SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: November 12, 2002
(Date of earliest event reported)
USFREIGHTWAYS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-19791 36-3790696
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation or Identification
organization) Number)
8550 West Bryn Mawr Avenue, Suite 700, Chicago, Illinois 60631
(Address of principal executive offices) (Zip Code)
(773) 824-1000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Item 2. Disposition of Assets.
On October 30, 2002, USFreightways Corporation (the Registrant) completed the
transfer of its freight forwarding units, USF Worldwide Inc. and USF Worldwide
Logistics (UK) Ltd. (the Companies) to GPS Logistics, LLC and Seko Worldwide
Acquisition LLC (the Transferees) pursuant to a Share Transfer Agreement dated
October 17, 2002 through the transfer of the shares of the Companies. As a
condition to the transfer and in consideration of Transferees' obligation to
assume ownership of the stock of the Companies, the Registrant agreed to
contribute $17,000,000 in cash to USF Worldwide Inc. As part of the agreement,
the Transferees have the option for a period of up to six months from closing to
return its interest in certain assets to the Registrant for $3,000,000 in cash.
The Pro Forma financial statements, presented in Item 7b, do not take into
account any potential losses that may occur upon the return of the
aforementioned certain assets. No material relationship exists between the
Transferees and the Registrant, any affiliate of the Registrant, and any
director or officer of the Registrant, or any associate of a director or officer
of the Registrant.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements
None.
(b) Pro Forma Financial Information
USFreightways Corporation ("USFC")
Unaudited Pro forma Condensed Consolidated Financial Statements
The following unaudited pro forma condensed consolidated balance sheet as of
June 29, 2002 and the unadudited pro forma condensed consolidated statements of
operations for the six months ended June 29, 2002 and for the years ended
December 31, 2001, 2000 and 1999 give effect to the transfer of USF Worldwide,
Inc. The unaudited pro forma condensed consolidated balance sheet as of June 29,
2002 assumes that the transfer took place on June 29, 2002. The unaudited pro
forma condensed statements of operations give effect to the transfer as if it
had occurred at the beginning of the earliest period presented.
The unaudited pro forma condensed consolidated balance sheet and statements of
operations are presented for information purposes only and are not necessarily
indicative of the financial position or the results of operations that would
have been obtained had the transfer of shares actually occurred as of the dates
assumed nor is it necessarily indicative of the financial position or future
results of operations. The pro forma adjustments are based upon information and
assumptions available at the time of the filing of this document. The pro forma
condensed consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and related notes thereto of USFC
contained in our annual report on Form 10-K for the year ended December 31, 2001
and the condensed consolidated financial statements in our Quarterly Report on
Form 10-Q for the quarter ended June 29, 2002.
USFreightways Corporation ("USFC")
Pro Forma Condensed Consolidated Balance Sheet
As of June 29, 2002
Unaudited (Dollars in Thousands)
USFC Pro Forma USFC
Historical Adjustments Pro Forma
Assets
Current assets:
Cash $ 58,957 $ (5,365) 3 $ 35,192
(18,400) 1
Accounts receivable, net 321,219 (47,175) 3 274,044
Other receivables 31,500 4 31,500
Other 75,239 (2,100) 3 72,611
( 528) 4
________ ________ ________
Total current assets 455,415 (42,068) 413,347
Property and equipment, net 727,391 (1,001) 3 726,390
Goodwill 100,504 100,504
Other intangible assets, net 1,792 (162) 3 1,630
Notes receivable 11,036 (6,000) 2 5,036
Other assets 22,498 22,498
_________ ________ _________
Total assets $1,318,636 $ (49,231) $1,269,405
========= ======== =========
Liabilities and Stockholders' Equity
Current liabilities:
Current bank debt $ 645 $ (6) 3 $ 639
Accounts payable 85,642 (28,376) 3 57,266
Accrued salaries, wages and benefits 102,630 (2,596) 3 100,034
Accrued claims and other 89,729 (5,188) 3 84,541
_______ ________ _______
Total current liabilities 278,646 (36,166) 242,480
Long-term liabilities:
Long-term bank debt 2,318 2,318
Notes payable 250,000 250,000
Accrued claims and other 81,187 (1,033) 3 80,154
Deferred income taxes 89,342 89,342
_______ ______ _______
Total long-term liabilities 422,847 (1,033) 421,814
Common stockholders' equity 617,143 (12,032) 5 605,111
_________ ________ _________
Total liabilities and stockholders' equity $1,318,636 $ (49,231) $1,269,405
========= ======== ==========
See accompanying notes describing pro forma adjustments.
USFreightways Corporation ("USFC")
Pro Forma Consolidated Statement of Operations
For the Six Months Ended June 29, 2002
Unaudited (Dollars in Thousands, Except Per-Share Amounts)
USFC Pro Forma USFC
Historical Adjustments Pro Forma
Operating revenue:
LTL Trucking $ 905,391 $ 905,391
TL Trucking 53,835 53,835
Logistics 136,145 136,145
Freight Forwarding 111,145 $ (111,145) 6 -
Intercompany eliminations (4,019) (4,019)
_________ _________ _________
Total operating revenue 1,202,497 (111,145) 1,091,352
Operating expenses:
LTL Trucking 860,013 860,013
TL Trucking 51,417 51,417
Logistics 131,779 131,779
Freight Forwarding 121,427 (121,427) 6 -
Freight Forwarding-Asia exit costs 12,760 12,760
Corporate and other 15,008 (1,875) 6 13,133
Intercompany eliminations (4,019) (4,019)
_________ ________ _________
Total operating expenses 1,188,385 (123,302) 1,065,083
_________ ________ _________
Income from operations 14,112 12,157 26,269
Non-operating income (expense)
Interest expense (10,455) 225 6 (10,230)
Interest income 1,411 (13) 6 1,398
Other, net (360) (21) 6 (381)
_______ ______ _______
Total non-operating income (expense) (9,404) 191 (9,213)
_______ ______ _______
Income before income taxes 4,708 12,348 17,056
Income tax expense (6,431) (4,445) 6 (10,876)
________ ______ _______
Income / (loss) from continuing
operations $ (1,723) $ 7,903 $ 6,180
======== ====== =======
Income /(loss) per share from
continuing operations: Basic $ (0.06) $ 0.29 $ 0.23
Diluted $ (0.06) $ 0.29 $ 0.23
Average shares outstanding: Basic 26,845,749 26,845,749 26,845,749
Diluted 26,845,749 27,385,140 27,385,140
See accompanying notes describing pro forma adjustments.
USFreightways Corporation ("USFC")
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2001
Unaudited (Dollars in Thousands, Except Per-Share Amounts)
USFC Pro Forma USFC
Historical Adjustments Pro Forma
Operating revenue:
LTL Trucking $ 1,816,204 $ 1,816,204
TL Trucking 100,439 100,439
Logistics 277,393 277,393
Freight Forwarding 264,611 $ (237,673) 6 26,938
_________ ________ _________
Total operating revenue 2,458,647 (237,673) 2,220,974
Operating expenses:
LTL Trucking 1,707,584 1,707,584
TL Trucking 97,552 97,552
Logistics 266,208 266,208
Freight Forwarding 282,804 (253,055) 6 29,749
Corporate and other 18,816 (2,271) 6 16,545
_________ _________ _________
Total operating expenses 2,372,964 (255,326) 2,117,638
_________ _________ _________
Income from operations 85,683 17,653 103,336
Non-operating income (expense)
Interest expense (21,469) 505 6 (20,964)
Interest income 2,292 (14) 6 2,278
Other, net (462) (37) 6 (499)
_______ ______ ______
Total non-operating income (expense) (19,639) 454 (19,185)
_______ ______ ______
Income before income taxes and minority
interest 66,044 18,107 84,151
Income tax expense (26,556) (6,518) 6 (33,074)
Minority interest (1,100) - (1,100)
_______ ______ ______
Income from continuing operations $ 38,388 $ 11,589 $ 49,977
======= ====== ======
Income from continuing
operations per share:
Basic $ 1.46 $ 0.44 $ 1.90
Diluted $ 1.43 $ 0.44 $ 1.87
Average shares outstanding: Basic 26,309,107 26,309,107 26,309,107
Diluted 26,765,861 26,765,861 26,765,861
See accompanying notes describing pro forma adjustments.
USFreightways Corporation ("USFC")
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2000
Unaudited (Dollars in Thousands, Except Per-Share Amounts)
USFC Pro Forma USFC
Historical Adjustments Pro Forma
Operating revenue:
LTL Trucking $ 1,913,675 $ 1,913,675
TL Trucking 86,317 86,317
Logistics 276,958 276,958
Freight Forwarding 261,749 $ (250,086) 6 11,663
_________ _________ _________
Total operating revenue 2,538,699 (250,086) 2,288,613
Operating expenses:
LTL Trucking 1,737,055 1,737,055
TL Trucking 81,646 81,646
Logistics 260,278 260,278
Freight Forwarding 265,830 (250,410) 6 15,420
Corporate and other 13,578 (2,037) 6 11,541
_________ ________ _________
Total operating expenses 2,358,387 (252,447) 2,105,940
_________ _________ _________
Income from operations 180,312 2,361 182,673
Non-operating income (expense)
Interest expense (21,282) 192 6 (21,090)
Interest income 894 (209) 6 685
Other, net (572) (549) 6 (1,121)
________ _____ _______
Total non-operating income (expense) (20,960) (566) (21,526)
________ _____ _______
Income before income taxes and
minority interest 159,352 1,795 161,147
Income tax expense (64,262) (646) 6 (64,908)
Minority interest 1,708 - 1,708
______ _____ ______
Income from continuing operations $ 96,798 $ 1,149 $ 97,947
====== ===== ======
Income from continuing
operations per share:
Basic $ 3.68 $ 0.04 $ 3.72
Diluted $ 3.61 $ 0.04 $ 3.65
Average shares outstanding: Basic 26,337,734 26,337,734 26,337,734
Diluted 26,828,046 26,828,046 26,828,046
See accompanying notes describing pro forma adjustments.
USFreightways Corporation ("USFC")
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 1999
Unaudited (Dollars in Thousands, Except Per-Share Amounts)
USFC Pro Forma USFC
Historical Adjustments Pro Forma
Operating revenue:
LTL Trucking $ 1,750,309 $ 1,750,309
TL Trucking 44,715 44,715
Logistics 206,881 206,881
Freight Forwarding 225,010 $ (225,010) 6 -
_________ _________ _________
Total operating revenue 2,226,915 (225,010) 2,001,905
Operating expenses:
LTL Trucking 1,578,399 1,578,399
TL Trucking 41,568 41,568
Logistics 190,008 190,008
Freight Forwarding 216,835 (216,345) 6 490
Corporate and other 11,237 (1,813) 6 9,424
_________ _________ _________
Total operating expenses 2,038,047 (218,158) 1,819,889
_________ ________ _________
Income from operations 188,868 (6,852) 182,016
Non-operating income (expense)
Interest expense (14,003) 350 6 (13,653)
Interest income 1,129 (132) 6 997
Other, net (414) 101 6 (313)
_______ _______ _______
Total non-operating income (expense) (13,288) 319 (12,969)
_______ ______ _______
Income before income taxes 175,580 (6,533) 169,047
Income tax (expense)/ benefit (71,340) 2,352 6 (68,988)
_______ _______ _______
Income from continuing operations $ 104,240 $ (4,181) $ 100,059
======= ======= =======
Income from continuing
operations per share:
Basic $ 3.95 $ (0.16) $ 3.79
Diluted $ 3.79 $ (0.15) $ 3.64
Average shares outstanding: Basic 26,416,631 26,416,631 26,416,631
Diluted 27,478,479 27,478,479 27,478,479
See accompanying notes describing pro forma adjustments.
USFreightwayss Corporation ("USFC")
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
As of June 29, 2002
(Dollars in Thousands)
(1) Cash paid at closing (17,000)
Estimated transaction costs ( 1,400)
_______
Total (18,400)
=======
(2) As part of the transfer transaction, $6,000 in loans made to Asia
in January 2002 were forgiven.
(3) Represents the adjustments to remove the current and non-current
assets and liabilites of USF Worldwide, Inc. at closing.
(4) Represents certain tax related benefits including:
Accounts receivable, net (benefit realizable from 31,500
losses associated with the transfer)
Deferred tax assets (528)
______
Total 30,972
======
(5) Represents the estimated net after tax loss incurred upon the
completion of the transfer:
Cash at closing (17,000)
Notes receivable forgiven (6,000)
Net assets transferred (18,604)
Estimated transaction costs (1,400)
Estimated net tax benefits 30,972
_______
Estimated after tax net loss (12,032)
=======
(6) To eliminate the revenue and expenses relating to the discontinued
operations of USF Worldwide, Inc. assuming the transfer had occurred at
the beginning of the earliest period presented.
(c)Exhibits
The following are filed as exhibits to this report.
Exhibit Description
Number
2 Share Transfer Agreement among USFreightways Corporation, GPS
Logistics, Inc., and Seko Worldwide Acquisition LLC, dated
October 17, 2002. Pursuant to Item 601(b)(2) of Regulation
S-K, the exhibits and schedules to the Agreement are omitted.
A list of such exhibits and schedules appears after the
Agreement.
99.1 Press Release dated October 30, 2002
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
USFREIGHTWAYS CORPORATION
By:/s/ Christopher L. Ellis
________________________
Christopher L. Ellis
Senior Vice President, Finance and Chief Financial Officer
Date:November 12, 2002
EXHIBIT 2
SHARE TRANSFER AGREEMENT among USFreightways Corporation, GPS Logistics, Inc.
and
Seko Worldwide Acquisition LLC
Dated as of October 17, 2002
SHARE TRANSFER AGREEMENT
THIS SHARE TRANSFER AGREEMENT (this "Agreement") entered into as of October 17,
2002, by and among USFreightways Corporation, a Delaware corporation ("USF"),
GPS Logistics, Inc., a New York corporation ("GPS") and Seko Worldwide
Acquisition LLC, an Illinois limited liability company ("I/C Group") (GPS and
I/C Group are collectively and jointly and severally referred to as the
"Transferee"). Each of USF and Transferee is referred to herein individually as
a "Party" and collectively as the "Parties." RECITALS
A. USF owns all of the issued and outstanding shares of capital stock of USF
Worldwide Inc., a Delaware corporation ("Worldwide") and USF Worldwide
Logistics (UK) Ltd., a company incorporated under the laws of England and
Wales ("Worldwide UK") (Worldwide, Worldwide UK and their subsidiaries are
collectively referred to as the "Company");
B. USF has determined that the stock of Worldwide is worthless. USF has
determined that, after taking into account any capitalization of the
outstanding indebtedness due from Worldwide to USF and without regard to any
potential cash contribution to Worldwide, the liabilities of Worldwide exceed
the fair market value of the assets of Worldwide by more than $17,000,000;
C. USF desires to transfer and Transferee desires to assume ownership of all of
the issued and outstanding shares of capital stock of Worldwide and Worldwide
UK upon the terms and subject to the conditions set forth in this Agreement;
and
D. The Company is engaged in the business of freight forwarding, air, ocean and
brokerage operation, international logistics and project forwarding (the
"Business").
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, and the mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties hereby agree as follows: ARTICLE
1.
THE TRANSACTION
1.1. Transaction. Subject to the provisions of this Agreement, Transferee will
assume ownership from USF, and USF will transfer and convey to Transferee, all
of the issued and outstanding shares of the common stock, no par value per share
of Worldwide ("Worldwide Stock") and the entire share capital of Worldwide UK
("Worldwide UK Stock"), for the consideration specified below in Section 1.2.
1.2. Price. Transferee agrees to pay to USF at the Closing an amount equal to
one dollar ($1.00), in cash. 1.3. Allocation of Purchase Price. USF and the
Transferee agree that, as of the date hereof, and without regard to the
obligation of USF to make the capital contribution required pursuant to Section
4.1 of this Agreement, (i) the stock of Worldwide has a net negative value of
not more than negative $17,000,000 (the value may be negative $17,000,000 or
negative $18,000,000) and (ii) the total liabilities of Worldwide exceed its
total assets by at least $17,000,000.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF USF
2.1. Title. USF has, and the Transferee will acquire good and marketable title
to all of the shares of Worldwide Stock, free and clear of any and all security
interests, options, restrictions, encumbrances or rights of any nature. The
Worldwide UK Stock is being transferred to Transferee with full title guarantee.
The Worldwide Stock and the Worldwide UK Stock constitute 100% of the issued and
outstanding stock of Worldwide and 100% of the issued share capital of Worldwide
UK. Other than the rights granted to Transferee pursuant to this Agreement,
there are no preemptive rights, subscription rights, options, warrants,
agreements, commitments, understandings or arrangements obligating either
Company to issue any additional shares of capital stock or any other securities
convertible into, exchangeable for or evidencing the right to subscribe for any
shares of capital stock.
2.2. Power and Authority of USF. USF has the full
right, power and authority to execute and deliver this Agreement and all other
agreements entered into in connection herewith by USF and to perform USF's
obligations hereunder and thereunder. This Agreement constitutes the valid and
legally binding obligations of USF enforceable against USF in accordance with
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other laws
relating to or affecting the enforcement of creditors' rights generally, now or
hereafter in effect, and subject to the application of equitable principles and
the availability of equitable remedies.
2.3. No Prohibition. Neither USF nor the Company is a party to, subject to nor
bound by any agreement or any judgment, order, writ, prohibition, injunction or
decree of any court or other governmental body which would prevent the execution
or delivery of this Agreement by USF or the consummation of the transactions
contemplated hereby.
2.4. Organization, Qualification and Corporate Power of
Worldwide and Worldwide UK.
(a) Worldwide is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Worldwide has all
requisite corporate power and authority to carry on the business in which
it is engaged and to own and use the properties owned and used by it.
(b) Worldwide UK has been duly incorporated in England and Wales and is validly
existing. Worldwide UK has all requisite corporate power and authority to
carry on the business in which it is engaged and to own and use the
properties owned and used by it.
(c) Schedule 2.4 lists all subsidiaries of the Company.
(d) A majority of the operations of the Business are conducted through
Worldwide and USF Worldwide Logistics Limited, the wholly-owned subsidiary
of Worldwide UK.
2.5. Noncontravention. Neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby will (a) violate or
conflict in any way with any statute, regulation, law, rule or common law
doctrine which violation or conflict would have a material adverse effect or (b)
violate or conflict in any way with any judgment, order, decree, stipulation,
injunction, charge or other restriction of any government, governmental agency
or court to which USF, Worldwide or Worldwide UK is subject which violation or
conflict would in either case have a material adverse effect on Worldwide or
Worldwide UK or any provision of its respective Certificates/Articles of
Incorporation or By-Laws.
2.6. No Consents. None of USF, Worldwide or Worldwide
UK is required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government, governmental agency or
court, or any other person, in order for the Parties hereto to consummate the
transactions contemplated hereby, except for such notices, filings,
authorizations, consents or approvals which, if not obtained, would not have a
material adverse effect.
2.7. Capitalization.
(a) The authorized capital stock of Worldwide consists solely of 1,000 shares
of Worldwide Stock, of which 124.21 are issued and outstanding as of the
date hereof. Worldwide has not authorized, offered, sold or issued capital
stock other than the shares of Worldwide Stock. All of the issued and
outstanding shares of Worldwide Stock have been duly authorized, validly
issued, fully paid, and nonassessable, and are not subject to any
preemptive rights.
(b) The authorized share capital of Worldwide UK consists of 1,000 ordinary
shares of UKP1 of which 100 are in issue at the date hereof. Worldwide has
not authorized, offered, sold or issued capital stock other than the shares
of Worldwide UK Stock. All of the issued shares of Worldwide UK Stock have
been duly authorized, have been validly issued, are fully paid, and are not
subject to any preemptive rights.
2.8. Broker's Fees. Worldwide and Worldwide UK shall not have any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement. Any fees and
expenses payable to Morgan Stanley & Co. Incorporated relating to the
transactions contemplated hereby will be paid by USF.
2.9. Environmental Matters. None of USF, Worldwide or Worldwide UK has received
any demand, claim, suit, action, administrative proceeding, investigation or
inquiry, whether brought by any governmental authority, private person or other
party under, arising under, relating to or in connection with any Environmental
Laws (as defined below) and, to the knowledge of USF, none is threatened. Except
as described on Schedule 2.9, to the knowledge of USF, the Company is
substantially in compliance with all Environmental Laws. As used herein,
"Environmental Laws" means any law, statute or ordinance enacted by the United
States of America or the United Kingdom; or by any state, province, municipality
or any other political subdivision thereof or therein, concerning hazardous
materials or the protection of human health, safety or the environment, or
regulating the discharge of substances into, the environment, and any rules
regulations or standards promulgated thereunder by any agency, regulatory
authority or commi ssion of any of the foregoing.
2.10. Taxes. All Federal, foreign, state and local income tax returns required
to be filed by any date preceding the Closing Date by Worldwide or Worldwide UK
in any jurisdiction have, in fact, been filed, all such returns are true and
correct in all material respects and all taxes, assessments, fees, and other
governmental charges upon Worldwide or Worldwide UK or upon any of its property,
income or franchises whether or not shown in such returns, have been paid,
except such taxes, assessments, fees and governmental charges, if any, as are
being contested in good faith and by appropriate proceedings which prevent
enforcement of the matter under contest and as to which adequate reserves
established in accordance with generally accepted accounting principles have
been provided or where the failure to pay such tax, assessment, fee or other
governmental charge or file any tax return would not have a material adverse
effect on Worldwide or Worldwide UK. There are no outstanding agreements or
waivers by or with respect to Worldwide or Worldwide UK that extend the
statutory period of limitations applicable to any income tax returns for any
period. Worldwide is and as of the Closing will be a member of the "affiliated
group" (within the meaning of Section 1504(a) of the Internal Revenue Code) of
which USF is the "common parent" and Worldwide is and as of the Closing will be
included in the consolidated federal income tax return filed by USF with respect
to such affiliated group.
2.11. Litigation. Attached hereto as Schedule 2.11 is a list of all pending and
threatened pending litigation against Worldwide and Worldwide UK, which list has
been prepared by USF to the best of its knowledge.
2.12. Financial Information. Attached as Schedule 2.12 is a copy of the internal
unaudited consolidated balance sheet of the Company as of September 28, 2002 and
the unaudited consolidated income statement of the Company for the nine months
ended September 28, 2002 (the "Financial Statements"). The Financial Statements
were prepared in accordance with generally accepted accounting principles and
are substantially the same financial statements for the Business that will be
used in the preparation of USF's Form 10-Q for the quarterly period ended
September 28, 2002.
2.13. Interim Change. Since September 28, 2002, to the knowledge of USF, there
has not been (a) any sale, transfer or other disposition of any material asset
by the Company, (b) any affirmative assumption of an obligation of USF or any of
its affiliates by the Company, (c) any declaration or payment of any dividend or
distribution by Worldwide or Worldwide UK, (d) any purchase or redemption of any
securities by Worldwide or Worldwide UK (other than mergers of stock) or (d) any
payment to USF of any intercompany debt or other intercompany obligation by
Worldwide or Worldwide UK.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF TRANSFEREE
3.1. Organization. GPS is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York. I/C Group is a
limited liability company duly organized, validly existing and in good
standing under the laws of the State of Illinois.
3.2. Authorization of Transaction. Transferee has full right, power and
authority to enter into this Agreement and to perform its obligations
hereunder. The entry into and performance hereof have been duly authorized
by all necessary corporate actions on the part of Transferee in accordance
with its respective Certificate/Articles of Incorporation, By-Laws,
articles of organization, operating agreement and applicable law. This
Agreement constitutes a valid agreement, binding upon and enforceable
against Transferee in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other laws relating to or affecting the
enforcement of creditors' rights generally, now or hereafter in effect and
subject to the application of equitable principles and the availability of
equitable remedies.
3.3. Noncontravention. Neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby will (a)
violate or conflict in any way with any statute, regulation, law, rule or
common law doctrine which violation or conflict would have a material
adverse effect or (b) violate or conflict in any way with any judgment,
order, decree, stipulation, injunction, charge or other restriction of any
government, governmental agency or court to which Transferee is
specifically subject which violation or conflict would have a material
adverse effect on Transferee or any provision of its respective Certificate
/Articles of Incorporation or By-Laws, articles of organization and
operating agreement.
3.4. No Consents. Transferee is not required to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government, governmental agency or court, or any other person in order for
the Parties to consummate the transactions contemplated by this Agreement
except for such notices, filings, authorizations, consents or approvals
which, if not obtained or made, would not have a material adverse effect on
Transferee.
3.5. Brokers' Fees. Transferee has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which USF is or could
become liable or obligated.
ARTICLE 4.
COVENANTS PRIOR TO CLOSING
4.1. Contribution of Funds. Immediately prior to the Closing, in consideration
of Transferee's obligation to assume ownership of the Worldwide Stock and the
Worldwide UK Stock, USF agrees to contribute $17,000,000 in cash to Worldwide.
4.2. Outstanding Indebtedness of Worldwide to USF. Immediately prior to the
Closing, all of the outstanding indebtedness or payables due from Worldwide and
Worldwide UK to USF shall be capitalized except trade payables due subsidiaries
or affiliates of USF for services rendered in the ordinary course of business.
4.3. Dismissal of Certain Employees. Certain employees and consultants of
Worldwide and Worldwide UK, as mutually agreed to by USF and Transferee, shall
be dismissed prior to the Closing and the cost associated with such dismissals
shall be borne by Worldwide and Worldwide UK, as the case may be.
4.4. Conduct of Operations. Prior to the Closing, USF will not take any action
which will cause the Company (a) not to operate the Business other than in the
ordinary course consistent with past practices, (b) not to maintain its existing
contractual relationships, and (c) to enter into any transactions (other than
the transaction contemplated hereby) outside the ordinary course of business,
and USF shall direct all officers of Worldwide and Worldwide UK not to do any of
the foregoing.
4.5. Capitalization. As of the Closing Date, Transferee shall
have net equity determined under generally accepted accounting principles of not
less than $5,000,000 in cash.
4.6. Exclusivity. Until the earlier of the termination of this Agreement
pursuant to Article 7 or November 11, 2002, none of USF, Worldwide or Worldwide
UK, shall, directly or indirectly, (a) solicit, encourage or initiate any
discussion with, (b) negotiate or otherwise deal with, (c) accept any offer
from, or provide any information to, any person, other than Transferee,
concerning any disposition or sale of Worldwide or Worldwide UK, whether by sale
of stock, sale of assets, merger or otherwise, and none of USF, Worldwide or
Worldwide UK shall enter into any agreement concerning any of the transactions
described herein.
4.7. Confidentiality. Prior to the Closing, Transferee will treat and hold as
confidential all of the confidential information of Worldwide and Worldwide UK
disclosed to Transferee by USF (the "Confidential Information"), and shall
refrain from using or disclosing any of the Confidential Information except (a)
to authorized representatives of Transferee, or (b) to counsel or other advisers
(provided such advisers other than counsel agree to comply with the
confidentiality provisions of this Section 4.7), unless disclosure is required
by law or order of any governmental authority under color of law. In the event
that, prior to the Closing, Transferee is requested or required (by oral
question or written request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, Transferee will notify USF
promptly of the request or requirement so that USF may seek an appropriate
protective order or waive comp liance with the provisions of this Section 4.7.
If, in the absence of a protective order or the receipt of a waiver hereunder,
Transferee is, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, Transferee may
disclose the Confidential Information to the tribunal; provided, however, that
Transferee shall, upon the request of USF, exert all reasonable efforts to
obtain, at the reasonable request of USF, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as USF shall reasonably designate.
4.8. Press Release and Announcements. Prior to the consummation of the
transactions contemplated hereby, no press releases or public announcement
relating to this Agreement and the transactions contemplated herein, or other
announcements to the employees, independent contractors, clients, referral
sources, customers and suppliers of the Company's business will be issued
without the joint approval of Transferee and USF; provided that the foregoing
restriction shall cease to apply to announcements to the extent that USF
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (provided that in such case
USF shall use its best efforts to provide Transferee with an advance copy of
such announcement).
ARTICLE 5.
CONDITIONS TO OBLIGATIONS OF TRANSFEREE The obligations of Transferee to
consummate the transactions contemplated hereby are subject to satisfaction at
or prior to the Closing Date of the following conditions:
5.1. Representations and Warranties. The representations and warranties of USF
contained in this Agreement shall be true and correct in all material respects
as of the date when made and on the Closing Date as if made again on the Closing
Date;
5.2. Obligations. USF shall have performed and complied in all material respects
with all of its respective covenants, duties and obligations hereunder through
the Closing Date;
5.3. USF's Certificate. USF shall have delivered a certificate dated the Closing
Date, signed and verified by an executive officer of USF certifying that the
conditions specified in Sections 5.1 and 5.2 have been fulfilled;
5.4. Corporate Resolutions. USF shall have delivered to Transferee (i) a copy of
the text of the resolutions by which the corporate action on the part of USF
necessary to approve this Agreement were taken, certified by USF's Secretary and
(ii) an incumbency certificate signed by USF's secretary certifying the
signature and office of each officer executing this Agreement or any other
agreement, certificate or other instrument executed pursuant hereto;
5.5. Transition Services Agreement. Transferee and USF shall have entered into a
Transition Services Agreement in substantially the form attached hereto as
Exhibit A ("Transition Services Agreement"), subject to such modifications as
shall be agreed to by the Parties prior to the Closing; and
5.6. Trademark License Agreement. Transferee and USF shall have entered into a
Trademark License Agreement in substantially the form attached hereto as Exhibit
B ("Trademark License Agreement"), subject to such modifications as shall be
agreed to by the Parties prior to the Closing;
5.7. Access and Information USF will and will cause both Companies to promptly
provide Transferee and its employees, lenders, financial advisors, attorneys,
accountants and other authorized representatives (collectively, the "Transferee
Representatives") with free and full access to the Company's premises, books and
records, and its employees, accountants, vendors, suppliers, distributors,
customers of Worldwide and Worldwide UK (collectively, the "Worldwide
Representatives") so that Transferee will have an opportunity to fully and
completely investigate the Business and its operations, assets, contracts,
liabilities and prospects. USF will cause all Worldwide Representatives to fully
cooperate with Transferee and will cause all requested documents and information
to be delivered promptly to Transferee and the Transferee Representatives.
ARTICLE 6.
CONDITIONS TO OBLIGATIONS OF USF The obligations of USF to consummate the
transactions contemplated hereby are subject to satisfaction at or prior to the
Closing Date of the following conditions:
6.1. Representations and Warranties. The representations and warranties of
Transferee contained in this Agreement shall be true and correct in all material
respects as of the date when made and on the Closing Date as if made again on
the Closing Date;
6.2. Obligations. Transferee shall have performed and complied in all material
respects with all of its respective covenants, duties and obligations hereunder
through the Closing Date;
6.3. Transferee's Certificate. Transferee shall have delivered a certificate
dated the Closing Date, signed and verified by an officer of each of GPS and I/C
Group certifying that the conditions specified in Sections 6.1 and 6.2 have been
fulfilled; and
6.4. Corporate Resolutions. Transferee shall have delivered to USF (i) a copy of
the text of the resolutions by which the corporate actions on the part of GPS
and I/C Group necessary to approve this Agreement were taken, certified by GPS's
and I/C Group's Secretary and (ii) an incumbency certificate signed by GPS's and
I/C Group's Secretary certifying the signature and office of each officer
executing this Agreement or any other agreement, certificate or other instrument
executed pursuant hereto.
ARTICLE 7.
TERMINATION
7.1. Termination. Either USF or Transferee may terminate this Agreement at any
time prior to the Closing Date as provided below:
(a) USF and Transferee may terminate this Agreement by mutual written consent;
(b) Transferee may terminate this Agreement upon written notice to USF in
the event USF has breached any representation, warranty or covenant
contained of USF in this Agreement which has not been cured prior to such
termination upon at least ten days' prior written notice to USF; or
(c) USF may terminate this Agreement upon written notice to Transferee in
the event Transferee has breached any representation, warranty or covenant
of Transferee contained in this Agreement which has not been cured prior
to such termination upon at least 10 days' prior written notice to
Transferee.
7.2. Effect of Termination. In the event of termination of this Agreement as
provided above, this Agreement will forthwith become void and there will be no
further liability on the part of the Transferee or USF, except that (i) the
covenants and agreements set forth in Sections 4.7 and 12.9 and this Section 7.2
shall survive such termination indefinitely; (ii) in the case of a termination
by Transferee pursuant to Section 7.1(b), USF shall pay GPS and I/C Group its
actual out of pocket expenses not to exceed $200,000 as their sole remedy for
any breach by USF hereunder; and (iii) in the case of a termination by
Transferee pursuant to Section 7.1(c), GPS and I/C Group, jointly and severally,
shall pay USF its actual out of pocket expenses not to exceed $200,000 as USF's
sole remedy for any breach by GPS and I/C Group hereunder, of which 50% shall be
paid by GPS and 50% shall be paid by I/C Group.
ARTICLE 8.
CLOSING
8.1. Time and Place of Closing. The consummation of the acquisition of the
Worldwide Stock and the Worldwide UK Stock and the related transactions and
deliveries herein provided for ("Closing") shall take place at 10:00 a.m., local
time, on October 30, 2002, at the offices of Sachnoff & Weaver, Ltd., or at such
other time or place as the parties hereto may mutually agree. The date and time
of Closing are referred to herein as the "Closing Date."
8.2. Documents to be Delivered by USF. At the Closing, the following instruments
and documents shall be delivered or provided to Transferee by USF:
(a) Certificates evidencing all of the issued and outstanding Worldwide Stock
and Worldwide UK Stock, together with executed assignments or stock
transfers, as the case may be, separate from certificates sufficient to
effect the transfers thereof to Transferee;
(b) The certificates referred to in Sections 5.3 and 5.4;
(c) The corporate minute book and stock ledger of Worldwide and Worldwide UK;
(d) An executed copy of the Transition Services Agreement;
(e) An executed copy of the Trademark License Agreement;
(f) Resignations of Norman Carlson, Christopher L. Ellis, Richard C.Pagano
and Christopher H. Reehl as officers and/or directors of the Companies,
and if requested by Transferee, the resignation of any other director;
and
(g) Such other documents or instruments as Transferee may reasonably request in
order to give effect to the transactions contemplated hereby.
8.3. Documents to be Delivered by Transferee. At the Closing, the following
instruments and documents shall be delivered or provided to USF by Transferee:
(a) Transferee shall deliver in cash the amount set forth in Section 1.2 hereof;
(b) A balance sheet of Transferee dated as of the Closing Date and certified by
an officer of GPS and manager of I/C Group reflecting net equity of not less
than $5,000,000 in cash;
(c) The certificates referenced in Sections 6.3 and 6.4;
(d) An executed copy of the Transition Services Agreement;
(e) An executed copy of the Trademark License Agreement; and
(f) Such other documents or instruments as USF may reasonably request in order
to give effect to the transactions contemplated hereby.
ARTICLE 9.
POST-CLOSING OBLIGATIONS OF THE PARTIES
9.1. Further Obligations of the Parties. Each party shall execute all
certificates, instruments and other documents and take all actions reasonably
requested by the other party to effectuate the purposes of this Agreement and to
consummate and evidence the consummation of the transactions herein provided
for.
9.2. Agreement Not to Sell or Merge Worldwide UK. Transferee agrees that for a
period ending on December 31, 2003, Transferee shall not enter into any
transaction or series of transactions pursuant to which any person(s) or
entity(ies) other than Transferee or a Permitted Transferee (as defined herein)
acquire(s), directly or indirectly: (i) capital stock of Worldwide UK possessing
the voting power to elect a majority of Worldwide UK's board of directors
(whether by merger, consolidation, reorganization, combination, sale or transfer
of Worldwide UK's capital stock, shareholder or voting agreement, proxy, power
of attorney or otherwise) or; (ii) all or substantially all of Worldwide UK's
assets determined on a consolidated basis unless Transferee pays USF a cash sum
equivalent to 25% of the gain received by Transferee in such transaction and 25%
of any dividends or distributions by Transferee or Worldwide UK prior to such
transaction. Nothing herein shall restrict Transferee from engaging in a
spin-off, d istribution or transfer of the Company or its assets to one or more
entities as long as such entities are controlled by any of the parties who
directly and/or indirectly controls GPS or the I/C Group as of the date hereof
("Permitted Transferees").
9.3. Agreement Not to Sell or Merge Worldwide. Transferee agrees that for a
period ending on December 31, 2003, Transferee or a Permitted Transferee shall
not enter into any transaction or series of transactions pursuant to which any
Restricted Party (as hereinafter defined) acquire(s), directly or indirectly:
(i) capital stock of Worldwide possessing the voting power to elect a majority
of Worldwide's board of directors (whether by merger, consolidation,
reorganization, combination, sale or transfer of Worldwide's capital stock,
shareholder or voting agreement, proxy, power of attorney or otherwise) or; (ii)
all or substantially all of Worldwide's assets determined on a consolidated
basis. As used herein, "Restricted Party" shall mean any of the following
companies or affiliates thereof: CNF Transportation, Inc., Con-Way Services,
Inc., Roadway Express Inc., Yellow Corporation, Arkansas Best Corporation, FedEx
Corporation United Parcel Service, Inc., Consolidated Freightways Corp., Old
Dominion Freight Line, Inc. and Overnight Transportation Company.
9.4. Access to Financial Records. The Parties shall cooperate in a reasonable
manner with each other for a 5 year period after the Closing Date by providing
such access to all financial records of Worldwide and Worldwide UK or related to
the Business relating to periods ended prior to the Closing as may be reasonably
requested from time to time by either Party for financial reporting or tax
purposes including but not limited to access to all accounting books and
records, audit workpapers and tax returns and all related records.
9.5. Use of Capital. Transferee shall cause the net equity specified in Section
4.5, along with any amounts contributed to Worldwide by USF prior to the
Closing, as described in Section 4.1, to be used exclusively to operate and
conduct the Business of the Company or any Permitted Transferee and not for
distributions to the members or shareholders of GPS and I/C Group or any of
their affiliates, other than Permitted Transferees until after December 31,
2003. Beginning December 31, 2002 and ending December 31, 2003, Transferee shall
cause Worldwide and Worldwide UK or their Permitted Transferees to provide USF
with a quarterly compliance statement setting forth the amount of shareholders
equity of Worldwide, Worldwide UK or their Permitted Transferees and a statement
to the effect that no distributions have been made to the members or
shareholders of GPS and I/C Group or any of their affiliates.
9.6. Payment of Trade Payables. Transferee shall cause Worldwide and Worldwide
UK to pay or otherwise satisfy all outstanding trade payables of Worldwide and
Worldwide UK as soon as practicable after the Closing in accordance with
existing trade terms, including but not limited to, obligations to Forward Air
and Kitty Hawk.
9.7. Maintenance of Existing Relationships. Transferee and USF shall maintain
existing relationships between the motor carrier and logistics subsidiaries of
USF and the Company under existing terms.
9.8. Letters of Credit. USF shall continue for a 90 day period from Closing all
Worldwide and Worldwide UK letters of credit and customs clearance bonds
presently in place. Transferee shall cause all letters of credit and custom
clearance bonds listed on Schedule 9.8 to be replaced not later than 90 days
from Closing and shall indemnify and hold USF harmless from any and all amounts
which may be drawn against such letters of credit and custom clearance bonds
pursuant to Section 11.4 hereunder. In the event Transferee shall fail to cause
such letters of credit and custom clearance bonds to be cancelled or replaced
with letters of credit or custom clearance bonds supporting the same obligations
within such 90 day period, Transferee shall establish or cause to be established
a cash collateral account equal to the total amount that can be drawn on such
letters of credit which account shall be assigned to USF as security for
Transferee's obligation to reimburse USF for any amounts drawn against the
letters of credit until all replacement letters are issued.
9.9. Guarantees. The Parties acknowledge that USF has guaranteed certain lease
and other obligations of Worldwide and Worldwide UK including obligations to
Forward Air and Kitty Hawk. Transferee shall undertake to cause USF to be
released from all guarantees listed on Schedule 9.9 as soon as practicable after
the Closing and to indemnify and hold USF harmless from any liability or loss
arising from such guarantees pursuant to Section 11.4 hereunder.
9.10. Obligations to Larry Bauer. Transferee shall undertake to satisfy all
obligations to pay principal and accrued interest under a certain promissory
note payable to Larry Bauer provided that such amount does not exceed $880,209
as of September 28, 2002.
9.11. Put Option.
(a) USF shall grant to Transferee for a period commencing sixty days after the
Closing and ending six months from the Closing the right to put ("Put
Option") its stock interest in, or assets used exclusively in, and the
liabilities related to, (a) the Company's ocean freight forwarding business
formerly known as USF Coast Consolidators Inc. involving traffic originating
in Los Angeles, California and San Francisco, California and destined to
Hawaii, Guam or any other United States possessions in the Pacific Ocean and
(b) the Company's ocean freight forwarding business formerly known as (1) USF
Caribbean Services Inc. involving traffic originating in Jacksonville,
Florida, Newark, New Jersey and Charleston, North Carolina and destined to
Puerto Rico or any other United States possession in the Caribbean and
(2) the CaroTrans or PRE Trans business involving traffic originating in
Puerto Rico and destined to all points in the United States. The exercise
of the Put Option shall be subject to the condition that the business which
is the subject of the Put Option shall be in no worse than substantially the
same condition as the condition of such business at the time of Closing.
Upon the exercise of the Put Option by written notice to USF and subject to
conditions to be agreed upon in documentation (which will be no more
extensive than those contained in this Agreement), USF shall pay the
Transferee $3,000,000 in cash at closing which shall take place as soon as
practicable after such notice.
(b) In the event the Put Option is exercised, USF agrees to the following:
(i) To sublease from Worldwide, one-half of the remaining office and warehouse
space at the San Francisco location which has not been subleased to third
parties at the current rental rate for such remaining space for the remainder of
the existing term. Transferee shall cause Worldwide to cooperate with USF to
accommodate additional space needs at such facilities.
(ii) To sublease from Worldwide, one-half of the remaining office and warehouse
space at the Los Angeles location which has not been subleased to third parties
at the current rental rate for such remaining space for a period of six months
from the date of the exercise of the Put Option. At the end of the six month
period, the sublease shall continue as a month to month lease which shall be
terminable by Worldwide or USF upon thirty days notice.
9.12. Non-Competition. (a) USF hereby agrees that, except as otherwise provided
herein, during the period beginning on the Closing Date and ending on the three
year anniversary of the Closing (the "Non-Competition Period"), it will not,
either directly or indirectly, Participate in any Restricted Business, anywhere
in the world. For purposes of this Agreement, (A) the term "Participate" means
to have any direct or indirect interest, whether as an officer, director,
employee, partner, sole proprietor, agent, representative, independent
contractor, consultant, franchisor, franchisee, creditor, owner or otherwise;
provided, that the term "Participate" shall not include ownership of less than
one percent of a class of stock of a publicly-held corporation which is traded
on a national securities exchange or in the over-the-counter market provided USF
does not have any active participation in the business or management of such
entity; and (B) the term "Restricted Business" means any enterprise, business or
venture engaged in or which p roposes to engage in the air and international
ocean freight forwarding business and custom brokerage business; provided,
however, that nothing herein shall restrict USF from Participating in the ocean
freight forwarding business involving traffic originating in and destined to any
point within the continental United States of America, Alaska, Hawaii, Puerto
Rico or a territory or possession of the United States of America. (b) During
the Non-Competition Period, USF will not solicit any employee or contractor of
Worldwide or Worldwide UK, the Transferee or their affiliates to become an
employee or contractor of USF or any of its subsidiaries or affiliates, except
that in the event Transferee exercises the Put Option, USF shall be entitled to
solicit or cause to be solicited the employees of the business which is the
subject of the Put Option. (c) During the Non-Competition Period, USF will treat
and hold as confidential all of the Confidential Information, and shall refrain
from using or disclosing any of the Confidential Information except (a) to
authorized representatives of USF, or (b) to counsel or other advisers (provided
such advisers other than counsel agree to comply with the confidentiality
provisions of this Section 9.12(c)), unless disclosure is required by law or
order of any governmental authority under color of law. In the event that,
during the Non-Competition Period, USF is requested or required (by oral
question or written request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, USF will notify Transferee
promptly of the request or requirement so that Transferee may seek an
appropriate protective order or waive compliance with the provisions of this
Section 9.12(c). If, in the absence of a protective order or the receipt of a
waiver hereunder, USF is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt, USF
may disclose the Confidential Information to the tribunal; provided, however,
that USF shall, upon the request of Transferee , exert all reasonable efforts to
obtain, at the reasonable request of Transferee, an order or other assurance
that confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Transferee shall reasonably designate.
9.13. Continued Assistance. Following the Closing, USF shall refer to Transferee
as promptly as practicable any telephone calls, letters, orders, notices,
requests, inquiries and other communications relating to the Business,
including, without limitation, any misdirected payments of accounts receivables.
9.14. Credit Facilities. Not later than 120 days from the Closing, Company or
Transferee shall have obtained credit facilities for not less than $10,000,000
from reputable financing sources.
ARTICLE 10.
TAX MATTERS
10.1. Liability for Taxes. USF shall be liable for, and shall indemnify and hold
Transferee, Worldwide and Worldwide UK harmless from and against (i) any income
taxes imposed on or incurred by Worldwide arising out of the inclusion of
Worldwide in the affiliated group of which USF is the common parent, any
predecessor group or any combined, consolidated, unitary or similar group prior
to the Closing Date, and (ii) any income taxes imposed on or incurred by
Worldwide or Worldwide UK for any taxable period ending on or prior to the
Closing Date (or the portion of any such taxes for any taxable period beginning
on or before and ending after the Closing Date which is allocable to the portion
of such period occurring on or before the Closing Date). For purposes of the
preceding sentence, the portion of any income taxes allocable to the period
occurring on or before the Closing Date shall be determined by assuming that
such period constitutes a separate taxable period of Worldwide or Worldwide UK
and by taking i nto account the actual taxable events occurring during such
period.
10.2. Tax Allocation Agreements. Effective as of the Closing, all liabilities
and obligations between Worldwide and Worldwide UK, on the one hand, and USF and
any its affiliates, on the other hand, under any tax indemnity, sharing,
allocation or similar agreement or arrangement in effect prior to the Closing
shall be extinguished in full, and any liabilities or rights existing under any
such agreement or arrangement shall cease to exist and shall no longer be
enforceable.
10.3. Cooperation and Exchange of Information. Each Party will provide the other
with such cooperation and information as they may reasonably request of each
other in preparing or filing any tax return or claim for refund or in conducting
any audit or other proceeding in respect of taxes imposed on the Parties or
their respective affiliates. The Parties will preserve and retain all tax
returns, schedules, work papers and all material records or other documents
relating to any such tax returns, claims, audits or other proceedings until the
expiration of the statutory period of limitations of taxable periods to which
such documents relate and shall make such documentation available to the other
Party upon reasonable notice and at reasonable times. Any information obtained
pursuant to this Section 10.3 shall be kept confidential, except as may be
otherwise necessary in connection with the filing of tax returns or claims for
refund or in conducting any audit or other related proceeding.
10.4. Survival of Obligations. The obligations of the Parties set forth in this
Article 10 shall be unconditional and absolute and shall remain in effect
without limitation as to time.
10.5. Conflict. In the event of a conflict between the provisions of this
Article 10 and any other provisions of this Agreement, the provisions of this
Article 10 shall control.
ARTICLE 11.
SURVIVAL OF WARRANTIES AND INDEMNIFICATION
11.1. Survival All of the representations and warranties of USF contained in
Article 2 hereof shall survive the Closing and shall continue in full force and
effect for a period of: (i) three months with respect to the representations set
forth in Section 2.9 and 2.11; (ii) the applicable statute of limitations with
respect to the representations set forth in Section 2.10 and; (iii) six months
with respect to all other representations set forth in Article 2 (the
"Transferee Indemnification Survival Period"), after which such representations
and warranties shall terminate and have no further force or effect. All of the
representations and warranties of Transferee contained in Article 3 hereof shall
survive the Closing and shall continue in full force and effect for a period of
six months ("the "USF Indemnification Survival Period") All post-Closing
covenants of the Parties contained in Article 9 of this Agreement shall survive
the Closing and shall continue in full force thereafter.
11.2. Indemnification by USF. Subject to Section 11.3, USF shall indemnify,
defend and hold Transferee harmless from and against the entirety of any Adverse
Consequences (as defined below) Transferee may suffer, sustain or become subject
to, through and after the date of the claim for indemnification ("Transferee
Indemnifiable Losses"), directly caused by: (i) any breach or inaccuracy of any
representation or warranty of USF set forth in this Agreement or in the
schedules, exhibits or certificates delivered by USF in connection herewith;
(ii) any nonfulfillment or breach of any covenant or agreement on the part of
USF set forth in this Agreement; and (iii) any liability under Gerald Post v.
USFreightways Corporation (Case No. 02L007414) or any related claim. As used
herein, "Adverse Consequences" shall mean all charges, complaints, actions,
suits, proceedings, hearings, investigations, claims, demands, judgments,
orders, decrees, stipulations, injunctions, damages, penalties, fines, costs,
amounts paid in settlement, liabilities, losses, taxes, expenses and fees and
including all attorneys' fees and court costs.
11.3. Limits on USF Indemnification. The obligation of USF to indemnify
Transferee under Section 11.2 above shall be subject to the following: (a) The
aggregate amount of Transferee Indemnifiable Losses to be paid by USF for a
breach described in Section 11.2(i) hereunder shall not exceed $100,000; and (b)
USF shall have no obligation to indemnify Transferee from and against any
Transferee Indemnifiable Losses under Section 11.2(i) unless Transferee makes a
written claim within the Transferee Indemnification Survival Period with respect
to the breach of which gives rise to Transferee Indemnifiable Losses. USF shall
have no obligation to indemnify Transferee from and against any Transferee
Indemnifiable Losses under Sections 11.2(ii) and 11.2(iii) unless Transferee
makes a written claim with respect to the breach of which gives rise to
Transferee Indemnifiable Losses
11.4. Indemnification by Transferee. Subject to Section 11.5, Transferee shall
indemnify, defend and hold USF harmless from and against the entirety of any
Adverse Consequences USF may suffer, sustain or become subject to, through and
after the date of the claim for indemnification ("USF Indemnifiable Losses"),
directly caused by: (i) any breach or inaccuracy of any representation or
warranty of Transferee set forth in this Agreement, or in the schedules,
exhibits or certificates delivered by it in connection herewith; (ii) any
nonfulfillment or breach of any covenant or agreement on the part of Transferee
set forth in this Agreement; (iii) any claims by an independent facilities
contractor relating to actions or inactions of the Transferee, the Company or
any of its Permitted Transferees whether arising prior to or after the Closing;
or (iv) any claims by third parties to the extent related to actions or
inactions of the Transferee, the Company or any of its Permitted Transferees
after the Closing, includi ng but not limited to (A) any liability under the
WARN Act related to actions or inactions after the Closing or (B) any liability
for severance costs or other amounts associated with the terminations of any
employees or contractors of the Company related to actions or inactions after
the Closing.
11.5. Limits on Transferee's Indemnification. The obligation of Transferee to
indemnify USF under Section 11.4 above shall be subject to the following: (a)
The aggregate amount of USF Indemnifiable Losses to be paid by USF for a breach
described in Section 11.4(i) hereunder shall not exceed $100,000; and (b)
Transferee shall have no obligation to indemnify USF from and against any USF
Indemnifiable Losses under Section 11.4(i) unless USF makes a written claim
within the USF Indemnification Survival Period with respect to the breach of
which gives rise to USF Indemnifiable Losses. Transferee shall have no
obligation to indemnify USF from and against any USF Indemnifiable Losses under
Sections 11.4(ii), 11.4(iii) and 11.4(iv) unless USF makes a written claim with
respect to the breach of which gives rise to USF Indemnifiable Losses.
11.6. Matters Involving Third Parties. (a) If any third party shall notify any
Party (the "Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim by such Indemnified Party for
indemnification against any other Party (the "Indemnifying Party") under this
Agreement, then the Indemnified Party shall notify each Indemnifying Party
thereof promptly; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any liability or obligation hereunder unless (and then
solely to the extent that) the Indemnifying Party is damaged thereby. (b) Any
Indemnifying Party will have the right to assume the defense of the Indemnified
Party against the Third Party Claim with counsel of the Indemnifying Party's
choice, reasonably satisfactory to the Indemnified Party, so long as (i) the
Indemnifying Party notifies the Indemnified Party, within 15 days after the
Indemnified Party has given notice of the Third Party Claim to the Indemnifying
Party (or by such earlier date as may be necessary under applicable procedural
rules in order to file a timely appearance and response) that the Indemnifying
Party is assuming the defense of such Third Party Claim and will indemnify the
Indemnified Party against such Third Party Claim in accordance with the terms
and limitations of this Section 11.6(b), and (ii) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.
Notwithstanding the foregoing, USF shall be entitled to control the defense of
any Third Party Claim brought against USF by an independent facilities
contractor. (c) So long as the conditions set forth in Section 11.6(b) are and
remain satisfied, then (i) the Indemnifying Party may conduct the defense of the
Third-Party Claim in accordance with Section 11.6(b); (ii) the Indemnified Party
may retain separate co-counsel at its sole cost and expense (except that the
Indemnifying Party will be responsible for the fees and expenses of the separate
co-counsel to the extent the Indemnified Party reasonably concludes that the
counsel the Indemnifying Party has selected has an actual or potential conflict
of interest), (iii) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party (not to be
unreasonably withheld, conditioned or delayed), (iv) the Indemnifying Party will
not consent to the entry of any judgment with respect to the matter, or enter
into any settlement, which either imposes an injunction or other equitable
relief upon the Ind emnified Party or does not include a provision whereby the
plaintiff or claimant in the matter releases the Indemnified Party from all
Liability with respect thereto, and (v) the Indemnified Party shall, at the
Indemnifying Party's reasonable request and at the Indemnifying Party's expense,
cooperate in the defense of the matter. In the event that the conditions in
Section 11.6(b) are not satisfied in the case of any Third Party Claim, then the
Indemnified Party may assume control of the defense of such claim; provided
that, except as provided in Section 11.6(d) below, the Indemnified Party may not
enter into any settlement or consent to the entry of any judgment with respect
to the matter without the consent of the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed. (d) If any injunction or other
equitable relief is entered against the Indemnified Party during the course of
any Third Party Claim, if brought during the Survival Period, and such
injunction or equitable relief is not removed within 10 days (an "Indemnified
Party Controlled Claim"), then (i) the Indemnified Party may assume control of
the defense of, and, subject to the provisions of this Section 11.6(d), consent
to the entry of any judgment or enter into any settlement with respect to, such
Indemnified Party Controlled Claim; and (ii) the Indemnifying Parties will
remain responsible in accordance with the terms and limitations of this Section
11.6 for any Transferee Indemnifiable Losses or USF Indemnifiable Losses which
Transferee or USF may suffer arising out of or relating to such Indemnified
Party Controlled Claim. The Indemnified Party may consent to the entry of any
judgment or enter into any settlement of any Indemnified Party Controlled Claim
in any manner it may deem appropriate, and the Indemnify ing Party shall not be
entitled to raise any objection in any other forum or proceeding to the amount
or appropriateness of any such judgment or settlement.
11.7. Set-Off For Pending Claims. As of the time USF becomes required to
indemnify or make any payments to Transferee under any provision of this
Agreement including but not limited to Sections 9.11 and 11.2, in addition to
any other right available to USF hereunder at law or in equity, USF shall,
notwithstanding the foregoing provisions, be entitled to withhold from such
payments an amount equal to (i) the amount of all claims for USF Indemnifiable
Losses which have theretofore been finally resolved against Transferee but have
not been paid and (ii) all amounts arising from Transferee's failure to perform
under Sections 9.2, 9.6, 9.8, 9.9 and 9.10.
ARTICLE 12.
MISCELLANEOUS PROVISIONS
12.1. No Third Party Beneficiaries. This Agreement shall not confer any rights
or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
12.2. Entire Agreement. Except as otherwise specifically provided herein, this
Agreement constitutes the entire agreement between the Parties with respect to
the subject matter hereof and supersedes any prior communications,
understandings, agreements, or documents with regard thereto.
12.3. Succession and Assignment. This Agreement shall be binding upon and inure
to the benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign this Agreement or any of such Party's
rights, interests, or obligations hereunder without the prior written approval
of the other Parties, except for assignments by Transferee to Permitted
Transferees (with notice to USF); provided that, in no event, shall any
assignment relieve Transferee of any liability or obligation hereunder.
12.4. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
12.5. Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given (i) 3 business days after it
is sent by registered or certified mail, return receipt requested, postage
prepaid; (ii) 1 business day after receipt is electronically confirmed, if sent
by fax (provided that a hard copy shall be promptly sent by first class mail);
or (iii) 1 business day following deposit with a recognized national overnight
courier service for next day delivery, charges prepaid, and, in each case,
addressed to the intended recipient as set forth below:
If to Transferee: With a copy to:
GPS Logistics, Inc. McDermott, Will and Emery
175-18 147th Avenue 227 West Monroe Street
Jamaica, New York 11434 Chicago, Illinois 60606
Attn:Paul Fitzpatrick, President Attn:Brooks Gruemmer, Esq.
Fax:718/995-8088 Fax:312/984-7700
And
Seko Worldwide Acquisition LLC Goldberg & Simpson PSC
c/o WJW Enterprises, Inc. 3000 National City Tower
48W375 Immelman Lane 101 South Fifth Street
Hampshire, Illinois 60140 Louisville, Kentucky 40202
Attn:William J. Wascher, President Attn:Steven A. Goodman, Esq.
Fax: 847/683-1917 Fax:502/581-1344
If to USF: And a copy To:
USFreightways Corporation Sachnoff & Weaver, Ltd.
8550 West Bryn Mawr Avenue 30 South Wacker Drive
Suite 700 Suite 2900
Chicago, Illinois 60631 Chicago, Illinois 60606
Attn:Richard C. Pagano,
Senior Vice President, General
Counsel and Secretary Attn:Joel R. Schaider, Esq.
Fax:312/207-6400 Fax:773/824-2200
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is delivered to the individual
for whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
12.6. Governing Law; Exclusive Jurisdiction. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Illinois. The Parties agree that any legal action or proceeding arising out of
or relating to this Agreement shall be instituted in the United States District
Court of the Northern District of Illinois, Eastern Division. Transferee
irrevocably and unconditionally agree to submit to the jurisdiction of such
court in any such action or proceeding and expressly waive any objection
relating to the basis for personal or in rem jurisdiction or to venue which it
now or hereafter has in any such action or proceeding. Transferee agrees that
service of process may be made by mailing a copy of the summons to it at its
address set fort h above or at such other address which Transferee may
subsequently specify to USF by written notice.
12.7. Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by Transferee and
USF. No waiver by any Party of any default, misrepresentation, breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent occurrence of such kind
12.8. Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the invalid or unenforceable term or provision in any other
situation or in any other jurisdiction. If a final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within whic
h the judgment may be appealed.
12.9. Expenses. Except as otherwise explicitly provided in this Agreement, each
of Transferee and USF will bear its own direct and indirect costs and expenses
(including fees and expenses of legal counsel, audit and accounting fees,
investment bankers, brokers or other representatives or consultants) incurred in
connection with the negotiation, preparation and execution of this Agreement and
the transactions contemplated hereby, whether or not such transactions are
consummated. USF will pay any fees and expenses payable to Morgan Stanley & Co.
Incorporated. All legal, accounting and other fees and expenses incurred by the
Company or USF related to the negotiation and execution of this Agreement and
completion of the transactions contemplated by this Agreement will be paid by
USF.
12.10. Construction. The Parties have jointly participated in the negotiation
and drafting of this Agreement. In the event of an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumptions or burdens of proof shall arise
favoring any Party by virtue of the authorship of any of the provisions of this
Agreement. Any reference to any Federal, state, local, or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The Parties intend that each
representation, warranty and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty or covenant
contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not de tract from or mitigate the fact that the Party is in
breach of the first representation, warranty, or covenant. Notwithstanding the
foregoing, in no event shall any party be entitled to "double count" or recover
twice with respect to any matter hereunder. Each defined term used in this
Agreement has a comparable meaning when used in its plural or singular form.
Each gender-specific term used herein has a comparable meaning whether used in a
masculine, feminine or gender-neutral form. The term "include" and its
derivatives shall have the same construction as the phrase "include, without
limitation," and its derivatives. The section headings contained in this
Agreement are inserted for convenience or reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
12.11. Incorporation of Schedules and Exhibits. The schedules and exhibits
attached to this Agreement are incorporated herein by reference and made a part
hereof.
12.12. Enforcement Expenses. In the event of any dispute arising out of the
subject matter of this Agreement, the prevailing Party shall recover, in
addition to any other damages assessed, its reasonable attorneys' fees and costs
incurred in resolving such dispute.
12.13. Directly or Indirectly. Where any provision in this Agreement refers to
any action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether the action in question is
taken by such Person, directly or indirectly, through one or more
intermediaries.
12.14. Time of the Essence. Time shall be of the essence of this Agreement and
of every part hereof.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties hereto have executed this Share Acquisition
Agreement as of the date first above written.
USFREIGHTWAYS CORPORATION
By: /s/ Samuel K. Skinner
_____________________
Name: Samuel K. Skinner
Title: Chairman and Chief Executive Officer
TRANSFEREE:
GPS LOGISTICS, INC.
By: /s/ Paul Fitzpatrick
___________________
Name: Paul Fitzpatrick
Title: President
SEKO WORLDWIDE ACQUISITION LLC
By: William J. Wascher
__________________
Name: William J. Wascher
Title: Manager
Schedule of Exhibits and Schedules
Disclosure Statement
Exhibit A - Transition Services Agreement
Exhibit B - Trademark License Agreement
EXHIBIT 99.1
FOR IMMEDIATE RELEASEFOR FURTHER INFORMATION CONTACT:
WEDNESDAY, OCTOBER 30, 2002 CHRIS ELLIS 773.824.2205
USFreightways Completes Freight Forwarding Agreement
Chicago ... USFreightways Corporation (NASDAQ USFC) announced today that it has
successfully completed the previously announced transaction with GPS Logistics,
LLC and Seko Worldwide Acquisition LLC for the acquisition of USF Worldwide Inc.
and USF Worldwide Logistics (UK) Ltd., USF's freight forwarding subsidiaries.
USFreightways (NASDAQ: USFC) provides comprehensive supply chain management
services, including high-value next-day, regional and national
less-than-truckload (LTL) transportation, logistics, and premium regional and
national truckload transportation. For more information, contact the Company at
www.usfreightways.com.