Exhibit 2.1
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MERGER AGREEMENT
BY AND AMONG
CEX HOLDINGS, INC.,
CORPORATE EXPRESS DELIVERY SYSTEMS, INC.,
UNITED SHIPPING & TECHNOLOGY, INC.
AND
UNITED SHIPPING & TECHNOLOGY ACQUISITION CORP.
DATED AS OF SEPTEMBER 8, 1999
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TABLE OF CONTENTS
PAGE NO.
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ARTICLE I
DEFINITIONS AND OTHER MATTERS
Section 1.1 Definitions..........................................................................1
ARTICLE II
THE TRANSACTION
Section 2.1 The Merger...........................................................................8
Section 2.2 Adjustment of the Merger Consideration...............................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Buyer's Representations and Warranties..............................................11
Section 3.2 CEX's Representations and Warranties................................................15
ARTICLE IV
COVENANTS AND AGREEMENTS
Section 4.1 Covenants and Agreements of Buyer...................................................22
Section 4.2 Covenants and Agreements of CEX and the Company.....................................24
Section 4.3 Continuing Joint Covenants and Agreements...........................................25
Section 4.4 Exclusivity.........................................................................28
ARTICLE V
CONDITIONS PRECEDENT TO THE CLOSING
Section 5.1 Conditions Precedent to Buyer's Obligations.........................................29
Section 5.2 Conditions Precedent to CEX's and the Company's Obligations.........................30
ARTICLE VI
THE CLOSING
Section 6.1 The Closing Date....................................................................31
Section 6.2 Deliveries at the Closing...........................................................31
Section 6.3 Simultaneous Closing................................................................33
ARTICLE VII
POST-CLOSING AGREEMENTS AND OTHER MATTERS
Section 7.1 Post-Closing Agreements.............................................................33
Section 7.2 Inspection of Records...............................................................34
Section 7.3 Mutual Assistance...................................................................34
Section 7.4 Further Assurances..................................................................34
Section 7.5 Exchange Act and Other Filings......................................................34
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Section 7.6 Insurance...........................................................................34
Section 7.7 Administration of Accounts..........................................................35
Section 7.8 Notice Obligations of Buyer.........................................................35
Section 7.9 Future Delivery Services............................................................35
ARTICLE VIII
TERMINATION
Section 8.1 Termination.........................................................................35
Section 8.2 Effect of Termination...............................................................36
Section 8.3 Break-up Fee........................................................................36
ARTICLE IX
INDEMNIFICATION
Section 9.1 Survival of Representations and Warranties..........................................37
Section 9.2 Indemnification by CEX..............................................................37
Section 9.3 Indemnification by Buyer and the Company............................................38
Section 9.4 Procedure for Third Party Claims....................................................38
Section 9.5 General Provisions Relating to Remedies and Indemnification.........................40
Section 9.6 Exclusive Nature....................................................................41
ARTICLE X
MISCELLANEOUS
Section 10.1 Company Name........................................................................41
Section 10.2 Exclusivity of Representations and Warranties; Relationship Between the Parties.....42
Section 10.3 Tax Matters.........................................................................43
Section 10.4 Entire Agreement....................................................................43
Section 10.5 Amendments..........................................................................43
Section 10.6 Severability........................................................................44
Section 10.7 Counterparts........................................................................44
Section 10.8 No Waiver...........................................................................44
Section 10.9 Assignment..........................................................................44
Section 10.10 Fees, Costs and Expenses............................................................44
Section 10.11 Third Party Beneficiaries...........................................................44
Section 10.12 Interpretation of Schedules.........................................................44
Section 10.13 Construction........................................................................45
Section 10.14 Consent to Jurisdiction and Related Matters.........................................45
Section 10.15 Waiver of Jury Trial................................................................46
Section 10.16 Notices.............................................................................46
Section 10.17 Governing Law.......................................................................48
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EXHIBITS
Exhibit A Noncompete Agreement
Exhibit B Tax Sharing and Indemnification Agreement
Exhibit C Transition Services Agreement
Exhibit D Short-Term Note
Exhibit E Long-Term Note
Exhibit F Convertible Note
Exhibit G Beginning Balance Sheet
Exhibit H Guaranty
Exhibit I Security Agreement (Subsidiaries)
Exhibit J Security Agreement (CEDS)
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SCHEDULES
Schedule 3.2.5 Required Consents
Schedule 3.2.6 Regulatory Approvals
Schedule 3.2.7 Subsidiaries of the Company
Schedule 3.2.10A Financial Statements
Schedule 3.2.10B Exceptions to Financial Statements
Schedule 3.2.11A Real Property
Schedule 3.2.11B Personal Property
Schedule 3.2.12 Intellectual Property
Schedule 3.2.13A Material Contracts
Schedule 3.2.13B Certain Contracts
Schedule 3.2.14 Labor Matters
Schedule 3.2.15 Pending Litigation
Schedule 3.2.16 Environmental Compliance
Schedule 3.2.17 Absence of Changes or Events
Schedule 3.2.18 Compliance with Laws
Schedule 3.2.20 Insurance Policies
Schedule 3.2.21 Employee Benefit Plans
Schedule 4.2.2 Ordinary Course of Business
Schedule 4.2.3 Continuing Contracts
Schedule 4.3.4 Guarantees
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MERGER AGREEMENT
This Merger Agreement (this "Agreement") is made and entered into as
of September 8, 1999, by and among CEX Holdings, Inc., a Colorado corporation
("CEX"), Corporate Express Delivery Systems, Inc., a Delaware corporation (the
"Company"), United Shipping & Technology, Inc., a Utah corporation ("Buyer") and
United Shipping & Technology Acquisition Corp., a Delaware corporation ("Merger
Sub"). CEX, the Company, Buyer and Merger Sub are sometimes individually
referred to herein as a "party" and sometimes collectively as the "parties".
WITNESSETH
WHEREAS, CEX owns all of the issued and outstanding common stock,
par value $.001 per share, of the Company (the "Company Shares"), which
represent 100% of the issued and outstanding shares of the capital stock of the
Company;
WHEREAS, the Company owns all of the issued and outstanding common
stock of those Subsidiaries identified on Schedule 3.2.7;
WHEREAS, Corporate Express, Inc., a Colorado corporation ("CEI"), is
the parent company of CEX;
WHEREAS, Buyer desires to acquire the Company and its Subsidiaries
from CEX in a merger transaction pursuant to which Merger Sub will merge with
and into the Company and the Company will be the surviving corporation; and
WHEREAS, in accordance with the terms and provisions of the Tax
Sharing and Indemnification Agreement (as defined herein), Buyer and CEX will
each file elections under Section 338(h)(10) of the Internal Revenue Code for
the Company and its Subsidiaries;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, CEX and Buyer hereby
agree as follows:
ARTICLE I
DEFINITIONS AND OTHER MATTERS
SECTION 1.1 DEFINITIONS. In this Agreement, the following terms
shall have the following meanings:
"Affiliate" of any Person means any other Person which Controls, is
Controlled by, or is under common Control with such Person.
"Agreement" means this Agreement, the Annexes, Schedules, Exhibits
and other attachments hereto, and all amendments and supplements to any of the
foregoing, made in
accordance with Section 10.4 or, in the case of Schedules, made in accordance
with Section 5.1.1 or Section 5.2.1, as the case may be.
"Ancillary Agreements" shall mean the Tax Sharing and
Indemnification Agreement, the Noncompete Agreement, the Exchange Agreement, the
Transition Services Agreement, the Registration Rights Agreement, the Parent
Guaranty, the Subsidiary Guaranty, the Security Agreement and the Promissory
Notes.
"Audited Financial Statements" shall have the meaning set forth in
Section 3.2.10.
"Bayview" means Bayview Capital Partners LP.
"Beginning Balance Sheet" shall have the meaning set forth in
Section 2.2.1.
"Buyer" shall have the meaning set forth in the preamble.
"Buyer's Bring Down Certificate" shall have the meaning set forth in
Section 5.2.1.
"Buyer's Common Stock" shall have the meaning set forth in Section
3.1.12(a)(i).
"Buyer Indemnified Parties" shall have the meaning set forth in
Section 9.2.
"Buyer SEC Reports" shall mean the reports and statements which
Buyer has filed, or is required to file, with the Securities and Exchange
Commission pursuant to the Exchange Act.
"Cash Reconciliation Report" shall have the meaning set forth in
Section 2.2.3.
"CEI" shall have the meaning set forth in the Recitals.
"CEI Plan" shall have the meaning set forth in Section 3.2.21(a).
"CEX's Bring Down Certificate" shall have the meaning set forth in
Section 5.1.1.
"CEX Indemnified Parties" shall have the meaning set forth in
Section 9.3.
"Closing" shall have the meaning set forth in Section 6.1.
"Closing Date" shall have the meaning set forth in Section 6.1.
"COBRA" shall have the meaning set forth in Section 3.2.21(f).
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations issued thereunder.
"Commission" shall have the meaning set forth in Section 3.1.11.
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"Commitment Letters" shall have the meaning set forth in Section
3.1.8.
"Company" shall, prior to the Merger, have the meaning set forth in
the preamble and, following the merger, shall mean the Surviving Corporation;
provided, however, that references to the Company in Section 3.2 shall mean and
include only Corporate Express Delivery Systems, Inc. prior to the Merger.
"Company Disclosure Schedule" shall mean the Disclosure Schedule
delivered by CEX in connection herewith, as amended or supplemented from time to
time.
"Company Plan" shall have the meaning set forth in Section
3.2.21(a).
"Company Properties" means all properties, sites and facilities
currently owned or operated by the Company or any of its Subsidiaries and all
properties, sites and facilities which were owned or operated at any previous
time by the Company or any of its Subsidiaries and for which a Governmental
Authority or any other Person seeks to hold the Company or any of its
Subsidiaries responsible or liable in whole or in part.
"Company Shares" shall have the meaning set forth in the preamble.
"Confidentiality Agreement" shall have the meaning set forth in
Section 4.1.1.
"Continuing Affiliates" shall mean CEI and each of its Affiliates
other than the Company and the Subsidiaries of the Company.
"Control" shall mean the direct or indirect power affirmatively to
direct the management and policies of a Person, whether through the ownership of
voting securities, by agreement or otherwise. "Controls," "Controlled" and
"Controlling" shall have corresponding meanings.
"Convertible Note" shall have the meaning set forth in Section
2.1.7(d).
"Data Room" means the room maintained by the Company at its offices
in Houston, Texas containing certain documents and materials relating to the
Company to which Buyer has been provided access.
"Delaware Law" shall mean the General Corporation Law of Delaware.
"DOT" shall have the meaning set forth in Section 3.1.7.
"Effective Date" shall have the meaning set forth in Section 2.2.1.
"Effective Time" has the meaning set forth in Section 2.1.3.
"Encumbrance" means any lien, security interest, mortgage or
encumbrance, other than a Permitted Encumbrance.
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"Environmental Claim" means any claim asserted by a Person or entity
alleging potential Liability (including, without limitation, a potential
Liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, or penalties)
arising out of, based on or resulting from the presence, or release into the
environment, of any Hazardous Substance at any property owned or operated by the
Company or any of its Subsidiaries.
"Environmental Laws" means any federal, state, local and foreign
statutes, laws (including without limitation, common law), judicial decisions,
regulations, ordinances, rules, judgments, orders, codes, injunctions, permits,
governmental agreements or governmental restrictions relating to human health
and safety, the environment or to pollutants, contaminants, wastes, or
chemicals.
"Equipment Leases" shall have the meaning set forth in Section
4.3.4(b).
"Equipment Lease Obligations" shall have the meaning set forth in
Section 4.3.4(b).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and all regulations and rules issued thereunder.
"ERISA Affiliate" shall have the meaning set forth in Section
3.2.21(d).
"Estimated Effective Date Balance Sheet" shall have the meaning set
forth in Section 2.2.1.
"Exchange Agreement" shall mean an agreement between Buyer and CEX
specifying (i) the terms and conditions pursuant to which CEX may exchange the
Convertible Note for Buyer's Common Stock at the initial rate of $4.59 per
share, and (ii) the antidilution protection and other rights that CEX shall have
with respect to such exchange. The Exchange Agreement will be in form mutually
acceptable to Buyer and CEX and will include exchange and antidilution
provisions mutually acceptable to Buyer and CEX; provided, however, that CEX
agrees that it will review in good faith the antidilution provisions agreed to
between Buyer and Bayview and will to the extent such provisions are acceptable
to CEX agree to such provisions in their Exchange Agreement.
"Final Adjustment Amount" shall have the meaning set forth in
Section 2.2.2.
"Final Effective Date Balance Sheet" shall have the meaning set
forth in Section 2.2.2.
"Foreign Plan" shall have the meaning set forth in Section
3.2.21(a).
"GE" shall mean GE Capital Corporation or an affiliate thereof.
"Governmental Authority" means any federal, state, local, foreign or
multinational (including the European Community) court, tribunal, legislative,
administrative or regulatory authority or agency, with competent jurisdiction.
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"Guarantees" shall have the meaning set forth in Section 4.3.4(a).
"Guaranty" shall mean the agreement substantially in the form
attached hereto as Exhibit H to be executed and delivered by Buyer and the
Company's Subsidiaries as required under Section 6.2.1(g).
"Hazardous Substance" means any substance that is listed, classified
or regulated pursuant to any Environmental Law, including any petroleum product
or by-product, asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"ICC" shall have the meaning set forth in Section 3.1.7.
"Intercreditor Agreements" shall have the meaning set forth in
Section 2.1.7.
"Internal Financial Statements" shall have the meaning set forth in
Section 3.2.10.
"Knowledge," "known," "belief," "believe" or variances thereof
(whether or not capitalized) shall mean, except as otherwise stated herein, when
applied to CEX or any of its Affiliates, the actual knowledge (without duty of
inquiry) of those representatives of CEI, CEX or the Company listed on Annex
A-1, and when used with respect to Buyer or any of its Affiliates shall mean the
actual knowledge (without duty of inquiry) of the representatives of Buyer
listed on Annex A-2.
"Laws" shall mean any law, statute, code, treaty, rule, directive,
plan, regulation, promulgation, decree, ruling, injunction or order of any
Governmental Authority, or any common law principle, doctrine or judgment
relating thereto or interpreting the application thereof.
"Liability" means any liability, obligation, loss or contingency,
whether known or unknown, asserted or unasserted, absolute or conditional,
accrued or unaccrued, liquidated or unliquidated, and whether due or to become
due, regardless of when asserted or arising.
"Long-Term Note" shall have the meaning set forth in Section
2.1.7(c).
"Losses" shall have the meaning set forth in Section 9.2.
"Material Adverse Effect" with respect to any Person means an event,
condition or circumstance that is, as of the date hereof or as of the Closing
Date, materially adverse to the business, operations, assets, or financial
condition of such Person and its Subsidiaries (or in the case of any Subsidiary
of the Company, the Company and its Subsidiaries), taken as a whole.
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"Material Contracts" shall have the meaning set forth in Section
3.2.13.
"Merger" shall mean the meaning set forth in Section 2.1.1.
"Merger Consideration" shall have the meaning set forth in Section
2.1.7.
"Merger Sub" shall have the meaning set forth in the preamble.
"Names" shall have the meaning set forth in Section 10.1.
"New Plan" shall have the meaning set forth in Section 4.1.3(a).
"Noncompete Agreement" shall mean the agreement substantially in the
form attached hereto as Exhibit A to be executed and delivered by CEI and CEX as
of the Closing.
"Permits" shall mean all licenses, permits, waivers and other
governmental authorizations including fuel permits, operating authorities
(including any necessary DOT or ICC operating authorities), state operating
licenses or registrations and other interstate or intrastate regulatory licenses
or authorizations.
"Permitted Encumbrances" means (a) such of the following as to which
no enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced or, if commenced, as to which any such proceedings are being
contested in good faith or for which adequate reserves are set aside on the
books and records of the Company: (i) liens for taxes, assessments and
governmental charges not yet due and payable; (ii) encumbrances in the nature of
materialmen's, mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business; (iii) pledges or
deposits to secure obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations; (b) survey exceptions,
easement agreements and other encumbrances on or exceptions to title to real
property that (i) do not result from the incurrence of any indebtedness and (ii)
do not materially affect the value or the use of such property for its present
purposes; and (c) zoning restrictions and other limitations imposed by any
authority having jurisdiction over real property.
"Person" means any individual, partnership, limited liability
company, firm, corporation, association, trust, unincorporated organization,
Governmental Authority or other entity.
"Personal Property" shall have the meaning set forth in Section
3.2.11(b).
"Plan Obligations" shall have the meaning set forth in Section
4.3.4(a).
"Plans" shall have the meaning set forth in Section 3.2.21(a).
"Proceeding" shall have the meaning set forth in Section 4.3.4(c).
"Promissory Notes" shall mean the Short-Term Note, the Long-Term
Note and the Convertible Note.
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"Real Property" shall have the meaning set forth in Section
3.2.11(a).
"Redemption Notices" shall have the meaning set forth in Section
3.1.14.
"Registration Rights Agreement" shall mean the agreement to be
executed and delivered by the parties substantially in the form of the
registration rights agreement to be entered into between Buyer and Bayview, or
other subordinated lender loaning funds to Buyer or the Company in connection
with the Merger, and in form reasonably satisfactory to CEX.
"Representatives" of any Person shall mean its officers, directors,
employees, shareholders, partners, members, agents, advisors and representatives
and the heirs, executors, successors or assigns of the foregoing.
"Required Consents" shall have the meaning set forth in Section
3.2.5.
"Security Agreements" shall mean those agreements substantially in
the forms attached as Exhibit I and Exhibit J to be executed and delivered by
the parties hereto or their Affiliates as of the Closing.
"Settlement Date" shall mean, for purposes of Section 2.2, (i) in
the event Buyer timely delivers a written notice of objections pursuant to
Section 2.2.5, (x) in the case of an adjustment pursuant to Section 2.2.2, the
date on which CEX and Buyer, or the Expert to whom the matter is submitted, as
the case may be, resolve(s) any disagreement with respect to the Final Effective
Date Balance Sheet or (y) in the case of an adjustment pursuant to Section
2.2.3, the date on which CEX and Buyer, or the Expert to whom the matter is
submitted, as the case may be, resolve(s) any disagreement with respect to the
Cash Reconciliation Report, or (ii) in the event Buyer does not deliver a
written notice of objections pursuant to Section 2.2.5, the last day on which
Buyer could timely deliver such notice to CEX.
"Shareholder's Equity" shall have the meaning set forth in Section
2.2.1.
"Short-Term Note" shall have the meaning set forth in Section
2.1.7(b).
"Subsidiary" of any Person shall mean any corporation or other
Person, whether incorporated or unincorporated, of which at least a majority of
the securities or interests having by the terms thereof ordinary voting power to
elect at least a majority of the board of directors or other similar governing
body of such corporation or other Person is directly or indirectly owned or
Controlled by such Person or by any one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries. Notwithstanding anything in this
Agreement to the contrary, (i) no Person that is not Controlled by another
Person shall be deemed to be a Subsidiary of such other Person, and (ii) the
Trucking Subsidiaries shall not be deemed to be Subsidiaries or former
Subsidiaries of the Company, but shall instead be deemed to be Continuing
Affiliates.
"Surviving Corporation" shall have the meaning set forth in Section
2.1.1.
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"Tax Sharing and Indemnification Agreement" shall mean the agreement
substantially in the form attached hereto as Exhibit B to be executed and
delivered by the parties hereto as of the Closing.
"Transaction Representations" shall have the meaning set forth in
Section 9.1.
"Transition Services Agreement" shall mean the agreement
substantially in the form attached hereto as Exhibit C to be executed and
delivered by the parties hereto as of the Closing.
"Trucking Claims" shall mean the Liabilities of the Trucking
Subsidiaries for workers compensation and auto liability claims arising prior to
the Effective Date which have been assumed by the Company
"Trucking Subsidiaries" shall mean Corporate Express Delivery
Systems-Expedited, Inc., Corporate Express Delivery Leasing-Expedited, Inc., Red
Arrow Corporation, R.A.C., Inc., Red Arrow Spotting Service, Inc., Red Arrow
Warehousing, Inc., Red Arrow Trucking Co., and Rush Trucking, Inc. and Corporate
Express Delivery Systems-Southeast, Inc., but in the case of the latter, only to
the extent of the business activities of the former entities of General
Transport Services, Inc. and Cross Town Cartage, Inc.
"Warrants" shall have the meaning set forth in Section 3.1.4.
ARTICLE II
THE TRANSACTION
SECTION 2.1 THE MERGER.
Section 2.1.1 Subject to the terms and conditions of this Agreement,
Merger Sub will be merged with and into the Company (the "Merger") at the
Effective Time, whereupon the separate existence of Merger Sub shall cease and
the Company shall be the surviving corporation in the Merger (the "Surviving
Corporation").
Section 2.1.2 At the Closing, (i) the Company and Merger Sub will
file with the Secretary of State of the State of Delaware a certificate of
merger in form mutually acceptable to the parties, (ii) the parties will make
all other filings or recordings required by Delaware Law in connection with the
Merger, and (iii) Buyer will cause the Surviving Corporation to pay to CEX the
Merger Consideration
Section 2.1.3 The Merger shall become effective at the time (the
"Effective Time") that the certificate of merger is duly filed with the
Secretary of State of the State of Delaware. The Merger shall have the effect
set forth under Delaware Law. From and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises, and
be subject to all of the restrictions, disabilities and duties of the Company
and Merger Subsidiary, all as provided under Delaware Law.
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Section 2.1.4 The certificate of incorporation of Merger Sub in
effect at and as of the Effective Time shall be the certificate of incorporation
of the Surviving Corporation until amended in accordance with applicable law,
except that, in the certificate of merger, the name of the Surviving Corporation
shall be changed to "UST Delivery Systems, Inc."
Section 2.1.5 The Bylaws of Merger Sub in effect at and as of the
Effective Time shall be the Bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 2.1.6 From and after the Effective Time, until successors
are duly elected or appointed and qualified in accordance with applicable law,
(a) the directors of Merger Sub at the Effective time shall be the directors of
the Surviving Corporation, and (b) the officers of the Company at the Effective
Time shall be the officers of the Surviving Corporation.
Section 2.1.7 At and as of the Effective Time, the Company Shares
shall be converted into the right to receive an aggregate amount equal to
$62,500,000 (the "Merger Consideration") which amount, subject to adjustment
pursuant to Section 2.2, Buyer shall cause the Surviving Corporation to pay to
CEX at Closing as follows:
(a) by payment to CEX of $43,000,000 in cash or immediately
available funds;
(b) by the execution and delivery to CEX of a promissory note of the
Surviving Corporation in the principal amount of $7,500,000 in the form attached
hereto as Exhibit D (the "Short-Term Note");
(c) by the execution and delivery to CEX of a promissory note of the
Surviving Corporation in the principal amount of $7,700,000, subject to
adjustment as set forth in Section 2.2.1, in the form attached hereto as Exhibit
E (the "Long-Term Note"); and
(d) by the execution and delivery to CEX of a promissory note of the
Surviving Corporation in the principal amount of $4,300,000 in the form attached
hereto as Exhibit F (the "Convertible Note").
The Promissory Notes shall be subordinate to the debt obligations of the Company
owing to GE and Bayview as set forth more completely in one or more
Intercreditor Agreements, dated as of the Closing Date, among GE, Bayview and
CEX (the "Intercreditor Agreements").
Section 2.1.8 At and as of the Effective Time, each share of common
stock of Merger Sub shall be converted into one share of common stock of the
Surviving Corporation.
SECTION 2.2 ADJUSTMENT OF THE MERGER CONSIDERATION.
Section 2.2.1 On the Closing Date the Merger Consideration shall be
increased or decreased on a dollar-for-dollar basis by an amount equal to the
increase or decrease, as the case may be, in the Company's Shareholder's Equity
on August 28, 1999 (the "Effective Date"), as compared to the Company's
Shareholder's Equity as calculated from the Company's balance
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sheet as of July 3, 1999 (the "Beginning Balance Sheet"), a copy of which
(together with the subject calculation) is attached hereto as Exhibit G.
"Shareholder's Equity" shall mean, at any point in time, subject to Section
2.2.4 below, the total value of the Company's assets as reflected on its balance
sheet for that date less the total amount of the Company's liabilities as
reflected on its balance sheet for such date. For purposes of the Closing Date
adjustment to the Merger Consideration, the parties shall use an estimated
Effective Date balance sheet (the "Estimated Effective Date Balance Sheet"),
which shall be prepared by CEX in a manner consistent with the preparation of
the Beginning Balance Sheet. Any adjustment required by this Section 2.2.1 shall
be made by increasing or decreasing, as the case may be, the principal amount of
the Long-Term Note.
Section 2.2.2 Within 10 business days after the Closing Date, CEX
shall prepare and deliver to Buyer the final Effective Date balance sheet (the
"Final Effective Date Balance Sheet"). The Merger Consideration, as adjusted and
paid on the Closing Date, shall be increased or decreased on a dollar-for-dollar
basis by the amount by which the Shareholder's Equity on the Final Effective
Date Balance Sheet is greater than or less than the Shareholder's Equity on the
Estimated Effective Date Balance Sheet (the "Final Adjustment Amount"). Any
adjustment required by the calculation of the Final Adjustment Amount shall be
made by increasing or decreasing, as the case may be, the principal amount of
the Long-Term Note by amending the Long-Term Note (with any such amendment being
effective as of the Closing Date) as appropriate within three business days
following the Settlement Date.
Section 2.2.3 Following the Effective Date and until the Closing
Date, or, if requested by Buyer, until a date no later than five business days
following the Closing Date, CEX will continue its established cash management
practices with respect to the Company, including "sweeping" cash from the
Company's accounts on a daily basis and advancing cash to the Company's payroll
and disbursement accounts as needed to cover checks presented for payment. Not
later than ten business days following the Closing, CEX shall present Buyer with
a report indicating CEX's daily cash receipts from and disbursements to the
Company subsequent to the Effective Date (the "Cash Reconciliation Report"). The
net amount of all such receipts or disbursements as the case may be, for such
period, shall decrease or increase, respectively, the Merger Consideration and
shall, within three business days following the Settlement Date, be paid in cash
or immediately available funds by Buyer or the Company to CEX, in the case of an
increase in the Merger Consideration attributable to net cash disbursements, or
to the Company by CEX, in the case of any decrease in the Merger Consideration
attributable to net cash receipts.
Section 2.2.4 The Beginning Balance Sheet, the Estimated Effective
Date Balance Sheet and the Final Effective Date Balance Sheet shall be prepared
in accordance with generally accepted accounting principles consistently applied
to each of the three balance sheets, subject to the following parameters: (i)
all inter-company debt owed to or by the Company and its Subsidiaries, on the
one hand, and CEI and its Continuing Affiliates, on the other hand, shall be
excluded as a liability from the determination of Shareholder's Equity and such
debt will be forgiven or otherwise eliminated as of the Effective Date; (ii)
consistent with the Section 338(h)(10) election required under the Tax Sharing
and Indemnification Agreement, deferred income tax assets and liabilities and
any income tax payables or receivables will be retained by CEX and thus not
included on the balance sheets; (iii) as to those liabilities which are
10
accrued on both the Beginning Balance Sheet and the Final Effective Date Balance
Sheet which involve estimates of future liability including, without limitation,
workers compensation, auto liability and litigation, no change in the amount of
such accruals shall be made based on changes in estimates or methodology; and
(iv) all assets and liabilities of the Trucking Subsidiaries, other than the
Trucking Claims, have been and shall be excluded from the balance sheets.
Section 2.2.5 Buyer shall, within 15 business days of its receipt of
(i) the Final Effective Date Balance Sheet, and (ii) the Cash Reconciliation
Report, deliver written objections thereto to CEX, failing which the Final
Effective Date Balance Sheet and the Cash Reconciliation Report shall be deemed
to have been agreed upon as delivered by CEX. If Buyer and CEX fail to reach
agreement on Buyer's written objections within 15 business days from the date of
Buyer's written notice of objections with respect to one or both of such items,
PricewaterhouseCoopers, LLP, the independent auditors of CEX, and Buyer's
independent auditors shall jointly select a third independent auditor of
recognized national standing (the "Expert") to resolve the disagreement. The
determination by such Expert shall be final and binding on the parties, and the
Long-Term Note shall be amended as required by such determination (pursuant to
Section 2.2.2). Buyer and CEX shall use their best efforts to cause such Expert
to make its determination within 15 business days of its engagement. The fees
and expenses of the Expert shall be borne equally by Buyer and the Company, on
the one hand and CEX, on the other hand.
Section 2.2.6 If an amendment of the Long-Term Note is required
pursuant to the provisions of Section 2.2.2, the Company shall, and Buyer shall
cause the Company to, issue within three business days of the Settlement Date,
in replacement of the then existing Long-Term Note, a replacement note of like
tenor, but reflecting the revised principal amount thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer hereby
represents and warrants to CEX as follows, which representations and warranties
are, as of the date hereof, and will be, as of the Closing Date, true and
correct:
Section 3.1.1 Due Organization. Buyer and Merger Sub are
corporations duly incorporated, validly existing and in good standing, under the
laws of their jurisdiction of incorporation.
Section 3.1.2 Due Authorization. Buyer and Merger Sub have the full
corporate power and authority to enter into and perform this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Ancillary
Agreements by Buyer and Merger Sub, the consummation of transactions
contemplated hereby and thereby, and the performance by Buyer and Merger Sub of
all of their respective obligations under this Agreement and the Ancillary
Agreements have been duly authorized and approved by Buyer and Merger Sub. This
Agreement has been, and at Closing the Ancillary Agreements will be, duly
executed and delivered by a duly authorized officer of Buyer and Merger Sub to
the extent each is a party thereto.
11
Section 3.1.3 Enforceability. This Agreement constitutes, and the
Ancillary Agreements will constitute, the legal, valid and binding obligation of
Buyer and Merger Sub, enforceable against Buyer and Merger Sub in accordance
with its respective terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, moratorium, fraudulent transfer or other
similar laws affecting creditors' rights generally or by principles governing
the availability of equitable remedies.
Section 3.1.4 No Conflict. Neither the execution and delivery of
this Agreement or the Ancillary Agreements by Buyer or Merger Sub, nor the
consummation by Buyer or Merger Sub of the transactions contemplated hereby or
thereby, will violate, conflict with or result in a breach of any of the terms,
conditions or provisions of (a) Buyer's or Merger Sub's certificate of
incorporation, as amended, by-laws, as amended, or other organizational
instruments, (b) any Law applicable to Buyer or any of its Subsidiaries or any
of their respective properties or assets, or (c) any order, writ, injunction,
judgment or decree of any Governmental Authority or any arbitration award
applicable to Buyer or its Subsidiaries or any of their respective properties or
assets, except in the case of clauses (b) and (c) above, for such violations
conflicts or breaches that in the aggregate, would not have a Material Adverse
Effect on Buyer or to interfere with Buyer's or Merger Sub's ability to
consummate this Agreement, the Ancillary Agreements or the transactions
contemplated hereby or thereby.
Section 3.1.5 No Contract Conflict. Neither the execution and
delivery of this Agreement or the Ancillary Agreements by Buyer or Merger Sub,
nor the consummation by Buyer or Merger Sub of the transactions contemplated
hereby or thereby will conflict with, or result in a breach or give rise to a
default or violation on the part of Buyer or any of its Subsidiaries under any
obligation, lease, license, agreement, contract, plan, or other arrangement,
which would be reasonably likely to have a Material Adverse Effect on Buyer or
to interfere with Buyer's or Merger Sub's ability to consummate this Agreement,
the Ancillary Agreements or the transactions contemplated hereby or thereby.
Section 3.1.6 No Litigation Conflict. There is no action, suit or
proceeding pending or, to Buyer's knowledge, threatened against or affecting
Buyer or any of its Subsidiaries or any of their respective properties or
assets, at law or in equity, or before any Governmental Authority, which would
be reasonably likely to have a Material Adverse Effect on Buyer or to interfere
with Buyer's or Merger Sub's ability to consummate this Agreement, the Ancillary
Agreements or the transactions contemplated hereby or thereby.
Section 3.1.7 Approvals. Except for (i) any required filings with
the Interstate Commerce Commission (the "ICC") or the Department of
Transportation (the "DOT"), and (ii) any required filings with or approvals from
public service commissions or public utility commissions, no notice, filing,
authorization, approval, order or consent of any Governmental Authority or any
third party is required to be given, filed or obtained by Buyer or any of its
Subsidiaries from any Governmental Authority or any third party in connection
with the execution, delivery and performance by Buyer or Merger Sub of this
Agreement, the Ancillary Agreements or the transactions contemplated hereby or
thereby.
12
Section 3.1.8 Buyer's Financial Capacity. Buyer has, and will have
at all times prior to Closing, available to it adequate funds or written
financing commitment letters, copies of which commitment letters have been
provided to CEX (the "Commitment Letters") in place, (i) to consummate the
transactions contemplated hereby and by the Ancillary Agreements and to perform
its obligations hereunder and thereunder and (ii) to fund the post-Closing
operations of the Company and its Subsidiaries. No bankruptcy proceedings are
pending or contemplated by or threatened against Buyer or any of its
Subsidiaries. Buyer is not insolvent and the execution of this Agreement, and
the consummation of the transactions contemplated hereunder and under the
Commitment Letters, will not render Buyer or the Company and its Subsidiaries
insolvent or unable to pay their respective debts as they mature.
Section 3.1.9 Access to Information. Buyer has had an opportunity to
discuss the business, condition, management and financial affairs of the Company
and its Subsidiaries with its management, and the opportunity to review in
detail the properties, operations, liabilities, obligations, books, accounts,
records, contracts and documents of the Company and its Subsidiaries; provided,
however, that no investigation by Buyer shall impair the ability of Buyer to
rely on the representations and warranties of CEX.
Section 3.1.10 No Commissions. Except for Persons whose fees and
expenses will solely be the obligation of Buyer, Buyer has not retained any
broker, investment banker or other Person entitled to any commission or similar
compensation in connection with this Agreement or the transactions contemplated
by this Agreement.
Section 3.1.11 SEC Reports and Financial Statements. Since June 30,
1998, Buyer has filed all forms, reports and other documents required to be
filed by Buyer with the Securities and Exchange Commission (the "Commission").
As of their respective dates, the Buyer SEC Reports complied as to form in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations promulgated thereunder applicable to
such Buyer SEC Reports and, except to the extent that information contained in
any Buyer SEC Report has been revised or superseded by a later Buyer SEC Report
filed and publicly available prior to the date of this Agreement, none of the
Buyer SEC Reports contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading on the dates that they were filed. The financial
statements of Buyer included in the Buyer SEC Reports complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the Commission with respect thereto, were prepared in
accordance with generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by the Commission or as otherwise indicated
in the notes thereto) and presented fairly in all material respects the
consolidated financial position of the Buyer and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
13
Section 3.1.12 Capitalization.
(a) At August 25, 1999:
(i) Buyer's authorized capital stock consisted of (A)
75,000,000 shares of Buyer's common stock, $.004 par value ("Buyer's
Common Stock"), of which 10,758,149 shares were issued and
outstanding, and (B) 25,000,000 authorized shares of preferred
stock, none of which are issued and outstanding.
(ii) There were outstanding stock options, warrants,
rights or subscriptions to purchase an aggregate of 5,186,055 shares
of Buyer's Common Stock.
(b) As of the date hereof, other than as referred to in Section
3.1.12(a)(i) above and other than shares of Buyer's Common Stock issued in
connection with the exercise of stock options or warrants after August 25, 1999,
there are no outstanding shares of capital stock or other voting securities of
Buyer.
(c) As of the date hereof, except (i) for options issued since
August 25, 1999 with an exercise price per share equal to the fair market value
of Buyer's Common Stock on the grant date, (ii) for options referred to in
Section 3.1.12(a)(ii) above, and (iii) the warrants to be issued to Bayview on
the Closing Date, there are no outstanding options, warrants, rights or
subscriptions to purchase Buyer's Common Stock or other securities of Buyer
convertible into or exchangeable for shares of Buyer's Common Stock.
Section 3.1.13 No Contingencies to Closing. Buyer represents and
warrants that (i) there are no contingencies to Buyer's ability to close the
Merger, other than those set forth in the Commitment Letters, (ii) Buyer has
delivered to CEX and its Representatives, and will from time to time delivery,
promptly after receipt thereof by Buyer or its Representatives, copies of all
commitment letters, information requests, documents (both drafts and final) and
all written correspondence related thereto, (iii) Buyer has completed all
required due diligence in connection with its evaluation of the Merger;
provided, however, that the foregoing shall not prevent Buyer from conducting
such additional investigations as may be required to verify the accuracy of
CEX's representations and warranties set forth herein; and provided further that
such additional investigations shall not modify or impair the rights of the
parties under Sections 8.1.4 and 8.3, (iv) Buyer has obtained, based on the
results of such due diligence, the approval of its board of directors to
consummate the Merger, (v) no filing will be required under the HSR Act with
respect to the Merger, and (vi) there are no consents required by Buyer which,
if not obtained, would prevent Buyer from consummating the Merger.
Section 3.1.14 Warrants. Buyer has outstanding warrants (the
"Warrants") to acquire 2,227,749 shares of Buyer's Common Stock, which warrants
(i) are exercisable at a price of $1.75 per share of Buyer's Common Stock, and
(ii) are subject to a mandatory redemption provision whereby Buyer has the
right, upon thirty days' written notice to the Warrant holders, to purchase the
Warrants if the Warrants remain unexercised at the expiration of such 30-day
period. Any conditions precedent to Buyer's exercise of its mandatory redemption
rights under the Warrants have been satisfied and Buyer's board of directors has
approved the delivery of any
14
required redemption notices (the "Redemption Notices") to the Warrant holders
immediately upon the public announcement of the Merger.
SECTION 3.2 CEX'S REPRESENTATIONS AND WARRANTIES. CEX hereby
represents and warrants to Buyer as follows, which representations and
warranties are, as of the date hereof, and will be, as of the Closing Date, true
and correct, except as set forth on the Company Disclosure Schedule:
Section 3.2.1 Due Organization. CEX and the Company are corporations
duly incorporated, validly existing and in good standing, under the laws of
their jurisdiction of incorporation. Each of the Subsidiaries of the Company is
a corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, except for those Subsidiaries
identified as inactive on Schedule 3.2.7. The Company and each of its
Subsidiaries is qualified to do business in each jurisdiction in which the
nature of its business or the ownership of its properties requires such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect on the Company.
Section 3.2.2 Due Authorization. Subject to Section 5.2.5, each of
CEX and the Company has the full corporate power and authority to enter into and
perform this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. Subject to Section 5.2.5, the
execution and delivery of this Agreement and the Ancillary Agreements by CEX and
the Company, and the performance by CEX and the Company of all of their
obligations under this Agreement and the Ancillary Agreements have been duly
authorized and approved by CEX and the Company. This Agreement has been, and at
Closing the Ancillary Agreements will be, duly executed and delivered by duly
authorized officers of CEX and the Company, as the case may be.
Section 3.2.3 Enforceability. This Agreement constitutes, and the
Ancillary Agreements will constitute, the legal, valid and binding obligation of
CEX and the Company enforceable against them in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
reorganization, moratorium, fraudulent transfer or other similar laws affecting
creditors' rights generally or by principles governing the availability of
equitable remedies.
Section 3.2.4 No Conflict. Neither the execution and delivery of
this Agreement or the Ancillary Agreements by CEX and the Company, nor the
performance by CEX and the Company of their respective obligations hereunder or
thereunder, will violate, conflict with or result in a breach of any of the
terms, conditions or provisions of (a) CEX's, the Company's or any of the
Company's Subsidiary's Certificate of Incorporation or Articles of
Incorporation, as the case may be, as amended, by-laws, as amended, or other
organizational documents, (b) any Law applicable to CEX, the Company or any of
its Subsidiaries or any of their respective properties or assets, or (c) any
order, writ, injunction, judgment or decree of any Governmental Authority or any
arbitration award applicable to CEX, the Company or any of its Subsidiaries or
any of their respective properties or assets, except in the case of clauses (b)
and (c) above, for such violations, conflicts or breaches that, in the aggregate
would not have a Material Adverse
15
Effect on the Company or interfere with CEX's or the Company's ability to
consummate this Agreement, the Ancillary Agreements or the transactions
contemplated hereby or thereby.
Section 3.2.5 No Contract Conflict. Subject to obtaining the
consents set forth on Schedule 3.2.5 (the "Required Consents"), neither the
execution and delivery of this Agreement or the Ancillary Agreements by CEX and
the Company, the performance by CEX and the Company of its respective
obligations hereunder or thereunder, nor the consummation of the transactions
contemplated hereby or thereby will conflict with, result in a breach of, or
constitute a default under any obligation, lease, license, agreement, contract
or plan, except for such conflicts, breaches and defaults that would not have a
Material Adverse Effect on the Company or materially interfere with CEX's, the
Company's or any of its Subsidiaries' ability to consummate this Agreement, the
Ancillary Agreements or the transactions contemplated hereby or thereby.
Section 3.2.6 Approvals. Except for (i) any required filings with or
approvals from the ICC or the DOT, (ii) any required filings with or approvals
from public service commissions or public utility commissions, and (iii) those
notices, filings, authorizations, approvals, orders or consents set forth on
Schedule 3.2.6, no material notice, filing, authorization, approval, order or
consent of any Governmental Authority is required to be given, filed or obtained
by CEX, the Company or any of its Subsidiaries from any Governmental Authority
in connection with the execution, delivery and performance by CEX or the Company
of this Agreement, the Ancillary Agreements or the transactions contemplated
hereby or thereby.
Section 3.2.7 Title to Stock.
(a) CEX has good and valid title to the Company Shares, free and
clear of any Encumbrance, and has the right, power, authority and capacity to
sell and transfer the Company Shares to Buyer in the manner provided herein,
free and clear of any Encumbrance. At the Closing, Buyer will receive good and
valid title to the Company Shares, free and clear of any Encumbrance (other than
Encumbrances arising from acts or omissions of Buyer). The Company Shares are
not subject to any voting trust or voting agreement, nor is any proxy in effect
with respect to any of the Company Shares. The Company Shares represent all of
the issued and outstanding shares of capital stock of the Company of any class.
(b) The Subsidiaries of the Company are identified on Schedule
3.2.7, which also sets forth the jurisdiction of incorporation of each
Subsidiary and the percentage of each Subsidiary's outstanding capital stock or
other equity interest owned by the Company or by another Subsidiary of the
Company, in each case identifying the stock or equity owners. With respect to
the shares of capital stock issued by the Subsidiaries of the Company, the
Company owns beneficially and of record all of such shares of stock, free and
clear of any Encumbrance. Except for the Subsidiaries of the Company identified
on Schedule 3.2.7, the Company has no equity interest in any corporation,
partnership, limited liability company or other entity.
Section 3.2.8 Capitalization. The authorized capital stock of the
Company consists of 3,000 shares of common stock, par value $.001 per share, of
which one share has been issued and is outstanding. All of the issued and
outstanding shares of common stock of the Company
16
and each of its Subsidiaries have been duly authorized and validly issued, and
are fully paid and nonassessable and are not subject to any preemptive rights.
None of CEX, the Company or any of its Subsidiaries is a party to any
outstanding subscriptions, contracts to purchase or issue capital stock or other
securities, conversion privileges, options, warrants or rights of any kind, with
respect to the purchase, sale or voting of the capital stock of the Company or
any of its Subsidiaries.
Section 3.2.9 Articles of Incorporation, Bylaws. The Articles of
Incorporation and By-Laws of the Company and its Subsidiaries, as amended, which
have been made available to Buyer for its inspection are complete and correct,
have not been amended further and are in full force and effect.
Section 3.2.10 Financial Statements. Attached as Schedule 3.2.10A
are the audited combined financial statements of the Company and its
Subsidiaries, and the related combined statements of operations, cash flows and
stockholders' equity of the Company as of and for the periods ended January 30,
1999, January 30, 1998 and March 1, 1997 (the "Audited Financial Statements"),
and an internal statement of operations and balance sheet for the six-month
period ended July 31, 1999 (the "Internal Financial Statements"). The Audited
Financial Statements and, except as set forth on Schedule 3.2.10B, the Internal
Financial Statements present fairly in all material respects the assets,
liabilities, and results of operations of the Company and its Subsidiaries in
accordance with generally accepted accounting principles.
Section 3.2.11 Property.
(a) Schedule 3.2.11A lists all material real property interests
owned or leased by the Company or any of its Subsidiaries as of the date hereof
(the "Real Property"). True and complete copies of all real property leases, as
amended to date, have been delivered or made available to Buyer. The Company or
one of its Subsidiaries has such title or leasehold interest to the Real
Property as is necessary to permit the operation of such properties,
substantially in the manner such properties are operated by the Company and its
Subsidiaries as of the date hereof, free and clear of any and all Encumbrances,
except for any such failures and Encumbrances that would not reasonably be
expected to have a Material Adverse Effect on the Company. CEX does not have
Knowledge of any actual or proposed condemnation, requisition or taking by any
public authority of any portion of the Real Property.
(b) Except as set forth on Schedule 3.2.11B, the Company and each of
its Subsidiaries has good and valid title to all equipment, machinery, motor
vehicles, furniture, fixtures, computer hardware and other tangible personal
property (collectively, "Personal Property") owned by it (including, without
limitation, the assets referred to in the Financial Statements) and a good and
valid leasehold interest in all Personal Property leased by it, in each case
free and clear of any and all Encumbrances.
Section 3.2.12 Intellectual Property. Schedule 3.2.12 lists all
material patents, trademarks, service marks, trade names, copyrights and
applications therefor owned by or registered in the name of the Company or any
of its Subsidiaries as of the date hereof. Except as set forth on Schedule
3.2.12, to CEX's Knowledge, none of the Company or any of its
17
Subsidiaries is infringing, in any material respect, on any valid patent right,
trademark, service xxxx, trade name or copyright of others, nor to CEX's
Knowledge, are any such material valid rights owned by the Company or any of its
Subsidiaries being infringed upon by any other party in any material respect, in
any case, except for any of the foregoing that would not reasonably be expected
to have a Material Adverse Effect on the Company.
Section 3.2.13 Material Contracts.
(a) True and correct copies of all material written contracts (the
"Material Contracts") to which the Company or its Subsidiaries is a party or by
which their assets will be bound after the Closing were made available to Buyer
in the Data Room or through the due diligence process. Except as otherwise set
forth in Schedule 3.2.13A, to CEX's Knowledge, the Material Contracts are in
full force and effect, are valid, binding and enforceable against the parties
thereto, subject to equitable remedies and to bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium or similar laws affecting
creditor's rights generally. No default by the Company or any of its
Subsidiaries or, to CEX's Knowledge, by the other contracting parties has
occurred thereunder which would reasonably be expected to have a Material
Adverse Effect on the Company. To CEX's Knowledge, no event, occurrence or
condition exists which, with the lapse of time, or the giving of notice or both,
would become a default by the Company, any of its Subsidiaries or by the other
contracting parties thereunder, which would reasonably be expected to have a
Material Adverse Effect on the Company.
(b) Except as set forth on Schedule 3.2.13B, neither the Company nor
any of its Subsidiaries is a party to or bound by any contract:
(i) prohibiting or limiting the ability of the Company
or any of its Subsidiaries to (A) engage in any line of business, or
(B) compete with any Person; or
(ii) to CEX's Knowledge, obligating the Company or any
of its Subsidiaries to pay any Person any money (other than
retention and sale incentive bonuses to employees of the Company or
its Subsidiaries listed on Schedule 3.2.13B) as a result of the
execution and delivery of this Agreement or the consummation of the
transaction contemplated hereby.
Section 3.2.14 Labor Matters. Neither the Company nor any of the
Subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement with a labor union or labor organization. Except as
set forth in Schedule 3.2.14, there is no unfair labor practice or labor
arbitration proceeding pending or, to CEX's Knowledge, threatened against the
Company or the Subsidiaries relating to their business. To CEX's Knowledge,
there are no organizational efforts with respect to the formation of a
collective bargaining unit presently being made or threatened involving
employees of the Company or any of its Subsidiaries.
Section 3.2.15 Litigation. Except as set forth in Schedule 3.2.15,
(i) there are no actions, suits, audits or proceedings pending or, to CEX's
Knowledge, threatened, against the Company or any of its Subsidiaries which
would reasonably be expected to result in a Material Adverse Effect on the
Company, and (ii) there are no outstanding judicial or administrative
18
orders or decrees to which the Company or any of its Subsidiaries is subject,
other than those applicable generally to the industry in which the Company and
its Subsidiaries operate.
Section 3.2.16 Environmental Compliance. Except as described on
Schedule 3.2.16, to the Knowledge of CEX:
(a) The Company and each of its Subsidiaries is in compliance with
all applicable Environmental Laws, except for violations or failures to comply
which would not reasonably be expected to result in a Material Adverse Effect on
the Company. None of CEX, with respect to the Company and its Subsidiaries, or
the Company or any of its Subsidiaries has received any written notice of
violation, cessation order, notice of fine or penalty, notice of proposed
assessment or other written notice from any Governmental Authority that CEX,
with respect to the Company and its Subsidiaries, or the Company or any of its
Subsidiaries, is not in compliance with any Environmental Laws or Permits and
which relate to any matters or conditions that are not, or have not been,
resolved as of the date hereof except for such matters or conditions which, if
not resolved as of the date hereof, would not reasonably expected to result in a
Material Adverse Effect on the Company.
(b) There have been no releases of Hazardous Substances by any of
the Company or any of its Subsidiaries on, in, under or over the Company
Properties, except (i) in accordance with a valid Permit or (ii) for such
releases that would not reasonably be expected to result in a Material Adverse
Effect on the Company.
(c) None of the Company Properties is used to produce, manufacture,
process, generate, store, use, handle, recycle, treat, dispose of, manage, ship
or transport Hazardous Substances, other than as customary in the normal course
of operations of the type conducted or previously conducted on such real
property and except for any such activities that would not reasonably be
expected to have a Material Adverse Effect on the Company.
(d) None of the Company or any of its Subsidiaries has received
notice from any Governmental Authority that it is a "potentially responsible
party" under Section 107 of CERCLA for any matter or matters that has not been
or will not be resolved as of the Closing Date which, if not resolved as such
date, would reasonably be expected to result in a Material Adverse Effect on the
Company.
(e) There is no Environmental Claim pending or, to CEX's Knowledge,
threatened against the Company or any of its Subsidiaries or against any Person
or entity whose liability for such Environmental Claim has been contractually
retained or assumed by the Company or any of its Subsidiaries, except for
Environmental Claims that, in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Company. To CEX's Knowledge, there are no
past or present actions, activities, circumstances, conditions, events or
incidents, that would reasonably be expected to form the basis of any
Environmental Claim against the Company or any of its Subsidiaries or against
any Person or entity whose liability for such Environmental Claim has been
contractually retained or assumed by the Company or any of its Subsidiaries,
except for Environmental Claims that would not reasonably be expected to have a
Material Adverse Effect on the Company.
19
Section 3.2.17 Absence of Changes or Events. Except as may be set
forth in Schedule 3.2.17, since July 3, 1999, none of the Company or any of its
Subsidiaries has:
(a) declared, set aside, or paid any dividend or distribution to its
stockholders in respect of their shares of capital stock, other than any of the
foregoing declared, set aside or paid by any of the Company's Subsidiaries to
the Company;
(b) except in the ordinary course of business, incurred or committed
to incur (i) any single capital expenditures in an amount in excess of $50,000
or (ii) aggregate capital expenditures in an amount in excess of $100,000;
(c) made any change in its authorized or actual capitalization;
(d) except in the ordinary course of business or in connection with
the settlement of intercompany transactions, sold or transferred any assets or
properties for consideration with a value in excess of $50,000 individually or
$100,000 in the aggregate;
(e) suffered any damage, destruction or casualty loss not covered in
all material respects by insurance which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on the Company;
(f) increased the salary or severance or termination pay payable to
any employee or increased any benefit plan obligations, other than (A) raises
and compensation adjustments in the ordinary course of business, and (B)
increases for which the Buyer, the Company or any of its Subsidiaries will not
be responsible;
(g) amended its Certificate of Incorporation or By-Laws or taken any
action in contemplation of an amendment to such Certificate of Incorporation or
By-Laws or in contemplation of its liquidation of dissolution; or
(h) entered into an agreement to do any of the foregoing.
Section 3.2.18 Compliance with Laws. To the Knowledge of CEX, except
as provided on Schedule 3.2.18 hereto, the Company and its Subsidiaries are in
compliance with all Laws of all Governmental Authorities applicable to its
business, operations and assets, except for such failures to comply that would
not reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.2.19 Licenses, Permits, Approvals. The Company or one or
more of its Subsidiaries possess all Permits which are required in order to
operate its businesses as currently operated, other than those which the failure
to possess would not reasonably be expected to have a Material Adverse Effect on
the Company.
Section 3.2.20 Insurance. To CEX's Knowledge, Schedule 3.2.20 lists
all policies of fire, liability, or other material forms of third party
insurance issued in the name of the Company
20
or any of its Subsidiaries. Buyer acknowledges that such insurance policies will
not be available to the Company and its Subsidiaries after the Closing.
Section 3.2.21 Employee Benefit Plans. To CEX's Knowledge and except
as set forth on Schedule 3.2.21:
(a) Schedule 3.2.21 lists all employee benefit plans (as defined in
Section 3(3) of ERISA) and all deferred compensation, bonus, incentive
compensation, equity-based, severance and fringe benefit plans, arrangements or
agreements, in effect as of the date hereof, with respect to which
contributions, premiums or other payments are made or required to be made by the
Company or any of its Subsidiaries with respect to any current or former
employees of the Company or any of its Subsidiaries (the "Plans"). Schedule
3.2.21 identifies each Plan as either (i) a Plan maintained by the Company or
one of its Subsidiaries ("Company Plan") or (ii) a Plan maintained by CEI or any
of its ERISA Affiliates (other than the Company or any of its Subsidiaries), but
under which the Company or any of its Subsidiaries is a participating employer
("CEI Plan"). The employees of the Company in Australia, Canada, and the United
Kingdom participate in government sponsored, mandated and administered plans
pursuant to the laws of their applicable jurisdiction (each a "Foreign Plan").
(b) With respect to the Plans, such Plans are in compliance, in all
material respects, with applicable Laws, except where non-compliance would not
reasonably be expected to have a Material Adverse Effect on the Company.
(c) Each Company Plan, which is intended to be "qualified" within
the meaning of Section 401(a) of the Code, has received a favorable
determination letter from the Internal Revenue Service. Each Foreign Plan that
is required to be qualified or registered with any governmental authority as a
condition to the receipt of favorable tax treatment under the laws of a foreign
country or otherwise, has been so qualified or registered, and nothing has
occurred that would allow the qualification or registration to be revoked with
respect to any Foreign Plan, except for revocations that would not reasonably be
expected to have a Material Adverse Effect on the Company.
(d) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by the Company or any of its Affiliates with
respect to any ongoing, frozen or terminated "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). No Plan is a single-employer plan within the meaning of
Section 4001(a)(15) of ERISA. Further, to CEX's Knowledge, no defined benefit is
provided under any Foreign Plan.
(e) No withdrawal liability under Subtitle E of Title IV of ERISA
has been or is expected to be incurred by the Company or any of its Affiliates
with respect to any "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (regardless of whether based on contributions of an ERISA
Affiliate). No Plan is a multiemployer plan within the meaning of Section
4001(a)(3).
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(f) No action, suit or proceeding with respect to the administration
of any Company Plan (other than routine claims for benefits) is pending or
threatened that would reasonably be expected to have a Material Adverse Effect
on the Company. Each Company Plan that is a "group health plan" (as defined in
Section 607(1) of ERISA and Section 5000(b)(1) of the Code), has complied with
the requirements of Part 6 of Subtitle B of Title I of ERISA and of Section
4980B of the Code ("COBRA"), except where non-compliance would not reasonably be
expected to have a Material Adverse Effect on the Company.
(g) No "prohibited transaction" has occurred with respect to any
Plan, and no breach of fiduciary duty has occurred with respect to any Plan
which may have a Material Adverse Effect on the Company.
(h) No Plan which provides life insurance or medical benefits
provides such benefits to former employees except as required by COBRA.
(i) No Plan contains any provision (including any provision in any
summary plan description or other document) that would prohibit the Company from
amending or terminating such Plan (or discontinuing its status as a
participating employer under such Plan), or contains any provision that would
require an additional contribution or the payment of additional compensation or
other consideration as a condition to termination of the Plan, or otherwise
impose any liability on the Company as a result of termination of the Plan,
except for benefits accrued prior to termination or except as otherwise required
under ERISA or the Code.
(j) All contributions (including all employer contributions and
employee pay reduction contributions) which are due have been paid to each Plan.
Further, the Company and each of its Subsidiaries have at all times satisfied
all contribution obligations to all applicable government sponsored pension,
health or welfare programs in all foreign countries in which it has operations
(e.g., the Canada Pension Plan).
Section 3.2.22 No Commissions. Except for Deutsche Banc Alex. Xxxxx
Incorporated, whose fees and expenses are the obligation of CEX, and for other
Persons whose fees and expenses will solely be the obligation of CEX, none of
CEX or the Company has retained any broker, investment banker or other Person
entitled to any commission or similar compensation in connection with this
Agreement or the transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS AND AGREEMENTS
SECTION 4.1 COVENANTS AND AGREEMENTS OF BUYER. Buyer further
covenants and agrees that:
Section 4.1.1 Confidentiality. The provisions of the Confidentiality
Agreement, dated as of March 30, 1999, between Buyer and CEX (the
"Confidentiality Agreement") shall survive the execution and delivery of this
Agreement and shall apply to any information regarding the
22
Company or any of its Subsidiaries disclosed to or obtained by Buyer, any of its
Affiliates or any of their respective businesses or operations.
Section 4.1.2 Covenants in Connection With the Merger. Without
limiting the obligations of any party pursuant to the Confidentiality Agreement,
in the event that the contemplated transactions under this Agreement are not
consummated for any reason, Buyer will promptly, upon the request of CEX or the
Company, deliver to CEX a certification that all such confidential information
disclosed to or obtained by Buyer, its Affiliates or their respective
Representatives has been destroyed or returned to CEX. After the Closing, except
as otherwise provided herein, Buyer shall be free to disclose any Evaluation
Material (as defined in the Confidentiality Agreement) to the extent such
Evaluation Material relates exclusively to the Company and its Subsidiaries.
Section 4.1.3 Employee Benefit Matters.
(a) Prior to the Closing and effective no later than the Closing,
CEX shall spin off that part of the CEI 401(k) Retirement Plan which holds the
accounts of the current and former employees of the Company and its Subsidiaries
(and their beneficiaries) and shall cause the Company to sponsor such spun-off
plan (the "New Plan"). After the Closing, Buyer agrees to sponsor the New Plan
or to cause the Company to continue to sponsor the New Plan for a period of at
least six months. Buyer may, in its sole discretion and subject to applicable
law, merge the New Plan into another 401(k) plan maintained by the Buyer or an
Affiliate, and, to the extent permitted by applicable law, such 401(k) plan will
be considered to be comparable to the New Plan (even if such plan provides
different contribution rates or investment options than the New Plan). CEX shall
not enter into any contract with any service provider with respect to the New
Plan that cannot be terminated at will without penalty to the Company. Further,
CEX shall not cause any investment option to be made available under the New
Plan that includes any provision for a back-end load, surrender charge or other
termination penalty in the event such investment option is discontinued under
the New Plan.
(b) Buyer shall, or shall cause the Company to, make available to
current employees of the Company and its Subsidiaries immediately prior to the
Closing (and their beneficiaries) coverage under welfare benefit plans which, in
the aggregate, is comparable to the coverage being received by such employees
under welfare benefit plans immediately prior to Closing. With respect to such
employees (and their beneficiaries), Buyer shall, or shall cause the Company to,
waive any pre-existing conditions or limitations and eligibility waiting periods
under any group health plans of Buyer, or Company, and, for the plan year in
which the Closing occurs, shall give each such employee credit toward applicable
deductibles and annual out-of-pocket limits for expenses incurred during such
plan year prior to the Closing. With respect to any employee (or beneficiary)
who loses coverage under the group health plan maintained by CEI as a result of
the transaction contemplated in this Agreement, CEI shall provide, or shall
cause to be provided, continuation coverage under COBRA for each electing
employee (or beneficiary). Without limiting the generality of the foregoing,
effective as of the Closing, Buyer and the Company shall be responsible and
liable for providing the appropriate COBRA notices to the current employees of
the Company and its Subsidiaries (and their beneficiaries) who experience a
"qualifying event" on or after the Closing and for providing (or continuing to
23
provide) coverage required under COBRA with respect to employees (whether
current or former) of the Company and its Subsidiaries (and their beneficiaries)
who experience a "qualifying event" before, on or after the Closing.
Section 4.1.4 Other Obligations of Buyer. After the Effective Date,
Buyer shall be responsible for (i) any necessary restructuring costs, (ii) any
severance costs due the Company's employees as of and after the Effective Date
(except for payments to be made by CEX pursuant to Section 4.2.3(c)), (iii) all
health insurance claims of the Company's employees as of and after the Effective
Date, whether or not claims have been filed as of the Effective Date, and (iv)
any and all operating costs and other obligations of the Company, including,
without limitation, any and all payroll, insurance (worker's compensation, auto
liability, etc.) and lease obligations of the Company. Any such items paid by
CEX shall be for the account of Buyer.
SECTION 4.2 COVENANTS AND AGREEMENTS OF CEX AND THE COMPANY. CEX and
the Company further covenant and agree that until the Closing:
Section 4.2.1 Access to Information. The Company shall afford Buyer
access, during normal business hours and upon reasonable notice, to all of the
books, records, agreements and management of the Company for purposes consistent
with the provisions and intent of this Agreement; provided, however, that any
such investigation shall be conducted in such a manner as not to interfere
unreasonably with the operation of the business of the Company or of CEX, and
provided further CEX shall allow Buyer and its representatives full access.
Section 4.2.2 Ordinary Course of Business. Except as otherwise
contemplated by this Agreement, as necessary to effect the transactions
contemplated by this Agreement or as set forth on Schedule 4.2.2, the Company
shall not enter into any material transaction outside of its ordinary course of
business without the consent of Buyer, including (i) the sale, issuance or
transfer of any of its capital stock, (ii) the borrowing from third parties of
money, (iii) the entering into or amending of compensation arrangements with any
employees, directors or officers of the Company, other than raises or
compensation adjustments in the ordinary course of business, (iv) the
acquisition or accrual of capital assets having an individual cost in excess of
$25,000, or an aggregate cost in excess of $100,000 or incur any liability in
excess of $50,000, (v) the merger or consolidation with any Person, or (vi)
entering into communications regarding this transaction with customers,
employees or vendors of the Company. Except as contemplated herein, the Company
shall use efforts consistent with the ordinary course of business to preserve
substantially intact its business, operations, assets and present relationships
with its customers, suppliers and employees.
Section 4.2.3 Intercompany Accounts; Cash Accounts; Other Matters.
(a) All intercompany accounts providing for the payment of any
amounts between the Company and its Subsidiaries, on the one hand, and CEX and
the Continuing Affiliates, on the other hand, shall as of the Effective Date be
settled by way of (i) offset to the intercompany account, or (ii) dividend to
the extent of retained earnings and then a return of capital if the amount is a
receivable on the Company's or applicable Subsidiary's books, or as an increase
of paid-in capital if the amount is a payable on the Company's or applicable
24
Subsidiary's books as of the Closing Date, with no cash payments being made.
Intercompany indebtedness attributable after the Effective Date to cash receipts
from the Company by CEX and cash disbursements by CEX to the Company shall be
settled in the manner provided in Section 2.2.3.
(b) Except as otherwise expressly contemplated by this Agreement and
the agreements executed and delivered in connection herewith or as set forth on
Schedule 4.2.3, all agreements, arrangements and understandings between the
Company, its wholly owned Subsidiaries, on one hand, and CEX and the Continuing
Affiliates, on the other hand, whether or not in writing, shall automatically be
terminated and of no further force and effect, as of the Closing Date
(notwithstanding any contrary provision therein), and no Person shall have any
rights or claims under or in connection with any of the foregoing, including as
a result of any actions or inactions or alleged actions or inactions prior to
the Closing Date.
(c) CEX shall continue to fund CEX-approved operating and
restructuring costs for the Company through the Effective Date and shall pay all
retention and sale incentive bonuses to the Company's employees when due under
the CEX instituted retention and sale incentive plans (including, without
limitation, the plans listed on Schedule 3.2.13B) and all such payments shall be
for the account of CEX.
SECTION 4.3 CONTINUING JOINT COVENANTS AND AGREEMENTS.
Section 4.3.1 Consents of Others. Each party shall use its
reasonable efforts prior to the Closing to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated hereby, and to cooperate with the other in connection
with the foregoing, to obtain all authorizations, consents and permits required
of them to permit them to consummate the transactions contemplated by this
Agreement; provided that as to consents, CEX's and the Company's obligations
shall be limited to the Required Consents. Neither CEX, the Company nor Buyer
shall be required to file any lawsuit or take other legal action as against any
third party, make any amendment thereof or waive any rights thereunder, or pay
any amount, agree to any restriction or assume any obligation in connection
therewith and CEX, the Company and Buyer shall have no liability from any
failure to obtain any consent with respect to any Required Consents.
Section 4.3.2 Financing. Buyer shall take all steps necessary to
obtain the financing necessary to consummate the Closing and the transactions
contemplated hereby in accordance with the terms of this Agreement. Buyer agrees
that it shall (i) immediately upon the public announcement of the Merger, issue
a mandatory redemption notice for 100% of the Warrants, and shall cause 100% of
the cash proceeds received by the Buyer from the exercise of the Warrants to be
applied to the mandatory prepayment of the Short-Term Note (which amount shall
be applied first to the payment of accrued interest, with the balance applied in
reduction of principal), and (ii) immediately following the Closing, Buyer shall
use its reasonable best efforts to promptly obtain the credit facility
previously offered to Buyer by GE of up to $10 million secured by a first lien
on the property, plant and equipment of the Company and its Subsidiaries and, as
soon as possible, draw on such facility in an amount sufficient to prepay the
remaining
25
outstanding balance due on the Short-Term Note. In the event that GE fails or
refuses to make such credit facility available, Buyer shall use its reasonable
best efforts to obtain similar financing from another asset-based lender in
order to prepay the Short-Term Note.
Section 4.3.3 Publicity. During the period prior to the Closing, the
parties shall consult in advance of all public announcements in respect of the
subject matter of this Agreement and, except as required by Law or regulations
of the SEC or any securities exchange, Buyer shall not issue any announcement of
or concerning the transactions contemplated by this Agreement without the prior
written consent of CEX. Except for such announcements and except as required by
Law or regulation of the SEC or any securities exchange, Buyer shall not
disclose the existence or terms of the transactions contemplated hereby without
the prior written consent of CEX.
Section 4.3.4 Guarantees.
(a) Replacement of Guarantees. Prior to the Closing, Buyer shall
cooperate with CEX, and at the request of CEX shall use its reasonable best
efforts, in order to cause itself, the Company or one or more of their
respective Affiliates to be substituted in all respects for CEX or any
Continuing Affiliate, effective as of the Closing, in respect of all Liabilities
and other obligations of CEX and any Continuing Affiliate under any guarantees,
equipment leases, indemnities, letters of credit, letters of comfort, surety
bonds, bid bonds, performance bonds and other obligations obtained or issued by
CEX or any of the Continuing Affiliates, or by which CEX or any of its
Continuing Affiliates is bound, for the benefit of the Company or any of its
Subsidiaries, including but not limited to the guarantees, equipment leases,
indemnities, letters of credit, letters of comfort, surety bonds, bid bonds,
performance bonds and other obligations set forth in Schedule 4.3.4
(collectively, the "Guarantees"), and to cause CEX and its Continuing Affiliates
to be fully released and discharged with respect thereto. Buyer shall not,
however, be required to obtain the release of the letters of credit and surety
bonds pertaining to the consolidated worker's compensation or auto liability
insurance programs administered by CEI for the joint benefit of the Company and
the domestic Continuing Affiliates (the portion of such letters of credit or
surety bonds attributable to workers compensation and auto liability of the
Company and its Subsidiaries is hereinafter referred to as the "Plan
Obligations"). CEX shall keep the Plan Obligations in place to the extent
required by the administrators of such plans; provided, however, that if any one
or more of the Plan Obligations is not released upon the stated maturity
thereof, Buyer shall pay (on or before the renewal date) the cost associated
with the renewal of such Plan Obligations. If some or all of the Guarantees have
not been replaced with guarantees of Buyer in a manner satisfactory to CEX at
the Closing, Buyer shall (i) continue to use reasonable best efforts
post-Closing to replace such Guarantees (other than the Plan Obligations) and to
cause CEX and the Continuing Affiliates to be fully released and discharged from
such Guarantees (other than the Plan Obligations), (ii) to the extent such
Guarantee is an Equipment Lease (as defined below) take such action as is set
forth in clause (b) below, and (iii) indemnify CEX and its Continuing Affiliate
with respect to such Guarantees pursuant to Section 4.3.4(c) below.
Post-Closing, Buyer and CEX shall continue to use all reasonable efforts to
obtain the release of CEX and its Continuing Affiliates from the Guarantees
(other than the Plan Obligations) as soon as possible, but in no event shall
such Guarantees be allowed to remain outstanding beyond one year from the date
of Closing. Notwithstanding the foregoing provisions
26
of this Section 4.3.4(a), Buyer will not contact any party to any Guarantee or
any underlying obligation without the prior consent of CEX, such consent not to
be unreasonably withheld. Notwithstanding the foregoing, neither Buyer nor the
Company or any of its Subsidiaries shall have any obligation to secure
replacement Guarantees or Plan Obligations with respect to any portion of the
expiring Plan Obligations that relate to post-Closing assets or Liabilities of
CEX or the Continuing Affiliates.
(b) Treatment of Equipment Leases. In the event that Buyer is not
able to effect the substitution of Buyer, the Company or any of their respective
Affiliates for CEX or any of the Continuing Affiliates, and the full release and
discharge of CEX and its Continuing Affiliates, with respect to some or all of
the equipment leases listed in Schedule 4.3.4 (the "Equipment Leases"), as of
the Closing, Buyer and the Company shall assume and be jointly and severally
liable for all obligations and other Liabilities under any Equipment Lease which
relates to any property leased for the benefit of the Company and its
Subsidiaries (the "Equipment Lease Obligations") and shall make the lease
payments related to such Equipment Lease Obligations in the ordinary course of
business and shall be liable for all liabilities and obligations related
thereto, unless and until the Company's payments are rejected by the applicable
Lessor, in which case Buyer and the Company agree to provide CEX with
immediately available funds at least two business days prior to the date any
Equipment Lease Obligation payment (including Equipment Lease Obligations
relating to payments due upon termination of any Equipment Lease, payments
arising in connection with restoration or disposition of any equipment subject
to any Equipment Lease, or payments arising in respect of any other obligation
pursuant to any Equipment Lease) is due under any Equipment Lease so that CEX
can make payments to the respective obligees thereof. In lieu of the foregoing
Buyer may elect to have CEX acquire such equipment from the lessor on behalf of
the Company and Buyer and the Company hereby agree to provide CEX with
immediately available funds in the full amount of the purchase price for such
equipment at least two business days prior to CEX's purchase of such equipment.
CEX and its Continuing Affiliates shall pay and perform all of their obligations
under the Equipment Leases other than the Equipment Lease Obligations. Without
limiting the foregoing, CEX and the Continuing Affiliates shall have no
obligation to pay or perform any Equipment Lease Obligation under any Equipment
Lease, and shall have no Liability to Buyer or the Company for any such failure
to pay or perform any such obligation, unless CEX shall have timely received
funds in accordance with this Section 4.3.4(b) sufficient to make such payment
or satisfy such obligation. Buyer shall, and shall cause the Company and its
Subsidiaries to, provide CEX with information regarding any material
communications with any obligee under any Equipment Lease, including any
communications relating to the condition or disposition of any equipment and the
obligations of any party upon termination of any Equipment Lease, and shall
permit CEX to participate in any dealings or negotiations pertaining to any of
the foregoing. Buyer agrees that CEX or its Continuing Affiliate that is a party
to any such Equipment Lease shall have all of the enforcement rights under such
agreement against Buyer for Buyer's non-performance under such agreement that
the third party to such agreement has against CEX or its Continuing Affiliate in
the event of non-performance under such agreement.
(c) Indemnification After Closing. Buyer and the Company shall
jointly and severally indemnify and defend CEX and the Continuing Affiliates for
and hold CEX and the Continuing Affiliates harmless from and against, and pay
and reimburse CEX and the
27
Continuing Affiliates for, any and all Liabilities of CEX or Continuing
Affiliates, as the case may be, in respect of any Plan Obligation or any
Guarantee (including, without limitation, any Equipment Lease Obligation
obtained or issued by CEX or any Continuing Affiliates, or by which CEX or any
Continuing Affiliate is bound, on behalf of the Company or any of its
Subsidiaries), including any of the foregoing (i) arising out of or relating to
a payment by, or any other Liability of, CEX or any of the Continuing Affiliates
under any such Guarantee, including any draw made by any beneficiary of any
letter of credit or surety bond after the Closing Date or (ii) any action, suit,
claim, investigation or proceeding, whether involving a court of law,
administrative body, Governmental Authority, arbitrator, or alternative dispute
resolution mechanism ("Proceeding") arising out of or relating to any such
Guarantee. Any payment required to be made by Buyer and the Company under this
Section 4.3.4(c) shall be made within ten (10) business days of Buyer's receipt
of written notice from CEX or any Continuing Affiliate describing in reasonable
detail the amount then due. Amounts shall accrue interest at the default rate
under the Long-Term Note from the date of payment by CEX or any Continuing
Affiliate until the date of repayment.
(d) Refund of Premiums. All funds in respect of premiums that are
refunded by the issuer of any letter of credit, surety bond or other instrument
constituting one or more of the Guarantees on account of the replacement by
Buyer of such letter of credit, surety bond or other instrument as provided by
this Section 4.3.4 shall be for the account of CEX and the Continuing
Affiliates. In accordance with Section 7.7, Buyer shall pay over or cause the
Company and its Subsidiaries to pay over to CEX any such refunds received by the
Company or any of its Subsidiaries after the Closing promptly upon receipt of
such refunds by the Company or such Subsidiary.
(e) Third Party Beneficiaries. CEX and its Continuing Affiliates are
intended third party beneficiaries of this Section 4.3.4 and shall have the
right to enforce the benefits intended to be conferred upon each of them under
this Section 4.3.4 as though they were parties to this Agreement.
(f) No Amendment of Guarantees. Without limiting the foregoing,
after the Closing, Buyer will not, and will not permit the Company or any of
their respective Affiliates to, renew, extend, amend or supplement any loan,
contract, lease or other obligation that is covered by one or more Guarantees
without (i) providing CEX with evidence satisfactory to CEX that CEX's and its
Continuing Affiliates' Guarantees have been fully released and discharged or
(ii) obtaining the prior written consent of CEX which may or may not be given in
CEX's sole discretion.
SECTION 4.4 EXCLUSIVITY. From the date hereof through the date this
Agreement is terminated in accordance with Article VIII, neither CEX nor any of
its Affiliates or Representatives, will solicit, encourage or discuss with, or
supply any non-public information to, or enter into any agreement with any party
other than Buyer in connection with any transaction involving (i) any merger or
other business combination involving the Company, (ii) the acquisition of the
Company or a material equity interest in or a material portion of the assets of
the Company, or (iii) the dissolution, liquidation or spin-off of the Company.
28
ARTICLE V
CONDITIONS PRECEDENT TO THE CLOSING
SECTION 5.1 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The
obligations of Buyer to consummate the transactions contemplated hereby are
subject to the fulfillment of all of the following conditions on or prior to the
Closing Date (unless waived in writing in the sole discretion of Buyer):
Section 5.1.1 Accuracy of Warranties and Performance of Covenants.
The representations and warranties of CEX contained herein shall be accurate (i)
in the case of those representations and warranties of CEX which are qualified
by materiality thresholds, in all respects as if made on and as of the Closing
Date, and (ii) in the case of those representations and warranties of CEX which
are not qualified by materiality thresholds, in all material respects as if made
on and as of the Closing Date, except in each case for inaccuracies which are
attributable to matters arising in the ordinary course of business after the
date hereof. Except in the case of the Transaction Representations made by CEX,
the preceding condition shall be deemed to be satisfied unless any Losses
reasonably anticipated to be caused by any inaccuracies, as determined pursuant
to the preceding sentence, of the representations and warranties of CEX,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company. CEX shall have performed all of its
obligations and complied in all material respects with each and all of the
covenants and agreements required to be performed or complied with on or prior
to the Closing Date. CEX shall have delivered an Officer's Certificate
confirming the matters in each of the foregoing sentences ("CEX's Bring Down
Certificate"); provided, however, that such certificate may disclose any facts
or circumstances which would cause any representations and warranties to be
breached or inaccurate, in which case Buyer shall be entitled to elect not to
consummate the transactions contemplated hereby as a result of any breach of any
representation or warranty set forth therein if, and only if, Buyer is entitled
to so elect pursuant to the first three sentences of this Section 5.1.1. If
Buyer, nevertheless, decides to consummate the transactions contemplated hereby,
the breach or inaccuracy of the representations and warranties described in
CEX's Bring Down Certificate shall be deemed cured and may not be relied upon by
Buyer to avoid any of its obligations hereunder, impose any liabilities or
obligations upon CEX or any Continuing Affiliate or otherwise recover from CEX
or any Continuing Affiliate with respect thereto and the Company Disclosure
Schedule shall be automatically deemed amended as of the date hereof and as of
the Closing Date to include any matters set forth on CEX's Bring Down
Certificate. If Buyer decides not to consummate the transactions contemplated
hereby, as a result of any breach of any representation or warranty pursuant to
the first three sentences of this Section 5.1.1, this Agreement and the proposed
transactions contemplated hereunder shall terminate, and each party hereto shall
thereafter have no obligation or liability hereunder (other than pursuant to
Sections 8.2 and 8.3). Buyer's sole and exclusive remedy, in law or in equity,
for any claim related to or arising out of a failure of a condition or breach,
whether in contract, tort or otherwise, shall be to refuse to complete the
Closing under, and to terminate, this Agreement.
Section 5.1.2 Approvals, Absence of Litigation. No suit or
proceeding shall have been commenced by any Governmental Authority to restrain,
enjoin or hinder, or to seek material damages on account of the consummation of
the transactions herein contemplated.
29
Section 5.1.3 Buyer's Receipt of the Closing Documents. Buyer shall
have received from CEX the Closing documents referred to in Section 6.2.2.
Section 5.1.4 Intercreditor Agreement. CEX, GE and Bayview shall
have entered into Intercreditor Agreements reasonably acceptable to the parties
providing for, among other things, the subordination of the Promissory Notes,
the relative priority of the liens securing the indebtedness of the Company and
other intercreditor matters.
SECTION 5.2 CONDITIONS PRECEDENT TO CEX'S AND THE COMPANY'S
OBLIGATIONS. The obligations of CEX and the Company to consummate the
transactions contemplated hereby are subject to fulfillment of all of the
following conditions on or prior to the Closing Date (unless waived in writing
in the sole discretion of CEX):
Section 5.2.1 Accuracy of Warranties and Performance of Covenants.
The representations and warranties of Buyer contained herein shall be accurate
in all material respects as if made on and as of the Closing Date. Buyer shall
have performed in all material respects all of its obligations and complied in
all material respects with each and all of the covenants and agreements required
to be performed or complied with on or prior to the Closing. Buyer shall have
delivered an Officer's Certificate confirming the matters in each of the
foregoing sentences (the "Buyer's Bring Down Certificate"); provided, however,
that such certificate may disclose any facts or circumstances which would cause
any representations and warranties to be breached or inaccurate, in which case
CEX shall be entitled to elect not to consummate the transactions contemplated
hereby as a result of any breach of any representation or warranty set forth
therein if, and only if, CEX is entitled to so elect pursuant to the first two
sentences of this Section 5.2.1. If CEX, nevertheless, decides to consummate the
transactions contemplated hereby, the breach or inaccuracy of the
representations and warranties described in Buyer's Bring Down Certificate shall
be deemed cured and may not be relied upon by CEX to avoid any of its
obligations hereunder, impose any liabilities or obligations upon Buyer or the
Company or otherwise recover from Buyer or the Company with respect thereto and
Buyer's Schedules to this Agreement shall be automatically deemed amended as of
the date hereof and as of the Closing Date to include any matters set forth on
Buyer's Bring Down Certificate. If CEX decides not to consummate the
transactions contemplated hereby, as a result of any breach of any
representation or warranty pursuant to the first two sentences of this Section
5.2.1, this Agreement and the proposed transactions contemplated hereunder shall
terminate, and each party hereto shall thereafter have no obligation or
liability hereunder (other than pursuant to Sections 8.2 and 8.3). CEX's sole
and exclusive remedy, in law or in equity, for any claim related to or arising
out of a failure of a condition or breach, whether in contract, tort or
otherwise, shall be to refuse to complete the Closing under, and to terminate,
this Agreement.
Section 5.2.2 Approvals, Absence of Litigation. No suit or
proceeding shall have been commenced by any Governmental Authority to restrain,
enjoin or hinder, or to seek material damages on account of, the consummation of
the transactions herein contemplated.
Section 5.2.3 CEX's Receipt of the Closing Documents. CEX shall have
received from Buyer the Closing documents referred to in Section 6.2.1.
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Section 5.2.4 CEX's Receipt of Specified Consents. The Required
Consents shall have been obtained and shall be in full force and effect.
Section 5.2.5 Board Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the board of directors of CEX.
Section 5.2.6 Insurance Coverage. CEX shall have received from Buyer
proof of fire, liability or other forms of insurance for the Company and its
Subsidiaries and the business that, in the reasonable judgment of CEX, is
sufficient for the business of the Company and its Subsidiaries, effective as of
the Closing Date.
ARTICLE VI
THE CLOSING
SECTION 6.1 THE CLOSING DATE. Subject to the terms of this
Agreement, consummation of the transactions contemplated by this Agreement (the
"Closing") shall take place on September 9, 1999, or if the conditions to
Closing shall not have been satisfied on such date, as promptly as practicable
following the satisfaction or waiver thereof, but in no event later than
September 15, 1999. As used herein, the "Closing Date" shall refer to the date
of the actual Closing. The Closing shall be consummated at the offices of Faegre
& Xxxxxx LLP at 2200 Norwest Center, 00 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000-0000, or such other place as the parties hereto shall mutually
agree.
SECTION 6.2 DELIVERIES AT THE CLOSING.
Section 6.2.1 Buyer's Execution and Delivery of Documents and
Payment. Buyer shall deliver, or execute and deliver, or cause to be executed
and delivered, to CEX all of the following:
(a) A certificate of valid existence and good standing of Buyer
issued not earlier than 30 days prior to the Closing;
(b) The certificate of merger required pursuant to Section 2.1.3
hereof;
(c) Buyer's Bring Down Certificate;
(d) A certificate certifying to CEX the incumbency of Buyer's
officers and bearing the authentic signatures of all such officers who have
executed this Agreement or any other agreement executed and delivered in
connection herewith;
(e) Payment to CEX of the amount provided in Section 2.1.7(a), by
wire transfer of immediately available funds to a bank account designated by
CEX;
(f) The Promissory Notes, duly executed by the Company;
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(g) The Guaranty, duly executed by Buyer and by the Subsidiaries of
the Company;
(h) The Security Agreements duly executed by the Company and its
Subsidiaries, as appropriate;
(i) The Registration Rights Agreement, duly executed by the Buyer;
(j) A receipt, duly executed by Buyer, acknowledging receipt of the
certificates representing the Company Shares and establishing the time of the
Closing;
(k) The Tax Sharing and Indemnification Agreement, duly executed by
Buyer;
(l) The Transition Services Agreement, duly executed by Buyer;
(m) The Exchange Agreement, duly executed by Buyer;
(n) The written opinions of Faegre & Xxxxxx LLP, counsel to Buyer,
and Buyer's general counsel, in form reasonably acceptable to CEX;
(o) A certificate of the Chief Financial Officer of Buyer certifying
to CEX that (i) the obligations of Buyer and the Company under Sections 4.3.4(b)
and 4.3.4(c) will not conflict with or violate the terms and provisions of, or
cause a default (either with notice or the lapse of time or both) under, any
credit agreement or other agreement binding on Buyer or the Company, and (ii) as
of the Closing Date (and without regard to any insurance maintained by CEX or
its continuing Affiliates), the assets and activities of the Company and its
Subsidiaries will be insured against all liabilities, claims and risks in
coverage and amounts for which it is customary for companies similarly situated
to be insured against; and
(p) Without limitation by specific enumeration of the foregoing, all
other documents and instruments reasonably required or requested by CEX to
consummate the transactions contemplated hereby.
Section 6.2.2 CEX's Execution and Delivery of Documents and
Certificates. CEX shall deliver or execute and deliver, as the case may be, or
cause to be delivered or executed and delivered to Buyer all of the following:
(a) Certificates of valid existence and good standing of CEX, the
Company and Subsidiaries (except for Subsidiaries identified as inactive on
Schedule 3.2.7) issued not earlier than 30 days prior to the Closing;
(b) The certificate of merger required pursuant to Section 2.1.3
hereof;
(c) CEX's Bring Down Certificate;
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(d) A certificate certifying to Buyer the incumbency of CEX's
officers and bearing the authentic signatures of all such officers who have
executed this Agreement or any other agreement executed and delivered in
connection herewith;
(e) The resignations of all of the directors and officers of the
Company and its Subsidiaries, to the extent requested by Buyer;
(f) The Company's and, to the extent available, each of its
Subsidiary's by-laws, minute books, leases and other contracts held by CEI,
stock record books, all similar corporate records and all the seals of the
Company and each of its Subsidiaries, if any, unless in the possession of the
Company;
(g) One or more certificates duly endorsed by CEX and in proper form
for transfer to Buyer, or accompanied by duly executed stock powers, evidencing
all of the Company Shares;
(h) A receipt, duly executed by CEX, acknowledging receipt of
payment for the Company Shares;
(i) The Tax Sharing and Indemnification Agreement, duly executed by
CEX;
(j) The Transition Services Agreement, duly executed by CEX;
(k) The Noncompete Agreement, duly executed by CEX;
(l) The Security Agreements, duly executed by CEX;
(m) The Registration Rights Agreement, duly executed by CEX;
(n) The written opinions of Xxxxx, Xxxxxx & Xxxxxx LLP, counsel to
CEX, and CEX's general counsel, in forms reasonably acceptable to Buyer; and
(o) Without limitation by specific enumeration of the foregoing, all
other documents and instruments reasonably required or requested by Buyer to
consummate the transactions contemplated hereby.
SECTION 6.3 SIMULTANEOUS CLOSING. All actions taken at the Closing
are to be part of a simultaneous transaction, and no action is to be considered
completed until all actions necessary to be completed at the Closing have been
completed.
ARTICLE VII
POST-CLOSING AGREEMENTS AND OTHER MATTERS
SECTION 7.1 POST-CLOSING AGREEMENTS. From and after the Closing, the
parties shall have the respective rights and obligations which are set forth in
the remainder of this Article.
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SECTION 7.2 INSPECTION OF RECORDS. The Company shall maintain and
make its books and records available for inspection by the other parties, or by
their duly authorized representatives, for reasonable business purposes at all
reasonable times during normal business hours, for a period equal to any
statutorily determined record retention period (but in no event less than eight
(8) years after the Closing) with respect to all matters related to the period
prior to the Closing. As used in this Section, the right of inspection includes
the right to make extracts or copies at the expense of the party requesting such
extracts or copies.
SECTION 7.3 MUTUAL ASSISTANCE. The parties shall cooperate with each
other, and make available the reasonable assistance of their employees to each
other at reasonable out-of pocket cost (including reasonable allocated costs of
in-house counsel and other personnel), with respect to the defense or
prosecution of any claims or litigation made or commenced by or against third
parties subsequent to the Closing, including insurance and other cost recovery
claims, rights, causes of action and chooses in action.
SECTION 7.4 FURTHER ASSURANCES. The parties shall execute such
further documents, and perform such further acts, as may be necessary to effect
the transactions contemplated hereby, on the terms herein contained and
otherwise to comply with the terms of this Agreement; provided, that, except as
contemplated by this Agreement, no party shall be required to waive any right or
incur any obligation in connection therewith.
SECTION 7.5 EXCHANGE ACT AND OTHER FILINGS. Subject to applicable
law, in order to assist the parties in the preparation of all documents and
reports required to be filed by CEX or the Continuing Affiliates or the Buyer
under the Securities Act of 1933, as amended, or the Exchange Act of 1934, as
amended (i) with respect to any period ending on or prior to the Closing Date or
(ii) any period that would include but not end on the Closing Date, CEX and its
Continuing Affiliates and Buyer (as appropriate) shall, or shall cause the
Company and its Subsidiaries to, prepare and provide to CEX or Buyer (as the
case may be), at the requesting party's cost and expense, within the time frames
required by CEX or Buyer in accordance with such party's past practices, such
information and data as CEX or Buyer may reasonably request (including access to
books, records and personnel) in order for the operations of the Company and its
Subsidiaries to be properly reported in such filings.
SECTION 7.6 INSURANCE. The parties hereto acknowledge and agree
that, except as set forth in this Section 7.6 and except with respect to workers
compensation insurance provided by monopolistic state funds in the name of the
Company, its Subsidiaries or any predecessor entities, no insurance policy
maintained by CEX and its Affiliates (including the Company and its
Subsidiaries) shall be available to or cover the Company or any of its
Subsidiaries or their respective assets, properties, operations and liabilities
after the Closing Date, all benefits and coverage under each such insurance
policy shall terminate on the Closing Date and none of the Company or any of its
Affiliates will seek any recoveries thereunder attributable to any acts, events
or omissions occurring after the Closing Date. As of the Closing Date, Buyer
shall be responsible for obtaining and maintaining any and all insurance
policies and coverages in respect of the Company and its Subsidiaries and their
respective assets, properties, operations and liabilities.
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SECTION 7.7 ADMINISTRATION OF ACCOUNTS.
Section 7.7.1 In Trust for Buyer. All payments and reimbursements by
any third party after the Closing Date in the name of or to CEX or any of the
Continuing Affiliates to which the Company or any of its Subsidiaries is
entitled in accordance with the provisions of this Agreement and the
transactions contemplated hereby shall be held by CEX or such Affiliate in trust
for the benefit of the Company and, within five (5) business days of receipt by
CEX or such Affiliate of any such payment or reimbursement, CEX or such
Affiliate shall pay over to the Company the amount of such payment or
reimbursement without right of set off or counterclaim.
Section 7.7.2 In Trust for CEX. All payments and reimbursements by
any third party after the Closing Date in the name of or to the Company or any
of its Affiliates to which CEX or any of the Continuing Affiliates is entitled
in accordance with the provisions of this Agreement and the transactions
contemplated hereby shall be held by the Company or such Affiliate in trust for
the benefit of CEX and, within five (5) business days of receipt by the Company
or such Affiliate of any such payment or reimbursement, Buyer or such Affiliate
shall pay over to CEX or such Affiliate the amount of such payment or
reimbursement without right of set off or counterclaim.
SECTION 7.8 NOTICE OBLIGATIONS OF BUYER. Contemporaneously with the
Closing, Buyer shall take such actions as shall be necessary or appropriate to
cause each officer or director removed by CEX or who resigned contemporaneously
with the Closing to be replaced by an officer or director elected by Buyer. As
soon as practicable following the Closing (but in any event not later than
forty-five (45) days following the Closing), Buyer shall take such actions and
file such documents as shall be necessary or appropriate for the purpose of
giving notice to all Governmental Authorities of the names of each officer,
director and shareholder of the Company and its Subsidiaries (including each
officer and director elected by Buyer as provided herein) and such other
information with respect to the transactions contemplated by this Agreement as
shall be necessary or appropriate.
SECTION 7.9 FUTURE DELIVERY SERVICES. Until the later of (i) three
years following the Closing Date, or (ii) the date upon which the Promissory
Notes have either been paid in full or converted into Buyer's Common Stock,
Buyer agrees that it will, and will cause the Company and its other affiliates
to provide CEX and its Continuing Affiliates, at CEX's request, with pricing and
terms for services no less favorable than those offered to any other customer of
Buyer or the Company, as the case may be, for similar services.
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION. This Agreement may be terminated prior to
the Closing as follows:
Section 8.1.1 Mutual Consent. Upon the mutual written consent of CEX
and Buyer.
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Section 8.1.2 Litigation. By CEX or Buyer if an injunction or other
order shall have been issued by a Governmental Authority, which restrains or
otherwise makes unlawful the consummation of the transactions contemplated by
this Agreement and such injunction or other order shall have become final and
non-appealable; provided however that no party shall be entitled to terminate
this Agreement in reliance on this Section 8.1.2 if such injunction or order
shall have resulted from a breach by such party of this Agreement.
Section 8.1.3 Conditions to Buyer's Obligations Not Met. By Buyer if
any of the conditions provided in Section 5.1 shall not have been satisfied,
complied with or performed, in any material respect, on or before September 15,
1999, or if CEX's Bring Down Certificate reflects such a failure at the time of
delivery, and Buyer has not waived such failure of satisfaction, noncompliance
or nonperformance; provided however that Buyer shall not be entitled to
terminate this Agreement in reliance on this Section 8.1.3 if such failure of
such conditions to be satisfied, complied with or performed shall have resulted
from a breach of this Agreement by Buyer.
Section 8.1.4 Conditions to CEX's and the Company's Obligations Not
Met. By CEX, if any of the conditions provided in Section 5.2 shall not have
been satisfied, complied with or performed, in any material respect, on or
before September 15, 1999, or if Buyer's Bring Down Certificate reflects such a
failure at the time of delivery, and CEX has not waived, in writing, such
failure of satisfaction, noncompliance or nonperformance; provided however that
CEX shall not be entitled to terminate this Agreement in reliance on this
Section 8.1.4 if such failure of such conditions to be satisfied, complied with
or performed shall have resulted from a breach of this Agreement by CEX or the
Company.
Section 8.1.5 Failure of Adequate Financing. By CEX, in the event
that at any time the representations and warranties set forth in Section 3.1.8
shall fail to be true and correct or if CEX receives information that reasonably
causes it to believe that any of the representations or warranties in Section
3.1.8 will fail to be true and correct as of the Closing.
Section 8.1.6 Failure of CEX Board Approval. By Buyer, in the event
that the Merger has not been approved by the board of directors of CEX on or
before September 9, 1999.
SECTION 8.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement, this Agreement and the proposed transactions contemplated
hereunder shall terminate and, except as provided in the following sentence and
in Section 8.3, each party hereto shall have no further obligation or liability
hereunder, except that the provisions of Section 4.1.1, shall survive such
termination. Except as provided in Sections 5.1.1 and 5.2.1, nothing in this
Section 8.2 shall relieve any party from any liability for any breach of any
covenant or agreement contained in this Agreement or from any breach by Buyer of
the representation and warranty set forth in Section 3.1.8.
SECTION 8.3 BREAK-UP FEE. If (i) Buyer fails or is unable to close
the Merger on or before September 15, 1999, and (ii) this Agreement is
terminated by CEX pursuant to Section 8.1.4, then Buyer shall pay to CEX within
10 days of such termination an amount equal to $500,000. If (x) GE and Bayview
have removed or otherwise determined as set forth in a
36
written notice by GE or Bayview, as the case may be, to CEX that all
contingencies or conditions to Closing the Merger contained in the Commitment
Letters have been satisfied, except for execution of satisfactory documentation
as contemplated by the Commitment Letters, (y) Buyer and Merger Sub have
performed all material conditions to Closing (including having finalized all
loan documentation and having satisfied all of the conditions of GE and Bayview
other than execution of the final loan agreements and related documentation) and
are otherwise prepared and able to close and CEX nevertheless fails or is unable
to close the Merger, and (z) this Agreement is terminated by Buyer pursuant to
Section 8.1.3 (and is not terminable pursuant to any other provision hereof),
then CEX shall pay to Buyer within 10 days of such termination an amount equal
to $1,500,000.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in Sections 3.1.1, 3.1.2, 3.1.3, 3.1.4,
3.1.6, 3.1.7, 3.1.8, 3.1.10, 3.1.14, 3.2.1, 3.2.2, 3.2.3, 3.2.4, 3.2.6, 3.2.7,
3.2.8, 3.2.9 and 3.2.22 of this Agreement (the "Transaction Representations")
shall survive the Closing for a period of twelve (12) months after the Closing
Date. All other representations and warranties contained herein shall not
survive (and therefore shall not be covered by the provisions of this Article
IX) the Closing Date.
SECTION 9.2 INDEMNIFICATION BY CEX. Subject to the remaining
provisions of Article IX and this Agreement, from and after the Closing, CEX
shall indemnify and hold harmless Buyer, the Company and its Subsidiaries and
their respective directors, officers, employees and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Buyer Indemnified Parties") from and against any and all damages, liabilities,
losses, obligations, suits, demands, penalties, charges, costs and expenses
(including reasonable attorneys' fees and expenses and court costs incurred in
the investigation, defense or settlement or any of the foregoing in connection
with any third party proceeding relating thereto to the extent hereafter
provided) (collectively, "Losses") incurred in connection with, arising out of,
or resulting from (a) the breach or inaccuracy of any representations or
warranties made by CEX in Sections 3.2.1, 3.2.2, 3.2.3, 3.2.4, 3.2.6, 3.2.7,
3.2.8, 3.2.9 and 3.2.22, (b) any failure by CEX or its Continuing Affiliates to
comply, in whole or in part, with the covenants or agreements made by CEX in
this Agreement, (c) any obligations under the Tax Sharing and Indemnification
Agreement to the extent provided therein, (d) any current, former or future
businesses, assets, liabilities, operations, other activities or employees
(whether current or former) of CEX or any of its Continuing Affiliates
(including, without limitation, the Trucking Subsidiaries), whether arising
prior to, at or after the Closing or to any of the discontinued operations of
CEX or any of its Continuing Affiliates (including the Trucking Subsidiaries),
other than Losses related to the Trucking Claims and (e) except as provided in
Section 4.3.4, any guaranty or other obligation of, or any pledge, security
interest, mortgage or other lien on the property, assets or capital stock of,
the Company or any of its Subsidiaries securing or guaranteeing any indebtedness
or other obligation of CEX or any Continuing Affiliate under any loan agreement
or credit facility, including, without limitation, all such guaranties,
obligations, pledges, security interests, mortgages and other liens in respect
of that Credit Agreement, dated as of April 17, 1998, among CEI, CEX, various
banks, The First National Bank of Chicago, as Syndication Agent, The Bank
37
of New York, as Co-Documentation Agent, DLJ Capital Funding, Inc., as
Co-Documentation Agent and Bankers Trust Company as Administrative Agent. The
parties hereby acknowledge and agree that CEX shall have no obligation to
indemnify Buyer or the Buyer Indemnified Parties for (i) the Trucking Claims, or
(ii) any of the following lawsuits involving the Company in which CEI is or was
a named party: Ashabranner, Brimo, Van Epps, Addvensky, and General Messenger;
and (iii) the Chicago area audit that is currently being conducted by the
Internal Revenue Service. Without limiting the foregoing and unless otherwise
agreed by the parties, in the event any Buyer Indemnified Party is a named
defendant in any proceeding that is the subject of the indemnification
obligations of this Section 9.2, CEX shall use its reasonable best efforts to
have such Buyer Indemnified Party promptly removed as a party to such
litigation.
SECTION 9.3 INDEMNIFICATION BY BUYER AND THE COMPANY. Subject to the
remaining provisions of Article IX and this Agreement, Buyer and the Company
shall jointly and severally indemnify and hold harmless CEX, any Continuing
Affiliate and each of their respective directors, officers, employees and
agents, and each of the heirs, executors, successors and assigns of any of the
foregoing (collectively, the "CEX Indemnified Parties") from and against any and
all Losses incurred in connection with, arising out of, resulting from (a)
current, former or future businesses, assets, liabilities, operations, other
activities or employees (whether current or former) of the Company or any of its
Subsidiaries, whether arising prior to, at or after the Closing, including any
of the foregoing relating to any Liability reflected on the Financial Statements
(or the notes thereto) or to any of the discontinued operations of the Company
or any of its current or former Subsidiaries, (b) from and against any Losses to
the extent arising from the breach or inaccuracy of any representations or
warranties in Sections 3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.6, 3.1.7, 3.1.8, 3.1.10
and 3.1.14 or any failure to comply, in whole or in part, with the covenants or
agreements made by Buyer in this Agreement, (c) from and against any Losses
arising out of or resulting from any financing activities undertaken by Buyer or
any of its Affiliates in connection with the transactions contemplated hereby,
and (d) from and against any Losses incurred by any CEX Indemnified Party in
connection with any of the Plan Obligations. The parties hereby agree that the
obligation of Buyer and the Company under this Section 9.3 shall include any
claim for Losses asserted against the CEX Indemnified Parties, as an acquiror,
owner or operator, either derivatively or directly, by way of CEX, its
Affiliates', and their respective Representatives' previous ownership or
acquisition of or control over the Company or any of its Subsidiaries, or their
participation in the operations, acquisitions or activities of the Company or
any of its Subsidiaries. Without limiting the foregoing and unless otherwise
agreed by the parties, in the event any CEX Indemnified Party is a named
defendant in any proceeding that is the subject of the indemnification
obligations of this Section 9.3, Buyer and the Company shall use their
reasonable best efforts to have such CEX Indemnified Party promptly removed as a
party to such litigation.
SECTION 9.4 PROCEDURE FOR THIRD PARTY CLAIMS.
Section 9.4.1 In order for a Person (the "indemnified party") to be
entitled to any indemnification pursuant to this Article IX in respect of,
arising out of or involving a claim or demand made by any Person against the
indemnified party (a "Third Party Claim"), such indemnified party must notify
the indemnifying party in writing of (and in reasonable detail regarding) the
Third Party Claim promptly, and in any event within 10 business days, after
38
receipt by such indemnified party of notice of the Third Party Claim; provided,
however, that failure to give such notification shall not affect the
indemnification otherwise provided under this Agreement except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure (except that the indemnifying party shall not be liable for any expenses
incurred prior to the day on which the indemnified party gives such notice) and
except, in the case of a breach of the Transaction Representations, to the
extent the notice is not delivered timely pursuant to Section 9.1. Thereafter,
the indemnified party shall deliver to the indemnifying party promptly, and in
any event within five (5) business days, after the indemnified party's receipt
thereof, copies of all notices and documents (including court papers) received
by the indemnified party relating to the Third Party Claim.
Section 9.4.2 If a Third Party Claim is made against an indemnified
party, the indemnifying party shall be entitled to participate in the defense
thereof and, if it so chooses, to assume and control the defense thereof with
counsel selected by the indemnifying party. Other than as provided in Section
9.2, (a) if the indemnifying party elects to assume the defense of a Third Party
Claim, the indemnifying party shall not be liable to the indemnified party for
legal expenses subsequently incurred by the indemnified party in connection with
the defense thereof, and (b) if the indemnifying party assumes such defense, the
indemnified party shall have the right to participate in the defense thereof and
to employ at its own expense counsel not reasonably objected to by the
indemnifying party separate from the counsel employed by the indemnifying party,
it being understood that the indemnifying party shall control such defense and
shall be empowered to make any settlement with respect to such Third Party
Claim, subject to the remaining terms of this Section 9.4.2. The indemnifying
party shall be liable for the reasonable fees and expenses of counsel employed
by the indemnified party for any period during which the indemnifying party has
not assumed the defense thereof (other than the period prior to the day on which
the indemnified party gives notice of the Third Party Claim as provided above).
If the indemnifying party chooses to defend or prosecute any Third Party Claim,
all the parties hereto shall cooperate and shall cause their Affiliates to
cooperate in the defense or prosecution thereof. Such cooperation shall include
the retention and (upon the indemnifying party's request) the provision to the
indemnifying party of records and information that are reasonably relevant to
such Third Party Claim, and making employees available on any basis reasonably
requested by the indemnifying party to provide additional information and
explanation of any material provided hereunder or otherwise relating to the
Third Party Claim. Whether or not the indemnifying party assumes the defense of
a Third Party Claim, the indemnified party shall not admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the indemnifying party's prior written consent. If the indemnifying party
assumes the defense of a Third Party Claim, the indemnified party shall agree to
any settlement, compromise or discharge of such Third Party Claim that the
indemnifying party may recommend if such settlement, compromise or discharge
would only result in the entry of a monetary judgment for which the indemnified
party is fully indemnified hereunder.
Section 9.4.3 In the event any indemnified party should have an
indemnification claim against any indemnifying party under this Agreement that
does not involve a Third Party Claim being asserted against or sought to be
collected from such indemnified party, the indemnified party shall deliver
notice of such claim specifying with particularity the facts underlying such
39
claim with reasonable promptness to the indemnifying party. The failure by any
indemnified party so to notify the indemnifying party shall not relieve the
indemnifying party from liability that it may have to such indemnified party,
except to the extent that the indemnifying party has been actually prejudiced by
such failure and except, in the case of a breach of the Transaction
Representations, to the extent the notice is not delivered timely pursuant to
Section 9.1. If the indemnifying party disputes its liability with respect to
such claim, the indemnifying party and the indemnified party shall proceed in
good faith to negotiate a resolution of such dispute and, if not resolved
through negotiations, such dispute shall be resolved by litigation in an
appropriate court of competent jurisdiction.
Section 9.4.4 Notwithstanding anything to the contrary in the
foregoing, CEX, at its own expense except as otherwise provided above, shall be
entitled to participate in the defense of any litigation matters in which CEX
and/or CEI is named as a party and shall be consulted on any settlement
discussions with respect thereto.
SECTION 9.5 GENERAL PROVISIONS RELATING TO REMEDIES AND
INDEMNIFICATION.
Section 9.5.1 An indemnifying party shall have no obligation to
indemnify an indemnified party or otherwise have liability to an indemnified
party for consequential damages, special damages, punitive damages, incidental
damages, indirect damages, lost profits or similar items (and the indemnified
party shall not recover for such amounts).
Section 9.5.2 Buyer's Losses shall be reduced by any available
federal and state income tax deductions or other benefits which are available to
Buyer or any of its Affiliates in connection with the Losses, after giving
effect to any tax detriment to Buyer arising from the receipt of the
indemnification payment with respect to such Losses. If any Loss is covered by
insurance or subject to other third party recoveries (collectively, "Third Party
Rights"), Buyer shall use its best efforts (and Buyer shall cause the Company
and its Subsidiaries to use their respective best efforts) to recover the amount
of coverage or claim from the insurer or such third party, which recovery (after
deduction of costs of collection) shall reduce Losses hereunder. Buyer agrees to
assign (and to cause the Company and its Subsidiaries to assign) all Third Party
Rights to CEX and to appoint CEX as its limited agent and attorney-in-fact for
seeking such recovery to the extent Buyer fails to recover, does not timely
proceed with recovery actions, or obtains excess recovery with respect thereto,
and to cooperate with CEX in the collection thereof. Buyer shall cause the
Company to maintain in effect, for so long as the indemnification obligations of
CEX are effective hereunder, insurance policies of the Company insuring against
risks and liabilities to substantially the same extent and in substantially the
same amount as the insurance policies of the Company which are in effect as of
the date of this Agreement.
Section 9.5.3 CEX's Losses shall be reduced by any available federal
and state income tax deductions or other benefits which are available to CEX or
any of its Continuing Affiliates in connection with the Losses, after giving
effect to any tax detriment to CEX or its Continuing Affiliates arising from the
receipt of the indemnification payment with respect to such Losses. If any Loss
is covered by insurance or subject to other third party recoveries, CEX shall
use its best efforts(and CEX shall cause its Continuing Affiliates to use their
respective best efforts) to recover the amount of coverage or claim from the
insurer or such third party, which recovery
40
(after deduction of costs of collection) shall reduce Losses hereunder. CEX
agrees to assign (and to cause its Continuing Affiliates to assign) all Third
Party Rights to Buyer and to appoint Buyer as its limited agent and
attorney-in-fact for seeking such recovery to the extent CEX fails to recover,
does not timely proceed with recovery actions, or obtains excess recovery with
respect thereto, and to cooperate with Buyer in the collection thereof. CEX
shall, or shall cause its Continuing Affiliates to, maintain in effect, for so
long as the indemnification obligations of Buyer are effective hereunder,
insurance policies insuring against risks and liabilities to substantially the
same extent and in substantially the same amount as the insurance policies of
the Company which are in effect as of the date of this Agreement.
Section 9.5.4 To the extent that CEX or Buyer discharges any claim
for indemnification hereunder, it shall be subrogated to all related rights of
the other party against third parties except as otherwise provided herein.
Section 9.5.5 No party shall have any right to offset against any
payments to be made by it pursuant to this Agreement or otherwise; provided,
however, that so long as the Promissory Notes remain outstanding any amounts
owed by CEX to the Buyer Indemnified Parties under this Article IX may, at CEX's
option, be applied first to reduce the principal balance of the Promissory
Notes, in the following order: (i) Long-Term Note, (ii) Convertible Note, and
(iii) Short-Term Note.
SECTION 9.6 EXCLUSIVE NATURE. The indemnification provisions of
Article IX shall be the sole and exclusive remedy by any party and its
respective Representatives against the other party following the Closing for any
breaches or alleged breaches of any representation, warranty or other provision
of this Agreement or otherwise with respect to the former, current or future
business and operations of the Company and its Subsidiaries, any and all claims
relating to this Agreement and the transactions contemplated hereby, except for
any right that may exist to seek redress for common law fraud. Such remedies are
intended to be noncumulative with respect to, and shall preclude the assertion
by any party of, any other remedies which would otherwise have been available in
common law or by statute, except for any right that may exist to seek redress
for common law fraud. Nothing in this Section 9.6 shall be construed to limit in
any way the rights and benefits of or the remedies available to any party to
this Agreement under any other instrument or agreement to which such Person is a
party.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 COMPANY NAME. Each of Buyer and the Company
acknowledges that, from and after the Closing Date, CEX and the Continuing
Affiliates shall have the absolute and exclusive proprietary right to all names,
marks, trade names, trademarks and identifications using either or both
"Corporate Express Delivery Systems" and all variations and derivatives thereof
and logos relating thereto or any similar name or variant, version or derivative
thereof (collectively, the "Names") by themselves or in combination with any
other Name, and that none of the rights thereto or goodwill represented thereby
or pertaining thereto are being transferred hereby or in connection herewith;
provided, however, that, the Company and its Subsidiaries are hereby granted a
non-exclusive license to use the Names for a period expiring one year from the
41
Closing Date; and provided further that Buyer and the Company will not be
required to remove the name Corporate Express Delivery Systems that is
permanently affixed to motor vehicles or buildings that are owned by the Company
or its Subsidiaries as of the date hereof for a 3 year period from the Closing
Date. Except as contemplated by the proviso in the foregoing sentence, (i) each
of Buyer and the Company agrees that from and after the Closing Date it will
not, nor will it permit any of its Affiliates to, use any name, phrase or logo
incorporating any of the Names as its corporate or business name or in or on any
of its literature, sales materials or products or otherwise in connection with
the sale of any products or services or otherwise, and (ii) each of Buyer and
the Company shall, and shall cause its Affiliates to, cease to use any such
literature and sales materials, delete or cover (as by stickering) any such
name, phrase or logo from any of its or its Subsidiaries' respective assets or
properties (whether tangible or intangible, real or personal), and take such
other actions as may be necessary or advisable to clearly and prominently
indicate that none of Buyer, the Company or any of their Affiliates is
affiliated with CEX or any of the Continuing Affiliates.
SECTION 10.2 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES;
RELATIONSHIP BETWEEN THE PARTIES.
Section 10.2.1 Exclusivity of Representations and Warranties.
Notwithstanding anything in this Agreement to the contrary, it is the explicit
intent and understanding of the parties hereto that none of the parties nor any
of their respective Representatives is making any representation or warranty
whatsoever, oral or written, express or implied, other than those set forth in
this Agreement and the Tax Sharing and Indemnification Agreement and that none
of the parties is relying on any statement, representation or warranty, oral or
written, express or implied, made by any other party or such other party's
Representatives except for the representations and warranties expressly set
forth in such Agreements. EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS
AGREEMENT, THE PARTIES EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY OR REPRESENTATION
AS TO TITLE, OWNERSHIP, USE, POSSESSION, QUANTITY, CONDITION, LIABILITIES,
OPERATION, DESIGN, CAPACITY, FUTURE RESULTS, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, SUITABILITY OR OTHERWISE AS TO ANY OF THE ASSETS OR
LIABILITIES OF THE COMPANY OR ANY OF ITS SUBSIDIARIES AND, EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD THAT BUYER TAKES THE
ASSETS AND LIABILITIES OF THE COMPANY AND ITS SUBSIDIARIES "AS IS" AND "WHERE
IS."
Section 10.2.2 Forecasts, Projections, Etc. Without limiting the
generality of, and in furtherance of, Section 10.2.1, Buyer acknowledges that
none of CEX or any of its Affiliates makes any representations or warranties to
Buyer regarding any forecasts, projections, estimates, business plans or budgets
(whether contained or referred to in any written materials or verbal information
that has been or shall hereafter be provided or made available to Buyer or any
of its Representatives) and there are not and shall not be deemed to be
representations or warranties of CEX or any of its Affiliates in respect of
future revenues, expenses or expenditures, future results of operations (or any
component thereof), future cash flows or future financial condition (or any
component thereof) of the Company or any of its Subsidiaries.
42
Section 10.2.3 Relationship Between the Parties. The parties hereto
agree that this is an arm's length transaction in which the parties'
undertakings and obligations are limited to the performance of their obligations
under this Agreement. Buyer acknowledges that it is a sophisticated investor,
that it has undertaken, and that CEX has given Buyer such opportunities as it
has requested to undertake, a full investigation of the business and operations
of the Company and its Subsidiaries (including their assets, liabilities,
contracts, permits, licenses, premises, properties, facilities, books and
records), and that it has a contractual relationship with CEX based solely on
the terms of this Agreement, and that there is no special relationship of trust
or reliance between Buyer and CEX. Buyer acknowledges that it and its
Representatives are satisfied with (i) the access to the books and records,
facilities, equipment, contracts and other properties and assets of the business
and operations of the Company and its Subsidiaries that it and its
Representatives have been provided and (ii) the opportunity to meet with the
officers and employees of CEX and its Subsidiaries to discuss the business and
operations of the Company and its Subsidiaries that it and its Representatives
have been provided. Buyer further acknowledges that, except as set forth in this
Agreement, none of CEX, its Affiliates, their respective Representatives or any
other Person has made any representation or warranty, expressed or implied, as
to the completeness of any information regarding the business and operations of
the Company and its Subsidiaries furnished or made available to Buyer and its
Representatives. Except as specifically set forth in the representations and
warranties set forth in Section 3.2 hereof, none of CEX, its Affiliates, their
respective Representatives or any other Person shall have or be subject to any
liability to Buyer or any other Person resulting from the distribution to Buyer
or any other Person, or Buyer's or any other Person's use, whether prior to, on
or after the date hereof, of, any such information, including the Confidential
Descriptive Memorandum prepared by the Company and BT Alex.Xxxxx, and any
information, documents or material made available in any "data rooms" or formal
or informal management presentations or in any other form in expectation of the
transactions contemplated hereby.
SECTION 10.3 TAX MATTERS. The parties' sole and exclusive
representations, warranties, covenants, agreements or other obligations
(including indemnities or any obligations) arising pursuant to this Agreement,
by Law or otherwise with respect to tax matters (interpreted it its broadest
sense) and any other subject matters referred to in the Tax Sharing and
Indemnification Agreement shall be as set forth therein. No other
representation, warranty, covenant, agreement or obligation (including
indemnities or any obligations) arising pursuant to this Agreement, by Law or
otherwise by CEX, any of its Continuing Affiliates, the Company, Buyer or any of
their respective Representatives shall be deemed to apply to such matters.
SECTION 10.4 ENTIRE AGREEMENT. This Agreement, the Ancillary
Agreements and the Confidentiality Agreement and the agreements expressly
provided for herein and therein constitute the entire agreement between the
parties and supersede any and all other prior or contemporaneous understandings,
negotiations or agreements between the parties relating to the transactions
contemplated hereby, and shall be binding upon and inure to the benefit of the
parties hereto and their respective legal representatives.
SECTION 10.5 AMENDMENTS. Any amendment, supplement, variation,
alteration or modification to this Agreement must be made in writing and duly
executed by an authorized representative or agent of each of the parties hereto.
43
SECTION 10.6 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any other jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction Each party hereby waives
the benefit of any Law which renders any provision hereof prohibited or
unenforceable in any respect.
SECTION 10.7 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall be deemed to constitute one and the same instrument.
SECTION 10.8 NO WAIVER. The failure in any one or more instances of
a party to insist upon performance of any of the terms, covenants or conditions
of this Agreement, to exercise any right or privilege in this Agreement
conferred, or to waive any breach of any of the terms, covenants or conditions
of this Agreement, shall not be construed as a subsequent waiver of any such
terms, covenants, conditions, rights or privileges, but the same shall continue
and remain in full force and effect as if no such forbearance or waiver had
occurred. No waiver shall be effective unless it is in writing and signed by an
authorized representative of the waiving party.
SECTION 10.9 ASSIGNMENT. This Agreement and all the rights and
obligations granted hereby shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, it being expressly agreed
that this Agreement shall not be assigned nor shall any rights or obligations
arising hereunder be transferred by one party without the prior written consent
of the other party.
SECTION 10.10 FEES, COSTS AND EXPENSES. Except as otherwise provided
herein, each party shall be responsible for its own fees, costs and expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby. Buyer shall pay all transfer taxes with respect to the sale
of the shares of the Company and the consummation of the transaction.
SECTION 10.11 THIRD PARTY BENEFICIARIES. Except for the Persons
entitled to indemnification pursuant to Section 4.3.6, Article VIII, or Article
IX or under the Tax Sharing and Indemnification Agreement (who shall be third
party beneficiaries), nothing in this Agreement is intended to create, nor shall
anything in the Agreement be deemed to create or have created, any third party
beneficiary rights; provided, however, that, without the prior written consent
of CEX, Buyer may upon 5 days written notice to CEX, assign its rights (but not
its obligations) hereunder to any financial institution that is providing
financing to Buyer or any of its Affiliates in connection with the transactions
contemplated hereby.
SECTION 10.12 INTERPRETATION OF SCHEDULES. It is understood and
agreed that neither the specification of any dollar amount in the
representations and warranties contained in this Agreement nor the inclusion of
any specific item in the Company Disclosure Schedule is intended to imply that
such amounts or any higher or lower amount, or the items so included or other
items, are or are not material or otherwise required to be disclosed, and
neither party shall use the fact of the setting of such amounts or the fact of
the inclusion of any such item in the
44
Company Disclosure Schedule in any dispute or controversy between the parties as
to whether any obligation, item or matter is or is not material. CEX has
included items in the Company Disclosure Schedule hereto only in order to
provide certain information regarding the Company and its Subsidiaries to Buyer
and inclusion of any item in any Company Disclosure Schedule should not be
deemed an admission as to the existence of any liability or obligation, the
validity or accuracy of any claim or as to the absence of any defense or
counterclaim with respect thereto. The exceptions, modifications, descriptions
and disclosures in the Company Disclosure Schedule attached hereto are made for
all relevant purposes of this Agreement and are exceptions to the
representations and warranties set forth in this Agreement or in any agreement
or instrument delivered pursuant to or in connection with this Agreement,
whether or not explicit reference is made to the Company Disclosure Schedule to
the extent applicable thereto. Disclosure of the information contained in one
section or part of the Company Disclosure Schedule shall be deemed as proper
disclosure for all sections or parts of such Schedule. Matters reflected on the
Company Disclosure Schedule delivered hereunder are not necessarily limited to
matters required by this Agreement to be reflected in such Company Disclosure
Schedule. Any such additional matters are set forth for informational purposes
and do not necessarily include other matters of a similar nature.
SECTION 10.13 CONSTRUCTION. Words importing the singular shall
include the plural and vice versa, and words importing a gender shall include
other genders. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine or neuter form. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." The headings contained in this Agreement are inserted for
convenience only and shall not constitute a part hereof or affect any
interpretation hereof. All references herein to Articles, Sections (other than
references to Sections of the Code or any other statute) and subsections shall
be deemed to be references to Articles, Sections and subsections of this
Agreement unless the context shall otherwise require. References in this
Agreement to any Article shall include all Sections, subsections, paragraphs in
such Article; references in this Agreement to any Section shall include all
subsections and paragraphs in such Section; and references in this Agreement to
any subsection shall include all paragraphs in such subsection. The exhibits and
attachments to the Schedules form an integral part of the Schedules and are
incorporated by reference for all purposes as if set forth fully therein. Unless
the context shall otherwise require or provide, any reference to any agreement
or other instrument or statute, regulation or other Law is to such agreement,
instrument, statute, regulation or other Law as amended and supplemented from
time to time (and, in the case of a statute, regulation or other Law, to any
successor provision); provided, however, that no representation or warranty
herein shall be deemed to have been breached because of the adoption of any new
statute, regulation or other Law, any amendment of or change in any statute,
regulation or other Law or any change in interpretation of any statute,
regulation or other Law, in any event, issued or otherwise occurring subsequent
to the date hereof. This Agreement shall be construed in accordance with its
fair meaning and shall not be construed strictly against either party, without
regard to which party drafted this Agreement.
SECTION 10.14 CONSENT TO JURISDICTION AND RELATED MATTERS.
45
(a) Jurisdiction. Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the jurisdiction of any
Colorado State court or Federal court sitting in the State of Colorado and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby or for
recognition or enforcement of any judgment relating thereto, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
Colorado State court or, to the extent permitted by law, in such Federal court.
Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment of in any other manner provided by law.
(b) Venue. Each of the parties hereto hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby in any Colorado State or Federal court.
Each of the parties hereto hereby irrevocably and unconditionally waives, to the
fullest extent permitted by law, the defense of any inconvenient forum to the
maintenance of such action or proceeding in any such court.
SECTION 10.15 WAIVER OF JURY TRIAL.
(a) EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(b) EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (1) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE WAIVERS SET FORTH IN CLAUSE (A) OF THIS SECTION 10.15, (2) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (3) IT MAKES
SUCH WAIVERS VOLUNTARILY, AND (4) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN SUCH
SECTION.
SECTION 10.16 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered, five (5) business days after mailing when mailed by
certified mail, return receipt requested, or one (1) business day after sending
via Federal Express or similar overnight courier service, or when receipt is
confirmed when sent by facsimile. Such notices or other communications shall be
sent to the following addresses, unless other addresses are subsequently
specified in writing:
46
Buyer (and the Company after the Closing):
United Shipping & Technology, Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Faegre & Xxxxxx LLP
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
CEX (and the Company prior to the Closing):
c/o Corporate Express, Inc.
0 Xxxxxxxxxxxxx Xxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Xxxxx, Xxxxxx & Xxxxxx LLP
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
47
SECTION 10.17 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONTROLLED AS TO ITS VALIDITY, ENFORCEMENT, INTERPRETATION, CONSTRUCTION, EFFECT
AND IN ALL OTHER RESPECTS BY THE LAWS OF THE STATE OF COLORADO (WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THEREOF) APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THAT STATE.
(SIGNATURES FOLLOW ON NEXT PAGE)
* * * *
48
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
CEX HOLDINGS, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
CORPORATE EXPRESS
DELIVERY SYSTEMS, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
UNITED SHIPPING & TECHNOLOGY, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
UNITED SHIPPING & TECHNOLOGY
ACQUISITION CORP.
By:_____________________________________
Name:___________________________________
Title:__________________________________
49
ANNEX A-1
Xxxx Xxxxxx
Xxxx Xxxxxxx
Xxxx Xxxxxxx
Xxx Xxxx
Xxxx Xxxxxx
X-0
XXXXX X-0
Xxx Xxxxxx
Xxxx Xxxxxx
Xxxxx Xxxxxxx
Xxxxx Xxxxx
A-2
