STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into
as of October 5, 1998, by and among Covenant Transport, Inc., a Nevada
corporation ("Buyer"); the Xxxxx Charitable Remainder Trust (the "Selling
Stockholder"); Southern Refrigerated Transport, Inc., an Arkansas corporation
("Southern"); Xxxx Xxxxx Trucking, Inc., an Arkansas corporation ("Xxxxx
Trucking"); and Xxxx and Xxxxx Xxxxx, husband and wife and residents of Arkansas
(the "Smiths").
RECITALS
1. The Selling Stockholder owns all of the issued and outstanding capital
stock of Southern and Xxxxx Trucking, consisting of 300 shares and 1,000 shares
of Common Stock, respectively, $1.00 par value per share (together, the "Common
Stock").
2. The Selling Stockholder proposes to sell and Buyer proposes to purchase
the Common Stock.
3. The parties desire that the transaction be accomplished as stated
herein, in accordance with their respective representations, warranties, and
agreements, subject to the conditions contained herein.
AGREEMENTS
NOW, THEREFORE, in consideration of the covenants, representations,
warranties, and agreements herein contained, and for other good and valuable
consideration, the parties agree as follows:
ARTICLE I
Definitions
For the purposes of this Agreement, unless otherwise provided, the
following terms, when capitalized, shall have the meanings ascribed to them
below:
1.1 "Affiliate" means any person or entity controlling, controlled by, or under
common control with another person or entity, as well as the following: all
officers, directors, and persons owning 10% or more of the equity interests of
an entity.
1.2 "Authority" means each and every federal, state, local, and foreign
judicial, governmental, quasi-governmental, or regulatory agency, official, or
department; every arbitrator, mediator, and other similar official; and every
other entity to whose jurisdiction or decision making authority a party has
submitted.
1.3 "Benefit Plans" means all contracts, plans, arrangements, policies, and
understandings providing for any compensation or benefit other than base wages
or salaries that are maintained by Southern or Xxxxx Trucking or affect either
of their employees or independent contractors, regardless of whether defined as
an "employee benefit plan" under ERISA or subject to any provision of ERISA,
including, without limitation: all pension, profit-sharing, retirement, thrift,
401(K), ESOP, and other similar plans and arrangements (defined benefit and
defined contribution); all health and welfare, disability, insurance (including
self-insurance), workers' compensation, supplemental unemployment, severance,
vacation, and similar plans and arrangements; and all bonus, stock option,
incentive compensation, stock appreciation rights, phantom stock, overtime
guaranty, employment contract, employee handbook, and other similar plans or
arrangements.
1.4 "Closing" and "Closing Date" have the meanings set forth in Section 3.1
hereof.
1.5 "Code" means the Internal Revenue Code of 1986, as amended, or any successor
federal tax law.
1.6 "Contract" means any mortgage, indenture, agreement, contract, commitment,
lease, plan, license, permit, insurance policy or binder, authorization, or
other instrument, document, or understanding, oral or written.
1.7 "Environmental Laws" has the meaning ascribed in Section 4.3(u).
1.8 "GAAP" means generally accepted accounting principles, consistently applied
throughout all periods, provided, that interim, unaudited financial statements
lack footnotes and other presentation items.
1.9 "Historical Financial Statements" has the meaning ascribed to it in Section
4.3(f).
1.10 "IRS Proceeding" has the meaning ascribed in Section 6.6.
1.11 "IRS Claims" has the meaning ascribed in Section 6.6.
1.12 "Judgment" means any judgment, order, writ, injunction, decree, or award by
any Authority, as well as all settlements of actions or claims.
1.13 "Law" means any constitution, statute, Judgment, law, ordinance, rule,
regulation, or other pronouncement by any Authority (including, without
limitation, the following types: environmental, energy, safety, health, zoning,
antidiscrimination, antitrust, employment, transportation, Tax, and employee
benefit (including ERISA)).
1.14 "Lien" means any mortgage, lien, pledge, security interest, mechanics or
materialmens' or similar lien, conditional sale agreement, charge, claim, right,
condition, restriction, or other encumbrance or defect of title of any nature
whatsoever (including, without limitation, any assessment, charge, or other type
of notice which is levied or given by any Authority and for which a lien could
be filed).
1.15 "Loss" and "Losses" have the meanings ascribed to them in Section 6.1.
1.16 "Note" has the meaning ascribed in Section 3.3.
1.17 "Permits" has the meaning ascribed in Section 4.3(t).
1.18 "Proceeding" means any action, suit, litigation, arbitration,
investigation, hearing, notice of violation, order, claim, citation, charge,
demand, complaint, review, or penalty assessment, in each case whether formal or
informal, administrative, civil or criminal, at law or in equity, and whether or
not in front of any Authority.
1.19 "Real Estate" means the real estate and improvements thereon, and all
rights and appurtenances thereto, currently owned or leased by Southern or Xxxxx
Trucking, all as legally described on Exhibit A.
1.20 "Rights" means all patents, trademarks, copyrights, franchises, licenses,
permits, easements, computer software programs, rights (including, without
limitation, rights to trade secrets and proprietary information and know-how),
certificates, approvals, and other authorizations including those issued by or
filed with any Authority, and any applications for any of the foregoing.
1.21 "Taxes" shall mean all taxes, charges, fees, levies, or other assessments
of whatever kind or nature, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise, estimated, severance, stamp,
occupancy, or property taxes, customs duties, fees, assessments, or charges of
any kind whatsoever (together with any interest and any penalties, additions to
tax, or additional amounts) imposed by any Authority.
ARTICLE II
Stock Purchase and Sale
2.1 Transfer of Common Stock. Subject to the terms and conditions of this
Agreement, at the Closing, the Selling Stockholder shall sell, convey, transfer,
assign, and deliver to Buyer, and Buyer shall acquire, 100% of the issued and
outstanding Common Stock free and clear of all Liens.
2.2 Purchase Price. In consideration for the transfer of the Common Stock, Buyer
agrees to pay to the Selling Stockholder at Closing, Ten Million Seven Hundred
Fifty Thousand Dollars ($10,750,000) (the "Purchase "Price").
ARTICLE III
Closing
3.1 Date. The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Xxxxxxx & Associates located at
000 Xxxxx Xxxxxxxxxxx, Xxxxx 000, Xxxxxx Xxxx, Xxxxxxxx 00000. Contemporaneously
with the execution hereof, all actions taken or required to be taken pursuant to
this Article III shall be deemed to have occurred contemporaneously, and no
individual action shall have been taken until all are completed. The date hereof
shall be the "Closing Date."
3.2 Delivery of Certificates and Other Agreements. At the Closing, the Selling
Stockholder shall deliver to Buyer certificates representing all shares of
Common Stock, duly endorsed (or accompanied by duly executed stock powers). The
Release, Employment Agreement, Stock Option Agreement, Note, and each other
document required to be executed in connection with this Agreement shall be duly
executed and delivered by the parties thereto.
3.3 Delivery of Purchase Price. At the Closing, the Buyer shall deliver (i)
Seven Million Seven Hundred Fifty Thousand Dollars ($7,750,000) to the Selling
Stockholder by wire transfer of immediately available funds and (ii) a
non-negotiable promissory note payable to the Selling Stockholder in the
principal amount of Three Million Dollars ($3,000,000) in the form of Exhibit B
attached hereto (the "Note").
3.4 Opinion of Counsel. Counsel for Southern, Xxxxx Trucking, the Smiths, and
the Selling Stockholder shall deliver to Buyer written opinions, dated as of the
Closing Date, in substantially the forms attached as Exhibits C-1 and C-2.
3.5 Opinion of Counsel. Counsel for Buyer shall deliver to the Selling
Stockholder its written opinion, dated as of the Closing Date, in substantially
the form attached as Exhibit D.
ARTICLE IV
Representations and Warranties
4.1 General Statement. The parties hereto represent and warrant to each other
that the statements contained in this Article IV are correct and complete as of
the Closing Date. The survival of all such representations and warranties shall
be in accordance with Section 7.2 hereof. Copies of all documents referenced in
the Schedules shall be attached thereto or delivered separately.
4.2 Representations and Warranties of Buyer. Buyer represents and warrants to
the Selling Stockholder, that:
(a) Corporate Status. Buyer is a corporation, duly organized, validly
existing, and in good standing under the laws of the State of Nevada, with
all requisite power and authority to carry on its business.
(b) Authority. Buyer 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 Buyer 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 Buyer
and constitutes the legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
(c) Validity of Contemplated Transaction. The execution and delivery of this
Agreement by Buyer does not, and the performance of this Agreement by
Buyer will not (i) violate or conflict with any existing Law or any
Judgment which is applicable to Buyer 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 Buyer or any Contract to
which Buyer is a party or by which it is otherwise bound. 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 Buyer.
(d) Brokers or Finders. Buyer and its officers and agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
4.3 Representations and Warranties of the Smiths and the Selling Stockholder.
The Selling Stockholder and the Smiths, jointly and severally, represent and
warrant to Buyer that:
(a) Corporate Status. Southern and Xxxxx Trucking are corporations, duly
organized, validly existing, and in good standing under the laws of the
State of Arkansas, each 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.
Except as set forth on Schedule 4.3(a), Southern and Xxxxx Trucking are
duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction where the character of their properties
or the nature of their businesses requires them to be so qualified.
Southern and Xxxxx Trucking conduct their businesses only under their own
names. Southern and Xxxxx Trucking have no subsidiaries and no entities
affiliated through common ownership or otherwise that conduct any business
related to that which they conduct.
(b) Capitalization. The entire authorized capital stock of Southern consists
of 10,000 shares of common stock, of which 300 shares are issued and
outstanding and owned by the Selling Stockholder. The entire authorized
capital stock of Xxxxx Trucking consists of 1,000 shares of common stock,
of which 1,000 shares are issued and outstanding and owned by the Selling
Stockholder. Neither Southern nor Xxxxx Trucking has any stockholders or
issued and outstanding stock, whether voting or non-voting, common or
preferred, other than the Selling Stockholder and the aforesaid shares
owned by the Selling Stockholder. The Selling Stockholder is the record
and beneficial owner of the 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. None of the
Common Stock was issued in violation of the Securities Act of 1933 or any
other Law. 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 Southern or Xxxxx
Trucking (or any successor, parent, or acquiror of Southern or Xxxxx
Trucking) 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 Southern or Xxxxx Trucking.
(c) Officers; Directors; Bank Accounts; Powers of Attorney. Schedule 4.3(c)
lists all directors and officers of Southern and Xxxxx Trucking; all bank
accounts, lock boxes, safe deposit boxes, and borrowing authority of
Southern and Xxxxx Trucking, specifying with respect to each, the name and
address of the bank or other financial institution and the account number
and all persons having signing authority or authority to withdraw
therefrom or thereon; and all persons having power of attorney, authority
as an agent, or other authority to act on behalf of Southern or Xxxxx
Trucking.
(d) Authority. Southern, Xxxxx Trucking, and the Selling Stockholder, 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 Southern, Xxxxx Trucking, and the Selling Stockholder 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 Southern, Xxxxx Trucking, the Smiths, and the Selling Stockholder and
constitutes the legal, valid, and binding obligation of each, enforceable
against each, in accordance with its terms. The Selling Stockholder is a
validly formed trust and the only trustees of the Selling Stockholder, the
Smiths, 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.
(e) Validity of Contemplated Transactions. The execution and delivery of this
Agreement and every other Contract contemplated hereby by Southern, Xxxxx
Trucking, the Smiths, and the Selling Stockholder do not, and the
performance of this Agreement and every other Contract contemplated hereby
by Southern, Xxxxx Trucking, the Smiths, and the Selling Stockholder will
not, (i) violate or conflict with any existing Law or any Judgment which
is applicable to Southern, Xxxxx Trucking, the Smiths, or the Selling
Stockholder; (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 Southern or Xxxxx Trucking or any Contract to which
Southern, Xxxxx Trucking, the Smiths, or the Selling Stockholder is a
party or by which any is otherwise bound; or (iii) violate or conflict
with the trust documents applicable to the Selling Stockholder. No
authorization, approval, or consent of, and no registration, filing, or
notice to any Authority or other party to any Contract is required in
connection with the execution, delivery, and performance of this Agreement
by Southern, Xxxxx Trucking, the Smiths, or the Selling Stockholder.
(f) Financial Statements; Accounts Receivable.
(i) Southern and Xxxxx Trucking have delivered to Buyer the annual
financial statements (including balance sheets and statements of
income, cash flows, and retained earnings) of Southern at and for
the period ended June 30, 1996, 1997, and 1998 and of Xxxxx Trucking
at and for the period ended December 31, 1995, 1996, and 1997, and
the associated accountants review reports, as well as the internal
financial statements of each company at and for the period ended
July 31, 1998 (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 Southern and Xxxxx Trucking at and for all periods
reflected therein, and are consistent with the books and records of
Southern and Xxxxx Trucking, which books and records are correct and
complete. Copies of the Historical Financial Statements are attached
as Schedule 4.3(f).
(ii) All accounts receivable of whatever nature of Southern and Xxxxx
Trucking represent valid obligations arising from sales actually
made or services actually performed in the ordinary course of
business. All accounts receivable are collectible net of the
reserves shown on the companies' balance sheets. There is no
contest, claim, or right of set-off, other than returns in the
ordinary course of business, under any Contract with any obligor of
an accounts receivable relating to the amount or validity of such
accounts receivable.
(g) Absence of Undisclosed Liabilities. Southern and Xxxxx Trucking have 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
the July 31, 1998 balance sheet of each 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), and
(iii) in connection with the IRS Proceedings.
(h) Absence of Changes or Events. Except as disclosed on Schedule 4.3(h),
since June 30, 1998, there has not been any adverse change in the
business, operations, results of operations, or future prospects of
Southern or Xxxxx Trucking. Without limiting the generality of the
foregoing, since that date, except as disclosed on Schedule 4.3(h),
neither Southern nor Xxxxx Trucking has:
(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
Southern or Xxxxx Trucking; 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;
(v) acquired any substantial assets, properties, securities, or
interests of another person;
(vi) reduced or canceled any amounts owed to it (except for the debt
forgiven under Section 5.8);
(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.
(i) Asset Schedule. Schedule 4.3(i) sets forth all material assets owned by
Southern and Xxxxx Trucking together with the cost, depreciated book
value, and tax basis thereof. All of such assets are reflected on the
balance sheet included in Southern or Xxxxx Trucking's most recent
Historical Financial Statements.
(j) Title and Condition of Assets. All of Southern's and Xxxxx Trucking's
owned and leased assets are in good repair and condition and adequate for
the ordinary course of operation of Southern's and Xxxxx Trucking's
respective business as presently conducted, and all leased assets are in
compliance with any applicable lease provisions. All inventory is usable
and not obsolete. Neither Southern, Xxxxx Trucking, the Smiths, nor the
Selling Stockholder has received notice from any Authority of a Proceeding
in the nature of condemnation or eminent domain relating to any of the
property which Southern or Xxxxx Trucking owns, leases, or utilizes in its
operations, including the Real Estate. Except as set forth on Schedule
4.3(j), each of Southern and Xxxxx Trucking 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. Each of Southern and Xxxxx Trucking does not use
any assets in its businesses other than assets owned by it or assets
leased under valid and continuing leases that are identified on Schedule
4.3(o). There are no developments affecting any of Southern's or Xxxxx
Trucking's properties or assets, owned or leased, that might materially
detract from the value of such property or assets, interfere with any
present or intended use of such property or assets, or adversely affect
the marketability of such property or assets. All buildings, plants, and
structures owned or used by Southern or Xxxxx Trucking lie wholly within
the boundaries of the Real Estate and do not encroach upon the property
of, or otherwise conflict with the property rights of, any other third
party. The buildings, plants, structures, and equipment owned or used by
Southern or Xxxxx Trucking are structurally sound, are in good operating
condition and repair, and are adequate for the uses to which they are
being put, and none of such buildings, plants, structures, or equipment is
in need of maintenance or repairs except for ordinary, routine maintenance
and repairs that are not material in nature or cost. The buildings,
plants, structures, and equipment owned or used by each of Southern and
Xxxxx Trucking are sufficient for the continued conduct of the respective
businesses of Southern and Xxxxx Trucking after the Closing Date in
substantially the same manner as conducted prior to the Closing Date.
(k) Additional Warranties Concerning Tractors and Trailers. All tractors and
trailers operated by Southern and Xxxxx Trucking are in good operating
condition and repair, do not require any engine, drive train, or other
mechanical system repair, meet all Department of Transportation
requirements, and have been maintained in compliance with all applicable
manufacturers' specifications and warranties. All tractors and trailers
have been operated at all times in compliance with applicable leases or
other financing documents. All leased tractors and trailers satisfy the
"turn-in" requirements under applicable leases such that there would not
be any penalty, reconditioning fee, or other amount owed if such leased
tractors and trailers were returned at the Closing Date. Each leased
tractor (and if applicable, leased trailers) has been operated within the
mileage allowance of the applicable lease, prorated for the portion of the
lease period that has expired. All tractors and trailers that are owned or
covered by leases without specific return requirements have no major
damage. On a fleetwide basis, all tractors and trailers have averages of
at least 50% wear remaining on tires and brakes. There are no late fees,
penalties, or other amounts owing under any tractor or trailer lease or
other financing document, other than any current month payment that is not
yet due.
(l) Tax Matters. With respect to Taxes:
(i) Southern and Xxxxx Trucking have 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. Southern and Xxxxx Trucking have within
the time and in the manner prescribed by Law, paid all Taxes that
are due and payable with respect to each. Southern and Xxxxx
Trucking have 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.
There are no Liens for Taxes upon the assets of Southern or Xxxxx
Trucking except for Liens for Taxes not yet due and payable.
(ii) Except in connection with the IRS Proceeding (as hereinafter
defined), none of the Returns of Southern or Xxxxx Trucking is
presently under audit by any Authority nor has a deficiency for any
Taxes been proposed, asserted, or assessed against Southern or Xxxxx
Trucking. Except in connection with the IRS Proceeding (as
hereinafter defined), 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 Southern or Xxxxx Trucking.
(iii) Southern and Xxxxx Trucking and, if applicable, their 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.
(m) Litigation. Except as set forth in Schedule 4.3(m), there is no Proceeding
pending or threatened against Southern or Xxxxx Trucking. Neither
Southern, Xxxxx Trucking, nor the Selling Stockholder has reason to
believe that any Proceeding may be brought or threatened against Southern,
Xxxxx Trucking, or the Selling Stockholder.
(n) Insurance; Bonds. Schedule 4.3(n) contains a list of, and Buyer has been
furnished true and complete copies of, all insurance policies and fidelity
bonds covering Southern's and Xxxxx Trucking's assets, business,
properties, operations, employees, officers, and directors, and other
matters for which Southern and Xxxxx Trucking carry insurance. Schedules
4.3(n) describes any self-insurance arrangement by or affecting Southern
and Xxxxx Trucking, including any reserves established thereunder,
covering the period since January 1, 1991. Except as set forth in Schedule
4.3(n), there is no claim by any insured pending under any of such
policies or bonds as to which coverage has been questioned, denied, or
disputed by the underwriters of such policies or bonds. All premiums
payable under all such policies and bonds have been paid, and Southern and
Xxxxx Trucking are otherwise in full compliance with the terms and
conditions of all such policies and bonds. As to all claims that might be
covered by such policies or bonds, Southern and Xxxxx Trucking have
promptly and within any prescribed time period notified the insuring or
bonding party in the proper manner. Such policies of insurance and bonds
(or other policies and bonds providing substantially similar insurance
coverage) have been in effect continuously since January 1, 1991, and
remain in full force and effect. Such policies of insurance and bonds are
of the type and in amounts customarily carried by persons conducting
similar businesses and do not exclude coverage for punitive damages.
Except as set forth in Schedule 4.3(n), neither Southern, Xxxxx Trucking,
the Smiths, nor the Selling Stockholder knows of any threatened
termination of, or premium increase with respect to, any of such policies
or bonds. Except for claims listed on Schedule 4.3(m), neither Southern
nor Xxxxx Trucking has given notice to the insurer of any claims that may
be insured thereby.
(o) Material Contracts. Schedule 4.3(o) contains a list of all material
Contracts to which Southern or Xxxxx Trucking is a party, including but
not limited to: any Contract that is not by its terms cancelable on notice
of not longer than 30 days without liability or penalties, or which, if
performed, would involve the payment by Southern or Xxxxx Trucking of more
than $25,000; any Contract restricting or limiting Southern or Xxxxx
Trucking from carrying on its business or competing in any line of
business; any Contract involving a joint venture, partnership, or other
profit or loss sharing arrangement; any Contract with the Selling
Stockholder, the Smiths, or any Affiliate; any Contract relating to
indebtedness for borrowed money, deferred purchase price of property, or
the guaranty of the obligations of any person; any Contract concerning
leased assets used by Southern or Xxxxx Trucking; any Contract respecting
Rights, Real Estate, or employees; any power of attorney or similar
instrument; and any other Contract not made in the ordinary course of
business. Each Contract disclosed in any Schedule or required to be
disclosed pursuant to this Section 4.3(o) 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.
(p) Employee Benefit Plans and Arrangements. Schedule 4.3(p) identifies each
of Southern's and Xxxxx Trucking's Benefit Plans, copies of which, amended
to date, have been furnished to Buyer. No Benefit Plan is a multi-employer
or a defined benefit plan. Neither Southern, Xxxxx Trucking, any
Affiliate, nor any predecessor of either has ever been a party to or
sponsored a multi-employer or defined benefit plan. Southern, Xxxxx
Trucking, 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. 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. Southern and Xxxxx Trucking have
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 sheets contained in the
Historical Financial Statements. The "plan year" of each Benefit Plan is
the calendar year. Southern and Xxxxx Trucking have no current or
projected liability with respect to post-employment or post-retirement
welfare benefits for former or retired employees.
(q) Employees; Independent Contractors. Neither Southern nor Xxxxx Trucking is
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 Southern's or Xxxxx Trucking's employees as a
result of the consummation of the transactions contemplated hereunder.
Neither Southern nor Xxxxx Trucking has any employment agreements with
employees. Both Southern and Xxxxx Trucking maintain files on all employee
and independent contractor truck drivers. Each employee and independent
contractor driver of Southern and Xxxxx Trucking meets all DOT
requirements, and all driver files contain all required materials. All
independent contractors providing equipment and/or services to Southern or
Xxxxx Trucking have been retained under valid contracts and qualify for
independent contractor status under existing Internal Revenue Service
rules and interpretations. A copy of the form of contract used for any
independent contractor operators of rolling stock has been delivered to
Buyer. Neither Southern nor Xxxxx Trucking has taken action in respect of
its employees that would require notice or create liability under the
Worker Adjustment and Retraining Notification Act, and neither Southern
nor Xxxxx Trucking has present plans to take such action.
(r) Safety Rating. Southern has received and maintained a "satisfactory"
safety rating from the DOT. There is no investigation, audit, or other
proceeding pending or threatened by the DOT. Neither Southern nor Xxxxx
Trucking requires or permits any violation of the safety fitness
regulations or other DOT rules or regulations. Both Southern and Xxxxx
Trucking regularly and strictly enforce applicable hours in service and
other DOT requirements.
(s) Rights. All Rights owned, licensed, or otherwise used by Southern or Xxxxx
Trucking are listed on Schedule 4.3(s). Each of Southern and Xxxxx
Trucking owns or uses such Rights under valid license in the operation of
their business. Southern's and Xxxxx Trucking's interest in each of such
Rights, to the extent possible, has been registered under applicable state
and federal Laws. Neither Southern nor Xxxxx Trucking has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Rights of third parties. Neither Southern nor Xxxxx Trucking has received
any charge, complaint, demand, or notice alleging any such interference,
infringement, misappropriation, violation, or conflict (including any
claim that Southern or Xxxxx Trucking must license or refrain from using
any Rights of third parties).
(t) Compliance With Laws; Permits. Except for the IRS Proceedings, each of
Southern and Xxxxx Trucking 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. Except for the IRS Proceedings,
neither Southern, Xxxxx Trucking, the Smiths, nor the Selling Stockholder
has been charged with any violation of Law. No Proceeding is pending or
threatened by any Authority with respect to any violation of Law by
Southern, Xxxxx Trucking, the Smiths, or the Selling Stockholder. No
Judgment is unsatisfied against Southern, Xxxxx Trucking, the Smiths, or
the Selling Stockholder. Neither Southern, Xxxxx Trucking, the Smiths, nor
the Selling Stockholder is subject to any stipulation, order, consent, or
decree arising from an action before any Authority. Each of Southern and
Xxxxx Trucking 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 each is operating in
compliance with all Permits.
(u) Environment, Health, and Safety.
(i) Each of Southern, Xxxxx Trucking, their Affiliates, and any
predecessors of each 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 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 Southern, Xxxxx
Trucking, their Affiliates, or any predecessor of each alleging any
failure to comply with any Environmental Laws. Without limiting
the generality of the preceding sentence, each of Southern, Xxxxx
Trucking, their Affiliates and any predecessors of each has 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) Neither Southern nor Xxxxx Trucking has any liability (and neither
Southern, Xxxxx Trucking, their Affiliates, nor any predecessor of
each has 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 Southern or Xxxxx Trucking
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 Southern, Xxxxx
Trucking, their Affiliates, and any predecessors of each have 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 Southern or Xxxxx Trucking in its
business, including the Real Estate, 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 Southern or Xxxxx Trucking
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) Both Southern and Xxxxx Trucking have delivered to Buyer true and
complete copies and results of any reports, studies, analyses,
tests, or monitoring concerning Southern or Xxxxx Trucking or any
property owned or used by Southern or Xxxxx Trucking concerning
compliance with Environmental Laws.
(v) Disclosure. The representations and warranties of Southern, Xxxxx
Trucking, the Smiths, and the Selling Stockholder contained in this
Agreement and the contents of every document delivered in connection
herewith, do not contain any untrue statement of a material fact and do
not omit to state any fact necessary to make any statement herein or
therein not misleading or necessary to a correct presentation of all
material aspects of Southern or Xxxxx Trucking's business and the matters
contemplated under this Agreement.
(w) Brokers or Finders. Except any fee owed to Xxxxx Xxxxxxx, which shall be
borne by the Smiths, none of Southern, Xxxxx Trucking, the Smiths, the
Selling Stockholder, or their agents has incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or
agents' commissions or other similar payments in connection with this
Agreement.
(x) Prepayment of Indebtedness. All indebtedness of Southern and Xxxxx
Trucking and all capitalized and operating leases may be prepaid at any
time without penalty.
ARTICLE V
Covenants and Agreements
5.1 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.
5.2 Release of the Smiths. From and after the Closing the Buyer shall either
repay all indebtedness of Southern and Xxxxx Trucking to third-parties that is
reflected on the most recent balance sheets included in the Historical Financial
Statements that the Smiths have personally guaranteed or indemnify the Smiths
against any liability under such guaranties, including any attorney fees and
expenses incurred by the Smiths in responding to or defending claims made under
such guaranties.
5.3 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.
5.4 Stockholder Liability. Anything to the contrary notwithstanding, at the
Closing Southern and Xxxxx Trucking shall (i) forgive in full all obligations
(including interest) owed to them by the Smiths up to a maximum of $320,000
(aggregating the forgiveness of both companies); and (ii) present evidence of
the amount and form of such forgiveness to Buyer. It is understood by the
parties that such forgiveness shall in no way be construed as a breach of the
representations, warranties, comments, or agreements contained herein. In
addition, the Smiths and the Selling Stockholder shall execute a full and final
waiver and release of any and all claims against Southern and Xxxxx Trucking in
substantially the form attached hereto as Exhibit E (the "Release").
5.5 Non-Competition.
(a) The parties have negotiated the non-competition provisions of this
Agreement as an integral part of the transaction. The Purchase Price is
substantially higher than the net book value of Southern and Xxxxx
Trucking, resulting in substantial "goodwill" being paid by Buyer for the
ongoing prospects of Southern's and Xxxxx Trucking's business. The Smiths
acknowledge that the Buyer is willing to pay the Purchase Price and
proceed with the transaction because of Southern's and Xxxxx Trucking's
customer relationships, growth potential, and other prospects, and that
such prospects would be severely and irreparably harmed by competition
from the Smiths. The Smiths further acknowledge that the Buyer would not
have entered into this Agreement without the non-competition provisions
contained herein. The Smiths willingly agree to the non-competition
provisions of Section 5.5(b) hereof as consideration for the Purchase
Price and agree that the non-competition provisions are reasonable and are
necessary to induce the Buyer to enter into this Agreement. If the Smiths
violate any of the non-competition provisions of Section 5.5, the Buyer
shall be entitled to damages in the amount by which the Purchase Price
exceeds combined stockholder=s equity of Southern and Xxxxx Trucking as
reflected on the July 31, 1998 balance sheets included in the Historical
Financial Statements. The Smiths agree that the measure of damages set
forth herein is appropriate and fair.
(b) For a period of three years following the later of Closing or Xxxx Xxxxx'x
final day of employment with Buyer or an Affiliate, the Smiths agree that
they will not, directly or indirectly,
(i) except in the course of Xxxx Xxxxx'x employment with Buyer 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 the Smiths may purchase or otherwise acquire up to
(but not more than) one percent as an aggregate of all such
purchases and acquisitions made by the Smiths 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;
(ii) whether for their 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 Buyer or any Affiliate, from any
person that is or was a customer of Southern, Xxxxx Trucking, Buyer,
or any Affiliate, whether or not they had personal contact with such
person during and by reason of Xx. Xxxxx'x employment with Southern,
Xxxxx Trucking, Buyer, or an Affiliate;
(iii) whether for their 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 Southern, Xxxxx Trucking, Buyer, or an Affiliate,
or in any manner induce or attempt to induce any employee of
Southern, Xxxxx Trucking, Buyer, or an Affiliate to terminate his or
her employment with Southern, Xxxxx Trucking, Buyer, or an
Affiliate; or at any time interfere with Southern's or Xxxxx
Trucking's relationship with any person, including any person who at
any time was an employee, contractor, supplier, or customer of
Southern, Xxxxx Trucking, Buyer, or an Affiliate; or
(iv) at any time after Closing, disparage Southern, Xxxxx Trucking,
Buyer, or any Affiliate, or any of their shareholders, directors,
officers, employees, or agents.
(c) For purposes of this Agreement, "Competitive Business" shall mean the
interstate and/or intrastate transportation of freight, including
truckload and less-than-truckload carriage, intermodal service, and
brokerage, logistics, agent, consolidation, or other freight-related
operations. Competitive Business shall include, but not be limited to, dry
van, temperature-controlled van, and flatbed operations.
(d) If any covenant in Section 5.5 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 Smiths.
(e) The Smiths acknowledge that the injury that would be suffered by Buyer as
a result of a breach of the provisions of this Section 5.5 would be
irreparable and that even the award of monetary damages specified in
Section 5.5(a) for such breach would be an inadequate remedy.
Consequently, the Buyer 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 Buyer shall not be obligated to post bond or other
security in seeking such relief.
5.6 Selling Stockholder Access. From and after the Closing, Buyer shall provide
the Smiths and the Selling Stockholder with access to the pre-Closing books and
records of Southern and Xxxxx Trucking as are necessary in the preparation of
tax returns or other valid purposes.
5.7 Xxxx Xxxxx Employment. In accordance with the Employment Agreement attached
hereto as Exhibit F (the "Employment Agreement"), Xxxx Xxxxx shall be employed
as President of Southern at the salary rate of $200,000 annually, plus a
retention bonus of $120,000 annually, an annual bonus based upon the
profitability of Southern and Buyer, and benefits provided other employees of
Buyer's operating subsidiary, Covenant Transport, Inc., a Tennessee corporation.
Such salary shall be payable on the same frequency as wage payments made to
other employees and bonuses shall be made annually at the same time as bonuses
to other employees. In accordance with the Stock Option Agreement attached
hereto as Exhibit G, Buyer shall grant Xxxx Xxxxx an option to purchase 20,000
shares of Buyer's Class A common stock with terms customary to Buyer's option
holders.
ARTICLE VI
Indemnification
6.1 Indemnification by the Selling Stockholder. The Selling Stockholder hereby
indemnifies, defends, and holds harmless Buyer together with (as applicable) its
Affiliates, successors, 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 Southern, Xxxxx Trucking, the Smiths, or the
Selling Stockholder 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 Southern, Xxxxx Trucking, the Smiths,
or the Selling Stockholder.
6.2 Indemnification by Buyer. Buyer hereby indemnifies, defends, and holds the
Selling Stockholder harmless from and against all Losses arising out of or
otherwise in respect of any misrepresentation or inaccuracy in, or breach of,
any representation, warranty, covenant, or agreement of Buyer contained in this
Agreement or any other Contract executed in connection herewith.
6.3 Indemnification Procedures. A party seeking indemnification under Section
6.1 or Section 6.2 (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 or Proceeding
in respect of which indemnification may be sought. Subject to Section 6.6, the
Indemnifying Party, at its expense, may assume the defense of any such claim or
Proceeding and take all steps to settle or defeat any such claim or Proceeding,
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 or Proceedings. The Indemnified Party shall have the right to
participate at its own expense in such defense, but the control of such claim or
Proceeding 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
Proceeding or does not do so in a timely fashion, the Indemnified Party shall be
entitled to control the defense or settlement of such claim or Proceeding and
shall be entitled to indemnity with respect thereto.
6.4 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.
6.5 Right of Set-Off. Upon notice to the Selling Stockholder specifying in
reasonable detail the basis for such set-off, Buyer may set off any amount to
which it may be entitled under this Article VI against amounts otherwise payable
under the Note. The exercise of such right of set-off by Buyer in good faith,
whether or not ultimately determined to be justified, will not constitute an
event of default under the Note. Neither the exercise of nor the failure to
exercise such right of set-off or to give a notice of Loss will constitute an
election of remedies or limit Buyer in any manner in the enforcement of any
other remedies that may be available to it and the Note amount shall not serve
as a limit on the Selling Stockholder=s liability for Losses hereunder.
6.6 IRS Indemnification.
(a) Southern and Xxxxx Trucking have each received a notice of deficiency from
the Internal Revenue Service and are the subject of proceedings initiated
by the Internal Revenue Service with respect to the 1992 and 1993 tax
returns filed by them (the "IRS Proceedings"). In addition to any other
indemnification hereunder, the Selling Stockholder hereby agrees to
indemnify, defend, and hold harmless Buyer, Xxxxx Trucking, Southern, and
their Affiliates, agents, employees, officers, directors, shareholders,
successors, heirs, and assigns against any and all Losses arising from or
in any manner connected with the IRS Proceeding and any other claims made
by the Internal Revenue Service arising out of or otherwise in respect of
(a) any tax return filed by Southern or Xxxxx Trucking prior to the date
of Closing or (b) any event or transaction by Southern or Xxxxx Trucking
prior to the Closing (together, "IRS Claims").
(b) Anything to the contrary notwithstanding, the indemnification procedures
for IRS Claims shall be as set forth in this Section 6.6:
(i) In reference to any IRS Claims other than the IRS Proceeding, Buyer
shall assume control of any such IRS Claims and coordinate the
defense or settlement thereof; provided that Buyer shall reasonably
consider the advice and wishes of the Smiths and the Selling
Stockholder, and the Smiths and the Selling Stockholder shall
provide reasonable cooperation in connection with such defense or
settlement.
(ii) In connection with the IRS Proceedings only, the Selling Stockholder
shall take primary responsibility for negotiating, defending, and
settling the IRS Proceeding. The Selling Stockholder shall keep the
Buyer fully informed of all aspects of the IRS Proceedings, shall
invite the Buyer to participate in all meetings, conferences, and
discussions with representatives of the IRS, shall have the Buyer
copied on all correspondence and filings, and shall direct all
representatives to give Buyer full and complete access to any
desired information. Buyer shall be consulted and must consent to
any settlement of the IRS Proceedings; provided that such consent
shall not be withheld unless in Buyer's good faith judgment the
settlement would significantly compromise the position of Buyer or
its other subsidiaries in another case involving the IRS or the
settlement would involve more than the payment of civil damages. In
the event the IRS Proceedings go to litigation, the Buyer shall be
entitled to approve all litigation strategies, and the Selling
Stockholder shall not take any position inconsistent with the
positions of Buyer's other subsidiaries. Xxxxxxx Xxxxxxxx shall
continue to serve as counsel in the IRS Proceedings unless Buyer
becomes substantially and justifiably dissatisfied with such
services, in which case replacement counsel shall be retained. All
fees and expenses incurred in connection with such defense shall be
deemed "Losses" and be paid by the Selling Stockholder in accordance
with Section 6.6(a); provided, that the fees and expenses of Price
Waterhouse Coopers (or any successor or replacement CPA firm)
("Coopers' Fees") shall be borne as follows:
(A) From the date hereof through settlement discussions currently
scheduled, all Coopers' Fees shall be borne by Buyer and not
be subject to indemnification by the Selling Stockholder;
(B) From the date (if any) a decision is made to litigate the IRS
Proceedings, all Coopers' Fees on topics applicable both to
the IRS Proceedings and to proceedings involving Buyer or its
other subsidiaries shall be borne by Buyer and not be subject
to indemnification by the Selling Stockholder; and
(C) From the date (if any) a decision is made to litigate the IRS
Proceedings, all Coopers' Fees relating specifically to the
IRS Proceedings shall be borne by the Selling Stockholder and
Buyer shall be entitled to indemnification therefor.
(iii) In connection with all IRS Claims other than the IRS Proceedings,
all Losses, including all Coopers= Fees and all fees and expenses of
other advisors shall be the responsibility of the Selling
Stockholder and Buyer shall be entitled to indemnification therefor.
6.7 Xxxxx Guaranty. As additional security for the Selling Stockholder's
indemnification obligations, the Smiths hereby unconditionally guaranty and
agree to pay, perform, and discharge the obligations of the Selling Stockholder
under this Article VI subject to the monetary limitation contained in Section 9
of the Employment Agreement. The Smiths agree that the Buyer may collect on such
guarantee by offsetting any Losses against payments due under the Employment
Agreement as stated therein. To the extent the Smiths perform under this Section
or otherwise become liable to Buyer in connection with this Agreement, they
shall not be entitled to indemnification by Buyer, Xxxxx Trucking, Southern, or
any other subsidiary or Affiliate of Buyer under applicable state laws or under
such companies' respective articles, bylaws or other charter documents or
corporate resolutions or agreements with such corporations relating to
indemnification of officers, directors and others for corporate actions. Any
such rights are hereby waived. Notwithstanding anything to the contrary, the
Smiths, jointly and severally, shall be primarily liable for any violation by
them of Section 5.5 hereof.
ARTICLE VII
Miscellaneous
7.1 Costs and Expenses; Fees. 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.
7.2 Survival of Representations, Warranties, Covenants, and Agreements. The
covenants, agreements, representations, and warranties of the Smiths and the
Selling Stockholder contained in this Agreement or in any document delivered or
in connection herewith shall survive the Closing for a period of three years.
Anything to the contrary notwithstanding, (a) covenants, agreements,
representations, and warranties of the Smiths and the Selling Stockholder
relating to tax, environmental, and employee benefit plan matters shall survive
until the expiration of the applicable statutes of limitation and (b) the
obligations of the Smiths under Section 5.5 shall survive for the period
specified therein. Except for Buyer's obligations under Sections 5.6 and 5.7,
the covenants, agreements, representations, and warranties of Buyer contained in
this Agreement or in any document delivered in connection herewith shall
terminate at the Closing.
7.3 Complete Agreement, etc.. All Exhibits and Schedules referred to herein are
intended to be and hereby are specifically made a part of this Agreement. This
Agreement sets forth the entire understanding of the parties hereto with respect
to the transactions contemplated hereby, and any and all previous agreements and
understandings between or among the parties regarding the subject matter hereof,
whether written or oral, are superseded by this Agreement. It shall not be
amended or modified except by written instrument duly executed by each of the
parties hereto.
7.4 Assignment and Binding Effect. This Agreement shall not be assigned prior to
the Closing by any party hereto without the prior written consent of the other
parties and any assignment without consent shall be void; provided, that Buyer
may assign its rights hereunder to any subsidiary. Subject to the foregoing, all
of the terms and provisions of this Agreement shall be binding upon and inure to
the benefit of and be enforceable by the successors and assigns of any party.
Nothing expressed or referred to in this Agreement will be construed to give any
person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
7.5 Waiver. Any term or provision of this Agreement may be waived at any time by
the party entitled to the benefit thereof by a written instrument duly executed
by such party.
7.6 Time. Time is of the essence in connection with this Agreement and each and
every provision hereof. Any extension of time granted for the performance of any
duty under this Agreement shall not be considered an extension of time for the
performance of any other duty under this Agreement.
7.7 Notices. Any notice, request, demand, waiver, consent, approval, or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given only if delivered personally (including by nationally
recognized overnight courier service) or sent by telegram or by certified mail,
postage prepaid, and sent by telecopier as follows:
If to Buyer, to: Xxxxx X. Xxxxxx
Covenant Transport, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
(000) 000-0000 Telephone
(000) 000-0000 Fax
With a required copy to: Xxxx X. Xxxxxxx
Xxxxxxx Law Firm, P.C.
000 X. 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
(000) 000-0000 Telephone
(000) 000-0000 Fax
If to the Smiths or the Selling Xxxx Xxxxx
Stockholder, to: X.X. Xxx 000
Xxxxxxx, XX 00000
(000) 000-0000 Telephone
(000) 000-0000 Fax
With a required copy to: Xxxxxx Xxxxxxx, Esq.
000 X. Xxxxxxxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
(000) 000-0000 Telephone
(000) 000-0000 Fax
or to such other address as the addressee shall have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval, or other communication shall be deemed to have been given as
of the date so personally delivered, telegraphed, or deposited in the mail and
telecopied.
7.8 Cooperation. Subject to the terms and conditions herein provided, the
parties hereto shall use their best efforts to take, or cause to be taken, such
action, to execute and deliver, or cause to be executed and delivered, such
additional documents and instruments and to do, or cause to be done, all things
necessary, proper, or advisable under the provisions of this Agreement and under
applicable law to consummate and make effective the transactions contemplated by
this Agreement.
7.9 Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of Tennessee, without regard
to conflict-of-law principles.
7.10 Headings, Gender, and Person. All section headings contained in this
Agreement are for convenience and reference only, do not form a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine, or neuter, as the context
requires. Any reference to a "person" herein shall include an individual, firm,
corporation, partnership, trust, governmental authority, or any other entity.
7.11 Severability. Any provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
7.12 Counterparts. This Agreement may be executed in any number of 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.
This Agreement shall become binding when one or more counterparts taken together
shall have been executed and delivered by the parties. It shall not be necessary
in making proof of this Agreement or any counterpart hereof to produce or
account for any of the other counterparts.
7.13 Public Announcements. Buyer shall be entitled to issue a press release
announcing the execution of this Agreement and basic information concerning
Southern and Xxxxx Trucking and the proposed transaction. Buyer shall submit the
press release to the Smiths in advance and shall make such changes as may be
reasonably requested; provided, that Buyer shall not be required to make changes
contrary to the advice of its securities counsel.
* * * * * * * * * * *
Signature Page Follows
* * * * * * * * * * * * * * *
Signature Page to the Stock Purchase Agreement
among Covenant Transport, Inc., Xxxxx Charitable
Remainder Trust, Southern Refrigerated Transport, Inc.,
Xxxx Xxxxx Trucking, Inc., and the Smiths
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on the date first written.
COVENANT TRANSPORT, INC. SOUTHERN REFRIGERATED TRANSPORT,
a Nevada corporation INC.
an Arkansas corporation
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxx Xxxxx
Xxxxx X. Xxxxxx, President Xxxx Xxxxx, President
XXXX XXXXX TRUCKING, INC.
an Arkansas corporation
By: /s/ Xxxx Xxxxx /s/ Xxxxx Xxxxx
Xxxx Xxxxx, President Xxxxx Xxxxx, Individually
/s/ Xxxx Xxxxx
Xxxx Xxxxx, Individually
XXXXX CHARITABLE REMAINDER TRUST
By: /s/ Xxxx Xxxxx
Xxxx Xxxxx, Trustee
By: /s/ Xxxxx Xxxxx
Xxxxx Xxxxx, Trustee
Exhibit List to Stock Purchase Agreement
Exhibit A - Real Estate
Exhibit B - Note
Exhibit C-1 - Opinion of Xxxxxxxxxx, Xxxxxx & Xxxxxxxx
Exhibit C-2 - Opinion of Xxxxxx Xxxxxxx
Exhibit D - Opinion of Xxxxxxx Law Firm, P.C.
Exhibit E - Release
Exhibit F - Employment Agreement
Exhibit G - Stock Option Agreement
Schedule list to Stock Purchase Agreement
Schedule 4.3(a) - Corporate Status
Schedule 4.3(c) - Directors and Officers, Bank Accounts, Etc.
Schedule 4.3(f) - Historical Financial Statements Schedule 4.3(h)
Absence of Changes
or Events Schedule 4.3(i) - Asset Schedule
Schedule 4.3(j) - Title and Condition of Assets Schedule 4.3(m)
Litigation Schedule
4.3(n) - Insurance; Bonds Schedule 4.3(o)
Material Contracts
Schedule 4.3(p) - Employee Benefit Plans Schedule
4.3(s) - Rights
