been satisfied of the
Closing Date or if satisfaction of such a condition is or becomes impossible
(other than through the failure of Seller to comply with their obligations under
this Agreement) and Seller have not waived such condition on or before the
Closing Date; (c) by mutual consent of TGI and Seller; or
(d) by either TGI or Seller if the Closing has not occurred (other than through
the failure of any party seeking to terminate this Agreement to comply fully
with its obligations under this Agreement) on or before July 31, 1999, or such
later date as the Parties may agree upon. 38.2 EFFECT OF TERMINATION.
Each Party's right of termination under Section 8.1 is in addition to any
other rights it may have under this Agreement or otherwise. If this Agreement is
terminated pursuant to Section 8.1, all further obligations of the Parties under
this Agreement will terminate, except that the obligations in Sections 10.1 and
10.2 will survive.
9. INDEMNIFICATION; REMEDIES
9.1 SURVIVAL.
All representations, warranties, covenants, and obligations in this Agreement,
the Company's Disclosure Letter, the certificates delivered pursuant to Section
2.4 and any other certificate or document delivered pursuant to this Agreement
will survive the Closing. The right to indemnification, payment of Damages (as
defined below) or other remedy based on such representations, warranties,
covenants, and obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired), with
respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation.
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER.
Seller will indemnify and hold harmless TGI, the Company, and their respective
representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons") for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage (including incidental
and consequential damages), expense (including costs of investigation and
defense and reasonable attorneys' fees) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Seller in this
Agreement, the Company's Disclosure Letter or any other certificate or document
delivered by Seller or the Company pursuant to this Agreement, unless such
breach is cured to TGI's satisfaction or waived in writing by TGI, prior to
Closing;
(b) any breach by Seller or the Company of any covenant or obligation in this
Agreement, unless such breach is cured to TGI's satisfaction or waived in
writing by TGI, prior to Closing; (c) any product shipped or any services
provided by the Company prior to the Closing Date, less the net amount of any
insurance proceeds received by the Company in connection therewith; (d) any
claim or assessment for unpaid taxes or for failure to file accurate or
appropriate returns, in excess of the amounts accrued for unpaid taxes on the
Balance Sheet (in part relating to the pending IRS audit of the Company for tax
year 1996, the outcome of which may affect open tax years 1995, 1997, and 1998),
including without limitation, United States, state and/or local income, profits,
franchise, sales, use, occupancy, property (real and personal), ad valorem,
excise, value added, withholding, payroll, transfer and other taxes (including
interest, penalties and any additions to tax) due from the Company or claimed to
be due from the Company by any taxing authority for all periods through the
Closing Date, including taxes which may accrue for periods up to Closing Date
but which have not become due and owing, and including taxes which are
attributable to the distribution described in Section 5.9 hereof; (e) any use,
release, threatened release, emission, generation, storage, transportation,
disposal, or arrangement for the disposal of Hazardous Materials prior to the
Closing Date by the Company or the presence of any Hazardous Materials or
circumstance or condition at any Facility which would require remediation or
other action under any Environmental Laws, including, without limitation, the
cost of any environmental response action or liability under the Comprehensive
Environmental Response, Compensation and Liability Act whether such loss
accrues, is required or is necessary prior to the Closing Date, to the full
extent that such loss is attributable, in whole or in part, directly or
indirectly, to the presence, use, emission, generation, storage, transportation,
release, threatened release, disposal, or arrangements for disposal of Hazardous
Materials at any Facility or on any other properties to which the Company, its
affiliates or any other prior owner or operator of any Facility has sent or
arranged for the disposal of Hazardous Materials prior to the Closing Date. All
terms used in this paragraph and not otherwise defined herein shall be given the
meaning provided under the Environmental Laws; (f) any claim by any person for
brokerage or finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by any such person with
either Seller or the Company (or any person acting on their behalf) in
connection with any of the Contemplated Transactions; (g) any claim made by any
creditor or other third party related to the sale of assets by the Company to
Bestway Trucking, Inc. and distribution of the proceeds therefrom as provided in
Section 5.8.
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY TGI.
TGI will indemnify and hold harmless Seller, and will pay to Seller the amount
of any Damages (as defined in 9.2 above) arising, directly or indirectly, from
or in connection with (a) any breach of any representation or warranty made by
TGI in this Agreement or in any certificate delivered by TGI pursuant to this
Agreement, unless such breach is cured to Seller's satisfaction or waived in
writing by the Seller prior to Closing, (b) any breach by TGI of any covenant or
obligation of TGI in this Agreement, unless such breach is cured to Seller's
satisfaction or waived in writing by the Seller prior to Closing, or (c) any
claim by any person for brokerage or finder's fees or commissions or similar
payments based upon any agreement or understanding alleged to have been made by
such person with TGI (or any person acting on its behalf) in connection with any
of the Contemplated Transactions.
9.4 ESCROW.
At the Closing of the acquisition of Bestway Trucking, Inc., the Seller will
initially deposit 596,273 shares of TGI's Common Stock that are issued to the
Seller in connection therewith (the "Escrow Shares") with a bank or trust
company located within the State of Georgia which will act as an escrow agent
(the "Escrow Agent"), who will hold the Escrow Shares in escrow as collateral
for the indemnification obligations of the Seller under this Agreement, the
Agreement and Plan of Reorganization, the Membership Interest Purchase Agreement
pursuant to which TGI will purchase all of the Membership Interests of
Connection One Trucking, LLC (the "Connection One Agreement") and the Agreement
for the Sale of Assets pursuant to which Bestway Trucking, Inc. will purchase
certain of the assets of the Company (the "DLS Asset Agreement") in accordance
with the terms of the Escrow Agreement.
9.5 PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person of notice of the
commencement of any proceeding against it, such Indemnified Person will, if a
claim is to be made against an indemnifying party hereunder, give notice to the
indemnifying party of the commencement of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any Indemnified Person, except to the extent that the
indemnifying party demonstrates that the defense of such action is prejudiced by
the Indemnified Person's failure to give such notice.
(b) If any proceeding is brought against an Indemnified Person and it gives
notice to the indemnifying party of the commencement of such proceeding, the
indemnifying party will be entitled to participate in such proceeding and, to
the extent that it wishes (unless (i) the indemnifying party is also a party to
such proceeding and the Indemnified Person determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the Indemnified Person of its financial capacity
to defend such proceeding and provide indemnification with respect to such
proceeding), to assume the defense of such proceeding with counsel satisfactory
to the Indemnified Person and, after notice from the indemnifying party to the
Indemnified Person of its election to assume the defense of such proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the Indemnified Person under this Section 9 for any fees of other
counsel or any other expenses with respect to the defense of such proceeding, in
each case subsequently incurred by the Indemnified Person in connection with the
defense of such proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the Indemnified Person's consent unless (A) there is no finding or
admission of any violation of applicable laws or any violation of the rights of
any person and no effect on any other claims that may be made against the
Indemnified Person, and (B) the sole relief provided is monetary damages that
are paid in full by the indemnifying party; and (iii) the Indemnified Person
will have no liability with respect to any compromise or settlement of such
claims effected without its consent. If notice is given to an indemnifying party
of the commencement of any proceeding and the indemnifying party does not,
within ten (10) days after such notice is given, give notice to the Indemnified
Person of its election to assume the defense of such proceeding, the
indemnifying party will be bound by any determination made in such proceeding or
any compromise or settlement effected by the Indemnified Person. Notwithstanding
the foregoing, the filing of an answer by the indemnifying party in order to
preserve the rights of the Indemnified Party due to a filing deadline shall not
in itself constitute its election to assume the defense of a claim hereunder.
(c) Notwithstanding the foregoing, if an Indemnified Person determines in good
faith that there is a reasonable probability that a proceeding may adversely
affect it or its affiliates other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the Indemnified
Person may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such proceeding, but the indemnifying party will
not be bound by any determination of a proceeding so defended or any compromise
or settlement effected without its consent (which may not be unreasonably
withheld). (d) Seller hereby consents to the non-exclusive jurisdiction of any
court in which a proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such proceeding or the matters alleged therein, and agrees that
process may be served on Seller with respect to such a claim anywhere in the
world.
9.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS.
A claim for indemnification for any matter not involving a third-party claim
may be asserted by notice to the party from whom indemnification is sought.
9.7 TIME LIMITATIONS.
If the Closing occurs, Seller will have no liability (for indemnification or
otherwise) with respect to any representation or warranty other than those in
Sections 3.3, 3.10, 3.12, 3.18 and 3.19, unless on or before the third (3rd)
anniversary of the Closing Date, TGI notifies Seller of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
TGI. A claim with respect to Section 3.3, or a claim for indemnification or
reimbursement based upon any covenant or obligation may be made at any time. A
claim with respect to Sections 3.10, 3.12, 3.18 or 3.19 may be made at any time
prior to the expiration of the applicable statute of limitations for the cause
of action giving rise to such Damages. If the Closing occurs, TGI will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, unless on or before the third (3rd) anniversary of the Closing Date
Seller notifies TGI of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Seller.
9.8 LIMITATION.
Notwithstanding the foregoing, neither Party shall make a claim for
indemnification under Section 9.2(a) or (b) or Section 9.3(a) or (b) unless and
until the amount of such claim, or the aggregate amount of such claims, made by
such Party pursuant to this Agreement, the DLS Asset Agreement, the Connection
One Agreement, and the Agreement and Plan of Reorganization, equals or exceeds
Seventy-five Thousand Dollars ($75,000).
10. GENERAL PROVISIONS
10.1 EXPENSES.
Each Party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement,
the Agreement and Plan of Reorganization, and the Contemplated Transactions,
including all fees and expenses of agents, representatives, counsel, and
accountants.
10.2 PUBLIC ANNOUNCEMENTS.
Any public announcement or similar publicity with respect to this Agreement,
the Agreement and Plan of Reorganization, or the Contemplated Transactions will
be issued at such time and in such manner as mutually agreed, except TGI may
make such disclosures as it deems necessary to comply with applicable securities
laws. Unless consented to by TGI in advance or required by applicable law, prior
to the Closing Seller shall, and shall cause the Company to, keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to any
person. Seller and TGI will mutually agree upon the means by which the Company's
employees, customers, and suppliers and others having dealings with the Company
will be informed of the Contemplated Transactions, and TGI will have the right
to be present for any such communication.
10.3 NOTICES.
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):
Seller: ......... David L. Summitt
3205 Magnolia Court
Sellersburg, Indiana 47172
with a copy to: Norman R. Garvin, Esq.
Scopelitis, Garvin, Light & Hanson
Suite 1500
10 West Market Street
Indianapolis, Indiana 46204-2971
Facsimile No.: (317) 687-2414
TGI: ........ Transit Group, Inc.
Overlook III, Suite 1740
2859 Paces Ferry Road
Atlanta, Georgia 30339
Attention: Philip A. Belyew, President
Facsimile No.: (770) 444-0246
with a copy to:... Sharon L. McBrayer, Esq.
Womble Carlyle Sandridge & Rice, PLLC
Suite 3500, One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Facsimile No.: (404) 870-4825
10.4 JURISDICTION; SERVICE OF PROCESS.
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought by any Party against any of
the other Parties in the courts of the States of Georgia and Indiana, or, if it
has or can acquire jurisdiction, in the United States District Court for the
Northern District of Georgia and the Southern District of Indiana. Each of the
Parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
10.5 FURTHER ASSURANCES.
The Parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
10.6 WAIVER.
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither the failure nor any delay by any Party in exercising
any right, power, or privilege under this Agreement or the documents referred to
in this Agreement will operate as a waiver of such right, power, or privilege,
and no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one Party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other Parties; (b) no waiver that may be given by a Party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one Party will be deemed to be a waiver of any
obligation of such Party or of the right of the Party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
10.7 ENTIRE AGREEMENT AND MODIFICATION.
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the Party to be
charged with the amendment.
10.8 DISCLOSURE LETTER.
The disclosures in the Company's Disclosure Letter, and those in any
supplement thereto, relate only to the representations and warranties in the
Section of the Agreement to which they expressly refer. In the event of any
inconsistency between the statements in the body of this Agreement and those in
the Company's Disclosure Letter (other than an exception expressly set forth as
such in the Company's Disclosure Letter with respect to a specifically
identified representation or warranty), the statements in the body of this
Agreement will control.
10.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
Neither the Seller nor the Company may assign any of their rights under this
Agreement without the prior consent of TGI. TGI may assign this Agreement, the
Seller's Closing Documents, or any one of them at any time to any affiliated
entity without obtaining the consent of or notifying any other Party. This
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the Parties. Nothing
expressed or referred to in this Agreement will be construed to give any person
other than the Parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the Parties to this Agreement and their successors
and permitted assigns.
10.10 SEVERABILITY.
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable. The remedies provided in this
Agreement will not be exclusive of or limit any other remedies that may be
available.
10.11 SECTION HEADINGS, CONSTRUCTION.
The headings of Sections in this Agreement are provided for convenience only
and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
10.12 TIME OF ESSENCE.
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
10.13 GOVERNING LAW.
This Agreement will be governed by the laws of the State of Indiana without
regard to conflicts of laws principles.
10.14 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
"TGI":
TRANSIT GROUP, INC.
BY: /s/ Philip A. Belyew
PHILIP A. BELYEW, President
SELLER:
/s/ David L. Summitt
DAVID L. SUMMITT
SCHEDULE 4.2
TGI CONSENTS
1. AmSouth Bank, N.A.
2. GE Capital Equity Investments, Inc.