STOCK PURCHASE AGREEMENT
DATED
AS OF [JUNE 14], 2001
BY AND AMONG
CDL, INC.
NATIONAL EXPRESS COMPANY, INC.
EXECUTIVE EXPRESS, INC.
AND
CHARLES WALCH
FINAL
-----
STOCK PURCHASE AGREEMENT
------------------------
STOCK PURCHASE AGREEMENT ("Agreement"), dated as of June 14, 2001, by
and among CDL, INC. ("CDL" or the "Seller"), NATIONAL EXPRESS COMPANY, INC., a
Missouri corporation ("National" or the "Company"), EXECUTIVE EXPRESS, INC., a
Missouri corporation ("Express" or the "Purchaser") and CHARLES WALCH ("Walch").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, National is duly organized and existing under the laws of the
State of Missouri and is a wholly-owned subsidiary of CDL, a corporation
organized and existing under the laws of the State of Delaware; and
WHEREAS, the Purchaser is a corporation organized and existing under the
laws of the State of Missouri and is majority-owned by Walch; and
WHEREAS, CDL desires to sell and transfer to the Purchaser, and the
Purchaser desires to purchase from CDL, all of the issued and outstanding shares
of the Company's common stock, all as more specifically provided herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties and covenants contained herein, and
intending to be legally bound, the parties hereto hereby agree as follows:
ARTICLE I
Purchase and Sale of Stock
Section 1.1. Purchase and Sale of Stock. Upon the terms and subject to
the conditions of this Agreement and on the basis of the representations,
warranties and agreements contained herein, at the Closing (as defined in
Article II), CDL shall sell, assign, transfer, convey and deliver to the
Purchaser all of the issued and outstanding shares of the common stock of the
Company (collectively, the "Stock"), and the Purchaser shall purchase such
shares from CDL.
Section 1.2. Purchase Price. Prior to adjustment, the total purchase
price to be paid by the Purchaser for the Stock of the Company shall be the sum
of $2,591,000 (subject to certain closing date adjustments described below).
(a) March 31 Balance Sheet and the Spread. CDL has delivered an
unaudited consolidated balance sheet of the Company as of March 31, 2001,
together with supporting schedules of assets and liabilities to Walch (which is
annexed hereto as Exhibit A). The liquid asset value included in the Purchase
Price (the "Spread") is $867,166, which amount is the difference between the
Adjusted Assets and the Assumed Payables as of March 31, 2001. The "Adjusted
Assets" at March 31, 2001 are the sum of lines 2, 3 and 4 of the March 31, 2001
balance sheet. The "Assumed Payables" as of March 31, 2001 are the sum of lines
1 (treated as a positive amount), 14, 17, 19, and 20 (reduced by the interest
accrued on Schedule 10, Line 17) of said balance sheet. At Closing, the Adjusted
Assets and Assumed Payables will be the same line items in the closing balance
sheet which is defined below. If line 1 of the closing balance sheet described
in Section 1.2(b) is a positive number, it will be treated as a negative number
in the calculation of Assumed Payables.
(b) Purchase Price Adjustment. The $2,591,000 purchase price, payable by
the Purchaser, shall be adjusted as follows (as adjusted, the "Purchase Price"):
Within thirty (30) days after Closing, the Seller will deliver a consolidated
balance sheet together with supporting schedules of assets and liabilities of
the Company as of the closing date (the "closing balance sheet") to Walch. The
closing balance sheet and supporting schedules will be prepared consistently
with the format of and the methodology used to prepare the March 31, 2001
balance sheet and supporting schedules. Promptly after delivery of the closing
balance sheet and supporting schedules, Walch and CDL shall determine the
difference between the Adjusted Assets and the Assumed Payables at Closing (the
"Adjustment Value"). The Purchase Price shall be increased, on a
dollar-for-dollar basis, by the amount the Adjustment Value at Closing exceeds
the Spread at March 31, 2001, or decreased, on a dollar-for-dollar basis, by the
amount the Adjustment Value at Closing is less than the Spread at March 31,
2001. No change in the method of reserving for uncollectible receivables will be
made after March 31, 2001. Any prepaid expenses at Closing or at March 31, 2001
that will not inure to the Company's benefit after Closing will be disregarded
in the calculation.
(c) Transfer of Other Assets and Liabilities. The Purchase Price was
computed assuming that the current or liquid assets and the liabilities of the
Company at the Closing Date would be only the Adjusted Assets and the Assumed
Payables. Accordingly, if as of Closing the Company has any current or liquid
assets which are not used in computing the Adjustment Value (such as Line
5--Intercompany receivables--of the March 31 balance sheet), then such current
or liquid assets will be transferred to CDL immediately prior to Closing.
Likewise, if there are any liabilities on the closing balance sheet which are
not Assumed Payables or Retained Liabilities, then CDL shall assume such
liabilities immediately prior to Closing. The foregoing transfers of assets and
liabilities from the Company to CDL are referred to collectively as the
"Preclosing Distributions," and shall be effected pursuant to written
instruments on terms consistent with this Agreement and reasonably satisfactory
to CDL and Purchaser. CDL shall not expressly assume any category or type of
liabilities of the Company that are not reflected on the March 31, 2001 or the
closing balance sheets, but shall be required to indemnify the Purchaser and the
Company with respect to such liabilities to the extent set forth in Article VIII
of this Agreement.
(d) Payment of the Purchase Price and Exchange of Mutual Release. At
Closing, the Purchaser will deliver to CDL the following cash and note:
(i) The Purchaser will deliver by wire transfer to an account
designated by CDL $941,000 in cash;
-2-
(ii) The Purchaser will deliver to CDL a promissory installment term
note of the Purchaser in the principal amount of $1,650,000 with
a 7% interest rate and a maturity date on the fifth anniversary
of the Closing Date. The Purchaser's note will provide for
quarterly installment payments consisting of interest only on
the first two payment dates and level quarterly installments of
principal and interest thereafter using a ten year amortization
schedule. The note will be secured by a collateral pledge of
100% of the Purchaser's stock, executed by each of the holders
identified in Section 5.4, but will not otherwise be guaranteed
by the Purchaser's owners. The Note will be in the form of
Exhibit B annexed hereto.
In addition, at Closing, Walch and CDL will execute and deliver a Mutual
Release in the form of Exhibit C annexed hereto ("Mutual Release"). Payment of
any amounts due pursuant to Section 1.2(b) will be paid in cash within five (5)
Business Days after the Adjustment Value is determined under Section 1.2(b)
above.
Section 1.3 Merger and Sequence of Events. Immediately prior to Closing,
CDL shall cause each of the three subsidiaries of CDL identified on Schedule 4.5
to be merged with and into the Company as the surviving corporation (the
"Merger"), and CDL shall deliver to Purchaser evidence reasonably satisfactory
to Purchaser that such Merger has been completed. The principal actions
contemplated to occur in connection with or immediately prior to Closing under
this Agreement shall be simultaneous and sequenced as follows: First, the
Merger; second, the cessation of the Company's employees' active participation
in the CDL benefit plans as contemplated by Section 6.5; third, the Preclosing
Distributions; and fourth, the sale of the Stock to the Purchaser.
ARTICLE II
Closing
The closing of the transactions contemplated by this Agreement (herein
referred to as the "Closing") shall take place by exchange of facsimile
signature pages or at the offices of CDL at 80 Wesley Street, South Hackensack,
New Jersey 07606 on June 14, 2001, or at such other date as CDL, the Company and
the Purchaser, may mutually agree, which date shall be referred to as the
"Closing Date." The Closing shall be effective as of the close of business on
the Closing Date.
ARTICLE III
Certain Definitions
Section 3.1. Certain Definitions. As used in this Agreement, the
following terms have the respective meanings set forth below.
-3-
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlled" and "controlling" have meanings correlative thereto.
"Agreement" means this Stock Purchase Agreement.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks in New Jersey are open for the general transaction of business.
"Closing" has the meaning ascribed to such term in Article II.
"Closing Date" has the meaning ascribed to such term in Article II.
"Company's Stock" means the issued and outstanding capital stock of
National.
"Contracts" has the meaning ascribed to such term in Section 4.19.
"Damages" has the meaning ascribed to such term in Section 8.2.
"Employee Benefit Plan" has the meaning ascribed to such term in Section
4.16.
"Encumbrances" has the meaning ascribed to such term in Section 4.3.
"Environmental Laws" means any federal, state or local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any Governmental Authority, (x) relating to pollution (or the cleanup thereof or
the filing of information with respect thereto), human health or the protection
of air, surface water, ground water, drinking water supply, land (including land
surface or subsurface), plant and animal life or any other natural resource, or
(y) concerning exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production or
disposal of Regulated Substances, in each case as amended and as now or
hereafter in effect. The term Environmental Law includes, without limitation,
(i) the Comprehensive Environmental Response Compensation and Liability Act of
1980, the Water Pollution Control Act, the Clean Air Act, the Clean Water Act,
the Solid Waste Disposal Act (including the Resource Conservation and Recovery
Act of 1976 and the Hazardous and Solid Waste Amendments of 1984), the Toxic
Substances Control Act, the Insecticide, Fungicide and Rodenticide Act, the
Occupational Safety and Health Act of 1970, each as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Regulated Substance.
-4-
"Financial Statements" has the meaning ascribed to such term in Section
4.8.
"GAAP" means generally accepted accounting principles as in effect in
the United States on the date of this Agreement.
"Governmental Authority" means any national, federal, state, provincial,
county, municipal or local government, foreign or domestic, or the government of
any political subdivision of any of the foregoing, or any entity, authority,
agency, ministry or other similar body exercising executive, legislative,
judicial, regulatory or administrative authority or functions of or pertaining
to government, including any authority or other quasi-governmental entity
established to perform any of such functions.
"Indemnified Party" has the meaning ascribed to such term in Section
8.2.
"Indemnifying Party" has the meaning ascribed to such term in Section
8.2
"Leased Real Property" has the meaning ascribed to such term in Section
4.7.
"Material Adverse Change" means a material adverse change in the
business, financial condition, results of operations or prospects (financial and
other) of the entity.
"Merger" has the meaning ascribed to such term in Section 1.3.
"Person" means an individual, partnership, corporation, joint stock
company, unincorporated organization or association, trust or joint venture, or
a governmental agency or political subdivision thereof.
"Preclosing Distribution" has the meaning ascribed to such term in
Section 1.2(d).
"Proprietary Rights" means all patents, patent registrations, patent
applications, trademarks, service marks, trademark and service mark
registrations and applications therefor, copyrights, copyright registrations,
copyright applications, technology, inventions, computer software, data and
documentation (including electronic media) (other than shrink-wrap or
off-the-shelf software and accompanying data and documents), trade secrets,
know-how, customer lists, processes, other intellectual property and proprietary
information or rights related to or used in the conduct of the Company's
business; and permits, licenses or other agreements to or from third parties
regarding the foregoing.
"Regulated Substances" means pollutants, contaminants, hazardous or
toxic substances, compounds or related materials or chemicals, hazardous
materials, hazardous waste, flammable explosives (including, but not limited to
radon, radioactive materials, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls), medical waste or by-products, petroleum and
petroleum products (including, but not limited to, waste petroleum and petroleum
products) as regulated under applicable Environmental Laws.
-5-
"Retained Liabilities" means the following liabilities of National which
will remain liabilities of National on or after the Closing Date:
(i) Accounts payable reflected on Sch 7 Ln. 10 supporting line 14 of
the closing balance sheet;
(ii) Current Maturities of capitalized leases reflected on Sch 8B
Ln. 16 and Ln. 33 supporting line 17 of the closing balance sheet;
(iii) Account Payroll and Related Liabilities reflected on Sch 10
Ln. 13 supporting line 19 of the closing balance sheet;
(iv) Accrued other expenses (other than interest on Ln. 17 of Sch
10) reflected on Sch 10 Ln. 27 supporting line 20 of the closing
balance sheet;
(v) The Company's executory obligations arising after closing under
(a) the Company's software licenses, (b) the three leases of the
Company's offices in St. Louis, Kansas City and Indianapolis, (c)
the Company's vehicle and equipment leases; and (d) the Company's
contracts with customers and independent contractors;
(vi) The liabilities or obligations for insurance and employee
expenses described in Section 6.5 and Section 6.6 below and any
executory obligations under leases of the type described in Section
6.8 below where the leased property is used by the Company and CDL
or another affiliate of CDL is the lessor;
(vii) amounts due to CDL or its bank if there is negative cash
reflected in Line 1 of the closing balance sheet, which amounts will
be settled in cash in the ordinary course of business promptly after
the Closing.
"Survival Period" has the meaning ascribed to such term in Section 8.1.
"Third Party Claim" has the meaning ascribed to such term in Section
8.3.
Section 3.2. Interpretation. Unless otherwise indicated to the contrary
herein by the context or use thereof: (i) the words, "herein," "hereto,"
"hereof" and words of similar import refer to this Agreement as a whole and not
to any particular Section or paragraph hereof; (ii) words importing the
masculine gender shall also include the feminine and neutral genders, and vice
versa; and (iii) words importing the singular shall also include the plural, and
vice versa.
ARTICLE IV
Representations and Warranties Regarding the Company
-6-
CDL and National, jointly and severally, represent and warrant to the
Purchaser as follows:
Section 4.1. Organization and Qualification of the Company. National is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Missouri, with full corporate power and authority to own or
lease its properties and assets and to carry on its business as presently
conducted. National is duly qualified to transact business, but may not be in
good standing, as a foreign corporation in each state in which failure to
qualify would have a material adverse effect on National, and National has not
received notice from any other jurisdiction asserting that National is required
to be qualified to transact business therein. CDL is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Attached as Schedule 4.1 are true and complete copies of the Company's
Articles of Incorporation and Bylaws and all amendments thereto.
Section 4.2. Authorization. Each of National and CDL has full power and
authority, corporate and other, to execute and deliver this Agreement and to
perform its obligations hereunder, all of which have been duly authorized by all
requisite corporate action. This Agreement has been duly authorized, executed
and delivered by National and CDL and constitutes a valid and binding agreement
of National and CDL, enforceable against them in accordance with its terms.
Section 4.3. Non-contravention. Except as set forth in Schedule 4.3,
neither the execution and delivery of this Agreement nor the performance by
National or CDL of its obligations hereunder will (i) contravene any provision
contained in its Articles of Incorporation or by-laws, (ii) violate or result in
a breach (with or without the lapse of time, the giving of notice or both) of or
constitute a default under (A) any contract, agreement, commitment, indenture,
mortgage, lease, pledge, note, license, permit or other instrument or obligation
or (B) any judgment, order, decree, law, rule or regulation or other restriction
of any Governmental Authority, in each case to which CDL or National is a party
or by which it is bound or to which any of its assets or properties are subject,
(iii) result in the creation or imposition of any lien, claim, charge, mortgage,
pledge, security interest, option, equity, restriction or other encumbrance
(collectively, "Encumbrances") on any of the assets or properties of National if
such Encumbrance would have a material adverse effect on National, or (iv)
result in the acceleration of, or permit any Person to accelerate or declare due
and payable prior to its stated maturity, any liability.
Section 4.4. No Consents. Except as set forth in Schedule 4.4, no notice
to, filing with, or authorization, registration, consent or approval of any
Governmental Authority or other Person is necessary for the execution, delivery
or performance of this Agreement or the consummation of the transactions
contemplated hereby by CDL or National.
Section 4.5. Capitalization and Subsidiaries. (a) The respective
designations and numbers of authorized and issued and outstanding shares and
voting rights of each class of outstanding capital stock of the Company are as
follows: the authorized capital stock of National consists solely of fifty-five
(55) shares of common stock, $1.00 par value of which fifty-five (55)
-7-
shares are issued and outstanding and none are held in treasury. The Company
does not have any shares of its capital stock reserved for issuance and the
Company does not have any outstanding options, warrants, rights, calls or
commitments relating to its capital stock or any outstanding securities or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire from it, any shares of its capital stock. There are
no pre-emptive or other subscription rights with respect to any shares of the
capital stock of the Company and all of the issued and outstanding shares of the
capital stock of the Company have been duly authorized, validly issued, are
fully paid and are nonassessable.
(b) Except for the four wholly-owned subsidiaries of the Company
identified on Schedule 4.5 annexed hereto (which shall be merged into the
Company in the Merger), the Company does not own or control any stock or other
equity interest or participation in any other Person. Unless otherwise disclosed
in a Schedule to this Agreement, all representations and warranties in this
Article IV with respect to the "Company" or "National" are made with respect to
each of such subsidiaries as well, as if the Merger had previously occurred and
the Company had succeeded to the respective assets and liabilities of each of
such subsidiaries by operation of law.
Section 4.6. Personal Property. Except as set forth in Schedule 4.6, as
disclosed in the Financial Statements, or liens for taxes not yet due, the
Company has good and marketable title to (or valid leasehold or contractual
interests in) all personal property used in its business, free and clear of any
Encumbrances, other than Encumbrances securing Retained Liabilities. To CDL's
knowledge, all machinery, equipment, furniture, fixtures and other personal
property of the Company is in good operating condition and fit for operation in
the ordinary course of business (subject to normal wear and tear).
Section 4.7. Real Property. The Company does not own any real property
or real estate. Except as set forth in Schedule 4.7, the Company has valid
leasehold title to all real estate and real property used in its business (the
"Leased Real Property"), free and clear of all Encumbrances, subleases and
rights of occupancy. All plants, structures and buildings leased by of the
Company are in good operating condition and fit for operation in the ordinary
course of business (subject to normal wear and tear). The Company has delivered
to the Purchaser true and complete copies of any leases for the Leased Real
Property. The Company is in compliance with all material terms and conditions of
such leases and is subject to no past due obligations or contingent liabilities
in respect of such leased premises. To the best knowledge of CDL, the landlords
under such leases also are in compliance with the terms and conditions of such
leases. To CDL's knowledge, the Company is not in violation of any building,
zoning, anti-pollution, health, occupational safety or other law, ordinance or
regulation regarding its plants, structures and equipment or their operations,
and all prior violations have been remedied without further liability to the
Company.
Section 4.8. Financial Statements. Attached hereto as Schedule 4.8 is a
true and complete copy of the Company's consolidated unaudited balance sheet and
the related unaudited statements of earnings for the Company's fiscal years
ended December 31, 1999 and December 31, 2000 and for the quarter ended at March
31, 2001 (collectively, the "Financial Statements").
-8-
The Financial Statements have been prepared in conformity with GAAP, applied on
a consistent basis throughout the respective periods and present fairly the
financial condition and results of operations of the Company as of and for the
periods included therein.
Section 4.9. Absence of Certain Developments. Except as set forth in
Schedule 4.9, since March 31, 2001, there has not been any Material Adverse
Change, or any development which could reasonably be expected to result in a
prospective Material Adverse Change. Except as set forth in Schedule 4.9, since
March 31, 2001, the Company has conducted its businesses in the ordinary and
usual course consistent with past practices and has not (i) sold, leased,
transferred or otherwise disposed of any of its assets (other than dispositions
in the ordinary course of business consistent with past practices), (ii)
breached, terminated or amended in any material respect any contract or lease to
which it is a party or to which it is bound or to which its properties are
subject, (iii) amended its Articles of Incorporation or by-laws or taken any
action in contemplation of an amendment to such Articles of Incorporation or
by-laws or in contemplation of its liquidation or dissolution and, to its best
knowledge after due investigation, no such action has been taken by its
shareholders, directors or officers, (iv) repurchased or otherwise acquired any
shares of its capital stock or any option, warrant, right, call or commitment
relating to its capital stock or any outstanding securities or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire from it, any shares of its capital stock, (v) suffered
any material loss, damage or destruction whether or not covered by insurance,
(vi) made any change in the accounting methods or practices it follows, whether
for general financial or tax purposes, (vii) incurred any liabilities (other
than in the ordinary course of business) which, individually or in the
aggregate, are material, (viii) incurred, created or suffered to exist any
Encumbrances on its assets, except those created in the ordinary course of
business, none of which, individually or in the aggregate, are material, (ix)
other than in the ordinary course, increased the compensation payable or to
become payable to any of its officers or employees or increased any bonus,
severance, accrued vacation, insurance, pension or other Employee Benefit Plan,
payment or arrangement made by it for or with any such officers or employees,
(x) suffered any labor dispute, strike or other work stoppage, (xi) made or
obligated itself to make any capital expenditures in excess of $25,000
individually or in the aggregate, (xii) entered into any contract or other
agreement requiring it to make payments in excess of $25,000 per annum,
individually or in the aggregate, other than in the ordinary course of business
consistent with past practices, (xiii) breached or violated any law, statute,
rule or regulation applicable to the Company or its business in any material
respect, (xiv) suffered any Material Adverse Changes in its financial position
or results of operations, (xv) entered into any contract, agreement or
transaction with an Affiliate of CDL, (xvi) except for authorization of the
Preclosing Distributions, declared or paid any dividend or other distribution
with respect to the outstanding stock of the Company, or (xvii) entered into any
agreement to do any of the foregoing.
Section 4.10. Governmental Authorizations; Licenses. The business of
the Company has been operated in material compliance with all applicable laws,
rules, regulations, codes, ordinances, orders, policies and guidelines of all
Governmental Authorities, including but not limited to, those related to:
pricing, sales or distribution of products, antitrust, trade regulation, trade
practices, sanitation, land use and similar laws. The Company has all permits,
-9-
licenses, approvals, certificates, titles, fuel permits, franchises, operating
authorities (including any necessary ICC operating authorities), state operating
licenses or registrations and other interstate or intrastate regulatory licenses
and other authorizations, and has made all notifications, registrations,
certifications and filings with all Governmental Authorities, necessary or
advisable for the operation of the business as currently conducted by the
Company, except for those which, individually or in the aggregate could not
reasonably be expected to result in a material adverse effect on National. There
is no action, case or proceeding pending or, to CDL's knowledge, threatened by
any Governmental Authority with respect to (i) any alleged violation by the
Company of any law, rule, regulation, code, ordinance, order, policy or
guideline of any Governmental Authority, or (ii) any alleged failure by the
Company to have any permit, license, approval, certification or other
authorization required in connection with the operation of the business. No
notice of any violation of such laws has been received by the Company.
Section 4.11. Litigation. Except as set forth in Schedule 4.11, there
are no lawsuits, actions, proceedings, claims, orders or investigations by or
before any Governmental Authority pending or, to the knowledge of CDL,
threatened against the Company or its Affiliates relating to the Company, its
business or any product or service which has been sold by the Company or seeking
to enjoin the transactions contemplated hereby.
Section 4.12. Taxes. All federal, state, county, local and foreign tax
returns and reports of the Company required to be filed have been duly and
timely filed. Except as set forth in Schedule 4.12, There are no examinations in
progress or claims against the Company for federal, state, local and other taxes
(including penalties and interest) for any period or periods and no notice of
any claim for taxes, whether pending or threatened has been received. All
federal, state, county, local, foreign and any other taxes (including all
income, withholding and employment taxes), assessments (including interest and
penalties), fees, interest, penalties and other governmental charges with
respect to the employees, properties, assets, income or franchises of the
Company which are due and payable have been paid or duly provided for, or are
being contested in good faith by appropriate proceedings and adequate reserves
therefor have been established pursuant to GAAP, or have arisen after the date
of the Financial Statements in the ordinary course of business. There are no tax
liens on any of the assets of the Company, except for liens for taxes not yet
due and payable.
Section 4.13 Consolidated Tax Return And Basis. Schedule 4.13 includes a
correct and accurate federal income tax balance sheet of the Company at March
31,2001. Except for immaterial changes attributable to activities after March
31, 2001 and prior to Closing, Schedule 4.13 accurately reflects the tax basis
of the Company's assets and liabilities immediately after Closing except for the
line items on Schedule 4.13 designated Intercompany Receivable, Current
Maturities of long-term debt and Intercompany Payables, which shall be
transferred to and assumed by CDL as part of the Preclosing Distributions.
Section 4.14. Insurance. CDL has provided the Purchaser with information
with respect to insurance policies in effect with respect to the Company or its
business during the past three (3) years, showing, as to each policy or binder,
the carrier, policy number, coverage limits, expiration dates, annual premiums,
deductibles or retention levels and a general description of
-10-
the type of coverage provided. Such insurance policies are currently in full
force and will remain in full force and effect through the Closing.
Section 4.15. Environmental Matters. Except as set forth in Schedule
4.15, (i) the business of the Company is being and has been conducted in
compliance with all Environmental Laws, (ii) the business has, and at all times
has had, all permits, licenses and other approvals and authorizations required
under applicable Environmental Laws for the operation of the business, (iii)
neither the Company nor CDL has received any notice from any Governmental
Authority that the Company may be a potentially responsible party in connection
with any waste disposal site or facility used, directly or indirectly, by or
otherwise related to the business, (iv) no reports have been filed, or have been
required to be filed, by the Company or CDL, concerning the release of any
Regulated Substance or the violation of any Environmental Law, on or at the
properties used in the business; (v) to CDL's knowledge, there have been no
environmental investigations, studies, audits, tests, reviews, or other analyses
conducted by or which are in the possession of the Company relating to the
business or the Leased Real Property, true and complete copies of which have not
been delivered to the Purchaser prior to the date hereof, (vi) no Regulated
Substance has been disposed of, transferred, released, discharged or transported
by or for the Company from the Company's business premises, other than as
permitted under applicable Environmental Law pursuant to appropriate
regulations, permits or authorizations, and (vii) there are no civil, criminal
or administrative actions, suits, demands, claims, hearings, investigations or
other proceedings pending or, to the Company's knowledge, threatened against the
business of the Company with respect to its business or assets relating to any
violations, or alleged violations, of any Environmental Law, and neither the
Company nor CDL has received any notices, demand letters or requests for
information, arising out of, in connection with, or resulting from, a violation,
or alleged violation, of any Environmental Law, and neither the Company nor CDL
has been notified by any Governmental Authority or any other Person that the
Company or its business or assets have, or may have, any liability pursuant to
any Environmental Law.
-11-
Section 4.16. Employee Matters Except as set forth in Schedule 4.16, (i)
the Company has not entered into any collective bargaining agreements regarding
its employees, (ii) there are no written personnel policies applicable to such
employees generally, other than in the employee manuals identified on Schedule
4.16, true and complete copies of which have previously been provided to the
Purchaser, (iii) there is no labor strike, dispute, slowdown or work stoppage or
lockout pending or, to the best knowledge of the Company, threatened against or
affecting the Company and during the past three years there has been no such
action, (iv) to the best knowledge of the Company, no union organization
campaign is in progress with respect to any of the employees, and no question
concerning representation exists respecting such employees, (v) there is no
unfair labor practice, charge or complaint pending or, to the best knowledge of
the Company, threatened against the Company, and (vi) the Company has not
entered into any agreement, arrangement or understanding restricting its ability
to terminate the employment of any or all of its employees at any time, for any
lawful or no reason, without penalty or liability, and (vii) each former
employee of the Company (and his or her qualifying beneficiaries) has timely
received notice of his or her right to COBRA coverage (as defined in Section
6.5(d) below) following his or her qualifying event.
Section 4.17. Employee Benefit Plans. Attached hereto as Schedule 4.17
is a true and complete list of all bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock and stock option plans, all employment
or severance contracts, health and medical insurance plans, life insurance and
disability insurance plans, other material employee benefit plans, contracts or
arrangements which cover employees or former employees of the Company including,
but not limited to, "employee benefit plans" within the meaning of Section 3(3)
of ERISA (the "Employee Benefit Plans"). The Employee Benefit Plans which are
described in Section 3(3) of ERISA (the "ERISA Plans") are in compliance in all
material respects with the applicable provisions of ERISA and, if intended to be
tax qualified, Sections 401(a) and 501(a) of the Code. All ERISA Plans which are
intended to qualify under Section 401(a) of the Code have been submitted to and
approved under Section 401(a) of the Code by the Internal Revenue Service or,
alternatively, the applicable remedial amendment period with respect to any such
ERISA Plan will not have ended prior to the Closing Date. No liability under
Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by
the Company or any of its Affiliates with respect to any ongoing, frozen or
terminated "single-employer plan," within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the single-employer
plan of any entity which is considered one employer with the Company under
Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate"). Except
as set forth in Schedule 4.17, neither the Company nor any of its Affiliates
contributes to, has incurred or expects to incur any withdrawal liability with
respect to a multi-employer plan under Subtitle E of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate).
Section 4.18. Proprietary Rights. (a) The Company owns all right, title
and interest in, or has a valid right to use, any Proprietary Rights necessary
for its business. The transactions contemplated by this Agreement will have no
material adverse effect on the Proprietary Rights. Schedule 4.18 is a true and
complete list of all Proprietary Rights held by the Company under license from a
third party.
-12-
(b) No claim by any third party contesting the validity, enforceability,
use or ownership of any Proprietary Rights has been made, is currently pending
or, to the Company's or CDL's knowledge, is threatened. The Company has not
received any notice of, nor is it aware of any fact which indicates a likelihood
of, any infringement or misappropriation by, or conflict with, any third party
with respect to any of the Proprietary Rights. The Company has not infringed,
misappropriated or otherwise conflicted with any rights of any third parties,
nor is it aware of any infringement, misappropriation or conflict which will
occur as a result of the continued operation of the Company's business as now
conducted.
Section 4.19. Accounts Receivable. All of the accounts receivable of the
Company have arisen in the ordinary and regular course of business, represent
bona fide transactions with third parties and are not subject to any
counterclaims or offsets and have been billed and, to the Company's knowledge,
are collectible in the ordinary course (except for those for which adequate
reserves have been established in accordance with GAAP). No representation is
made as to any accounts receivable owed the Company by CDL or its Affiliates,
which receivables are to be distributed as part of the Preclosing Distributions.
Section 4.20. Contracts.
(a) The Company has provided the Purchaser with true and complete copies
of all contracts (except for usual and ordinary purchase orders executed in the
normal course of business), agreements, leases, commitments, instruments, plans,
permits or licenses, whether written or oral, to which the Company is a party or
is otherwise bound, of the type described below (the "Contracts"), all of which
are listed on Schedule 4.20:
(i) all agreements with or commitments to customers for
the sale by the Company of products or services;
(ii) all agreements or commitments for the purchase by the
Company of services, raw materials, products, machinery, equipment or
other personal property other than those that are for amounts not to
exceed $25,000;
(iii) all capitalized leases, pledges, conditional sale or title
retention agreements, and all agreements pursuant to which any assets of
the Company are subject to an Encumbrance to secure the payment or
performance of an obligation of the Company, CDL or any other third
party;
(iv) all agreements relating to the consignment or lease of
personal property (whether the Company is lessee, sublessee, lessor or
sublessor), other than such agreements that provide for annual payments
of less than $25,000;
(v) all license, royalty or other agreements relating to
the Proprietary Rights;
-13-
(vi) all agreements prohibiting the Company from freely engaging
in the business presently conducted by the Company in any geographic
area or from soliciting the personnel or customers of any third party;
(vii) all agreements to provide rebates to customers of the
Company, to the extent not reflected as a liability on the Financial
Statements;
(viii) to the extent not previously described in clauses (i)
through (vii), all agreements imposing a duty on the Company to maintain
the confidentiality of information obtained from a third party;
(ix) all agreements granting a power of attorney to act
on behalf of the Company to any other person; and
(x) any agreement other than those covered by clauses (i) through
(ix) above involving payment or receipt of more than $50,000 in the
aggregate.
(b) Except as disclosed in materials provided to the Purchaser
and Walch, the Company is not in, nor has given or received notice of, any
default or claimed, purported or alleged default, or facts that, with notice or
lapse of time, or both, would constitute a default (or give rise to a
termination right) on the part of any party in the performance of any obligation
to be performed under any of the Contracts, other than those which will not
result in a material adverse effect on the Company.
Section 4.21. Books and Records. The stock records of the Company
accurately reflect the record ownership of all of the outstanding shares of its
capital stock since December 8, 1998. The other books and records of the Company
since December 8. 1998, including financial records and books of account, are
complete and accurate and have been maintained in accordance with GAAP, to the
extent applicable, and sound business practices. The minute books of the Company
since December 8, 1998 contain complete and accurate records of all meetings of,
or actions taken without a meeting by, the shareholders, the Board of Directors
or any committee of the Company. No meetings of the shareholders or of the Board
of Directors of the Company or any of its committees have been held since
December 8, 1998 for which minutes have not been prepared and are not contained
in its minute books and no action taken by it without a meeting is not
accurately recorded in its minute books.
Section 4.22. Brokers. No Person is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee from the
Company in connection with this Agreement or any of the transactions
contemplated hereby. Neither CDL nor the Company has employed any such agent or
adviser in connection with the transactions contemplated by this Agreement.
Section 4.23. Full Disclosure. No representation or warranty made by CDL
or the Company in this Agreement or any certificate delivered by or on behalf of
the Company pursuant hereto contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading.
-14-
ARTICLE V
Representations and Warranties Regarding the Purchaser and Walch
The Purchaser and Walch, jointly and severally, represent and warrant to
CDL and National, as follows:
Section 5.1. Organization. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Missouri, has full power and authority, corporate and other, to own its property
and assets and to carry on its business as presently conducted.
Section 5.2. Authorization. The Purchaser and Walch have full power and
authority, corporate and other, to execute and deliver this Agreement and to
perform their respective obligations hereunder, all of which have been duly
authorized by all requisite corporate action. This Agreement, has been or, at
the time of delivery will be, duly authorized, executed and delivered by the
Purchaser and Walch and constitute or, at the time of delivery will constitute,
a valid and binding agreement of the Purchaser and Walch, enforceable against
the Purchaser and Walch in accordance with its terms.
Section 5.3. Non-contravention. Neither the Purchaser nor Walch is
subject to any provision of the Purchaser's Articles of Incorporation or by-laws
or any agreement, instrument, law, rule, regulation, order, decree or judgment
of any Governmental Authority or other restriction that would prevent the
consummation of the transactions contemplated by this Agreement.
Section 5.4. Ownership. The only shareholders of the Purchaser are
Charles Walch, The W. Stanley Walch Trust dated December 31, 1993,
Raymond Earlewine and Carter Williams.
Section 5.5. No Consents. No notice to, filing with, or authorization,
registration, consent or approval of any Governmental Authority or other Person
is necessary for the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby by the Purchaser and Walch.
Section 5.6. Brokers. No Person is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee from either
the Purchaser or Walch in connection with this Agreement or any of the
transactions contemplated hereby.
-15-
ARTICLE VI
Covenants and Agreements
Section 6.1. Access and Information. It is acknowledged that Walch is an
officer and employee of National and the Company. Walch shall have no right to
claim any breach or misrepresentation of this Agreement if he has knowledge of
the breach or misrepresentation at the time of execution hereof including (by
way of illustration and not limitation) any knowledge of contracts of the
Company not identified on Schedule 4.16. Notwithstanding the foregoing, however,
regardless of his knowledge of such matters, Walch may assert and maintain a
claim with respect to (a) any failure of the Company to be in good standing in
any jurisdiction in which it engages in business as of the Closing Date, and (b)
any Encumbrance affecting the Adjusted Assets as of the Closing Date.
Section 6.2 Real Estate Leases. (a) Indianapolis Sublease. At the
Closing, National shall sublease to one of CDL's subsidiaries a portion of its
space in Indianapolis, Indiana on the terms set forth on Exhibit D.
(b) St. Louis Property. The Purchaser acknowledges that the Company's
lease in St. Louis is subject to an oral sublease with respect to approximately
5,000 square feet of space to Global Delivery Systems, LLC ("GDS"), the
purchaser of certain assets from a subsidiary of CDL in March 2001. The Purchase
agrees to honor the terms of that oral sublease. The Purchaser and the Company
also agree to assist CDL in enforcing against GDS or its Affiliates any rights
CDL may have under the asset purchase agreement with GDS or otherwise, including
permitting CDL to enforce rights it currently has as sublessor of the St. Louis
property.
Section 6.3. Taxes. The following provisions shall govern the allocation
of responsibility as between CDL on the one hand and the Purchaser and the
Company on the other hand for certain tax matters following the Closing Date:
(a) Tax Periods Ending on or Before the Closing Date. CDL shall prepare
or cause to be prepared and file or cause to be filed all tax returns for the
Company for all periods ending on or prior to the Closing Date which have not
been filed and which were not required to be filed prior to the Closing Date,
including federal and state income tax returns with respect to the period from
January 1, 2001 through June 14, 2001. CDL shall permit the Purchaser to review
and comment on each such tax return described in the preceding sentence prior to
filing.
(b) Tax Periods Beginning Before and Ending After the Closing Date. The
Purchaser shall prepare or cause to be prepared, pay and file or cause to be
filed any tax returns of the Company for tax periods which begin before the
Closing Date and end after the Closing Date. CDL shall pay to the Purchaser
within fifteen (15) days after the date on which taxes are paid with respect to
such periods an amount equal to the portion of such taxes, interest and
penalties which relates to the portion of such taxable period ending on the
closing date, but only to the extent such taxes are not reflected in the
reserves for taxes, interest and penalties shown on the closing balance sheet.
Notwithstanding the foregoing, CDL shall only be responsible for
-16-
penalties and interest to the extent caused by its delay beyond applicable
filing dates, its failure to accurately prepare any return or other document, or
its wrongful acts.
(c) Cooperation on Tax Matters. CDL and the Purchaser shall cooperate
fully, as and to the extent reasonably requested by the other party, in
connection with the filing of tax returns pursuant to this Section and any
audit, litigation or other proceeding with respect to taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder.
(d) Tax Sharing Agreements. All tax sharing agreements or similar
agreements with respect to or involving the Company shall be terminated as of
the Closing Date and, after the Closing Date, the Company shall not be bound
thereby or have any liability thereunder.
(e) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by the
Purchaser when due, and the Purchaser will, at its own expense, file all
necessary tax returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other taxes and fees, and, if
required by applicable law, CDL will, and will cause its affiliates to, join in
the execution of any such tax returns and other documentation.
(f) Consolidated Return Liability. CDL will be responsible for and will
hold the Company harmless from and against any state and Federal income taxes,
together with additions to tax, interest and penalties, attributable to all
periods prior to the closing when the Company was required to be included in
CDL's consolidated Federal income tax returns irrespective of whether such taxes
were attributable to the Company's operations or to allocations to the Company
as a member of CDL's consolidated group, including without limitation the period
from January 1, 2001 through the Closing Date. The provisions of Section 8.6 of
this Agreement do not apply to the indemnification obligation of CDL under this
Section 6.3(f).
Section 6.4. Non-Competition Agreement. For a period of three (3) years
after Closing, CDL and its majority owned subsidiaries will refrain from
directly or indirectly (a) competing with the Business in the St. Louis, Kansas
City or Indianapolis metropolitan areas (within a fifty mile radius of the
center of each metropolitan area), and (b) soliciting for employment any person
who is an employee of the Company or was employed by the Company within six
months before the date of solicitation, except for Randy Cooper. Notwithstanding
clause (a), CDL and its majority owned subsidiaries (i) may continue to perform
the contract of CDL with Avon Products, Inc. and the delivery of Avon products
in Indiana, and (ii) may continue to service its national account customers in
the proscribed territory, provided that CDL has first notified Purchaser in
writing of its customers' service requirements and has offered to Purchaser the
opportunity to service such customers on the same terms as are offered by CDL to
such customers, and Purchaser has declined such offer. At any time during said
three years, at the Purchaser's request CDL will either assign its rights under
non-competition agreements to the
-17-
Purchaser or use its reasonable best efforts, but only at the Purchaser's
expense and direction, to enforce any non-competition agreements it may have
with Terry Bozzay and Randy Cooper.
The foregoing notwithstanding, the covenants set forth in this Section 6.4 shall
terminate and be of no further effect following the date on which the Purchaser
fails to make any payment to CDL under the Note after all allowable grace
periods and resolution of all disputes relating thereto.
Section 6.5. Employees.
(a) At or prior to Closing, CDL shall obtain the voluntary resignations
of Bruce McEwen and Randy Cooper from all positions they hold with the Company,
or shall otherwise cause the employment of such individuals to be terminated by
the Company prior to or as of the Closing Date. CDL shall indemnify, defend and
hold the Company and Purchaser harmless from any and all liability, obligation
and expense, including without limitation accrued vacation pay and severance
pay, arising out of or relating to the employment of such individuals by the
Company or the termination of their employment prior to the Closing. The
provisions of Section 8.6 of this Agreement do not apply to the indemnification
obligation of CDL under this Section 6.5(a).
(b) As of the Closing, all employees who are then employed by the
Company ("Company Employees") shall cease active participation in all employee
benefit plans and arrangements of CDL or its Affiliates. CDL shall indemnify,
defend and hold the Purchaser and the Company harmless from any and all
liabilities due or which may become due to, or in respect of, any Company
Employee under any employment benefit plan or arrangement of CDL or its
Affiliates, whether arising prior to, at or after the Closing, and without
regard to the provisions of Section 8.6 below, except only as provided in the
immediately succeeding sentence of this Section 6.5(b). The Purchaser and the
Company shall indemnify, defend and hold CDL and its Affiliates harmless from
any and all liabilities due or which may become due to, or in respect of, any
Company Employee, and without regard to the provisions of Section 8.6 below, to
the extent such liability arises (i) from occurrences after the Closing
including without limitation termination of his employment by the Company or
Purchaser and/or any reduction effected by the Purchaser or the Company in the
compensation, benefits, terms or conditions of his employment (provided,
however, that no indemnity will be extended with respect to such employees'
rights, if any, under CDL's 401(k) plan), or (ii) occurrences prior to Closing,
provided that the maximum amount for which Purchaser and the Company shall be
liable under this clause (ii) shall not exceed Forty Thousand Dollars ($40,000).
(c) From and after the Closing, the Purchaser shall cause the Company to
credit employees of the Company who are employed as of Closing with all
continuous service with CDL and its Affiliates prior to the Closing for purposes
of eligibility and vesting under all employee benefit plans, programs, policies,
and fringe benefits of the Company in which they become participants on or after
the Closing. With respect to any medical or dental benefit plan in which such
employees of the Company participate after the Closing, Purchaser shall cause
the Company to waive or cause to be waived any waiting periods, pre-existing
condition exclusions and actively-at-work requirements (provided, however, that
no such waiver shall apply to any
-18-
such employee who was, as of the Closing, excluded from participation in the
Company's medical and/or dental plan by virtue of any of such limitations).
(d) From and after the Closing, the Company shall be solely responsible
and liable for providing "COBRA" coverage to all present and former employees of
the Company and their qualifying beneficiaries who experience a "qualifying
event" before, at or after the Closing. For purposes of this paragraph and
Section 4.16, COBRA coverage refers to continued health coverage in accordance
with the provisions of Section 4980B of the Code and Section 601 et seq. of
ERISA and the term "qualifying event" shall have the meaning given such term
under such Sections.
(e) Without limitation of any other provision of this Agreement, the
Company shall remain liable for any earned and unused vacation time of each
employee attributable to service in calendar year 2001, and shall pay such
accrued and unused vacation pay or provide such accrued unused vacation days
following the Closing on the same terms as were in effect under the Company's
vacation policy prior to the Closing. Any such earned and unused vacation time
is not and will not be in the Company's payroll accrual on the Company's balance
sheet as of March 31, 2001 and on the closing balance sheet.
Section 6.6. Insurance.
(a) Insurance Coverage after Closing. The parties hereto agree and
acknowledge that no insurance policy maintained by CDL and its Affiliates
(including the Company) shall be available to or cover the Purchaser or its
assets, properties, operations, employees and liabilities after the Closing Date
(including in respect of any pre-Closing periods), all benefits and coverage
under each such insurance policy shall terminate as of the Effective Time and
none of the Purchaser or any of its Affiliates will seek any recoveries
thereunder for Losses occurring thereafter. As of the Closing Date, the
Purchaser shall be responsible for obtaining and maintaining any and all
insurance policies and coverages in respect of the Company and its assets,
properties, operations, employees and liabilities. Subject to the limitation in
Section 6.6(b), the Company shall be responsible for the payment of all costs
and expenses (including but not limited to settlements, judgments and attorney's
fees) incurred after the Closing Date which arise out of or which relate to any
pending pre-Closing insurance claims of the Company (without regard to the
provisions of Section 8.6 below), and shall reimburse to CDL for any amounts
paid by CDL after Closing with respect to the claims pending on the Closing
Date, and shall pay over to CDL amounts which are refunded to the Company by the
insurer. If the amount of costs and expenses with respect to a pre-Closing
insurance claim exceeds the stop loss cap of the policies in effect on the date
hereof, the Company's liability for such claim shall be limited to such amount
if CDL has coverage under its stop loss policies that will respond to such
claims. By way of example, if in the week before Closing, either (x) one of the
Company's Employees visits a doctor or (y) one of the Company's Employees has an
automobile accident, but the doctor's bill or body shop bill, as the case may
be, has not been paid prior to Closing, such bills shall become the
responsibility and liability of the Company or its insurer. Any such
reimbursement shall be paid by the Company within five (5) business days after
delivery of notice by CDL that such payment was made. The parties hereto further
agree that any and all premiums or deposits paid by CDL and its Affiliates
(including the Company) prior to the
-19-
Closing Date under any insurance maintained by CDL and its Affiliates on behalf
of the Seller shall be for the account of and retained by or paid to CDL. The
foregoing paragraph shall apply to all insurance, including but not limited to
automobile, casualty, medical and dental.
(b) Limitation. The aggregate liability of the Company to pay
pre-Closing insurance claims of the Company under Section 6.6(a) shall not
exceed Forty Thousand Dollars ($40,000). CDL shall indemnify, defend and hold
the Purchaser and the Company harmless from any and all liability, obligation
and expense arising out of or relating to pre-Closing insurance claims after the
Company has incurred aggregate liability therefor of Forty Thousand Dollars
($40,000). The provisions of Section 8.6 of this Agreement do not apply to the
indemnification obligation of CDL under this Section 6.6(b).
(c) Treatment of Certain Pre-Closing Claims. All insurance recoveries in
respect of premiums or other payments made by CDL or Company prior to the
Closing Date shall be for the account of CDL. The Purchaser agrees to hold in
trust for the benefit of the CDL and its Affiliates any insurance recoveries it
obtains that it is not entitled to retain hereunder. CDL shall be entitled to
control all claims under any insurance policies in effect on or prior to the
Closing and the Purchaser shall cooperate with CDL in connection therewith.
Section 6.7 Consents of Others. Each party shall use its reasonable
efforts prior to the Closing to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated
hereby, and to cooperate with the other in connection with the foregoing, to
obtain all authorizations, consents, licenses, permits, approvals and permits
required of them to permit them to consummate the transactions contemplated by
this Agreement; provided that as to consents and financing, the Seller's and the
Purchaser's obligations shall be limited to commercially reasonable efforts.
Section 6.8 Treatment of Leases and Equipment Leases. In the event that
the parties are not able to effect the substitution of the Purchaser for CDL or
any of its Affiliates (other than the Company) and the full release and
discharge of CDL and its Affiliates, with respect to any executory agreements,
real estate lease, the equipment lease or any vehicle lease of the Company (or
used by the Company and intended to be continued for use by the Company after
the Closing) included among the Retained Liabilities, if the Closing occurs, the
Purchaser nonetheless shall assume and be liable for all obligations and other
Liabilities arising under or related to each such agreement or lease. If CDL
remains the lessee of any such leases, the Purchaser shall timely pay all
amounts required to be paid to the lessor under such leases, including payments
due on termination, payments arising in connection with restoration or
disposition of leased equipment and other payments, and shall furnish to CDL
from time to time upon request such documentation as CDL shall reasonably
request to evidence such payments. The Purchaser and the Company shall indemnify
CDL for any failure to make a payment required hereunder or assumed by the
Purchaser. The Purchaser and CDL shall provide each other with information
regarding any material communications with any obligee under any Lease or
Equipment Lease, including any communications relating to the condition or
disposition of any equipment and the obligations of any party upon termination
of any Lease or Equipment Lease. CDL shall not
-20-
amend, extend, terminate or otherwise modify any Lease or Equipment Lease
without the prior written consent of the Purchaser, which may be withheld for
any reason or no reason.
Section 6.9 Financial Statements and Information. So long as any portion
of the Note remains unpaid, Purchaser shall furnish to CDL on a semiannual basis
the consolidated balance sheet and consolidated statements of income and cash
flows of Purchaser for each of its fiscal years and the first six months of each
fiscal year, such financial statements to be delivered within ten (10) business
days after completion thereof, but no later than the date sixty (60) days after
the end of each six month period. In addition, so long as any portion of the
Note remains unpaid, the Purchaser shall furnish such additional financial
information relating to the Purchaser or the Company as CDL shall reasonably
request from time to time.
Section 6.10. Best Efforts; Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto shall use its best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement. Each of the Purchaser, National and CDL will use their
respective best efforts to obtain consents of all Governmental Authorities and
third parties necessary to the consummation of the transactions contemplated by
this Agreement. The Company and the Purchaser shall use their respective
reasonable best efforts to assist CDL in connection with the fulfillment of any
SEC disclosure, reporting or other governmental compliance obligation of CDL,
including without limitation providing CDL with any financial and other
information requested by CDL. In the event that at any time after Closing any
further action is necessary to carry out the purposes of this Agreement, the
Company and the Purchaser shall take all such reasonable action without any
further consideration therefor.
ARTICLE VII
Closing Deliveries
Section 7.1. Mutual Conditions. The respective obligations of each party
to consummate the transactions contemplated by this Agreement shall be subject
to the fulfillment at or prior to Closing of the conditions that (A) no
Governmental Authority of competent jurisdiction shall have (i) enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order which is in effect; or (ii) commenced or
threatened any action or proceeding, which in either case would prohibit
consummation of the transactions contemplated by this Agreement, and (B) no
action or proceeding before a court or any other governmental agency or body
shall have been instituted or threatened to restrain or prohibit the
transactions contemplated by this Agreement.
Section 7.2. Deliveries by CDL and National. The obligations of the
Purchaser and Walch to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment prior to or at Closing of each of
the following conditions:
-21-
(a) All representations and warranties made by National and CDL,
respectively, in this Agreement and the Schedules hereto shall be true, correct
and complete on the date hereof and as of the Closing Date as though such
representations and warranties were made as of the Closing Date, and National
and CDL shall have duly performed or complied with all of the covenants,
obligations and conditions to be performed or complied with by them,
respectively, under the terms of this Agreement on or prior to or at Closing.
(b) There shall have been no (i) Material Adverse Change, or any
development which could reasonably be expected to result in a prospective
Material Adverse Change, or (ii) material damage, destruction or loss to, or any
other material and adverse change in, the assets or the business of the Company,
regardless of insurance coverage.
(c) [INTENTIONALLY OMITTED.]
(d) CDL shall have delivered to the Purchaser the certificates
representing the Stock, duly endorsed for transfer in blank, along with the
other items referred to in Article II.
(e) Prior to or at the Closing, National and CDL shall have delivered
such other closing documents as shall be requested by the Purchaser and Walch in
form and substance reasonably acceptable to counsel for the Purchaser and Walch,
including the following:
(i) a certificate of the Secretary or Assistant Secretary of
National and CDL, dated the Closing Date, as to the incumbency of any
officer of National and CDL executing this Agreement or any document
related thereto and covering such other matters as the Purchaser may
reasonably request; and
(ii) a certified copy of the resolutions of the Board of
Directors of CDL authorizing the execution, delivery and consummation of
this Agreement and the transactions contemplated hereby;
(iii) copies of all resolutions, instruments and other documents
giving effect or relating to the Merger and the Preclosing
Distributions;
(iv) duly executed releases, termination statements and other
instruments of satisfaction (or payoff letters satisfactory to Purchaser
which commit to deliver the same) as shall be appropriate to discharge
all Encumbrances, other than Encumbrances securing Retained Liabilities,
with respect to the assets of the Company as of Closing;
(v) the Mutual Release contemplated by Section 1.2(d) and the
Sublease contemplated by Section 6.2(a); and
(vi) such other documents or instruments as Purchaser or Walch
reasonably request to effect the transactions contemplated hereby.
-22-
Section 7.3. Deliveries by the Purchaser and Walch. The obligations of
CDL and National to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment at or prior to the Closing of each of the
following conditions:
(a) All representations and warranties made by the Purchaser and Walch,
respectively, in this Agreement shall be true, correct and complete on the date
hereof and as of the Closing Date as though such representations and warranties
were made as of the Closing Date, and the Purchaser and Walch shall have duly
performed or complied with all of their respective covenants, obligations and
conditions to be performed or complied with by them, respectively, under the
terms of this Agreement on or prior to or at the Closing.
(b) [INTENTIONALLY OMITTED.]
(c) CDL shall have received consents to the consummation of this
transaction from each of its lenders whose consent is required for the effective
transfer of the Stock free and clear of Encumbrances.
(d) Prior to or at the Closing, the Purchaser and Walch shall have
delivered to CDL and National such closing documents as shall be reasonably
requested by CDL and National in form and substance reasonably acceptable to his
counsel, including the following:
(i) a certificate of the Secretary or Assistant Secretary of the
Purchaser, dated the Closing Date, as to the incumbency of any officer
thereof executing this Agreement or any document related thereto and
covering such other matters as CDL and National may reasonably request;
(ii) a certified copy of the resolutions of the Board of
Directors of the Purchaser, authorizing the execution, delivery and
consummation of this Agreement and the transactions contemplated hereby
and thereby;
(iii) the Note and cash payments to be delivered at the Closing
as provided in Section 1.2 hereof;
(iv) the Mutual Release contemplated by Section 1.2(d) and the
Sublease contemplated by Section 6.2(a);
(v) a stock pledge agreement and the stock certificates
representing the shares of the Purchaser with stock powers endorsed in
blank; and
(vi) such other documents or instruments as CDL or National
reasonably request to effect the transactions contemplated hereby.
-23-
ARTICLE VIII
Survival of Representations and Warranties; Indemnification
Section 8.1. Survival of Representations and Warranties. Except as set
forth below, the representations and warranties provided for in this Agreement
shall survive the Closing for two (2) years from the Closing Date for the
benefit of the parties hereto and their successors and assigns. The
representations and warranties provided for in Sections 4.12, 4.13, 4.15 and
4.17 and the indemnities in Section 8.2(a)(iii) and (iv) shall survive the
Closing and remain in full force and effect for six (6) years, or, if less, the
period of the applicable statute of limitations within which a claim must be
asserted against the indemnified party with respect to the matters in those
Sections. The survival period of each representation or warranty as provided in
this Section 8.1 is hereinafter referred to as the "Survival Period."
Section 8.2. Indemnification.
(a) CDL shall indemnify and hold harmless the Purchaser and its
Affiliates, agents and representatives, and any Person claiming by or through
any of them, against and in respect of any and all claims, costs, expenses,
damages, liabilities, losses or deficiencies (including, without limitation,
counsel's fees and other costs and expenses incident to any suit, action or
proceeding or to enforcing the provisions of this Article VIII) (the "Damages")
arising out of, resulting from or incurred in connection with:
(i) any inaccuracy in any representation or the breach
of any warranty made by CDL or National for the applicable
Survival Period,
(ii) the breach of any covenant or agreement of CDL or
National to be performed prior to Closing hereunder,
(iii) any liability of National to Terry Bozzay and/or
Randy Cooper (and their respective heirs and other successors in
interest) with respect to any transactions, actions or omissions
of National occurring prior to Closing, including without
limitation (A) matters respecting their employment with CDL or
any Affiliate (including National), (B) certain notes payable to
such individuals in the face amount of $718,293 (to Bozzay) and $
122,707 (to Cooper), and (C) claims that may be asserted by
reason of the sale of the Stock to Purchaser or the other
transactions contemplated by this Agreement; and
(iv) any liability or obligation of National of any kind
or description, known or unknown, which either (A) exists as of
Closing or (B) arises after Closing, to the extent such liability
or obligation is attributable to events occurring or
circumstances existing as of or prior to Closing; but excluding
only the Retained Liabilities.
-24-
Notwithstanding that the representations and warranties of CDL and National are
made jointly under this Agreement, following the Closing CDL shall not have, and
CDL hereby irrevocably waives, any claim against National from and after the
Closing for contribution with respect to Damages that may arise from such
representations and warranties, it being understood that National shall have no
liability with respect to such representations and warranties after the Closing.
(b) The Purchaser and the Company, jointly and severally, shall
indemnify and hold harmless CDL and its Affiliates, agents and representatives,
and any Person claiming by or through any of them, against and in respect of any
and all Damages arising out of, resulting from or incurred in connection with
(i) any inaccuracy in any representation or the breach of any warranty made by
the Purchaser or Walch in this Agreement for the applicable Survival Period,
(ii) the breach by the Purchaser or Walch of any covenant or agreement to be
performed by either of them prior to Closing hereunder, and (iii) the Retained
Liabilities.
(c) Any Person providing indemnification pursuant to the provisions of
this Section 8.2 is hereinafter referred to as an "Indemnifying Party," and any
Person entitled to be indemnified pursuant to the provisions of this Section 8.2
is hereinafter referred to as an "Indemnified Party."
Section 8.3. Procedures for Third Party Claims. In the case of any claim
for indemnification arising from a claim of a third party (a "Third Party
Claim"), an Indemnified Party shall give prompt written notice to the
Indemnifying Party of any claim or demand which such Indemnified Party has
knowledge and as to which it may request indemnification hereunder. The
Indemnifying Party shall have the right to defend and to direct the defense
against any such Third Party Claim, in its name or in the name of the
Indemnified Party, as the case may be, at the expense of the Indemnifying Party,
and with counsel selected by the Indemnifying Party except where (i) such Third
Party Claim seeks an order, injunction or other equitable relief against the
Indemnified Party and it is reasonably necessary for the Indemnified Party to
utilize its own counsel either due to time demands or the mature of the relief
sought, or (ii) counsel for the Indemnified Party shall have reasonably
concluded that there is an actual conflict of interest arising from the counsel
chosen by the Indemnifying Party representing the Indemnified Party in the
conduct of the defense of such Third Party Claim. Notwithstanding anything in
this Agreement to the contrary, the Indemnified Party shall, at the expense of
the Indemnifying Party, cooperate with the Indemnifying Party, and keep the
Indemnifying Party fully informed, in the defense of such Third Party Claim. The
Indemnified Party shall have the right to participate in the defense of any
Third Party Claim with counsel employed at its own expense; provided, however,
that, in the case of any Third Party Claim described in clause (i) or (ii) of
the second preceding sentence or as to which the Indemnifying Party shall not in
fact have employed counsel to assume the timely defense of such Third Party
Claim, the reasonable fees and disbursements of the Indemnified Party's counsel
shall be at the expense of the Indemnifying Party. The Indemnifying Party shall
have no indemnification obligations with respect to any Third Party Claim which
shall be settled by the Indemnified Party without the prior written consent of
the Indemnifying Party, which consent shall not be unreasonably withheld or
delayed.
-25-
Section 8.4. Procedures for Inter-Party Claims. In the event that an
Indemnified Party determines that it has a claim for Damages against an
Indemnifying Party hereunder (other than as a result of a Third Party Claim),
the Indemnified Party shall give prompt written notice thereof to the
Indemnifying Party, specifying the amount of such claim and any relevant facts
and circumstances relating thereto. The Indemnified Party shall provide the
Indemnifying Party with reasonable access to its books and records for the
purpose of allowing the Indemnifying Party a reasonable opportunity to verify
any such claim for Damages. The Indemnified Party and the Indemnifying Party
shall negotiate in good faith regarding the resolution of any disputed claims
for Damages. Promptly following the final determination of the amount of any
Damages claimed by the Indemnified Party, the Indemnifying Party shall pay such
Damages to the Indemnified Party by wire transfer or check made payable to the
order of the Indemnified Party, without interest.
Section 8.5. Other Recovery. All amounts of Damages for which a Person
otherwise may be entitled to indemnification under this Agreement shall be
subject to reduction by any insurance or other monetary recovery received by the
Indemnified Party as a result of the event giving rise to an indemnity claim, so
that the Indemnified Party's recovery from all sources does not exceed the
amount of Damages for which indemnification is provided hereunder.
Section 8.6. Limitations. (a) No claim may be made for indemnification
for Damages arising from a breach of a representation or warranty in this
Agreement unless such claim is first asserted in writing before the expiration
of the applicable Survival Period. Claims for indemnification asserted prior to
the end of the Survival Period shall survive until final resolution thereof.
(b) No claim for indemnification shall be made under this Article
VIII unless the aggregate amount of all Damages exceeds $25,000 (the "Basket"),
and thereafter only for the amount of Damages in excess of $25,000.
(c) The aggregate liability of CDL under this Article VIII for
all claims made for indemnification shall be limited to a maximum aggregate
liability of $500,000.
(d) The limitations of paragraphs (b) and (c) above shall
not apply to:
(i) claims by Purchaser or National for Damages under
clause (iii) of Section 8.2(a), and claims by Purchaser for
Damages arising from breaches of the representations and
warranties in Sections 4.12, 4.13, 4.15 and 4.17; or
(ii) claims by CDL for Damages under clause (iii) of
Section 8.2(b).
(e) The parties shall make appropriate adjustments for current
tax benefits actually realized by an Indemnified Party in determining Damages
for purposes of this Article VIII.
(f) If, during the term of the Note, the Purchaser or the Company
incurs Damages which are indemnifiable under this Agreement, and if the
Indemnifying Party has not
-26-
paid such Damages within ten (10) days after demand therefor, then in addition
to any other remedy to enforce the terms of this Agreement, the Purchaser shall
be entitled to offset the amount of such Damages against the Note, and Purchaser
shall notify CDL in writing of the fact of such offset. Any offset shall be
taken (a) first, against the next succeeding principal installments under the
Note as a reduction of the Purchase Price, effective as of such time as the
Purchaser or the Company has incurred the Damages in question, and interest
shall thereafter accrue on the principal amount as so reduced, and (b) second,
against accrued and unpaid interest on the Note. In cases where the Company is
the party that sustains the Damages for which indemnification is claimed, the
Purchaser shall be entitled to be the Indemnified Party and to exercise the
rights in this paragraph (f) with respect to such Damages, and CDL shall not be
entitled to assert, and hereby waives, any defense that might be available to
CDL if the Company were the Indemnified Party (including but not limited to any
defense that public policy limits the ability of the Company to recover such
Damages).
(g) The parties acknowledge and agree that the enforcement of the
foregoing indemnification provision in this Article VIII shall be the exclusive
remedy of the Purchaser and its Affiliates with respect to CDL following the
Closing for any misrepresentation, breach of warranty, breach of contract or
other claim arising out of the sale of the Stock contemplated by this Agreement,
except for claims for injunctive relief and specific performance of an
obligation not involving the payment of money.
ARTICLE IX
Miscellaneous
Section 9.1. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile or sent by certified, registered or express air mail, postage prepaid,
and shall be deemed given when so delivered personally, or by facsimile, or if
mailed, five days after the date of mailing, as follows:
If to National or CDL: 80 Wesley Street
South Hackensack, New Jersey 07606
Telephone:(201) 487-7740
Facsimile:(201) 489-6974
Attention: Mark Carlesimo, Esq., General Counsel
With a copy to: Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068
Telephone:(973) 597-2500
Facsimile:(973) 597-2400
Attention: Alan Wovsaniker, Esq.
-27-
If to the Shareholders: Charles Walch
312 Planthurst Road
St. Louis, Missouri 63119
With a copy to: Thompson Coburn LLP
One Firstar Plaza
St. Louis, Missouri 63101
Telephone: 314-552-6000
Facsimile: 314-552-7000
Attention: W. Stanley Walch, Esq.
or to such other address as any party hereto shall notify the other parties
hereto (as provided above) from time to time.
Section 9.2. Expenses. Regardless of whether the transactions provided
for in this Agreement are consummated, except as otherwise provided herein, the
Purchaser and CDL shall each pay its own expenses incident to this Agreement and
the transactions contemplated herein. Notwithstanding the foregoing, the Company
shall pay the Company's expenses to the extent such expenses are reflected on
the Company's Closing Date balance sheet.
Section 9.3. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New Jersey,
without reference to the choice of law principles thereof.
Section 9.4. Assignment; Successors and Assigns; No Third Party Rights.
Except as otherwise provided herein, this Agreement may not be assigned as of or
prior to Closing, by operation of law or otherwise, and any attempted assignment
shall be null and void. After the Closing, any party may assign its rights under
this Agreement to any Person, provided that such assignment shall not relieve
the assigning party from the due and timely performance of its obligations
hereunder. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns and legal
representatives. This Agreement shall be for the sole benefit of the parties to
this Agreement and their respective successors, assigns and legal
representatives and is not intended, nor shall be construed, to give any Person,
other than the parties hereto and their respective successors, assigns and legal
representatives, any legal or equitable right, remedy or claim hereunder.
Section 9.5. Counterparts; Facsimile. This Agreement may be executed in
counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument. This agreement may
be executed by facsimile signature.
Section 9.6. Titles and Headings. The headings and table of contents in
this Agreement are for reference purposes only, and shall not in any way affect
the meaning or interpretation of this Agreement.
-28-
Section 9.7. Entire Agreement. This Agreement, including the Schedules
and Exhibits attached thereto, constitutes the entire agreement among the
parties with respect to the matters covered hereby and supersedes all previous
written, oral or implied understandings among them with respect to such matters.
Section 9.8. Amendment and Modification. This Agreement may only be
amended or modified in writing signed by the party against whom enforcement of
such amendment or modification is sought.
Section 9.9. Public Announcement. Except as may be required by law,
neither the Company, the Purchaser or CDL, shall issue any press release or
otherwise publicly disclose this Agreement or the transactions contemplated
hereby or any dealings between or among the parties in connection with the
subject matter hereof without the prior approval of the other; provided,
however, that the Purchaser recognizes that CDL may be required to issue a press
release promptly after the Closing and shall not delay such release. In the
event that any such press release or other public disclosure shall be required,
the party required to issue such release or other disclosure shall consult in
good faith with the other party hereto with respect to the form and substance of
such release or other disclosure prior to the public dissemination thereof.
Section 9.10. Waiver. Any of the terms or conditions of this Agreement
may be waived at any time by the party or parties entitled to the benefit
thereof, but only by a writing signed by the party or parties waiving such terms
or conditions.
Section 9.11. Severability. The invalidity of any portion hereof shall
not affect the validity, force or effect of the remaining portions hereof. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, such restriction shall be enforced to
the maximum extent permitted by law.
Section 9.12. No Strict Construction. Each of the parties to this
Agreement acknowledge that this Agreement has been prepared jointly by the
parties hereto, and shall not be strictly construed against any party.
[The balance of this page has been left blank intentionally]
-29-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
--------------------------------
CHARLES WALCH
EXECUTIVE EXPRESS, INC.
By:
------------------------------
Charles Walch, President
NATIONAL EXPRESS COMPANY, INC.
By:
------------------------------
Name:
Title:
CDL, INC.
By:
------------------------------
Name:
Title:
Exhibits
Exhibit A March 31, 2001 Balance Sheet and form of closing balance sheet
Exhibit B Form of Purchaser's Note to CDL
Exhibit C Mutual Release
Exhibit D Indianapolis Sublease
-i-