Exhibit 2.2
STOCK PURCHASE AGREEMENT
XXXXXXXX TRUCK BROKERS, INC.
DATED: JULY 2, 1999
TABLE OF CONTENTS
1. DEFINITIONS.........................................................1
2. SALE AND TRANSFER OF SHARES; CLOSING................................4
2.1 SHARES..............................................................4
2.2 PURCHASE PRICE......................................................4
2.3 CLOSING.............................................................4
2.4 CLOSING OBLIGATIONS.................................................4
3. REPRESENTATIONS AND WARRANTIES OF SELLERS...........................5
3.1 ORGANIZATION AND GOOD STANDING......................................5
3.2 AUTHORITY; NO CONFLICT..............................................5
3.3 CAPITALIZATION......................................................6
3.4 FINANCIAL STATEMENTS................................................7
3.5 BOOKS AND RECORDS...................................................7
3.6 TITLE TO PROPERTIES; ENCUMBRANCES...................................7
3.7 CONDITION AND SUFFICIENCY OF ASSETS.................................8
3.8 ACCOUNTS RECEIVABLE.................................................8
3.9 NO UNDISCLOSED LIABILITIES..........................................8
3.10 TAXES.............................................................8
3.11 NO MATERIAL ADVERSE CHANGE........................................9
3.12 EMPLOYEE BENEFITS.................................................9
3.13 COMPLIANCE........................................................9
3.14 LITIGATION........................................................10
3.15 ABSENCE OF CHANGES................................................10
3.16 CONTRACTS; NO DEFAULTS............................................11
3.17 INSURANCE.........................................................12
3.18 ENVIRONMENTAL MATTERS.............................................12
3.19 EMPLOYEES; INDEPENDENT CONTRACTORS................................13
3.20 LABOR RELATIONS; COMPLIANCE.......................................13
3.21 INTELLECTUAL PROPERTY.............................................14
3.22 RELATIONSHIPS WITH RELATED PERSONS................................15
3.23 BROKERS OR FINDERS................................................15
3.24 DISCLOSURE........................................................15
3.25 INVESTMENT REPRESENTATION.........................................15
3.26 TAX REPRESENTATIONS...............................................16
4. REPRESENTATIONS AND WARRANTIES OF TGI...............................16
4.1 ORGANIZATION AND GOOD STANDING......................................16
4.2 AUTHORITY; NO CONFLICT..............................................16
4.3 CERTAIN PROCEEDINGS.................................................17
5. COVENANTS...........................................................17
5.1 ACCESS AND INVESTIGATION............................................17
5.2 OPERATION OF THE BUSINESS OF THE COMPANY............................17
5.3 NEGATIVE COVENANT...................................................17
5.4 NOTIFICATION........................................................17
5.5 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS..........................18
5.6 NO NEGOTIATION......................................................18
5.7 BEST EFFORTS........................................................18
5.8 RELEASE OF GUARANTEES...............................................18
6. CONDITIONS PRECEDENT TO TGI'S OBLIGATION TO CLOSE...................18
6.1 ACCURACY OF REPRESENTATIONS.........................................18
6.2 SELLERS' PERFORMANCE................................................18
6.3 CONSENTS............................................................18
6.4 ADDITIONAL DOCUMENTS................................................19
6.5 NO PROCEEDINGS......................................................19
6.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS.................19
6.7 SATISFACTORY DUE DILIGENCE..........................................19
6.8 FINANCING...........................................................19
6.9 ENVIRONMENTAL AUDIT.................................................19
6.10 ACQUISITION OF R & M ENTERPRISES, INC.............................19
7. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE................20
7.1 ACCURACY OF REPRESENTATIONS.........................................20
7.2 TGI'S PERFORMANCE...................................................20
7.3 NO PROCEEDINGS......................................................20
7.4 ACQUISITION OF R & M ENTERPRISES, INC...............................20
8. TERMINATION.........................................................20
8.1 TERMINATION EVENTS..................................................20
8.2 EFFECT OF TERMINATION...............................................21
9. INDEMNIFICATION; REMEDIES...........................................21
9.1 SURVIVAL............................................................21
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS...................21
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY TGI.......................22
9.4 ESCROW..............................................................22
9.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS...................23
9.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS.........................24
10. GENERAL PROVISIONS..................................................24
10.1 EXPENSES..........................................................24
10.2 PUBLIC ANNOUNCEMENTS..............................................24
10.3 NOTICES...........................................................24
10.4 JURISDICTION; SERVICE OF PROCESS..................................25
10.5 FURTHER ASSURANCES................................................25
10.6 WAIVER............................................................25
10.7 ENTIRE AGREEMENT AND MODIFICATION.................................26
10.8 DISCLOSURE LETTER.................................................26
10.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS................26
10.10 SEVERABILITY......................................................26
10.11 SECTION HEADINGS, CONSTRUCTION....................................27
10.12 TIME OF ESSENCE...................................................27
10.13 GOVERNING LAW.....................................................27
10.14 COUNTERPARTS......................................................27
SCHEDULES
TGI CONSENTS...................................................SCHEDULE 14.2
PERSONAL GUARANTEES............................................SCHEDULE 15.8
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of July 2, 1999,
by and between Transit Group, Inc., a Florida corporation ("TGI") and Xxxxxxx X.
Xxxxxxx and Xxxxx X. Xxxxxxxx, each a resident of the State of Nebraska
(referred to herein individually as a "Seller" and collectively as the
"Sellers"). TGI and the Sellers are sometimes referred to herein individually as
a "Party" and collectively as the "Parties."
RECITALS
A. TGI desires to purchase and Sellers desire to sell 1000 shares of
common stock representing all of the outstanding shares of common stock, of
Xxxxxxxx Truck Brokers, Inc., a Nebraska corporation, (the "Company") as more
fully provided for in Article 12 of this Agreement (the "Stock Purchase").
B. Simultaneous with the closing of the Stock Purchase, TGI will
acquire all of the issued and outstanding stock of R & M Enterprises, Inc.
pursuant to the provisions of an Agreement and Plan of Reorganization by and
between R & M Enterprises, Inc., TGI and the Sellers of even date herewith (the
"Agreement and Plan of Reorganization").
C. Upon the closing of the Stock Purchase, all of the outstanding
capital stock of the Company will be owned by TGI.
D. Each Seller owns 500 shares of common stock of the Company, which
together represents all of the outstanding shares of common stock of the
Company.
AGREEMENT
For and in consideration of the above premises and the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:
11. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Agreement" --this Agreement together with all Schedules and Exhibits
hereto.
"Agreement and Plan of Reorganization"--that certain Agreement and Plan
of Reorganization by and between R & M Enterprises, Inc., TGI and the Sellers of
even date herewith.
"Balance Sheet"--as defined in Section 3.4.
"Closing"--as defined in Section 2.7.
"Closing Date"--the date and time as of which the Closing actually
takes place.
"Company"--the Company identified in the Recitals to this Agreement.
"Company's Disclosure Letter"--the disclosure letter delivered by
Sellers to TGI concurrently with the execution and delivery of this Agreement.
"Computer Devices"--as defined in Section 3.21(c).
"Contemplated Transactions"--all of the transactions contemplated by
this Agreement, including:
(d) the purchase and sale of the Shares;
(e) the execution, delivery, and performance of the Noncompetition
Agreements, and the Escrow Agreement as such terms are defined
in the Agreement and Plan of Reorganization; and
(f) the performance by TGI, the Company and the Sellers of their
respective covenants and obligations under this Agreement.
"Damages"--as defined in Section 9.2 hereof.
"Environmental Assessment"--as defined in Section 16.9 hereof.
"Environmental Law"--any law or regulation that requires or relates to:
(f) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or
other prohibitions and of the commencements of activities,
such as resource extraction or construction, that could have
significant impact on the environment;
(g) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the
environment;
(h) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or
other potentially harmful substances;
(i) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or
prevention; or
(j) making responsible parties pay private parties, or groups of
them, for damages done to their health or the environment, or
permitting self-appointed representatives of the public
interest to recover for injuries done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974, as
amended, and regulations and rules issued pursuant to that act or any successor
law.
"Escrow Agent"--as defined in Section 19.4 hereof.
"Escrow Agreement"--as defined in the Agreement and Plan of
Reorganization.
"Escrow Shares"--as defined in Section 19.4 hereof.
"Facility"-- as defined in Section 13.18 hereof.
"GAAP"--generally accepted United States accounting principles, applied
on a basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4 were prepared.
"Hazardous Materials"--any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"Indemnified Persons"--as defined in Section 19.2 hereof.
"Intellectual Property Assets"--as defined in Section 13.21 hereof.
"Noncompetition Agreements"--as defined in the Agreement and Plan of
Reorganization.
"Occupational Safety and Health Law"--any law or regulation designed to
provide safe and healthy working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"Party" or "Parties"--as defined in the first paragraph of this
Agreement.
"Plans"--as defined in Section 13.12 hereof.
"Purchase Price"--as defined in Section 12.2 hereof.
"Securities Act"--the Securities Act of 1933 or any successor law,and
regulations and rules issued pursuant to that act or any successor law.
"Sellers"--as defined in the first paragraph of this Agreement.
"Sellers' Closing Documents"--as defined in Section 13.2 hereof.
"Shares"--as defined in Section 13.3.
"Stock Purchase"--as defined in the Recitals hereto.
"Subsidiary" or "Subsidiaries"--means any company, entity, partnership
or joint venture in which the Company owns an equity or other interest.
"TGI"--Transit Group, Inc., a Florida corporation.
"TGI's Advisors"--as defined in Section 15.1 hereof.
"Year 2000 Problem"--as defined in Section 3.21(c).
12. SALE AND TRANSFER OF SHARES; CLOSING
12.1 SHARES.
Subject to the terms and conditions of this Agreement, at the
Closing, Sellers will sell and transfer the Shares to TGI, and TGI will purchase
the Shares from Sellers, free and clear of all liens, claims and encumbrances
whatsoever.
12.2 PURCHASE PRICE.
The purchase price for the Shares will be an amount equal to
$1,425,000, to be paid by wire transfer or certified check (the "Purchase
Price") at Closing, with one-half of the Purchase Price being paid to each
Seller.
12.3 CLOSING.
The consummation of the Stock Purchase provided for in this Agreement
(the "Closing") will take place at the offices of the Company in Gretna,
Nebraska at 10:00 a.m. (local time) on the second business day following the day
on which all necessary consents, as required by Section 16.3 hereof, have been
received, or at such time and place as the Parties may agree.
12.4 CLOSING OBLIGATIONS.
At the Closing:
(a) Sellers will deliver to TGI:
(i) certificates representing the Shares, duly endorsed for
transfer to TGI (or accompanied by duly executed stock
powers), with signatures guaranteed by a commercial bank;
(ii) releases and resignations from the officers and directors of the Company
duly executed by such parties; (iii) a noncompetition agreement in the form of
Exhibit "A" executed by each of the Sellers (the "Noncompetition Agreements");
and (iv) a certificate executed by the Sellers certifying to TGI that the
Sellers' representations and warranties in this Agreement were accurate in all
respects as of the date of this Agreement and are accurate in all respects
as of the Closing Date as if made on the Closing Date.
(b) TGI will deliver to Sellers:
(i) the Purchase Price by wire transfer or bank cashier's or certified check
payable to the order of the Sellers;
(ii) a certificate executed by TGI to the effect that the TGI's representations
and warranties in this Agreement were accurate in all respects as of the date of
this Agreement and are accurate in all respects as of the Closing Date as if
made on the Closing Date.
13. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers jointly and severally represent and warrant to TGI as follows:
13.1 ORGANIZATION AND GOOD STANDING.
(a) Part 3.1 of the Company's Disclosure Letter contains a statement of the
Company's and each Subsidiary's jurisdiction of incorporation, a list of all
other jurisdictions in which it is authorized to do business, and its
capitalization (including the identity of each stockholder and the number of
shares held by each). The Company and each Subsidiary is duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under its contracts.
The Company and each Subsidiary is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification, except where the failure to so qualify would not adversely impact
the Company nor cost the Company additional fees or penalties to qualify due to
the failure of the Company to previously do so.
(b) Sellers have delivered to TGI copies of the Articles of Incorporation and
Bylaws of the Company and each Subsidiary, as currently in effect.
13.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding obligation of
Sellers and the Company enforceable against them in accordance with its terms.
Upon the execution and delivery by Sellers of the Escrow Agreement and the
Noncompetition Agreements (collectively, the "Sellers' Closing Documents"),
the Sellers' Closing Documents will constitute the legal, valid, and binding
obligations of Sellers, enforceable against each of them in accordance with
their respective terms. Each of the Sellers and the Company has the absolute and
unrestricted right, power, authority and capacity to execute and deliver this
Agreement and the Sellers' Closing Documents and to perform their respective
obligations under this Agreement and the Sellers' Closing Documents.
(b) Except as set forth on Part 13.2(b) of the Company's Disclosure Letter,
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time): (i) contravene, conflict with, or
result in a violation of (A) any provision of the Articles of Incorporation or
Bylaws of the Company or any Subsidiary; or (B) any resolution adopted by the
board of directors or the stockholders of the Company or any Subsidiary; or (C)
any of the terms or requirements of, or give any governmental body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any permit or
authorization that is held by the Company or any Subsidiary or that otherwise
relates to the business of, or any of the assets owned or used by, the Company
or any Subsidiary; or (D) any provision of, or give any person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify any contract to which the
Company or any Subsidiary is bound; or
(ii) result in the imposition or creation of any lien, claim or encumbrance upon
or with respect to any of the assets owned or used by the Company or any
Subsidiary. (c) Except as set forth in Part 3.2 of the Company's Disclosure
Letter, neither Sellers, the Company nor any Subsidiary is or will be required
to give any notice to or obtain any consent from any person in connection with
the execution and delivery of this Agreement or the consummation or performance
of any of the Contemplated Transactions.
13.3 CAPITALIZATION.
(a) The authorized equity securities of the Company consist of 10,000 shares of
common stock, par value $1.00 per share, of which 1,000 shares are issued and
outstanding (the "Shares"). Sellers are and ------ will be on the Closing Date
the record and beneficial owners and holders of the Shares, free and clear of
all liens, claims or encumbrances. The shares are owned of record as shown on
Part 3.3 of the Company's Disclosure Letter. With the exception of the Shares
(which are owned by Sellers), there are no other outstanding equity securities
or other securities of the Company. No legend or other reference to any
purported encumbrance appears upon any certificate representing equity
securities of the Company, including, without limitation, any options warrants,
convertible securities or other rights or agreements to acquire any securities
of the Company. All of the outstanding equity securities of the Company have
been duly authorized and validly issued and are fully paid and nonassessable.
There are no contracts relating to the issuance, sale or transfer of any equity
securities or other securities of the Company. None of the outstanding equity
securities or other securities of the Company was issued in violation of the
Securities Act or any other law or regulation. The Company does not own, nor
does it have any contract to acquire, any equity securities or other securities
of any person (other than the Company) or any direct or indirect equity or
ownership interest in any other business.
(b) The authorized equity securities of each Subsidiary and the number of shares
of such Subsidiary that are outstanding are set forth on Part 3.3 of the
Company's Disclosure Letter. The Company is and will be on the Closing Date the
record and beneficial owner and holder of all of the issued and outstanding
stock of each Subsidiary, free and clear of all liens, claims or encumbrances.
With the exception of the shares owned by the Company, there are no other
outstanding equity securities or other securities of any Subsidiary. No legend
or other reference to any purported encumbrance appears upon any certificate
representing equity securities of a Subsidiary, including, without limitation,
any options, warrants, convertible securities or other rights or agreements to
acquire any securities of the Subsidiary. All of the outstanding equity
securities of each Subsidiary have been duly authorized and validly issued and
are fully paid and nonassessable. There are no contracts relating to the
issuance, sale, or transfer of any equity securities or other securities of any
Subsidiary. None of the outstanding equity securities or other securities of any
Subsidiary was issued in violation of the Securities Act or any other law or
regulation. No Subsidiary owns, nor does it have any contract to acquire, any
equity securities or other securities of any person or any direct or indirect
equity or ownership interest in any other business.
13.4 FINANCIAL STATEMENTS.
Sellers have delivered to TGI: (a) unaudited balance sheets of the
Company and its Subsidiaries as at their fiscal year ends in each of the years
1996 through 1998, and the related unaudited statements of income, changes in
stockholders' equity, and cash flow for each of the fiscal years then ended, and
(b) unaudited balance sheets of the Company and its Subsidiaries as at May 31,
1999 (the "Balance Sheet") and income statements for the five (5) month period
then ended. Such financial statements and the notes thereto fairly present the
financial condition and the results of operations, changes in stockholders'
equity and cash flow of the Company and its Subsidiaries as at the respective
dates of and for the periods referred to in such financial statements, all in
accordance with GAAP, consistently applied throughout the periods involved.
13.5 BOOKS AND RECORDS.
The books of account, minute books, stock record books and other
records of the Company and each Subsidiary, all of which have been made
available to TGI, are complete and correct and have been maintained in
accordance with applicable law. The minute books of the Company and each
Subsidiary contain accurate and complete records of all meetings of, and
corporate actions taken by, the stockholders, the Boards of Directors and
committees of the Boards of Directors of the Company and each Subsidiary, and no
meeting of any such stockholders, Board of Directors or committee has been held
for which minutes have not been prepared and are not contained in such minute
books.
13.6 TITLE TO PROPERTIES; ENCUMBRANCES.
Part 3.6 of the Company's Disclosure Letter contains a complete and
accurate list of all real property and material items of personal property owned
by the Company and each Subsidiary. The Company and each Subsidiary owns good
and marketable title to the properties and assets located in the facilities
owned or operated by the Company or any Subsidiary or reflected as owned in the
books and records of the Company or any Subsidiary, including all of the
properties and assets reflected in the Balance Sheet, and all of the properties
and assets purchased or otherwise acquired by the Company or any Subsidiary
since the date of the Balance Sheet. All real property listed on Part 3.6 of the
Company's Disclosure Letter is owned in fee simple title. All material
properties and assets reflected in the Balance Sheet are owned free and clear of
all liens, claims or encumbrances and are not, in the case of real property,
subject to any use restrictions, exceptions, variances, reservations, or
limitations of any nature except, with respect to all such properties and
assets, (a) mortgages or security interests shown on the Balance Sheet as
securing specified liabilities or obligations, with respect to which no default
(or event that, with notice or lapse of time or both, would constitute a
default) exists, and (b) zoning laws and other land use restrictions that do not
impair the present or anticipated use of the property subject thereto. All
buildings, plants, and structures owned by the Company or any Subsidiary lie
wholly within the boundaries of the real property owned by the Company or any
Subsidiary and do not encroach upon the property of, or otherwise conflict with
the property rights of, any other person.
13.7 CONDITION AND SUFFICIENCY OF ASSETS.
The buildings, plants, structures, and equipment owned or leased by
the Company and each Subsidiary 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, individually or in the aggregate. The
building, plants, structures, and equipment owned or leased by the Company and
each Subsidiary are sufficient for the continued conduct of the Company's and
each Subsidiary's businesses after the Closing in substantially the same manner
as conducted prior to the Closing.
13.8 ACCOUNTS RECEIVABLE.
All accounts receivable of the Company and each Subsidiary as of the
Closing Date represent or will represent valid obligations arising from sales
actually made or services actually performed in the ordinary course of business.
Unless paid prior to the Closing Date, the accounts receivable are or will be as
of the Closing Date current and collectible net of the respective reserves shown
on the Balance Sheet. There is no contest, claim, or right of set-off relating
to the amount or validity of such accounts receivable, except immaterial amounts
arising in the ordinary course of business.
13.9 NO UNDISCLOSED LIABILITIES.
Except as set forth on Part 3.9 of the Company's Disclosure Letter,
neither the Company nor any Subsidiary has any liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Balance Sheet and nonmaterial current liabilities incurred in the
ordinary course of business since the date thereof.
13.10 TAXES.
(a) The Company and each Subsidiary has filed or caused to be filed on a
timely basis all tax returns that are or were required to be filed by
or with respect to it. The Company and each Subsidiary has paid, or
made provision for the payment of, all taxes that have or may have
become due for all periods prior to and through Closing. All tax
returns filed by the Company any each Subsidiary are true, correct and
complete. All references in this Section 3.10 to "taxes" and "tax
returns" shall include all federal, state, local and foreign taxes
required to be paid and tax returns, reports and statements required to
be filed by the Company or any Subsidiary.
(b) Except as set forth on Part 13.10 of the Company's Disclosure Letter, no
United States, federal or state income tax returns of the Company or any
Subsidiary have been audited by the IRS or relevant state tax authorities during
the past seven years. Neither Sellers, the Company, nor any Subsidiary has given
or been requested to give waivers or extensions (or is or would be subject to a
waiver or extension given by any other person) of any statute of limitations
relating to the payment of taxes of the Company. (c) The charges, accruals, and
reserves with respect to taxes on the books of the Company are adequate
(determined in accordance with GAAP) and are at least equal to the Company's
liability for taxes (including any Subsidiary's liability). There exists no
proposed tax assessment against the Company or any Subsidiary except as
disclosed in the Balance Sheet. (d) Proper and accurate amounts have been
withheld by Company and its Subsidiaries from its employees for all periods in
full and complete compliance with the tax, social security and unemployment
withholding provisions of applicable federal, state, local and foreign law and
such withholdings due and payable have been timely paid to the respective
governmental agencies. Neither the Company nor any of its Subsidiaries has
executed or filed with the IRS or any other governmental authority any agreement
or other document extending, or having the effect of extending the period for
assessment or collection of any taxes. 13.11 NO MATERIAL ADVERSE CHANGE.
Except as set forth on Part 3.11 of the Company's Disclosure Letter,
since December 31, 1998, there has not been any material adverse change in the
business, operations, properties, prospects, assets, or condition of the Company
or any Subsidiary, and no event has occurred or circumstance exists that may
result in such a material adverse change.
13.12 EMPLOYEE BENEFITS.
Part 3.12 of the Company's Disclosure Letter contains a list of all
pension, retirement, disability, medical, dental or other health plans, life
insurance or other death benefit plans, profit sharing, deferred compensation
agreements, stock, option, bonus or other incentive plans, vacation, sick,
holiday or other paid leave plans, severance plans or other similar employee
benefit plans maintained by the Company or any Subsidiary (the "Plans"),
including, without limitation, all "employee benefit plans" as defined in
Section 3(3) of ERISA. All contributions due from the Company or any Subsidiary
with respect to any of the Plans have been made or accrued on the Company's
financial statements, and no further contributions will be due or will have
accrued thereunder as of the Closing. Each of the Plans, and its operation and
administration, is, in all material respects, in compliance with all applicable,
federal, state, local and other governmental laws and ordinances, orders, rules
and regulations, including the requirements of ERISA and the Internal Revenue
Code. All such Plans that are "employee pension benefit plans" (as defined in
Section 3(2) of ERISA) which are intended to qualify under I.R.C. Section
401(a)(8) have received favorable determination letters that such plans satisfy
all qualification requirements. In addition, the Company has not been a
participant in any "prohibited transaction," within the meaning of Section 406
of ERISA, with respect to any employee pension benefit plan (as defined in
Section 3(2) of ERISA) which the Company or any Subsidiary sponsors as employer
or in which the Company or any Subsidiary participates as an employer, which was
not otherwise exempt pursuant to Section 408 of ERISA (including any individual
exemption granted under Section 408(a) of ERISA), or which could result in an
excise tax.
13.13 COMPLIANCE.
(a) The Company and each Subsidiary is and at all times has conducted its
business and the ownership and use of its assets in compliance with all
applicable laws.
(b) Part 3.13 of the Company's Disclosure Letter contains a complete and
accurate list of each permit or governmental consent or authorization that is
held by the Company and each Subsidiary or that otherwise relates to the
business of, or to any of the assets owned or used by, the Company or any
Subsidiary. Each such permit or governmental consent or authorization is valid
and in full force and effect and constitutes all of the governmental
authorizations necessary to permit the Company and each Subsidiary to lawfully
conduct and operate its business in the manner currently conducted.
13.14 LITIGATION.
(a) Except as set forth in Part 3.14 of the Company's Disclosure Letter, there
is no pending or to the knowledge of the Sellers, threatened action, claim,
arbitration, audit, hearing, investigation, litigation or suit (whether civil,
criminal, administrative, investigative, or informal) by or against the Company
or any Subsidiary or that relates to or may affect the business of, or any of
the assets owned or used by, the Company or any Subsidiary; or that challenges,
or that may have the effect of preventing, delaying, making illegal or
enjoining, any of the Contemplated Transactions. The Company has not received
notice of any vehicle accident involving any employees or vehicles of the
Company or a Subsidiary which could reasonably be expected to result in a claim
or action against the Company or a Subsidiary and which is not set forth on Part
3.14.
(b) Except as set forth on Part 3.14 of the Company's Disclosure Letter, there
is no order or court decision to which the Company, any Subsidiary, the Sellers,
any director or officer of the Company, or any of the assets owned or used by
the Company, is subject.
13.15 ABSENCE OF CHANGES.
Except as set forth in Part 3.15 of the Company's Disclosure Letter,
since December 31, 1998, the Company and each Subsidiary has conducted its
business only in the ordinary course and there has not been any:
(a) change in its authorized or issued capital stock; grant of any stock
option or right to purchase shares of capital stock of the Company or
any Subsidiary; issuance of any security convertible into such capital
stock; grant of any purchase, redemption or stock retirement rights, or
any acquisition by the Company or any Subsidiary of any shares of its
capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
(b) amendment to the Articles of Incorporation or Bylaws of the Company or any
Subsidiary; (c) payment or increase by the Company or any Subsidiary of any
bonuses, salaries or other compensation to any stockholder, director, officer or
employee (except normal raises in the ordinary course of business consistent
with past practices), or entry into any employment, severance, or similar
contract with any director, officer or employee; (d) adoption of, or increase in
the payments to or benefits under, any profit sharing, bonus, deferred
compensation, savings, insurance, pension, retirement or other employee benefit
plan for or with any employees of the Company or any Subsidiary; (e) damage to
or destruction or loss of any material asset or property of the Company or any
Subsidiary, whether or not covered by insurance; (f) entry into, termination of,
or receipt of notice of termination of any material contract or any contract or
transaction involving a total remaining commitment by or to the Company or any
Subsidiary of at least $50,000; (g) sale, lease, or other disposition of any
material asset or property of the Company or any Subsidiary, or mortgage,
pledge, or imposition of any lien or other encumbrance on any material asset or
property of the Company or any Subsidiary; (h) material change in the accounting
methods used by the Company; or (i) agreement, whether oral or written, by the
Company or any Subsidiary to do any of the foregoing.
13.16 CONTRACTS; NO DEFAULTS.
(a) Part 3.16 of the Company's Disclosure Letter contains a complete and
accurate list, and Sellers have delivered to TGI true and complete
copies, of:
(i) each contract that involves performance of services or
delivery of goods or materials by or to the Company or any
Subsidiary of an amount or value in excess of $50,000 in the
aggregate or which is not terminable by the Company or its
Subsidiaries upon 60 days or less notice;
(ii) each lease, license, installment and conditional sales agreement, and other
contract affecting the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or personal property; (iii) each
agreement evidencing or relating to any indebtedness or capital lease of the
Company or its Subsidiaries; (iv) each joint venture, partnership, and other
contract involving a sharing of profits, losses, costs, or liabilities by the
Company or any Subsidiary with any other person; (v) each contract containing
covenants that in any way purport to restrict the business activity of the
Company or any Subsidiary; (vi) each power of attorney that is currently
effective and outstanding; and (vii) each written warranty, guaranty, and or
other similar undertaking by the Company or any Subsidiary. (b) Each contract
identified or required to be identified in Part 3.16 of the Company's Disclosure
Letter is in full force and effect and is valid and enforceable in
accordance with its terms. The Company and each Subsidiary is, and at
all times has been, in full compliance with all applicable terms and
requirements of each contract. Each third party to any contract with
the Company or any Subsidiary is, and at all times has been, in full
compliance with all applicable terms and requirements of such contract.
Neither the Company nor any Subsidiary has given nor received notice
from any other person regarding any actual, alleged, possible, or
potential violation or breach of, or default under, any contract, and
no default or event of default has occurred thereunder.
13.17 INSURANCE.
(a) Set forth on Part 3.17 of the Company's Disclosure Letter is a true and
complete list and description of all insurance policies to which the
Company or any Subsidiary is a party or under which the Company or any
Subsidiary is or has been covered at any time within the three (3)
years preceding the date of this Agreement, and all pending
applications for policies of insurance, including the premium paid,
coverage amounts, deductible, and risks insured.
(b) All policies to which the Company or any Subsidiary is a party or that
provide coverage to either Seller, the Company, any Subsidiary or any director
or officer of the Company or any Subsidiary (i) are valid, outstanding, and
enforceable; (ii) are issued by an insurer that is financially sound and
reputable; (iii) provide adequate insurance coverage for the assets and the
operations of the Company and the Subsidiaries for all risks normally insured
against in the Company's industry; (iv) will continue in full force and effect
following the consummation of the Contemplated Transactions; and (v) except as
set forth in Part 3.17(b) of the Company's Disclosure Letter, do not provide for
any retrospective premium adjustment or other experienced-based liability on the
part of the Company or any Subsidiary. (c) Neither Seller, the Company nor any
Subsidiary has received (i) any refusal of coverage or any notice that a defense
will be afforded with reservation of rights, or (ii) any notice of cancellation
or any other indication that any insurance policy is no longer in full force or
effect or will not be renewed or that the issuer of any policy is not willing or
able to perform its obligations thereunder. (d) The Company and each Subsidiary
has paid all premiums due, and has otherwise performed all of its obligations,
under each policy to which it is a party or that provides coverage to it. The
Company and each Subsidiary has given notice to the insurer of all claims that
may be insured thereby.
13.18 ENVIRONMENTAL MATTERS.
(a) The Company and each Subsidiary is, and at all times has been, in full
compliance with, and has not been and is not currently in violation of or liable
under, any Environmental Law. All real property owned, leased or otherwise
operated by Company and its Subsidiaries (each, a "Facility") is free of
-------- contamination from any Hazardous Material which may result in liability
under any Environmental Law. Sellers have no basis to expect, nor have Sellers
or the Company or any Subsidiary received, any actual or threatened order,
notice, or other communication from (i) any governmental body or private
citizen, or (ii) the current or prior owner or operator of any facilities owned
or leased by the Company or any Subsidiary, of any actual or potential violation
or failure to comply with any Environmental Law. Neither Company nor any of its
Subsidiaries has caused or suffered to occur any release, spill, migration,
leakage, discharge, spillage, uncontrolled loss, seepage, or filtration of
Hazard Material at or from any Facility.
(b) There are no above or underground storage tanks, landfills, land deposits,
or dumps present on or at any Facility or, to the knowledge of the Sellers, at
any adjoining property, or incorporated into any structure therein or thereon.
Neither the Company nor any Subsidiary has transported Hazardous Materials in
the operation of its business. (c) Sellers have delivered to TGI true and
complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by Sellers, the Company or any Subsidiary
pertaining to Hazardous Materials in, on, or under the facilities owned or
leased by the Company or any Subsidiary.
13.19 EMPLOYEES; INDEPENDENT CONTRACTORS.
(a) Part 3.19 of the Company's Disclosure Letter contains a complete and
accurate list of (i) each employee or director of the Company and each
Subsidiary, including each employee on leave of absence or layoff
status, his or her job title, and current compensation; and (ii) each
independent contractor of the Company and each Subsidiary, the type of
services he or she provides and his current compensation.
(b) No employee or, to the knowledge of the Sellers, no independent contractor
of the Company or any Subsidiary is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, noncompetition or
proprietary rights agreement, between such employee and any other person that in
any way adversely affects or will affect (i) the performance of his duties to
the Company or any Subsidiary, or (ii) the ability of the Company or any
Subsidiary to conduct its business. (c) All persons rendering services to the
Company or any Subsidiary have been properly characterized and treated as either
employees or independent contractors, and neither the Company nor any Subsidiary
has received notice of, nor do Sellers have any reason to believe that, such
treatment will be challenged by the IRS or otherwise.
13.20 LABOR RELATIONS; COMPLIANCE.
(a) Neither the Company nor any Subsidiary has been nor is it now a party to any
collective bargaining or other labor contract. There is not presently pending or
existing, and there is not threatened, (a) any strike, slowdown, picketing, work
stoppage, or employee grievance process, (b) any proceeding against or affecting
the Company or any Subsidiary relating to the alleged violation of any
applicable law pertaining to labor relations or employment matters, including
any charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any comparable
governmental body, organizational activity, or other labor or employment dispute
against or affecting the Company, or (c) any application for certification of a
collective bargaining agent. There is no lockout of any employees by the Company
or any Subsidiary, and no such action is contemplated by the Company or any
Subsidiary. The Company and each Subsidiary has complied in all respects with
all legal requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing.
(b) The Company and each Subsidiary is, and at all times has been, in full
compliance with, and has not been and is not in violation of or liable under,
any Occupational Safety and Health Law. Seller has no basis to expect, nor has
Seller, the Company or any Subsidiary received, any actual or threatened order,
notice, or other communication from any person of any actual or potential
violation or failure to comply with any Occupational Safety and Health Law.
13.21 INTELLECTUAL PROPERTY.
(a) Intellectual Property Assets. The term "Intellectual
Property Assets" includes:
(i) the Company's and each Subsidiary's name, all fictional
business names, trade names, registered and unregistered
trademarks, service marks, and applications;
(ii) all patents, patent applications, inventions and discoveries that may be
patentable; (iii) all copyrights in both published works and unpublished works;
and (iv) all know-how, trade secrets, confidential information, customer lists,
software, technical information, data, process technology, plans, drawings and
blue prints owned, used, or licensed by the Company or any Subsidiary. (b) The
Intellectual Property Assets are listed on Part 3.21 of the Disclosure Letter.
The Company (directly or indirectly through its Subsidiaries) owns all right,
title and interest in and to each of the Intellectual Property Assets, free and
clear of all liens, security interests, charges, encumbrances, equities and
other adverse claims, and has the right to use without payment to a third party
all of the Intellectual Property Assets.
(c) All of the computer software, computer hardware, other computer and
microprocessor-based equipment and all other equipment which performs or is or
may be required to perform functions involving dates or the computation of
dates, or containing date related data, owned, licensed, or used by the Company
or any Subsidiary (collectively the "Computer Devices") will not suffer a Year
2000 Problem (as defined below). The Company has prepared and implemented, prior
to the date hereof, a written plan of action to ensure that the Computer Devices
will not have a Year 2000 Problem. The Company and each Subsidiary has contacted
and received written assurances from all material suppliers of goods and
services, including but not limited to suppliers of Computer Devices, that all
of the computer software, computer hardware, and other computer and
microprocessor-based equipment owned, licensed, or used by such supplier will
not have a Year 2000 Problem. For the purposes of this Section 3.21(c), "Year
2000 Problem" shall mean any failure of a Computer Device to: (a) store all
date-related information and process all data interfaces involving dates in a
manner that unambiguously identifies the century, for all date values before,
during or after January 1, 2000; (b) calculate, sort, report and otherwise
operate correctly and in a consistent manner and without interruption regardless
whether the date on which the Computer Device is operated or executed is before,
during or after January 1, 2000; (c) report and display all dates with a
four-digit date so that the century is unambiguously identified; and (d) handle
all leap years, including but not limited to the year 2000 leap year, correctly.
13.22 RELATIONSHIPS WITH RELATED PERSONS.
Except as set forth on Part 3.22 of the Company's Disclosure Letter,
no Seller or any related person or affiliate of Sellers or of the Company has,
or has had, any interest in any property used in the Company's or any
Subsidiary's business. No Seller or any related person or affiliate of Sellers
or of the Company is, or has owned, directly or indirectly, an equity interest
or any other financial or profit interest in, an entity that has (i) had
business dealings or a material financial interest in any transaction with the
Company or any Subsidiary; or (ii) engaged in competition with the Company or
any Subsidiary with respect to any line of the products or services of the
Company or any Subsidiary. No Seller or any related person or affiliate of
Sellers or of the Company is a party to any contract with the Company or any
Subsidiary. All transactions or agreements set forth on Part 3.22 of the
Company's Disclosure Letter are on arms length terms no less favorable to the
Company and its Subsidiaries than independently obtained.
13.23 BROKERS OR FINDERS.
Neither the Company, Sellers or their respective agents have 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.
13.24 DISCLOSURE.
No representation or warranty of Sellers in this Agreement and no
statement in the Company's Disclosure Letter omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading. There is no fact known to
Sellers that has specific application to any Seller, the Company or any
Subsidiary (other than general economic or industry conditions) and that
materially adversely affects or, as far as either Seller can reasonably foresee,
materially threatens, the assets, business, prospects, financial condition, or
results of operations of the Company or any Subsidiary that has not been set
forth in this Agreement or the Disclosure Letter.
13.25 INVESTMENT REPRESENTATION.
Each of the Sellers is acquiring the shares of the TGI Common Stock
for their own account and not with a view to their distribution within the
meaning of Section 2(11) of the Securities Act. Each Seller understands that
such shares are "restricted stock" and agrees not to sell, pledge, transfer,
assign or otherwise dispose of such shares for a minimum period of one (1) year
following the Closing Date.
13.26 TAX REPRESENTATIONS.
The liabilities of the Company were incurred by the Company in the
ordinary course of business. Through the Closing Date, the Company will not
discontinue any of its historic businesses nor has it discontinued any of its
historic businesses within the period beginning twelve months prior to the date
hereof. The Company and the Sellers will each pay their own expenses in
connection with the Reorganization. Dividends the Company has paid (or may pay)
in anticipation of the Reorganization will be regular and normal distributions
made in accordance with the Company's past practices and no share of Company
stock has been or will be redeemed in anticipation of the Reorganization. At all
times during the five year period ending on the Closing Date, the fair market
value of all of the Company's real property interests has been less than fifty
percent (50%) of the total fair market value of all the assets used in the
Company's trade or business, including any real property owned by the Company
which is not used in its trade or business.
14. REPRESENTATIONS AND WARRANTIES OF TGI
TGI represents and warrants to Sellers as follows:
14.1 ORGANIZATION AND GOOD STANDING.
TGI is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida.
14.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid and binding obligation of
TGI, enforceable against TGI in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by TGI nor the
consummation or performance of any of the Contemplated Transactions by TGI will
give any person the right to prevent, delay or otherwise interfere with any of
the Contemplated Transactions pursuant to: (i) any provision of TGI's Articles
of Incorporation or Bylaws;
(ii) any resolution adopted by the board of directors or the stockholders of
TGI; (iii) any legal requirement or order to which TGI may be subject; or (iv)
any contract to which TGI is a party or by which TGI may be bound.
(c) TGI will not be required to obtain any consent from any person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions,
except as set forth on Schedule 14.2 hereto.
14.3 CERTAIN PROCEEDINGS.
There is no pending proceeding that has been commenced against TGI
and that challenges, or may have the effect of preventing, delaying, making
illegal, or otherwise enjoining, any of the Contemplated Transactions.
15. COVENANTS
15.1 ACCESS AND INVESTIGATION.
Between the date of this Agreement and the Closing Date, Sellers
will, and will cause the Company, its Subsidiaries and their representatives to,
(a) afford TGI and its representatives and prospective lenders and their
representatives (collectively, "TGI's Advisors") full and free access to the
Company's and its Subsidiaries' personnel, properties, contracts, books and
records, and other documents and data, (b) furnish TGI and TGI's Advisors with
copies of all such contracts, books and records, and other existing documents
and data as TGI may reasonably request, and (c) furnish TGI and TGI's Advisors
with such additional financial, operating, and other data and information as TGI
may reasonably request.
15.2 OPERATION OF THE BUSINESS OF THE COMPANY.
Between the date of this Agreement and the Closing Date, Sellers
will, and will cause the Company and its Subsidiaries to: (a) conduct their
businesses only in the ordinary course; and (b) use its best efforts to preserve
intact the current business organization of the Company and its Subsidiaries,
keep available the services of their current officers, employees, and agents,
and maintain the relations and good will with their suppliers, customers,
landlords, creditors, employees, agents, and others having business
relationships with the Company or any Subsidiary.
15.3 NEGATIVE COVENANT.
Except as otherwise expressly permitted by this Agreement, between
the date of this Agreement and the Closing Date, Sellers will not, and will
cause the Company and each Subsidiary not to, without the prior consent of TGI,
take any affirmative action, or fail to take any reasonable action within their
or its control, as a result of which any of the changes or events listed in
Section 3.15 is likely to occur.
15.4 NOTIFICATION.
(a) Between the date of this Agreement and the Closing Date, each Seller
will promptly notify TGI in writing if such Seller or the Company
becomes aware of any fact or condition that causes or constitutes a
breach of any of Sellers' representations and warranties as of the date
of this Agreement, or if such Seller or the Company becomes aware of
the occurrence after the date of this Agreement of any fact or
condition that would cause or constitute a breach of any such
representation or warranty had such representation or warranty been
made as of the time of occurrence or discovery of such fact or
condition.
(b) Between the date of this Agreement and the Closing Date, TGI will promptly
notify the Company in writing if TGI becomes aware of any fact or condition that
causes or constitutes a breach of any of TGI's representations and warranties as
of the date of this Agreement, or if TGI becomes aware of the occurrence after
the date of this Agreement of any fact or condition that would cause or
constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition.
15.5 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS.
Except as expressly provided in this Agreement, Sellers will cause
all indebtedness owed to the Company by any Seller or any related person of any
Seller to be paid in full prior to Closing.
15.6 NO NEGOTIATION.
Until such time, if any, as this Agreement is terminated pursuant to
Section 18, Sellers will not, and will cause the Company and each of its
Subsidiaries and representatives not to, directly or indirectly solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any person (other than TGI) relating to
any transaction involving the sale of the business or assets of the Company or
any Subsidiary, or any of the capital stock of the Company or any Subsidiary, or
any merger, consolidation, business combination, or similar transaction
involving the Company or any Subsidiary.
15.7 BEST EFFORTS.
Between the date of this Agreement and the Closing Date, Sellers will
use their best efforts to cause the conditions in Section 6 to be satisfied.
15.8 RELEASE OF GUARANTEES.
The Company and TGI will use their respective best efforts to obtain,
within 60 days from the Closing Date, the release of the personal guarantees
provided by the Sellers and any family member of the Sellers to each entity
listed on Schedule 15.8 hereto with respect to any debt or obligation of the
Company. Until such guarantees are released or the underlying obligations fully
satisfied, TGI will cause the Company to perform all obligations thereunder and
will fully indemnify the Sellers against any loss, claim or payment made with
respect thereto.
16. CONDITIONS PRECEDENT TO TGI'S OBLIGATION TO CLOSE
TGI's obligation to consummate the Reorganization and to take the other
actions required to be taken by TGI at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by TGI, in whole or in part):
16.1 ACCURACY OF REPRESENTATIONS.
All of Sellers' representations and warranties in this Agreement must
have been accurate in all respects as of the date of this Agreement and as of
the Closing Date as if made on the Closing Date.
16.2 SELLERS' PERFORMANCE.
All of the covenants and obligations that the Company and the Sellers
are required to perform or to comply with pursuant to this Agreement at or prior
to the Closing must have been duly performed and complied with in all respects.
16.3 CONSENTS.
Each of the consents identified in Part 3.2 of the Company's
Disclosure Letter and on Schedule 14.2 hereto must have been obtained and must
be in full force and effect.
16.4 ADDITIONAL DOCUMENTS.
Each of the following documents must have been delivered to TGI:
(a) an opinion of counsel to the Company and the Sellers, dated the Closing
Date, in form acceptable to TGI; and
(b) such other documents as TGI may reasonably request (i) evidencing the
accuracy of any of Sellers' representations and warranties; (ii) evidencing the
performance by either Seller of, or the compliance by either Seller with, any
covenant or obligation required to be performed or complied with by such Seller;
(iii) evidencing the satisfaction of any condition referred to in this Section
6; or (iv) otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
16.5 NO PROCEEDINGS.
Since the date of this Agreement, there must not have been commenced
or threatened against TGI, Sellers, the Company or any Subsidiary, or against
any person affiliated with TGI, Sellers, the Company or any Subsidiary, any
proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying or making illegal, any of the Contemplated
Transactions.
16.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS.
There must not have been made or threatened by any person any claim
asserting that such person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity, or ownership interest in, the Company or any Subsidiary,
or (b) is entitled to all or any portion of the merger consideration.
16.7 SATISFACTORY DUE DILIGENCE.
TGI shall have completed its investigation of the Company's assets,
business and financial condition and shall be satisfied with the results thereof
in its sole discretion.
16.8 FINANCING.
TGI shall have obtained financing for the Purchase Price on terms
satisfactory to TGI in its sole discretion.
16.9 ENVIRONMENTAL AUDIT.
TGI may cause an independent environmental consultant, chosen by TGI
at its sole discretion, to inspect, audit, and test the Facilities for the
existence of any and all environmental conditions and any and all violations of
Environmental Laws, and to deliver a report describing the findings and
conclusions of the inspection (hereafter referred to as the "Environmental
Assessment"). The scope, sequence, and timing of the Environmental Assessment
shall be at the sole discretion of TGI and expense of the Sellers. The results
of the Environmental Assessment shall be satisfactory in all respects to TGI.
16.10 ACQUISITION OF R & M ENTERPRISES, INC.
Simultaneously herewith, TGI and the Sellers have entered into an Agreement
and Plan of Reorganization providing for the acquisition by TGI of all of the
outstanding stock of R & M Enterprises, Inc. All of the conditions precedent to
TGI's obligation to close such transaction shall have been satisfied as of the
Closing Date.
17. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The Company's obligation to consummate the Reorganization and to take
the other actions required to be taken by the Company or the Sellers at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by the Company, in whole or
in part):
17.1 ACCURACY OF REPRESENTATIONS.
All of TGI's representations and warranties in this Agreement must
have been accurate in all respects as of the date of this Agreement and must be
accurate in all respects as of the Closing Date as if made on the Closing Date.
17.2 TGI'S PERFORMANCE.
All of the covenants and obligations that TGI is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing must
have been performed and complied with in all respects.
17.3 NO PROCEEDINGS.
Since the date of this Agreement, there must not have been commenced
or threatened against TGI, Sellers, the Company or any Subsidiary, or against
any person affiliated with TGI, Sellers, the Company or any Subsidiary, any
proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, or making illegal, any of the Contemplated
Transactions.
17.4 ACQUISITION OF R & M ENTERPRISES, INC.
Simultaneously herewith, TGI and the Sellers have entered into an Agreement
and Plan of Reorganization providing for the acquisition by TGI of all of the
outstanding stock of R & M Enterprises, Inc. All of the conditions precedent to
Sellers' obligation to close such transaction shall have been satisfied as of
the Closing Date.
18. TERMINATION
18.1 TERMINATION EVENTS.
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by either TGI or the Company if a material breach of any provision of
this Agreement has been committed by the other party and such breach
has not been waived;
(b) by:
(i) TGI if any of the conditions in Section 6 has not been
satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the
failure of TGI to comply with its obligations under this
Agreement) and TGI has not waived such condition on or before
the Closing Date; or
(ii) Sellers, if any of the conditions in Section 17 has not been satisfied of
the Closing Date or if satisfaction of such a condition is or becomes impossible
(other than through the failure of Sellers to comply with their obligations
under this Agreement) and Sellers have not waived such condition on or before
the Closing Date; (c) by mutual consent of TGI and Sellers; or
(d) by either TGI or Sellers if the Closing has not occurred (other than through
the failure of any party seeking to terminate this Agreement to comply fully
with its obligations under this Agreement) on or before July 31, 1999, or such
later date as the Parties may agree upon. 18.2 EFFECT OF TERMINATION.
Each Party's right of termination under Section 8.1 is in addition to
any other rights it may have under this Agreement or otherwise. If this
Agreement is terminated pursuant to Section 8.1, all further obligations of the
Parties under this Agreement will terminate, except that the obligations in
Sections 10.1 and 20.2 will survive.
19. INDEMNIFICATION; REMEDIES
19.1 SURVIVAL.
All representations, warranties, covenants, and obligations in this
Agreement, the Company's Disclosure Letter, the certificates delivered pursuant
to Sections 12.4(a)(iv) and 12.4(b)(ii) and any other certificate or document
delivered pursuant to this Agreement will survive the Closing. The right to
indemnification, payment of Damages (as defined below) or other remedy based on
such representations, warranties, covenants, and obligations will not be
affected 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 or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation.
19.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS.
Sellers, jointly and severally, will indemnify and hold harmless TGI,
the Company, and their respective representatives, stockholders, controlling
persons, and affiliates (collectively, the "Indemnified Persons") for, and will
pay to the Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Sellers in this
Agreement, the Company's Disclosure Letter or any other certificate or
document delivered by Sellers or the Company pursuant to this
Agreement;
(b) any breach by Sellers or the Company of any covenant or obligation in this
Agreement; (c) any product shipped or any services provided by the Company or
any Subsidiary prior to the Closing Date; (d) any claim for unpaid taxes or for
failure to file appropriate returns above the amounts accrued therefor on the
Balance Sheet, including without limitation, United States, state and/or local
income, profits, franchise, sales, use, occupancy, property (real and personal),
ad valorem, excise, value added, withholding, payroll, transfer and other taxes
(including interest, penalties and any additions to tax) due from the Company or
any Subsidiary or claimed to be due from the Company or any Subsidiary by any
taxing authority for all periods through the Closing Date, including taxes which
may accrue for periods up to Closing Date but which have not become due and
owing; (e) any use, release, threatened release, emission, generation, storage,
transportation, disposal, or arrangement for the disposal of Hazardous Materials
by the Company or any Subsidiary or the presence of any Hazardous Materials or
circumstance or condition at any Facility which would require remediation or
other action under any Environmental Laws, including, without limitation, the
cost of any environmental response action or liability under the Comprehensive
Environmental Response, Compensation and Liability Act whether such loss
accrues, is required or is necessary prior to the Closing Date, to the full
extent that such loss is attributable, in whole or in part, directly or
indirectly, to the presence, use, emission, generation, storage, transportation,
release, threatened release, disposal, or arrangements for disposal of Hazardous
Materials at any Facility or on any other properties to which the Company, its
Subsidiaries or affiliates or any other prior owner or operator of any Facility
has sent or arranged for the disposal of Hazardous Materials prior to the
Closing Date. All terms used in this paragraph and not otherwise defined herein
shall be given the meaning provided under the Environmental Laws; (f) any claim
by any person for brokerage or finder's fees or commissions or similar payments
based upon any agreement or understanding alleged to have been made by any such
person with either Seller or the Company (or any person acting on their behalf)
in connection with any of the Contemplated Transactions.
19.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY TGI.
TGI will indemnify and hold harmless Sellers, and will pay to Sellers
the amount of any Damages (as defined in 19.2 above) arising, directly or
indirectly, from or in connection with (a) any breach of any representation or
warranty made by TGI in this Agreement or in any certificate delivered by TGI
pursuant to this Agreement, (b) any breach by TGI of any covenant or obligation
of TGI in this Agreement, or (c) any claim by any person for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such person with TGI (or any person
acting on its behalf) in connection with any of the Contemplated Transactions.
19.4 ESCROW.
At the closing of the acquisition of R & M Enterprises, Inc., the
Sellers will initially deposit 750,000 shares of TGI's Common Stock that are
issued to the Sellers in the merger (the "Escrow Shares") with a bank or trust
company located within the State of Georgia which will act as an escrow agent
(the "Escrow Agent"), who will hold the Escrow Shares in escrow as collateral
for the indemnification obligations of the Sellers under the Agreement and Plan
of Reorganization and this Agreement. The Escrow Shares will be released to the
Sellers as set forth in the Escrow Agreement.
19.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person of notice of the
commencement of any proceeding against it, such Indemnified Person
will, if a claim is to be made against an indemnifying party hereunder,
give notice to the indemnifying party of the commencement of such
claim, but the failure to notify the indemnifying party will not
relieve the indemnifying party of any liability that it may have to any
Indemnified Person, except to the extent that the indemnifying party
demonstrates that the defense of such action is prejudiced by the
Indemnified Person's failure to give such notice.
(b) If any proceeding is brought against an Indemnified Person and it gives
notice to the indemnifying party of the commencement of such proceeding, the
indemnifying party will be entitled to participate in such proceeding and, to
the extent that it wishes (unless (i) the indemnifying party is also a party to
such proceeding and the Indemnified Person determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the Indemnified Person of its financial capacity
to defend such proceeding and provide indemnification with respect to such
proceeding), to assume the defense of such proceeding with counsel satisfactory
to the Indemnified Person and, after notice from the indemnifying party to the
Indemnified Person of its election to assume the defense of such proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the Indemnified Person under this Section 9 for any fees of other
counsel or any other expenses with respect to the defense of such proceeding, in
each case subsequently incurred by the Indemnified Person in connection with the
defense of such proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the Indemnified Person's consent unless (A) there is no finding or
admission of any violation of applicable laws or any violation of the rights of
any person and no effect on any other claims that may be made against the
Indemnified Person, and (B) the sole relief provided is monetary damages that
are paid in full by the indemnifying party; and (iii) the Indemnified Person
will have no liability with respect to any compromise or settlement of such
claims effected without its consent. If notice is given to an indemnifying party
of the commencement of any proceeding and the indemnifying party does not,
within ten (10) days after such notice is given, give notice to the Indemnified
Person of its election to assume the defense of such proceeding, the
indemnifying party will be bound by any determination made in such proceeding or
any compromise or settlement effected by the Indemnified Person. Notwithstanding
the foregoing, the filing of an answer by the indemnifying party in order to
preserve the rights of the Indemnified Party due to a filing deadline shall not
in itself constitute its election to assume the defense of a claim hereunder.
(c) Notwithstanding the foregoing, if an Indemnified Person determines in good
faith that there is a reasonable probability that a proceeding may adversely
affect it or its affiliates other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the Indemnified
Person may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such proceeding, but the indemnifying party will
not be bound by any determination of a proceeding so defended or any compromise
or settlement effected without its consent (which may not be unreasonably
withheld). (d) Sellers hereby consent to the non-exclusive jurisdiction of any
court in which a proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such proceeding or the matters alleged therein, and agree that
process may be served on Sellers with respect to such a claim anywhere in the
world.
19.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS.
A claim for indemnification for any matter not involving a
third-party claim may be asserted by notice to the party from whom
indemnification is sought.
20. GENERAL PROVISIONS
20.1 EXPENSES.
Each Party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants.
20.2 PUBLIC ANNOUNCEMENTS.
Any public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued at such time and in
such manner as mutually agreed, except TGI may make such disclosures as it deems
necessary to comply with applicable securities laws. Unless consented to by TGI
in advance or required by applicable law, prior to the Closing Sellers shall,
and shall cause the Company to, keep this Agreement strictly confidential and
may not make any disclosure of this Agreement to any person. Sellers and TGI
will mutually agree upon the means by which the Company's employees, customers,
and suppliers and others having dealings with the Company will be informed of
the Contemplated Transactions, and TGI will have the right to be present for any
such communication.
20.3 NOTICES.
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Sellers: .........Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Xxxxx X. Xxxxxxxx
14806 Monroe
Xxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
with a copy to: .........Xxxxxx X. Xxxxxx
000 Xxxx Xxxxxx
P. X. Xxx 000
Xxxx Xxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
TGI: .........Transit Group, Inc.
Overlook III, Suite 1740
0000 Xxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President
Facsimile No.: (000) 000-0000
with a copy to: .........Xxxxxx X. XxXxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
Suite 3500, One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
20.4 JURISDICTION; SERVICE OF PROCESS.
Any action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this Agreement may be brought by TGI against
any of the other Parties in the courts of the State of Georgia, County of Xxxx,
or, if it has or can acquire jurisdiction, in the United States District Court
for the Northern District of Georgia. Each of the Parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
20.5 FURTHER ASSURANCES.
The Parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
20.6 WAIVER.
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any Party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one Party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other Parties; (b) no waiver that may be
given by a Party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one Party will be deemed to be a
waiver of any obligation of such Party or of the right of the Party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
20.7 ENTIRE AGREEMENT AND MODIFICATION.
This Agreement supersedes all prior agreements between the parties
with respect to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the Party
to be charged with the amendment.
20.8 DISCLOSURE LETTER.
The disclosures in the Company's Disclosure Letter, and those in any
supplement thereto, relate only to the representations and warranties in the
Section of the Agreement to which they expressly refer. In the event of any
inconsistency between the statements in the body of this Agreement and those in
the Company's Disclosure Letter (other than an exception expressly set forth as
such in the Company's Disclosure Letter with respect to a specifically
identified representation or warranty), the statements in the body of this
Agreement will control.
20.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
None of the Sellers nor the Company may assign any of their rights
under this Agreement without the prior consent of TGI. TGI may assign this
Agreement, the Seller's Closing Documents, or any one of them at any time to any
affiliated entity without obtaining the consent of or notifying any other Party.
This Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the heirs, successors and permitted assigns of the Parties. 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 permitted assigns.
20.10 SEVERABILITY.
If any provision of this Agreement is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable. The remedies provided in
this Agreement will not be exclusive of or limit any other remedies that may be
available.
20.11 SECTION HEADINGS, CONSTRUCTION.
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
20.12 TIME OF ESSENCE.
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
20.13 GOVERNING LAW.
This Agreement will be governed by the laws of the State of Georgia
without regard to conflicts of laws principles.
20.14 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
[EXECUTIONS SET FORTH ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
"TGI":
TRANSIT GROUP, INC.
BY: /s/Xxxxxx X. Belyew________
XXXXXX X. XXXXXX, President
THE "COMPANY":
XXXXXXXX TRUCK BROKERS, INC.
BY: /s/Xxxxxxx X. Sortino_________
XXXXXXX X. XXXXXXX, President
SELLERS:
--------------------------------------
XXXXXXX X. XXXXXXX
--------------------------------------
XXXXX X. XXXXXXXX
SCHEDULE 14.2
TGI CONSENTS
1. AmSouth Bank, N.A.
2. GE Capital Equity Investments, Inc.
SCHEDULE 15.8
PERSONAL GUARANTEES
Lender Guarantor
------ ---------
Security National Bank of Omaha, Nebraska Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
Xxxxxxx County Bank & Trust Company of Omaha, Nebraska Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
Mercedes-Benz Credit Corporation Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
Associates Commercial Corporation Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
Navistar Financial Corporation Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
AT&T Capital Corporation Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
Tie Systems, Inc. Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
SCHEDULE 5.9
GUARANTEES
Lender... Guarantor
------ ---------
Security National Bank of Omaha, Nebraska Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
Xxxxxxx County Bank & Trust Company of Omaha, Nebraska Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
Mercedes-Benz Credit Corporation Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
Associates Commercial Corporation Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
Navistar Financial Corporation Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
AT&T Capital Corporation Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
Tie Systems, Inc. Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx
