EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
CERTIFIED TRANSPORT, INC.
and
VENTURE LOGISTICS, INC.
DATED: May 5, 1998
TABLE OF CONTENTS
1. DEFINITIONS..............................................1
2. PLAN OF REORGANIZATION...................................4
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2.1 THE MERGER......................................4
2.2 FRACTIONAL SHARES...............................6
2.3 EFFECTS OF THE MERGER...........................6
2.4 TAX-FREE REORGANIZATION.........................6
2.5 PURCHASE ACCOUNTING TREATMENT...................7
2.6 WAIVER OF DISSENTERS RIGHTS.....................7
2.7 LOAN TO XXXXX XXXXXX............................7
2.8 RESTRICTED SHARES...............................7
3. REPRESENTATIONS AND WARRANTIES OF SELLERS................7
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3.1 ORGANIZATION AND GOOD STANDING..................7
3.2 AUTHORITY; NO CONFLICT..........................8
3.3 CAPITALIZATION..................................9
3.4 FINANCIAL STATEMENTS............................9
3.5 BOOKS AND RECORDS..............................10
3.6 TITLE TO PROPERTIES; ENCUMBRANCES..............10
3.7 CONDITION AND SUFFICIENCY OF ASSETS............10
3.8 ACCOUNTS RECEIVABLE............................10
3.9 NO UNDISCLOSED LIABILITIES.....................11
3.10 TAXES..........................................11
3.11 NO MATERIAL ADVERSE CHANGE.....................11
3.12 EMPLOYEE BENEFITS..............................12
3.13 COMPLIANCE.....................................12
3.14 LITIGATION.....................................12
3.15 ABSENCE OF CHANGES.............................13
3.16 CONTRACTS; NO DEFAULTS.........................14
3.17 INSURANCE......................................14
3.18 ENVIRONMENTAL MATTERS..........................15
3.19 EMPLOYEES; INDEPENDENT CONTRACTORS.............16
3.20 LABOR RELATIONS; COMPLIANCE....................16
3.21 INTELLECTUAL PROPERTY..........................17
3.22 RELATIONSHIPS WITH RELATED PERSONS.............17
3.23 BROKERS OR FINDERS.............................18
3.24 DISCLOSURE.....................................18
3.25 INVESTMENT REPRESENTATION......................18
4. REPRESENTATIONS AND WARRANTIES OF TGI AND NEWCO.........18
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4.1 ORGANIZATION AND GOOD STANDING.................18
4.2 AUTHORITY; NO CONFLICT.........................18
4.3 CERTAIN PROCEEDINGS............................19
4.4 SECURITIES COMPLIANCE..........................19
4.5 ORGANIZATION AND GOOD STANDING.................19
4.6 AUTHORITY; NO CONFLICT.........................19
4.7 CERTAIN PROCEEDINGS............................20
5. CLOSING.................................................20
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5.1 CLOSING........................................20
5.2 CLOSING OBLIGATIONS............................20
6. INDEMNIFICATION; REMEDIES...............................22
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6.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT
AFFECTED BY KNOWLEDGE..........................22
6.2 INDEMNIFICATION AND PAYMENT OF DAMAGES
BY SELLERS.....................................22
6.3 INDEMNIFICATION AND PAYMENT OF DAMAGES
BY TGI.........................................22
6.4 TIME LIMITATIONS...............................23
6.5 ESCROW.........................................23
6.6 PROCEDURE FOR INDEMNIFICATION--THIRD
PARTY CLAIMS...................................23
6.7 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS....25
6.8 LIMITATION.....................................25
6.9 RELEASE OF GUARANTEES..........................25
7. GENERAL PROVISIONS......................................25
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7.1 EXPENSES.......................................25
7.2 PUBLIC ANNOUNCEMENTS...........................25
7.3 CONFIDENTIALITY................................25
7.4 NOTICES........................................26
7.5 FURTHER ASSURANCES.............................27
7.6 WAIVER.........................................27
7.7 ENTIRE AGREEMENT AND MODIFICATION..............27
7.8 DISCLOSURE LETTER..............................27
7.9 ASSIGNMENTS, SUCCESSORS, AND NO
THIRD-PARTY RIGHTS.............................27
7.10 SEVERABILITY...................................28
7.11 SECTION HEADINGS, CONSTRUCTION.................28
7.12 TIME OF ESSENCE................................28
7.13 GOVERNING LAW..................................28
7.14 COUNTERPARTS...................................28
Exhibits and Schedules
Exhibit "A" --.......Articles of Merger
Exhibit "B" --.......Employment Agreements
Exhibit "C" --.......Noncompetition Agreement
Exhibit "D" --.......Escrow Agreement
Exhibit "E" --.......Subscription Agreement
Exhibit "F" --.......Promissory Note
Exhibit "G" --.......Stock Pledge Agreement
Exhibit "H" --.......Lease Agreement
Exhibit "I" --.......Xxxxxx Promissory Note
Agreement and Plan of Reorganization
This Agreement and Plan of Reorganization ("Agreement") is made as of
May 5, 1998, by and between Transit Group, Inc., a Florida corporation ("TGI"),
Certified Acquisition Corp., an Indiana corporation ("Newco"), Certified
Transport, Inc., an Indiana corporation ("Certified"), Venture Logistics, Inc.,
an Indiana corporation ("Venture" and together with Certified, the
"Companies"), and Xxxxx Xxxxxx, Xxxxxxx X. Xxxxxx and M. Xxxxxxx Xxxxxxxx, each
a resident of the State of Indiana (individually a "Seller" and, collectively,
the "Sellers"). TGI, the Companies and the Sellers are sometimes referred to
herein individually as a "Party," and collectively as the "Parties".
RECITALS
A. The Parties intend that, subject to the terms and conditions set
forth herein, Newco and Venture will merge with and into Certified in a reverse
triangular merger (the "Merger"), with Certified to be the surviving
corporation of the Merger, all pursuant to the terms and conditions of this
Agreement, the Articles of Merger substantially in the form of Exhibit "A"
hereto (the "Articles of Merger") and the applicable provisions of the laws of
Indiana.
B. Upon the effectiveness of the Merger, all the outstanding capital
stock of the each of the Companies will be converted into capital stock of TGI,
in the manner and on the basis determined herein and as provided in the
Articles of Merger.
C. The Merger is intended to be treated as a "purchase" for accounting
purposes and a tax-free reorganization pursuant to the provisions of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"), by
virtue of the provisions of Section 368(a)(2)(D) of the Code.
X. Xxxxxxx are the sole shareholders of the Companies.
AGREEMENT
For and in consideration of the above premises and the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties,
intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Agreement" --this Agreement and Plan of Reorganization together with
all Schedules and Exhibits hereto.
"March 31 Balance Sheet"--as defined in Section 3.4.
"Closing"--as defined in Section 5.1.
"Closing Date"--the date and time as of which the Closing actually
takes place.
"Companies"--collectively the Companies identified in the Recitals to
this Agreement together with each Subsidiary.
"Contemplated Transactions"--all of the transactions contemplated by
this Agreement, including:
(a) the Merger of Newco, Venture and Certified;
(b) the execution, delivery, and performance of the Employment
Agreements, the Noncompetition Agreements, the Subscription Agreements and the
Escrow Agreement; and
(c) the performance by TGI, the Companies and the Sellers of their
respective covenants and obligations under this Agreement.
"Damages"--as defined in Section 6.2.
"Effective Time" --the effective time of the Merger as defined in
Section 2.1.
"Employment Agreements"--as defined in Section 5.2(a)(iii).
"Environmental Law"--any law or regulation that materially requires
or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the environment;
(c) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(d) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or prevention; or
(e) making responsible parties pay private parties, or groups of them,
for damages done to their health or the environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974, as
amended, and regulations and rules issued pursuant to that act or any successor
law.
"Escrow Agreement" --as defined in Section 5.2(a)(v).
"GAAP"--generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the financial statements
referred to in Section 3.4 were prepared.
"Hazardous Materials"--any waste or other substance that, as of the
date of this Agreement, is listed, defined, designated, or classified as
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any applicable Environmental Law, including petroleum and all
derivatives thereof or synthetic substitutes therefor and asbestos or
asbestos-containing materials.
"Merger"--as defined in the Recitals hereto.
"Noncompetition Agreements"--as defined in Section 5.2(a)(iv).
"Occupational Safety and Health Law"--any law or regulation designed
to provide safe and healthy working conditions and to reduce occupational
safety and health hazards, and any program, whether governmental or private
(including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working
conditions.
"Securities Act"--the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that act or any successor law.
"Sellers"--as defined in the first paragraph of this Agreement.
"Subsidiary" or "Subsidiaries"--means Certified Transport, LLC,
Venture Logistics, LLC and Ontario, Ltd.
"TGI Disclosure Letter"--the disclosure letter delivered by TGI to
Sellers concurrently with the execution and delivery of this Agreement.
2. PLAN OF REORGANIZATION
2.1 THE MERGER. Subject to the terms and conditions of this Agreement,
the Articles of Merger will be filed with the Secretary of State of the State
of Indiana on the Closing Date. The date and time that the Articles of Merger
are filed with the Indiana Secretary of State and the Merger thereby becomes
effective will be referred to in this Agreement as the "Effective Time."
Notwithstanding the Effective Time of the Merger, the Parties agree that for
all accounting purposes, the Merger shall be deemed to occur as of April 30,
1998, and the results of operations and all other rights and benefits accruing
to the Companies after April 30, 1998 shall be for the account of the surviving
corporation. Subject to the terms and conditions of this Agreement and the
Articles of Merger, Newco and Venture will be merged with and into Certified in
a statutory merger pursuant to the Articles of Merger and in accordance with
applicable provisions of Indiana law as follows:
2.1.1 (a) Conversion of Certified Common Stock. Each
share of common stock of Certified, no par value (the "Certified Common
Stock"), that is issued and outstanding immediately prior to the Effective
Time, will, by virtue of the Merger and at the Effective Time and without
further action on the part of any holder thereof, be converted into the right
to receive (i) 2,524.77 shares of fully paid and nonassessable common stock of
TGI, $.01 par value per share ("TGI Common Stock"); and (ii) cash consideration
in the amount of $1,333.33 per share. The aggregate $400,000 in cash
consideration shall be paid to the Sellers who are shareholders of Certified in
cash at Closing, by wire transfer or certified check. The Sellers have elected
and instructed TGI to allocate all of the cash consideration to Xxxxxxx Xxxxxx
and to therefore disproportionately allocate the stock consideration among the
shareholders of Certified. The total number of shares of TGI Common Stock and
cash consideration into which each Seller's shares of Certified Common Stock
will be converted is set forth below:
Seller Cash TGI Stock
------ ---- ---------
Xxxxxxx Xxxxxx $400,000 345,725
Xxxxx Xxxxxx -0- 411,705
(b) Conversion of Venture Common Stock. Each share of common stock of
Venture, no par value (the "Venture Common Stock"), that is issued and
outstanding immediately prior to the Effective Time, will, by virtue of the
Merger and at the Effective Time and without further action on the part
of any holder thereof, be converted into the right to receive (i) 3,147.35
shares of TGI Common Stock, for a total of 314,735 shares of TGI Common Stock
to be issued to M. Xxxxxxx Xxxxxxxx as the sole shareholder of Venture;
and (ii) cash consideration in the amount of $4,000.00 per share. The
aggregate $400,000 in cash consideration shall be paid to M. Xxxxxxx
Xxxxxxxx as the shareholder of Venture in cash at Closing, by wire transfer or
certified check.
(c) Earn-Out. In addition, the Sellers shall have the potential to
receive, and TGI will reserve on its books and records, up to an additional
270,512 shares of TGI restricted Common Stock in the event that the fiscal
1998 pre-tax net profits of the Companies reaches certain targets as set forth
below (using GAAP and calculated based on the Companies' historical method of
operations and excluding (i) any benefits attributable to synergies contributed
by TGI, such as cost savings, decreased interest charges and purchasing
improvements, other than synergies related to the Companies' change in
accounting methods from cash basis to accrual basis ; and (ii) any increased
expenses or charges attributable to post-closing operations by TGI outside of
the ordinary course for the Companies. The additional shares, if any, shall be
issued to the Sellers within fifteen (15) days after TGI's calculation of the
Companies pre-tax net profits is deemed final as provided in 2.1.1(d) below,
and shall be allocated among the Sellers equally. The share amounts set forth
below shall be appropriately adjusted for any stock split, stock combination,
stock dividend or other recapitalization or reorganization prior to the
issuance thereof. In the event of the merger or sale of substantially all of
the stock or assets of TGI prior to December 31, 1998, the Sellers shall be
entitled to receive the full 270,512 shares of TGI common stock, whether or not
the applicable earnings targets have been met.
Additional Shares
Pre-Tax Profits To Be Issued
$1.3 million or less 0
Greater than $1.3 million 37,935
Greater than $1.4 million 99,791
Greater than $1.5 million 161,646
Greater than $1.6 million 223,502
Greater than $1.7 million 270,512
(d) Dispute Resolution. Within ninety (90) days following the
end of the Companies' 1998 fiscal year, TGI shall calculate and deliver to the
Sellers a report showing the Companies' pre-tax net profit, calculated in the
manner described above. On or prior to the thirtieth (30th) day thereafter, the
Sellers may give TGI a written notice stating in reasonable detail any
objections the Sellers may have to the calculation of pre-tax net profit. If
the Sellers do not give TGI such notice within said 30-day time period, then
TGI's calculation of pre-tax net profit will be conclusive and binding on the
parties. If the Sellers do give TGI notice of an objection to such calculation,
then the Sellers and TGI will attempt amicably to resolve the items in dispute
and any such agreement will be conclusive and binding on the parties. If the
Sellers and TGI do not resolve all items in dispute, then such dispute will be
resolved by arbitration in Nashville, Tennessee (unless the Parties mutually
agree upon a different location) in accordance with the commercial arbitration
rules of the American Arbitration Association ("AAA") in as expedited a manner
as is practicable. The Sellers shall appoint one arbitrator and TGI shall
appoint one arbitrator within fifteen (15) calendar days from the date of
submission of the claim to arbitration, and the two arbitrators so appointed
shall appoint a third arbitrator within fifteen (15) days of the appointment of
the second arbitrator. In the event that any party fails to appoint an
arbitrator, such appointment shall be made by the AAA. The prevailing party
shall be entitled to recover the cost of their respective attorneys, witnesses
and experts in connection with such arbitration.
2.1.2 Conversion of Newco Shares. Each share of Newco Common
Stock, par value $0.01 ("Newco Common Stock"), that is issued and outstanding
immediately prior to the Effective Time, will, by virtue of the Merger and
without further action on the part of the sole shareholder of Newco, be
converted into and become one share of common stock of Certified as the
surviving corporation, which shall be the only share of Certified Common Stock
that is issued and outstanding immediately after the Effective Time.
2.2 FRACTIONAL SHARES. De minimis adjustments may be made to the
relative amounts of cash and TGI stock to avoid fractional shares of TGI Common
Stock.
2.3 EFFECTS OF THE MERGER. At the Effective Time: (a) the separate
existence of Venture and Newco will cease and each of Venture and Newco will be
merged with and into Certified, and Certified will be the surviving corporation
pursuant to the terms of the Articles of Merger; (b) the Articles of
Incorporation and Bylaws of Newco will be the Articles of Incorporation and
Bylaws of the surviving corporation, provided that such Articles will be
amended to change the name of Newco to "Certified Transport, Inc."; (c) each
share of Newco Common Stock outstanding immediately prior to the Effective Time
will be converted as provided in Section 2.1.2 above; (d) the directors of
Newco in effect at the Effective Time will be the directors of Certified as the
surviving corporation, and the officers of Newco will be the officers of Newco
as the surviving corporation; (e) each share of Certified Common Stock and
Venture Common Stock outstanding immediately prior to the Effective Time will
be converted as provided in Section 2.1.1; and (f) the Merger will, at and
after the Effective Time, have all of the effects provided by applicable law.
2.4 TAX-FREE REORGANIZATION. The Parties intend to adopt this
Agreement as a tax-free plan of reorganization and to consummate the Merger in
accordance with the provisions of Section 368(a)(1)(A) of the Code. The Parties
believe that the value of the TGI Common Stock and the cash consideration to be
received by the Sellers in the Merger is equal to the value of the Certified
Common Stock and the Venture Common Stock to be surrendered in exchange
therefor. The TGI Common Stock issued in the Merger will be issued solely in
exchange for the Certified Common Stock and Venture Common Stock, and no other
transaction other than the Merger represents, provides for or is intended to be
an adjustment to, the consideration paid for the Certified Common Stock and the
Venture Common Stock. TGI represents now, and as of the Closing, that it
presently intends to continue the Companies' historic business or use a
significant portion of the Companies' business assets in a business. Sellers
represent that they have no plan or intention to sell, exchange or otherwise
dispose of a number of shares of TGI Common Stock received in the Merger that
would reduce the value of the Sellers' TGI Common Stock in the aggregate to
less than fifty percent (50%) of the value of the stock on the Closing Date.
Sellers acknowledge that they have received their own independent tax advice
and counsel with respect to the Merger and the transactions contemplated herein
and are not relying on representations made by TGI or its counsel, accountants
or advisors with respect thereto.
2.5 PURCHASE ACCOUNTING TREATMENT. The Parties intend that
the Merger be treated as a "purchase" for accounting purposes.
2.6 WAIVER OF DISSENTERS RIGHTS. Each of the Sellers hereby waives any
and all rights such shareholder has to dissent from the Merger under Indiana
law.
2.7 LOAN TO XXXXX XXXXXX. TGI agrees to deliver to Xxxxx Xxxxxx on the
Closing Date, in exchange for, and in accordance with the terms and conditions
of, the Promissory Note, which shall be secured by Xx. Xxxxxx'x pledge of
65,979 shares of TGI Common Stock, the sum of US Four Hundred Thousand Dollars
($400,000). The Promissory Note shall bear interest at a rate of eight and
one-half percent (8.5%) per annum and shall be payable in accordance with the
terms set forth therein. The Parties acknowledge that the loan described herein
is not intended to serve as additional merger consideration and is intended to
be repaid in cash in accordance with its terms.
2.8 RESTRICTED SHARES. The shares of TGI Common Stock to be issued to
the Sellers in connection with the Merger have not been registered with the
Securities and Exchange Commission, and therefore may not be sold by the
Sellers except pursuant to an exemption from registration. Upon receipt by TGI
of a letter from legal counsel to the Sellers stating that such shares may be
freely sold under Rule 144(k) of the Securities Act of 1933, TGI will reissue
the certificate for said shares without the restrictive legend therefor.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to TGI as follows:
3.1 ORGANIZATION AND GOOD STANDING.
(a) Schedule 3.1 hereto contains a statement of the Companies' and
each Subsidiary's jurisdiction of incorporation, a list of all other
jurisdictions in which it is authorized to do business. The Companies and each
Subsidiary are duly organized, validly existing, and in good standing under the
laws of its jurisdiction of incorporation, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all
its obligations under its contracts. The Companies and each Subsidiary are duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except for those jurisdictions
where the failure to be so qualified will not have a material adverse effect on
the Companies.
(b) Sellers have delivered to TGI copies of the Articles of
Incorporation and Bylaws of the Companies and the Articles of Organization and
Operating Agreements for each Subsidiary, as currently in effect.
(c) The Companies do not own any equity or other interest in any
company, entity, partnership or joint venture other than the Subsidiaries.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Sellers and the Companies enforceable against them in accordance
with its terms. Upon the execution and delivery by Sellers of the Employment
Agreements, the Escrow Agreement, the Subscription Agreements and the
Noncompetition Agreements (collectively, the "Sellers' Closing Documents"), the
Sellers' Closing Documents will constitute the legal, valid, and binding
obligations of Sellers and the Companies, enforceable against them in
accordance with their respective terms. Each of the Sellers and the Companies
has the absolute and unrestricted right, power, authority and capacity to
execute and deliver this Agreement and the Sellers' Closing Documents and to
perform their respective obligations under this Agreement and the Sellers'
Closing Documents.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of
(A) any provision of the Articles of Incorporation or Bylaws of the
Companies or any Subsidiary; or (B) any resolution adopted by the
board of directors or the stockholders of the Companies or any
Subsidiary; or (C) any of the material terms or requirements of, or
give any governmental body the right to revoke, withdraw, suspend,
cancel, terminate, or modify, any permit or authorization that is held
by the Companies or any Subsidiary or that otherwise relates to the
business of, or any of the assets owned or used by, the Companies or
any Subsidiary; or (D) any material provision of, or give any person
the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or
modify any contract to which the Companies or any Subsidiary is bound;
or
(ii) result in the imposition or creation of any lien, claim
or encumbrance upon or with respect to any of the assets owned or used
by the Companies or any Subsidiary.
(c) Except as set forth in Schedule 3.2, neither Sellers, the
Companies nor any Subsidiary is or will be required to give any notice to or
obtain any consent from any person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
3.3 CAPITALIZATION.
(a) The authorized equity securities of Certified consists of 1,000
shares of common stock, no par value per share, of which 300 shares will be
issued and outstanding as of the Closing Date. The authorized equity securities
of Venture consists of 1,000 shares of common stock, no par value per share, of
which 100 shares will be issued and outstanding as of the Closing Date (the
issued and outstanding shares of Certified and Venture are referred to as the
"Shares"). Sellers are and will be on the Closing Date the record and
beneficial owners and holders of the Shares, free and clear of all liens,
claims or encumbrances. As of the Closing Date, the shares will be owned of
record as shown on Schedule 3.3. With the exception of the Shares (which are
owned by Sellers), there are no other outstanding equity securities or other
securities of the Companies. No legend or other reference to any purported
encumbrance appears upon any certificate representing equity securities of the
Companies. All of the outstanding equity securities of the Companies have been
duly authorized and validly issued and are fully paid and nonassessable. There
are no contracts relating to the issuance, sale or transfer of any equity
securities or other securities of the Companies. None of the outstanding equity
securities or other securities of either of the Companies was issued in
violation of the Securities Act or any other law or regulation. With the
exception of its current interest in the Subsidiaries, neither of the Companies
owns, nor does it have any contract to acquire, any equity securities or other
securities of any person or any direct or indirect equity or ownership interest
in any other business.
(b) The authorized equity securities of each Subsidiary and the number
of shares of such Subsidiary that are outstanding are set forth on Schedule
3.3. Certified will be on the Closing Date the record and beneficial owner and
holder of all of the issued and outstanding stock of each Subsidiary, free and
clear of all liens, claims or encumbrances. With the exception of the shares
owned by Certified, there are no other outstanding equity securities or other
securities of any Subsidiary. No legend or other reference to any purported
encumbrance appears upon any certificate representing equity securities of a
Subsidiary. All of the outstanding equity securities of each Subsidiary have
been duly authorized and validly issued and are fully paid and nonassessable.
There are no contracts relating to the issuance, sale, or transfer of any
equity securities or other securities of any Subsidiary. None of the
outstanding equity securities or other securities of any Subsidiary was issued
in violation of the Securities Act or any other law or regulation. No
Subsidiary owns, nor does it have any contract to acquire, any equity
securities or other securities of any person or any direct or indirect equity
or ownership interest in any other business.
3.4 FINANCIAL STATEMENTS. Sellers have delivered to TGI: (a) audited
balance sheets of Venture Logistics, LLC, and Certified Transport, LLC, as at
its fiscal year end in each of the years 1995 through 1997, and the related
audited statements of income, changes in stockholders' and members' equity, and
cash flow for each of the fiscal years then ended (such financial statements as
of December 31, 1997, are referred to herein as the "1997 Financial
Statements"), and (b) a balance sheet of the Subsidiaries as at March 31, 1998
(the "March 31 Balance Sheet"). Such financial statements and the notes thereto
fairly present the financial condition and the results of operations, changes
in stockholders' equity and cash flow of the Companies as at the respective
dates of and for the periods referred to in such financial statements, all in
accordance with GAAP (except as indicated in the notes thereto), consistently
applied throughout the periods involved (subject, in the case of the interim
statements, to normal year-end adjustments).
3.5 BOOKS AND RECORDS. The books of account, minute books, stock
record books and other records of each of the Companies and each Subsidiary,
all of which have been made available to TGI, are complete and correct and have
been maintained in all material respects in accordance with applicable law. The
minute books of each of the Companies and each Subsidiary contain accurate and
complete records of all meetings of, and corporate actions taken by, the
stockholders, the Boards of Directors and committees of the Boards of Directors
of the Companies and each Subsidiary, and no formal meeting of any such
stockholders, Board of Directors or committee has been held for which minutes
have not been prepared and are not contained in such minute books.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES. Schedule 3.6 contains a
complete and accurate list of all real property and material items of personal
property owned by the Companies and each Subsidiary. Except as set forth in
Schedule 3.6 or as otherwise reflected in the 1997 Financial Statements or the
March 31 Balance Sheet, the Companies and each Subsidiary own good and
marketable title to the properties and assets located in the facilities owned
or operated by the Companies or any Subsidiary or reflected as owned in the
books and records of the Companies or any Subsidiary, including all of the
properties and assets reflected in the 1997 Financial Statements, and all of
the properties and assets purchased or otherwise acquired by the Companies or
any Subsidiary since the date thereof. All material properties and assets
reflected in the 1997 Financial Statements are free and clear of all liens,
claims or encumbrances and are not, in the case of real property, subject to
any use restrictions, exceptions, variances, reservations, or limitations of
any nature except, with respect to all such properties and assets, (a)
mortgages or security interests shown on the 1997 Financial Statements or the
March 31 Balance Sheet as securing specified liabilities or obligations, with
respect to which no material default (or event that, with notice or lapse of
time or both, would constitute a default) exists, and (b) zoning laws and other
land use restrictions that do not impair the present or anticipated use of the
property subject thereto.
3.7 CONDITION AND SUFFICIENCY OF ASSETS. The buildings, plants,
structures, and equipment owned or leased by the Companies and each Subsidiary
are structurally sound, are in good operating condition and repair (normal wear
and tear excepted) and are adequate for the uses to which they are being put,
and none of such buildings, plants, structures, or equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs.
The building, plants, structures, and equipment owned or leased by the
Companies and each Subsidiary are sufficient for the continued conduct of the
Companies' and each Subsidiary's businesses after the Closing in substantially
the same manner as conducted prior to the Closing, subject to the receipt by
Certified of fifty (50) tractors currently on order and normal turnover in
equipment.
3.8 ACCOUNTS RECEIVABLE. All accounts receivable of each of the
Companies and each Subsidiary as of the Closing Date represent or will
represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business. Unless paid prior to the
Closing Date, the accounts receivable are or will be as of the Closing Date
current and collectible without resort to litigation, net of the respective
reserves shown on the 1997 Financial Statements. There is no contest, claim, or
right of set-off relating to the amount or validity of such accounts
receivable, except immaterial amounts arising in the ordinary course of
business, and subject to reconciliation of the Air Cargo account. The parties
agree that in the event that the Sellers are required to reimburse TGI or the
Companies for an uncollected receivable due to a breach of this representation
and warranty, the amount of such receivable paid by the Sellers will be
assigned to the Sellers for collection and receipt.
3.9 NO UNDISCLOSED LIABILITIES. Except as noted on Schedule 3.9,
neither the Companies nor any Subsidiary has any liabilities or obligations
except for liabilities or obligations reflected or reserved against in the 1997
Financial Statements, the March 31 Balance Sheet or otherwise reflected herein,
and current liabilities incurred in the ordinary course of business since the
date thereof.
3.10 TAXES.
(a) The Companies and each Subsidiary have filed or caused to be filed
on a timely basis all tax returns that are or were required to be filed by or
with respect to it. The Companies and each Subsidiary have paid, or made
provision as reflected on its financial statements for the payment of, all
taxes that have or may have become due for all periods prior to Closing. All
tax returns filed by the Companies any each Subsidiary are true, correct and
complete.
(b) Neither Sellers, the Companies, nor any Subsidiary has given or
been requested to give waivers or extensions (or is or would be subject to a
waiver or extension given by any other person) of any statute of limitations
relating to the payment of taxes of the Companies.
(c) The charges, accruals, and reserves with respect to taxes on the
books of the Companies are adequate (determined in accordance with GAAP) and
are at least equal to the Companies' liability for taxes (including any
Subsidiaries' liability). To the Sellers' knowledge, there exists no proposed
tax assessment against the Companies or any Subsidiary except as disclosed in
the 1997 Financial Statements or the March 31 Balance Sheet. All taxes that
either of the Companies or any Subsidiary is or was required to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper governmental body or other person.
3.11 NO MATERIAL ADVERSE CHANGE. With the exception of matters
disclosed in the March 31 Balance Sheet, since the date of the 1997 Financial
Statements, there has not been any material adverse change in the business,
operations, properties, prospects, assets, or condition of the Companies or any
Subsidiary, and no event has occurred or, to the Sellers' knowledge,
circumstance exists that should reasonably be expected to result in such a
material adverse change.
3.12 EMPLOYEE BENEFITS. Schedule 3.12 contains a list of all pension,
retirement, disability, medical, dental or other health plans, life insurance
or other death benefit plans, profit sharing, deferred compensation agreements,
stock, option, bonus or other incentive plans, vacation, sick, holiday or other
paid leave plans, severance plans or other similar employee benefit plans
maintained by either of the Companies or any Subsidiary (the "Plans"),
including, without limitation, all "employee benefit plans" as defined in
Section 3(3) of ERISA. As of the Closing Date, all contributions due from the
Companies or any Subsidiary with respect to any of the Plans have been made or
accrued on the Companies' financial statements, and no further contributions
will be due or will have accrued thereunder as of the Closing. Each of the
Plans, and its operation and administration, is, in all material respects, in
compliance with all applicable, federal, state, local and other governmental
laws and ordinances, orders, rules and regulations, including the requirements
of ERISA and the Internal Revenue Code. All such Plans that are "employee
pension benefit plans" (as defined in Section 3(2) of ERISA) which are intended
to qualify under I.R.C. Section 401(a)(8) have received favorable determination
letters that such plans satisfy all qualification requirements. In addition,
neither of the Companies has been a participant in any "prohibited
transaction," within the meaning of Section 406 of ERISA, with respect to any
employee pension benefit plan (as defined in Section 3(2) of ERISA) which
either of the Companies or any Subsidiary sponsors as employer or in which
either of the Companies or any Subsidiary participates as an employer, which
was not otherwise exempt pursuant to Section 408 of ERISA (including any
individual exemption granted under Section 408(a) of ERISA), or which could
result in an excise tax.
3.13 COMPLIANCE.
(a) The Companies and each Subsidiary are, and for the past three (3)
years have conducted their business and the ownership and use of their assets
in substantial compliance with all applicable laws.
(b) Schedule 3.13 contains a complete and accurate list of each permit
or governmental consent or authorization that is held by either of the
Companies and each Subsidiary or that otherwise relates to the business of, or
to any of the assets owned or used by, the Companies or any Subsidiary. Each
such permit or governmental consent or authorization is valid and in full force
and effect and constitutes all of the governmental authorizations materially
necessary to permit the Companies and each Subsidiary to lawfully conduct and
operate its business in the manner currently conducted.
3.14 LITIGATION.
(a) Except as set forth in Schedule 3.14, there is no pending or to
the knowledge of the Sellers, threatened action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any governmental body or arbitrator (i) that
has been commenced by or against either of the Companies or any Subsidiary or
that otherwise relates to or may affect the business of, or any of the assets
owned or used by, the Companies or any Subsidiary; or (ii) that challenges, or
that may have the effect of preventing, delaying, making illegal or enjoining,
any of the Contemplated Transactions.
(b) Except as set forth on Schedule 3.14, there is no order or court
decision to which any of the Companies, any Subsidiary, the Sellers, any
director or officer of either of the Companies, or any of the assets owned or
used by the Companies or any Subsidiary, is subject.
3.15 ABSENCE OF CHANGES. Except as set forth in Schedule 3.15, since
December 31, 1997 (except as disclosed in the March 31 Balance Sheet), each of
the Companies and each Subsidiary has conducted its business only in the
ordinary course and there has not been any:
(a) change in its authorized or issued capital stock; grant of any
stock option or right to purchase shares of capital stock of either of the
Companies or any Subsidiary; issuance of any security convertible into such
capital stock; grant of any purchase, redemption or stock retirement rights, or
any acquisition by either of the Companies or any Subsidiary of any shares of
its capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
(b) amendment to the Articles of Incorporation or Bylaws
of either of the Companies or any Subsidiary;
(c) payment or increase by either of the Companies or any Subsidiary
of any bonuses, salaries or other compensation to any stockholder, director,
officer or employee (except normal raises in the ordinary course of business
consistent with past practices), or entry into any employment, severance, or
similar contract with any director, officer or employee;
(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement or other employee benefit plan for or with any employees of either
of the Companies or any Subsidiary;
(e) material damage to or destruction or loss of any material asset or
property of either of the Companies or any Subsidiary not covered by insurance;
(f) entry into, termination of, or receipt of notice of termination of
any material contract or any contract or transaction involving a total
remaining commitment by or to either of the Companies or any Subsidiary of at
least $50,000;
(g) sale, lease, or other disposition of any material asset or
property of either of the Companies or any Subsidiary, or mortgage, pledge, or
imposition of any lien or other encumbrance on any material asset or property
of either of the Companies or any Subsidiary;
(h) material change in the accounting methods used by the
Companies; or
(i) agreement, whether oral or written, by either of the Companies or
any Subsidiary to do any of the foregoing.
3.16 CONTRACTS; NO DEFAULTS.
(a) Schedule 3.16 contains a complete and accurate list, and
Sellers have delivered to TGI true and complete copies, of:
(i) each contract that involves performance of services or
delivery of goods or materials by or to either of the Companies or any
Subsidiary of an amount or value in excess of $50,000 in the
aggregate;
(ii) each lease, license, installment and conditional sale
agreement, and other contract affecting the ownership of, leasing of,
title to, use of, or any leasehold or other interest in, any real or
personal property;
(iii) each joint venture, partnership, and other contract
involving a sharing of profits, losses, costs, or liabilities by
either of the Companies or any Subsidiary with any other person;
(iv) each contract containing covenants that in any way
purport to restrict the business activity of either of the Companies
or any Subsidiary;
(v) each power of attorney that is currently effective
and outstanding; and
(vi) each written warranty, guaranty, and or other similar
undertaking by either of the Companies or any Subsidiary.
(b) Each contract identified or required to be identified in Schedule
3.16 is in full force and effect and is valid and enforceable in accordance
with its terms and is enforceable by Certified as the surviving company in the
Merger. Each of the Companies and each Subsidiary is, and at all times has
been, in compliance with all material terms and requirements of each contract.
Each third party to any contract with either of the Companies or any Subsidiary
is, and at all times has been, in material compliance with all applicable terms
and requirements of such contract. Neither of the Companies nor any Subsidiary
has given nor received notice from any other person regarding any actual,
alleged, possible, or potential violation or breach of, or default under, any
contract, and no default or event of default has occurred thereunder.
3.17 INSURANCE.
(a) Sellers have delivered to TGI true and complete copies of all
insurance policies to which either of the Companies or any Subsidiary is a
party or under which either of the Companies or any Subsidiary is or has been
covered at any time within the three (3) years preceding the date of this
Agreement, and true and complete copies of all pending applications for
policies of insurance.
(b) All policies to which either of the Companies or any Subsidiary is
a party or that provide coverage to any Seller, either of the Companies, any
Subsidiary or any director or officer of either of the Companies or any
Subsidiary (i) are valid, outstanding, and enforceable; (ii) in the Sellers'
judgment, are issued by an insurer that is financially sound and reputable;
(iii) in the Sellers' judgment provide adequate insurance coverage for the
assets and the operations of the Companies and the Subsidiaries; (iv) will
continue in full force and effect following the consummation of the
Contemplated Transactions; and (v) except as set forth in Schedule 3.17, do not
provide for any retrospective premium adjustment or other experienced-based
liability on the part of either of the Companies or any Subsidiary.
(c) None of the Sellers, the Companies nor any Subsidiary has received
(i) any refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (ii) any notice of cancellation or any other
indication that any insurance policy is no longer in full force or effect or
will not be renewed or that the issuer of any policy is not willing or able to
perform its obligations thereunder.
(d) Each of the Companies and each Subsidiary has paid all premiums
due, and has otherwise performed all of its obligations, under each policy to
which it is a party or that provides coverage to it. Each of the Companies and
each Subsidiary has given notice to the insurer of all known claims that may be
insured thereby.
3.18 ENVIRONMENTAL MATTERS.
(a) None of the Companies nor any Subsidiary is or has been in
material violation of or liable under, any applicable Environmental Law.
Sellers have no basis to expect, nor have Sellers or either of the Companies or
any Subsidiary received, any actual or threatened order, notice, or other
communication from (i) any governmental body or private citizen, or (ii) the
current or prior owner or operator of any facilities owned or leased by either
of the Companies or any Subsidiary, of any actual or potential violation or
failure to comply with any Environmental Law.
(b) To the Sellers' knowledge, there are no above or underground
storage tanks, landfills, land deposits, or dumps present on or at the
facilities owned or leased by either of the Companies or any Subsidiary or, to
the knowledge of the Sellers, at any adjoining property, or incorporated into
any structure therein or thereon. None of the Companies nor any Subsidiary has
transported Hazardous Materials except in the ordinary operation of its
business.
(c) The Sellers have delivered to TGI true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by Sellers, the Companies or any Subsidiary pertaining to Hazardous
Materials in, on, or under the facilities owned or leased by either of the
Companies or any Subsidiary.
3.19 EMPLOYEES; INDEPENDENT CONTRACTORS.
(a) Schedule 3.19 contains a complete and accurate list of (i) each
officer or director of each of the Companies and each Subsidiary, his or her
job title, and current compensation; and (ii) each independent contractor of
each of the Companies and each Subsidiary, the type of services he or she
provides and his current compensation.
(b) To the Sellers' knowledge, no employee or independent contractor
of either of the Companies or any Subsidiary is a party to, or is otherwise
bound by, any agreement or arrangement, including any confidentiality,
noncompetition or proprietary rights agreement, between such employee and any
other person that in any way adversely affects or will affect (i) the
performance of his duties to the Companies or any Subsidiary, or (ii) the
ability of either of the Companies or any Subsidiary to conduct its business.
(c) Except as noted on Schedule 3.19, all persons rendering services
to each of the Companies or any Subsidiary have been properly characterized and
treated as either employees or independent contractors, and neither of the
Companies nor any Subsidiary has received notice of, nor do Sellers have any
reason to believe that, such treatment will be challenged by the IRS or
otherwise.
3.20 LABOR RELATIONS; COMPLIANCE.
(a) Neither of the Companies nor any Subsidiary has been nor is it now
a party to any collective bargaining or other labor contract. There is not
presently pending or existing, and there is not threatened, (a) any strike,
slowdown, picketing, work stoppage, or employee grievance process, (b) any
proceeding against or affecting the Companies or any Subsidiary relating to the
alleged violation of any applicable law pertaining to labor relations or
employment matters, including any charge or complaint filed by an employee or
union with the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable governmental body, organizational activity, or
other labor or employment dispute against or affecting the Companies, or (c)
any application for certification of a collective bargaining agent. There is no
lockout of any employees by the Companies or any Subsidiary, and no such action
is contemplated by the Companies or any Subsidiary. Each of the Companies and
each Subsidiary has complied in all material respects with all legal
requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing.
(b) Each of the Companies and each Subsidiary is, and at all times has
been, in substantial compliance with, and has not been and is not in material
violation of or liable under, any Occupational Safety and Health Law. Sellers
have no reasonable basis to expect, nor have Sellers, either of the Companies
or any Subsidiary received, any actual or threatened order, notice, or other
communication from any person of any actual or potential violation or failure
to comply with any Occupational Safety and Health Law.
3.21 INTELLECTUAL PROPERTY.
(a) Intellectual Property Assets. The term "Intellectual
Property Assets" includes:
(i) the Companies and each Subsidiary's names, all fictional
business names, trade names, registered and unregistered trademarks,
service marks, and applications;
(ii) all patents, patent applications, inventions and
discoveries that may be patentable;
(iii) all copyrights in both published works and unpublished
works; and
(iv) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings and blue prints owned, used, or licensed
by the Companies or any Subsidiary.
(b) The Intellectual Property Assets are listed on Schedule 3.21. Each
of the Companies (directly or indirectly through its Subsidiaries) owns all
right, title and interest in and to each of the Intellectual Property Assets,
free and clear of all liens, security interests, charges, encumbrances,
equities and other adverse claims, and has the right to use without payment to
a third party all of the Intellectual Property Assets.
(c) Following completion of upgrades scheduled for August, 1998, which
have been contracted and paid for by the Companies, the operating systems and
other software used by the Companies and the Subsidiaries will (i) store all
date-related information and process all data interfaces involving dates in a
manner that unambiguously identifies the century, for all date values before,
during and after the Year 2000; (ii) calculate, sort, report and otherwise
operate correctly and in a consistent manner for all date information processed
by the software, whether before, during or after the Year 2000; (iii)
calculate, sort, report and otherwise operate correctly, in a consistent manner
and without interruption regardless of whether the date of operation is before,
during or after the Year 2000; (iv) report and display all dates with a
four-digit date so that the century is unambiguously identified; and (v) handle
all leap years, including but not limited to the Year 2000 leap year,
correctly.
3.22 RELATIONSHIPS WITH RELATED PERSONS. Except as set forth in
Schedule 3.22, no Seller or any related person or affiliate of Sellers or of
either of the Companies has, or has had, any interest in any property used in
either of the Companies' or any Subsidiary's business. No Seller or any related
person or affiliate of Sellers or of either of the Companies is, or has owned,
directly or indirectly, an equity interest or any other financial or profit
interest in, an entity that has (i) had business dealings or a material
financial interest in any transaction with either of the Companies or any
Subsidiary; or (ii) engaged in competition with either of the Companies or any
Subsidiary with respect to any line of the products or services of either of
the Companies or any Subsidiary. No Seller or any related person or affiliate
of Sellers or of either of the Companies is a party to any contract with either
of the Companies or any Subsidiary.
3.23 BROKERS OR FINDERS. Except as set forth in Schedule 3.23, neither
of the Companies, any Seller or their respective agents have incurred any
obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement.
3.24 DISCLOSURE. No representation or warranty of Sellers in this
Agreement omits to state a material fact necessary to make the statements
herein or therein, in light of the circumstances in which they were made, not
misleading. There is no fact known to Sellers that has specific application to
any Seller, either of the Companies or any Subsidiary (other than general
economic or industry conditions) and that materially adversely affects or, as
far as either Seller can reasonably foresee, materially threatens, the assets,
business, prospects, financial condition, or results of operations of either of
the Companies or any Subsidiary that has not been set forth in this Agreement.
3.25 INVESTMENT REPRESENTATION. Each of the Sellers is acquiring the
shares of the TGI Common Stock for their own account and not with a view to
their distribution within the meaning of Section 2(11) of the Securities Act.
Each Seller understands that such shares are "restricted stock" and agrees not
to sell, pledge, transfer, assign or otherwise dispose of such shares except in
accordance with the Securities Act and the rules and regulations promulgated
thereunder.
4. REPRESENTATIONS AND WARRANTIES OF TGI AND NEWCO
A. TGI has delivered to Sellers, simultaneously herewith, the TGI
Disclosure Letter. TGI represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING. TGI is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Florida, with the corporate power to own its properties and to carry on its
business as now being conducted.
4.2 AUTHORITY; NO CONFLICT.
. (a) This Agreement constitutes the legal, valid and binding
obligation of TGI, enforceable against TGI in accordance with its terms.
TGI has the absolute and unrestricted right, power and authority to execute
and deliver this Agreement and to perform its obligations hereunder.
(b) This Agreement has been approved by all necessary corporate action
of TGI. Neither the execution and delivery of this Agreement by TGI nor the
consummation or performance of any of the Contemplated Transactions by TGI will
give any person the right to prevent, delay or otherwise interfere with any of
the Contemplated Transactions pursuant to or conflict with:
(i) any provision of TGI's Articles of Incorporation or
Bylaws;
(ii) any resolution adopted by the board of directors or
the stockholders of TGI;
(iii) any legal requirement or order to which TGI may be
subject; or
(iv) any contract to which TGI is a party or by which TGI may
be bound.
(c) Except as set forth on Schedule 4.2, TGI is not and will not be
required to obtain any consent from any person in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS. There is no pending proceeding that has been
commenced against TGI and that challenges, or may have the effect of
preventing, delaying, making illegal or otherwise enjoining, any of the
Contemplated Transactions.
4.4 SECURITIES COMPLIANCE. TGI has made all securities filings
required as a "reporting company" under the Exchange Act of 1934, as amended.
TGI's 10-K for the year ended December 31, 1997, is accurate and complete in
form and content in all material respects, and does not contain any material
misstatement or omit to state a material fact required to make such filing not
misleading, and no material adverse change has occurred with respect to TGI
since the date thereof. Upon completion of the Merger, the TGI Common Stock to
be issued to the Sellers in connection with the Merger will be fully paid and
nonassessable.
B. Newco represents and warrants to Sellers as follows:
4.5 ORGANIZATION AND GOOD STANDING. Newco is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Indiana, with the corporate power to own its properties and to carry on its
business as now being conducted.
4.6 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid and binding
obligation of Newco, enforceable against Newco in accordance with its terms.
Newco has the absolute and unrestricted right, power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
(b) This Agreement has been approved by all necessary corporate action
of Newco. Neither the execution and delivery of this Agreement by Newco nor the
consummation or performance of any of the Contemplated Transactions by Newco
will give any person the right to prevent, delay or otherwise interfere with
any of the Contemplated Transactions pursuant to or conflict with:
(i) any provision of Newco's Articles of Incorporation
or Bylaws;
(ii) any resolution adopted by the board of directors or
the stockholders of Newco;
(iii) any legal requirement or order to which Newco may be
subject; or
(iv) any contract to which Newco is a party or by which Newco
may be bound.
(c) Except as set forth on Schedule 4.6, Newco is not and will not be
required to obtain any consent from any person in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
4.7 CERTAIN PROCEEDINGS. There is no pending proceeding that has been
commenced against Newco and that challenges, or may have the effect of
preventing, delaying, making illegal or otherwise enjoining, any of the
Contemplated Transactions.
5. CLOSING
5.1 CLOSING. The consummation of the Merger provided for in this
Agreement (the "Closing") will take place at the offices of Xxxxxx Xxxxxxx
Xxxxxxxxx & Xxxx, PLLC, Suite 700, 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx
00000, at 10:00 a.m. (local time) on May 5, 1998, or at such time and place as
the Parties may agree.
5.2 CLOSING OBLIGATIONS. At the Closing:
(a) Sellers will deliver to TGI:
(i) certificates representing their shares of
Certified Common Stock and Venture Common Stock, duly
endorsed for transfer (or accompanied by duly executed stock
powers), with signatures guaranteed by a commercial bank;
(ii) releases and resignations from the officers,
directors and managers of each of the Companies and each
Subsidiary duly executed by such parties;
(iii) employment agreements in the form of Exhibit
"B," executed by each of the Sellers (collectively,
"Employment Agreements");
(iv) noncompetition agreements in the form of
Exhibit "C," executed by each of the Sellers (collectively, the
"Noncompetition Agreements");
(v) an escrow agreement in the form of Exhibit
"D," executed by Sellers (the "Escrow Agreement");
(vi) a subscription agreement executed by each of
the Sellers for the shares of TGI Common Stock to be received
by the Sellers in the Merger in the form attached hereto as
Exhibit "E";
(vii) promissory notes in the aggregate principal
amount of $603,018 in the form of Exhibit "F," executed by
the Sellers and secured by a pledge of the equivalent value
of shares of TGI Common Stock issued in connection herewith
in consideration of prior loans by the Subsidiaries to such
Sellers;
(viii) a Stock Pledge Agreement in the form of
Exhibit "G," executed by each Seller; and
(ix) Sellers shall execute and deliver closing
certificates in the form attached hereto as Exhibit "H," with
all attachments called for accurately attached thereto.
(b) TGI will deliver to Sellers:
(i) share certificates representing the TGI Common
Stock, issued in the name of the Sellers in the amounts
indicated in Section 2.1.1;
(ii) the cash consideration referred to in
Section 2.1.1 hereof; and
(iii) TGI and Newco shall execute and deliver
closing certificates in the form attached hereto as Exhibit
"H," with all attachments called for accurately attached
thereto.
(c) Certified will deliver:
(i) to Keywan & Xxxxxx Properties, LLC, a five year
Lease Agreement for its current headquarters facility in the
form of Exhibit "H," executed by Certified; and
(ii) to the Sellers, the employment agreements in
the form of Exhibit "B" executed by Certified.
(4) Xxxxx Xxxxxx will deliver to TGI :
(i) a promissory note in the amount of $400,000 in
the form of Exhibit "I," executed by Xxxxx Xxxxxx and secured
by a pledge of 65,979 shares of TGI Common Stock, issued to
Xx. Xxxxxx in connection herewith in consideration of a loan
by TGI to Xx. Xxxxxx in the original principal amount of
$400,000; and
(ii) a Stock Pledge Agreement in the form of Exhibit
"G," executed by Xxxxx Xxxxxx.
(e) The Companies and Newco shall execute and file Articles of
Merger in the form attached hereto as Exhibit "A."
6. INDEMNIFICATION; REMEDIES
6.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE. All
representations, warranties, covenants, and obligations in this Agreement, and
any other certificate or document delivered pursuant to this Agreement, will
survive the Closing.
6.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS. Sellers,
jointly and severally, will indemnify and hold harmless TGI, the Companies, and
their respective representatives, stockholders, controlling persons, and
affiliates (collectively, the "Indemnified Persons") for, and will pay to the
Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Sellers in
this Agreement or any other certificate or document delivered by Sellers or the
Companies pursuant to this Agreement to the extent not cured or waived as of
the Closing Date;
(b) any breach by Sellers or either of the Companies of any covenant
or obligation in this Agreement to the extent not cured or waived as of the
Closing Date;
(c) any product shipped or any services provided by either of the
Companies or any Subsidiary prior to the Closing Date, less any insurance
proceeds received by the Companies in connection therewith; or
(d) any claim by any person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such person with either Seller or either of
the Companies (or any person acting on their behalf) in connection with any of
the Contemplated Transactions other than fees of Certified to Xxxxxxxxxx,
Xxxxx, Light & Xxxxxx, together with actual attorneys' fees, in an aggregate
amount not to exceed $350,000.
6.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY TGI. TGI will indemnify
and hold harmless Sellers, and will pay to Sellers the amount of any Damages
(as defined in 6.2 above) arising, directly or indirectly, from or in
connection with (a) any breach of any representation or warranty made by TGI in
this Agreement or in any certificate delivered by TGI pursuant to this
Agreement to the extent not cured or waived as of the Closing Date, (b) any
breach by TGI of any covenant or obligation of TGI in this Agreement to the
extent not cured or waived as of the Closing Date, (c) any claim by any person
for brokerage or finder's fees or commissions or similar payments based upon
any agreement or understanding alleged to have been made by such person with
TGI (or any person acting on its behalf) in connection with any of the
Contemplated Transactions, or (d) any product shipped or any services provided
by the Companies after the Closing Date, less any insurance proceeds received
by the Sellers in connection therewith.
The remedies provided in this Section 6.2 will not be exclusive of or
limit any other remedies that may be available to TGI or the other Indemnified
Persons.
6.4 TIME LIMITATIONS. If the Closing occurs, Sellers will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty other than those in Sections 3.3, 3.10, 3.12, 3.18 and 3.19, unless
on or before the second (2nd) anniversary of the Closing Date TGI notifies
Sellers of a claim specifying the factual basis of that claim in reasonable
detail to the extent then known by TGI. A claim with respect to Section 3.3, or
a claim for indemnification or reimbursement based upon any covenant or
obligation to be performed and complied with prior to the Closing Date, may be
made at any time. A claim with respect to Sections 3.10, 3.12, 3.18 or 3.19 may
be made at any time prior to the expiration of the applicable statute of
limitations for the cause of action giving rise to such Damages. If the Closing
occurs, TGI will have no liability (for indemnification or otherwise) with
respect to any representation or warranty, unless on or before the second (2nd)
anniversary of the Closing Date Sellers notify TGI of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
Sellers.
6.5 ESCROW. At the Closing, the Sellers will deposit 165,000 shares of
TGI's Common Stock that are issued to the Sellers in the Merger (the "Escrow
Shares") with a bank or trust company located within the State of Georgia which
will act as an escrow agent (the "Escrow Agent"), who will hold the Escrow
Shares in escrow as collateral for the indemnification obligations of the
Sellers under this Agreement. The Escrow Shares will be released to the Sellers
on the expiration of one (1) year following the Closing Date, if no
indemnification claims are then outstanding and will serve as security for the
Sellers' indemnity obligations as set forth in the Escrow Agreement.
6.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person of notice of the
commencement of any proceeding against it, such Indemnified Person will, if a
claim is to be made against an indemnifying party under such Section, promptly
give notice to the indemnifying party of the commencement of such claim, but
the failure to notify the indemnifying party will not relieve the indemnifying
party of any liability that it may have to any Indemnified Person, except to
the extent that the indemnifying party demonstrates that the defense of such
action is prejudiced by the Indemnified Person's failure to give such notice.
(b) If any proceeding referred to in Section 6.6(a) is brought against
an Indemnified Person and it gives notice to the indemnifying party of the
commencement of such proceeding, the indemnifying party will, unless the claim
involves taxes, be entitled to participate in such proceeding and, to the
extent that it wishes (unless (i) the indemnifying party is also a party to
such proceeding and the Indemnified Person determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the Indemnified Person of its financial
capacity to defend such proceeding and provide indemnification with respect to
such proceeding), to assume the defense of such proceeding with counsel
reasonably satisfactory to the Indemnified Person and, after notice from the
indemnifying party to the Indemnified Person of its election to assume the
defense of such proceeding, the indemnifying party will not, as long as it
diligently conducts such defense, be liable to the Indemnified Person under
this Section 6 for any fees of other counsel or any other expenses with respect
to the defense of such proceeding, in each case subsequently incurred by the
Indemnified Person in connection with the defense of such proceeding, other
than reasonable costs of investigation. The indemnifying party may elect not to
assume the defense of a proceeding until such time as its indemnification
obligation hereunder is established. If the indemnifying party assumes the
defense of a proceeding, (i) it will be conclusively established for purposes
of this Agreement that the claims made in that proceeding are within the scope
of and subject to indemnification, (ii) no compromise or settlement of such
claims may be effected by the indemnifying party without the Indemnified
Person's consent unless (A) there is no finding or admission of any violation
of applicable laws or any violation of the rights of any person and no effect
on any other claims that may be made against the Indemnified Person, and (B)
the sole relief provided is monetary damages that are paid in full by the
indemnifying party; and (iii) the Indemnified Person will have no liability
with respect to any compromise or settlement of such claims effected without
its consent. If notice is given to an indemnifying party of the commencement of
any proceeding and the indemnifying party does not, within twenty (20) days
after such notice is given, give notice to the Indemnified Person of its
election to assume the defense of such proceeding, the indemnifying party will
be bound by any determination made in such proceeding or any compromise or
settlement effected by the Indemnified Person. Notwithstanding the foregoing,
the filing of an answer, appearance or pre-answer motions by the indemnifying
party in order to preserve the rights of the Indemnified Party due to a filing
deadline shall not in itself constitute its election to assume the defense of a
claim hereunder.
(c) Notwithstanding the foregoing, if an Indemnified Person determines
in good faith that there is a reasonable probability that a proceeding may
adversely affect it or its affiliates other than as a result of monetary
damages for which it would be entitled to indemnification under this Agreement,
the Indemnified Person may, by notice to the indemnifying party, assume the
exclusive right to defend, compromise, or settle such proceeding, but the
indemnifying party will not be bound by any determination of a proceeding so
defended or any compromise or settlement effected without its consent (which
may not be unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction of any
court in which a proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such proceeding or the matters alleged therein, and agree that
process may be served on Sellers with respect to such a claim anywhere in the
world.
6.7 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be
asserted by notice to the party from whom indemnification is sought.
6.8 LIMITATION. Notwithstanding the foregoing, neither Party shall be
liable for indemnification hereunder unless and until the amount of any claim,
or the aggregate amount of all claims, then made by the other Party equals or
exceeds Fifty Thousand Dollars ($50,000).
6.9 RELEASE OF GUARANTEES. The Companies will use their best efforts
to obtain the release of any personal guarantees provided by the Sellers to a
third party with respect to any debt or obligation of the Companies or its
Subsidiaries. Until such guarantees are released or the underlying obligations
fully satisfied, TGI will cause the Companies to perform all obligations
thereunder and will fully indemnify the Sellers against any loss, claim or
payment made with respect thereto.
7. GENERAL PROVISIONS
7.1 EXPENSES. Each Party to this Agreement will bear its respective
expenses incurred in connection with the preparation, execution, and
performance of this Agreement and the Contemplated Transactions, including all
fees and expenses of agents, representatives, counsel, and accountants, with
the exception of $350,000 in fees payable to Scopelitis, Garvin, Light &
Xxxxxx, one half of which shall be paid by Certified or Newco on the Closing
Date, with the remainder paid by Certified or Newco within thirty (30) days
after the Closing.
7.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity
with respect to this Agreement or the Contemplated Transactions will be issued
at such time and in such manner as mutually agreed, except TGI may make such
disclosures as it deems necessary to comply with applicable securities laws.
Unless consented to by TGI in advance or required by applicable law, prior to
the Closing Sellers shall, and shall cause the Companies to, keep this
Agreement strictly confidential and may not make any disclosure of this
Agreement to any person. Sellers and TGI will mutually agree upon the means by
which the Companies' employees, customers, and suppliers and others having
dealings with the Companies will be informed of the Contemplated Transactions,
and TGI will have the right to be present for any such communication.
7.3 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, TGI, Newco and Sellers will maintain in confidence, and will
cause the directors, officers, employees, agents, and advisors of TGI, Newco
and the Companies to maintain in confidence, any written information originally
furnished by another party in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by
or necessary or appropriate in connection with legal proceedings. Unless
otherwise agreed in writing between the Parties, if the Contemplated
Transactions are not consummated by May 31, 1998, each party will return all
such written information to the other party as it may reasonably request.
7.4 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Sellers: Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Xxxxxxx X. Xxxxxx
0000 Xxxx Xxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
M. Xxxxxxx Xxxxxxxx
00000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
with a copy to: Xxx X. Xxxxxxxx, Xx., Esq.
Scopelitis, Garvin, Light & Xxxxxx
1777 Market Tower
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
TGI: Transit Group, Inc.
Overlook III, Suite 1740
0000 Xxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxx X. XxXxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
7.5 FURTHER ASSURANCES. The Parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each
other such other documents, and (c) to do such other acts and things, all as
the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
7.6 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
Party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one Party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other Parties; (b) no waiver
that may be given by a Party will be applicable except in the specific instance
for which it is given; and (c) no notice to or demand on one Party will be
deemed to be a waiver of any obligation of such Party or of the right of the
Party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
7.7 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the Party to be charged with the amendment.
7.8 DISCLOSURE LETTER. The disclosures in the Companies's Schedules
relate only to the representations and warranties in the Section of the
Agreement to which they expressly refer.
7.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No Party may
assign any of its rights under this Agreement without the prior consent of the
other Parties. Subject to the preceding sentence, this Agreement will apply to,
be binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the Parties. Nothing expressed or referred to in this
Agreement will be construed to give any person other than the Parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
Parties to this Agreement and their successors and assigns.
7.10 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions
of this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
7.11 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Agreement. All words used in
this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word
"including" does not limit the preceding words or terms.
7.12 TIME OF ESSENCE. With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the essence.
7.13 GOVERNING LAW. This Agreement will be governed by the
laws of the State of Indiana without regard to conflicts of laws principles.
7.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
"TGI":
TRANSIT GROUP, INC.
BY: /s/ Xxxxxx X.Xxxxxx
XXXXXX X. XXXXXX, President
"NEWCO":
CERTIFIED ACQUISITION CORP.
BY: /s/ Xxxxxx X.Xxxxxx
XXXXXX X. XXXXXX, President
THE "COMPANIES":
CERTIFIED TRANSPORT, INC.
BY: /s/ Xxxxxxx X. Xxxxxx
XXXXXXX X. XXXXXX, President
VENTURE LOGISTICS, INC.
BY: /s/ M. Xxxxxxx Xxxxxxxx
M. XXXXXXX XXXXXXXX, President
SELLERS:
/s/ Xxxxx Xxxxxx
XXXXX XXXXXX
/s/ Xxxxxxx X. Xxxxxx
XXXXXXX X. XXXXXX
/s/ M. Xxxxxxx Xxxxxxxx
M. XXXXXXX XXXXXXXX
Rev. May 15, 1998
