EXHIBIT 10.1
Asset Purchase Agreement
Dated
As of APRIL 30, 1999
By and among
CONSOLIDATED DELIVERY & LOGISTICS, INC.,
SILVER STAR EXPRESS, INC.
METRO PARCEL SERVICE, INC.,
XXXXXX XXXXXXXXX
AND
XXXXX X. XXXXXXXXX
TABLE OF CONTENTS
ARTICLE I - Certain Definitions...............................................
Section 1.1. Certain Definitions.........................................
Section 1.2. Interpretation..............................................
ARTICLE II - Purchase and Sale of Assets; Assumption of Liabilities;
Additional Covenants..........................................................
Section 2.1. Purchase and Sale of Assets.................................
Section 2.2. Purchase Price..............................................
Section 2.3. Payment of the Purchase Price...............................
Section 2.4. Allocation of the Purchase Price............................
Section 2.5. Closing.....................................................
ARTICLE III - Representations and Warranties of the Seller
and the Shareholders............................................
Section 3.1. Organization and Qualification of the Seller................
Section 3.2. Authorization...............................................
Section 3.3. Non-contravention...........................................
Section 3.4. No Consents.................................................
Section 3.5. The Purchased Assets........................................
Section 3.6. Personal Property...........................................
Section 3.7. Real Property...............................................
Section 3.8. Predecessor Status..........................................
Section 3.9. Employment Matters; No Collective Bargaining Agreement......
Section 3.10. Financial Statements........................................
Section 3.11. Absence of Certain Developments.............................
Section 3.12. Governmental Authorizations; Licenses.......................
Section 3.13. Litigation..................................................
Section 3.14. Undisclosed Liabilities.....................................
Section 3.15. Taxes.......................................................
Section 3.16. Insurance...................................................
Section 3.17. Environmental Matters.......................................
Section 3.18. Proprietary Rights..........................................
Section 3.19. Material Customers, Contracts and Commitments...............
Section 3.20. Accounts Receivable.........................................
Section 3.21. Books and Records...........................................
Section 3.22. Brokers.....................................................
Section 3.23. Net Worth of Seller.........................................
Section 3.24. Affiliates..................................................
Section 3.25. Full Disclosure. ...........................................
ARTICLE IV - Representations and Warranties of the Purchaser and CDL..........
Section 4.1. Organization................................................
Section 4.2. Authorization...............................................
Section 4.3. Non-contravention...........................................
Section 4.4. No Consents.................................................
Section 4.5. Brokers.....................................................
Section 4.6. SEC Filings.................................................
Section 4.7 CDL Common Stock............................................
ARTICLE V - Covenants and Agreements..........................................
Section 5.1. Transfer and Property Taxes.................................
Section 5.2. Non-Competition and Confidentiality Agreement...............
Section 5.3. Further Assurances..........................................
Section 5.4. Employment Matters..........................................
Section 5.5. Audited Financial Statements of the Seller..................
Section 5.6. Access and Information......................................
Section 5.7 Securities Law Matters......................................
Section 5.8. Restrictions on Transfer....................................
Section 5.9. Lock-Up of Payment Shares...................................
Section 5.10. Lease of Facility...........................................
Section 5.11. Payment of Pre-Closing Accounts Receivable..................
ARTICLE VI - Deliveries at Closing............................................
Section 6.1. Deliveries by the Shareholders and the Seller. .............
Section 6.2. Deliveries by the Purchaser and CDL. .......................
ARTICLE VII - Survival of Representations and Warranties; Indemnification.....
Section 7.1. Survival of Representations and Warranties..................
Section 7.2. Indemnification.............................................
Section 7.3. Procedures for Third Party Claims...........................
Section 7.4. Procedures for Inter-Party Claims...........................
Section 7.5. Right of Set-Off............................................
ARTICLE VIII - Miscellaneous..................................................
Section 8.1. Notices. ...................................................
Section 8.2. Expenses. ..................................................
Section 8.3. Governing Law; Consent to Jurisdiction. ....................
Section 8.4. Assignment; Successors and Assigns; No Third Party Rights. .
Section 8.5. Counterparts. ..............................................
Section 8.6. Titles and Headings. .......................................
Section 8.7. Entire Agreement. ..........................................
Section 8.8. Amendment and Modification. ................................
Section 8.9. Public Announcement. .......................................
Section 8.10. Waiver. ....................................................
Section 8.11. Severability................................................
Section 8.12. No Strict Construction. ....................................
Schedules
Schedule 1.1AL Assumed Liabilities
Schedule 1.1PA Purchased Assets
Schedule 3.1 Foreign Qualification
Schedule 3.3 Contravention of Agreements
Schedule 3.4 Consents
Schedule 3.6 Encumbrances
Schedule 3.8 Predecessor Names
Schedule 3.9A Employee Benefit Plans
Schedule 3.9B Employee List
Schedule 3.10 Financial Statements
Schedule 3.11 Certain Developments
Schedule 3.12 Authorizations
Schedule 3.13 Litigation
Schedule 3.15 Tax Contests
Schedule 3.16 Insurance Policies
Schedule 3.17 Environmental Matters
Schedule 3.18 Proprietary Rights
Schedule 3.19A Customer List
Schedule 3.19B Assumed Contracts
Schedule 3.19C Largest Customers and Suppliers
Schedule 3.19D Defaults
Schedule 3.20 Accounts Receivable
Schedule 3.24 Affiliates
Schedule 4.1 Good Standing Exceptions
Schedule 5.11 Retained Accounts Receivable
Exhibits
Exhibit A Form of Note
Exhibit B Allocation of Purchase Price
Exhibit C Xxxxxxxxx Employment Agreement
Exhibit D Form of Lease
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("Agreement"), dated as of April 30, 1999, by
and among CONSOLIDATED DELIVERY & LOGISTICS, INC., a Delaware corporation
("CDL"), SILVER STAR EXPRESS, inc., a Florida corporation (the "Purchaser"),
METRO PARCEL SERVICE, INC. a Florida corporation (the "Seller"), XXXXXX
XXXXXXXXX ("Xxxxxxxxx") and XXXXX X. XXXXXXXXX (collectively, the
"Shareholders").
W I T N E S S E T H:
WHEREAS, prior to the date hereof, the Seller has engaged in the small
package express delivery business and related operations (the "Business"); and
WHEREAS, the Seller desires to sell and transfer to the Purchaser, and
the Purchaser desires to purchase and assume from the Seller, certain of the
assets and certain liabilities relating to the Business, all as more
specifically provided herein; and
WHEREAS, the Purchaser is a wholly owned subsidiary of CDL; and
WHEREAS, the Shareholders own all of the outstanding equity of the
Seller;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties and covenants contained herein, and
intending to be legally bound, the parties hereto hereby agree as follows:
ARTICLE I
Certain Definitions
Section 1.1. Certain Definitions. As used in this Agreement, the
following terms have the respective meanings set forth below.
"Accounts Receivable" mean accounts receivable and notes receivable
and all reserves related thereto, deposits, advances and manufacturer and
supplier rebates.
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlled" and "controlling" have meanings correlative thereto.
"Agreement" means this Asset Purchase Agreement.
"Assignment and Assumption Agreement" means the assignment and
assumption agreement to be executed by the Seller and the Purchaser covering the
Assumed Liabilities.
"Assumed Liabilities" means only the following liabilities: (i) the
obligations of the Seller to perform, after the Closing Date, continuing
services required under executory contracts with the customers of Seller
detailed on Schedule 3.19A and which are expressly assumed by the Purchaser at
the Closing and (ii) the obligations arising on or after the Closing Date under
the equipment leases and other agreements listed on Schedule 1.1AL.
"Authorizations" has the meaning ascribed to such term in Section
3.12.
"Xxxx of Sale" means the general xxxx of sale to be executed and
delivered by the Seller covering the Purchased Assets.
"Business" has the meaning ascribed to such term in the first recital
to this Agreement.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks in New Jersey and Florida are open for the general transaction
of business.
"CDL Common Stock" has the meaning ascribed to such term in Section
2.1.
"Closing" has the meaning ascribed to such term in Section 2.5.
"Closing Date" has the meaning ascribed to such term in Section 2.5.
"Code" means the Internal Revenue Code of 1986, as amended.
"Customer List" has the meaning ascribed to such term in Section 3.19.
"Damages" has the meaning ascribed to such term in Section 7.2.
"Encumbrances" has the meaning ascribed to such term in Section 3.3.
"Environmental Laws" means any federal, state and local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any Governmental Authority, (x) relating to pollution (or the investigation or
cleanup thereof or the filing of information with respect thereto), human health
or the protection of air, surface water, ground water, drinking water supply,
land (including land surface or subsurface), plant and animal life or any other
natural resource, or (y) concerning exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production or disposal of Regulated Substances, in each case as amended and as
now or hereafter in effect. The term Environmental Law includes, without
limitation, (i) the Comprehensive Environmental Response Compensation and
Liability Act of 1980, the Water Pollution Control Act, the Clean Air Act, the
Clean Water Act, the Solid Waste Disposal Act (including the Resource
Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984), the Toxic Substances Control Act, the Insecticide,
Fungicide and Rodenticide Act, the Occupational Safety and Health Act of 1970,
each as amended and as now or hereafter in effect, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to or threatened as
a result of the presence of, exposure to, or ingestion of, any Regulated
Substance.
"Excluded Liabilities" means any and all liabilities or obligations of
the Seller or of the Affiliates of the Seller, of any kind or nature, whether or
not relating to the Business or the Purchased Assets, and whether known or
unknown, absolute, accrued, contingent or otherwise, or whether due or to become
due, arising out of events or transactions or facts occurring on, prior to, or
after the Closing Date, other than specifically identified Assumed Liabilities,
but specifically including without limitation as Excluded Liabilities: (i) trade
and other accounts payable, (ii) accrued wages and employee benefits, (iii) tax
liabilities, (iv) all amounts due to any Shareholder, any Affiliate of any
Shareholder or any related party, (v) all expenses of this transaction
(including legal and accounting fees), (vi) all liabilities and obligations
arising out of or related to the Retained Assets and (vii) all liabilities
arising out of or related to events prior to the Closing Date.
"Facility" has the meaning ascribed to such term in Section 3.7.
"Financial Statements" has the meaning ascribed to such term in
Section 3.10.
"GAAP" means generally accepted accounting principles as in effect in
the United States on the date of this Agreement.
"Governmental Authority" means any national, federal, state,
provincial, county, municipal or local government, foreign or domestic, or the
government of any political subdivision of any of the foregoing, or any entity,
authority, agency, ministry or other similar body exercising executive,
legislative, judicial, regulatory or administrative authority or functions of or
pertaining to government, including any authority or other quasi-governmental
entity established to perform any of such functions.
"Indemnified Party" has the meaning ascribed to such term in Section
7.2.
"Indemnifying Party" has the meaning ascribed to such term in Section
7.2.
"Inventory" means all raw material inventories, warehouse stock,
parts, inventories, material and supplies, including without limitation,
packaging and shipping materials.
"Lease" has the meaning ascribed to such term in Section 5.9.
"Material Adverse Change" means a material adverse change in the
Business of the Seller, or in the financial condition, results of operations or
prospects (financial and other) of the Business or the Purchased Assets, taken
as a whole. Without limiting the foregoing, any change or series of changes
involving more than $5,000 shall automatically be deemed material, but a change
with lesser financial impact may also be material.
"Note" means the promissory note of CDL in the principal amount of Two
Hundred Two Thousand Three Hundred Seventy Four Dollars ($202,374) bearing
interest at the rate of 7% per annum, all on the terms set forth in the form of
note attached hereto as Exhibit A.
"Payment Shares" has the meaning ascribed to such term in Section 2.2.
"Person" means an individual, partnership, corporation, joint stock
company, unincorporated organization or association, trust or joint venture, or
a governmental agency or political subdivision thereof.
"Proprietary Rights" mean patents, patent registrations, patent
applications, trademarks, service marks, trademark and service xxxx
registrations and applications therefor, copyrights, copyright registrations,
copyright applications, technology, inventions, computer software, data and
documentation (including electronic media), product drawings, trade secrets,
know-how, customer lists, processes, other intellectual property and proprietary
information or rights related to or used in the conduct of the Business, and
permits, licenses or other agreements to or from third parties regarding the
foregoing.
"Purchase Price" has the meaning ascribed to such term in Section 2.2.
"Purchased Assets" means all of the right, title and interest in and
to all assets used in the conduct of the Business, wherever located, whether
tangible or intangible (including, without limitation, goodwill). The Purchased
Assets include, without limitation, the following:
(a) the Customer List;
(b) all rights of the Seller to transact business with the current,
former or future customers on the Customer List, all contract or other rights
under franchise, license or written agency agreements, and all rights under any
executory contract, agreement or purchase order form, or sales and marketing
contracts, transportation services and/or other contracts with, any customer on
the Customer List or supplier, related to the Business to which the Seller or
any of its Affiliates is a party that is designated on Schedule 3.19B including
an assignment of any contracts listed on Schedule 3.19B between a customer on
the Customer List or supplier and the Seller;
(c) all computer hardware, software and operating equipment;
(d) the machinery and equipment (including spare parts) and business
machines, automobiles, trucks, trailers, fork-lift trucks, and other vehicles,
furniture, fixtures, supplies, capital improvements in process, tools, office
and warehouse equipment and all other tangible personal property employed in the
conduct of the Business or owned by the Seller, including those assets listed on
Schedule 1.1PA;
(e) all Inventory;
(f) all authorizations, consents, approvals, licenses, orders,
permits, exemptions of, filings or registrations with, any Governmental
Authority which are necessary or desirable to service the customers on the
Customer List or conduct the Business;
(g) all Proprietary Rights;
(h) all trademark, trade names and other intangible property related
to the operation of the Business, including without limitation use of the
corporate name and logo for Metro Parcel Service, Inc.;
(i) all telephone and facsimile numbers, and all email addresses and
domain names, in the name of the Seller or used in the Business;
(j) all other assets used in the conduct of the Business, whether or
not reflected on the books and records of the Seller, including without
limitation, the Business as a going concern, its goodwill and franchises, its
rights to insurance proceeds with respect to its assets, its restrictive
covenants and obligations of present and former employees, agents,
representatives, independent contractors and others, all books, records, files
and papers relating to, or necessary to the conduct of, the Business, including
without limitation, operating and training manuals, computer programs, manuals
and data, catalogs, quotations, bids, sales and promotional materials,
correspondence, trade association memberships (to the extent transferable),
research and development records, prototypes and models, lists of present and
former suppliers, customer credit information, customers' pricing information,
business plans, studies and analyses, whether prepared by the Seller or a third
party, relating to the Business, books of account, accounting records and other
records relating to the Business.
"Regulated Substances" means pollutants, contaminants, hazardous or
toxic substances, compounds or related materials or chemicals, hazardous
materials, hazardous waste, flammable explosives (including, but not limited to
radon, radioactive materials, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls), medical waste or by-products, petroleum and
petroleum products (including, but not limited to, waste petroleum and petroleum
products) as regulated under applicable Environmental Laws.
"Retained Assets" means all cash and cash equivalents (including
prepaid expenses and deposits), Accounts Receivable from services rendered by
the Seller prior to the Closing Date, tax refunds with respect to tax returns
filed prior to the Closing Date for periods ending prior to the Closing Date,
notes due to the Company from the Shareholders, key man life insurance policies
(and the cash value thereof) and the items of personalty listed on Schedule
1.1RA, which are not necessary or desirable for operation of the Business.
"SEC" means the Securities and Exchange Commission.
"SEC Filings" has the meaning ascribed to such term in Section 4.6.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller's Accountants" means the independent certified accountants
engaged to audit the year end Financial Statements.
"Xxxxxxxxx Employment Agreement" has the meaning ascribed to such term
in Section 5.4.
"Survival Period" has the meaning ascribed to such term in Section 7.1
"Third Party Claim" has the meaning ascribed to such term in Section
7.3. determined in accordance with GAAP.
Section 1.2. Interpretation. Unless otherwise indicated to the
contrary herein by the context or use thereof: (i) the words, "herein,"
"hereto," "hereof" and words of similar import refer to this Agreement as a
whole and not to any particular Section or paragraph hereof; (ii) words
importing the masculine gender shall also include the feminine and neutral
genders, and vice versa; and (iii) words importing the singular shall also
include the plural, and vice versa.
ARTICLE II
Purchase and Sale of Assets; Assumption of Liabilities;
Additional Covenants
Section 2.1. Purchase and Sale of Assets. Upon the terms and subject
to the conditions of this Agreement and on the basis of the representations,
warranties and agreements contained herein, at the Closing (as defined in
Section 2.5), the Seller shall sell, assign, transfer, convey and deliver to the
Purchaser all of the Seller's right, title and interest in and to the Purchased
Assets and the Purchaser shall purchase such Purchased Assets from the Seller
and assume the Assumed Liabilities. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS AGREEMENT WITH RESPECT TO THE ASSUMED LIABILITIES, THE PURCHASER IS NOT
ASSUMING, NOR SHALL IT IN ANY MANNER BECOME LIABLE FOR, ANY LIABILITIES OR
OBLIGATIONS OF ANY KIND OR NATURE WHATSOEVER OF THE SELLER, THE SHAREHOLDERS OR
ANY OF THEIR RESPECTIVE AFFILIATES, INCLUDING BUT NOT LIMITED TO THE EXCLUDED
LIABILITIES OR RELATING TO THE RETAINED ASSETS.
Section 2.2. Purchase Price.
(a) The aggregate purchase price (the "Purchase Price") to be paid by
the Purchaser for the Purchased Assets shall be (i) Nine Hundred Twelve Thousand
Three Hundred Seventy Four Dollars ($912,374) and (ii) Forty Thousand (40,000)
shares (the "Payment Shares") of the common stock, par value $0.001 per share,
of CDL (the "CDL Common Stock").
(b) Seller represents and warrants that (i) all assets on its balance
sheet at December 31, 1998 remain as assets at the Closing Date except for de
minimis sales in the ordinary course and (ii) net value of the Purchased Assets
on the date hereof is not less than the net value of the Purchased Assets at
December 31, 1998 .
Section 2.3. Payment of the Purchase Price. (a) On the Closing Date,
the Purchaser shall pay the Seller the Purchase Price by delivery of (a) a check
or wire transfer in the sum of Seven Hundred Ten Thousand Dollars ($710,000),
(b) the Note and (c) irrevocable instructions to the Company's transfer agent to
issue the Payment Shares.
Section 2.4. Allocation of the Purchase Price. The Purchase Price
shall be allocated among the Purchased Assets as set forth in Exhibit B hereto.
The Purchaser, CDL, the Shareholders and the Seller shall use such allocation in
filing their respective Internal Revenue Service Form 8594s and any other tax
filings.
Section 2.5. Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place by exchange of facsimile signature pages
or at the offices of CDL at 000 Xxxxxxx Xxxx, Xxxxxxx Xxx Xxxxxx 00000 on April
30, 1999, effective as of the 11:59 p.m. on that date, or at such other time and
date thereafter as the Purchaser, CDL and the Seller may mutually agree, which
date shall be referred to as the "Closing Date".
ARTICLE III
Representations and Warranties of the Seller and the Shareholders
The Seller and the Shareholders, jointly and severally, represent and
warrant to the Purchaser and CDL as follows:
Section 3.1. Organization and Qualification of the Seller. The Seller
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Florida, with full power and authority, corporate and
other, to own or lease its property and assets and to carry on the Business as
presently conducted, and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the Seller is
currently conducting the Business or where the failure to be so qualified and in
good standing would not reasonably be expected to result in a Material Adverse
Change. Each jurisdiction in which the Seller conducts the Business is listed on
Schedule 3.1. The Shareholders are the sole equity owners of the Seller. The
Seller has no subsidiary corporations.
Section 3.2. Authorization. (a) The Seller has full power and
authority, corporate and other, to execute and deliver this Agreement, the
instruments of transfer and other documents and to perform its obligations
hereunder and thereunder, all of which have been duly authorized by all
requisite corporate action. This Agreement and each instrument of transfer to be
delivered in connection herewith has been or, at the time of delivery will be,
duly authorized, executed and delivered by the Seller and constitutes or, at the
time of delivery will constitute, a valid and binding agreement of the Seller
enforceable against the Seller in accordance with its terms.
(b) Each Shareholder has the capacity to execute and deliver
this Agreement and the other documents to be delivered by such Shareholder
pursuant to this Agreement and to perform his obligations hereunder and
thereunder. No Shareholder is under any impairment or other disability, legal,
physical, mental or otherwise, that would preclude or limit the ability of such
Shareholder to perform his obligations hereunder or thereunder. This Agreement
and each instrument of transfer to be delivered in connection herewith
constitutes or, at the time of delivery will constitute, a valid and binding
agreement of each Shareholder, respectively, enforceable against such
Shareholder in accordance with its terms.
Section 3.3. Non-contravention. Except as otherwise set forth in
Schedule 3.3, neither the execution and delivery of this Agreement or the
instruments of transfer nor the performance by the Seller and the Shareholders
of their respective obligations hereunder and thereunder will (i) contravene any
provision contained in the Seller's Certificate of Incorporation or By-laws,
copies of which previously have been delivered to the Purchaser and CDL, (ii)
violate or result in a breach (with or without the lapse of time, the giving of
notice or both) of or constitute a material default under (A) any contract,
agreement, commitment, indenture, mortgage, lease, pledge, note, license, permit
or other instrument or obligation of the Seller or any Shareholder or (B) any
judgment, order, decree, law, rule or regulation or other restriction of any
Governmental Authority, in each case to which the Seller or any Shareholder is a
party or by which either is bound or to which any of either of its assets or
properties are subject, (iii) result in the creation or imposition of any lien,
claim, charge, mortgage, pledge, security interest, equity, restriction or other
encumbrance (collectively, "Encumbrances") on any of the Purchased Assets or
(iv) result in the acceleration of, or permit any Person to accelerate or
declare due and payable prior to its stated maturity, any Assumed Liability.
Section 3.4. No Consents. Except as set forth in Schedule 3.4, no
notice to, filing with, or authorization, registration, consent or approval of
any Governmental Authority or other Person is necessary for the execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby by the Seller or the Shareholders and the
assignment of the benefits of any material agreements of the Seller to the
Purchaser.
Section 3.5. The Purchased Assets. The Purchased Assets constitute
substantially all of the rights, properties and assets which are necessary for
the conduct of the Business in the manner in which the Business is currently
conducted. No third party (including any Affiliate) owns or has any interest by
lease, license or otherwise in any of the Purchased Assets. The documents of
transfer to be executed and delivered by the Seller and the Shareholders at the
Closing will be sufficient to convey good and marketable title to the Purchased
Assets to the Purchaser, free and clear of all Encumbrances except for the lien
of taxes not yet due and payable.
Section 3.6. Personal Property. Except as otherwise set forth in
Schedule 3.6, the Seller has good and marketable title to (or valid leasehold or
contractual interests in) all personal property comprising the Purchased Assets,
free and clear of any Encumbrances except for the lien of taxes not yet due and
payable. All machinery, equipment, furniture, fixtures and other personal
property used in the Business and included in the Purchased Assets is in good
operating condition and fit for operation in the ordinary course of business
(subject to normal wear and tear).
Section 3.7. Real Property. Other than the warehouse facility located
at 00000 Xxxxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxxxx (the "Facility"), the Seller does
not own any real property or real estate. The Seller operates the Business
solely out of the Facility. The Purchaser shall not be responsible for any
obligations of the Seller with respect to the Facility as a result of this
Agreement or otherwise, except as may be expressly set forth in the lease
referenced in Section 5.9 below to be entered into at the Closing between the
Purchaser and the Seller. All plants, structures and buildings owned or leased
by the Seller are in good operating condition and fit for operation in the
ordinary course of business (subject to normal wear and tear) with no structural
or other defects that could interfere with the conduct of normal operations of
such facilities and are suitable for the purposes for which they are currently
being used. The Seller is not in violation of any building, zoning,
anti-pollution, health, occupational safety or other law, ordinance or
regulation regarding its plants, structures and equipment or their operations.
Section 3.8. Predecessor Status. Set forth in Schedule 3.8 is a
listing of all names of all predecessor companies of the Seller, including the
names of any entities from whom within the last five years the Seller previously
acquired significant assets. The Seller has never been a subsidiary or division
of another corporation or a part of any acquisition which was later rescinded.
Set forth on Schedule 3.8 is a listing of each business name used by the Seller
and its predecessors and by any companies acquired by or merged into it, and
each state and county in which any such trade name is registered, if any.
Section 3.9. Employment Matters; No Collective Bargaining Agreement.
(a) Except as set forth on Schedule 3.9A, the Seller has no employee
benefit plans of any kind or nature (including but not limited to plans under
ERISA). The Purchaser and CDL shall have no obligation under or related to any
such plan to any employee of the Seller hired by the Purchaser. There are no
written employment or compensation agreements with any employees of the Seller.
All employees of the Seller are employees-at-will. All accrued vacation pay and
employee benefits due to the Seller's employees have been paid in full or
accrued on the Seller's balance sheet as at December 31, 1998 included as part
of the Financial Statements (as defined in Section 3.10 below).
(b) No employees of the Seller have been, or are currently represented
by, any labor union or covered by any collective bargaining agreement nor, to
the best of each Shareholder's or the Seller's knowledge, is any organization
campaign to establish such representation in progress. There is no pending or,
to any Shareholder's or the Seller's knowledge, threatened labor dispute
involving the Seller, the Seller has not experienced any labor interruption,
strike, slowdown, picketing, work stoppage or other labor dispute over the past
five years, nor has any application or complaint about the Seller been filed by
an employee or any union with the National Labor Relations Board or any
comparable state or local agency since inception and the Seller considers its
relationship with its employees to be good. The Seller is not bound by nor
subject to (and none of its assets or properties are bound by or subject to) any
arrangement with any labor union.
(c) Schedule 3.9B contains a true and complete list of the employees
currently employed by the Seller, indicating the title or position of each and a
description of any agreements concerning such employees and the current
compensation payable by the Seller to each employee.
Section 3.10. Financial Statements. The Seller has previously
delivered to the Purchaser a true and complete copy of (a) the Seller's audited
balance sheets as of December 31, 1997 and 1998, respectively, and the related
audited statements of earnings and cash flows for the respective fiscal years
then ended, with notes thereto, audited by the Seller's Accountants and (b) the
Seller's unaudited balance sheet as of March 31, 1999 and the related unaudited
statement of earnings and cash flows for the three (3) months then ended
(collectively, the "Financial Statements") all of which are set forth on
Schedule 3.10. The Financial Statements have been prepared in conformity with
GAAP, applied on a consistent basis throughout the respective periods and
present fairly the financial condition and results of operations of the Seller
as of and for the periods included therein.
Section 3.11. Absence of Certain Developments. Except as set forth in
Schedule 3.11, since December 31, 1998, there has not been any Material Adverse
Change, or any development which could reasonably be expected to result in a
prospective Material Adverse Change. Except as set forth in Schedule 3.11, since
December 31, 1998, the Seller has conducted the Business in the ordinary and
usual course consistent with past practices and has not (i) sold, leased,
transferred or otherwise disposed of any of the assets of the Business to any
Person, including, without limitation, any Shareholder (other than dispositions
in the ordinary course of business consistent with past practices), (ii)
breached, terminated or amended in any material respect any contract or lease to
which the Seller is a party or to which it is bound or to which its properties
are subject, (iii) suffered any material loss, damage or destruction to its
property whether or not covered by insurance, (iv) made any change in the
accounting methods or practices it follows, whether for general financial or tax
purposes, (v) incurred any liabilities other than in the ordinary course of
business, none of which individually or in the aggregate, are material, (vi)
incurred, created or suffered to exist any Encumbrances on the Purchased Assets,
(vii) made any plan, agreement or arrangement granting any preferential rights
to purchase or acquire any of the Purchased Assets or requiring consent of any
party to the transfer of the Purchased Assets or assignment of the accounts to
be assumed by the Purchaser (as detailed on Schedule 3.19), (viii) breached or
violated any law, statute, rule or regulation applicable to the Seller or its
Business in any material respect, (ix) suffered any material adverse changes in
its financial position or results of operations, (x) declared or paid any
dividend or distribution on its capital stock, or repurchased or otherwise
acquired any shares of its capital stock or any option, warrant, right, call or
commitment relating to its capital stock or any outstanding securities or
obligations convertible into or exchangeable for any shares of its capital
stock, (xi) except in the ordinary course of business consistent with past
practices, increased the compensation payable or to become payable to any of its
officers or employees or increased any bonus, severance, accrued vacation,
insurance, pension or other employee benefit plan, payment or arrangement made
by it for or with any such officers or employees, (xii) suffered any labor
dispute, strike or other work stoppage, (xiii) made or obligated itself to make
any capital expenditures in excess of $10,000 individually or in the aggregate,
(xiv) entered into any contract or other agreement requiring it to make payments
in excess of $10,000 per annum, individually or in the aggregate, other than in
the ordinary course of business consistent with past practices, (xv) amended its
Certificate of Incorporation or by-laws or taken any action in contemplation of
any such amendment or in contemplation of such entity's liquidation or
dissolution and, to the Seller and the Shareholder's best knowledge, no such
action has been taken by the shareholders, directors or officers of the Seller
or (xvi) entered into any agreement to do any of the foregoing.
Section 3.12. Governmental Authorizations; Licenses. The Business has
been operated in compliance with all applicable laws, rules, regulations, codes,
ordinances and orders, of all Governmental Authorities, including but not
limited to, those related to: pricing, sales or distribution of products,
antitrust, trade regulation, trade practices, sanitation, land use and similar
laws. The Seller has all permits, licenses, approvals, certificates, titles,
fuel permits, franchises, operating authorities (including any necessary FAA or
ICC operating authorities), state operating licenses or registrations and other
interstate or intrastate regulatory licenses and other authorizations, and has
made all notifications, registrations, certifications and filings with all
Governmental Authorities, necessary for the operation of the Business as
currently conducted by the Seller, except for those which, individually or in
the aggregate could not reasonably be expected to result in a Material Adverse
Change. There is no action, case or proceeding pending or, to any Shareholder's
or Seller's best knowledge after due investigation, threatened by any
Governmental Authority with respect to (i) any alleged violation by the Seller
or its Affiliates of any law, rule, regulation, code, ordinance, order, policy
or guideline of any Governmental Authority, or (ii) any alleged failure by the
Seller or its Affiliates to have any permit, license, approval, certification or
other authorization required in connection with the operation of the Business.
No notice of any violation of such laws has been received by the Seller, any
Affiliate of the Seller or any Shareholder. Schedule 3.12 sets forth a true and
complete list of all of the Seller's permits, licenses, approvals, certificates,
registrations and other authorizations relating to the Business (the
"Authorizations"). Such Authorizations are in full force and effect and neither
the Seller nor any Shareholder has received notification of the suspension or
cancellation of, or the intent to cancel, terminate or not renew, any thereof.
Section 3.13. Litigation. Except as otherwise set forth in Schedule
3.13, there are no lawsuits, actions, proceedings, claims, orders or
investigations by or before any Governmental Authority pending or, to any
Shareholder's or the Seller's knowledge after due investigation, threatened
against the Seller, its Affiliates or any Shareholder relating to the Business,
the Purchased Assets, or seeking to enjoin the transactions contemplated hereby
or which could have a material adverse effect on such transactions or on the
Purchaser. There are no facts or circumstances known to any Shareholder or the
Seller that could result in a claim for damages or equitable relief which, if
decided adversely, could reasonably be expected to result in a Material Adverse
Change, individually or in the aggregate. The litigation listed on Schedule 3.13
is fully covered by insurance. Notwithstanding any listing on Schedule 3.13, the
Purchaser is not assuming any litigation or judgments, and the Seller and the
Shareholders will indemnify, defend and hold the Purchaser harmless with respect
to all such matters.
Section 3.14. Undisclosed Liabilities. Other than those reflected in
the Financial Statements or on Schedule 1.1AL, there are no liabilities of the
Seller of any kind or nature whatsoever, whether known or unknown, absolute,
accrued, contingent or otherwise, or whether due or to become due, other than
liabilities incurred in the ordinary course of business and consistent with past
practices since the date of the Financial Statements.
Section 3.15. Taxes. All federal, state, county, local and foreign tax
returns and reports of the Seller or any Affiliate of the Seller required to be
filed which relate to or affect the Business or the Purchased Assets have been
duly filed. There are no examinations in progress or claims against the Seller
for federal, state, local and other taxes (including penalties and interest) for
any period or periods and no notice of any claim for taxes, whether pending or
threatened has been received. All federal, state, county, local, foreign and any
other taxes (including all income, withholding and employment taxes),
assessments (including interest and penalties), fees and other governmental
charges with respect to the employees, properties, assets, income or franchises
of the Seller or any Affiliate of the Seller relating to or affecting the
Business or the Purchased Assets have been paid or duly provided for, or are
being contested in good faith by appropriate proceedings as disclosed on
Schedule 3.15 and adequate reserves therefor have been established pursuant to
GAAP on the Seller's December 31, 1998 balance sheet. There are no tax liens on
any of the Purchased Assets, except for the lien of taxes not yet due and
payable.
Section 3.16. Insurance. At all times prior to the execution of this
Agreement, the Seller has maintained appropriate and adequate insurance policies
covering the Purchased Assets and all aspects of the Business. Such insurance
policies are currently in full force and have remained in full force and effect
through the Closing. Schedule 3.16 lists all insurance policies in effect with
respect to the Seller or the Business during the past three (3) years, showing,
as to each policy or binder, the carrier, policy number, coverage limits,
expiration dates, annual premiums, deductibles or retention levels and a general
description of the type of coverage provided.
Section 3.17. Environmental Matters. Except as set forth on Schedule
3.17, (i) the Business is being and has been conducted in compliance with all
Environmental Laws, (ii) the Business has, and at all times has had, all
permits, licenses and other approvals and authorizations required under
applicable Environmental Laws for the operation of the Business, (iii) neither
the Seller nor any Shareholder has received any notice from any Governmental
Authority that the Seller or any of its Affiliates may be a potentially
responsible party in connection with any waste disposal site or facility used,
directly or indirectly, by or otherwise related to the Business, (iv) no reports
have been filed, or have been required to be filed, by the Seller or any
Shareholder, concerning the release of any Regulated Substance or the violation
of any Environmental Law, on or at the properties used in the Business; (v)
there have been no environmental investigations, studies, audits, tests,
reviews, or other analyses conducted by or which are in the possession of the
Seller or any Affiliate of the Seller relating to the Business, true and
complete copies of which have not been delivered to the Purchaser and CDL prior
to the date hereof, (vi) no Regulated Substance has been disposed of,
transferred, released or transported by the Seller or from the Seller's business
premises, other than as permitted under applicable Environmental Law pursuant to
appropriate regulations, permits or authorizations, and (vii) there are no
civil, criminal or administrative actions, suits, demands, claims, hearings,
investigations or other proceedings pending or threatened against the Business
or the Seller or any Affiliate of the Seller with respect to the Business or the
Purchased Assets relating to any violations, or alleged violations, of any
Environmental Law, and neither the Seller, any Affiliate of the Seller nor any
Shareholder has received any notices, demand letters or requests for
information, arising out of, in connection with, or resulting from, a violation,
or alleged violation, of any Environmental Law, and neither the Seller, any
Affiliate of the Seller nor any Shareholder has been notified by any
Governmental Authority or any other Person that the Business or the Purchased
Assets have, or may have, any liability pursuant to any Environmental Law.
Section 3.18. Proprietary Rights. (a) All of the Seller's Proprietary
Rights are listed in Schedule 3.18. Except as disclosed in Schedule 3.18, the
Seller owns and possesses all right, title and interest in the Proprietary
Rights. Upon consummation of the transactions contemplated hereby, the Purchaser
will own all right, title and interest in, the Proprietary Rights. The Seller
has taken all necessary or desirable action to protect the Proprietary Rights
and the transactions contemplated by this Agreement will have no material
adverse effect on the Seller's right, title and interest in the Proprietary
Rights.
(b) No claim by any third party contesting the validity,
enforceability, use or ownership of any Proprietary Rights has been made, is
currently pending or, to the Seller's knowledge after due investigation, is
threatened. The Seller has not received any notice of, nor is it aware of any
fact which indicates a likelihood of, any infringement or misappropriation by,
or conflict with, any third party with respect to any of the Proprietary Rights.
The Seller has not infringed, misappropriated or otherwise conflicted with any
rights of any third parties, nor is it aware of any infringement,
misappropriation or conflict which will occur as a result of the continued
operation of the Business as now conducted.
Section 3.19. Material Customers, Contracts and Commitments.
(a) Schedule 3.19A sets forth a list (the "Customer List") of all
customers (including names, addresses, contact persons, and telephone and
facsimile numbers) with whom the Seller (i) currently does business, (ii) is
currently actively pursuing as a prospective customer, or (iii) has done
business with since January 1, 1997.
(b) True and complete copies of all material written contracts with
customers, including any amendments thereto, have been delivered by the Seller
to the Purchaser and such documents constitute the legal, valid and binding
obligation of the Seller and, to the Seller's knowledge, each other party
purportedly obligated thereunder. Schedule 3.19B lists all of such contracts
with customers that are to be assumed by the Purchaser (the "Assumed
Contracts"). All Assumed Contracts are assignable to the Purchaser and Seller
has obtained all consents to assignment required under any such contracts except
as indicated on Schedule 3.19B. Except for obligations under the Assumed
Contracts arising after the Closing Date, the Purchaser is not assuming any
obligations or liabilities under any of the Seller's contracts or agreements
with customers or suppliers or otherwise.
(c) Schedule 3.19C lists the ten (10) largest customers (in terms of
sales) of the Seller for the fiscal year ended December 31, 1998 and the
revenues received from each such customer during fiscal 1998. Except to the
extent set forth in Schedule 3.19C, no one customer or group of related
customers of the Seller accounted for more than 5% of the Seller's revenues for
the fiscal year ended December 31, 1998. Except to the extent set forth on
Schedule 3.19C, (i) none of the Seller's customers with revenues greater than 5%
of the total revenues for the fiscal year ended December 31, 1998 have canceled
or substantially reduced or, to the knowledge of any Shareholder or the Seller
are currently attempting or threatening to cancel or substantially reduce the
amount of business done with the Business and (ii) the Seller has complied with
all material commitments and obligations pertaining to them and is not in
default under any such contracts and agreements and no notice of default has
been received.
(d) Except as disclosed in Schedule 3.19D, the Seller is not in, nor
has the Seller given or received notice of, any material default or claimed,
purported or alleged material default, or facts that, with notice or lapse of
time, or both, would constitute a material default by the Seller (or give rise
to a termination right) in the performance of any obligation to be performed
under any of its contracts with its customers.
Section 3.20. Accounts Receivable. Schedule 3.20 sets forth a true and
complete listing of all Accounts Receivable and an aging schedule at March 31,
1999 reflecting the aggregate amount of all Accounts Receivable outstanding (i)
30 days or less, (ii) more than 30 days but less than or equal to 60 days, (iii)
more than 60 days but less than or equal to 90 days and, (iv) more than 90 days.
All of the Accounts Receivable have arisen in the ordinary and regular course of
business, represent bona fide transactions with third parties and are not
subject to any material counterclaims or material offsets (except for those for
which adequate reserves have been established in accordance with GAAP), have
been billed and are collectible in the ordinary course of business consistent
with past practices.
Section 3.21. Books and Records. The books and records of the Seller,
including financial records and books of account, are complete and accurate and
have been maintained in accordance with GAAP, to the extent applicable, and
sound business practices.
Section 3.22. Brokers. No Person is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee from the
Seller or any Shareholder in connection with this Agreement or any of the
transactions contemplated hereby. Neither the Seller nor any of the Shareholders
have employed any broker or agent in connection with the transactions
contemplated by this Agreement.
Section 3.23. Net Worth of Seller. As of December 31, 1998 and the
date hereof, the Seller has a positive net worth and is not subject to any
bankruptcy or insolvency proceedings. Seller will be able to satisfy all of its
debts in full as they come due.
Section 3.24. Affiliates. Neither the Seller nor any of the
Shareholders have any interest in, nor affiliation with, any entity or person in
the air or ground messenger or delivery business or any related business except
as set forth in Schedule 3.24.
Section 3.25. Full Disclosure. No representation or warranty made by
any Shareholder or the Seller in this Agreement, any Schedule, any Exhibit or
any certificate delivered, or to be delivered, by or on behalf of the Seller or
any Shareholder pursuant hereto contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading.
ARTICLE IV
Representations and Warranties of the Purchaser and CDL
The Purchaser and CDL represent and warrant to the Seller and the
Shareholders as follows:
Section 4.1. Organization. The Purchaser and CDL are each corporations
duly organized, validly existing and in good standing under the laws of the
States of Florida and Delaware, respectively (except as set forth in Schedule
4.1) and have full power and authority, corporate and other, to own their
respective property and assets and to carry on their respective businesses as
presently conducted except where the failure to be so qualified would not have a
material adverse effect on their respective businesses.
Section 4.2. Authorization. The Purchaser and CDL have full power and
authority, corporate and other, to execute and deliver this Agreement and to
perform their respective obligations hereunder, all of which have been duly
authorized by all requisite corporate action. This Agreement, has been or, at
the time of delivery will be, duly authorized, executed and delivered by the
Purchaser and CDL and constitute or, at the time of delivery will constitute, a
valid and binding agreement of the Purchaser and CDL, enforceable against the
Purchaser and CDL in accordance with its terms.
Section 4.3. Non-contravention. Neither the Purchaser nor CDL is
subject to any provision of their respective Certificates of Incorporation or
By-laws or any agreement, instrument, law, rule, regulation, order, decree or
judgment of any Governmental Authority or other restriction that would prevent
the consummation of the transactions contemplated by this Agreement.
Section 4.4. No Consents. No notice to, filing with, or authorization,
registration, consent or approval of any Governmental Authority or other Person
is necessary for the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby by the Purchaser and CDL.
Section 4.5. Brokers. No person is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee from the
Purchaser or CDL in connection with this Agreement or any of the transactions
contemplated hereby.
Section 4.6. SEC Filings. CDL has delivered to the Seller copies of
(i) its Annual Reports on Form 10-K for year of the year ended December 31,
1998, (ii) its Current Reports on Form 8-K or 8-KA, filed on February 22 and
February 26, 1999, (iii) its proxy statement for its annual meeting to be held
on June 16, 1999; and (iv) its Registration Statement on Form S-4 (collectively,
the "SEC Filings"). The SEC Filings taken as a whole are true, complete and
correct in all material respects. The financial statements contained in the SEC
Filings are true, complete and correct in all material respects and fairly
represent in all material respects the consolidated financial position of CDL as
of the respective dates thereof and the results of operations for the periods
then ended and have been prepared in accordance with GAAP consistently applied
on a basis consistent with prior periods.
Section 4.7. CDL Common Stock. The CDL Common Stock to be issued
hereunder shall be duly authorized, fully paid and non-assessable. No
Encumbrances or restrictions exist on the CDL Common Stock, except any
restrictions on transfer pursuant to state and federal securities laws and
pursuant to Sections 5.7, 5.8 and 5.9 below.
ARTICLE V
Covenants and Agreements
Section 5.1. Transfer and Property Taxes. (a) The Seller shall pay any
transfer, sales, purchase, use or similar tax under the laws of any Governmental
Authority arising out of or resulting from the purchase of the Purchased Assets.
The Seller shall prepare and file the required tax returns and other required
documents with respect to the taxes and fees required to be paid by the Seller
pursuant to the preceding sentence and shall promptly provide the Purchaser and
CDL with evidence of the payment of such taxes and fees.
(b) The Shareholders or the Seller shall (i) prepare and file all tax
returns reporting the income attributable to the Purchased Assets or the
operation of the Business for all periods ending prior to or on the Closing
Date, (ii) prepare and file all income tax returns reporting the income of the
Seller arising on the Closing Date from the sale to the Purchaser and CDL of the
Purchased Assets, (iii) be responsible for the conduct of all tax examinations
relating to the tax returns referred to in (i) and (ii) above, and (iv) pay all
taxes attributable to the Purchased Assets or the operation of the Business due
with respect to the tax returns referred to in (i) and (ii) above. The Purchaser
and/or CDL shall prepare and file all tax returns reporting the income
attributable to the ownership of the Purchased Assets and the operation of the
Business for all periods beginning after the Closing and shall be liable for and
pay all taxes due in respect of such tax returns.
Section 5.2. Non-Competition and Confidentiality Agreement. (a) For a
period of five (5) years after the Closing Date (or, with respect to each
Shareholder, such longer period of time as may be indicated in any employment,
consulting or other agreement with the Purchaser or CDL), the Shareholders and
the Seller will not directly or indirectly:
(i) engage in the small package express delivery business in
competition with the Purchaser or CDL or any of the subsidiaries of
either thereof, in the State of Florida;
(ii) call upon any person who is, at that time, an employee
of the Purchaser or CDL (including the subsidiaries of either thereof)
in a managerial capacity for the purpose or with the intent of
enticing such employee away from or out of the employ of the Purchaser
or CDL;
(iii) call upon any person or entity (x) which is, at that
time, or which has been, within one (1) year prior to that time, a
customer of the Purchaser or CDL (including the subsidiaries of either
thereof) or (y) which was a customer of the Seller in the 18 month
period preceding the Closing, for the purpose of soliciting or selling
products or services in competition with the Purchaser or CDL anywhere
in the United States; or
(iv) use for its own benefit or divulge or convey to any
third party, any Confidential Information (as hereinafter defined)
relating to the Business. For purposes of this Agreement, Confidential
Information consists of all information, knowledge or data relating to
the Business including, without limitation, customer and supplier
lists, formulae, trade know-how, processes, secrets, routing
information, consultant contracts, pricing information, marketing
plans, product development plans, business acquisition plans and all
other information relating to the operation of the Business not in the
public domain or otherwise publicly available. Information which
enters the public domain or is publicly available loses its
confidential status hereunder so long as the Shareholders or the
Seller do not directly or indirectly cause such information to enter
the public domain.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit any Shareholder from acquiring, as an investment, not more than one
percent (1%) of the capital stock of a competing business whose stock is traded
on a national securities exchange or over-the-counter.
(b) The Shareholders and the Seller acknowledge that the restrictions
contained in this Section 5.2 are reasonable and necessary to protect the
legitimate interests of the Purchaser and CDL and that any breach by any of the
Shareholders or the Seller of any provision hereof will result in irreparable
injury to the Purchaser and CDL. The Seller and the Shareholders acknowledge
that, in addition to all remedies available at law, the Purchaser and CDL shall
be entitled to equitable relief, including injunctive relief, and an equitable
accounting of all earnings, profits or other benefits arising from such breach
and shall be entitled to receive such other damages, direct or consequential, as
may be appropriate. Neither the Purchaser nor CDL shall be required to post any
bond or other security in connection with any proceeding to enforce this Section
5.2.
(c) It is specifically agreed that the five (5) year period stated at
the beginning of this Section 5.2, during which the agreements and covenants of
the Shareholders and the Seller shall be effective, shall be computed by
excluding from such period any time during which either the Seller or any
Shareholder is in violation of any provision of this Section 5.2.
(d) All of the covenants on this Section 5.2 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim of Seller or any Shareholder against Purchaser or CDL
shall not constitute a defense to the enforcement of such covenants.
(e) If any court determines that the provision of this Section 5.2, or
any part hereof, is unenforceable because of the duration or geographic scope of
such provisions, such court shall reduce the duration or scope of such
provisions, as the case may be, so that, as so reduced, such provisions are then
enforceable to the maximum extent permitted by applicable law.
Section 5.3. Further Assurances. In the event that at any time after
Closing any further action is necessary to carry out the purposes of this
Agreement, the Seller and each Shareholder shall take all such action without
any further consideration therefor. The Seller and each Shareholder also shall
take such actions and deliver such documents as the Purchaser may reasonably
request from time to time to perfect the Purchaser's title and ability to use
and dispose of the Purchased Assets. In addition, the Seller and each
Shareholder shall use their best efforts to provide CDL with any financial or
other information required for SEC disclosure or other governmental compliance.
Section 5.4. Employment Matters. (a) Except as otherwise set forth in
(b) below, neither the Purchaser nor CDL or any of the subsidiaries of either
thereof will have any liability or responsibility as to any employee of the
Seller. Neither CDL nor the Purchaser shall have any obligation to hire any
employees of the Seller, but the Purchaser may offer employment to any employees
of the Seller; provided, that the Seller shall terminate such employees
immediately prior to their employment by the Purchaser and remain solely
responsible for all amounts due to such employees through the termination date
unless such liabilities are set forth on Schedule 1.1AL. The Seller does not
currently, and at any time during the preceding twelve months did not, have
fifty (50) or more employees.
(b) Simultaneously with the execution of this Agreement, the Purchaser
and Xxxxxxxxx shall enter into an employment agreement upon substantially the
same terms and conditions as set forth in attached Exhibit C (the "Xxxxxxxxx
Employment Agreement").
Section 5.5. Audited Financial Statements of the Seller. All fees and
expenses incurred in connection with any audits of the financial statements of
the Seller, including without limitation the audited financial statements of the
Seller for the fiscal years ended December 31, 1997 and 1998, respectively,
shall be the sole responsibility of the Seller and the Shareholders, except that
the Purchaser will pay up to $15,000 towards the cost of the audit ($5,000 to
reimburse Seller for fees paid to date and the balance to Seller's Accountants
after receipt of their invoices).
Section 5.6. Access and Information. No investigation by the Purchaser
and CDL heretofore or hereafter made shall modify or otherwise affect any
representations and warranties of the Seller or any Shareholder, which shall
survive any such investigation, or the conditions to the respective obligations
of the Purchaser and CDL to consummate the transactions contemplated hereby.
Section 5.7 Securities Law Matters. The Shareholders represent that
they, or their purchaser representative, have read, reviewed and understood the
information provided pursuant to this Agreement and the other documentation and
information furnished by the Purchaser or CDL (including CDL's SEC Filings) and
has had ample opportunity to ask questions of and receive answers from the
officers of CDL, concerning CDL, the Note, the CDL Common Stock and CDL's
business. The Purchaser and CDL have provided to the Seller and the Shareholders
an opportunity to obtain any and all additional information necessary for them
to verify the accuracy of the information supplied by those individuals. The
Registration Statement on Form S-4 and the other SEC Filings then available were
received and reviewed at the time of commencement of negotiations for the
transaction.
Section 5.8 Restrictions on Transfer. (a) The Seller and each of the
Shareholders acknowledges that they have been advised that they might be
considered to be an "affiliate" of the Seller for purposes of Rule 145 ("Rule
145") of the General Rules and Regulations (the "Rules and Regulations") of the
SEC under the Securities Act. The Seller and each of the Shareholders represents
and warrants to, and agrees with, the Purchaser and CDL that:
(i) Neither the Seller nor the Shareholder shall make any
sale, transfer or other disposition of the CDL Common Stock in
violation of the Securities Act or the Rules and Regulations
promulgated thereunder.
(ii) The Seller and each Shareholder has been advised that the
offering, sale and delivery of the CDL Common Stock to him pursuant
hereto has been registered under the Securities Act on a Registration
Statement on Form S-4, a copy of which was provided to them prior to
the commencement of negotiations of the terms of this Agreement. The
Shareholder has also been advised, however, that since he may be deemed
to be an "affiliate" of the Seller as of the date hereof, any public
offering or sale by him of any of the CDL Common Stock will, under
current law, require either (i) the further registration under the
Securities Act of the CDL Common Stock to be offered and sold, (ii)
compliance with Rule 145, or (iii) the availability of another
exemption from such registration under the Securities Act.
(iii) Each of the Shareholders has read the provisions of this
Agreement, including the provisions of this Section 5.8, and has
discussed their requirements and other applicable limitations upon his
ability to sell, transfer or otherwise dispose of the CDL Common Stock,
to the extent the Shareholder felt necessary, with his counsel.
(iv) The Seller and each of the Shareholders acknowledge that
stop transfer instructions will be given to CDL's transfer agent with
respect to the shares of the CDL Common Stock and that there will be
placed on the certificates for the shares of the CDL Common Stock, or
any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were
issued in a transaction to which Rule 145 promulgated under
the Securities Act of 1933, as amended (the "Act"), applies,
and may be sold or otherwise transferred only in compliance
with the limitations of such Rule 145, or upon receipt by CDL
of an opinion of counsel acceptable to it that some other
exemption from registration under the Act is available, or
pursuant to a registration statement under the Act.
(v) The Seller and each of the Shareholders hereby agrees
that, for a period of one (1) year following the Closing Date, they
will obtain an agreement similar to this from each transferee of the
CDL Common Stock sold or otherwise transferred by the them, but only if
such transaction is effected other than in a transaction involving a
registered public offering or as a sale pursuant to Rule 145.
(b) CDL agrees that the restrictions set forth in Section 5.8(a) shall
terminate and be of no further force and effect, the legend set forth in Section
5.8(a)(v) above shall be removed at the Seller's request by delivery of
substitute certificates without such legend and the related stop transfer
restrictions shall be lifted forthwith if (i) any such shares of CDL Common
Stock shall have been registered under the Securities Act for sale, transfer or
other disposition by the Seller or the Shareholders or on their respective
behalves or (ii) any such shares of CDL Common Stock are sold in accordance with
the provisions of paragraphs (c), (e), (f) and (g) of Rule 144 promulgated under
the Securities Act or (iii) neither the Seller nor any of the Shareholders is at
the time an "affiliate" of CDL and has held the CDL Common Stock for at least
one (1) year (or such other period as may be prescribed by the Securities Act
and the Rules and Regulations promulgated thereunder) and CDL has filed with the
SEC all of the reports it is required to file under the Securities Exchange Act
of 1934, as amended, during the preceding twelve (12) months or (iv) neither the
Seller nor any of the Shareholders is nor has been for at least three months an
"affiliate" of CDL and has held the CDL Common Stock for at least two (2) years
(or such other period as may be prescribed by the Securities Act and the Rules
and Regulations promulgated thereunder) or (v) CDL shall have received a letter
from the staff of the SEC, or an opinion of counsel acceptable to CDL, to the
effect that the stock transfer restrictions and the legend are not required.
Section 5.9 Lock-Up of Payment Shares. Notwithstanding anything to the
contrary set forth in Section 5.8, the Seller and the Shareholders shall not
offer to sell, contract to sell or otherwise sell, dispose of, loan, pledge or
grant any rights with respect to (collectively, a "Disposition") the Payment
Shares until after the six month anniversary of the Closing Date. The foregoing
restriction (i) shall be applicable to the Seller and the Shareholders, as a
group (the "Selling Parties"), without regard to the distribution of the CDL
Common Stock from the Seller to the Shareholders and (ii) is expressly intended
to preclude each of the Selling Parties from engaging in any hedging or other
transaction which is designed to or reasonably expected to lead or result in a
Disposition of the Payment Shares during the period indicated in the first
sentence of this Section 5.9 even if such Payment Shares would be disposed of by
someone other than a Selling Party. Each of the Selling Parties consents to the
entry of stop transfer instructions with the transfer agent for CDL against the
transfer of the Payment Shares held by such Selling Party except in compliance
with this Section 5.9.
Section 5.10. Lease of Warehouse. Simultaneously with the execution of
this Agreement, the Purchaser and the Seller shall enter into a lease with
respect to the Facility (the "Lease"). The Lease shall provide for an initial
term of two years, a monthly rental of $1,011 and the Seller with the right to
terminate on 90 days prior written notice to the Purchaser, all as more fully
set forth on attached Exhibit D.
Section 5.11. Payment of Pre-Closing Accounts Receivable. Schedule
5.11 provides a true and complete list of all Accounts Receivable which relate
to services rendered by the Seller prior to the Closing Date (the "Retained
Accounts Receivable"). The Purchaser shall remit to the Seller all Retained
Accounts Receivable received by the Seller following the Closing within ten (10)
days of the end of the month in which such Accounts Receivable were received by
the Seller. The Purchaser shall not be obligated to take any additional actions
with respect to the collection of the Retained Accounts.
ARTICLE VI
Deliveries at Closing
Section 6.1. Deliveries by the Shareholders and the Seller.
Simultaneously with the execution of this Agreement, the Seller and the
Shareholders, as the case may be, shall have delivered to the Purchaser and CDL
all instruments of assignment, transfer and conveyance identified herein and
such other closing documents as shall be reasonably requested by the Purchaser
and CDL in form and substance acceptable to the Purchaser's counsel, including
the following:
(a) such instruments of sale, transfer, assignment, conveyance
and delivery (including all vehicle titles), in form and substance
reasonably satisfactory to counsel for the Purchaser (including without
limitation a Xxxx of Sale and an Assignment and Assumption Agreement), as
are required in order to transfer to the Purchaser good and marketable
title to the Purchased Assets, free and clear of all Encumbrances;
(b) a certificate of the Chairman, President or a Vice President
of the Seller, dated the Closing Date, to the effect that (1) the Person
signing such certificate is familiar with this Agreement and (2) (i) all
authorizations, consents, waivers, approvals or other actions required in
connection with the execution, delivery and performance of this Agreement
by the Shareholders and the Seller and the consummation by the Shareholders
and the Seller of the transactions contemplated hereby have been obtained
and are in full force and effect; (ii) the Seller has obtained any
authorizations, consents, waivers, approvals or other actions required to
prevent a material breach or default by the Seller under any contract to
which the Seller is a party or for the continuation of any agreement to
which the Seller is a party and which relates and is material to the
Purchased Assets or the Business and is being assumed by the Purchaser; and
(iii) all authorizations, consents, waivers, approvals or other actions
necessary to permit the Purchaser to operate the Business in compliance
with all applicable laws immediately after the Closing have been obtained
and are in full force and effect.
(c) a certificate of the Secretary or Assistant Secretary of the
Seller, dated the Closing Date, as to the incumbency of any officer of the
Seller executing this Agreement or any document related thereto and
covering such other matters as the Purchaser and CDL may reasonably
request;
(d) a certified copy of (i) the Certificate of Incorporation and
By-laws of the Seller and all amendments thereto, (ii) a certificate, dated
as of no later than 10 days prior to the Closing Date, duly issued by the
Secretary of State of the State of [Florida] showing the Seller is in good
standing and authorized to do business in such jurisdiction, and (iii) the
resolutions of the Seller's Board of Directors authorizing the execution,
delivery and consummation of this Agreement, the instruments of transfer
and the transactions contemplated hereby;
(e) an opinion of Rogers, Towers, Xxxxxx, Xxxxx & Gay, counsel to
the Shareholders and the Seller, dated the Closing Date, in form and
substance reasonably satisfactory to counsel for the Purchaser and CDL;
(f) a copy of the Lease, duly executed by the Seller;
(g) a copy of the Xxxxxxxxx Employment Agreement, duly executed
by Xxxxxxxxx; and
(h) such other documents or instruments as the Purchaser and CDL
reasonably request to effect the transactions contemplated hereby.
Section 6.2. Deliveries by the Purchaser and CDL. Simultaneously with
the execution of this Agreement, the Purchaser and CDL shall have delivered to
the Shareholders and the Seller such closing documents as shall be reasonably
requested by the Shareholder and the Seller in form and substance reasonably
acceptable to the Seller's counsel, including the following:
(a) the Assignment and Assumption Agreement executed by the
Purchaser and dated the Closing Date;
(b) certificates of the Secretary or Assistant Secretary of the
Purchaser and CDL, respectively dated the Closing Date, as to the
incumbency of any officer of the Purchaser and CDL executing this
Agreement, or any document related thereto and covering such other matters
as the Seller may reasonably request;
(c) a certified copy of the resolutions of the Purchaser's Board
of Directors and CDL's Board of Directors authorizing the execution,
delivery and consummation of this Agreement and the transactions
contemplated hereby;
(d) payment of the Purchase Price as set forth in Section 2.2;
(e) a copy of the Xxxxxxxxx Employment Agreement, duly executed
by the Purchaser; and
(f) a copy of the Lease, duly executed by the Purchaser.
ARTICLE VII
Survival of Representations and Warranties; Indemnification
Section 7.1. Survival of Representations and Warranties. Except as set
forth below, the representations and warranties provided for in this Agreement
shall survive the Closing for two (2) years from the Closing Date for the
benefit of the parties hereto and their successors and assigns. The
representations and warranties provided for in Sections 3.13, 3.15 and 3.17
shall survive the Closing and remain in full force and effect for six (6) years.
The survival period of each representation or warranty as provided in this
Section 7.1 is hereinafter referred to as the "Survival Period."
Section 7.2. Indemnification. (a) The Shareholders and the Seller
jointly and severally, subject to the limitations set forth in Section 7.2(d)
below, shall indemnify, defend and hold harmless the Purchaser and CDL or any of
their respective Affiliates, officers, directors, employees, agents and
representatives, and any Person claiming by or through any of them, against and
in respect of any and all claims, costs, expenses, damages, liabilities, losses
or deficiencies (including, without limitation, counsel's fees and other costs
and expenses incident to any suit, action or proceeding) (the "Damages") arising
out of, resulting from or incurred in connection with (i) any inaccuracy in any
representation or the breach of any warranty made by the Seller or any
Shareholder in this Agreement for the applicable Survival Period, (ii) the
breach by any Shareholder or the Seller of any covenant or agreement to be
performed by them hereunder, (iii) any Retained Asset and (iv) any Excluded
Liability. Seller agrees to pay or otherwise satisfy all of its obligations and
liabilities in the ordinary course of business.
(b) The Purchaser and CDL shall indemnify, defend and hold harmless
the Shareholders and the Seller or any of their respective affiliates, officer,
directors, employees, agents and representatives and any Person claiming by or
through either of them, against and in respect of any and all damages arising
out of, resulting from or incurred in connection with (i) any inaccuracy in any
representation or the breach of any warranty made by the Purchaser and CDL in
this Agreement for the applicable Survival Period, (ii) the breach by the
Purchaser or CDL of any covenant or agreement to be performed by them hereunder,
and (iii) any Assumed Liability.
(c) Any Person providing indemnification pursuant to the provisions of
this Section 7.2 is hereinafter referred to as an "Indemnifying Party" and any
Person entitled to be indemnified pursuant to the provisions of this Section 7.2
is hereinafter referred to as an "Indemnified Party."
(d) The indemnification obligations contained in Sections 7.2(a) and
7.2(b) above, respectively, shall not apply to any claim for Damages until the
aggregate of all such claims suffered by an Indemnified Party total Ten Thousand
Dollars ($10,000), and then shall apply only to the excess. The Indemnified
Party shall notify the Indemnifying Party in writing promptly (i) upon suffering
any Damages to be included in calculating such $10,000 and (ii) upon suffering
any Damages in the aggregate amount of $10,000 or more. All such claims made
during the relevant Survival Period shall be counted in determining whether the
thresholds specified above have been achieved.
Section 7.3. Procedures for Third Party Claims. In the case of any
claim for indemnification arising from a claim of a third party (a "Third Party
Claim"), an Indemnified Party shall give prompt written notice to the
Indemnifying Party of any claim or demand which such Indemnified Party has
knowledge and as to which it may request indemnification hereunder. The
Indemnifying Party shall have the right to defend and to direct the defense
against any such Third Party Claim, in its name or in the name of the
Indemnified Party, as the case may be, at the expense of the Indemnifying Party,
and with counsel selected by the Indemnifying Party unless (i) such Third Party
Claim seeks an order, injunction or other equitable relief against the
Indemnified Party, or (ii) the Indemnified Party shall have reasonably concluded
(and shall have advised the Indemnifying Party in writing of the basis for its
conclusion) that (x) there is a conflict of interest between the Indemnified
Party and the Indemnifying Party in the conduct of the defense of such Third
Party Claim or (y) the Indemnified Party has one or more defenses not available
to the Indemnifying Party. Notwithstanding anything in this Agreement to the
contrary, the Indemnified Party shall, at the expense of the Indemnifying Party,
cooperate with the Indemnifying Party, and keep the Indemnifying Party fully
informed, in the defense of such Third Party Claim. The Indemnified Party shall
have the right to participate in the defense of any Third Party Claim with
counsel employed at its own expense; provided, however, that, in the case of any
Third Party Claim or demand described in clause (i) or (ii) of the second
preceding sentence or as to which the Indemnifying Party shall not in fact have
employed counsel to assume the defense of such Third Party Claim, the reasonable
fees and disbursements of such counsel shall be at the expense of the
Indemnifying Party. The Indemnifying Party shall have no indemnification
obligations with respect to any such Third Party Claim or demand which shall be
settled by the Indemnified Party without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
Section 7.4. Procedures for Inter-Party Claims. In the event that an
Indemnified Party determines that it has a claim for Damages against an
Indemnifying Party hereunder (other than as a result of a Third Party Claim),
the Indemnified Party shall give prompt written notice thereof to the
Indemnifying Party, specifying the amount of such claim and any relevant facts
and circumstances relating thereto. The Indemnified Party shall provide the
Indemnifying Party with reasonable access to its books and records for the
purpose of allowing the Indemnifying Party a reasonable opportunity to verify
any such claim for Damages. The Indemnified Party and the Indemnifying Party
shall negotiate in good faith regarding the resolution of any disputed claims
for Damages. Promptly following the final determination of the amount of any
Damages claimed by the Indemnified Party, the Indemnifying Party shall pay such
Damages to the Indemnified Party by wire transfer or check made payable to the
order of the Indemnified Party, without interest. In the event that the
Indemnified Party is required to institute legal proceedings in order to recover
Damages hereunder, the cost of such proceedings (including costs of
investigation and reasonable attorneys' fees and disbursements) shall be added
to the amount of Damages payable to the Indemnified Party.
Section 7.5. Right of Set-Off. The Purchaser and CDL shall have the
right to set-off, against any amount which may be owed by the Purchaser or CDL
to the Seller or any Shareholder, including but not limited to pursuant to the
Note, whether due or unpaid at the time of such set-off, any amount owed to the
Purchaser and CDL by the Seller or any Shareholder pursuant to this Agreement or
otherwise. The exercise of such right of set-off by the Purchaser and CDL shall
not constitute a breach by the Purchaser or CDL of this Agreement or the
agreement underlying such obligation.
ARTICLE VIII
Miscellaneous
Section 8.1. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile or sent by certified, registered or express air mail, postage prepaid,
and shall be deemed given when so delivered personally, or by facsimile, or if
mailed, five days after the date of mailing, as follows:
If to the Purchaser or CDL: 000 Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxx, Esq., General Counsel
With a copy to: Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxxx, Esq.
If to the Seller or
the Shareholders: 00000 Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Telephone:
Facsimile:
Attention: Xxxxxx Xxxxxxxxx
With a copy to: Rogers, Towers, Xxxxxx, Xxxxx & Gay
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Section 8.2. Expenses. Regardless of whether the transactions provided
for in this Agreement are consummated, except as otherwise provided herein, each
party hereto shall pay its own expenses incident to this Agreement and the
transactions contemplated herein.
Section 8.3. Governing Law; Consent to Jurisdiction This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of New Jersey, without reference to the choice of law principles thereof.
Each of the parties hereto irrevocably submits to the non-exclusive jurisdiction
of the courts of the State of New Jersey and the United States District Court
for the District of New Jersey, located in Passaic or Essex County, State of New
Jersey, for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Agreement and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
Section 8.4. Assignment; Successors and Assigns; No Third Party
Rights. Except as otherwise provided herein, this Agreement may not be assigned
by operation of law or otherwise, and any attempted assignment shall be null and
void. The Purchaser and CDL may assign all of their rights under this Agreement
to any Affiliate; provided such Affiliate assumes all of the obligations of the
Purchaser and CDL remains liable hereunder. No such assignment shall relieve
Purchaser or CDL of their obligations hereunder. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, assigns and legal representatives. This Agreement shall be for the
sole benefit of the parties to this Agreement and their respective successors,
assigns and legal representatives and is not intended, nor shall be construed,
to give any Person, other than the parties hereto and their respective
successors, assigns and legal representatives, any legal or equitable right,
remedy or claim hereunder.
Section 8.5. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument.
Section 8.6. Titles and Headings. The headings and table of contents
in this Agreement are for reference purposes only, and shall not in any way
affect the meaning or interpretation of this Agreement.
Section 8.7. Entire Agreement. This Agreement, including the Schedules
and Exhibits attached thereto, constitutes the entire agreement among the
parties with respect to the matters covered hereby and supersedes all previous
written, oral or implied understandings among them with respect to such matters.
Section 8.8. Amendment and Modification. This Agreement may only be
amended or modified in writing signed by the party against whom enforcement of
such amendment or modification is sought.
Section 8.9. Public Announcement. Except as may be required by law,
neither the Seller, on the one hand, or the Purchaser, on the other hand, shall
issue any press release or otherwise publicly disclose this Agreement or the
transactions contemplated hereby or any dealings between or among the parties in
connection with the subject matter hereof without the prior approval of the
other. In the event that any such press release or other public disclosure shall
be required, the party required to issue such release or other disclosure shall
consult in good faith with the other party hereto with respect to the form and
substance of such release or other disclosure prior to the public dissemination
thereof.
Section 8.10. Waiver. Any of the terms or conditions of this Agreement
may be waived at any time by the party or parties entitled to the benefit
thereof, but only by a writing signed by the party or parties waiving such terms
or conditions.
Section 8.11. Severability. The invalidity of any portion hereof shall
not affect the validity, force or effect of the remaining portions hereof. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, such restriction shall be enforced to
the maximum extent permitted by law.
Section 8.12. No Strict Construction. Each of the Purchaser, CDL, the
Seller and the Shareholders acknowledge that this Agreement has been prepared
jointly by the parties hereto, and shall not be strictly construed against any
party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
CONSOLIDATED DELIVERY &
LOGISTICS, INC.
By:______________________________
Name:
Title:
SILVER STAR EXPRESS, INC.
By:______________________________
Name:
Title:
METRO PARCEL SERVICE, INC.
By:______________________________
Name:
Title:
_________________________________
XXXXXX XXXXXXXXX
_________________________________
XXXXX X. XXXXXXXXX
