EXHIBIT 2.3
AGREEMENT AND PLAN OF MERGER
of
JAGUAR FAST FREIGHT, INC.
(an Arizona corporation)
with and into
CENTRAL FREIGHT LINES, INC.
(a Texas corporation)
DATED AS OF
JUNE 11, 1999
This Agreement and Plan of Merger (the "Agreement"), is made as of this
11th day of June, 1999, between Jaguar Fast Freight, Inc., an Arizona
corporation ("Jaguar"), and Central Freight Lines, Inc., a Texas corporation
("Central"), and the stockholders of Jaguar listed on the signature page hereto
(the "Selling Stockholders"), all of whom together, with the exception of Xxxxx
Xxxxx, are sometimes referred to as the "Employees." Jaguar and Central are
hereinafter referred to collectively as the "Constituent Corporations."
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree that Jaguar shall be merged with and
into Central (the "Merger") and that the terms and conditions of the Merger, the
means of carrying the Merger into effect, the manner and basis of converting the
shares of Jaguar into shares of Central, and certain other provisions relating
thereto shall be as hereinafter set forth.
ARTICLE I
BASIC TRANSACTION
1.01 Surviving Corporation. Subject to the terms and provisions of
this Agreement and in accordance with the Arizona Business Corporation Act and
the Texas Business Corporation Act, at the Effective Time of the Merger (as
defined in Section 1.03 hereof) Jaguar shall be merged with and into Central,
and Central shall be the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") and shall continue its corporate existence under the
laws of the State of Texas. At the Effective Time of the Merger, the separate
existence of Jaguar shall cease. The Surviving Corporation shall succeed to all
the properties, rights, and other assets and shall be subject to all the
liabilities of the Constituent Corporations, without further action by either
corporation.
1.02 Closing. Each party hereto shall use its best efforts to cause
this Agreement to be closed in the Waco, Texas offices of Central, at 8:00 a.m.,
Central Standard Time, within forty-five (45) days following the execution of
this Agreement, or at such other time and place as the parties may agree, and
such shall be the "Closing."
1.03 Effective Time of the Merger. The Merger shall become
effective, and the term "Effective Time of the Merger" as used herein shall
mean, (a) for purposes of the Texas Business Corporation Act, the time of
issuance of the certificate of merger respecting the Merger by the Secretary of
State of the State of Texas, and (b) for purposes of the Arizona Business
Corporation Act, the time at which the Surviving Corporation delivers Articles
of Merger respecting the Merger to the Secretary of State of the State of
Arizona for filing, in such form as is required by the Arizona Business
Corporation Act. The date on which the Effective Time shall occur shall be the
"Effective Date of the Merger."
ARTICLE II
TERMS AND CONDITIONS OF MERGER
2.01 Articles of Incorporation. The Articles of Incorporation of
Central, as in effect immediately prior to the Effective Time of the Merger (see
Exhibit 1), shall continue in full force and effect as the Articles of
Incorporation of the Surviving Corporation, until thereafter duly amended in
accordance with applicable law.
2.02 Bylaws. The Bylaws of Central, as in effect immediately prior
to the Effective Time of the Merger, shall be in full force and effect as the
Bylaws of the Surviving Corporation until thereafter duly altered, amended or
repealed in accordance with the terms thereof.
2.03 Directors and Officers of Surviving Corporation. The persons
who are directors and officers of Central immediately prior to the Effective
Time of the Merger shall be the directors and officers of the Surviving
Corporation after the Effective Time of the Merger, retaining their respective
positions and terms in office until their respective successors have been duly
elected and qualified.
2.04 Additional Actions. If, at any time after the Effective Time
of the Merger, the Surviving Corporation shall consider or be advised that any
further assignments or assurances in law or any other acts are necessary or
desirable (a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation, title to and possession of any property or right of the
Constituent Corporations to be acquired by reason of, or as a result of, the
Merger, or (b) otherwise to carry out the purposes of this Agreement, the
Constituent Corporations and their proper officers and directors shall be deemed
to have granted hereby to the Surviving Corporation an irrevocable power of
attorney to execute and deliver all such proper deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such property or rights in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement; and the
proper officers and directors of the Surviving Corporation are fully authorized
by the Constituent Corporations to take any and all such action.
ARTICLE III
MANNER AND BASIS OF CONVERTING SHARES
3.01 Manner and Basis of Converting Shares. The manner and basis of
converting the shares of Jaguar into shares, obligations, or other securities is
as follows:
(a) At the Effective Time of the Merger, the aggregate
shares of common stock of Jaguar ("Jaguar Common Stock") issued and
outstanding immediately prior to the Effective Time of the Merger
shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted automatically into 211,611 fully paid
and nonassessable shares of Centrals' common stock ("Central's Common
Stock"), such shares to be distributed ratably to Jaguar's shareholders
in accordance with their interests, rounded to the nearest whole share.
(b) Each share of Jaguar Common Stock held in the
treasury of Jaguar immediately prior to the Effective Time of the
Merger, shall, by virtue of the Merger and without any further action,
be canceled and retired and cease to exist and shall not be converted
into Central's Common Stock or the right to receive cash.
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(c) After the Effective Time of the Merger, no transfer
of the shares of Jaguar Common Stock outstanding immediately prior to
the Effective Time of the Merger shall be made on the stock transfer
books of Jaguar, and all certificates for such shares shall forthwith
be canceled. Upon surrender of certificates representing such shares of
Jaguar Common Stock to Central, Central shall issue to the holder
thereof a certificate representing such holder's shares of Central's
Common Stock (the "New Stock"). The New Stock shall be deemed to have
been issued on the Effective Date of the Merger.
ARTICLE IV
RESTRICTED STOCK AND RESTRICTIVE LEGEND
4.01 Restricted Stock. The Selling Stockholders acknowledge that
the shares of New Stock they are to receive under the Agreement will be issued
in a transaction not involving any public offering; therefore, their shares will
be "restricted securities" and not freely transferrable, absent an effective
registration statement filed by Central or an available exemption. The Selling
Stockholders represent that they are acquiring the shares of New Stock for
investment purposes and not with a view toward sale or distribution. Absent the
filing of a registration statement covering the shares of New Stock issued
pursuant to this Agreement (which Central is not required to do), the Selling
Stockholders will be able to resell their shares of New Stock only pursuant to
an exemption, if and when one becomes available. Presently, such exemption would
be afforded by Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act") which would impose, among other things, a one-year holding
period, volume and manner of sale restrictions, and certain other requirements.
4.02 Restrictive Legend. The certificates representing the New
Stock shall bear the following legend:
The securities represented by this certificate have not been
registered under the securities act of 1933 (the "Act") or the
securities act of any state. The securities have been acquired
for investment and may not be sold, transferred for value,
pledged, hypothecated, or otherwise encumbered in the absence
of either (1) an effective registration of them under the act
and all applicable state securities laws, or (2) an opinion of
counsel acceptable to the issuer that such registration is not
required under such act or acts.
4.03 Adequate Information. The Selling Stockholders acknowledge
that they have received such information concerning Central as they deemed
necessary; that they were afforded the opportunity to meet with the management
of Central and ask and receive answers to any questions they had; that they were
represented by such financial, legal, and other advisors as they deemed
necessary. In particular, the Selling Stockholders acknowledge that: (i)
although Central has planned a public offering there is no assurance that the
offering will occur or that if it occurs what the price will be; (ii) in the
event the public offering does occur, the vehicle for such public offering will
have two classes of common stock, Class A (into which Central's Common Stock,
other than Central's Common Stock owned by Xxxxx and Xxxxxx Xxxxx or their
families, shall be converted) and Class B (into which Central's Common Stock
beneficially owned by
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Xxxxx and Xxxxxx Xxxxx or their families shall be converted and which will have
three votes per share, giving the Moyes brothers disproportionate control);
(iii) the New Stock has one vote per share; and (iv) Central has elected S
Corporation status and it is a condition to Closing that the Selling Stockholder
join in such election.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 General Statement. The parties hereto represent and warrant to
each other that the statements contained in this Article V are correct and
complete as of the date hereof and shall be correct and complete as of the date
of Closing. The survival of all such representations and warranties shall be in
accordance with Section 9.09 hereof. Copies of all documents referenced in the
Schedules shall be attached thereto or delivered separately.
5.02 Representations and Warranties of Central. Central represents
and warrants to the Selling Stockholders, that:
(a) Corporate Status. Central is a corporation, duly
organized, validly existing, and in good standing under the laws of the
state of its incorporation, with all requisite power and authority to
carry on its business.
(b) Authority. Central has full right, power, and
authority to execute and deliver this Agreement and to consummate and
perform the transactions contemplated hereby. The execution and
delivery of this Agreement and every other contract contemplated
hereunder by Central and the consummation and performance of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate and other proceedings. This
Agreement has been duly executed and delivered by Central and
constitutes the legal, valid, and binding obligation of Central,
enforceable in accordance with its terms.
(c) Validity of Contemplated Transaction. The execution
and delivery of this Agreement by Central does not, and the performance
of this Agreement by Central will not (i) violate or conflict with any
existing law or any judgment which is applicable to Central or (ii)
conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any person the right to
accelerate, terminate, modify, or cancel, or require any notice under
the articles of incorporation or other charter documents, bylaws, or
any securities of Central or any contract to which Central is a party
or by which it is otherwise bound. Except for the filing of the
Articles of Merger in Texas and Arizona and Form 2553 with the IRS by
the Selling Stockholders and Central, no authorization, approval, or
consent of, and no registration, filing, or notice to any authority or
any other party to any contract is required in connection with the
execution, delivery, and performance of this Agreement by Central.
(d) Brokers or Finders. Neither Central nor its agents
has incurred any obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar
payment in connection with this Agreement.
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5.03 Representations and Warranties of the Selling Stockholders.
The Selling Stockholders, jointly and severally, represent and warrant to
Central that:
(a) Corporate Status. Jaguar is a corporation, duly
organized, validly existing, and in good standing under the laws of the
State of Arizona, with all requisite power, authority, and Permits to
carry on its business as it has been and is now being conducted and to
own, lease, and operate its properties used in connection therewith.
(b) Capitalization. The entire authorized capital stock
of Jaguar consists of 100,000 shares of common stock, of which 17,050
shares are issued and outstanding and owned by the Selling
Stockholders. The Selling Stockholders are the record and beneficial
owners of the Jaguar Common Stock, free and clear of all liens. All of
such shares have been duly authorized and validly issued, are fully
paid and non-assessable, and are free of all adverse claims. There are
no outstanding or authorized (i) options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require Jaguar (or any successor,
parent, or acquiror of Jaguar) to issue, sell, or otherwise cause to
become outstanding any capital stock or other securities or
obligations; (ii) stock appreciation, phantom stock, profit
participation, or similar rights; or (iii) voting trusts, proxies,
rights of first refusal, registration rights, transfer restrictions, or
other contracts relating to the capital stock or other securities or
obligations of Jaguar.
(c) Authority. Jaguar and the Selling Stockholders, as
appropriate, have full right, power, and authority to execute and
deliver this Agreement and every other contract contemplated hereunder
and to consummate and perform the transactions contemplated hereby. The
execution and delivery of this Agreement and every other contract
contemplated hereunder by Jaguar and the Selling Stockholders, and the
consummation and performance of the transactions contemplated hereby
and thereby, have been duly and validly authorized by all necessary
corporate and other proceedings. This Agreement has been duly executed
and delivered by Jaguar and the Selling Stockholders and constitutes
the legal, valid, and binding obligation of each, enforceable against
each, in accordance with its terms.
(d) Validity of Contemplated Transactions. The execution
and delivery of this Agreement and every other contract contemplated
hereby by Jaguar and the Selling Stockholders does not, and the
performance of this Agreement and every other contract contemplated
hereby by Jaguar, and the Selling Stockholders will not, (i) violate or
conflict with any existing law or any judgment which is applicable to
Jaguar, or the Selling Stockholders; (ii) conflict with, result in a
breach of, constitute a default under, result in acceleration of,
create in any person the right to accelerate, terminate, modify, or
cancel, or require any notice under, the articles of incorporation or
other charter documents, bylaws, or any securities of Jaguar or any
contract to which Jaguar or any of the Selling Stockholders is a party
or by which any is otherwise bound. Except for the filing of the
Articles of Merger in Texas and Arizona, and IRS Form 2553 with the IRS
by the Selling Stockholders and Central, no authorization, approval, or
consent of, and no registration, filing, or notice to, any governmental
authority or other party to any contract
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is required in connection with the execution, delivery, and performance
of this Agreement by Jaguar or the Selling Stockholders.
(e) Financial Statements. Jaguar has delivered to Central
the annual financial statements (including balance sheets and
statements of income, cash flows, and retained earnings) of Jaguar at
and for the periods ended December 31, 1996, 1997, and 1998, as well as
its internal financial statements for the period ended March 31, 1999
(collectively, the "Historical Financial Statements"). The Historical
Financial Statements and all notes thereto are true, correct, and
complete, have been prepared in accordance with GAAP, consistently
applied, present fairly the financial condition and results of
operations, changes in stockholder's equity and cash flows of Jaguar at
and for all periods reflected therein, and are consistent with the
books and records of Jaguar, which books and records are correct and
complete. Copies of the Historical Financial Statements are attached as
Schedule 5.03(e).
(f) Absence of Undisclosed Liabilities. Jaguar has no
liabilities or obligations, accrued or unaccrued, contingent or
absolute, liquidated or unliquidated, and whether due or to become due,
except for (i) liabilities that are reflected and adequately accrued on
the face of its December 31, 1998, balance sheet included in the
Historical Financial Statements, (ii) liabilities arising in the
ordinary course of business since such date (none of which arises from
or relates to any breach of contract or warranty, tort, infringement,
or violation of law, or would have to be disclosed on any Schedule to
this Agreement).
(g) Absence of Changes or Events. Except as disclosed on
5.03(g), since December 31, 1998, there has not been any adverse change
in the business, operations, results of operations, or future prospects
of Jaguar. Without limiting the generality of the foregoing, since that
date, except as disclosed on 5.03(g), Jaguar has not:
(i) declared, set aside, or paid any dividend or
made any other distribution or payment in respect of its
capital stock; redeemed, purchased, or otherwise acquired any
of its capital stock; issued any capital stock or other
securities; granted any stock option or right to purchase
shares of capital stock or any other securities of Jaguar;
issued any security convertible into capital stock; or granted
any registration rights concerning its securities;
(ii) discharged or satisfied any lien or paid any
material liabilities, other than in the ordinary course of
business consistent with past practice, or failed to pay or
discharge any liabilities when due;
(iii) sold, assigned, or transferred or agreed to
sell, assign, or transfer any of its assets or any interest
therein;
(iv) created, incurred, assumed, or guaranteed
any indebtedness for money borrowed or any other indebtedness
or obligation of any nature (absolute or contingent), or
mortgaged, pledged, or subjected to any lien, any of its
assets;
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(v) acquired any substantial assets, properties,
securities, or interests of another person;
(vi) reduced or canceled any amounts owed to it;
(vii) settled any claims against it;
(viii) granted or entered into any agreement or
policy with any employee that grants severance or termination
pay, increases compensation, increases benefits under any
current benefit plan, or creates any continuing employment
relationship;
(ix) experienced any labor unrest or union
organizing activity;
(x) suffered any adverse change in its business;
(xi) changed any of the accounting principles
which it follows or the methods of applying such principles;
(xii) amended, terminated, or entered into any
contract other than in the ordinary course of business,
consistent with past practice;
(xiii) suffered to its assets any damage,
destruction, or loss, whether or not covered by insurance;
(xiv) amended its articles of incorporation or
bylaws or made any changes in its authorized or issued capital
stock or other securities;
(xv) directly or indirectly engaged in any
transaction, arrangement, or contract with any officer,
director, partner, shareholder, or other insider or affiliate;
(xvi) entered into any transactions outside the
ordinary course of business; or
(xvii) agreed, whether orally or in writing, to do
any of the foregoing.
(h) Title and Condition of Assets. All of Jaguar's owned
and leased assets are in good repair and condition and adequate for the
ordinary course of operation of Jaguar's business as presently
conducted, and all leased assets are in compliance with any applicable
lease provisions. Except as set forth on Schedule 5.03(h), Jaguar
possesses good and marketable title to all of its owned assets and a
valid leasehold interest in all leased assets, free and clear of all
liens, except liens for current taxes not yet due and payable.
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(i) Tax Matters. With respect to taxes:
(i) Jaguar has filed, within the time and in the
manner prescribed by law, all returns, declarations, reports,
estimates, information returns, and statements (the "Returns")
required to be filed under applicable laws, and all such
Returns are true, correct, and complete. Jaguar has, within
the time and in the manner prescribed by law, paid all taxes
that are due and payable by it. Jaguar has established on the
most recent balance sheet included in the Historical Financial
Statements reserves, charges, and accruals that are adequate
for the payment of all taxes not yet due and payable that are
attributable to periods ending on such date, and Jaguar has
continued to make all such accruals through the Closing. There
are no liens for taxes upon the assets of Jaguar except for
liens for taxes not yet due and payable.
(ii) None of the Returns of Jaguar are presently
under audit by any authority nor has a deficiency for any
taxes been proposed, asserted, or assessed against Jaguar.
There are no outstanding waivers or comparable consents
regarding the application of the statute of limitations with
respect to any tax or Return that have been given by or on
behalf of Jaguar.
(iii) Jaguar and, if applicable, its agents and
contracted service providers, have complied in all respects
with all applicable laws relating to the payment and
withholding of taxes and have, within the time and in the
manner prescribed by applicable law, withheld, collected, and
paid over to the proper governmental authorities all amounts
required to be so withheld, collected, and paid over under all
applicable laws.
(j) Litigation. Except as set forth in Schedule 5.03(j),
there is no claim, action, suit, or proceeding pending or threatened
against Jaguar. Neither Jaguar, nor any of the Selling Stockholders has
reason to believe that any such claim, action, suit, or proceeding may
be brought or threatened against Jaguar or the Selling Stockholders.
(k) Material Contracts. Schedule 5.03(k) contains a list
of all material contracts to which Jaguar is a party. Each contract
disclosed in any Schedule or required to be disclosed pursuant to
Schedule 5.03(k) is a valid and binding agreement of the parties
thereto, is in full force and effect, no party thereto is in default
thereunder, and there exists no condition that with notice or lapse of
time or both would constitute a default thereunder.
(l) Employee Benefit Plans and Arrangements. Schedule
5.03(l) identifies each of Jaguar's employee benefit plans, contracts,
and arrangements (singularly, "Benefit Plan"; collectively, "Benefit
Plans"), copies of which, amended to date, have been furnished to
Central. No Benefit Plan is a multi-employer or a defined benefit plan.
Neither Jaguar, any affiliate, nor any predecessor of either has ever
been a party to or sponsored a multi-employer or defined benefit plan.
Jaguar, and all Benefit Plan fiduciaries have fully complied with their
obligations with respect to all Benefit Plans. There has been no
prohibited transaction with respect to any Benefit Plan. Each Benefit
Plan that is intended to be qualified under Section 401(a) of the Code
is so qualified and has been since inception.
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Each trust created under any Benefit Plan is exempt from tax under
Section 501(a) of the Code and has been exempt from tax since creation.
Jaguar has received determination letters from the Internal Revenue
Service for each such Benefit Plan at inception and after each
amendment. Each Benefit Plan has been maintained in compliance with its
terms and all applicable laws. There has not been any event that would
threaten the tax-qualified status of any Benefit Plan. All payments and
contributions due or accrued under each Benefit Plan, determined in
accordance with the terms of such plans and prior funding and accrual
practices, have been paid or are reflected as a liability on the most
recent balance sheet contained in the Historical Financial Statements.
The "plan year" of each Benefit Plan is the calendar year. Jaguar has
no current or projected liability with respect to post-employment or
post-retirement welfare benefits for former or retired employees.
(m) Employees; Independent Contractors. Jaguar is not a
party to any collective bargaining agreement relating to its employees,
nor does any such agreement determine the terms and conditions of
employment of any employee. There are no agreements, plans, or policies
which would give rise to any severance, termination, change-in-control,
or other similar payment to Jaguar's employees as a result of the
consummation of the transactions contemplated hereunder. Jaguar does
not have any employment agreements with its employees. Jaguar maintains
files on all employee and independent contractor truck drivers. Each
employee and independent contractor driver of Jaguar meets all DOT
requirements, and all driver files contain all required materials. All
independent contractors providing equipment and/or services to Jaguar
have been retained under valid contracts and qualify for independent
contractor status under existing Internal Revenue Service rules and
interpretations. Copies of the form of contract used for any
independent contractor operators of rolling stock have been delivered
to Central. Jaguar has not taken action in respect of its employees
that would require notice or create liability under the Worker
Adjustment and Retraining Notification Act, and at present, does not
have plans to take such action.
(n) Compliance With Laws; Permits. Jaguar has owned,
leased, and used all of its properties and assets, and has conducted
its business, in compliance in all respects with all applicable laws.
Neither Jaguar nor the Selling Stockholders have been charged with any
violation of law. No proceeding is pending or threatened by any
authority with respect to any violation of law by Jaguar or the Selling
Stockholders. No judgment is unsatisfied against Jaguar or the Selling
Stockholders. Neither Jaguar nor the Selling Stockholders are subject
to any stipulation, order, consent, or decree arising from an action
before any authority. Jaguar possesses all permits, licenses,
franchises, and other approvals of authorities (collectively,
"Permits") required to operate its business, such Permits are in full
force and effect, any applications for renewal have been duly filed on
a timely basis, no proceeding is pending or threatened to revoke or
limit any Permit, and it is operating in compliance with all Permits.
(o) Environment, Health, and Safety.
(i) Jaguar, its affiliates, and its predecessors
have complied with all laws concerning pollution or protection
of the environment, public health and safety, and employee
health and safety, including laws relating to emissions,
discharges, releases, or threatened release of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes (including petroleum and any fraction or
derivative
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thereof) into ambient air, surface water, ground water, or
lands, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
hauling of such substances (collectively, "Environmental
Laws"). No proceeding has been filed or commenced against
Jaguar, its affiliates, or its predecessors alleging any
failure to comply with any Environmental Laws. Without
limiting the generality of the preceding sentence, Jaguar, its
affiliates, and its predecessors have obtained and been in
compliance with all of the terms and conditions of all Permits
which are required under, and has complied with all other
limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental Laws.
(ii) Jaguar has no liability (and neither Jaguar,
its affiliates, nor any of its predecessors have handled or
disposed of any substance, arranged for the disposal of any
substance, exposed any employee or other individual to any
substance or condition, or owned, operated, or used any
property or facility in any manner that could form the basis
for any present or future proceeding against Jaguar giving
rise to any liability) for damage to any site, location, or
body of water (surface or subsurface), for any illness of, or
personal injury to, any employee or other individual, or for
any reason under any Environmental Law.
(iii) All properties and equipment used in the
business of Jaguar, its affiliates, and its predecessors has
been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2-transdichloroethylene, dioxins,
dibenzofurans, and other extremely hazardous substances as
defined by any law.
(iv) Any fuel or other storage tanks located at
properties presently or previously owned or used by Jaguar in
its business comply in all respects with applicable laws, do
not leak, are registered with the appropriate state agency
(and all required actions in connection therewith have been
taken) in the manner permitting Jaguar to take advantage of
any state liability limitation, insurance, or similar program
relating to fuel storage tanks, and such tanks are not
scheduled for removal in the next five years.
(v) Jaguar has delivered to Central true and
complete copies and results of any reports, studies, analyses,
tests, or monitoring concerning Jaguar or any property owned
or used by Jaguar concerning compliance with Environmental
Laws.
ARTICLE VI
Covenants and Agreements
6.01 Approvals and Consents. Each party to this Agreement shall use
its best efforts to obtain (and assist the other in obtaining), as soon as
reasonably practicable, all Permits, authorizations, consents, and waivers from
third parties or authorities necessary to consummate this Agreement and the
transactions contemplated hereby or thereby.
6.02 Services of Each of the Employees. From and after the Closing,
for a period of one year, Central agrees to employ each of the Employees as an
"at-will" employee at the salary rate of
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$80,000 annually, plus benefits generally provided to other Central employees of
comparable status, including participation in Central's bonus plan. Each of the
Employees (i) agrees to devote the time, attention, skill, and energy as
necessary on a full-time basis to fulfill the requests of Central, (ii) shall
use his best efforts to promote the success of Central's business, and (iii)
shall cooperate fully with Central's senior management in the advancement of the
best interests of Central. Each Employee's salary shall be payable by Central on
the same frequency as wage payments made to other employees and shall continue
for such one-year term unless an Employee is terminated for "cause" or resigns.
If an Employee is terminated by Central for "cause" or an Employee resigns for
any reason, such Employee shall receive any salary accrued to the date of such
termination and shall not be entitled to any compensation or other payment or
benefit under this Agreement thereafter. If an Employee is terminated by Central
other than for "cause," Central shall pay such terminated Employee (in full
satisfaction of any claims such Employee may have, under this Agreement or
otherwise, and by accepting such payment Employee releases all such claims)
payments at an annualized rate of $80,000 (i) as they come due until the
anniversary of the Closing or, (ii) at Central's option, in a lump sum,
discounted to present value at the "prime" interest rate then in effect. For
purposes of this Section 6.02, "cause" shall mean conviction or plea of guilty
or no contest to a felony or other crime punishable by death or imprisonment for
a term exceeding one year, breach of the non-competition provisions of this
Agreement, breach of fiduciary duties, commission of an act of knowing or
intentional fraud against Central or any of its affiliates, or refusal to carry
out the lawful directions of the Board of Directors or President of Central. In
addition, Central hereby grants to each of the Employees an option to purchase
10,000 shares of Central's Common Stock at an exercise price of $12.00 per
share; provided, however, that the option shall be forfeited and expire
automatically if the Closing fails to occur prior to July 31, 1999. The options
shall expire ten (10) years from the date hereof and shall vest and become
exercisable 20% on the sixth anniversary of the date hereof and 20% each
succeeding anniversary; provided, however, that the final 20% shall vest and
become exercisable ninety (90) days prior to the tenth (10th) anniversary of the
date hereof. The options shall be evidenced by agreements comparable to those
executed by other Central employees.
6.03 Notification. Each party shall give prompt written notice to
the others of any development causing a breach of any of his, her, or its own
representations and warranties or that would prevent the fulfillment of any of
his, her, or its covenants or agreements contained in this Agreement or any
document contemplated hereby.
6.04 Selling Stockholders Release. At Closing the Selling
Stockholder shall execute a full and final waiver and release of any and all
claims against Jaguar in substantially the form attached hereto as Exhibit 2
(the "Release").
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6.05 Non-Competition.
The parties have negotiated the non-competition provisions of this Agreement as
an integral part of the transaction. The merger consideration is substantially
higher than the net book value of Jaguar, resulting in substantial "goodwill"
being paid by Central for the ongoing prospects of Jaguar's business. The
Employees acknowledge that the Central is willing to pay the merger
consideration and proceed with the transaction because of Jaguar's customer
relationships, growth potential, and other prospects, and that such prospects
would be severely and irreparably harmed by competition from the Employees. The
Employees further acknowledge that Central would not have entered into this
Agreement without the non-competition provisions contained herein. The Employees
willingly agree to the non-competition provisions of Section 6.05(b) hereof as
consideration for the merger consideration and agree that the non-competition
provisions are reasonable and are necessary to induce Central to enter into this
Agreement.
Through the later of (i) six (6) months following termination of employment with
Central or an affiliate, or (ii) June 30, 2004, each Employee agrees that he
will not, directly or indirectly,
except in the course of his employment with Central, or an affiliate, engage or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be employed by,
associated with, or in any manner connected with, lend their name or any similar
name to, lend their credit to or render services or advice to, any Competitive
Business that engages in business in the United States; provided, however, that
each employee may purchase or otherwise acquire up to (but not more than) one
percent as an aggregate of all such purchases and acquisitions made by such
Employee of any class of securities of any enterprise (but without otherwise
participating in the activities of such enterprise) if such securities are
listed on any national or regional securities exchange or have been registered
under Section 12(g) of the Securities Exchange Act of 1934;
whether for his own account or for the account of any other person, at any time
after the Closing, solicit business of the same or similar type being carried on
by Central, or an affiliate, from any person that is or was a customer of
Central, Jaguar, or any affiliate, whether or not they had personal contact with
such person during and by reason of such Employee's employment with Central,
Jaguar, or any affiliate;
whether for his own account or the account of any other person at any time after
Closing, solicit, employ, or otherwise engage as an employee, independent
contractor, or otherwise, any person who is or was an employee of Central,
Jaguar, or an affiliate, or in any manner induce or attempt to induce any
employee of Central, Jaguar, or an affiliate to terminate his or her employment
with Central, Jaguar, or an affiliate; or at any time interfere with the
relationship between Central, or any affiliate and any other person, including
any person who at any time was an employee, contractor, supplier, or customer of
Central, Jaguar, or an affiliate; or
at any time after Closing, disparage Central, Jaguar, or any affiliate, or any
of their shareholders, directors, officers, employees, or agents.
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For purposes of this Agreement, "Competitive Business" shall mean the interstate
and/or intrastate transportation of general commodity freight, including
truckload and less-than-truckload carriage, intermodal service, and brokerage,
logistics, agent, consolidation, or other freight-related operations in the
combined geographic service territory of Jaguar, Central, and any affiliates at
the date of the Employee's last day of service with any of such companies.
Competitive Business shall not include temperature-controlled van or flatbed
operations, or any operations outside of the service territory specified above.
If any covenant in Section 6.05 is held to be unreasonable, arbitrary, or
against public policy, such covenant will be considered to be divisible with
respect to scope, time, and geographic area, and such lesser scope, time, or
geographic area, or all of them, as a court of competent jurisdiction may
determine to be reasonable, not arbitrary, and not against public policy, will
be effective, binding, and enforceable against the Employees.
The Employees acknowledge that the injury that would be suffered by Central as a
result of a breach of the provisions of this Section 6.05 would be irreparable
and that even the award of monetary damages for such breach would be an
inadequate remedy. Consequently, Central shall have the right, in addition to
any other rights it may have, to obtain injunctive relief to restrain any breach
or threatened breach or otherwise to specifically enforce any provision of this
Agreement, and Central shall not be obligated to post bond or other security in
seeking such relief.
(f) Noncompetition Payments. On each of the second
through the fifth anniversaries of the Closing, the Employees who have
continuously honored their obligations under this Section 6.05 shall
receive the number of shares of New Stock set forth below:
Xxxx Xxxxxxx 3,176
Xxxx Xxxxxxx 3,176
Xxxx Xxxxxx 3,176
Xxxxx Xxxxxxxx 1,620
The shares of New Stock issued pursuant to this Section
6.05(f) shall be subject to the conditions of Sections 4.01 and 4.02
respecting restricted securities and shall bear the restrictive legend.
(g) Cash Advance. If during the second year following the
Closing a Selling Stockholder is no longer employed by Central or a
successor employer and is in compliance with this Section 6.05, such
Selling Stockholder may request in writing that Central advance the
Selling Stockholder cash against the New Stock to be issued to him in
respect of the first installment under Section 6.05(f) above. On the
date requested and each 90 days thereafter until the second
anniversary, the Selling Stockholder shall be entitled to receive cash
in an amount equal to one-fourth of the number of shares to be issued
at a rate of $10.00 per share. The requesting Selling Stockholder shall
pay interest on such cash advance at the then-current short term
applicable federal rate. The principal and all accrued interest shall
be due and payable on the date 90 days after the second
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anniversary of the Closing. The cash advance shall be secured by the
shares to be issued and Central shall have the right of offset.
6.06 Selling Stockholder Access. From and after Closing Central
shall provide the Selling Stockholders with access to the pre-Closing books and
records of Jaguar as are necessary in the preparation of tax returns or other
valid purposes.
6.07 S Election. Central has elected S Corporation status under the
Internal Revenue Code. Accordingly, its taxable income is recognized directly by
the stockholders rather than by the corporations. The Selling Stockholders agree
to join in the S election by Central and agree not to take any action that would
result in the termination of such S Corporation status. The Selling Stockholders
acknowledge that the S election will terminate at or before any public offering.
6.08 Exchange Agreement. In the event Central proceeds with a
public offering, the Selling Stockholders agree to participate in any tax-free
exchange of the New Stock for one-vote stock in the company that would be public
and to execute the exchange agreement in a form prepared by Central and executed
by all of the other shareholders of Central.
6.09 Release of Selling Stockholders. From and after the Closing
Central shall either repay indebtedness of Jaguar to third-parties that is
reflected on the most recent balance sheets included in the Historical Financial
Statements that the Selling Stockholders have personally guaranteed or use its
best efforts to obtain a release of such guarantors, including by offering
Central as a guarantor on such indebtedness.
ARTICLE VII
Indemnification
7.01 Indemnification by the Selling Stockholders. The Selling
Stockholders, jointly and severally, hereby indemnify, defend, and hold harmless
Central together with (as applicable) its affiliates, successors, subsidiaries,
heirs, assigns, employees, and agents from and against any and all claims,
causes of action, suits, judgments, taxes, losses, proceedings, damages, fines,
penalties, deficiencies, obligations, costs, and expenses, including without
limitation reasonable expenses of investigation and reasonable attorneys' and
other experts' fees and expenses (individually, a "Loss" and collectively,
"Losses") arising out of or otherwise in respect of (a) any misrepresentation or
inaccuracy in, or breach of, any representation, warranty, covenant, or
agreement of Jaguar or the Selling Stockholders contained in this Agreement or
any other contract executed in connection herewith; and (b) any act, omission,
event, or circumstance occurring prior to Closing and relating to Jaguar or the
Selling Stockholders that is not paid by Jaguar prior to Closing and fully
reserved on Jaguar's December 31, 1998, balance sheet included in the Historical
Financial Statements.
7.02 Indemnification by Central. Central hereby indemnifies,
defends, and holds the Selling Stockholders harmless from and against all Losses
arising out of or otherwise in respect
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of any misrepresentation or inaccuracy in, or breach of, any representation,
warranty, covenant, or agreement of Central contained in this Agreement or any
other contract executed in connection herewith.
7.03 Indemnification Procedures. A party seeking indemnification
under Section 7.01 or Section 7.02 (the "Indemnified Party") agrees to give
prompt written notice to the party against whom indemnification is sought (the
"Indemnifying Party") of the assertion or commencement of any third-party claim
in respect of which indemnification may be sought. The Indemnifying Party, at
its expense, may assume the defense of any such claim and take all steps to
settle or defeat any such claim, and to employ counsel to contest the same. The
Indemnifying Party shall reasonably consider the advice of the Indemnified Party
as to the defense of such claims. The Indemnified Party shall have the right to
participate at its own expense in such defense, but the control of such claim
shall remain with the Indemnifying Party. The Indemnified Party shall provide
all reasonable cooperation in connection with any such defense. If an
Indemnifying Party elects not to undertake the defense of a tendered claim or
does not do so in a timely fashion, the Indemnified Party shall be entitled to
control the defense or settlement of such claim and shall be entitled to
indemnity with respect thereto.
7.04 Right to Indemnification Not Affected By Knowledge. The right
to indemnification, payment for Losses, or other remedy based on any
representations, warranties, covenants, and obligations will not be affected by
disclosure on any Schedule or by any investigation conducted with respect to, or
any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment for Losses, or other remedy based on such
representations, warranties, covenants, and obligations.
7.05 Escrow of New Stock. As security against the indemnification
obligations of the Selling Stockholders under Section 7.01, the certificates
representing the shares of New Stock issued to the Selling Stockholders in the
Merger shall be placed in escrow with Xxxxxxx Law Firm, P.C. until the first
anniversary of the Closing. At the first anniversary, if no claim has been made
against the Selling Stockholders for indemnification, the escrow agent shall
release the certificates to the registered holders.
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 Conditions Precedent to the Obligations of Central. The
obligation of Central to consummate this Agreement is subject to the fulfillment
of all of the following conditions precedent (any of which may be waived in
writing by Central, in whole or in part) at or prior to the date of Closing.
(a) Representations and Warranties True as of the Closing
Date. The representations and warranties of Jaguar and the Selling
Stockholders contained in this Agreement and in every document
delivered by such parties pursuant to the provisions hereof shall be
true in all material respects as of the date of this Agreement and at
and as of the date of Closing with the same effect as though such
representations and warranties were made as of such date.
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(b) Compliance with Agreement. Jaguar and the Selling
Stockholders shall have performed and complied in all material respects
with all agreements, covenants, and conditions required to be performed
or complied with by them under this Agreement. Each of the documents
required to be delivered hereunder and each of the covenants and
obligations hereunder must have been performed and complied with in all
respects.
(c) No Bar to Consummation of Transaction. There shall
not exist any law or judgment of any authority which would prevent the
consummation of the transactions contemplated hereby or adversely
affect the rights of Central after consummation of said transactions.
There shall be no pending or threatened proceeding that seeks to enjoin
the transactions contemplated by this Agreement. All consents and
approvals from any authority and any other person required for the
consummation of this Agreement shall have been obtained.
(d) Bring-Down Certificate. Jaguar and the Selling
Stockholders shall have delivered to Central a duly signed certificate
to the effect that each of the conditions in Sections 8.01(a)-(c) has
been satisfied in all respects.
(e) Completion of Due Diligence. Central shall have
completed its due diligence investigation of the business, assets, and
liabilities of Jaguar and shall be satisfied, in its sole discretion,
with the results of such investigation.
(f) Board Approval. Central shall have received the
approval of the terms and conditions of this Agreement from its Board
of Directors.
8.02 Conditions Precedent to the Obligations of Jaguar and Selling
Stockholders. The obligations of Jaguar and the Selling Stockholders to
consummate this Agreement are subject to the fulfillment of all of the following
conditions precedent (any of which may be waived in writing by Jaguar and the
Selling Stockholders, in whole or in part) at or prior to the Closing.
(1) Representations and Warranties True as of the Closing
Date. The representations and warranties of Central contained in this
Agreement or in any document delivered by such parties pursuant to the
provisions hereof shall be true in all material respects at and as of
the date of Closing with the same effect as though such representations
and warranties were made as of such date.
(2) Compliance with Agreement. Central shall have
performed and complied in all material respects with all agreements,
covenants, and conditions required to be performed or complied with by
it under this Agreement.
(3) No Bar to Consummation of Transaction. There shall
not exist any law or judgment of any authority which would prevent the
consummation of the transactions contemplated hereby or adversely
affect the rights of Jaguar or the Selling Stockholders after
consummation of the transactions contemplated hereby. There shall be no
pending or threatened litigation or other proceeding that seeks to
enjoin the transactions contemplated by this Agreement. All consents
and approvals from any authority and any other person required for the
consummation of this Agreement shall have been obtained.
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(4) Bring-Down Certificate. Central shall have delivered
to Jaguar, and the Selling Stockholders, a duly signed certificate to
the effect that each of the conditions in Sections 8.02(a)-(c) has been
satisfied in all respects.
ARTICLE IX
MISCELLANEOUS
9.01 Termination.
(a) Termination of Agreement. The parties may terminate
this Agreement as provided below:
(i) The parties may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) Central may terminate this Agreement by
giving written notice to Jaguar and the Selling Stockholders
on or before the Closing, if it is not satisfied with the
results of its continuing business, legal, and accounting due
diligence;
(iii) Central may terminate this Agreement by
giving written notice to Jaguar and the Selling Stockholders
at any time prior to the Closing (A) if Jaguar or the Selling
Stockholders have breached any representation, warranty, or
covenant contained in this Agreement and the breach has
continued after notice to Jaguar and the Selling Stockholders
by Central without cure for a period of ten (10) days or (B)
if the Closing shall not have occurred on or before July 31,
1999, by reason of the failure of any condition precedent
under Section 8.01 hereof (unless the failure results
primarily from Central breaching any representation, warranty,
or covenant contained in this Agreement); and
(iv) Jaguar and the Selling Stockholders may
terminate this Agreement by giving written notice to Central
at any time prior to the Closing (A) in the event Central has
breached any representation, warranty, or covenant contained
in this Agreement, and the breach has continued after notice
to Central without cure for a period of ten (10) days, or (B)
if the Closing shall not have occurred on or before July 31,
1999, by reason of the failure of any condition precedent
under Section 8.02 hereof (unless the failure results
primarily from Jaguar or the Selling Stockholders breaching
any representation, warranty, or covenant contained in this
Agreement).
(b) Effect of Termination. Each party's right of
termination under Section 9.01 is in addition to any other rights it
may have under this Agreement or otherwise, and the exercise of the
right of termination shall not be an election of remedies. If this
Agreement is terminated pursuant to Section 9.01, all further
obligations of the parties under this Agreement shall terminate, except
that the obligations of Section 9.02 shall survive. However, if this
Agreement is terminated by a party because of a breach of the
Agreement, of any type, by the other party, the non-defaulting party's
right to pursue all legal remedies will survive such termination
unimpaired. In addition,
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the non-defaulting party shall be entitled to collect its expenses
incurred at any time in connection with pursuing or consummating the
Agreement and the transactions contemplated by the Agreement,
including, but not limited to, fees and expenses of business brokers,
legal counsel, accountants, and other facilitators and advisors.
9.02 Costs and Expenses; Fees. Except as provided in Section
9.01(b) with respect to a breach of the Agreement, each party shall be solely
responsible for and bear all of its own respective expenses incurred at any time
in connection with pursuing or consummating the Agreement and the transactions
contemplated by the Agreement, including, but not limited to, fees and expenses
of business brokers, legal counsel, accountants, and other facilitators and
advisors. The expenses of Jaguar and the Selling Stockholders shall be borne by
the Selling Stockholders and shall not be charged to Jaguar, except that Jaguar
may pay legal fees up to $10,000 incurred in relation to the Merger.
9.03 Governing Law. This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of Arizona,
without regard to the conflict of law rules thereof.
9.04 Severability. The parties agree that each provision to this
Agreement shall be construed independent of any other provision of this
Agreement. The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof. This Agreement
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.
9.05 Amendment and Modification. No amendment or other modification
to this Agreement shall be binding upon any party unless executed in writing by
all of the parties hereto.
9.06 Waiver. No waiver by any party of any of the provisions of
this Agreement will be deemed, or will constitute, a waiver of any other
provision, whether similar, nor will any waiver constitute a continuing waiver.
No waiver will be binding unless executed in writing by the party making the
waiver.
9.07 Binding Effect. This Agreement shall be binding upon, and
shall inure to the benefit of and be enforceable by, the parties hereto, their
respective affiliates, successors and assigns.
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9.08 Merger. This Agreement constitutes the entire agreement among
the parties with respect to the subject matter described herein and the Selling
Stockholders acknowledge and agree that in entering this Agreement, the Selling
Stockholders did not rely on any representations or warranties other than those
set forth herein. This Agreement supersedes all prior and contemporaneous
agreements, representations, writings, discussions, and understandings of the
parties.
9.09 Counterparts. This Agreement may be executed in counterparts
and any party hereto may execute any such counterpart, each of which when
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
9.10 Survival of Representations, Warranties, Covenants and
Agreements. All representations, warranties, covenants and agreements made by
the parties shall survive the closing of this Agreement indefinitely.
9.11 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Amendment.
IN WITNESS WHEREOF, each of the parties has executed this Amendment as
of the day and year first above written.
JAGUAR FAST FREIGHT, INC., Attest:
an Arizona corporation
By: /s/ Xxxx Xxxxxxx /s/ Xxxxxxx Xxxxxx
Xxxx Xxxxxxx, President Xxxxxxx Xxxxxx, Secretary
CENTRAL FREIGHT LINES, INC., Attest:
a Texas corporation
By: /s/ Xxx Xxxx /s/ Xxxxxxx Xxxxxxxxx
Xxx Xxxx, President Xxxxxxx Xxxxxxxxx, Secretary
SELLING STOCKHOLDERS
/s/ Xxxxx Xxxxx /s/ Xxxx Xxxxxxx
Xxxxx Xxxxx, individually Xxxx Xxxxxxx, individually
/s/ Xxxxxxx Xxxxxx /s/ Xxxxx Xxxxxxxx
Xxxxxxx Xxxxxx, individually Xxxxx Xxxxxxxx, individually
/s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx, individually
