Exhibit 10.1
ASSET Purchase AGREEMENT
Dated
FEBRUARY 27, 2004
By and Among
Cd&L, Inc.,
SILVER STAR EXPRESS, INC. (a subsidiary of CD&L, INC.),
EXECUTIVE EXPRESS, INC., d/b/a 1st CHOICE COURIER AND DISTRIBUTION INC.
AND
CHARLES WALCH
ASSET PURCHASE AGREEMENT
This ASSET Purchase AGREEMENT (the "Agreement"), dated as of February
27, 2004, by and among CD&L, INC. ("CDL"), SILVER STAR EXPRESS, INC., a
wholly-owned subsidiary of CDL (the "Purchaser"), EXECUTIVE EXPRESS, Inc., d/b/a
1st CHOICE COURIER AND DISTRIBUTION, INC. ("1st Choice" or the "Seller") and
Charles WalCh ("Walch").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, CDL is a corporation organized and existing under the laws of
the State of Delaware; and
WHEREAS, Purchaser is a corporation organized and existing under the
laws of the State of Florida and a wholly-owned subsidiary of CDL;
WHEREAS, Seller is a corporation organized and existing under the laws
of the State of Missouri and is wholly-owned by Walch; and
WHEREAS, Seller desires to sell and transfer to the Purchaser, and the
Purchaser desires to purchase from the Seller, certain assets of Seller's
Indianapolis, Indiana branch (the "Indiana Branch"), 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 Assets
Section 1.1. Purchase and Sale of Assets. 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), the Seller shall sell, assign, transfer, convey and deliver to the
Purchaser all of the Seller's right, title and interest in and to the Purchased
Assets and the Purchaser shall purchase such Purchased Assets from the Seller.
Purchaser is not purchasing any of the Retained Assets. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN THIS AGREEMENT WITH RESPECT TO THE ASSUMED LIABILITIES,
THE PURCHASER IS NOT ASSUMING, NOR SHALL IT IN ANY MANNER BECOME LIABLE FOR, ANY
LIABILITIES OR OBLIGATIONS OF ANY KIND OR NATURE WHATSOEVER OF THE SELLER OR ITS
AFFILIATES, INCLUDING BUT NOT LIMITED TO THE EXCLUDED LIABILITIES.
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Section 1.2. Purchase Price. The aggregate purchase price (the
"Purchase Price") to be delivered at Closing by CDL and the Purchaser for the
Purchased Assets shall consist of (i) the reduction by one half of the accrued
interest from December 14, 2003 through the Closing Date on the promissory note
(the "Note") payable by Seller to CDL, dated June 14, 2001 in the original
aggregate principal amount of $1,650,000 and (ii) the cancellation by CDL of the
principal balance of $1,626,708 currently due on such Note.
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 March 1, 2004 or at such other date as the parties may
mutually agree, which date shall be referred to as the "Closing Date". The
Closing shall be effective as of 9:00 a.m. 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.
"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 Asset Purchase Agreement.
"Assumed Liabilities" means only those liabilities and obligations of
the Indiana Branch and/or the Seller arising after the Closing Date under (i)
the real estate lease for the building occupied by the Indiana Branch at 1911
Stout Field East Drive, Indianapolis, Indiana 46241, Indianapolis, Indiana and
(ii) the lease of one straight truck identified as follows: VIN
#VG6M116A6YB203782.
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"Authorizations" has the meaning ascribed to such term in Section 4.10.
"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.
"Contracts" has the meaning ascribed to such term in Section 4.18.
"Damages" has the meaning ascribed to such term in Section 8.2.
"EBITDA" means earnings before interest, taxes, depreciation and
amortization, calculated in accordance with GAAP.
"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.
"Excluded Liabilities" means all liabilities of the Indiana Branch
and/or Seller and any other Affiliate of Seller of any kind or nature, whether
or not relating to the business of the Indiana Branch or the Purchased Assets,
and whether known or unknown, absolute, accrued, contingent or otherwise, or
whether due or to become due, arising out of events or transactions or facts
occurring on, prior to, or after the Closing Date, other than the other than the
Assumed Liabilities.
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"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
4.6.
"Material Adverse Change" means a material adverse change in the
business, financial condition, results of operations or prospects (financial and
other) of the entity.
"Material Adverse Effect" means a material adverse effect on the
business, financial condition or results of operations of the entity. Any matter
or matters which in the aggregate involve $10,000 or more shall presumptively be
deemed to be material.
"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.
"Proprietary Rights" means all patents, patent registrations, patent
applications, trademarks, service marks, trademark and service mark
registrations and applications therefore, 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 business of the
Indiana Branch; and permits, licenses or other agreements to or from third
parties regarding the foregoing.
"Purchased Assets" means the following assets of the Indiana Branch on
the Closing Date:
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(i) all furniture, fixtures, leasehold improvements, computer
equipment, software, software licenses (to the extent
transferable), radio and communication equipment, rolling
stock, warehouse equipment, supplies and any other
miscellaneous assets used by or located at the Indiana
Branch (to the extent transferable);
(ii) all equipment and delivery vehicles used at the Indiana
Branch, as further described on Schedule 3.1 (except that
one leased straight truck, identified as 1911 Stout Field
East Drive, Indianapolis, Indiana 46241 (the "Retained
Truck"), is to be retained by Seller, and no liability for
such truck will be assumed by Purchaser, Seller shall
remove all decals from the other leased truck prior to
delivery, with the parties dividing certain other costs of
transfer);
(iii) any prepaid insurance and other prepaid expenses of the
Indiana Branch which can be utilized by the Purchaser and
cannot be refunded to the Seller;
(iv) all books and records (or copies thereof) pertaining to
the business of the Indiana Branch, including customer
lists, personnel and independent contractor records,
contracts with customers, financial records, insurance and
workers compensation histories and advertising or
promotional materials;
(v) all executory rights under the lease for the Indiana
Branch's offices in Indianapolis, all leasehold
improvements, the security deposit, and the equipment
leases used in the Indiana Branch's business;
(vi) all telephone numbers, e-mail addresses or the like used
by the Indiana Branch;
(vii) all customer lists of the Seller relating to customers
serviced by the Indiana Branch; all of the Indiana
Branch's rights, if assignable, under customer contracts
and contracts with independent contractors, relating to
the Indiana Branch's business; and
(viii) all goodwill and going concern value associated with the
Indiana Branch's business.
"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.
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"Retained Assets" means the following assets of the Indiana Branch:
(i) all accounts, notes and other receivables of the Indiana
Branch representing actual revenue earned in the ordinary course of business
prior to Closing; and
(ii) the Retained Truck.
"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 Seller and Walch
The Seller and Walch, jointly and severally, represent and warrant to
the Purchaser and CDL as follows:
Section 4.1. Organization and Qualification of the Seller and the
Indiana Branch. The Seller 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. The Seller is duly qualified to do business
as a foreign corporation in Indiana. The Indiana Branch is an unincorporated
division or branch of Seller's business wholly-owned by Seller.
Section 4.2. Authorization. Each of the Seller and Walch has full power
and authority, corporate (in the case of the Seller) 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 on the part of
Seller. This Agreement has been duly authorized, executed and delivered by the
Seller and Walch and constitutes a valid and binding agreement of the Seller and
Walch, enforceable against them in accordance with its terms.
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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 the
Seller or Walch of its or his 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 the Seller, the
Indiana Branch or Walch is a party or by which any of them is bound or to which
any of their assets or properties are subject, (iii) result in the creation or
imposition of any lien, claim, charge, mortgage, pledge, security interest,
equity, restriction or other encumbrance (collectively, "Encumbrances") on any
of the assets or properties of the Indiana Branch or Seller if such Encumbrance
would have a Material Adverse Effect, 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 the Seller or Walch.
Section 4.5. Personal Property. Except as set forth in Schedule 4.5, as
disclosed in the Financial Statements, or liens for taxes not yet due, the
Seller has good and marketable title to (or valid leasehold or contractual
interests in) all personal property used in the Indiana Branch's business, free
and clear of any Encumbrances. To Seller's and Walch's knowledge, all machinery,
equipment, furniture, fixtures and other personal property of the Indiana Branch
is in good operating condition and fit for operation in the ordinary course of
business (subject to normal wear and tear). The Seller has delivered to the
Purchaser true and complete copies of all leases for the leased personal
property. The Seller and the Indiana Branch are in compliance with all material
terms and conditions of such leases and are subject to no past due obligations
or contingent liabilities in respect of such leases.
Section 4.6. Real Property. The Seller does not own any real property
or real estate used in connection with the Indiana Branch. The Seller has valid
leasehold title to all real estate and real property used in the Indiana
Branch's business, located at 1911 Stout Field East Drive, Indianapolis, Indiana
46241, Indianapolis, Indiana (the "Leased Real Property"), which interest is
free and clear of all Encumbrances. All plants, structures and buildings leased
by of the Indiana Branch are in good operating condition and fit for operation
in the ordinary course of business (subject to normal wear and tear). The Seller
has delivered to the Purchaser true and complete copies of any leases for the
leased personal property. The Seller has delivered to the Purchaser true and
complete copies of any leases for the Leased Real Property. The Seller and the
Indiana Branch are in compliance with all material terms and conditions of such
leases and are subject to no past due obligations or contingent liabilities in
respect of such leases. To the Seller's and Walch's knowledge, the landlord
under such leases also is in compliance with the terms and conditions of such
lease and the Seller and the Indiana Branch are 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. The landlord has consented to the assignment of the lease for the
Leased Real Property to the Purchaser.
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Section 4.7. Financial Statements.
(a) The Seller has previously delivered to the Purchaser and CDL a true
and complete copy of an unaudited balance sheet and the related unaudited
statements of earnings and cash flows for the year ended December 14, 2003 for
each of (i) the Seller on a consolidated basis and (ii) the Indiana Branch
separately (collectively, the "December 14 Financial Statements"). The December
14 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 Seller and the Indiana
Branch as of and for the periods included therein.
(b) The Seller will, prior to Closing, deliver to the Purchase a CDL a
true and complete copy of the unaudited balance sheet and the related unaudited
statements of earning and cash flows for the four weeks ended January 11, 2004
for each of (i) the Seller on a consolidated basis and (ii) the Indiana Branch
separately (collectively "the January 11 Financial Statements"). The January 11
Financial Statements that Seller will deliver to the Purchaser and CDL hereunder
and pursuant to Section 6.2 hereof will be prepared in conformity with GAAP,
applied on a consistent basis throughout the respective periods and will present
fairly the financial condition and results of operations of the Seller and the
Indiana Branch as of and for the periods included therein.
(c) The EBITDA of the Indiana Branch for each of the years ending
December 14, 2003 and December 15, 2002 was not less than $325,000, and the
Seller has no reason to believe there will be any material decline in the EBITDA
of the Indiana Branch in 2004.
Section 4.8. Absence of Certain Developments. Except as set forth in
materials previously delivered to the Purchaser and CDL, since December 14,
2003, 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 materials previously delivered to the Purchaser and CDL,
since December 14, 2003, the Seller and the Indiana Branch have conducted their
businesses in the ordinary and usual course consistent with past practices and
have not (i) sold, leased, transferred or otherwise disposed of the Indiana
Branch's 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
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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 $10,000
individually or in the aggregate, (xii) entered into any contract or other
agreement requiring it to make payments in excess of $10,000 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 Indiana Branch or its business in any
material respect, (xiv) suffered any Material Adverse Changes in its financial
position or results of operations, or (xv) entered into any agreement to do any
of the foregoing.
Section 4.9. Governmental Authorizations; Licenses. Except as set forth
in Schedule 4.9, the business of the Indiana Branch 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 Indiana Branch and/or Seller have all permits, 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 of the Indiana Branch as currently conducted by the
Seller and the Indiana Branch, except for those which, individually or in the
aggregate could not reasonably be expected to result in a Material Adverse
Effect. There is no action, case or proceeding pending or, to Seller's or
Walch's knowledge, threatened by any Governmental Authority with respect to (i)
any alleged violation by the Seller or the Indiana Branch of any law, rule,
regulation, code, ordinance, order, policy or guideline of any Governmental
Authority, or (ii) any alleged failure by the Seller or the Indiana Branch 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 Seller or the Indiana Branch.
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Section 4.10. Litigation. Except as set forth in Schedule 4.10, there
are no lawsuits, actions, proceedings, claims, orders or investigations by or
before any Governmental Authority pending or, to Seller's or Walch's knowledge,
threatened against the Seller, the Indiana Branch or their Affiliates relating
to the Seller, the Indiana Branch or their businesses or any product or service
which has been sold by the Seller or the Indiana Branch or seeking to enjoin the
transactions contemplated hereby.
Section 4.11. Taxes. All federal, state, county, local and foreign tax
returns and reports of the Seller required to be filed have been duly and timely
filed. There are no examinations in progress or claims against the Seller 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 Seller 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 therefore have been established pursuant to
GAAP, or have arisen after the date hereof in the ordinary course of business.
There are no tax liens on any of the assets of the Seller, except for liens for
taxes not yet due and payable.
Section 4.12. Insurance. The Seller has provided the Purchaser with
information with respect to insurance policies in effect with respect to the
Indiana Branch 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 the type of coverage provided. Such insurance policies are
currently in full force and have remained in full force and effect through the
Closing. Seller will terminate its insurance coverage with respect to the
operations of the Indiana Branch and the Purchased Assets as of the Closing
Date, retaining coverage for events or occurrences on or prior to the Closing
Date.
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Section 4.13. Environmental Matters. Except as set forth in Schedule
4.13, (i) the businesses of the Seller and the Indiana Branch are being and have
been conducted in compliance with all Environmental Laws, (ii) the businesses of
the Seller and the Indiana Branch have, and at all times have had, all permits,
licenses and other approvals and authorizations required under applicable
Environmental Laws for the operation of their businesses, (iii) neither the
Seller nor the Indiana Branch has received any notice from any Governmental
Authority that the Seller or the Indiana Branch 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 Seller or the Indiana Branch,
concerning the release of any Regulated Substance or the violation of any
Environmental Law, on or at the properties used in the business; (v) there have
been no environmental investigations, studies, audits, tests, reviews, or other
analyses conducted by or which are in the possession of the Seller or the
Indiana Branch relating to their businesses, true and complete copies of which
have not been delivered to the Purchaser and CDL prior to the date hereof, (vi)
no Regulated Substance has been disposed of, transferred, released, discharged
or transported by or for the Seller or the Indiana Branch from any of the
Seller's business premises (including the Indiana Branch's 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 Seller's or the Indiana Branch's knowledge,
threatened against the businesses of the Seller or the Indiana Branch with
respect to their businesses or assets relating to any violations, or alleged
violations, of any Environmental Law, and neither the Seller nor the Indiana
Branch 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 Seller nor the Indiana
Branch has been notified by any Governmental Authority or any other Person that
the Seller's or Indiana Branch's businesses or assets have, or may have, any
liability pursuant to any Environmental Law.
Section 4.14. Employee Matters Except as set forth in materials
previously delivered to the Purchaser and CDL, (i) the Seller and the Indiana
Branch have not entered into any collective bargaining agreements regarding the
employees of the Indiana Branch, (ii) there are no written personnel policies
applicable to such employees generally, other than employee manuals, true and
complete copies of which have previously been provided to the Purchaser and CDL,
(iii) there is no labor strike, dispute, slowdown or work stoppage or lockout
pending or, to the Seller's or Walch's knowledge, threatened against or
affecting the Indiana Branch and during the past three years there has been no
such action, (iv) to the Seller's or Walch's knowledge, no union organization
campaign is in progress with respect to any of the employees of the Indiana
Branch, and no question concerning representation exists respecting such
employees, (v) there is no unfair labor practice, charge or complaint pending
or, to the Seller's or Walch's knowledge, threatened against the Indiana Branch,
and (vi) the Seller and the Indiana Branch have not entered into any agreement,
arrangement or understanding restricting the ability of the Seller and the
Indiana Branch to terminate the employment of any or all of the employees of the
Indiana Branch at any time, for any lawful or no reason, without penalty or
liability.
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Section 4.15. Employee Benefit Plans. The Seller has provided the
Purchaser and CDL with a 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 Indiana Branch
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 Seller, the Indiana Branch or any of their 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 Seller under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). Except as set forth in materials previously delivered to
the Purchaser and CDL, neither the Seller, the Indiana Branch nor any of their
Affiliates have incurred or expect 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 4.16. Proprietary Rights. (a) The Seller owns and possesses no
Proprietary Rights necessary or useful in the business of the Indiana Branch
other than its customer lists, computer software and computer licenses. The
customer lists and software will be transferred to the Purchaser pursuant to
this Agreement and the licenses will be transferred upon request if the licensor
consents. The transactions contemplated by this Agreement will have no material
adverse effect on the Seller's right, title and interest in such Proprietary
Rights, which will be effectively transferred to the Purchaser.
(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 Seller's or Walch's knowledge, is threatened.
Neither the Seller nor the Indiana Branch 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. Neither the Seller nor the Indiana Branch has infringed,
misappropriated or otherwise conflicted with any rights of any third parties,
and neither the Seller nor the Indiana Branch is aware of any infringement,
misappropriation or conflict which will occur as a result of the continued
operation of the Indiana Branch's business as now conducted.
Section 4.17. Contracts.
(a) The Seller has provided the Purchaser and CDL with all information
CDL has requested concerning 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 Seller or the Indiana Branch is a party or is otherwise bound, of
the type described below, relating to the Indiana Branch (the "Contracts"):
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(i) all agreements with or commitments to customers for the
sale by the Seller or the Indiana Branch of products or services of the
Indiana Branch;
(ii) all agreements or commitments for the purchase by the
Seller or the Indiana Branch of services, raw materials, products,
machinery, equipment or other personal property other than those that
are for amounts not to exceed $10,000, relating to the business of the
Indiana Branch;
(iii) all capitalized leases, pledges, conditional sale or
title retention agreements relating to the Indiana Branch;
(iv) all agreements relating to the consignment or lease of
personal property (whether the Seller or the Indiana Branch is lessee,
sublessee, lessor or sublessor), other than such agreements that
provide for annual payments of less than $25,000, relating to the
Indiana Branch;
(v) all license, royalty or other agreements relating to the
Proprietary Rights;
(vi) all agreements prohibiting the Seller or the Indiana
Branch from freely engaging in the business presently conducted by the
Indiana Branch in any geographic area;
(vii) all agreements to provide rebates to customers of the
Indiana Branch's business, to the extent not reflected as a liability
on the Financial Statements; and
(viii) any agreement other than those covered by clauses (i)
through (viii) above involving payment or receipt of more than $25,000
in the aggregate, relating to the Indiana Branch.
(b) Except as disclosed in materials provided to the Purchaser and CDL,
neither the Seller nor the Indiana Branch is 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 Indiana Branch.
Section 4.18. Books and Records. The books and records of the Seller
and the Indiana Branch pertaining to the Purchased Assets, including financial
books and records, are complete and accurate and have been maintained in
accordance with GAAP, to the extent applicable, and sound business practices.
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Section 4.19. 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
Seller or the Indiana Branch in connection with this Agreement or any of the
transactions contemplated hereby. Neither the Seller nor the Indiana Branch has
employed any broker or agent in connection with the transactions contemplated by
this Agreement.
Section 4.20. Full Disclosure. No representation or warranty made by
the Seller or Walch in this Agreement or any certificate delivered by or on
behalf of the Seller or the Indiana Branch 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.
ARTICLE V
Representations and Warranties Regarding the Purchaser and CDL
The Purchaser and CDL represent and warrant to the Seller and Walch 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
Florida, has full power and authority, corporate and other, to own its property
and assets and to carry on businesses as presently conducted. The Purchaser is a
wholly owned subsidiary of CDL. CDL is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has full
power and authority, corporate and other, to own its property and assets and to
carry on businesses as presently conducted.
Section 5.2. Authorization. The Purchaser and CDL 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 CDL and constitute or, at the time of delivery will constitute, a
valid and binding agreement of the Purchaser and CDL, enforceable against the
Purchaser and CDL in accordance with its terms.
Section 5.3. Non-contravention. Neither the Purchaser nor CDL is
subject to any provision of their respective Certificates 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. 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 CDL.
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Section 5.5. 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 CDL in connection with this Agreement or any of the
transactions contemplated hereby.
ARTICLE VI
Covenants and Agreements
Section 6.1. Due Diligence Review; Access to Information. During the
period from the date hereof through the Closing Date, Purchaser and CDL will
conduct a due diligence review of the Indiana Branch and the financial and legal
condition thereof, as the Purchaser and CDL deem necessary or advisable. The
Seller and Walch will cooperate with Purchaser and CDL and promptly furnish to
them all documents and other information requested by them relating to the
Indiana Branch and its business. In furtherance of the foregoing, but not in
limitation thereof, the Seller shall permit the Purchaser and CDL and their
respective authorized agents and representatives, or cause them to be permitted,
to have full and complete access to the Seller's premises, books and records,
including any physical inspection of the Seller's assets and facilities, upon
reasonable notice during regular business hours and shall furnish such financial
and operating data, projections, forecasts, business plans, strategic plans and
other data relating to the Indiana Branch as the Purchaser or CDL or the
authorized agents and representations of either of them shall request from time
to time. The Seller and Walch will make employees and officers of Seller and the
Indiana Branch (including Walch) available to Purchaser and CDL and their
representatives during reasonable business hours upon reasonable notice by
Purchaser and CDL to answer questions and provide information about the Indiana
Branch and its business. Purchaser and CDL shall have the absolute and
unfettered right to terminate this Agreement at any time prior to the Closing
Date, in their sole discretion, by written notice to the Seller and Walch, for
any reason or no reason as a result of such due diligence review. In the event
of such termination, none of the parties shall have any obligation to the
others, and each party shall be responsible for its own expenses.
If the transactions contemplated hereby are consummated, no
investigation by the Purchaser or CDL heretofore or hereafter made shall modify
or otherwise affect any representations and warranties of the Seller, which
shall survive any such investigation, or the conditions to the obligation of the
Purchaser and CDL to consummate the transactions contemplated hereby.
Section 6.2. February 2004 Financial Statements. On or before February
26, 2004, Seller will deliver to the Purchaser and CDL a true and complete copy
of the unaudited balance sheet and the related unaudited statements of earnings
and cash flows for the four week period ended February 8, 2004 for each of
Seller on a consolidated basis and the Indiana Branch separately (collectively,
the "February Financial Statements").
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Section 6.3. Affirmative Covenants. Prior to Closing, except as
otherwise expressly provided herein, the Seller shall:
(a) conduct the Business only in the ordinary and regular course of
business consistent with past practices;
(b) keep in full force and effect its corporate existence and all
material rights, franchises, Proprietary Rights and goodwill relating or
obtaining to the Business;
(c) endeavor to preserve its present relationships with customers,
suppliers, contractors and distributors and perform all of its material
obligations under agreements relating to or affecting the customers on the
Customer List or the Purchased Assets;
(d) maintain the Proprietary Rights so as not to affect adversely the
validity or enforcement thereof, maintain the other Purchased Assets in
customary repair, order and condition and maintain insurance reasonably
comparable to that in effect on the date of this Agreement; and in the event of
any casualty, loss or damage to any of the Purchased Assets, either repair or
replace such assets with assets of comparable quality or transfer consideration
to the Purchaser at Closing equal to the full repair cost or replacement value
of such assets;
(e) maintain the books, accounts and records related to the Business in
accordance with GAAP, to the extent applicable, consistent with past practices;
(f) use its best efforts to obtain all authorizations, consents,
waivers, approvals or other actions necessary or desirable to consummate the
transactions contemplated hereby and to cause the other conditions to the
Purchaser's and CDL's obligation to close to be satisfied; and
(g) promptly inform the Purchaser and CDL in writing of any material
breach of or change in the representations and warranties contained in Article
III hereof.
Section 6.4. Negative Covenants. Prior to the Closing, without the
prior written consent of the Purchaser and CDL or as otherwise expressly
provided herein, the Seller will not:
(a) enter into any contract, agreement or commitment or take any other
action which, if entered into or taken prior to the date of this Agreement,
would cause any representation or warranty of the Seller or the Principal to be
untrue or be required to be disclosed on one or more Schedules referred to in
Article III; and
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(b) take or omit to be taken any action, or permit its Affiliates to
take or to omit to take any action, which could reasonably be expected to result
in a Material Adverse Change.
Section 6.5. Transfer and Property Taxes. (a) The Seller and Purchaser
shall each pay any transfer, sales, purchase, use or similar tax they are each
primarily obligated to pay under the laws of any Governmental Authority arising
out of or resulting from the purchase of the Purchased Assets.
(b) The Seller and Walch shall (i) prepare and file all tax returns
reporting the income attributable to the Purchased Assets or the operation of
the business of the Indiana Branch for all periods ending prior to or on the
Closing Date, (ii) prepare and file all income tax returns reporting the income
of the Seller arising on the Closing Date from the sale to the Purchaser of the
Purchased Assets, (iii) be responsible for the conduct of all tax examinations
relating to the tax returns referred to in (i) and (ii) above, and (iv) pay all
taxes attributable to the Purchased Assets or the operation of the business of
the Indiana Branch due with respect to the tax returns referred to in (i) and
(ii) above. The Purchaser and CDL shall prepare and file all tax returns
reporting the income attributable to the ownership of the Purchased Assets and
the operation of the business of the Indiana Branch for all periods beginning
after the Closing and shall be liable for and pay all taxes due in respect of
such tax returns.
(c) All personal property, motor vehicle (including road use) and ad
valorem taxes, if any, and all other taxes, charges or assessments levied or
imposed upon the Purchased Assets by any Governmental Authority, for the taxable
year beginning before and ending on or after the Closing Date shall be
apportioned and pro rated on a per diem basis between the Purchaser and the
Seller as of 11:59 p.m. on the day before the Closing Date (the "Adjustment
Time"). The Seller shall pay or cause to be paid, on or prior to the Closing
Date (or promptly when due, if due after the Closing Date), all taxes and any
other taxes and assessments against the Purchased Assets for all taxable periods
ending prior to the Closing Date. The Purchaser shall pay all other taxes and
assessments against the Purchased Assets for all periods beginning on or after
the Closing Date.
Section 6.6. Non-Competition and Confidentiality Agreement; Referrals
to Purchaser.
(a) For a period of five (5) years after the Closing Date, Walch and
the Seller for themselves or on behalf of or in conjunction with any other
Affiliate, Person, Persons, company, partnership, corporation or business of
whatever nature, will not directly or indirectly:
(i) engage in any business selling any products or services in
competition with the Purchaser or CDL or any of the subsidiaries of
either thereof, in the State of Indiana (the "Territory");
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(ii) use or permit the use of the name "First Choice" for delivery
services in the Territory;
(iii) without first obtaining permission from an officer of CDL,
call upon any person who is, at that time, an employee of the
Purchaser or CDL (including the subsidiaries of either thereof) in
a managerial capacity for the purpose or with the intent of
enticing such employee away from or out of the employ of the
Purchaser or CDL;
(iv) call upon any person or entity which was a customer of the
Indiana Branch in the 18 month period preceding the Closing, for
the purpose of soliciting or selling products or services in direct
competition with the Purchaser or CDL; or
(v) use for its own benefit or divulge or convey to any third
party, any Confidential Information (as hereinafter defined)
relating to the Business. For purposes of this Agreement,
Confidential Information consists of all information, knowledge or
data relating to the Business including, without limitation,
customer and supplier lists, formulae, trade know-how, processes,
secrets, consultant contracts, pricing information, marketing
plans, product development plans, business acquisition plans and
all other information relating to the operation of the Business not
in the public domain or otherwise publicly available. Information
which enters the public domain or is publicly available loses its
confidential status hereunder so long as the Shareholder or the
Seller does not directly or indirectly cause such information to
enter the public domain.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Walch from acquiring, as an investment, not more than one percent (1%)
of the capital stock of a competing business whose stock is traded on a national
securities exchange or over-the-counter.
(b) Whenever during the first five years after Closing, Seller's
customers or prospective customers located outside of Indiana are in need of
delivery, freight or warehouse services in Indiana, Seller will offer Purchaser
or CDL a right of first refusal to act as its agent or subcontractor to perform
such work upon terms and conditions no less favorable than those offered by any
unrelated third party to perform such delivery, freight, or warehouse services..
If CDL or Purchaser refuses such work, Seller shall have the right to engage any
other third party to perform such work.
(c) Notwithstanding the foregoing, (i) if on occasion from time to time
a customer of the Seller requests it to deliver freight or a package from a
location outside of Indiana to a location inside Indiana (or vice versa), Seller
may request permission to do so from Purchaser, which request may not be
unreasonably denied by Purchaser and (ii) if Seller on occasion from time to
time seeks to solicit a customer located in a city in Indiana bordering on a
state served by Seller, which city is not regularly served by Seller, it may do
so, but only with Purchaser's prior written permission which may be withheld or
granted in Purchaser's sole discretion.
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(d) Walch and the Seller acknowledge that the restrictions contained
in this Section 6.6 are reasonable and necessary to protect the legitimate
interests of the Purchaser and CDL and that any breach by any of the Shareholder
or the Seller of any provision hereof will result in irreparable injury to the
Purchaser and CDL. The Seller and Walch acknowledge that, in addition to all
remedies available at law, the Purchaser and CDL shall be entitled to equitable
relief, including injunctive relief, and an equitable accounting of all
earnings, profits or other benefits arising from such breach and shall be
entitled to receive such other damages, direct or consequential, as may be
appropriate. Neither the Purchaser nor CDL shall be required to post any bond or
other security in connection with any proceeding to enforce this Section 5.3.
(e) It is specifically agreed that the five (5) year period stated at
the beginning of this Section 6.6, during which the agreements and covenants of
Walch and the Seller shall be effective, shall be computed by excluding from
such period any time during which either Walch or the Seller is in violation of
any provision of this Section 6.6.
(f) All of the covenants on this Section 6.6 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim of Seller or Walch against Purchaser or CDL shall not
constitute a defense to the enforcement of such covenants.
(g) The prior covenants in favor of Seller and related parties pursuant
to the provisions of Section 6.4 of the Stock Purchase Agreement dated as of
June 14, 2001 by and among CDL, National Express Company, Inc., Seller and
Walch, are hereby terminated.
Section 6.7. Employees.
(a) Purchaser shall have the right but not the obligation, (a) to offer
employment to any employee of the Indiana Branch ("Indiana Branch Employee")
after Closing and (b) to engage any independent contractors currently working
for the Indiana Branch ("Indiana Branch IC") on terms to be determined by the
Purchaser. The Seller shall terminate any such employees to be hired by
Purchaser immediately prior to their employment by the Purchaser and Seller
remain solely responsible for all amounts due to such employees through the
termination date.
(b) The Seller and Walch shall indemnify, defend and hold CDL and the
Purchaser harmless from any and all liabilities due or which may become due to,
or in respect of, any Indiana Branch Employee or Indiana IC, whether arising
prior to, at or after the Closing, including but not limited to any liability
arising from or related to the termination of employment by the Seller of any
Indiana Branch Employee or Indiana IC and/or any reduction in the compensation,
benefits, terms or conditions of any Indiana Branch Employee's employment,
except that the Purchaser shall be liable for obligations due to those Indiana
Branch Employees or Indiana IC's that it actually engages but then only for
obligations arising solely from services performed for Purchaser and after the
Closing Date.
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(c) Effective upon the Closing, the Seller shall be solely responsible
and liable for providing "COBRA" coverage to all Indiana Branch Employees and
their qualifying beneficiaries who experience a "qualifying event" on or prior
to the Closing and for providing (or continuing to provide) COBRA coverage with
respect to any former employee of the Seller and their qualifying beneficiaries
who experience or experienced a "qualifying event" before, on or after the
Closing. For purposes of this paragraph, 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.
(d) Any and all liabilities of Seller and the Indiana Branch due to any
current or former employee or independent contractor of Seller or the Indiana
Branch accruing through and including the Closing Date, including but not
limited to accruals for severance, relating to vacation time or pay, and medical
and disability benefits shall remain the obligations and liabilities of Seller
after the Closing. Seller shall satisfy all such liabilities and fully indemnify
CD&L and Purchaser for any and all claims by employees or independent
contractors of Seller arising from events, acts or omissions through the Closing
Date. Notwithstanding the foregoing, Purchaser will assume and be responsible
for any accrued vacation pay earned after December 31, 2003 and prior to Closing
by any employees of Seller's Indiana Branch who become employees of Purchaser or
CDL after the Closing.
Section 6.8. 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 6.9. 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 Seller 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 Seller and Walch 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 Seller and the Purchaser shall
take all such reasonable action without any further consideration therefor
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Section 6.10. Payments under Note. The parties acknowledge and agree
that the amount outstanding under the Note as of the date hereof is $1,626,708
in principal plus interest accrued after December 14, 2003, the December 14,
2003 interest payment having been paid in full. One-half of the accrued interest
in the amount of$15,657.06 for the period from December 15, 2003 to Closing if
Closing is as of March 1, 2004) shall be paid in cash by Seller to CDL in full
at the Closing.
Section 6.11. Commission Payments. CDL shall pay the Seller for (i) the
period beginning on the Closing Date and ending on the day immediately prior to
the first anniversary of the Closing Date (the "First Period"), (ii) the period
beginning on the first anniversary of the Closing Date and ending on the day
immediately prior to the second anniversary of the Closing Date (the "Second
Period"), and (iii) the period beginning on the second anniversary of the
Closing Date and ending on the day immediately prior to the third anniversary of
the Closing Date (the "Third Period" and, collectively with the First Period and
the Second Period, the "Periods"), an amount in cash equal to 3% (with respect
to the First Period), 2% (with respect to the Second Period) and 2% (with
respect to the Third Period) of the net revenues (the "Revenues") collected by
Purchaser for services performed by Purchaser during each of the First Period,
the Second Period and the Third Period, respectively, for the customers listed
on Exhibit 6.11 attached hereto (the "Customers"). Such payments will be made
monthly in arrears after such Revenues are collected by Purchaser.
Notwithstanding the foregoing, the maximum amounts payable by Purchaser pursuant
to this Section 6.11 shall not exceed $100,000 for the First Period, $75,000 for
the Second Period and $75,000 for the Third Period. No collections received more
than 90 days after the end of the Third Period will be the basis for any
payments hereunder. Each payment made by Purchaser hereunder shall be
accompanied by a certificate from Purchaser's Chief Financial Officer which sets
forth how the amount of such payment was calculated. If the Seller objects to
any such calculation, it shall notify Purchaser of its objections within five
(5) business days of receipt of such payment and calculation. If the Seller so
objects, Purchaser and the Seller shall use their best efforts to resolve such
objections. If Purchaser and Seller cannot resolve the matter within ten (10)
days after Purchaser's receipt of Seller's objections, then the matter will be
submitted to and determined by a mutually acceptable accounting firm, whose
determination as to the amount of such payment shall be final and binding on the
parties. Any adjustment to a payment that that must be made as a result of the
accountants' determination or an agreement among the parties shall be made
within ten (10) days of such determination or agreement. The fees and expenses
of the accountants incurred in resolving disputed payments shall be paid one
half by Purchaser and one half by the Seller.
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Notwithstanding the foregoing, if Walch or Seller violate the covenants
of Section 6.6, CDL and Purchaser shall have no further obligation to pay
commissions hereunder.
Section 6.12. Additional Assistance.
(a) From the date hereof until the Closing Date, Seller and Walch will
use their reasonable efforts to retain the customers, independent contract
drivers and employees of the Indiana Branch for the benefit of CDL and
Purchaser.
(b) After the Closing Date, Seller and Walch will, upon the request of
CDL or Purchaser, render any assistance reasonably requested by CDL or Purchaser
to retain the customers, independent contract drivers and employees of the
Indiana Branch for the benefit of CDL and Purchaser.
(c) After the Closing Date, Seller and CDL will use their reasonable
efforts to agree on the terms of a cross agency agreement between them, pursuant
to which CDL or Purchaser or their Affiliates will act as Seller's agent for
deliveries originating or terminating in Indiana and Seller will act as CDL's
agent for similar delivery services in Missouri.
(d) If any payments from customers or other third parties to due
Purchaser are inadvertently paid to or received by Seller, Seller shall deliver
such payments in cash or in kind to Purchaser within two (2) business days of
receipt by Seller. If any payments from customers or other third parties to due
Seller are inadvertently paid to or received by Purchaser, Purchaser shall
deliver such payments in cash or in kind to Seller within two (2) business days
of receipt by Purchaser.
ARTICLE VII
Closing Conditions
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 condition 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.
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Section 7.2. Conditions to Closing for Purchaser and CDL. The
obligations of the Purchaser and CDL 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:
(a) The Purchaser and CDL shall have completed their investigation
pursuant to Section 6.1 hereof of the Indiana Branch and the Purchased Assets,
and the Purchaser and CDL shall be satisfied in their sole and unfettered
discretion with the results of their investigation.
(b) All representations and warranties made by each of the Seller and
Walch 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 the Seller
and Walch shall have duly performed or complied with all of the covenants,
obligations and conditions to be performed or complied with by them under the
terms of this Agreement on or prior to or at Closing.
(c) 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 Indiana
Branch, regardless of insurance coverage, since December 14, 2003.
(d) (i) All authorizations, consents, waivers, approvals or other
actions required in connection with the execution, delivery and performance of
this Agreement by the Seller and Walch and the consummation by Seller and Walch
of the transactions contemplated hereby shall have been obtained and shall be in
full force and effect; and (ii) the Seller shall have obtained any
authorizations, consents, waivers, approvals or other actions required to
prevent a material breach or default by the Seller and the Indiana Branch under
any contract to which the Seller or the Indiana Branch is party which
constitutes part of the Purchased Assets or for the continuation of any
agreement to which the Seller or the Indiana Branch is a party which constitutes
part of the Purchased Assets;
(e) Prior to or at the Closing, the Seller and Walch shall have
delivered such other closing documents as shall be requested by the Purchaser
and CDL in form and substance reasonably acceptable to counsel for the Purchaser
and CDL, including the following:
(i) a certificate of the President or a Vice President of Seller
and of Walch, dated the Closing Date, to the effect that (1) the Person
or Persons signing such certificate is familiar with this Agreement and
(2) the conditions specified in Section 7.2(a), (b) and (c), have been
satisfied;
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(ii) a certificate of the Secretary or Assistant Secretary of the
Seller, dated the Closing Date, as to the incumbency of any officer of
the Seller executing this Agreement or any document related thereto and
covering such other matters as the Purchaser may reasonably request;
(iii) a certified copy of the resolutions of the Board of Directors
of the Seller authorizing the execution, delivery and consummation of
this Agreement and the transactions contemplated hereby;
(iv) Assignments of Leases and Lessor consents and Estoppel
Certificates from the landlord for the real estate lease (with
confirmation of security deposit held and that it is held for the
benefit of Purchaser) and the lessor of the equipment lease being
assigned by Seller to Purchaser, all to Purchaser's reasonable
satisfaction;
(v) a wire transfer representing one half of the accrued interest
from December 14, 2003 through the Closing Date under the original
terms of the Note;
(vi) UCC, tax, judgment and other searches requested by Purchaser
showing an absence of liens except for the lien of Midwest Banc Centre,
CDL shall have received from (i) Midwest Banc Centre a release of all
liens on the Purchased Assets in form and substance satisfactory to
CDL.
(vii) Proof that payroll through February 29, 2004 (and related
taxes) has been paid in full; and
(viii) such other documents or instruments as the Purchaser and CDL
reasonably request to effect the transactions contemplated hereby.
Section 7.3. Conditions to Closing for Seller. The obligations of the
Seller 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 CDL,
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 CDL 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) All authorizations or approvals or other action required in
connection with the execution, delivery and performance of this Agreement by the
Purchaser and CDL and the consummation by such party of the transactions
contemplated hereby and thereby shall have been obtained and shall be in full
force and effect.
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(c) Prior to or at the Closing, the Purchaser and CDL shall have
delivered to the Seller and Walch such closing documents as shall be reasonably
requested by the Seller and Walch in form and substance reasonably acceptable to
his counsel, including the following:
(i) a certificate of the President or a Vice President of the
Purchaser and of CDL, dated the Closing Date, to the effect that (1)
the Person signing such certificate is familiar with this Agreement and
(2) the conditions specified in Section 7.3(a) and (b) have been
satisfied;
(ii) a certificate of the Secretary or Assistant Secretary of the
Purchaser and CDL, 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 the Seller and Walch may
reasonably request;
(iii) 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;
(iv) upon receipt of the original Note, such Note marked
"Canceled";
(v) all stock certificates of Seller and executed stock powers
previously delivered by Seller's stockholders to CDL as collateral
security for the Note; and
(vi) such other documents as the Seller or Walch reasonably
request.
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 one (1) year from the Closing Date for the benefit
of the parties hereto and their successors and assigns. The representations and
warranties provided for in Sections 4.11, 4.13 and 4.15 shall survive the
Closing and remain in full force and effect for three (3) years. The survival
period of each representation or warranty as provided in this Section 8.1 is
hereinafter referred to as the "Survival Period."
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Section 8.2. Indemnification.
(a) The Seller and Walch shall indemnify and hold harmless the
Purchaser, CDL and their 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) (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 the Seller or Walch for the
applicable Survival Period, (ii) the breach by Seller or Walch of any covenant
or agreement to be performed by it hereunder, (iii) any liability of the Seller
or the Indiana Branch relating to the Purchased Assets prior to the Closing and
(iv) any liability of Seller or the Indiana Branch prior to or after the Closing
other than the Assumed Liabilities.
(b) The Purchaser and CDL, jointly and severally, shall indemnify and
hold harmless the Seller, Walch and their 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 CDL in this Agreement for the applicable
Survival Period, (ii) the breach by the Purchaser or CDL of any covenant or
agreement to be performed by it hereunder, and (iii) the Assumed 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 unless (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) the Indemnified Party shall have reasonably concluded that there
is an actual conflict of interest arising from the counsel chosen by the
Indemnified Party representing the Indemnifying 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 defense of such Third Party Claim, the reasonable fees and
disbursements of such 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.
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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. Offset to Indemnification. All amounts of Damages for
which a party claims indemnity shall be offset by any insurance or other
monetary benefit received by the Indemnified Party as a result of the event
giving rise to an indemnity claim, so that there is no double recovery by the
Indemnified Party.
Section 8.6. Remedies Limited. (a) No claim may be made for
indemnification after the expiration of the 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 unless the aggregate
amount of all Losses exceeds $10,000.
(c) The aggregate liability of the Seller and Walch under this Article
VIII for all claims made for indemnification shall be limited to a maximum
aggregate liability of $1,650,000.
(d) The limitations of paragraphs (b) and (c) above shall not apply to
breaches of Seller's and Walch's representations and warranties concerning Tax
Liabilities or ERISA, nor shall they apply to any personal injury claims.
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(e) The parties shall make appropriate adjustments for tax benefits in
determining Damages for purposes of Article VIII.
Section 8.7. Right of Set-Off. The Purchaser and CDL shall have the
right to set-off against any amount which may be owed by the Purchaser or CDL to
Walch or the Seller, whether unpaid at the time of such set-off, any amount owed
to the Purchaser and/or CDL by the Seller, Walch or any other Person pursuant to
this Agreement. The exercise of such right of set-off by the Purchaser and CDL
shall not constitute a breach by the Purchaser and CDL of this Agreement.
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 the Purchaser 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) 597-2564
Facsimile: (973) 597-2565
Attention: Alan Wovsaniker, Esq.
If to the Seller or Walch: Charles Walch
312 Planthurst Road
St. Louis, Missouri 63119
With a copy to: Thompson Coburn
One Mercantile Center
St. Louis, Missouri 63101
Telephone: 314-552-6000
Facsimile: 314-552-7000
Attention: Thomas E. Proost, Esq.
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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, on the one hand, and the Seller and Walch, on the other hand,
shall each pay its own expenses incident to this Agreement and the transactions
contemplated herein.
Section 9.3. Governing Law; Consent to Jurisdiction. 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.
Each of the parties hereto irrevocably submits to the non-exclusive jurisdiction
of the courts of the State of New Jersey and the United States District Court
for the District of New Jersey, located in Passaic or Essex County, State of
Jersey, for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Agreement and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
Section 9.4. Assignment; Successors and Assigns; No Third Party Rights.
Except as otherwise provided herein, this Agreement may not be assigned by
operation of law or otherwise, and any attempted assignment shall be null and
void. CDL and the Purchaser may assign all of their rights under this Agreement
to any Affiliate; provided such Affiliate assumes all of the obligations of CDL
and the Purchaser remains liable hereunder. No such assignment shall relieve CDL
or the Purchaser of their 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.
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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,
none of the parties 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 Seller and Walch
recognize that CDL may be required to issue a press release promptly after the
signing or Closing of this Agreement 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CD&L, INC.
By:_______________________________
Name:
Title:
EXECUTIVE Express, Inc., d/b/a
1st Choice Courier and Distribution, Inc.
By:_______________________________
Name:
Title:
---------------------------------
CHARLES WALCH
SILVER STAR EXPRESS, INC.
(a subsidiary of CDL, Inc.)
By:_______________________________
Name:
Title:
The Sublease dated as of June 15, 2001 between National Express Company, Inc.
and CD&L, Inc. shall be deemed cancelled as of the Closing Date and CDL shall
have no further obligations thereunder.
NATIONAL EXPRESS COMPANY, INC.
By:__________________________________
Name:
Title:
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