EXHIBIT 10.12
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STOCK PURCHASE AGREEMENT
AMONG
PMT HOLDINGS, INC.,
INTERSTATE CONSOLIDATION, INC.,
INTERSTATE CONSOLIDATION SERVICE, INC.,
XXXX X. XXXXXXXX
AND
XXXXX X. XXXXXXX
DATED AS OF DECEMBER 16, 1997
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TABLE OF CONTENTS
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PAGE
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ARTICLE I PURCHASE AND SALE OF SHARES............................... 1
1.1. Transfer of Shares........................................... 1
1.2. Purchase Price............................................... 2
1.3. Payments at Closing.......................................... 2
1.4. Delivery of Shares........................................... 3
1.5. Further Assurances........................................... 3
ARTICLE II THE CLOSING.............................................. 3
ARTICLE III FINAL DETERMINATION OF ADDITIONAL AMOUNT................ 3
3.1. Preparation and Delivery of Statements....................... 3
3.2. Adjustments and Payment...................................... 5
3.3. Reimbursement of Transaction Expenses........................ 6
3.4. Affiliate Payments From December 1 to Closing................ 6
3.5. Dividends; Etc............................................... 6
ARTICLE IV SEVERAL REPRESENTATIONS AND WARRANTIES OF EACH SELLER.... 7
4.1. Title to the Shares.......................................... 7
4.2. Authority; Noncontravention; Consents........................ 7
4.3. Investment Representations................................... 8
ARTICLE V SEVERAL REPRESENTATIONS AND WARRANTIES OF EACH SELLER..... 9
5.1. Organization, Power, Authority and Good Standing............. 9
5.2. Authorization, Execution and Enforceability.................. 9
5.3. Consents..................................................... 10
5.4. Capitalization............................................... 11
5.5. Subsidiaries; Investments.................................... 12
5.6. Financial Information........................................ 12
5.7. Absence of Undisclosed Liabilities........................... 13
5.8. Absence of Changes........................................... 13
5.9. Tax Matters.................................................. 14
5.10. Title to Assets, Properties and Rights and Related Matters... 16
5.11. Real Property-Owned or Leased................................ 17
5.12. Intellectual Property........................................ 18
5.13. Agreements, No Defaults, Etc................................. 18
5.14. Litigation, Etc.............................................. 21
5.15. Compliance with Laws......................................... 21
5.16. Insurance.................................................... 22
5.17. Labor Relations; Employees................................... 22
5.18. ERISA Compliance............................................. 23
5.19. Environmental Matters........................................ 24
5.20. Brokers...................................................... 26
5.21. Related Party Transactions................................... 26
5.22. Accounts and Notes Receivable................................ 26
5.23. Bank Accounts; Powers of Attorney............................ 27
5.24. Suppliers and Vendors........................................ 27
5.25. Customers.................................................... 27
5.26. Conflicts of Interest........................................ 28
5.27. Disclosure................................................... 28
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.................................................. 28
6.1. Organization; Corporate Authority................................................................... 28
6.2. Corporate Action; Authority; No Conflict............................................................ 29
6.3. Consents............................................................................................ 29
6.4. Capitalization...................................................................................... 30
6.5. Brokers............................................................................................. 30
6.6. Duly Authorized, Validly Issued PMT Shares.......................................................... 30
6.7. Investment Representations.......................................................................... 30
6.8. Financial Information............................................................................... 31
6.9. Absence of Undisclosed Liabilities.................................................................. 32
6.10. Absence of Changes.................................................................................. 32
6.11. Agreements, No Defaults, Etc........................................................................ 33
6.12. Litigation, Etc..................................................................................... 33
6.13. Compliance with Laws................................................................................ 33
ARTICLE VII COVENANTS AND AGREEMENTS........................................................................ 34
7.1. Transfer of A&G Investments Assets.................................................................. 34
7.2. Cooperation Regarding Tax Filings................................................................... 34
7.3. Real Property Lease................................................................................. 34
7.4. Noncompetition Covenant............................................................................. 35
7.5. Employee Matters.................................................................................... 37
7.6. Purchaser Covenants and Treatment of Transferred Employees Under Purchaser Employee Benefit Plans... 38
7.7. Termination of Certain Agreements................................................................... 38
7.8. Use of Certain Power Intermodal Assets.............................................................. 38
ARTICLE VIII DELIVERIES AT CLOSING.......................................................................... 39
8.1. Deliveries by the Sellers........................................................................... 39
8.2. Deliveries by the Purchaser......................................................................... 40
ARTICLE IX INDEMNIFICATION.................................................................................. 41
9.1. Indemnification Generally; Etc...................................................................... 41
9.2. Assertion of Claims................................................................................. 42
9.3. Notice and Defense of Third Party Claims............................................................ 43
9.4. Survival of Representations and Warranties.......................................................... 44
9.5. Limitations on Indemnification...................................................................... 44
9.6. Satisfaction of Indemnification Obligations of the Seller Indemnifying Persons...................... 45
9.7. Special Indemnification............................................................................. 46
9.8. Satisfaction of Claims by Purchaser................................................................. 47
9.9. Cooperation Regarding Tax Proceedings............................................................... 47
ARTICLE X MISCELLANEOUS PROVISIONS.......................................................................... 49
10.1. Amendment........................................................................................... 49
10.2. Entire Agreement.................................................................................... 49
10.3. Severability........................................................................................ 49
10.4. Benefits of Agreement............................................................................... 49
10.5. Expenses............................................................................................ 50
10.6. Headings............................................................................................ 50
10.7. Notices............................................................................................. 50
10.8. Counterparts........................................................................................ 51
10.9. Governing Law....................................................................................... 51
10.10. Independence of Covenants and Representations and Warranties........................................ 52
10.11. Interpretation; Construction........................................................................ 52
10.12. Remedies............................................................................................ 53
10.13. Consent of Spouses.................................................................................. 53
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ANNEXES, SCHEDULES AND EXHIBITS
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ANNEXES
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Annex I - Shareholder Ownership
Annex II - Certain Definitions
Annex III - Determination of Additional Amount
SCHEDULES
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Schedule 1.5 - Further Assurances
Schedule 4.1 - Title to the Shares
Schedule 4.2(a) - Authority; Noncontravention; Consents
Schedule 5.1 - Foreign Jurisdictions
Schedule 5.1(b) - A&G Documents
Schedule 5.2(b) - A&G Documents
Schedule 5.3 - Consents
Schedule 5.4 - Capitalization
Schedule 5.5 - Subsidiaries; Investments
Schedule 5.6 - Financial Information
Schedule 5.7 - Absence of Undisclosed Liabilities
Schedule 5.8 - Absence of Changes
Schedule 5.9(a) - Tax Matters
Schedule 5.9(c) - Taxing Authority Notifications
Schedule 5.10 - Encumbrances
Schedule 5.10(a) - Location of Material Tangible Personal Property
Schedule 5.10(b) - Acquisitions and Dispositions in Past 24 Months
Schedule 5.11(a) - Leased Real Property
Schedule 5.11(b) - Leased Property Notices
Schedule 5.12(a) - Licensed Requisite Rights
Schedule 5.12(b) - Patents, Trademarks and Service marks
Schedule 5.13 - Contracts
Schedule 5.13(b) - Oral Items
Schedule 5.13(c) - Funded Indebtedness
Schedule 5.14(a) - Proceedings, Orders
Schedule 5.14(b) - Certain Litigation Matters
Schedule 5.15 - Compliance with Laws
Schedule 5.16(a) - Insurance Policies
Schedule 5.16(b) - Insurance Claims, Etc.
Schedule 5.17 - Employees
Schedule 5.18(a) - Employee Benefit Plans
Schedule 5.18(b) - ERISA Compliance
Schedule 5.19(a) - Environmental Laws - Violations
Schedule 5.19(b) - Previous Facilities - Environmental Compliance
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Schedule 5.21 - Related Transactions
Schedule 5.22 - Accounts and Notes Receivable
Schedule 5.23 - Bank Accounts; Powers of Attorney
Schedule 5.24 - Suppliers and Vendors
Schedule 5.25 - Customers
Schedule 5.26 - Conflicts of Interest
Schedule 6.1 - Foreign Jurisdictions
Schedule 6.3 - Consents
Schedule 6.4 - Capitalization
Schedule 6.5 - Brokers
Schedule 6.8 - Financial Information
Schedule 6.9 - Absence of Undisclosed Liabilities
Schedule 6.10 - Absence of Changes
Schedule 6.12 - Certain Litigation Matters
Schedule 6.13 - Compliance With Laws
Schedule 7.1 - Transferred A&G Assets
Schedule 7.3 - Real Property Lease
Schedule 7.6 - ICI Plans to be continued
Schedule 7.7 - Terminated Agreements
EXHIBITS
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Exhibit A - Form of Seller Note
Exhibit B - Form of Letter of Credit
Exhibit C-1 - Form of Headquarters Lease
Exhibit C-2 - Form of Lease Guaranty
Exhibit C-3 - Form of Material Inducement
Exhibit D - Form of Opinion of Seller Group's Counsel
Exhibit E - Form of General Release
Exhibit F-1 - Form of Employment Agreement of Xxxx X. Xxxxxxxx
Exhibit F-2 - Form of Employment Agreement of Xxxxx X. Xxxxxxx
Exhibit G - Form of Amended and Restated Stockholders Agreement
Exhibit H-1 - Form of A&G Xxxx of Sale
Exhibit H-2 - Form of A&G Assignment Agreement
Exhibit I - Form of Opinion of Purchaser's Counsel
Exhibit J - Spousal Consent
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INDEX OF DEFINED TERMS
The following capitalized terms, which may be used in more than one Section
or other location of this Agreement, are defined in the following Sections or
other locations:
SECTION
OR OTHER
TERM LOCATION
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A&G 5.2(b)
A&G Assigned Leases 7.1
A&G Xxxx of Sale 7.1
A&G Documents 5.2(b)
Acquisition Proposal Annex II
Actual Knowledge Annex II
Additional Amount Annex III
Affiliate Annex II
Agreement 10.2
Audited Financial Statements 5.6(a)(i)
Best Knowledge Annex II
Business Preamble
Business Day Annex II
Capital Leases Annex II
Cash Portion 1.2
Charter Documents Annex II
Closing Article III
Closing Date Article III
Closing Date Financial Statements 3.1(a)
Closing Payment 1.3
Company Caption
Company Common Stock Preamble
Company Employee Plans 5.18(a)
Competing Business 7.4(c)
Contract Annex II
Control Annex II
Covered Properties 5.19(b)
EMI 6.10
Employee Benefit Plan Annex II
Employment Agreements 8.1(f)
Encumbrances Annex II
Environmental, Health and Safety Laws Annex II
Environmental/Tax Cap 9.5(a)
ERISA Affiliate Annex II
Estimated Additional Amounts 1.3
Financial Statements 5.6(a)(ii)
Funded Indebtedness Annex II
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SECTION
OR OTHER
TERM LOCATION
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General Release 8.1(e)
Governmental Entity Annex II
Guaranty Annex II
Headquarters Lease 6.3
ICI Caption
ICS Caption
Indemnified Persons Annex II
Indemnifying Persons Annex II
Independent Accounting Firm 3.1(b)
Intellectual Property Rights Annex II
Key Employees Annex II
Latest Balance Sheet Date 5.6(a)(iii)
Latest Balance Sheet 5.6(a)(iii)
Law Annex II
Lawsuit Annex II
Leased Property 5.11(a)
Letter of Credit 1.3
Letters of Credit 1.3
Liability Annex II
Licensed Requisite Rights 5.12(a)(i)
Litigation Cap 9.7
Litigation Expense Annex II
Losses Annex II
Orders Annex II
Owned Requisite Rights 5.12(a)(i)
Pacific Motor 6.8
Permits Annex II
Permitted Encumbrances Annex II
Person Annex II
PMT Caption
PMT Annual Financial Statements 6.8
PMT Interim Financial Statements 6,8(a)(ii)
PMT Latest Balance Sheet 6.8(a)(ii)
PMT Remainder Cap 9.5(b)
PMT Unaudited Financial Statements 6.8(a)(ii)
PMT Shares 1.3
Power Intermodal 1.3(c)
Pre-Closing Dividend Annex IV
Proceedings Annex II
Proportionate Percentage Annex II
Purchase Price 1.2
Purchaser Caption
Purchaser's Accountants 3.1(b)
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SECTION
OR OTHER
Term LOCATION
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Purchaser Indemnified Persons Annex II
Purchaser Indemnifying Persons Annex II
Purchaser Losses Annex II
Purchaser Representation Cap 9.5(b)
Real Property Lease 6.3
Related Documents Annex II
Remainder Cap 9.5(a)
Representation Cap 9.5(a)
Requisite Rights 5.12(a)(i)
Securities Annex II
Securities Act Annex II
Seller Group Caption
Seller Indemnified Persons Annex II
Seller Indemnifying Persons Annex II
Seller Losses Annex II
Seller(s) Caption
Seller Note 1.3
Seller Notes 1.3
Sellers' Accountants 3.1
Shares Preamble
Special Liabilities 9.7
Special Tax Losses Annex II
Spousal Consent 10.13
Stockholders Agreement 8.1(g)
Subsidiary Annex II
Survival Date 9.4
Tax Return Annex II
Tax(es) Annex II
Third Party Claim 9.3
Transferred Employees 7.6
Unaudited Financial Statements 5.6(a)(ii)
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STOCK PURCHASE AGREEMENT dated as of December 16, 1997, by and among, PMT
HOLDINGS, INC., a Delaware corporation (the "Purchaser" or "PMT"), INTERSTATE
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CONSOLIDATION, INC., a California corporation ("ICI"), INTERSTATE CONSOLIDATION
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SERVICE, INC., a California corporation ("ICS"; and ICI and ICS collectively,
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the "Companies" and each individually, a "Company"), and XXXX X. XXXXXXXX and
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XXXXX X. XXXXXXX (each, a "Seller," and collectively, the "Sellers," and
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together with the Companies prior to the Closing, the "Seller Group").
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PREAMBLE
The Companies are engaged in the business (the "Business") of providing the
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following transportation services to third party customers: (i) nationwide
trailer load intermodal transportation services throughout the United States,
Canada and Mexico; (ii) less-than-truckload common carrier services with 48-
state operating authority from Southern California origins to all points in the
continental United States; (iii) local container and railroad intermodal
drayage, consolidation, deconsolidation and distribution services; and (iv)
contract warehousing, freight handling and customized logistics services through
its U.S. customs bonded container freight station. The Sellers are the sole
shareholders of the Companies, with each Seller owning that number of shares of
common stock, no par value, of each of the Companies (collectively, the "Company
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Common Stock"), as is set forth opposite such Seller's name on ANNEX I attached
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hereto. The shares of Company Common Stock owned by the Sellers are
collectively referred to herein as the "Shares." The Sellers desire to sell to
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the Purchaser, and the Purchaser desires to purchase from the Sellers, all of
the Shares, on the terms and subject to the conditions contained in this
Agreement. Certain capitalized terms used in this Agreement are defined on
ANNEX II attached hereto.
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ACCORDINGLY, in consideration of the premises and the mutual
representations hereinafter set forth, the parties hereto hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1. TRANSFER OF SHARES.
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On the terms and subject to the conditions of this Agreement, at the
Closing, the Sellers shall sell, transfer, convey and assign to the Purchaser,
and the Purchaser shall
purchase and acquire from the Sellers, all of the Shares, free and clear of all
Encumbrances.
1.2. PURCHASE PRICE.
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The aggregate purchase price (the "Purchase Price") to be paid by the
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Purchaser to the Sellers for the Shares shall be an aggregate amount equal to
the sum of the Cash Portion plus the PMT Shares issued and delivered by PMT to
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the Sellers at the Closing pursuant to SECTION 1.3. As used herein, the term
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"Cash Portion" means the sum of (i) the amount set forth in CLAUSE (I) of
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SECTION 1.3(A), plus (ii) the Additional Amount, as finally determined pursuant
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to ARTICLE III, plus (iii) the amount determined pursuant to CLAUSE (III) of
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SECTION 1.3(A). As used herein, the term "Additional Amount" shall be defined
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on, and determined in accordance with the provisions of, ANNEX III attached
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hereto.
1.3. PAYMENTS AT CLOSING.
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(a) At the Closing, the Purchaser shall pay to each Seller an amount
equal to such Seller's Proportionate Percentage of the sum of (i) $16,851,719,
plus (ii) $3,062,082, constituting the Estimated Additional Amount, plus (iii)
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$69,562, constituting interest accrued on the sum of the amounts described in
clauses (i) and (ii) at the rate of 8.5% per annum for the period from (and
including) December 1, 1998, through (but excluding) the Closing Date,
calculated based on the actual number of days elapsed over a year of 365 days
(the sum of the amounts in clauses (i), (ii) and (iii) being called the "Closing
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Payment" herein), by delivery to such Seller of (A) a non-negotiable promissory
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note of the Purchaser in such principal amount due January 2, 1998, in the form
attached hereto as EXHIBIT A (each, a "Seller Note," and collectively, the
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"Seller Notes") and (B) a non-negotiable, stand-by, irrevocable letter of credit
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issued by The First National Bank of Chicago, in a face amount equal to the
principal amount of such Seller Note and securing the Purchaser's payment
obligations under such Seller Note, in the form attached hereto as EXHIBIT B
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(each, a "Letter of Credit," and collectively, the "Letters of Credit"). As used
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herein, the term "Estimated Additional Amount" means the parties' joint good
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faith estimate of the Additional Amount as set forth on ANNEX III.
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(b) At the Closing, the Purchaser shall issue and deliver to each Seller
that number of shares of common stock, $.01 par value, of PMT (the "PMT Shares")
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set forth opposite such Seller's name on ANNEX I.
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(c) Prior to the Closing, the Sellers shall pay (or cause to be paid, as
applicable) the following amounts to the Companies:
(i) $285,135 in satisfaction of the outstanding accounts
receivable due to the Companies from Power Intermodal, Inc. ("Power
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Intermodal") (such amount to be paid by Power Intermodal Inc.);
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(ii) $501,954 in satisfaction of outstanding notes receivable
due to the Companies from the Sellers for amounts advanced to the Sellers
to fund payment of life insurance premiums; and
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(iii) $247,174 in reimbursement of amounts paid by the Companies prior
to the Closing with respect to fees, costs and expenses incurred by the
Sellers in connection with the transactions contemplated by this Agreement.
1.4. DELIVERY OF SHARES.
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At the Closing, in consideration of the Purchaser's delivery of the Seller
Notes, Letters of Credit and PMT Shares pursuant to Section 1.3 hereof, the
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Sellers shall each deliver to the Purchaser the certificate or certificates
representing the Shares of each Company owned by such Seller (or, in lieu
thereof, an Affidavit of Loss and Indemnity reasonably satisfactory in form and
substance to the Purchaser), duly endorsed for transfer to the Purchaser or
accompanied by duly executed stock powers transferring the Shares to the
Purchaser in each case sufficient in form and substance to convey to the
Purchaser good title to all of the Shares, free and clear of all Encumbrances.
1.5. FURTHER ASSURANCES.
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The Sellers shall, at any time after the Closing, upon the request of the
Purchaser and at the Purchaser's expense, do, execute, acknowledge and deliver,
and cause to be done, executed, acknowledged and delivered, all such further
acts, deeds, assignments, transfers, conveyances, powers of attorney and other
assurances as may be reasonably required to transfer, convey, grant and confirm
to and vest in the Purchaser good title to (i) all of the Shares, and (ii) any
asset used in or necessary to conduct the Business that is owned by a Seller or
any Affiliate of any Seller (other than fee title to the real estate subject to
the Headquarters Lease and those assets listed on SCHEDULE 1.5), in each case
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free and clear of all Encumbrances.
ARTICLE II
THE CLOSING
The closing (the "Closing") of the transactions contemplated by this
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Agreement shall take place at the offices of Manatt, Xxxxxx & Xxxxxxxx, LLP,
counsel for the Seller Group, at their address set forth in SECTION 11.7, on
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December 16, 1997, or at such other place or on such other date as shall be
mutually agreeable to the parties hereto (the "Closing Date"), provided that all
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of the deliveries set forth in ARTICLE VIII have been made or waived.
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ARTICLE III
FINAL DETERMINATION OF ADDITIONAL AMOUNT
3.1. PREPARATION AND DELIVERY OF STATEMENTS.
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(a) As soon as practicable after the Closing, but in no event later than
90 days after the Closing Date, the Sellers shall cause KPMG Peat Marwick, LLP
(the "Sellers' Accountants"), to prepare and deliver to the Purchaser and the
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Sellers (i)audited
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combined balance sheets of the Companies and Subsidiary as of the Closing Date,
together with related footnotes, and related audited combined statements of
earnings, stockholders' equity and cash flows of the Companies and Subsidiary
for the period from January 1, 1997, through the Closing Date (collectively, the
"Closing Date Financial Statements") and (ii) a certificate signed by the
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Sellers' Accountants setting forth the Sellers' Accountants' calculation of the
Additional Amount and certifying that such calculation was made in accordance
with ANNEX III. The Closing Date Financial Statements shall include a
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supplemental schedule to the audited combined financial statements presenting a
combined statement of earnings and stockholders equity of the Companies and
Subsidiary for the periods from January 1, 1997, through June 30, 1997, and from
July 1, 1997, through November 30, 1997, adjusting for the provisions of Annex
III. Such supplemental schedule will be subjected to the auditing procedures
applied in the audit of the Closing Date Financial Statements referred to in
clause (i) above in relation to the Closing Date Financial Statements taken as a
whole and will be utilized for the calculation of the Additional Amount and,
accordingly, will be covered in the Sellers' Accountants' report thereon. The
Closing Date Financial Statements shall be prepared in accordance with GAAP
consistently applied; provided, however, that with respect to the Closing Date
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Financial Statements, the Purchaser may specify changes in GAAP that are
reasonably acceptable to the Sellers but such changes shall not affect the
calculation of the Additional Amount. If not disputed by the Purchaser in
accordance with SECTION 3.1(B), the Closing Date Financial Statements and the
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Sellers' Accountants' calculation of the Additional Amount shall be final and
binding on the Sellers and the Purchaser for purposes of determining the
adjustment to the Purchase Price, if any, to be made under this ARTICLE III.
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(b) If the Purchaser disputes any amounts reflected on the Closing Date
Financial Statements or in the Sellers' Accountants' calculation of the
Additional Amount, the Purchaser shall notify the Sellers in writing of each
disputed item, specifying the amount thereof in dispute and setting forth in
reasonable detail the basis for such dispute, within 30 days of the Purchaser's
receipt of the Closing Date Financial Statements. The Purchaser shall be
entitled to have Xxxxxx Xxxxxxxx (the "Purchaser's Accountants") review the
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Closing Date Financial Statements and the Sellers' Accountants calculation of
the Additional Amount. The Sellers shall provide, and shall use their
commercially reasonable efforts to cause the Sellers' Accountants to provide, to
the Purchaser and the Purchaser's Accountants timely access to the work papers,
trial balances and similar materials used in connection with or relating to the
preparation and calculation of the Closing Date Financial Statements and the
Additional Amount. In the event of such a dispute by the Purchaser, each of the
Purchaser and the Sellers shall negotiate in good faith to resolve such dispute.
If the Purchaser and the Sellers are unable to reach a resolution within 30 days
following the Purchaser's delivery to the Sellers of its written notice of such
dispute, the Purchaser and the Sellers shall submit the items in dispute for
resolution to Price Waterhouse LLP or, in the event such persons are unable or
unwilling to act, such other independent accounting firm as may be mutually
acceptable to the Purchaser and the Sellers (the "Independent Accounting Firm"),
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which Independent Accounting Firm shall be instructed by the parties to
determine and report to the Sellers and the Purchaser within upon such remaining
disputed items within 30 Business Days of the submission of such items to the
Independent Accounting Firm, and such report shall
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have the legal effect of an arbitral award and shall be final, binding and
conclusive on the Sellers and the Purchaser.
(c) The reasonable fees and disbursements of the Independent Accounting
Firm shall be allocated between the Sellers on the one hand and the Purchaser on
the other hand in the same proportion that the aggregate amount of such disputed
items so submitted to the Independent Accounting Firm that is unsuccessfully
disputed by each such party (as finally determined by the Independent Accounting
Firm) bears to the total amount of such disputed items so submitted. Up to
$70,000 of the reasonable fees and disbursements of the Sellers' Accountants for
the preparation, audit and delivery of the Closing Date Financial Statements
shall be paid by the Purchaser. Each of the Sellers, on the one hand, and the
Purchaser, on the other hand, shall bear all fees and disbursements of the
Sellers' Accountants and the Purchaser's Accountants, respectively, incurred in
connection with the discussion and negotiation of any and all disputes that may
arise as to the determination of the Additional Amount and the Closing Date
Financial Statements; provided, however, that in the event any such disputes are
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submitted to and resolved by the Independent Accounting Firm, then all such
reasonable fees and disbursements of the Sellers' Accountants and the
Purchaser's Accountants shall be allocated between and borne by the Sellers, on
the one hand, and the Purchaser, on the other hand, in the manner provided in
the first sentence of this SECTION 3.1(C).
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3.2. ADJUSTMENTS AND PAYMENT.
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Upon the final determination of the Additional Amount pursuant to SECTION
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3.1, the following adjustment and payment, as applicable, shall be made:
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(i) if the Additional Amount as finally determined is greater than
the Estimated Additional Amount, the Cash Portion shall be increased by an
amount equal to such excess and the Purchaser shall, within 5 days after
such final determination, pay to each Seller such Seller's Proportionate
Percentage of the amount by which the Additional Amount as finally
determined exceeds the Estimated Additional Amount, such payment to be made
by wire transfer of immediately available funds to the account designated
by such Seller;
(ii) if the Additional Amount as finally determined is less than the
Estimated Additional Amount, the Cash Portion shall be decreased by an
amount equal to such deficiency and the Sellers shall jointly and severally
pay to the Purchaser within 5 days after such final determination, by wire
transfer of immediately available funds to an account designated by the
Purchaser, the amount by which the Additional Amount as finally determined
is less than the Estimated Additional Amount; and
(iii) if the Additional Amount as finally determined equals the
Estimated Additional Amount, then no adjustment shall be made to the
Purchase Price and no payment shall be made under this ARTICLE III.
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3.3. REIMBURSEMENT OF TRANSACTION EXPENSES.
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All transaction expenses (excluding expenses for travel by the Sellers) of
the Companies or the Sellers either charged or chargeable against net income
through the Closing Date will reimbursed to the Companies by the Sellers prior
to or at the Closing. If the actual amount of such transaction expenses for
such period is subsequently found to differ from the amount reimbursed to the
Companies by the Sellers, the Companies will promptly reimburse the Sellers for
the difference (if the actual amount is less than the amount reimbursed) or the
Sellers will promptly reimburse the Companies for the difference (if the actual
amount is greater than the amount reimbursed). All such transaction expenses
arising after November 30, 1997, and not paid by the Companies (and thus subject
to the reimbursement provisions of the preceding sentences of this Section)
shall be paid directly by the Sellers, or, if any of the Companies is required
(contractually or otherwise) to pay such amount, such Company will promptly be
reimbursed by the Sellers for such amount so paid by it.
3.4. AFFILIATE PAYMENTS FROM DECEMBER 1 TO CLOSING.
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As promptly as practicable, but in any event within 30 days, after the
Closing, the Sellers shall determine and pay to the Companies the sum of the
following amounts: (i) the net amount by which any and all payments made by any
of the Companies to any Seller or Affiliate of a Seller during the period from
December 1, 1997, through the Closing Date exceeded that which would have been
payable in accordance with this Agreement, the Headquarters Lease and the
Employment Agreements as if such agreements had been in effect on and since
December 1, 1997 (including salary and other compensation paid to the Sellers in
excess of such amounts that would have been payable under their respective
Employment Agreements), less the amount by which rent paid by the Companies for
the headquarters premises plus truck parking rentals is less than $45,000, (ii)
the net amount by which rents and other charges paid by the Companies to A&G
during the period from December 1, 1997, through the Closing Date with respect
to the trailers and other equipment leased by third parties to A&G under the A&G
Assigned Leases exceeded the amounts paid by A&G to such third parties for such
period with respect to such trailers and equipment, and (iii) the aggregate
amount of all out-of-pocket expenses (including travel of third party advisers
and representatives, but excluding expenses for travel by the Sellers) paid or
incurred by the Companies in connection with the transactions contemplated by
this Agreement to the extent the same were not paid by or reimbursed to the
Companies by the Sellers pursuant to SECTION 3.3. In the event that the
-----------
Purchaser's Accountants dispute the Sellers' determination of any of the
foregoing amounts, such dispute shall be resolved by the Independent Accounting
Firm in an manner consistent with the provisions of SECTION 3.1.
-----------
3.5. DIVIDENDS; ETC.
--------------
The Sellers covenant and agree with the Purchaser that prior to the Closing
(i) the Sellers have reimbursed the Companies for transaction expenses paid by
the Company in the amount of $247,174, (ii) the Sellers have reimbursed the
Companies for advances previously made to the Sellers for insurance premiums in
the amount of $501,954, (iii)
- 6 -
the Sellers have caused Power Intermodal to satisfy its obligations to the
Companies by the payment to the Companies of $285,135, and (iv) the aggregate
amount of all dividends and distributions received by the Sellers from the
Companies during the period from July 1, 1997, through the Closing equaled
$2,030,000. In the event that any of the foregoing payments in clauses (i), (ii)
and (iii) shall not have been made, in whole or in part, the Sellers shall make
such payment promptly upon written demand from the Purchaser, and in the event
that the aggregate amount of all dividends and distributions on or with respect
to the capital stock of the Companies received by the Sellers from the Companies
during the period from July 1, 1997, through the Closing exceeded $2,030,000,
the Sellers shall reimburse the Companies for such excess amount promptly upon
written demand from the Purchaser.
ARTICLE IV
SEVERAL REPRESENTATIONS AND WARRANTIES OF EACH SELLER
Each Seller represents and warrants severally as to himself on and as of
the date hereof as follows:
4.1. TITLE TO THE SHARES.
-------------------
Such Seller is the lawful owner, of record and beneficially, of those
Shares set forth opposite his name on ANNEX I attached hereto and has good and
-------
marketable title to such Shares, free and clear of any Encumbrances whatsoever
and with no restriction on the voting and transfer rights and other incidents of
record and beneficial ownership pertaining thereto. Such Seller is not the
subject of any bankruptcy, reorganization or similar proceeding. Except for
this Agreement and except as set forth on SCHEDULE 4.1, there are no agreements
------------
or understandings between such Seller and any other Seller or any other Person
with respect to the acquisition, disposition, transfer, registration or voting
of or any other matters in any way pertaining or relating to any of the capital
stock of the Companies. Such Seller does not have any right whatsoever to
receive or acquire any additional capital stock of the Companies.
4.2. AUTHORITY; NONCONTRAVENTION; CONSENTS.
-------------------------------------
(a) Such Seller has the full and absolute legal right, capacity, power and
authority to enter into this Agreement and each Related Document to which such
Seller is or will be a party, this Agreement and each Related Document to which
such Seller is or will be a party has been, or upon the execution thereof will
be, duly and validly executed and delivered by such Seller, and except as set
forth on SCHEDULE 4.2(A) this Agreement and each Related Document is, or upon
---------------
the execution thereof will be, the valid and binding obligation of such Seller,
enforceable against such Seller in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, good faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity).
- 7 -
(b) Neither the execution, delivery or performance by such Seller of this
Agreement or the Related Documents to which such Seller is or will be a party
nor the consummation of the transactions contemplated hereby or thereby nor
compliance by such Seller with any of the provisions hereof or thereof will (i)
conflict with, or result in any violation of, or cause a default (with or
without notice or lapse of time, or both) under, or give rise to any right of
termination, amendment, cancellation or acceleration of any obligations
contained in or the loss of any material benefit under, any term, condition or
provision of any Contract to which such Seller is a party, or by which such
Seller or its assets may be bound or (ii) violate any Law applicable to such
Seller, which conflict or violation could prevent the consummation of the
transactions contemplated by this Agreement or any of the Related Documents to
which such Seller is or will be a party or result in an Encumbrance on or
against any assets, rights or properties of such Seller, or on or against any
capital stock of any Company, or give rise to any claim against either Company
or the Purchaser.
(c) Except as contemplated by this Agreement, no Permit, authorization,
consent or approval of or by, or any notification of or filing with, any Person
(governmental or private) is required in connection with the execution, delivery
and performance by such Seller of this Agreement or the Related Documents to
which such Seller is or will be a party or the consummation by such Seller of
the transactions contemplated hereby or thereby.
4.3. INVESTMENT REPRESENTATIONS.
--------------------------
(a) Such Seller is acquiring the PMT Shares to be acquired by such Seller
hereunder for his own account, for investment and not with a view to the
distribution thereof in violation of the Securities Act or applicable state
securities laws.
(b) Such Seller understands that the PMT Shares have not been registered
under the Securities Act or applicable state securities laws by reason of their
issuance by the Purchaser in a transaction exempt from the registration
requirements of the Securities Act and applicable state securities laws and that
the PMT Shares must be held by such Seller indefinitely unless a subsequent
disposition thereof is registered or qualified, as the case may be, under the
Securities Act and applicable state securities laws or is exempt from
registration or qualification, as the case may be.
(c) Such Seller is an "accredited investor" (as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act). The Purchaser has made
available to such Seller or his attorneys and other representatives all
agreements, documents, records and books that such Seller has requested relating
to his acquisition of the PMT Shares. Such Seller has had an opportunity to ask
questions of, and receive answers from, persons acting on behalf of the
Purchaser concerning the Purchaser and the terms and conditions of such Seller's
acquisition of the PMT Shares hereunder, and answers have been provided to all
of such questions to the full satisfaction of such Seller. Such Seller
(together with his adviser representative) has such knowledge and experience in
financial and business matters that he is capable of evaluating the risks and
merits of his acquisition of the PMT Shares hereunder.
- 8 -
(d) Such Seller is not a person who himself is, or would cause the
Purchaser to be, disqualified pursuant to Rule 262 promulgated under the
Securities Act.
ARTICLE V
SEVERAL REPRESENTATIONS AND WARRANTIES OF EACH SELLER
Each Seller severally represents and warrants on and as of the date hereof
as follows:
5.1. ORGANIZATION, POWER, AUTHORITY AND GOOD STANDING.
------------------------------------------------
(a) Each of the Companies and their respective subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite power and
authority (corporate and otherwise) to own, lease and operate its assets and
properties and to carry on its business as presently conducted and as presently
proposed to be conducted. Each of the Companies and their respective
subsidiaries is duly qualified and in good standing to transact business as a
foreign Person in those jurisdictions set forth on SCHEDULE 5.1, which
------------
constitute all the jurisdictions in which the character of the property owned,
leased or operated by such Company or subsidiary or the nature of the business
or activities conducted by such Company or subsidiary makes such qualification
necessary. The Purchaser has been furnished with true, correct and complete
copies of the Charter Documents of each of the Companies and their respective
subsidiaries, in each case as amended and in effect on the date hereof. Except
as set forth on SCHEDULE 5.1, none of the Companies nor any of their respective
------------
subsidiaries has (i) engaged in any business or activity other than the Business
or (ii) used within the last five years any trade name or assumed names.
(b) A&G Investments ("A&G") is a validly existing general partnership
---
and is in good standing under the laws of the jurisdiction of its formation and
has all requisite partnership power and authority to own, lease and operate its
assets and properties.
5.2. AUTHORIZATION, EXECUTION AND ENFORCEABILITY.
-------------------------------------------
(a) Each of the Companies has all requisite power and authority (corporate
and otherwise) to execute, deliver and perform its obligations under this
Agreement and each Related Document to which it is or will be a party and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by each of the Companies of this Agreement and each Related Document to
which it is or will be a party, and the performance by such Company of its
obligations hereunder and thereunder have been duly and validly authorized by
all requisite action on the part of such Company and its shareholders, and this
Agreement and each Related Document to which such Company is or will be a party
has been, or upon the execution thereof will be, duly and validly executed and
delivered by such Company and constitutes, or upon its execution and delivery
will constitute, a valid and binding obligation of such Company, enforceable
against such Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws
- 9 -
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity). Neither the execution and delivery by each of the Companies of, nor the
performance of its obligations under, this Agreement and each Related Document
to which it is or will be a party, nor the consummation of the transactions
contemplated hereby or thereby, will (a) violate, or result in the creation of
an Encumbrance upon any of such Company's assets as a result of, any Laws
applicable to such Company or any of its properties or assets or (b) conflict
with, or result in any violation or breach of, any of the terms, conditions or
provisions of, or constitute (with due notice or lapse of time, or both) a
default or give rise to any right of contingent payment, termination,
cancellation or acceleration, or result in the creation of any Encumbrance upon
any of the properties or assets of such Company under, any provision of such
Company's Charter Documents or any Contract to which it is a party or by which
it or any of its assets or properties is or may be bound.
(b) A&G has all requisite partnership power and authority to execute,
deliver and perform its obligations under each of the documents listed on
SCHEDULE 5.2(B) (the "A&G DOCUMENTS") and to consummate the transactions
--------------- -------------
contemplated thereby. The execution and delivery by A&G of each A&G Document,
and the performance by A&G of its obligations thereunder have been duly and
validly authorized by all requisite action on the part of A&G and its partners,
and each A&G Document has been, or upon the execution thereof will be, duly and
validly executed and delivered by A&G and, except for the Headquarters Lease,
constitutes ,a valid and binding obligation of A&G, enforceable against A&G in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity). Neither the
execution and delivery by A&G of, nor the performance of its obligations under,
each A&G Document (other than the Headquarters Lease), nor the consummation of
the transactions contemplated thereby, will (a) violate, or result in the
creation of any Encumbrance upon any of A&G's assets as a result of, any Laws
applicable to A&G or any of its properties or assets or (b) conflict with, or
result in any violation or breach of, any of the terms, conditions or provisions
of, or constitute (with due notice or lapse of time, or both) a default or give
rise to any right of contingent payment, termination, cancellation or
acceleration, or result in the creation of any Encumbrance upon any of the
properties or assets of A&G under, any provision of A&G's certificate and/or
agreement of partnership or any Contract to which it is a party or by which it
or any of its assets or properties is or may be bound.
5.3. CONSENTS.
--------
Except as set forth on SCHEDULE 5.3, no Permit, authorization, consent or
------------
approval of or by, or notification of or filing with, any Person (governmental
or otherwise) is required in connection with the execution, delivery and
performance by each of the Companies of this Agreement or the Related Documents
to which it is or will be a party or the consummation of the transactions
contemplated hereby or thereby. Except as set
- 10 -
forth on SCHEDULE 5.3, no Permit, authorization, consent or approval of or by,
------------
or notification of or filing with, any Person (governmental or otherwise) is
required in connection with the execution, delivery and performance by A&G of
the A&G Documents (other than the Headquarters Lease) to which it is or will be
a party or the consummation of the transactions contemplated thereby (except
where the failure to obtain or make such authorization, consent, approval,
notification or filing will not have an adverse effect on A&G's ability to
perform its obligations under the A&G Documents).
5.4. CAPITALIZATION.
--------------
(a) The authorized capital stock of each of the Companies and their
respective subsidiaries is as set forth on SCHEDULE 5.4, which schedule also
------------
sets forth the total number of outstanding shares of each of the Companies and
their respective subsidiaries. All such outstanding shares disclosed on
SCHEDULE 5.4 are duly and validly issued and outstanding, fully paid and
------------
nonassessable, with no personal Liability attached to the ownership thereof, and
are held of record and beneficially by the Persons, and in the amounts, set
forth on SCHEDULE 5.4.
------------
(b) Except as set forth on SCHEDULE 5.4, there are no securities presently
------------
outstanding, and on the Closing Date there will not be any outstanding
securities, which are convertible into, exchangeable for, or carrying the right
to acquire, equity securities of any of the Companies or their respective
subsidiaries, or subscriptions, warrants, options, calls, puts, convertible
securities, registration or other rights, arrangements or commitments obligating
any of the Companies or their respective subsidiaries to issue, sell, register,
purchase or redeem any of its equity securities or any ownership interest or
rights therein. There are no voting trusts or other agreements or
understandings to which any of the Companies or their respective subsidiaries is
bound with respect to the voting of such Company's or subsidiary's capital
stock. There are no stock appreciation rights, phantom stock rights or similar
rights or arrangements outstanding with respect to any of the Companies or their
respective subsidiaries. Except as set forth on SCHEDULE 5.4, there are no
------------
Contracts, commitments, arrangements, understandings or restrictions to which
any Company or any of its subsidiaries, any Seller or any other Person is bound
relating in any way to any shares of capital stock or other securities of any
Company or any of its subsidiaries.
(c) All securities issued by the Companies and their respective
subsidiaries have been issued in transactions exempt from registration under the
Securities Act and the rules and regulations promulgated thereunder and all
applicable state securities or "blue sky" laws, and none of the Companies nor
any of their respective subsidiaries has violated the Securities Act or any
applicable state securities or "blue sky" laws in connection with the issuance
of any such securities.
- 11 -
5.5. SUBSIDIARIES; INVESTMENTS.
-------------------------
Except as set forth on SCHEDULE 5.4 and SCHEDULE 5.5, none of the Companies
------------ ------------
or their respective subsidiaries owns or holds, directly or indirectly, any
equity interest in any other Person.
5.6. FINANCIAL INFORMATION.
---------------------
(a) SCHEDULE 5.6 attached hereto contains copies of:
------------
(i) the following audited financial statements (collectively,
the "AUDITED FINANCIAL STATEMENTS"):
-----------------------------
(A) the audited combining balance sheets of the Companies
and Subsidiary as of December 31, 1994, and the related audited
combining statements of income and retained earnings and
combining statements of cash flows of the Companies and
Subsidiary for the fiscal year then ended, including the
footnotes and schedules thereto, as audited by (and together with
the report of their audit) Belinkoff & Xxxxx CPAs; and
(B) the audited combined balance sheets of the Companies
and Subsidiary as of December 31, 1995 and 1996, and the related
audited combined statements of earnings and retained earnings and
combined statements of cash flows of the Companies and Subsidiary
for the fiscal years then ended, including the footnotes and
schedules thereto, as audited by (and together with the report of
their audit) KPMG Peat Marwick LLP; and
(ii) the following unaudited financial statements (collectively,
the "UNAUDITED FINANCIAL STATEMENTS"; and the Audited Financial Statements
------------------------------
and the Unaudited Financial Statements collectively, the "FINANCIAL
---------
STATEMENTS"):
----------
(A) the unaudited (internally prepared) combining balance
sheets of the Companies and Subsidiary as of June 30, 1997 (the
"LATEST BALANCE SHEET"; and such date being the "LATEST BALANCE
-------------------- --------------
SHEET DATE"), and the related unaudited (internally prepared)
----------
combined statements of operations of each of the Companies and
subsidiary for the six-month period then ended; and.
(B) the unaudited (internally prepared) combining balance
sheets of the Companies and Subsidiary as of September 30, 1997,
and the related unaudited (internally prepared) combined
statements of operations of the Companies and Subsidiary for the
nine-month period ending September 30, 1997.
(b) The Audited Financial Statements (i) are true, complete and correct in
all material respects, (ii) fairly present the financial position of the
Companies as of the dates indicated and the results of operations of the
Companies for the periods indicated, (iii)
- 12 -
have been prepared in accordance with GAAP consistently applied throughout the
periods covered thereby (except as disclosed in the notes thereto) and (iv) are
in accordance with the books and records of the Companies which have been
maintained in a manner consistent with historical practice.
(c) The Unaudited Financial Statements (i) fairly present the financial
position of the Companies as of the date indicated, (ii) have been prepared in
accordance with GAAP consistently applied throughout the periods covered thereby
(subject to (A) normal, recurring year-end adjustments which are not material
individually or in the aggregate, (B) the absence of a statement of cash flows,
(C) the absence of any or all footnote disclosures, (D) matters expressly
disclosed in the Audited Financial Statements, and (E) the absence of
allocations made for accruals of rail refunds, charges for split dollar life
insurance expense for key employees, accrued vacation pay and accrued bonuses
arising in the ordinary course of business and (iii) are in accordance with
books and records of the Companies which have been maintained in a manner
consistent with historical practice.
5.7. ABSENCE OF UNDISCLOSED LIABILITIES.
----------------------------------
Except as set forth on SCHEDULE 5.7, (a) none of the Companies or their
------------
respective subsidiaries has any Liabilities except (i) to the extent expressly
reflected or reserved against on the Latest Balance Sheet, (ii) Liabilities
under Contracts (except resulting from any breach thereof) and (iii) Liabilities
incurred since the date of the Latest Balance Sheet in the ordinary course of
business consistent with past practice (other than any such Liability arising
from breach of contract, breach of warranty, tort, infringement, any
environmental matter, including any Liability arising under Environmental Health
and Safety Laws, or violation of any Law or any Proceeding), (b) there are no
loss contingencies (as such term is used in Statement of Financial Accounting
Standards No. 5 issued by the Financial Accounting Standards Board in March
1975) of or affecting any of the Companies or their respective subsidiaries
which are not adequately provided for or disclosed on the Latest Balance Sheet
or in the notes thereto and (c) none of the Companies or their respective
subsidiaries has, either expressly or by operation of Law, assumed or undertaken
any Liability of any other Person, including any obligation for corrective or
remedial action relating to Environmental, Health and Safety Laws. Anything
contained herein to the contrary notwithstanding, this Section 5.7 shall not
supercede or obviate any other representation or warranty made in this Agreement
by any Seller, and this Section 5.7 shall not be breached with respect to the
subject matter of any undisclosed liability that is the subject of a more
specific representation or warranty made in this Agreement by a Seller unless
such other representation or warranty is also breached with respect to the
subject matter of such undisclosed liability.
5.8. ABSENCE OF CHANGES.
------------------
Since the Latest Balance Sheet Date, except as set forth on SCHEDULE 5.8,
------------
each of the Companies and its subsidiaries has been operated in the ordinary
course, consistent with past practice, and there has not been:
- 13 -
(a) (i) any material adverse change or changes in the business,
operations, assets, condition (financial or otherwise), operating results,
liabilities, relations with employees, customers or suppliers, or prospects of
any Company or any of its subsidiaries (it being agreed that any such change or
changes shall only be deemed "material," for purposes of this clause (i) only,
if such change or changes have resulted, or would reasonably be expected to
result, individually or in the aggregate for all such changes, in Losses having
the effect of reducing the value of such Company or subsidiary by $500,000) or
more, or (ii) any material casualty loss or damage to the assets of any Company
or any of its subsidiaries, whether or not covered by insurance;
(b) any declaration, setting aside or payment of any dividend or
distribution on or with respect to any shares of capital stock of any Company or
its subsidiaries, or any direct or indirect redemption, purchase or other
acquisition of any thereof, or any other payments of any nature to any Affiliate
of any Company or its subsidiaries whether or not on or with respect to any
shares of capital stock of such Company or its subsidiaries owned by such
Affiliate (excluding salaries and benefits paid in the ordinary course of
business consistent with past practices at rates equal to those in effect since
December 31, 1996);
(c) any general uniform increase in the compensation of employees
(including any increase pursuant to any bonus, pension, profit-sharing or other
plan or commitment) of any Company or its subsidiaries, or any increase in any
such compensation payable to any officer, director, manager or key employee;
(d) any change in the tax or other accounting methods or practices
followed by any Company or its subsidiaries, any material change in depreciation
or amortization policies or rates previously adopted or any write-up of
inventory or other assets;
(e) any material change in the manner in which products or services of any
Company or its subsidiaries are marketed (including any material change in
prices), any material change in the manner in which any Company or its
subsidiaries extends discounts or credit to customers or any material change in
the manner or terms by which any Company or its subsidiaries collects in
accounts receivable or otherwise deals with customers;
(f) any failure by any Company or its subsidiaries to pay trade accounts
payable or any other Liability of such Company or subsidiary when due; or
(g) any agreement, whether in writing or otherwise, to take any of the
actions specified in the foregoing CLAUSES (A) through (F).
----------- ---
5.9. TAX MATTERS.
-----------
(a) Except as set forth on SCHEDULE 5.9(A), each Company and each other
---------------
Person included in any consolidated or combined Tax Return and part of an
affiliated group, within the meaning of Section 1504 of the Internal Revenue
Code of 1986, as amended (the "Code"), of which any Company is or has been a
----
member:
- 14 -
(i) has timely paid or caused to be paid all Taxes required to be
paid by it through the Latest Balance Sheet Date and through the date
hereof (including any Taxes shown due on any Tax Return);
(ii) has filed or caused to be filed in a timely and proper manner
(within any applicable extension periods) all Tax Returns required to be
filed by it with the appropriate Governmental Entities in all jurisdictions
in which such Tax Returns are required to be filed; and
(iii) has not requested or caused to be requested any extension of time
within which to file any Tax Return, which Tax Return has not since been
filed.
(b) The Companies have previously delivered to the Purchaser true, correct
and complete copies of all Tax Returns filed by or on behalf of the Companies
for all completed Tax years of the Companies that remain open for audit or
review by the relevant taxing authority. All such Tax Returns were complete and
correct in all material respects.
(c) Except as set forth in SCHEDULE 5.9(C):
---------------
(i) no Company has been notified by the Internal Revenue Service or
any other taxing authority that any issues have been raised (and no such
issues are currently pending) by the Internal Revenue Service or any other
taxing authority in connection with any Tax Return of any Company, there
are no pending Tax audits and no waivers of statutes of limitations have
been given or requested with respect to any Company;
(ii) full and adequate provision has been made (A) on the Latest
Balance Sheet Date for all Taxes payable by the Companies for all periods
ending on or prior to the Latest Balance Sheet Date, and (B) on the books
and records of the Companies for all Taxes payable by the Companies for all
periods beginning on or after the Latest Balance Sheet Date;
(iii) none of the Companies has incurred any Tax Liability from and
after the Latest Balance Sheet Date other than Taxes incurred in the
ordinary course of business and consistent with previous years and past
practices;
(iv) none of the Companies (A) is, or has made an election to be
treated as, a "consenting corporation" under Section 341(f) of the Code or
(B) is, or has been, a "personal holding company" within the meaning of
Section 542 of the Code;
(v) the Companies have complied in all respects with all applicable
Laws relating to the collection or withholding of Taxes (such as sales
Taxes or withholding of Taxes from the wages of employees);
(vi) none of the Companies is or has ever been a party to any Tax
sharing agreement with any Person;
- 15 -
(vii) none of the Companies has incurred any Liability to make or
possibly make any payments either alone or in conjunction with any other
payments that:
(A) shall be non-deductible under, or would otherwise
constitute a "parachute payment" within the meaning of, Section 280G
of the Code (or any corresponding provision of state, local or foreign
income Tax Law); or
(B) are or may be subject to the imposition of an excise Tax
under Section 4999 of the Code;
(viii) none of the Companies has agreed to or is required to make any
adjustments or changes either on, before or after the Closing Date, to its
accounting methods pursuant to Section 481 of the Code, and the Internal
Revenue Service has not proposed any such adjustments or changes in the
accounting methods of any Company; no claim has ever been made by any
taxing authority in a jurisdiction in which any of the Companies do not
file Tax Returns that any Company is or may be subject to taxation by that
jurisdiction; and
(ix) none of the Companies is a foreign Person within the meaning of
Section 1.1445-2(b) of the rules and regulations promulgated under Section
1445 of the Code, and the Purchaser has been furnished with a true and
accurate certificates of the Companies so stating which complies in all
respects with Section 1.1445-2(b)(1) of such rules and regulations.
(d) ICSI has had in effect at all times since January 1, 1994, through the
date hereof a valid election under Section 1362(a) of the Code to be taxed as an
S corporation.
5.10. TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS.
----------------------------------------------------------
(a) Each Company has good and marketable title to (or a valid leasehold
interest in) all of the assets, properties and interests in properties, real,
personal or mixed, reflected on the Latest Balance Sheet or acquired after the
Latest Balance Sheet Date (except for property sold or otherwise disposed of
since the Latest Balance Sheet Date in the ordinary course of business and
accounts receivable and notes receivable paid in full subsequent to the Latest
Balance Sheet Date), free and clear of all Encumbrances, of any kind or
character, except for those Encumbrances set forth on SCHEDULE 5.10 and
-------------
Permitted Encumbrances. Upon the execution and delivery of the Headquarters
Lease by the Companies, the Companies will have a valid leasehold interest in
the premises and improvements to be leased pursuant thereto, as purported to be
granted in accordance with the terms thereof. To the Actual Knowledge of the
Sellers, such assets (and the premises and improvements to be leased to the
Companies pursuant to the Headquarters Lease) are in good operating condition
and repair (normal wear and tear excepted), are suitable for the uses for which
they are used in the Business, are not subject to any condition which materially
interferes with the economic value or use thereof. Except as set forth on
SCHEDULE 5.10, with respect to any leased assets, such assets are in such
-------------
condition as to permit the surrender thereof by the Companies to the lessors
thereunder
- 16 -
on the date hereof without any cost or expense for repair or restoration as if
the related leases were terminated on the date hereof in the ordinary course of
business. Except for any inventory, supplies, trailers and automobiles in
transit in the ordinary course of business, all material tangible personal
property of the Companies is located on the premises of the Companies listed on
SCHEDULE 5.10(A).
----------------
(b) SCHEDULE 5.10(B) lists all of the trailers, yard equipment and
----------------
related personal property and other assets of A&G and all of A&G's dispositions
of such property and assets made in the past 24 months.
5.11. REAL PROPERTY-OWNED OR LEASED.
-----------------------------
(a) None of the Companies owns any real property. SCHEDULE 5.11(A)
----------------
contains a list of all real property leased by the Companies and their
subsidiaries (the "Leased Property"), true, correct and complete copies of all
---------------
of which leases have been delivered to the Buyer prior to the date hereof. The
Leased Property constitutes all real property used or occupied by the Companies
and their subsidiaries in connection with the Business.
(b) With respect to the Leased Property, except as set forth on SCHEDULE
--------
5.11(B):
-------
(i) no portion thereof is subject to any pending condemnation
Proceeding or Proceeding by any public or quasi-public authority and, to
the Best Knowledge of the Sellers, there is no threatened condemnation
Proceeding with respect thereto;
(ii) the physical condition of the Leased Property is
sufficient to permit the continued conduct of the Business as presently
conducted subject to the provision of usual and customary maintenance
and repair performed in the ordinary course with respect to similar
properties of like age and construction;
(iii) the Company or subsidiary indicated on SCHEDULE 5.11(B) is
----------------
the owner and holder of all the leasehold estates purported to be
granted by such leases;
(iv) there are no Contracts, written or oral, to which any
Company or any Affiliate thereof is a party, granting to any party or
parties the right of use or occupancy of any portion of the parcels of
the Leased Property;
(v) there are no parties (other than the Companies and their
subsidiaries or lessees disclosed pursuant to clause (iv) above) in
possession of the Leased Property;
(vi) no notice of any increase in the assessed valuation of the
Leased Property and no notice of any contemplated special assessment has
been received by any Company or subsidiary and to the Best Knowledge of
the Sellers, there is no threatened increase in assessed valuation or
threatened special assessment pertaining to any of the Leased Property;
and
-17-
(vii) to the Best Knowledge of the Sellers, the current lease
between A&G and the Companies is at a rental rate that does not exceed
fair market value.
5.12. INTELLECTUAL PROPERTY.
---------------------
(a) Except in each case as set forth on SCHEDULE 5.12(A):
----------------
(i) the Companies and their subsidiaries own, have the right
to use, sell, license and dispose of, and have the right to bring
actions for the infringement of, all Intellectual Property Rights
necessary or required for the conduct of the Business (collectively, the
"Owned Requisite Rights"), other than those Intellectual Property Rights
----------------------
for which a Company or subsidiary has a valid license, all of which are
listed on SCHEDULE 5.12(A) (collectively, the "Licensed Requisite
---------------- ------------------
Rights"; and together with the Owned Requisite Rights, the "Requisite
------ ---------
Rights"), and such rights to use, sell, license, dispose of and bring
------
actions are exclusive with respect to the Owned Requisite Rights;
(ii) the Companies and their subsidiaries have taken reasonable
and practicable steps designed to safeguard and maintain (A) the secrecy
and confidentiality of confidential or proprietary Information and (B)
the proprietary rights of such Company or subsidiary in all of its
Requisite Rights;
(iii) the Companies and their subsidiaries have not received
from any Person in the past five years any notice, charge, complaint,
claim or assertion thereof, and no such claim is impliedly threatened by
an offer to license from another Person; and
(iv) none of the Companies or their subsidiaries have sent to
any Person in the past five years, or otherwise communicated to any
Person, any notice, charge, complaint, claim or other assertion of any
present, impending or threatened infringement by or misappropriation of,
or other conflict with, any Intellectual Property Rights of such Company
or subsidiary by such other Person or any acts of unfair competition by
such other Person, nor to the Best Knowledge of the Sellers, is any such
infringement, misappropriation, conflict or act of unfair competition
occurring or threatened.
(b) SCHEDULE 5.12(B) contains a true and complete list of all
----------------
applications, filings and other formal actions made or taken pursuant to any
Laws by the Companies and their subsidiaries to perfect or protect their
respective interests in their Intellectual Property Rights, including, all
patents, patent applications, trademarks, trademark applications, service marks
and service xxxx applications.
5.13. AGREEMENTS, NO DEFAULTS, ETC.
-----------------------------
(a) SCHEDULE 5.13 contains a true and complete list and brief
-------------
description of all written or oral Contracts, to which any Company or subsidiary
of a Company is a party and (x) which were entered into or made outside the
ordinary course of business, or (y) which were entered into or made in the
ordinary course of business and are described in
-18-
CLAUSES (I) through (XIII) of this SECTION 5.13. Except as set forth on SCHEDULE
----------- ------ ------------ --------
5.13, none of the Companies or their respective subsidiaries is a party to any
----
of the following, whether written or oral:
(i) any distributorship, dealer, sales, advertising, agency,
sales representative or other Contract relating to the payment of a
commission providing for the payment of more than $100,000 annually or
$750,000 annually in the aggregate for all such Contracts;
(ii) any Contract for the employment of any officer, employee
or consultant or any other type of Contract or understanding with any
officer, employee or consultant, including any agreement or
understanding relating to severance payments;
(iii) any indenture, mortgage, promissory note, loan agreement,
pledge agreement, conditional sale, guarantee or other Contract for the
borrowing of money, for a line of credit or for a Capital Lease;
(iv) any Contract providing for charitable contributions in
excess of $10,000 annually or $20,000 annually in the aggregate for all
such Contracts;
(v) any Contract for capital expenditures in excess of
$250,000 annually or $500,000 in the aggregate for all such Contracts;
(vi) any agreement or arrangement for the sale of any assets,
properties or rights other than the sale of services or products in the
ordinary course of business;
(vii) any lease or other agreement pursuant to which it is a
lessee of or holds or operates any machinery, equipment, motor vehicles,
office furniture, fixtures, products, merchandise or other personal
property owned by any other Person providing for the payment of more
than $100,000 annually;
(viii) any Contract with respect to the lending or investing of
funds;
(ix) any Contract with respect to any form of intangible
property, including any Intellectual Property Rights;
(x) any Contract which restricts such Company or subsidiary
from engaging in any aspect of the Business or any other business
anywhere in the world;
(xi) any Contract or group of related Contracts with the same
Person or group of Affiliated Persons (excluding purchase orders entered
into in the ordinary course of business which are to be completed within
three months of entering into such purchase orders) for the purchase or
sale of products or services under which the undelivered or unperformed
balance or portion thereof (including the aggregate undelivered or
unperformed balance or portion under any such
-19-
Contracts between the same Person and such Company or subsidiary) has a
selling price in excess of $50,000;
(xii) any agreement for the acquisition or disposition of a
Person or a division of a Person made within the preceding five years
(whether or not such acquisition or disposition was consummated); and
(xiii) any other Contract providing for the payment of more than
$100,000 annually or that is otherwise material to the Business.
The Contracts disclosed on SCHEDULE 5.4, the leases described on SCHEDULE
------------ --------
5.11(A), the licenses described on SCHEDULE 5.12(A), the insurance policies on
------- ----------------
SCHEDULE 5.16(A), the Company Employee Plans and the Contracts on SCHEDULE 5.21
---------------- -------------
are incorporated by reference onto SCHEDULE 5.13.
-------------
(b) Each of the items listed on SCHEDULE 5.13 (or incorporated therein by
-------------
reference) is in full force and effect, constitutes legal, valid and binding
obligation of such Company or subsidiary party thereto and, to the Actual
Knowledge of the Sellers, the other parties thereto, and is enforceable against
such Company or subsidiary party thereto in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights generally, and subject,
as to enforceability, to general principles of equity, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity). Each of the Companies and their respective subsidiaries has in all
material respects performed all of the obligations required to be performed by
it to date thereunder, and there exists no material default, or any event which
upon the giving of notice or the passage of time, or both, would give rise to a
claim of a material default in the performance by any Company or its subsidiary
or, to the Actual Knowledge of the Sellers, any other party to any of the
foregoing of their respective obligations thereunder. The Purchaser has been
furnished with true, complete and correct copies of all written items listed on
SCHEDULE 5.13 (and items incorporated therein by reference) and SCHEDULE 5.13
------------- -------------
contains a fair and reasonable summary description of the material terms of all
oral items listed on SCHEDULE 5.13(B) (and items incorporated therein by
----------------
reference).
(c) SCHEDULE 5.13 contains a true and complete list of all Funded
-------------
Indebtedness of each of the Companies and their subsidiaries, all of which is to
be repaid or canceled in full on or prior to the Closing Date, in each case
showing the aggregate principal amount thereof (and the aggregate amount of any
undrawn commitments with respect thereto), the name of the lender and the name
of the respective borrower and any other Person which directly or indirectly
guaranteed such debt.
(d) Each of the Assigned A&G Leases is in full force and effect,
constitutes a legal, valid and binding obligation of A&G and, to the Actual
Knowledge of the Sellers, the other parties thereto, and is enforceable against
A&G in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights generally, and subject, as to enforceability, to general
principles of equity, good faith and fair dealing (regardless of
-20-
whether enforcement is sought in a proceeding at law or in equity). A&G has in
all material respects performed all of the obligations required to be performed
by it to date thereunder, and there exists no material default, or any event
which upon the giving of notice or the passage of time, or both, would give rise
to a claim of a material default in the performance by A&G or, to the Actual
Knowledge of the Sellers, any other party to any of the foregoing of their
respective obligations thereunder. The Purchaser has been furnished with true,
complete and correct copies of all of the Assigned A&G Leases.
5.14. LITIGATION, ETC.
---------------
(a) Except for workers' compensation claims made in the ordinary course
of business and except as set forth on SCHEDULE 5.14(A), there are no (i)
----------------
Proceedings pending or, to the Best Knowledge of the Sellers, threatened against
any of the Companies or their subsidiaries, whether at law or in equity, whether
civil or criminal in nature or before or by any Governmental Entity or
arbitrator, nor to the Actual Knowledge of the Sellers does there exist any
basis therefor, or (ii) Orders of any Governmental Entity or arbitrator with
respect to, involving or against any of the Companies or their subsidiaries. The
Companies have delivered to the Purchaser all material documents and
correspondence relating to such matters referred to on SCHEDULE 5.14(A).
----------------
(b) SCHEDULE 5.14(B) lists each matter described in SECTION 5.14(A)
---------------- ---------------
that (i) was in existence at any time since the inception of such Company and
resulted in any criminal sanctions or (ii) was in existence at any time within
the last three years and resulted in payments in excess of $50,000 by any
Company or subsidiary (whether as a result of a judgment, civil fine, settlement
or otherwise).
5.15. COMPLIANCE WITH LAWS.
--------------------
Each of the Companies and their subsidiaries (a) has complied in all
material respects with, and is in compliance in all material respects with, all
material Laws, Orders and Permits applicable to it and the Business and (b) has
all Permits used or necessary in the conduct of the Business. Such Permits are
listed on SCHEDULE 5.15 and are in full force and effect, no material violations
-------------
with respect to any thereof have occurred or are or have been recorded, no
Proceeding is pending or, to the Best Knowledge of the Sellers, threatened to
revoke or limit any thereof. No investigation or review by any Governmental
Entity with respect to any of the Companies or their subsidiaries is pending or,
to the Best Knowledge of the Sellers, threatened, nor has any Governmental
Entity notified any of the Companies or their subsidiaries of its intention to
conduct the same. Except as set forth on SCHEDULE 5.15 none of the Companies or
-------------
their subsidiaries has received any written opinion or memorandum or legal
advice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any Liability or disadvantage which may be material to its
business, financial condition, operations, property or affairs.
-21-
5.16. INSURANCE.
---------
(a) SCHEDULE 5.16(A) contains a true and complete list of all policies
----------------
of liability, theft, fidelity, life, fire, product liability (including
"bobtail"), cargo, workmen's compensation, health and other forms of insurance
held any of the Companies or their subsidiaries, or any Seller for the benefit
of the Company (specifying the insurer, amount of coverage, type of insurance,
policy number, and any pending claims thereunder). All such coverages under the
non-health insurance policies set forth on Schedule 5.16(a) have been maintained
----------------
at all times on an occurrence (as opposed to a claims made) basis. With respect
to all periods prior to the coverage periods set forth on Schedule 5.16(a), the
----------------
Companies have maintained such insurance coverages as the Sellers have
reasonably believed to be adequate.
(b) Except as set forth on SCHEDULE 5.16(B), with respect to each
----------------
policy of insurance listed on SCHEDULE 5.16(A), (i) all premiums with respect
----------------
thereto are currently paid and are not subject to adjustment, and neither any
Seller nor any Company or subsidiary is in material default in any respect with
respect to its obligations under such policy, and no basis exists that would
give any insurer under any such policy the right to cancel or unilaterally
reduce or limit the stated coverages contained in such policy; (ii) there are no
outstanding and material claims currently pending under such policy; and (iii)
none of the Companies or their subsidiaries has received any notice that such
policy has been or shall be canceled or terminated or will not be renewed on
substantially the same terms as are now in effect or the premium on such policy
shall be materially increased on the renewal thereof.
5.17. LABOR RELATIONS; EMPLOYEES.
--------------------------
(a) SCHEDULE 5.17 sets forth a list of all directors, officers and Key
-------------
Employees of each of the Companies and their subsidiaries as of the date hereof,
together with their respective titles (if any), their current compensation
(including salary, wages, bonuses and commissions) and the respective dates on
which they commenced employment. To the extent any such employee is on a leave
of absence, SCHEDULE 5.17 indicates the nature of such leave of absence and such
-------------
employee's anticipated date of return to active employment. To the Best
Knowledge of the Sellers, no Key Employee has given written notice of his or her
intention to leave the service of such Company or subsidiary. During the 90
days immediately preceding the date hereof, there have been no terminations of
employees of any of the Companies or their respective subsidiaries other than
for cause.
(b) Except as set forth on SCHEDULE 5.17, (i) each of the Companies and
-------------
their subsidiaries generally enjoys good relations with its employees, and there
is no labor strike, dispute or grievance, slowdown or stoppage actually pending
or, to the Best Knowledge of the Sellers, threatened against or involving any
Company or subsidiary; and (ii) none of the Companies or their subsidiaries is a
party to or bound by any collective bargaining agreement, union contract or
singular agreement, no such agreement is currently being negotiated by any
Company or subsidiary, no labor union has taken any action with respect to
organizing employees of any Company or subsidiary
-22-
and to the Best Knowledge of the Sellers, no representation question exists with
respect to any such employees.
5.18. ERISA COMPLIANCE.
----------------
(a) Company Employee Plans. SCHEDULE 5.18(A) contains a true, complete
---------------------- ----------------
and correct list of all Employee Benefit Plans (collectively, the "Company
-------
Employee Plans") (i) that cover any employees, contract employees or former
--------------
employees of the Company or any spouses, family members or beneficiaries thereof
(A) that are maintained, sponsored or contributed to by any Company or
subsidiary or (B) with respect to which any Company or subsidiary is obligated
to contribute or has any actual or potential Liability, or (ii) with respect to
which any Company or subsidiary has any actual or potential liability or
obligation on account of the maintenance or sponsorship thereof or contribution
thereto by any present or former ERISA Affiliate of any Company or subsidiary.
(b) Administration and Compliance. Except as set forth on SCHEDULE
----------------------------- --------
5.18(B), with respect to each Company Employee Plan:
-------
(i) such Company Employee Plan has been established,
maintained, operated and administered in accordance with its terms and
in compliance in all material respects with ERISA, the Code, and other
applicable Laws (including with respect to reporting and disclosure);
(ii) all required, declared or discretionary (in accordance
with historical practices) payments, premiums, contributions,
reimbursements or accruals for all periods ending prior to or as of the
date hereof have been made or properly accrued on the Latest Balance
Sheet, or with respect to accruals properly made after the Latest
Balance Sheet Date, on the books and records of such Company or
subsidiary and all amounts withheld from employees have been timely
deposited into the appropriate trust or account;
(iii) there is no unfunded actual or potential Liability
relating to such Company Employee Plan which is not reflected on the
Latest Balance Sheet, or with respect to accruals properly made after
the Latest Balance Sheet Date, on the books and records of such Company
or subsidiary;
(iv) none of the Companies, its subsidiaries or its ERISA
Affiliates, nor any other "disqualified person" or "party in interest"
(as such terms are defined in Section 4975 of the Code and Section 3(14)
of ERISA, respectively) with respect to such Company Employee Plan, has
breached the fiduciary rules of ERISA or engaged in a prohibited
transaction that could subject any of the foregoing Persons to any tax
or penalty imposed under Section 4975 of the Code of Section 502(i), (j)
or (l) of ERISA;
(v) no Proceedings (other than routine claims for benefits)
are pending or, to the Best Knowledge of the Sellers, threatened against
or relating to any Company Employee Plan or any fiduciary thereof, and
there is, to the Best
-23-
Knowledge of the Sellers, no basis for any such Proceeding against any
Company Employee Plan;
(vi) such Company Employee Plan, if intended to be "qualified",
within the meaning of Section 401(a) of the Code, has been determined by
the Internal Revenue Service to be so qualified and the related trusts
are exempt from Tax under Section 501(a) of the Code, and nothing has
occurred that has or could reasonably be expected to adversely affect
such qualification or exemption;
(vii) except as may be required under Laws of general
application, such Company Employee Plan does not obligate any Company or
subsidiary to provide any employee or former employee, or their spouses,
family members or beneficiaries, any post-employment or post-retirement
health or life insurance, accident or other "welfare-type" benefits;
(viii) if such Company Employee Plan is a "group health plan"
within the meaning of Section 5000 of the Code, such Company Employee
Plan has been maintained in compliance with Section 4980B of the Code
and Title I, Subtitle B, Part 6 of ERISA and no material amount of Tax
payable on account of Section 4980B of the Code has been or is expected
to be incurred; and
(ix) neither any Company nor any subsidiary or any ERISA
Affiliate thereof is or has ever maintained or been obligated to
contribute to a Multiemployer Plan (as defined in Section 3(37) of
ERISA), a Multiple Employer Plan (as defined in Section 413 of the Code)
or a Defined Benefit Pension Plan (as defined in Section 3(35) of
ERISA).
(c) The Purchaser has been provided with true and complete copies, to
the extent applicable, of all documents pursuant to which each such Company
Employee Plan is maintained and administered, the two most recent annual reports
(Form 5500 and attachments) and financial statements therefor, all governmental
rulings, determinations, and opinions (and pending requests therefor), and, if
such Company Employee Plan provides post-employment or post-retirement health
and life insurance, accident or other "welfare-type" benefits, the most recent
valuation of the present and future obligations under such Company Employee
Plan; and the foregoing documents accurately reflect all of the terms of such
Company Employee Plan (including any agreement or provision which would limit
the ability of any Company or subsidiary to make any prospective amendments or
terminate such Company Employee Plan).
5.19. ENVIRONMENTAL MATTERS.
---------------------
(a) Except as set forth on SCHEDULE 5.19(A), none of the Companies or
----------------
their subsidiaries or Affiliates, nor any of their respective predecessors, has
received any written or oral notice, report or other information (i) regarding
any actual or alleged violation of any Environmental, Health and Safety Laws, or
any Liabilities or potential Liabilities arising under any Environmental, Health
and Safety Law, including any investigatory, remedial or corrective obligations,
relating to any of the Companies or its
-24-
subsidiaries, the Business or any of the Companies' or its subsidiaries' current
or former owned or leased properties or operations or (ii) that any of the
Companies or its subsidiaries is potentially responsible under any
Environmental, Health and Safety Laws for response costs, corrective action or
natural resource damages, as those terms are defined under the Environmental,
Health and Safety Laws, at any location.
(b) SCHEDULE 5.19(B) sets forth a complete and accurate list of all
----------------
properties and facilities previously owned, leased or operated by any of the
Companies or its subsidiaries or any of their respective predecessors, (together
with the Leased Properties, the "Covered Properties"). To the Best Knowledge of
------------------
the Sellers, there has been no release, discharge, spill, or disposal of any
substance, at any of the Covered Properties so as to give rise to Liability of
any of the Companies or its subsidiaries under any Environmental, Health and
Safety Laws. Except as set forth on SCHEDULE 5.19(B), neither is there now, nor
----------------
has there ever been, any asbestos-containing material in any form or condition,
underground storage tanks, above-ground storage tanks, landfill, waste pile,
surface impoundment, or article or equipment containing polychemical biphenyls
on or at any of the Leased Properties.
(c) To the Best Knowledge of the Sellers, none of the Companies or
their subsidiaries or Affiliates, nor any of their respective predecessors, has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled or released any substance, or owned or operated any
property (and to the Best Knowledge of the Sellers, no such property is
contaminated by any such substance) in a manner that has given or would give
rise to Liabilities pursuant to any Environmental, Health and Safety Laws,
including any Liability for response costs, corrective action costs, personal
injury, property damage, natural resources damage or attorney fees, or any
investigative, corrective or remedial obligations pursuant to any Environmental,
Health and Safety Laws.
(d) To the Best Knowledge of the Sellers, no facts, events or
conditions relating to the past or present operations of any of the Companies or
its subsidiaries or Affiliates, nor any of their respective predecessors or any
of the Covered Properties will prevent continued compliance by the Companies and
its subsidiaries with any Environmental, Health and Safety Laws, or give rise to
any investigatory, remedial or corrective obligations pursuant to any
Environmental, Health and Safety Laws, or give rise to any other Liabilities
pursuant to Environmental Health and Safety Laws, including any relating to on-
site or off-site releases or threatened releases of materials, substances or
wastes, personal injury, property damage or natural resources damage.
(e) Neither this Agreement nor the consummation of the transactions
contemplated by this Agreement or any of the Related Documents will result in
any obligations for site investigation or cleanup, or notification to or consent
of government agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Laws.
(f) The Companies have provided the Purchaser with correct and complete
copies of all reports and studies within the possession or control of the
Companies with respect
-25-
to past or present environmental conditions or events at any of the Covered
Properties and to the Best Knowledge of the Sellers, there are no other
environmental reports or studies with respect thereto.
(g) Solely for purposes of those representations and warranties
contained in this Section 5.19 that relate to those matters described in the
------------
draft Phase I Environmental Assessment of Interstate Consolidation Facilities by
-----------------------------------------------------------------------
Environ Corporation dated December 2, 1997, the term "Best Knowledge" of the
Sellers shall mean the "Actual Knowledge" of the Sellers without any duty to
investigate any such matter described in such Phase I Environmental Assessment.
5.20. BROKERS.
-------
Other than Huntington Holdings, Inc., neither the Sellers nor any
Company has employed any broker or finder or incurred any Liability for any
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated hereby. All fees and related out--of--pocket expenses payable to
Huntington Holdings, Inc., with respect to the transactions contemplated herein,
will be paid, or if paid by any of the Companies will be reimbursed to the
Companies prior to or at the Closing, by the Sellers.
5.21. RELATED PARTY TRANSACTIONS.
--------------------------
Except as set forth on SCHEDULE 5.21, and except for compensation to
-------------
bona--fide employees of the Companies and their subsidiaries for services
rendered in the ordinary course of business, no current or former Affiliate of
any Company or subsidiary or any "Associate" (as defined in the rules
promulgated under the Securities Exchange Act of 1934, as amended) of any
thereof, is now, or has been during the last five fiscal years, (i) party to any
transaction or Contract with any Company or subsidiary (including any contract,
agreement or other arrangement providing for the furnishing of services by, or
rental of real or personal property from, or otherwise requiring payments to,
any such Affiliate or Associate), or (ii) the direct or indirect owner of an
interest in any Person which is a present or potential competitor, supplier or
customer of any Company or subsidiary (other than non--affiliated holdings in
publicly held companies). Except as set forth on SCHEDULE 5.21, none of the
-------------
Companies or their subsidiaries is a guarantor or otherwise liable for any
actual or potential Liability of its Affiliates and their Associates. Except as
set forth on SCHEDULE 5.21, none of the Companies or their subsidiaries (x) owns
-------------
or operates any vehicles, boats, aircrafts, apartments or other residential or
recreational properties or facilities for executive, administrative or sales
purposes or (y) owns or pays for any social club memberships, whether or not for
the benefit of any Company or subsidiary and/or any of its executives.
5.22. ACCOUNTS AND NOTES RECEIVABLE.
-----------------------------
Except as set forth on SCHEDULE 5.22, all the accounts receivable and
-------------
notes receivable owing to any of the Companies or their subsidiaries as of the
date hereof constitute valid and enforceable claims, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors'
-26-
rights generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity), arising from bona fide transactions in the ordinary course of business,
and to the Best Knowledge of the Sellers, there are no known or asserted claims,
refusals to pay or other rights of set--off against any thereof. Except as set
forth on SCHEDULE 5.22, there is (i) no account debtor or note debtor that is
-------------
delinquent by more than 30 days for payments in excess of $10,000 in the
aggregate, (ii) no account debtor or note debtor that has refused or, to the
Best Knowledge of the Sellers, threatened to refuse to pay its obligations to
any of the Companies or their subsidiaries for any reason, or has otherwise made
a claim of set--off or similar claim (other than in amounts not in excess of
$5,000 per account debtor or $10,000 in the aggregate), and (iii) to the Best
Knowledge of the Sellers, no account debtor or note debtor that owes any of the
Companies or their subsidiaries amounts in excess of $10,000 in the aggregate
that is insolvent or bankrupt.
5.23. BANK ACCOUNTS; POWERS OF ATTORNEY.
---------------------------------
SCHEDULE 5.23 sets forth a true and complete list of (i) all bank
-------------
accounts and safe deposit boxes of the Companies and their subsidiaries and all
persons who are signatories thereunder or who have access thereto and (ii) the
names of all persons, firms, associations, corporations or business
organizations holding general or special powers of attorney from the Companies
and their subsidiaries and a summary of the material terms thereof (excluding
ministerial powers of attorney granted to representatives of the Companies and
their subsidiaries which are terminable at will).
5.24. SUPPLIERS AND VENDORS.
---------------------
Except in the ordinary course of business or as set forth on SCHEDULE
--------
5.24, no material supplier or vendor to any of the Companies or its subsidiaries
----
has canceled or otherwise terminated, or, to the Best Knowledge of the Sellers,
threatened to cancel or otherwise terminate, its relationship with any of the
Companies or its subsidiaries or has decreased, limited or otherwise modified,
or to the Best Knowledge of the Sellers, threatened to decrease, limit or
otherwise modify, the services, supplies or materials it provides to any of the
Companies or its subsidiaries.
5.25. CUSTOMERS.
---------
Except as set forth on SCHEDULE 5.25(i), no customer of any of the
----------------
Companies or its subsidiaries to which more than $50,000 of annual sales are
attributable has notified any of the Companies or its subsidiaries that it
intends to terminate or materially curtail its relationship and dealings with
any of the Companies or its subsidiaries, or(ii) to the Best Knowledge of the
Sellers, no customer of any of the Companies or its subsidiaries to which more
than $50,000 of annual sales are attributable has threatened to terminate or
materially curtail its relationship and dealings with any of the Companies or
its subsidiaries.
-27-
5.26. CONFLICTS OF INTEREST.
---------------------
Except as set forth on SCHEDULE 5.26, to the Best Knowledge of the
-------------
Sellers, none of the Sellers, the Companies or any of their subsidiaries, or any
officer, employee, agent or other Person acting on their behalf has directly or
indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any Governmental Entity or other Person who was, is, or may be in
a position to help or hinder the business of any of the Companies or its
subsidiaries (or assist in connection with any actual or proposed transaction)
that (i) has subjected or would reasonably be expected to subject, any of the
Companies or its subsidiaries to any damage or penalty in any Proceeding, (ii)
if not given in the past, would have resulted in a material adverse effect on
the business, operations, assets, condition (financial or otherwise), operating
results, liabilities, relations with employees, customers or suppliers or
prospects of any of the Companies or their respective Subsidiaries (a "Material
--------
Adverse Effect"), or (iii) if not continued in the future, could reasonably be
--------------
expected to result in a Material Adverse Effect. There is not now, and there has
never been, any employment by any of the Companies or its subsidiaries of, or
beneficial ownership in any of the Companies or its subsidiaries by, any
governmental or political official in any jurisdiction in which any of the
Companies or its subsidiaries has conducted or proposes to conduct business.
5.27. DISCLOSURE.
----------
To the Best Knowledge of the Sellers, neither this Agreement, including
the schedules, attachments or exhibits hereto, nor any other written material
delivered by or on behalf of any of the Companies or the Sellers to the
Purchaser or any of its representatives (excluding financial statements and the
notes thereto and the schedules and other statistical data included therein as
to which no representation is made in this SECTION 5.27) contains any untrue
------------
statement of a material fact or omits a material fact necessary to make the
statements contained herein or therein, taken as a whole, in light of the
circumstances in which they were made, not misleading. There is no fact that has
not been disclosed to the Purchaser of which any of the Companies or the Sellers
are aware and which constitutes or could reasonably be anticipated to result in
a Material Adverse Effect.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants on and as of the date hereof as
follows:
6.1. ORGANIZATION; CORPORATE AUTHORITY.
---------------------------------
The Purchaser is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation and has
all requisite power and authority (corporate or otherwise) to own, lease and
operate its assets and
-28-
properties and to carry on its business as presently conducted and as presently
proposed to be conducted. The Purchaser is duly qualified and in good standing
to transact business as a foreign Person in those jurisdictions set forth on
SCHEDULE 6.1, which constitute all the jurisdictions in which the character of
------------
the property owned, leased or operated by the Purchaser or the nature of the
business or activities conducted by the Purchaser makes such qualification
necessary. The Sellers have been furnished with true, correct and complete
copies of the Purchaser's Charter Documents, in each case as amended and in
effect on the date hereof.
6.2. CORPORATE ACTION; AUTHORITY; NO CONFLICT.
----------------------------------------
The Purchaser has all requisite power and authority (corporate and
otherwise) to execute, deliver and perform its obligations under this Agreement
and each Related Document to which it is or will be a party and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance by the Purchaser of this Agreement and each Related Document to
which it is or will be a party, and performance of its obligations hereunder and
thereunder have been duly and validly authorized by all necessary corporate
action on the part of the Purchaser and its shareholders. This Agreement and
each Related Document to which the Purchaser is or will be a party has been or
upon the execution thereof will be, duly and validly executed and delivered by
the Purchaser, and constitutes, or upon its execution and delivery will
constitute, a valid and binding obligation of the Purchaser, enforceable against
it in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity). Neither the
Purchaser's execution and delivery of, and performance of its obligations under,
this Agreement and each Related Document to which it is or will be a party, nor
the consummation of the transactions contemplated hereby and thereby will (i)
conflict with or result in any violation or breach of, any of the terms,
conditions or provisions of, or constitute (with due notice or lapse of time, or
both) a default under, or give rise to any right of termination, cancellation or
acceleration or result in the creation of any Encumbrance upon any of the assets
or properties of the Purchaser under any provision of the Purchaser's Charter
Documents or any Contract to which the Purchaser is a party or by which it or
any of its assets or properties is or may be bound or (ii) violate, or result in
the creation of an Encumbrance upon any of the Purchaser's assets as a result
of, any Laws applicable to the Purchaser or any of its properties or assets.
6.3. CONSENTS.
--------
Except as set forth on SCHEDULE 6.3, no Permit, authorization, consent
------------
or approval of or by, or notification of or filing with, any Person
(governmental or otherwise) is required in connection with the execution,
delivery and performance by the Purchaser of this Agreement or the Related
Documents to which the Purchaser is or will be a party or the consummation of
the transactions contemplated hereby or thereby (other than those which have
been or will be timely made or obtained).
-29-
6.4. CAPITALIZATION.
--------------
(a) The authorized capital stock of the Purchaser and its subsidiaries
is as set forth on SCHEDULE 6.4, which schedule also sets forth the total number
------------
of outstanding shares of the Purchaser and its subsidiaries. All such
outstanding shares disclosed on SCHEDULE 6.4 are duly and validly issued and
------------
outstanding, fully paid and nonassessable, with no personal Liability attached
to the ownership thereof, and are held of record and beneficially by the Persons
and in the amounts set forth on SCHEDULE 6.4.
------------
(b) Except as set forth on SCHEDULE 6.4, there are no securities
------------
presently outstanding, and on the Closing Date there will not be any outstanding
securities, which are convertible into, exchangeable for, or carrying the right
to acquire, equity securities of the Purchaser or any of its subsidiaries, or
subscriptions, warrants, options, calls, puts, convertible securities,
registration or other rights, arrangements or commitments obligating the
Purchaser or any of its subsidiaries to issue, sell, register, purchase or
redeem any of its equity securities or any ownership interest or rights therein.
Except as set forth on SCHEDULE 6.4, there are no voting trusts or other
------------
agreements or understandings to which the Purchaser or any of its subsidiaries
is bound with respect to the voting of such Person's capital stock. There are no
stock appreciation rights, phantom stock rights or similar rights or
arrangements outstanding with respect to the Purchaser or any of its
subsidiaries.
(c) All securities issued by the Purchaser have been issued in
transactions exempt from registration under the Securities Act and the rules and
regulations promulgated thereunder and all applicable state securities or "blue
sky" laws, and the Purchaser has not violated the Securities Act or any
applicable state securities or "blue sky" laws in
6.5. BROKERS
-------
Except as set forth on SCHEDULE 6.5, the Purchaser has not employed any
------------
broker or finder or incurred any Liability for any brokerage fees, commissions
or finders' fees in connection with the transactions contemplated hereby other
than the closing fee payable to Eos Partners, L.P., or its Affiliate.
6.6. DULY AUTHORIZED, VALIDLY ISSUED PMT SHARES.
------------------------------------------
The PMT Shares have been duly authorized and, when issued and delivered
to the Sellers against payment therefor in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable and free of any preemptive
or similar rights upon such issuance.
6.7. INVESTMENT REPRESENTATIONS.
--------------------------
(a) PMT is acquiring the Shares to be acquired by PMT hereunder for its
own account, for investment and not with a view to the distribution thereof in
violation of the Securities Act or applicable state securities laws.
-30-
(b) PMT understands that the Shares have not been registered under the
Securities Act or applicable state securities laws by reason of their issuance
by the Companies in a transaction exempt from the registration requirements of
the Securities Act and applicable state securities laws and that the Shares must
be held by PMT indefinitely unless a subsequent disposition thereof is
registered or qualified, as the case may be, under the Securities Act and
applicable state securities laws or is exempt from registration or
qualification, as the case may be.
(c) PMT is an "accredited investor" (as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act). The Sellers have made
available to PMT or its attorneys and other representatives all agreements,
documents, records and books that PMT has requested relating to its acquisition
of the Shares. PMT has had an opportunity to ask questions of, and receive
answers from, persons acting on behalf of the Sellers concerning the Companies
and the terms and conditions of PMT's acquisition of the Shares hereunder, and
answers have been provided to all of such questions to the full satisfaction of
PMT. PMT has such knowledge and experience in financial and business matters
that it is capable of evaluating the risks and merits of his acquisition of the
PMT Shares hereunder.
6.8. FINANCIAL INFORMATION.
---------------------
(a) SCHEDULE 6.8 attached hereto contains copies of the following:
------------
(i) unaudited (internally prepared) balance sheets of Pacific
Motor Transport Company as of December 31, 1995 and 1996 and the related
unaudited (internally prepared) statements of operations of Pacific Motor
Transport Company ("Pacific Motor")for the fiscal years then ended (all of
-------------
foregoing being hereinafter collectively called the "PMT Annual Financial
--------------------
Statements"); and
----------
(ii) the unaudited (internally prepared) balance sheet of PMT
and its subsidiaries as of June 30, 1997 (the "PMT Latest Balance Sheet";
------------------------
and such date being the "PMT Latest Balance Sheet Date"), and the related
-----------------------------
unaudited (internally prepared) statements of operations of PMT and its
subsidiaries for the six-month period then ended; and
(iii) the unaudited (internally prepared) balance sheet of PMT
and its subsidiaries as of September 30, 1997, and the related unaudited
(internally prepared) statements of operations of PMT and its subsidiaries
for the nine-month period then ended (all of the foregoing, including the
PMT Latest Balance Sheet, being hereinafter collectively referred to as
the "PMT Interim Financial Statements"; and the PMT Annual Financial
--------------------------------
Statements and the PMT Interim Financial Statements collectively, the "PMT
---
Unaudited Financial Statements").
------------------------------
(b) Except as set forth on SCHEDULE 6.8, the PMT Unaudited Financial
------------
Statements (i) are true, complete and correct in all material respects, (ii)
fairly present the financial position of the companies covered thereby as of the
dates indicated and the results of operations of the companies covered thereby
for the periods indicated, (iii) have been
-31-
prepared in accordance with GAAP consistently applied throughout the periods
covered thereby (subject, in the case of the PMT Unaudited Financial Statements,
to (A) normal, recurring year-end adjustments which are not material
individually or in the aggregate, (B) the absence of statements of cash flows
and any or all footnote disclosures and (C) such other matters described on
SCHEDULE 6.8) and (iv) are in accordance with the books and records of the
------------
companies covered thereby which have been maintained in a manner consistent with
historical practice.
6.9. ABSENCE OF UNDISCLOSED LIABILITIES.
----------------------------------
Except as set forth on SCHEDULE 6.9, (a) none of PMT and its subsidiaries
-------------
has any Liabilities (other than Liabilities under Environmental Health and
Safety Laws), (b) to the Best Knowledge of PMT, none of PMT and its subsidiaries
has any Liabilities arising under Environmental Health and Safety Laws, (c)
there are no loss contingencies (as such term is used in Statement of Financial
Accounting Standards No. 5 issued by the Financial Accounting Standards Board in
March 1975) of or affecting any of PMT or its subsidiaries which are not
adequately provided for or disclosed on the PMT Latest Balance Sheet or in the
notes thereto and (d) none of PMT or its subsidiaries has, either expressly or
by operation of Law, assumed or undertaken any Liability of any other Person,
including any obligation for corrective or remedial action relating to
Environmental, Health and Safety Laws.
6.10. ABSENCE OF CHANGES.
------------------
Since the PMT Latest Balance Sheet Date, except as set forth on SCHEDULE
--------
6.10, each of PMT and its subsidiaries has been operated in the ordinary course,
----
consistent with past practice, and there has not been:
(a) (i) any material adverse change or changes in the business,
operations, assets, condition (financial or otherwise), operating results,
liabilities, relations with employees, customers or suppliers, or prospects of
PMT or any of its subsidiaries (it being agreed that any such change or changes
shall only be deemed "material," for purposes of this clause (i) only, if such
----------
change or changes have resulted, or would reasonably be expected to result,
individually or in the aggregate for all such changes, in Losses having the
effect of reducing the value of PMT or such subsidiary by $500,000 or more), or
(ii) any material casualty loss or damage to the assets of PMT or any of its
subsidiaries, whether or not covered by insurance;
(b) any declaration, setting aside or payment of any distribution with
respect to any shares of capital stock of PMT or its subsidiaries, or any direct
or indirect redemption, purchase or other acquisition of any thereof, or any
other payments of any nature to any Affiliate of PMT or its subsidiaries whether
or not on or with respect to any shares of capital stock of PMT or its
subsidiaries owned by such Affiliate (excluding salaries and benefits paid in
the ordinary course of business consistent with past practices, payments
pursuant to the Management Consulting Agreement with Eos Management, Inc.
("EMI") and the transaction fee payable to EMI as contemplated by SECTION 10.5);
------------
-32-
(c) any general uniform increase in the compensation of employees
(including any increase pursuant to any bonus, pension, profit-sharing or other
plan or commitment) of PMT or its subsidiaries, or any increase in any such
compensation payable to any officer, director, manager or Key Employee;
(d) any change in the tax or other accounting methods or practices
followed by PMT or its subsidiaries, any material change in depreciation or
amortization policies or rates previously adopted or any write-up of inventory
or other assets;
(e) any material change in the manner in which products or services of PMT
or its subsidiaries are marketed (including any material change in prices), any
material change in the manner in which PMT or its subsidiaries extends discounts
or credit to customers or any material change in the manner or terms by which
PMT or its subsidiaries collects in accounts receivable or otherwise deals with
customers;
(f) any failure by PMT or its subsidiaries to pay trade accounts payable
or any other Liability of PMT or subsidiary when due; or
(g) any agreement, whether in writing or otherwise, to take any of the
actions specified in the foregoing CLAUSES (A) through (F).
----------- ---
6.11. AGREEMENTS, NO DEFAULTS, ETC.
-----------------------------
Each of PMT and its subsidiaries has in all material respects performed
all of the obligations required to be performed by it to date under each
material Contract to which it is a party, and there exists no material default,
or any event which upon the giving of notice or the passage of time, or both,
would give rise to a claim of a material default in the performance by PMT or
subsidiary or, to the Actual Knowledge of PMT, any other party to any of the
foregoing of their respective obligations thereunder.
6.12. LITIGATION, ETC.
----------------
Except for workers' compensation claims made in the ordinary course of
business and except as set forth on SCHEDULE 6.12, there are no (i) Proceedings
-------------
pending or, to the Best Knowledge of PMT, threatened against any of PMT or its
subsidiaries, whether at law or in equity, whether civil or criminal in nature
or before or by any Governmental Entity or arbitrator, nor to the Actual
Knowledge of PMT does there exist any basis therefor, or (ii) Orders of any
Governmental Entity or arbitrator with respect to, involving or against any of
PMT or its subsidiaries.
6.13. COMPLIANCE WITH LAWS.
--------------------
Except as set forth on SCHEDULE 6.13, each of PMT and its subsidiaries (a)
-------------
has complied in all material respects with, and is in compliance in all material
respects with, all material Laws, Orders and Permits applicable to it and (b)
has all Permits used or necessary in the conduct of its business. Such Permits
are in full force and effect, no material violations with respect to any thereof
have occurred or are or have been recorded, and no Proceeding is pending or, to
the Best Knowledge of PMT, threatened to
-33-
revoke or limit any thereof. No investigation or review by any Governmental
Entity with respect to PMT or any of its subsidiaries is pending or, to the Best
Knowledge of PMT, threatened, nor has any Governmental Entity notified PMT or
any of its subsidiaries of its intention to conduct the same.
ARTICLE III
COVENANTS AND AGREEMENTS
7.1. TRANSFER OF A&G INVESTMENTS ASSETS.
----------------------------------
Concurrently with the Closing the Sellers shall cause A&G to sell,
transfer, convey and assign to ICI all right, title and interest of A&G in, to
and under those assets, properties and rights listed on SCHEDULE 7.1 and the
------------
agreements listed as items 1.b. and 1.c. on SCHEDULE 5.3 (collectively, the "A&G
------------ ---
Assigned Leases"), in consideration of the payment by ICI to A&G of $398,535 by
---------------
wire transfer of immediately available funds at the Closing and in consideration
of ICI's assumption of A&G's obligations under the A&G Assigned Leases, free and
clear of all Encumbrances (other than the A&G Assigned Leases, to the extent any
of the same constitute an encumbrance on the equipment leased or sold
thereunder), pursuant to a xxxx of sale in the form attached hereto as EXHIBIT
-------
H-1 (the "A&G Xxxx of Sale"), and, in the case each of the A&G Assigned Leases,
--- ----------------
an Assignment and Assumption Agreement in the form attached hereto as EXHIBIT H-
---------
2 (collectively, the "A&G Assignment Agreements") (provided that, in the case of
- -------------------------
such item 1.b. (the "TIP Lease"), in the event the consent of the vendor or
---------
lessor thereunder is not obtained prior to the Closing then from and after the
Closing, the Sellers shall use their commercially reasonable efforts to obtain
such consent after the Closing, and the Purchaser shall cooperate in all
commercially reasonable respects in connection therewith, and unless and until
such consent is obtained, the Sellers shall cause A&G to provide to the
Companies all of the benefits thereunder (including use of the equipment leased
or sold thereunder) including enforcement by A&G for the benefit of the
Companies of A&G's rights thereunder, and the Companies shall pay, or reimburse
A&G for, all rent and other charges due and payable to vendor or the lessor
thereunder and shall otherwise perform the obligations of A&G thereunder).
7.2. COOPERATION REGARDING TAX FILINGS.
---------------------------------
After the Closing, the Purchaser, the Companies and the Sellers shall act
in good faith and cooperate with one another for the purpose of filing all Tax
Returns and reports to be filed by any of them.
7.3. REAL PROPERTY LEASE.
-------------------
At or prior to the Closing, the Sellers shall cause A&G and the Companies
to enter into a lease in the form attached hereto as EXHIBIT C-1 for the
-----------
premises described on SCHEDULE 7.3 (the "Headquarters Lease"), the Purchaser
------------ ------------------
shall enter into a guarantee for such lease commitment in the form attached
hereto as EXHIBIT C-2 and the
-----------
-34-
Companies and the Purchaser shall enter into a Material Inducement in the form
attached hereto as EXHIBIT C-3.
-----------
7.4. NONCOMPETITION COVENANT.
-----------------------
(a) The Sellers each acknowledge and agree that the nature of the
Business is providing services to customers, that a significant asset of the
Companies being acquired by the Purchaser hereunder is the knowledge of the
Sellers relating to the Business and its existing and potential customers and
that the value of the Business would be significantly impaired in the absence of
such asset from and after the Closing. Accordingly, the Sellers acknowledge and
agree that as a mutual condition to the respective obligations of the parties at
the Closing, as a material inducement to the Purchaser to enter into and perform
its obligations hereunder, and in consideration of the payments to be received
by the Sellers under this Agreement, the Sellers shall not, without the prior
written consent of the Purchaser, at any time during the period beginning on the
Closing Date and ending on the fifth anniversary thereof, (i) directly or
indirectly engage in, represent in any way, or be connected with, any Competing
Business (as defined below), whether such engagement shall be as an officer,
director, owner, employee, partner, affiliate or other participant in any
Competing Business, (ii) assist others in engaging in any Competing Business in
any manner described in clause (i) above, (iii) induce other employees of the
Companies or any of their respective subsidiaries or affiliates to terminate
their employment with any of the Companies or any of their respective
subsidiaries or affiliates or to engage in any Competing Business in any manner
described in clause (i) above or (iv) induce any customer, vendor or agent or
any other person or entity with which any of the Companies or their respective
subsidiaries or affiliates has a business relationship to terminate or alter
such business relationship. This covenant is considered an integral part of this
Agreement. The foregoing restriction shall not apply to any Seller's ownership
of publicly traded securities which represent not more than 5% of the ownership
interests of the issuer.
(b) The Sellers understand that the foregoing restrictions may limit
their ability to earn a livelihood in a business similar to the business of any
of the Companies or any subsidiary or affiliate thereof, but each Seller
nevertheless believes that he has received and will receive sufficient
consideration and other benefits under this Agreement and under the terms of
this Agreement to justify clearly such restrictions which, in any event (given
such Seller's education, skills and ability), such Seller does not believe would
prevent him from earning a living.
(c) As used herein, the term "Competing Business" shall mean, as to any
------------------
Seller, any business engaged in providing any of the following transportation
services to third party customers:
(i) intermodal marketing or transportation services in any city
or county in any state or province located in the continental United
States, Canada or Mexico;
-35-
(ii) less-then-truckload common carrier services in any city or
county in any state or province located in the continental United States,
Canada or Mexico;
(iii) intra-state trucking of truckload or less-than-truckload
freight in any city or county located in the state of California;
(iv) drayage, consolidation, deconsolidation or distribution
services in any city or county in any state or province located in the
continental United States Canada or Mexico where the Business is conducted
or provides such services at the time of, or where there are fixed plans
for the Business to be conducted or to provide such services at any time
within 12 months after, the termination of such Seller's employment with
the Purchaser and the Companies; or
(v) contract warehousing, freight handling or logistics
services in any city or county in any state or province located in the
continental United States, Canada or Mexico where the Business is conducted
or provides such services at the time of, or where there are fixed plans
for the Business to be conducted or to provide such services at any time
within 12 months after, the termination of such Seller's employment with
the Purchaser and the Companies.
Anything contained in the immediately preceding sentence to the contrary
notwithstanding,
(A) any entity which has separate divisions or business
units, one or more of which are engaged in a business described
in the immediately preceding sentence, will not be deemed to be a
Competing Business with respect to those separate divisions or
business units of such entity that are not engaged in a business
described in the immediately preceding sentence so long as such
Seller's association with any such separate division or business
unit (fully taking into account his functions and the nature of
his work at such division or business unit) does not (1) involve
existing customers of any of the Companies at the time of the
termination of such Seller's employment with the Purchaser and
the Companies or former customers of any of the Companies at any
time during the 12 months preceding such termination or (2)
relate in any material respect to such portion of such business
which would be a Competing Business hereunder;
(B) the provision of consulting services to a direct
shipper who is not a customer of any of the Companies at the time
of the termination of such Seller's employment with the Purchaser
and the Companies, or a former customer of any of the Companies
at any time during the 12 months preceding such termination,
shall not be deemed to be "engaging in a Competing Business" for
purposes of this SECTION 7.4;
-----------
(C) in the case of Xxxxxxxx, the provision of any
drayage, consolidation, deconsolidation, distribution, contract
warehousing, freight
-36-
handling or logistics services in any location described in
clause (iv) or (v) of the immediately preceding sentence shall
only be deemed to be a "Competing Business" if (1) Xxxxxxxx was
the President or Chief Executive Officer of the Purchaser or any
Company (or any of their separate divisions or business units)
that was engaged in providing any drayage, consolidation,
deconsolidation, distribution, contract warehousing, freight
handling or logistics services at the time of (or at any within
the 12 months prior to) the termination of Xxxxxxxx'x employment
with the Purchaser and the Companies or where the Purchaser or
such Company (or such division or business unit) had fixed plans
at the time of such termination to provide any drayage,
consolidation, deconsolidation, distribution, contract
warehousing, freight handling or logistics services at any time
within 12 months after such termination, or (2) any drayage,
consolidation, deconsolidation, distribution, contract
warehousing, freight handling or logistics services are being
provided to any Person who was a customer of the Company at the
time of the termination of Xxxxxxxx'x employment with the
Purchaser and the Companies or at any time during the 12 months
prior to such termination; and
(D) in the case of Xxxxxxx, the provision of any drayage,
consolidation, deconsolidation, distribution, contract
warehousing, freight handling or logistics services in any
location described in clause (iv) or (v) of the immediately
preceding sentence shall only be deemed to be a "Competing
Business" if (1) Xxxxxxx had direct managerial authority at the
Purchaser or any Company (or any of their separate divisions or
business units), or otherwise had ongoing contact with the
customers of the Purchaser or such Company (or division or
business unit), that was engaged in providing any drayage,
consolidation, deconsolidation, distribution, contract
warehousing, freight handling or logistics services at the time
of (or at any time within the 12 months prior to) the termination
of Xxxxxxx'x employment with the Purchaser and the Companies or
where the Purchaser or such Company (or such division or business
unit) had fixed plans at the time of such termination to provide
any drayage, consolidation, deconsolidation, distribution,
contract warehousing, freight handling or logistics services at
any time within 12 months after such termination, or (2) any
drayage, consolidation, deconsolidation, distribution, contract
warehousing, freight handling or logistics services are being
provided to any Person who was a customer of the Company at the
time of the termination of Xxxxxxx'x employment with the
Purchaser and the Companies or at any time during the 12 months
prior to such termination.
7.5. EMPLOYEE MATTERS.
----------------
Subject to the exclusions set forth in this Section, and in reliance upon
the representations and warranties of the Sellers made in SECTION 5.17(A), the
---------------
Purchaser will not cause the Companies or the Subsidiary, for a period of 90
days after the Closing Date,
-37-
to terminate the employment of any employees of the Companies and the Subsidiary
on the date hereof, except for cause, in any manner that would cause the Sellers
to incur any liability under the Worker Adjustment Retraining and Notification
Act.
7.6. PURCHASER COVENANTS AND TREATMENT OF TRANSFERRED EMPLOYEES UNDER
----------------------------------------------------------------
PURCHASER EMPLOYEE BENEFIT PLANS.
--------------------------------
(a) The Purchaser covenants and agrees that as of the Closing Date,
persons employed by the Companies immediately prior to the Closing Date who
became employees of the Purchaser as of the Closing Date ("Transferred
-----------
Employees") shall be entitled to participate in all employee benefit plans and
---------
arrangements maintained by the Purchaser for the benefit of its employees
generally in accordance with the terms thereof; (provided, however, that during
-------- -------
the period ending on the first anniversary of the date hereof (or April 1, 1999,
in the case of group health plans), the Purchaser shall cause the Companies to
maintain in effect and not to amend or modify, in any manner that would have a
materially adverse effect on the benefits made available thereunder, any of the
employee benefit plans and programs set forth in SCHEDULE 7.6 that are currently
------------
maintained by the Companies). For purposes of determining each such Transferred
Employee's eligibility and vesting under such employee benefit plans and
arrangements the Purchaser shall recognize such Transferred Employee's service
with the Companies beginning on the date such Transferred Employee commenced
employment with the Companies.
(b) The Purchaser also covenants and agrees that any pre-existing
condition limitation or exclusion in its health plans shall not apply to
Transferred Employees or their covered dependents who are covered under similar
health plans of the Companies on the Closing Date and who change coverage to the
Purchaser's health plans at the time such Transferred Employees are first given
the option to enroll in the Purchaser's health plans.
7.7. TERMINATION OF CERTAIN AGREEMENTS.
---------------------------------
The Seller Group agrees that, effective as of the Closing, those
agreements listed on SCHEDULE 7.7 shall be automatically terminated without any
------------
further action by the parties thereto or any further liability of the Companies
or their subsidiaries thereunder.
7.8. USE OF CERTAIN POWER INTERMODAL ASSETS.
--------------------------------------
From and after the Closing for such period of time as shall be reasonably
determined by the Companies, the Sellers shall cause Power Intermodal to provide
the Companies with the use of those assets listed on Attachment 6A to SCHEDULE
------------- --------
1.5 in connection with the Companies' conduct of the Business. The Companies
---
shall pay, or reimburse Power Intermodal for, all costs and expenses to third
parties incurred by Power Intermodal to provide the use of such assets to the
Companies, and in connection with such use, none of the Companies shall take any
action that would cause Power Intermodal to be in breach of or default under any
lease, license or other agreement
-38-
between Power Intermodal and any third party that relates to such assets or
governs Power Intermodal's right to the use of the same.
ARTICLE VIII
DELIVERIES AT CLOSING
8.1. DELIVERIES BY THE SELLERS.
-------------------------
The Sellers shall cause to be delivered, unless waived by the Purchaser,
the following:
(a) OPINION OF THE SELLER GROUP'S COUNSEL. An opinion of Manatt, Xxxxxx &
-------------------------------------
Xxxxxxxx LLP, counsel for the Seller Group, dated the Closing Date,
substantially in the form of EXHIBIT D attached hereto.
---------
(b) CONSENTS AND APPROVALS. Duly executed copies of all consents and
----------------------
approvals required for or in connection with the execution and delivery by the
Companies and the Sellers of this Agreement and each of the Related Documents to
which any of them may be parties, the consummation of the transactions
contemplated hereby and thereby, and the continued conduct of the Business as
previously conducted (including any material consent identified on SCHEDULE
--------
4.3), in form and substance reasonably satisfactory to the Purchaser and its
---
counsel.
(c) EVIDENCE OF PAYMENTS. Evidence reasonably satisfactory to the
--------------------
Purchaser of the payments required to be made to the Companies pursuant to
SECTION 1.3(C).
--------------
(d) HEADQUARTERS LEASE. A lease for the premises described therein
------------------
executed by A&G, as landlord, with the Companies to execute the same after the
Closing as the tenant and the Purchaser to execute the same after the Closing as
the guarantor, substantially in the form of EXHIBIT C-1 attached hereto (the
-----------
"Headquarters Lease");
------------------
(e) GENERAL RELEASES. A General Release in favor of the Companies from
----------------
the Seller and their respective Affiliates substantially in the of EXHIBIT E
---------
attached hereto (each, a "General Release");
---------------
(f) EMPLOYMENT AGREEMENTS. An employment agreement with each of the
---------------------
Sellers and the Purchaser and the Companies substantially in the forms of
EXHIBITS F-1 and F-2 attached hereto, as applicable (the "Employment
------------ --- ----------
Agreements");
----------
(g) STOCKHOLDERS AGREEMENT. A counterpart of the Amended and Restated
----------------------
Stockholders Agreement substantially in the form of EXHIBIT G attached hereto
---------
(the "Stockholders Agreement") executed by each of the Sellers;
----------------------
(h) A&G XXXX OF SALE AND ASSIGNMENT AGREEMENTS. The A & G Xxxx of Sale
------------------------------------------
and A&G Assignment Agreements from A & G to ICI in the forms attached hereto as
EXHIBITS H-1 and H-2.
------------ ---
-39-
(i) SELLER CERTIFICATES. Each of the following certificates by the Person
-------------------
who or which is the subject thereof:
(i) a certificate of the secretary of each of the Companies,
their respective subsidiaries and A&G, dated as of the Closing Date,
certifying:
(A) that true and complete copies of such Person's
Charter Documents as in effect on the Closing Date are attached
thereto,
(B) as to the incumbency and genuineness of the
signatures of each officer of such Person executing this
Agreement and the Related Documents on behalf of such Person; and
(C) the genuineness of the resolutions (attached
thereto) of the board of directors or similar governing body of
such Person authorizing the execution, delivery and performance
of this Agreement and the Related Documents to which such Person
is a party and the consummation of the transactions contemplated
hereby and thereby;
(ii) certificates dated as of a recent date prior to the Closing
Date of the secretaries of state of the states in which such Person is
organized and qualified to do business dated as of the Closing Date,
certifying as to the good standing and nondelinquent tax status of such
Person; and
(iii) a certificate of a principal executive officer of each
Company, dated as of the Closing Date, certifying that such Company is not
a foreign person within the meaning of Section 1445 of the Code.
(j) PAY-OFF LETTERS; TERMINATION AGREEMENTS. Pay-off letters and/or
---------------------------------------
termination agreements relating to the payment of the Funded Indebtedness, all
on terms and substance reasonably satisfactory to the Purchaser.
8.2. DELIVERIES BY THE PURCHASER.
---------------------------
The Purchaser shall cause to be delivered, unless waived by the Sellers,
the following:
(a) OPINION OF THE PURCHASER'S COUNSEL. An opinion of X'Xxxxxxxx Graev &
----------------------------------
Karabell, LLP, counsel for the Purchaser, dated the Closing Date, substantially
in the form of EXHIBIT I attached hereto.
---------
(b) CONSENTS AND APPROVALS. Executed copies of all consents and approvals
----------------------
required for or in connection with the execution and delivery by the Purchaser
of this Agreement and each of the Related Documents to which it may be a party
and the consummation of the transactions contemplated hereby and thereby, in
form and substance reasonably satisfactory to the Sellers and their counsel.
-40-
(c) RELATED DOCUMENTS. Each of the Related Documents to which the
-----------------
Purchaser is a party.
(d) PURCHASER CERTIFICATES. Each of the following certificates by the
----------------------
Person who or which is the subject thereof:
(i) a certificate of the secretary of Purchaser, dated as of the
Closing Date, certifying (x) that true and complete copies of Purchaser's
Charter Documents as in effect on the Closing Date are attached thereto,
(y) as to the incumbency and genuineness of the signatures of each officer
of such Person executing this Agreement and the Related Documents on behalf
of Purchaser; and (z) the genuineness of the resolutions (attached thereto)
of the board of directors or similar governing body of Purchaser
authorizing the execution, delivery and performance of this Agreement and
the Related Documents to which Purchaser is a party and the consummation of
the transactions contemplated hereby and thereby; and
(ii) certificates dated as of a recent date prior to the Closing
Date of the secretaries of state of the states in which Purchaser is
organized or qualified to do business dated as of the Closing Date,
certifying as to the good standing and nondelinquent tax status of
Purchaser.
ARTICLE IX
INDEMNIFICATION
9.1. INDEMNIFICATION GENERALLY; ETC.
-------------------------------
(a) Subject to the further provisions of this ARTICLE IX, each of the
----------
Sellers shall severally, and not jointly, indemnify the Purchaser Indemnified
Persons for, and hold each of them harmless from and against, any and all
Purchaser Losses arising from or in connection with any of the following:
(i) the untruth, inaccuracy or breach of any representation or
warranty of either of the Sellers contained herein (other than ARTICLE IV)
----------
or any certificate delivered by any of the Companies or any of the Sellers
in connection herewith at the Closing (or any facts or circumstances
constituting any such untruth, inaccuracy or breach);
(ii) the breach of any agreement or covenant of any of the
Companies contained in this Agreement
Subject to the further provisions of this Article IX, the Sellers shall jointly
and severally indemnify the Purchaser Indemnified Persons for, and hold each of
them harmless from and against, any and all Purchaser Losses arising from or in
connection with (A) any and all Special Tax Losses and (B) any and all Losses
arising from or in connection with the letter dated January 19, 1990, between
the Subsidiary and Xxxxxx Xxxxxxx regarding
-41-
payments due Xxxxxxx upon or following a change in control. Anything contained
herein to the contrary notwithstanding, each Seller shall only be liable for 50%
of the sum of all Losses incurred by the Purchaser Indemnified Persons for which
indemnification is payable by the Seller Indemnifying Persons pursuant to clause
(i) of the first sentence of this SECTION 9.1(A).
--------------
(b) Subject to the further terms of this ARTICLE IX, each of the Sellers
----------
shall severally, and not jointly, indemnify the Purchaser Indemnified Persons
for, and hold each of them harmless from and against, any and all Purchaser
Losses, arising from or in connection with any of the following:
(i) the untruth, inaccuracy or breach of any representation or
warranty of such Seller contained in ARTICLE IV hereof or in any
----------
certificate delivered by such Seller relating thereto delivered in
connection herewith at the Closing (or any facts or circumstances
constituting any such untruth, inaccuracy or breach); and
(ii) the breach of any agreement or covenant of such Seller
contained in this Agreement.
(c) Subject to the further terms of this ARTICLE IX, the Purchaser shall
----------
indemnify the Seller Indemnified Persons for, and hold each of them harmless
from and against, any and all Seller Losses arising from or in connection with
any of the following:
(i) the untruth, inaccuracy or breach of any representation or
warranty of the Purchaser contained herein or any certificate delivered by
the Purchaser in connection herewith at the Closing (or any facts or
circumstances constituting any such untruth, inaccuracy or breach); and
(ii) the breach of any agreement or covenant of the Purchaser
contained in this Agreement; and
(iii) any claim by PaineWebber Incorporated for brokers' or
finders' fees arising from an alleged agreement or arrangement with the
Purchaser in connection with the transactions contemplated by this
Agreement (excluding, however, any such claim to the extent it arises from
any written agreement or arrangement between PainWebber Incorporated and
any Seller); provided, however, that for purposes of this clause (iii)
-------- -------
"Seller Losses" shall consist only of direct Losses incurred by the Seller
Indemnified Persons, or any of them, and not any Losses resulting from any
diminution in value of the PMT Shares or other securities of PMT or its
subsidiaries held by any Seller Indemnified Person, whether resulting from
any payment made by PMT, other liability incurred by PMT or otherwise.
9.2. ASSERTION OF CLAIMS.
-------------------
No claim shall be brought for a breach of a representation or warranty
under SECTION 9.1 hereof unless the Indemnified Persons, or any of them, at any
-----------
time prior to the applicable Survival Date (as defined below), give the
Indemnifying Persons (a)
-42-
written notice of the existence of any such claim, specifying the nature and
basis of such claim and the amount thereof, to the extent known or (b) written
notice pursuant to SECTION 9.3 of any Third Party Claim, the existence of which
-----------
might give rise to such a claim. Upon the giving of such written notice as
aforesaid, the Indemnified Persons, or any of them, shall have the right to
commence legal proceedings subsequent to the Survival Date for the enforcement
of their rights under SECTION 9.1.
-----------
9.3. NOTICE AND DEFENSE OF THIRD PARTY CLAIMS.
----------------------------------------
The obligations and liabilities of an Indemnifying Person with respect to
Losses resulting from the assertion of liability by third parties (each, a
"Third Party Claim"), other than Tax Claims, shall be subject to the following
------------------
terms and conditions:
(a) The Indemnified Persons shall promptly give written notice to the
Indemnifying Persons of any Third Party Claim which might give rise to any Loss
by the Indemnified Persons, stating the nature and basis of such Third Party
Claim, and the amount thereof to the extent known; provided, however, that no
-------- -------
delay on the part of the Indemnified Persons in notifying any Indemnifying
Persons shall relieve the Indemnifying Persons from any liability or obligation
hereunder unless (and then solely to the extent) the Indemnifying Person thereby
is prejudiced by the delay. Such notice shall be accompanied by copies of all
relevant documentation with respect to such Third Party Claim, including any
summons, complaint or other pleading which may have been served, any written
demand or any other document or instrument.
(b) If the Indemnifying Persons shall acknowledge in a writing delivered
to the Indemnified Persons that such Third Party Claim is properly subject to
their indemnification obligations hereunder and the Indemnifying Persons shall
have the financial resources to meet such indemnification obligations, then the
Indemnifying Persons shall have the right to assume the defense of any Third
Party Claim at their own expense and by their own counsel, which counsel shall
be reasonably satisfactory to the Indemnified Persons; provided, however, that
-------- -------
the Indemnifying Persons shall not have the right to assume the defense of any
Third Party Claim, notwithstanding the giving of such written acknowledgment, if
(i) the Indemnified Persons shall have been advised by counsel that there are
one or more legal or equitable defenses available to them which are different
from or in addition to those available to the Indemnifying Persons, and counsel
for the Indemnifying Persons could not adequately represent the interests of the
Indemnified Persons because such interests are in conflict with those of the
Indemnifying Persons, (ii) such action or proceeding involves, or could have a
material effect on, any material matter beyond the scope of the indemnification
obligation of the Indemnifying Persons or (iii) the Indemnifying Persons shall
not have assumed the defense of the Third Party Claim in a timely fashion.
(c) If the Indemnifying Persons shall assume the defense of a Third Party
Claim (under circumstances in which the proviso to the first sentence of SECTION
-------
9.3(B) is not applicable), the Indemnifying Persons shall not be responsible for
------
any legal or other defense costs subsequently incurred by the Indemnified
Persons in connection with the defense thereof. If the Indemnifying Persons do
not exercise their right to assume the
-43-
defense of a Third Party Claim by giving the written acknowledgment referred to
in SECTION 9.3(B), or are otherwise restricted from so assuming by the proviso
--------------
to the first sentence of SECTION 9.3(B), the Indemnifying Persons shall
--------------
nevertheless be entitled to participate in such defense with their own counsel
and at their own expense. If the defense of a Third Party Claim is assumed by
the Indemnified Persons pursuant to clause (i) or (ii) of the proviso to the
first sentence of SECTION 9.3(B), the Indemnified Persons shall not be entitled
--------------
to settle such Third Party Claim without the prior written consent of the
Indemnifying Persons, which consent shall not be unreasonably withheld,
conditioned or delayed.
(d) If the Indemnifying Persons exercise their right to assume the defense
of a Third Party Claim pursuant to clause (i) or (ii) of SECTION 9.3(B), (i) the
--------------
Indemnified Persons shall be entitled to participate in such defense with their
own counsel at their own expense and (ii) the Indemnifying Persons shall not
make any settlement of any claims without the written consent of the Indemnified
Persons, which consent shall not be unreasonably withheld, delayed or
conditioned.
9.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
------------------------------------------
(a) Subject to the further provisions of this SECTION 9.4, the
-----------
representations and warranties contained in this Agreement or in any certificate
or other writing delivered in connection with this Agreement shall survive the
Closing until May 31, 1999; provided, however, that the representations and
-------- -------
warranties contained in SECTIONS 4.1, 5.4, 6.4 AND 6.6 shall survive
------------------------------
indefinitely and the representations and warranties contained in SECTION 5.9
-----------
shall survive the Closing Date until 30 days after the expiration of the
applicable statutes of limitations for Third Party Claims applicable to the
matters covered thereby.
(b) The covenants and other agreements of the parties contained in this
Agreement shall survive the Closing Date until they are otherwise terminated by
their terms. For convenience of reference, the date upon which any
representation or warranty contained herein shall terminate, if any, is referred
to herein as the "Survival Date."
-------------
(c) From and after the Closing, no member of the Seller Group shall have
any recourse against any Company for any breach of any representation, warranty,
covenant or agreement of any Company or any other member of the Seller Group set
forth in this Agreement or in any certificate or other writing delivered in
connection with this Agreement.
9.5. LIMITATIONS ON INDEMNIFICATION.
------------------------------
(a) The Purchaser Indemnified Persons shall not have the right to be
indemnified for breaches of representations and warranties pursuant to clause
------
(i) of the first sentence of SECTION 9.1(A) unless and until the Purchaser
--- --------------
Indemnified Persons (or any member thereof) shall have incurred on a cumulative
basis aggregate Losses in an amount exceeding $100,000, in which event the right
to be indemnified shall apply only to the extent such Losses exceed $100,000.
The sum of all Losses pursuant to which indemnification is payable by the Seller
Indemnifying Persons pursuant to clause (i) of
----------
-44-
the first sentence of SECTION 9.1(A) with respect to the representations and
-------------
warranties set forth in this Agreement shall not exceed an amount equal to 12.5%
of the Cash Portion plus 12.5% of the aggregate value of the PMT Shares
----
(determined in accordance with SECTION 9.6) (the "Representation Cap");
----------- -------------------
provided, however, that the sum of all Losses pursuant to which indemnification
-------- -------
is payable by the Seller Indemnifying Persons pursuant to clause (i) of the
----------
first sentence of SECTION 9.1(A) with respect to the representations and
-------------
warranties set forth in SECTIONS 5.9 and 5.19 shall not exceed an amount equal
------------ ----
to 15% of the Cash Portion plus 15% of the aggregate value of the PMT Shares
----
(determined in accordance with SECTION 9.6) (the "Environmental/Tax Cap");
----------- ---------------------
provided, further, that the sum of all Losses pursuant to which indemnification
-------- -------
is payable by the Seller Indemnifying Persons pursuant to clause (i) of the
----------
first sentence of SECTION 9.1(A) with respect to the representations and
-------------
warranties set forth in SECTIONS 4.1 and 5.4 shall not exceed the Cash Portion
------------ ---
plus the aggregate value of the PMT Shares (determined in accordance with
SECTION 9.6) (the "Remainder Cap"). Notwithstanding anything to the contrary
----------- -------------
stated above, any payment by the Seller Indemnifying Persons pursuant to SECTION
-------
9.5 hereof shall reduce, dollar for dollar, the dollar amount required to be
---
paid by the Seller Indemnifying Persons under the Representation Cap, the
Environmental/Tax Cap, the Remainder Cap and the Litigation Cap (as defined
below).
(b) The Seller Indemnified Persons shall not have the right to be
indemnified for breaches of representations and warranties pursuant to SECTION
-------
9.1(C)(I) unless and until the Seller Indemnified Persons (or any member
--------
thereof) shall have incurred on a cumulative basis aggregate Losses in an amount
exceeding $100,000, in which event the right to be indemnified shall apply only
to the extent such Losses exceed $100,000. The sum of all Losses pursuant to
which indemnification is payable by the Purchaser Indemnifying Persons pursuant
to SECTION 9.1(C)(I) with respect to the representations and warranties set
----------------
forth in this Agreement shall not exceed $625,000 (the "Purchaser Representation
------------------------
Cap"); provided, however, that the sum of all Losses pursuant to which
---- -------- -------
indemnification is payable by the Purchaser Indemnifying Persons pursuant to
SECTION 9.1(C)(I) with respect to the representations and warranties contained
----------------
in SECTION 6.4. shall not exceed $5 million (the "PMT Remainder Cap").
----------- -----------------
Notwithstanding anything to the contrary stated above, any payment by the
Purchaser Indemnifying Persons pursuant to any provision of SECTION 9.1(C) shall
-------------
reduce, dollar for dollar, the dollar amount required to be paid by the
Purchaser Indemnifying Persons under the PMT Representation Cap and the PMT
Remainder Cap.
9.6. SATISFACTION OF INDEMNIFICATION OBLIGATIONS OF THE SELLER INDEMNIFYING
----------------------------------------------------------------------
PERSONS.
-------
The obligations of the Seller Indemnifying Persons pursuant to SECTION
-------
9.1(A) to indemnify the Purchaser Indemnified Persons for Purchaser Losses
------
arising from or in connection with the matters described in CLAUSE (I) of such
----------
SECTION 9.1(A) shall be satisfied in the following manner: (i) an amount equal
--------------
to 17/18ths of each such Purchaser Loss shall be paid in cash by the Seller
Indemnifying Persons to the Purchaser Indemnified Persons by wire transfer of
immediately available funds to an account specified by the Purchaser and (ii) an
amount equal to 1/18th of each such Purchaser Loss shall be paid by the
surrender to the Purchaser for no consideration of that number of
-45-
PMT Shares having an aggregate value on the Closing Date equal to such amount
(unless all of the PMT Shares have been surrendered, at which time all Purchaser
Losses shall be satisfied in full by cash payment in the manner provided in
CLAUSE (I) of this sentence), it being agreed that solely for purposes of
----------
SECTION 9.5(A) and this SECTION 9.6 on the Closing Date the aggregate value of
-------------- -----------
the PMT Shares is $1,000,000 and the per share value of the PMT Shares is $7.02
per share.
9.7. SPECIAL INDEMNIFICATION.
-----------------------
Notwithstanding anything to the contrary contained in ARTICLE IX hereof,
----------
all settlement or judgment liabilities (collectively, the "Special Liabilities")
-------------------
directly resulting from the Lawsuit (as defined below) shall be handled as
follows: (a) up to the first $2 million of such Special Liabilities shall
remain an obligation solely of the Companies and the Purchaser after the
Closing, as to which the Companies and the Purchaser shall indemnify and hold
harmless the Sellers, and neither the Purchaser nor the Companies shall have any
indemnification rights against the Sellers therefor; (b) of the next $2 million
of any such Special Liabilities, on a pari passu basis, (i) the Companies and
the Purchaser shall bear (and indemnify and hold harmless the Sellers from and
against) one-half thereof (and neither the Purchaser nor the Companies shall
have any indemnification rights against the Sellers for such portion of any such
Special Liabilities) and (ii) each of the Sellers shall, severally, and not
jointly, bear (and indemnify the Purchaser and the Companies from and against
such Seller's Proportionate percentage of the other one-half thereof (and
neither of the Sellers shall have any indemnification rights against the
Purchaser or the Companies for such portion of any such Special Liabilities)
(such $1 million obligation by the Sellers to be referred to as the "Litigation
----------
Cap"); (c) any and all such Special Liabilities in excess of the first $4
---
million thereof shall be borne solely by the Companies and the Purchaser, as to
which the Companies and the Purchaser shall indemnify and hold harmless the
Sellers, and neither the Purchaser nor the Companies shall have any
indemnification rights against the Sellers therefor; and (d) the Purchaser shall
have complete control of all aspects of the Companies' investigation and
defense, and any settlement, of the Lawsuit and shall bear all costs and
expenses, including attorneys' fees, incurred in connection with such
investigation, defense and settlement, which costs and expenses, including
attorneys' fees, incurred in connection with such investigation, defense and
settlement shall not, for purposes of this Agreement, be considered a part of
the Liabilities. Anything contained in this SECTION 9.7 to the contrary
-----------
notwithstanding, the indemnification obligations of the Purchaser under this
SECTION 9.7 shall be subject to any limitations thereon imposed by or under
-----------
applicable law. The obligations of the Sellers under the Litigation Cap shall
be subject to and limited by the available dollar amount under any limitation of
liability in ARTICLE IX hereof. Any payment made by the Sellers pursuant to
----------
CLAUSE (B) above also shall reduce, dollar for dollar, the available dollar
----------
amount under any other provision of ARTICLE IX hereof to be paid by the Seller
----------
Indemnifying Persons that is subject to the Representation Cap, the
Environmental/Tax Cap or the Remainder Cap.
-46-
9.8. SATISFACTION OF CLAIMS BY PURCHASER.
-----------------------------------
In the event of a claim by the Purchaser Indemnified Persons, or any of
them, for indemnification pursuant to SECTION 9.1(A)(I), the Purchaser
-----------------
Indemnified Persons shall use all commercially reasonable efforts to seek such
indemnification from both of the Sellers simultaneously.
9.9. COOPERATION REGARDING TAX PROCEEDINGS.
-------------------------------------
(a) Each of the Purchaser, on the one hand, and the Sellers, on the other
hand, shall promptly notify the other party upon becoming aware of the assertion
of any claim (a "Tax Claim") with respect to Taxes paid or payable by a Company
---------
for which the Purchaser Indemnified Persons may seek indemnity hereunder;
provided, however, that no delay on the part of either party in so notifying the
-------- -------
other party shall relieve the other party from any liability or obligation
hereunder unless (and then solely to the extent) that the other party is
prejudiced by such delay. Such notice shall be accompanied by copies of all
relevant documentation with respect to such Tax Claim and, to the extent then
known to the party so obligated to provide such notice, the action that such
party in good faith intends to take with respect to such Tax Claim, but such
party shall not thereby be restricted from taking other or different action.
(b) If the Sellers shall acknowledge in a writing delivered to the
Purchaser that such Tax Claim is properly subject to their indemnification
obligations hereunder and the Sellers shall have the financial resources to meet
such indemnification obligations, then subject to the further provisions of this
SECTION 9.9, the Sellers shall have the right to assume the defense of such Tax
-----------
Claim at their own expense and by their own counsel and other advisers, which
counsel and other advisors shall be reasonably satisfactory to the Purchaser
Indemnified Persons; provided, however, that the Sellers shall not have the
-------- -------
right to assume the defense of any Tax Claim, notwithstanding the giving of such
written acknowledgment, if such Tax Claim involves, or could have a material
effect on, any material matter beyond the scope of the indemnification
obligations of the Sellers or the Sellers shall not have assumed the defense of
such Tax Claim in a timely fashion.
(c) If the Sellers shall assume the defense of a Tax Claim pursuant to and
in accordance with SECTION 9.9 (B), the Sellers shall not be responsible for any
---------------
legal or other defense costs subsequently incurred by the Purchaser Indemnified
Persons in connection with the defense thereof. If the Sellers do not exercise
their right to assume the defense of a Tax Claim or are otherwise restricted
from doing so pursuant to SECTION 9.9(B), the Sellers shall nevertheless be
--------------
entitled to participate in such defense with their own counsel and other
advisors and at their own expense. If the defense of a Tax Claim is retained by
a Purchaser Indemnified Person, the Purchaser Indemnified Persons shall not be
entitled to settle such Tax Claim without the prior written consent of the
Sellers, which consent shall not be unreasonably withheld, delayed or
conditioned.
(d) If the Sellers exercise their right to assume the defense of a Tax
Claim pursuant to and in accordance with SECTION 9.9(B), (i) the Purchaser
--------------
Indemnified Persons shall be entitled to participate in such defense with their
own counsel and other advisors
-47-
at their own expense and (ii) the Sellers shall not make any settlement of such
Tax Claim without the written consent of the Purchaser Indemnified Persons,
which consent shall not be unreasonably withheld, delayed or conditioned.
(e) Anything contained in this SECTION 9.9 to the contrary notwithstanding,
-----------
if the Purchaser Indemnified Persons (or any of them) or the Sellers elect to
pay any Tax asserted by a Tax Claim, such party nevertheless shall not do so for
at least thirty (30) days after the date of its notice to the other party
hereunder (or such shorter period as may be required by law or by prudent
practice) in order to permit the other party to inform the former of the other
party's views as to the merits of such Tax Claim. Each of the Sellers, on the
one hand, and the Purchaser Indemnified Persons, on the other hand, shall use
commercially reasonable efforts to resist an assertion of Taxes with respect to
which the Sellers are obligated to indemnify the Purchaser Indemnified Persons
but shall not be required to contest any such assertion if the other party
consents. Such other party shall give its consent if (i) there would not be a
reasonable probability of having such Tax Claim declared to be incorrect by a
court if the matter were fully litigated, or (ii) the Purchaser Indemnified
Persons reasonably would agree to such claim if the Purchaser Indemnified
Persons were not indemnified for such Tax Claim, taking into account the
collateral effects of such Tax Claim. If the Sellers, on the one hand, and the
Purchaser Indemnified Persons, on the other hand, are unable to resolve any
dispute regarding the application of the principles of this SECTION 9.9(E), the
--------------
matter shall be referred for determination as promptly as possible to the
Independent Accounting Firm, whose determination shall be binding on the parties
in the absence of fraud.
(f) For purposes of this SECTION 9.9(A) and to the extent permitted by law, a
--------------
Purchaser Indemnified Person may contest a Tax Claim either by contesting the
imposition of such Tax prior to payment or by paying the Tax and pursuing
appropriate procedures for obtaining a refund. If the Purchaser Indemnified
Person elects the latter course, the Sellers shall indemnify the Purchaser
Indemnified Persons (but only to the extent they are required to do so under the
applicable provisions of this ARTICLE 9) promptly after the Purchaser
---------
Indemnified Person's payment of the Tax, and if a refund subsequently is
obtained, the Purchaser Indemnified Person shall turn over to the Sellers the
amount of Tax (but not interest) refunded, up to the amount of the
indemnification payment actually made by the Sellers to the Purchaser
Indemnified Persons, together with interest on such refund of Tax from the date
the Sellers made such indemnification payment, at the rates in effect from time
to time under Section 6621(a)(1) of the Code.
During the course of any Proceeding regarding any Tax Claim, the Purchaser
Indemnified Persons and the Sellers will cooperate and consult with each other
from time to time in good faith regarding the defense of such Tax Claim. Each
of the Purchaser Indemnified Persons, on the one hand, and the Sellers, on the
other hand, will afford the other and its attorneys and other advisors
reasonable access to all documents and other materials pertaining to such Tax
Claim and the defense thereof.
-48-
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1. AMENDMENT.
---------
This Agreement may not be altered or otherwise amended except pursuant to
an instrument in writing signed by each party, except that any party may waive
in writing any obligation owed to it by another party under this Agreement. No
waiver by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
10.2. ENTIRE AGREEMENT.
----------------
This Agreement and the other agreements and documents referred to herein
and to be executed and delivered in connection herewith (including, but not
limited to, the schedules and the exhibits (in their executed form) attached
hereto) embody the entire agreement and understanding among the parties hereto
with respect to the subject matter hereof and thereof and supersede and preempt
all prior and contemporaneous understandings, agreements or arrangements or
representations by or among the parties, written or oral, which relate to the
subject matter hereof and thereof in any way (including the Letter of Intent
dated as of August 13, 1997, as amended, among the Companies, the Sellers and
the Purchaser). Other than this Agreement and the other agreements referred to
herein and to be executed and delivered in connection herewith, there are no
other agreements continuing in effect relating to the subject matter hereof.
10.3. SEVERABILITY.
------------
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the Law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
10.4. BENEFITS OF AGREEMENT.
---------------------
All the terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Except as expressly provided herein, this Agreement shall
not confer any rights or remedies upon any Person other than the foregoing. No
party may assign either this Agreement or any
-49-
of his or its rights, interests or obligations hereunder without the prior
written approval of the other parties; provided, however, that, unless expressly
-------- -------
prohibited hereunder, the Purchaser may, without the consent of any other party
hereto, (i) assign any or all of its rights and interests hereunder to one or
more of its wholly-owned Affiliates and designate one or more of its wholly-
owned Affiliates to perform its obligations hereunder and (ii) assign any or all
of its rights and interests hereunder as security for any obligations arising in
connection with the financing of the transactions contemplated hereby, in any or
all of which cases the Purchaser nonetheless shall remain responsible for the
performance of all of its obligations hereunder.
10.5. EXPENSES.
--------
Except as otherwise provided in this Agreement, the Purchaser on the one
hand and the Seller Group on the other hand shall each bear their own expenses
(with the Sellers reimbursing the Companies for expenses of the Sellers paid by
the Companies (or any of them) at or prior to the Closing) incurred in
connection with this Agreement and the Related Documents. If the Closing
occurs, a transaction fee of not more than $100,000 shall be paid by the
Purchaser to EMI.
10.6. HEADINGS.
--------
Descriptive headings are for convenience only and shall not control or
affect in any way the meaning or construction of any provision of this
Agreement.
10.7. NOTICES.
-------
All notices or other communications pursuant to this Agreement shall be in
writing and shall be deemed to be sufficient if delivered personally,
telecopied, sent by nationally recognized, overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to any of the Sellers, to each Seller at his address below:
Xxxx X. Xxxxxxxx
000 X. Xxxxxxxxx Xxx.
Xxx Xxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Xxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxxx Xxxxxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
-00-
Xxxxxx, Xxxxxx & Xxxxxxxx, LLP
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) if to the Purchaser or, after the Closing, any Company, to:
PMT Holdings, Inc.
c/o Eos Partners, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx X. Xxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
All such notices and other communications shall be deemed to have been given and
received (i) in the case of personal delivery, on the date of such delivery,
(ii) in the case of delivery by telecopy, on the date of such delivery, (iii) in
the case of delivery by nationally recognized, overnight courier, on the
Business Day following dispatch, and (iv) in the case of mailing, on the third
Business Day following such mailing.
10.8. COUNTERPARTS.
------------
This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
10.9. GOVERNING LAW.
-------------
THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT, ALTHOUGH THE CLOSING
HEREUNDER MAY PHYSICIALLY OCCUR OUTSIDE THE STATE OF CALIFORNIA FOR
ADMINISTRATIVE PURPOSES, ALL OR SUBSTANTIALLY ALL NEGOTIATIONS WITH THE SELLERS
AND INVESTIGATIONS AND OTHER ACTIONS IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY OCCURRED IN THE STATE OF CALIFORNIA. IT IS THE PARTIES
AGREEMENT AND
-51-
INTENTION THAT THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE DOMESTIC LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF
CALIFORNIA, OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF CALIFORNIA TO BE APPLIED. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY RELATED DOCUMENT.
10.10. INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES.
------------------------------------------------------------
All covenants hereunder shall be given independent effect so that if a
certain action or condition constitutes a default under a certain covenant, the
fact that such action or condition is permitted by another covenant shall not
affect the occurrence of such default, unless expressly permitted under an
exception to such initial covenant. In addition, all representations and
warranties hereunder (as modified and supplemented by the Schedules attached
hereto) shall be given independent effect so that if a particular representation
or warranty proves to be incorrect or is breached, the fact that another
representation or warranty concerning the same or similar subject matter is
correct or is not breached shall not affect the incorrectness of or a breach of
a representation and warranty hereunder. Any matter disclosed on any Schedule
to this Agreement shall be deemed to be disclosed on all other Schedules to this
Agreement provided that such disclosure is, on its face, responsive to the other
provisions of this Agreement with respect to which such matter is deemed
disclosed.
10.11. INTERPRETATION; CONSTRUCTION.
----------------------------
The use in this Agreement of the term "including" means "including, without
limitation." The words "herein", "hereof", "hereunder", "hereby", "hereto",
"hereinafter", and other words of similar import refer to this Agreement as a
whole, including the schedules and exhibits, as the same may from time to time
be amended, modified, supplemented or restated, and not to any particular
article, section, subsection, paragraph, subparagraph or clause contained in
this Agreement. All references to articles, sections, subsections, clauses,
paragraphs, schedules and exhibits mean such provisions of this Agreement and
the schedules and exhibits attached to this Agreement, except where otherwise
stated. The title of and the article, section and paragraph headings in this
Agreement are for convenience of reference only and shall not govern or affect
the interpretation of any of the terms or provisions of this Agreement. The use
herein of the masculine, feminine or neuter forms shall also denote the other
forms, as in each case the context may require. Where specific language is used
to clarify by example a general statement contained herein, such specific
language shall not be deemed to modify, limit or restrict in any manner the
construction of the general statement to which it relates. The language used in
this Agreement has been chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.
Accounting terms used but not otherwise defined herein shall have the meanings
given to
-52-
them under GAAP. Unless expressly provided otherwise, the measure of a period of
one month or year for purposes of this Agreement shall be that date of the
following month or year corresponding to the starting date, provided that if no
corresponding date exists, the measure shall be that date of the following month
or year corresponding to the next day following the starting date. For example,
one month following February 18 is March 18, and one month following March 31 is
May 1.
10.12. REMEDIES.
--------
The parties shall each have and retain all rights and remedies existing in
their favor under this Agreement, at law or in equity, including rights to bring
actions for specific performance and injunctive and other equitable relief
(including the remedy of rescission) to enforce or prevent a breach or violation
of any provision of this Agreement. All such rights and remedies shall, to the
extent permitted by applicable Law, be cumulative and a party's pursuit of any
such right or remedy shall not preclude such party from exercising or pursuing
any other available right or remedy.
10.13. CONSENT OF SPOUSES.
------------------
Each Seller shall cause his spouse to execute and deliver a separate
consent and agreement in substantially the form attached hereto as EXHIBIT J or
---------
otherwise reasonably acceptable to the Purchaser and such Seller (a "Spousal
-------
Consent").
-------
* * * * * * *
-53-
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the date first written above.
THE PURCHASER:
PMT HOLDINGS, INC.
By:___________________________
Name:
Title:
THE COMPANIES:
INTERSTATE CONSOLIDATION, INC.
By:___________________________
Name:
Title:
INTERSTATE CONSOLIDATION
SERVICE, INC.
By:___________________________
Name:
Title:
THE SELLERS:
___________________________________
Xxxx X. Xxxxxxxx
____________________________________
Xxxxx X. Xxxxxxx
ANNEX I
SHAREHOLDER OWNERSHIP
---------------------
SELLER ICI ICS PROPORTIONATE COMMON SHARES
SHARES SHARES PERCENTAGE AT CLOSING
-------- -------- --------- ----------
Xxxx X. Xxxxxxxx 100.00 100.00 50% 71,250
Xxxxx X. Xxxxxxx 100.00 100.00 50% 71,250
200.00 200.00 100% 142,500
======== ======= === =========
ANNEX II
CERTAIN DEFINITIONS
-------------------
"ACQUISITION PROPOSAL" means any offer, proposal or indication of interest
--------------------
in (i) the direct or indirect acquisition of all or any material part of any of
the Companies or their subsidiaries, (ii) a merger, consolidation or other
business combination directly or indirectly involving any of the Companies or
their subsidiaries or (iii) the direct or indirect acquisition of any capital
stock of any of the Companies or their subsidiaries.
"ACTUAL KNOWLEDGE" of any Person means the actual knowledge of such Person
----------------
without any obligation of additional inquiry on the part of such Person as to
the matter in question. When used with respect to the Purchaser, "Actual
Knowledge" shall mean only the Actual Knowledge (as defined in the foregoing
sentence) of Xxxx Xxxx, Xxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxxx Xxxxx and Xxxxx
Xxxxxx, and the Actual Knowledge of each of them shall be imputed to the
Purchaser. The Actual Knowledge of any Seller shall be imputed to the other
Seller.
"AFFILIATE" means, with respect to any Person, (i) a director, officer or
---------
shareholder of such Person, (ii) a spouse, parent, sibling or descendant of such
Person (or spouse, parent, sibling or descendant of any director or executive
officer of such Person), and (iii) any other Person that, directly or indirectly
through one or more intermediaries, Controls, or is Controlled by, or is under
common Control with, such Person.
"AGREEMENT" means this agreement together with all schedules and exhibits
---------
hereto, as the same may from time to time be amended, modified, supplemented or
restated in accordance with the terms hereof.
"BEST KNOWLEDGE" of any Person means (i) the actual knowledge of such
--------------
Person and (ii) that knowledge which such Person would have obtained after
making such reasonable inquiry and exercising such reasonable diligence as a
prudent businessperson would have made or exercised in the management of his or
her business affairs. When used with respect to the Purchaser, "Best Knowledge"
shall mean only the Best Knowledge (as defined in the foregoing sentence) of
Xxxx Xxxx, Xxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxxx Xxxxx and Xxxxx Xxxxxx, and the
Best Knowledge of each of them shall be imputed to the Purchaser. The knowledge
(actual and constructive) of any Seller shall be imputed to the other Seller.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or a day on
------------
which banking institutions in New York, New York are not required to be open.
"CAPITAL LEASE" means any obligation to pay rent or other amounts under any
-------------
lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person
as of such date computed in accordance with GAAP.
-1-
"CHARTER DOCUMENTS" means, as to any corporation, the articles, certificate
-----------------
or memorandum of incorporation or association of such corporation, the by-laws
of such corporation, and each other instrument or other document governing such
corporation's existence and internal affairs, in each case as amended and
restated and in effect at the time in question.
"CONTRACT" means any loan or credit agreement, note, bond, mortgage,
--------
indenture, lease, sublease, purchase order or other agreement, commitment,
instrument, permit, concession, franchise or license.
"CONTROL" means, with respect to any Person, the possession, directly or
-------
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"EMPLOYEE BENEFIT PLAN" means (i) any qualified or non-qualified Employee
---------------------
Pension Benefit Plan (as defined in Section 3(2) of ERISA), including any
Multiemployer Plan or Multiple Employer Plan, (ii) any Employee Welfare Benefit
Plan (as defined in Section 3(1) of ERISA), or (iii) any employee benefit,
fringe benefit, compensation, severance, incentive, bonus, profit-sharing, stock
option, stock purchase or other plan, program or arrangement, whether or not
subject to ERISA and whether or not funded.
"ENCUMBRANCES" shall mean and include security interests, mortgages, liens,
------------
pledges, charges, easements, reservations, restrictions, rights of way,
servitudes, options, rights of first refusal, community property interests,
equitable interests, restrictions of any kind and all other encumbrances,
whether or not relating to the extension of credit or the borrowing of money.
"ENVIRONMENTAL, HEALTH AND SAFETY LAWS" means all Laws, Permits, Orders and
-------------------------------------
Contracts and all common law relating to or addressing pollution or protection
of the environment, public health and safety, or employee health and safety,
including, but not limited to, all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect.
"ERISA AFFILIATE" means, with respect to any Person, any other Person that
---------------
is a member of a "controlled group of corporations" with, or is under "common
-------------------------------- ------
control" with, or is a member of the same "affiliated service group" with such
------- ------------------------
Person as defined in Section 414(b), 414(c), or 414(m) or 414(o) of the Code.
"FUNDED INDEBTEDNESS" means, without duplication, the aggregate amount
-------------------
(including the current portions thereof) of all (i) indebtedness for money
borrowed from others (including any prepayment and similar penalties) and
purchase money
-2-
indebtedness (other than accounts payable in the ordinary course); (ii)
indebtedness of the type described in clause (i) above guaranteed, directly or
indirectly, in any manner by any Company or subsidiary or in effect guaranteed,
directly or indirectly, in any manner by any Company or subsidiary through an
agreement, contingent or otherwise, to supply funds to, or in any other manner
invest in, the debtor, or to purchase indebtedness, or to purchase and pay for
property if not delivered or pay for services if not performed, primarily for
the purpose of enabling the debtor to make payment of the indebtedness or to
assure the owners of the indebtedness against loss (any such arrangement being
hereinafter referred to as a "GUARANTY") (but the term "Guaranty" shall exclude
--------
endorsements of checks and other instruments in the ordinary course); (iii) all
indebtedness of the type described in clause (i) above secured by any
Encumbrance upon property owned by any Company or subsidiary even though such
Company or subsidiary has not in any manner become liable for the payment of
such indebtedness; (iv) Capital Leases; and (v) all interest expense and other
charges accrued but unpaid, and all prepayment premiums, on or relating to any
of such indebtedness.
"GOVERNMENTAL ENTITY" means any governmental authority or instrumentality,
-------------------
whether Federal, state, local or foreign and whether legislative, executive,
judicial or otherwise.
"INDEMNIFIED PERSONS" means and includes the Seller Indemnified Persons
-------------------
and/or the Purchaser Indemnified Persons, as the case may be.
"INDEMNIFYING PERSONS" means and includes the Seller Indemnifying Persons
--------------------
and/or the Purchaser Indemnifying Persons, as the case may be.
"INTELLECTUAL PROPERTY RIGHTS" means all intellectual property rights,
----------------------------
including, patents, patent applications, trademarks, trademark applications,
trade names, service marks, service xxxx applications, trade dress, logos and
designs and the goodwill connected with the foregoing, copyrights and copyright
applications, know-how, trade secrets, proprietary processes and formulae,
confidential information, franchises, licenses, inventions, instructions,
marketing materials and all documentation and media constituting, describing or
relating to the foregoing, including, manuals, memoranda and records.
"KEY EMPLOYEE" means any employee of the Company or any of its subsidiaries
------------
or of PMT or any of its subsidiaries, as the case may be, earning in excess of
$150,000 per annum in regular salary and bonuses.
"LAW" means any applicable foreign, federal, state or local law, statute,
---
treaty, rule, directive, regulation, ordinances and similar provisions having
the force or effect of law or an Order of any Governmental Entity (including all
Environmental, Health and Safety Laws).
"LAWSUIT" means the action entitled Xxxxx Xxxxxxx et al. vs. Intermodal
------- -----------------------------------
Container Service, Inc., et al. (Case No. BO174508), as such action may be
-------------------------------
amended, modified, restated or refiled, whether by the plaintiff Albillo or one
or more other independent
-3-
owner/operator truck drivers against one or more of the Sellers, the Companies
and the Subsidiary asserting claims based on the facts alleged in the Albillo
-------
action cited above.
"LIABILITY" means any liability or obligation, whether known or unknown,
---------
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated and whether due or to become due, regardless of when asserted.
"LITIGATION EXPENSE" means any out-of-pocket expenses incurred in
------------------
connection with investigating, defending or asserting any claim, legal or
administrative action, suit or Proceeding incident to any matter indemnified
against hereunder including, court filing fees, court costs, arbitration fees or
costs, witness fees and fees and disbursements of outside legal counsel,
investigators, expert witnesses, accountants and other professionals.
"LOSSES" means any and all losses (including a diminution in the value of
------
any Company's capital stock), claims, shortages, damages, expenses (including
reasonable attorneys' and accountants' and other professionals' fees and
Litigation Expenses), assessments, Taxes (including interest or penalties
thereon) and insurance premium increases arising from or in connection with any
such matter that is the subject of indemnification under ARTICLE IX, as reduced
----------
by tax benefits actually realized under Tax Laws in respect of such Losses, in
each case net of all reasonable costs and expenses of recovering any such tax
benefits. For purposes of determining tax benefits actually realized, there
shall be included tax benefits resulting from such Loss that are actually
realized before the taxable year in which a payment for a Loss is received and
tax benefits resulting from such Loss that are resulting from such Loss that are
actually realized in the taxable year in which a payment for a Loss is received
and in the two subsequent taxable years, as increased by (x) the amount of any
---------
Taxes payable on such indemnification payment and (y) the amount of any Taxes
payable on the payment referred to in clause (x) hereof. Any tax benefit
realized within the two taxable years subsequent to the year in which a payment
for a Loss is received shall be paid to the Indemnifying Party (less of all
expenses).
"ORDERS" means judgments, writs, decrees, compliance agreements,
------
injunctions or judicial or administrative orders and determinations of any
Governmental Entity or arbitrator.
"PERMITS" means all permits, licenses, authorizations, registrations,
-------
franchises, approvals, consents, certificates, variances and similar rights
obtained, or required to be obtained, from Governmental Entities (other than any
of the foregoing of general applicability, the loss of which would not have a
materially adverse effect).
"PERMITTED ENCUMBRANCES" means (i) Encumbrances for Taxes not yet due and
----------------------
payable or being contested in good faith by appropriate proceedings and for
which there are adequate reserves on the books, (ii) workers or unemployment
compensation liens arising in the ordinary course of business; and (iii)
mechanic's, materialman's, supplier's,
-4-
vendor's or similar liens arising in the ordinary course of business securing
amounts that are not delinquent.
"PERSON" shall be construed broadly and shall include an individual, a
------
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization or a
governmental entity (or any department, agency or political subdivision
thereof).
"PROCEEDINGS" means any action, suit, investigation or proceedings before
-----------
any Governmental Entity or arbitrator.
"PROPORTIONATE PERCENTAGE" means, as to each Seller, a fraction, the
------------------------
numerator of which is the number of Shares owned by such Seller prior to the
Closing and reflected on ANNEX I, and the denominator of which is the aggregate
-------
number of Shares owned by all Sellers prior to the Closing and reflected on
ANNEX I.
-------
"PURCHASER INDEMNIFIED PERSONS" means and includes the Purchaser and its
-----------------------------
subsidiaries (including, following the Closing, the Companies), their respective
successors and assigns, and the respective officers, directors and controlling
parties of each of the foregoing; provided, however, that any such Person who
-------- -------
was, prior to the Closing Date, an officer, director, employee, Affiliate,
successor or assign of any Company or any Seller shall not, in such capacity, be
a Purchaser Indemnified Person with respect to a breach of this Agreement or any
Related Document based on facts or circumstances occurring, or actions taken by
such Person, at or prior to the Closing.
"PURCHASER INDEMNIFYING PERSONS" means the Purchaser and its successors.
------------------------------
"PURCHASER LOSSES" means any and all Losses sustained, suffered or incurred
----------------
by any Purchaser Indemnified Person arising from or in connection with any such
matter which is the subject of indemnification under ARTICLE IX.
----------
"RELATED DOCUMENTS" means, collectively, the following:
-----------------
(i) General Releases of the Companies from each of Goldfein,
Steiner, A&G and Power Intermodal;
(ii) Employment Agreements between the Purchaser and the Companies
and each of the Sellers;
(iii) Stockholders Agreement; and
(iv) A&G Xxxx of Sale.
"SECURITIES" means "SECURITIES" as defined in SECTION 2(1) of the
---------- ---------- ------------
Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
--------------
-5-
"SELLER INDEMNIFIED PERSONS" means and includes the Sellers and their
--------------------------
respective personal representatives, estates and heirs.
"SELLER INDEMNIFYING PERSONS" means and includes the Sellers and their
---------------------------
respective personal representatives, estates and heirs.
"SELLER LOSSES" shall mean any and all Losses sustained, suffered or
-------------
incurred by any Seller Indemnified Person arising from or in connection with any
matter which is the subject of indemnification under ARTICLE IX.
----------
"SPECIAL TAX LOSSES" means (i) all Taxes payable by the Companies with
------------------
respect to all periods through the Closing Date and (ii) any and all Losses
sustained, suffered or incurred by any Purchaser Indemnified Person arising from
or in connection with the existence of any facts or circumstances that
constitute (or would constitute notwithstanding the disclosure of such facts or
circumstances or such Losses) any untruth, inaccuracy or breach of the
representations and warranties of the Sellers contained in SECTION 5.9, in each
-----------
case in clause (i) and clause (ii) that relate to or arise out of any
compensation, dividends, distributions or other payments made (including by way
of expenses incurred by the Companies on behalf of such Persons) by any of the
Companies or their Affiliates to any Seller, former shareholder of any of the
Companies or their respective Affiliates or any officer of any of the Companies
or their respective Affiliates.
"SUBSIDIARY" shall mean Intermodal Container Service, Inc., a California
----------
corporation.
"TAX RETURN" means any return, declaration, report, claim for refund, or
----------
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TAXES" means, with respect to any Person, (i) all income taxes (including
-----
any tax on or based upon net income, gross income, income as specially defined,
earnings, profits or selected items of income, earnings or profits) and all
gross receipts, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property or windfall profits taxes, alternative or add-on minimum taxes, customs
duties and other taxes, fees, assessments or charges of any kind whatsoever,
together with all interest and penalties, additions to tax and other additional
amounts imposed by any taxing authority (domestic or foreign) on such Person (if
any) and (ii) any liability for the payment of any amount of the type described
in CLAUSE (I) above as a result of (A) being a "transferee" (within the meaning
---------- ----------
of Section 6901 of the Code or any other applicable Law) of another Person, (B)
being a member of an affiliated, combined or consolidated group or (C) a
contractual arrangement or otherwise.
-6-
ANNEX III
ADDITIONAL AMOUNT
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The Additional Amount shall be calculated as follows:
An amount equal to: a) $3,030,958, plus b) net income for the period from
and including July 1, 1997, through and including November 30, 1997
(calculated on a pre-tax basis for ICI and an after-tax basis for ICS and
its subsidiary, as defined below), minus c) dividends paid by the Company
during the period from and including July 1, 1997, through and including
the Closing Date.
For the purpose of the above calculation, the following will apply:
(i) Net income will be calculated in accordance with GAAP, as
applied by the Company for the periods 1995 and 1996 plus the interim
period through June 30, 1997, except that no allocations that might
otherwise be required by GAAP will be made for (A) accruals for rail
refunds, (B) charges for split-dollar life insurance policies maintained
for the benefit of key employees, and (C) accruals for vacation pay and
bonuses arising in the ordinary course of business, as and to the extent
consistent with the Companies' historical practice.
(ii) Net income will not be reduced by any extraordinary or one-time
write-off or write-down of goodwill during the period.
(iii) With regard to the recognition of income due to customer
credit balances and the reversal of prior period accounts payable, such
recognition will be made on a basis consistent with past practice as to
amount and timing of such recognition. Notwithstanding the foregoing, the
offsets made since June 30, 1997, of $18,859in accounts receivable from
Riverwood International against $17,880 in accounts payable to Riverwood
International will not be taken into account in determining net income for
purposes of calculating the Additional Amount.
(iv) Income tax expense for the above calculation will be based on
pre-tax income for the period from July 1, 1997, through November 30, 1997,
and will not take into account any reversal of, or additions to, tax
reserves based on prior periods.
(v) Net income used in the calculation of the Additional Amount and
the Estimated Additional Amount will be adjusted by the after-tax amount of
the estimated pre-tax expense reimbursement of $247,174 made by the Sellers
prior to the Closing and referred to in Section 1.3(c) of this Agreement,
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which shall increase November's net income.
