Exhibit 10.1
PURCHASE AGREEMENT
dated as of May 13, 1999
by and between
TRANSIT GROUP, INC.
and
GE CAPITAL EQUITY INVESTMENTS, INC.
TABLE OF CONTENTS
PURCHASE AGREEMENT
(continued)
Page
TABLE OF CONTENTS
PURCHASE AGREEMENT
I. DEFINITIONS.........................................................1
II. THE PURCHASE OF CONVERTIBLE PREFERRED STOCK.........................8
2.1. Authorization of Issue.....................................8
2.2. Purchase of Convertible Preferred Stock....................8
2.3. Closing....................................................9
2.4. Use of Proceeds............................................9
III. PURCHASER'S REPRESENTATIONS.........................................9
3.1. Investment Intention.......................................9
3.2. Accredited Investor........................................9
3.3. Corporate Existence........................................10
3.4. Corporate Power; Authorization; Enforceable Obligations....10
3.5. Restricted Shares..........................................10
3.6. Brokers....................................................10
IV. COMPANY'S REPRESENTATIONS AND WARRANTIES............................10
4.1. Authorized and Outstanding Shares of Capital Stock.........10
4.2. Authorization and Issuance of Convertible Preferred Stock..11
4.3. Securities Laws............................................11
4.4. Corporate Existence; Compliance with Law...................11
4.5. Subsidiaries...............................................12
4.6. Corporate Power; Authorization; Enforceable Obligations....12
4.7. Financial Statements.......................................13
4.8. Ownership of Property......................................13
4.9. Material Contracts; Indebtedness...........................14
4.10. Environmental Protection...................................14
4.11. Labor Matters..............................................15
4.12. Other Ventures.............................................16
4.13. Taxes......................................................16
4.14. No Litigation..............................................17
4.15. Brokers....................................................17
4.16. Employment and Labor Agreements............................17
4.17. Patents, Trademarks, Copyrights and Licenses...............17
4.18. No Material Adverse Effect.................................17
4.19. ERISA......................................................18
4.20. Registration Rights........................................19
4.21. SEC Documents..............................................19
4.22. Ordinary Course of Business................................19
4.23. Insurance..................................................19
4.24. Minute Books...............................................20
4.25. Year 2000 Compliance.......................................20
4.26. Full Disclosure............................................20
V. COVENANTS...........................................................21
5.1. Affirmative and Financial Covenants........................21
(a) Books and Records.................................21
(b) Financial and Business Information................21
(c) Communication with Accountants....................22
(d) Tax Compliance....................................23
(e) Insurance.........................................23
(f) Employee Plans....................................23
(g) Compliance with Law...............................24
(h) Maintenance of Existence and Conduct of Business..24
(i) Access............................................24
(j) Exchange of Stock Certificates....................24
(k) Lost, Stolen, Destroyed or Mutilated Stock
Certificates.....................................25
5.2. Negative Covenants.........................................25
(a) Permitted Acquisitions or Investments.............25
(b) Sales of Assets; Liquidation......................26
(c) Agreements........................................26
(d) Employee Loans....................................26
(e) Capital Stock.....................................26
(f) Transactions with Affiliates......................26
(g) Indebtedness......................................27
(h) Restricted Payments...............................27
(i) Mergers and Subsidiaries..........................27
(j) Amendments to Articles of Incorporation and
By-Law...........................................27
5.3. Remedies for Events of Default.............................28
5.4. Certain Tax Matters........................................28
5.5. Status of Dividends........................................29
VI. CONDITIONS PRECEDENT................................................29
6.1. Purchaser Conditions Precedent.............................29
6.2. Additional Purchaser Conditions............................31
6.3. Company Conditions Precedent...............................31
VII. SECURITIES LAW MATTERS..............................................32
7.1. Legends....................................................32
VIII. SURVIVAL; INDEMNIFICATION...........................................32
8.1. Survival...................................................32
8.2. Indemnification............................................32
IX. EXPENSES............................................................33
X. MISCELLANEOUS.......................................................34
10.1. Notices....................................................34
10.2. Binding Effect; Benefits...................................35
10.3. Amendment..................................................35
10.4. Successors and Assigns; Assignability......................36
10.5. Remedies...................................................36
10.6. Section and Other Headings.................................36
10.7. Severability...............................................36
10.8. Counterparts...............................................36
10.9. Publicity..................................................36
10.10. Entire Agreement...........................................36
10.11. Governing Law; Waiver of Jury Trial........................37
Schedules
Schedule 4.1 - Stock and Warrants
Schedule 4.5 - Subsidiaries
Schedule 4.6 - Consents
Schedule 4.7 - Financial Statements; Other Obligations
Schedule 4.8 - Ownership and Properties
Schedule 4.9 - Material Contracts and Indebtedness
Schedule 4.10 - Environmental Matters
Schedule 4.12 - Other Ventures
Schedule 4.13 - Taxes
Schedule 4.14 - Litigation
Schedule 4.15 - Brokers
Schedule 4.16 - Employment Contracts
Schedule 4.17 - Patents, Trademarks, Etc.
Schedule 4.19 - ERISA
Schedule 4.20 - Registration Rights
Schedule 4.22 - Insurance
Schedule 5.2(d) - Employee Loans
Schedule 5.2(f) - Transactions with Affiliates
Exhibits
Exhibit A Certificate of Designation-Convertible Preferred
Stock
Exhibit B Stockholders Agreement
Exhibit C Registration Rights Agreement
Exhibit D Opinion of Company Counsel
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of May 13, 1999, by and between
Transit Group, Inc., a Florida corporation having an office at 0000 Xxxxx Xxxxx
Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000 ("Company"), and GE Capital Equity
Investments, Inc., a Delaware corporation having an office at 000 Xxxx Xxxxx
Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 ("GE Capital" or "Purchaser").
W I T N E S S E T H :
WHEREAS, Company has agreed to issue and sell to Purchaser,
and Purchaser has agreed to purchase from Company, upon the terms and
conditions hereinafter provided, 5,000,000 shares of Company's Series A
Convertible Preferred Stock, no par value per share, the terms, preferences and
limitations of which are set forth in Exhibit A hereto (the "Convertible
Preferred Stock");
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, it is agreed as follows:
DEFINITIONS
"Affiliate" shall mean, with respect to any Person, (i) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, 5% or more of the Stock having
ordinary voting power in the election of directors of such Person, (ii) each
Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person, (iii) each of such Person's officers,
directors, joint venturers and partners, (iv) any trust or beneficiary of a
trust of which such Person is the sole trustee or (v) any lineal descendants,
ancestors, spouse or former spouses (as part of a marital dissolution) of such
Person (or any trust for the benefit of such Person). For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
"Balance Sheet" shall have the meaning set forth in Section
4.7(a) hereof.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"Capital Expenditures" shall mean all payments for any fixed
assets or improvements or for replacements, substitutions or additions thereto,
that have a useful life of more than one year and which are required to be
capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as
lessee that, in accordance with GAAP, either would be required to be classified
and accounted for as a capital lease on a balance sheet of such Person or
otherwise be disclosed as a capital lease in a note to such balance sheet,
other than, in the case of Company or a Subsidiary of Company, any such lease
under which Company or such Subsidiary is the lessor.
"Capital Lease Obligation" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease or otherwise be disclosed in a note to such balance
sheet.
"Cash Equivalents" shall mean (i) marketable direct
obligations issued or unconditionally guaranteed by the United States of
America or any agency thereof maturing within one year from the date of
acquisition thereof; (ii) commercial paper maturing no more than one year from
the date of creation thereof and at the time of their acquisition having the
highest rating obtainable from either Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc.; and (iii) certificates of deposit, maturing not more
than one year from the date of creation thereof, issued by commercial banks
incorporated under the laws of the United States of America, each having
combined capital, surplus and undivided profits of not less than $200,000,000
and having a rating of "A" or better by a nationally recognized rating agency.
"Certificate of Designation" shall mean the Certificate of
Designation setting forth the rights and preferences of the Convertible
Preferred Stock attached as Exhibit A hereto.
"Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental (including, without limitation,
PBGC) taxes at the time due and payable, levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) Company's or any of its
Subsidiaries' employees, payroll, income or gross receipts, (ii) Company's or
any of its Subsidiaries' ownership or use of any of its assets, or (iii) any
other aspect of Company's or any of the Subsidiaries' business.
"Closing" shall have the meaning set forth in Section 2.3
hereof.
"Closing Date" shall have the meaning set forth in Section
2.3 hereof.
"COBRA" shall have the meaning set forth in Section 4.19(m)
hereof.
"Common Stock" shall mean the common stock, $.01 par value
per share, of Company.
"Compensation" shall mean, with respect to any Person, all
payments and accruals commonly considered to be compensation, including,
without limitation, all wages, salary, deferred payment arrangements, bonus
payments and accruals, profit sharing arrangements, payments in respect of
stock option or phantom stock option or similar arrangements, stock
appreciation rights or similar rights, incentive payments, pension or
employment benefit contributions or similar payments, made to or accrued for
the account of such Person or otherwise for the direct or indirect benefit of
such Person.
"Convertible Preferred Stock" shall have the meaning set
forth in the recitals hereto.
"Default" shall mean any event which, with the passage of
time or notice or both, would, unless cured or waived, become an Event of
Default.
"Environmental Laws" shall mean all federal, state and local
laws, statutes, ordinances and regulations, now or hereafter in effect, and in
each case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment,
relative to the applicable Real Estate, relating to the regulation and
protection of human health, safety, the environment and natural resources
(including, without limitation, ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species and
vegetation). Environmental Laws include but are not limited to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. ss. 9601 et seq.) ("CERCLA"); the Hazardous Material
Transportation Act, as amended (49 U.S.C. ss. 1801 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. ss. 136 et
seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. ss.
6901 et seq.) ("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C.
ss. 2601 et seq.); the Clean Air Act, as amended (42 U.S.C. ss. 740 et seq.);
the Federal Water Pollution Control Act, as amended (33 U.S.C. ss. 1251 et
seq.); the Occupational Safety and Health Act, as amended (29 U.S.C. ss. 651 et
seq.) ("OSHA"); and the Safe Drinking Water Act, as amended (42 U.S.C. ss. 300f
et seq.), and any and all regulations promulgated thereunder, and all analogous
state and local counterparts or equivalents and any transfer of ownership
notification or approval statutes.
"Environmental Liabilities and Costs" shall mean all
liabilities, obligations, responsibilities, remedial actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all fees, disbursements and expenses of
counsel, experts and consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
claim, suit, action or demand by any person or entity, whether based in
contract, tort, implied or express warranty, strict liability, criminal or
civil statute or common law (including, without limitation, any thereof arising
under any Environmental Law, permit, order or agreement with any Governmental
Authority) and which relate to any health or safety condition regulated under
any Environmental Law or in connection with any other environmental matter or
Spill or the presence of a hazardous substance or threatened Spill of any
Hazardous Substance.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974 (or any successor legislation thereto), as amended from time to
time and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to Company, any
trade or business (whether or not incorporated) under common control with
Company and which, together with Company, are treated as a single employer
within the meaning of Sections 414(b), (c), (m) or (o) of the IRC, excluding
Purchaser and each other person which would not be an ERISA Affiliate if
Purchaser did not own any issued and outstanding shares of Stock of Company.
"Event of Default" shall mean the occurrence of any breach of
any representation or warranty in any material respect, or any breach of any
covenant or agreement of Company under this Agreement, which in the case of the
covenants set forth in Section 5.1 (other than Sections (f)(iii) and (iv)) of
this Agreement remain uncured for a period of twenty days after receipt by
Company of written notice thereof by the Required Holders, but only during the
continuance of such breach.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and all rules and regulations promulgated thereunder.
"Fair Market Value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's-length transaction, with neither
being under any compulsion to buy or sell.
"Financials" shall mean the financial statements referred to
in Section 4.7(a) hereof.
"Fiscal Year" shall mean the twelve month period ending
December 31. Subsequent changes of the fiscal year of Company shall not change
the term "Fiscal Year," unless the Required Holders shall consent in writing to
such changes.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any Indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person, other than, with
respect to Company, a Subsidiary (the "primary obligor"), in any manner
including, without limitation, any obligation or arrangement of such Person (a)
to purchase or repurchase any such primary obligation, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect thereof.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Indebtedness" of any Person shall mean (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price of
property or services (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured, but not including obligations to trade
creditors incurred in the ordinary course of business), (ii) all obligations
evidenced by notes, bonds, debentures or similar instruments, (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreements with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property),
(iv) all Capital Lease Obligations, (v) all Guaranteed Indebtedness, (vi) all
Indebtedness referred to in clause (i), (ii), (iii), (iv) or (v) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness and (vii) all liabilities under Title IV of ERISA.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any
successor thereto.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or similar preferential arrangement of any kind or nature whatsoever
(including, without limitation, any title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing,
and the filing of, or agreement to give, any financing statement perfecting a
security interest as to assets owned by the relevant Person under the Uniform
Commercial Code or comparable law of any jurisdiction).
"Material Adverse Effect" shall mean material adverse effect
on the business, assets, operations, prospects or financial or other condition
of Company and its Subsidiaries, if any, taken as a whole.
"Material Contracts" means (i) all of Company's and its
Subsidiaries' contracts, agreements, leases or other instruments to which
Company or any of its Subsidiaries is a party or by which Company, its
Subsidiaries or its properties are bound, which involve payments by or to
Company or its Subsidiaries of more than $500,000 or which extend for a term of
more than a year from the date hereof, other than shipper contracts entered
into in the ordinary course of business which are terminable on not more than
90 days notice, (ii) all of Company's and its Subsidiaries' loan agreements,
bank lines of credit agreements, indentures, mortgages, deeds of trust, pledge
and security agreements, factoring agreements, conditional sales contracts,
letters of credit or other debt instruments in excess of $1,000,000, (iii) all
material operating or capital leases for equipment to which Company or any of
its Subsidiaries is a party in excess of $1,000,000, (iv) all non-competition
and similar agreements to which Company is a party, (v) all contracts for the
employment of any officer or employee of Company, (vi) any Guaranteed
Indebtedness by the Company or any of its Subsidiaries, and (vii) all other
material contracts not made in the ordinary course of business.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which Company, any of its
Subsidiaries or any ERISA Affiliate is making, is obligated to make, has made
or been obligated to make, contributions on behalf of participants who are or
were employed by any of them.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Pension Plan" shall have the meaning set forth in Section
4.19(a) hereof.
"Permitted Acquisitions" means any acquisition permitted
under Section 5.2 or approved by the Required Holders as provided therein.
"Permitted Indebtedness" means, with respect to Company and
its Subsidiaries, (i) taxes or assessments or other governmental charges or
levies, either not yet due and payable or to the extent that nonpayment thereof
is permitted by the terms of this Agreement; (ii) obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (iii) bids, tenders, contracts (other than contracts
for the payment of money) or leases to which Company or any of its Subsidiaries
is a party as lessee made in the ordinary course of business; (iv) public or
statutory obligations of Company or any of its Subsidiaries; (v) all deferred
taxes and (vi) all unfunded pension fund and other employee benefit plan
obligations and liabilities but only to the extent permitted to remain unfunded
under applicable law.
"Person" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit
corporation, entity or government (whether federal, state, county, city,
municipal or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
"Plan" shall have the meaning set forth in Section 4.19(a)
hereof.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement by and between Company and Purchaser, substantially in the
form attached hereto as Exhibit C, as such agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Required Holders" shall mean Persons who hold at least a
majority of the outstanding Convertible Preferred Stock.
"Restricted Payment" shall mean (i) the declaration of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of Company's Stock
or (ii) any payment on account of the purchase, redemption or other retirement
of Company's Stock or any other payment or distribution made in respect of any
Stock of Company, either directly or indirectly, but shall not include the
redemption of shares of Common Stock by Company pursuant to contractual
commitments in effect on the date hereof.
"Retiree Welfare Plan" shall refer to any Welfare Plan
providing for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of
employment, other than continuation coverage provided pursuant to Section 4980B
of the IRC and at the sole expense of the participant or the beneficiary of the
participant.
"SEC" shall mean the U.S. Securities and Exchange Commission,
or any successor thereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and all rules and regulations promulgated thereunder.
"Spill" shall have the meaning set forth in Section 4.10.
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests, limited liability company membership interest,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity
whether voting or nonvoting, including, without limitation, common stock,
preferred stock, or any other "equity security" (as such term is defined in
Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under
the Exchange Act).
"Stockholders Agreement" shall mean the Stockholders
Agreement by and among Company, Purchaser and each of the other stockholders
party thereto, substantially in the form attached hereto as Exhibit B, as such
agreement may be amended, supplemented or otherwise modified from time to time.
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, and (b) any partnership or other entity in which
such Person and/or one or more Subsidiaries of such Person shall have an
interest (whether in the form of voting or participation in profits or capital
contribution) of more than 50%.
"Transaction Documents" shall mean this Agreement, the
Certificate of Designation, the Stockholders Agreement and the Registration
Rights Agreement.
"Welfare Plan" shall mean any welfare plan, as defined in
Section 3(1) of ERISA, which is maintained or contributed to by Company, any of
its Subsidiaries or any ERISA Affiliate.
"Year 2000 Compliant" shall have the meaning set forth in
Section 4.25 hereof.
References to this "Agreement" shall mean this Purchase
Agreement, including all amendments, modifications and supplements and any
exhibits or schedules to any of the foregoing, and shall refer to the Agreement
as the same may be in effect at the time such reference becomes operative.
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with
GAAP consistently applied. That certain terms or computations are explicitly
modified by the phrase "in accordance with GAAP" shall in no way be construed
to limit the foregoing. The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole, including the
Exhibits and Schedules hereto, as the same may from time to time be amended,
modified or supplemented, and not to any particular section, subsection or
clause contained in this Agreement. Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include
the singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, the feminine and the neuter. Any
reference to the "knowledge" of Company or its Subsidiaries shall mean the
actual knowledge of any of the officers or chairman of the board of directors
of Company.
THE PURCHASE OF CONVERTIBLE PREFERRED STOCK
1.1. . Prior to the Closing, Company shall have duly authorized the issuance
and sale to Purchaser of the number of shares of Convertible Preferred Stock
set forth in Section 2.2 below.
. Subject to the terms and conditions set forth in this
Agreement, Purchaser agrees to subscribe for and purchase from Company, and
Company agrees to issue and sell to Purchaser, on the Closing Date an aggregate
of 5,000,000 shares of Convertible Preferred Stock containing the terms,
preferences and limitations set forth in Exhibit A to this Agreement.
The aggregate purchase price for the aggregate number of
shares subscribed for by Purchaser is $25,000,000, payable in full on the
Closing Date.
. The closing of the purchase and sale of the Convertible
Preferred Stock (the "Closing") shall take place within five Business Days
after the satisfaction or waiver of the conditions set forth in Article VI
hereof or such date and time as shall be mutually agreed to by the parties
hereto (the "Closing Date") at the offices of Weil, Gotshal & Xxxxxx LLP, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, or such other place as shall be mutually
agreed to by the parties hereto.
On the Closing Date, Company will deliver to Purchaser a
certificate representing the Convertible Preferred Stock to be purchased by
Purchaser registered in such names and in such denominations as Purchaser
requests against delivery by Purchaser of the purchase price therefor by wire
transfer of funds to the account of Company.
. Company shall use the proceeds of the sale of the
Convertible Preferred Stock to finance acquisitions and provide for its working
capital, including repayment of revolving credit indebtedness.
PURCHASER'S REPRESENTATIONS
Purchaser makes the following representations and warranties
to Company, each and all of which shall survive the execution and delivery of
this Agreement and the Closing hereunder:
1.2. . Purchaser is purchasing the Convertible Preferred Stock for its own
account, for investment purposes and not with a view to the distribution
thereof. Purchaser will not, directly or indirectly, offer, transfer, sell,
assign, pledge, hypothecate or otherwise dispose of any of the Convertible
Preferred Stock (or solicit any offers to buy, purchase, or otherwise acquire
any of the Convertible Preferred Stock), except in compliance with the
Securities Act.
. Purchaser is an "accredited investor" (as that term is
defined in Rule 501 of Regulation D under the Securities Act) and by reason of
its business and financial experience, it has such knowledge, sophistication
and experience in business and financial matters as to be capable of evaluating
the merits and risks of the prospective investment, is able to bear the
economic risk of such investment and is able to afford a complete loss of such
investment. Purchaser has had the opportunity to ask such questions of Company
and to review such documents and information as Purchaser deemed necessary in
connection with the purchase of the Convertible Preferred Stock.
. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation.
1.3. . The execution, delivery and performance by Purchaser of this Agreement
and the other Transaction Documents to be executed by it: (i) are within
Purchaser's corporate power; (ii) have been duly authorized by all necessary
corporate action; (iii) are not in contravention of any provision of
Purchaser's certificate of incorporation or by-laws; and (iv) will not violate
any law or regulation, or any order or decree of any court or governmental
instrumentality binding on Purchaser. This Agreement and the other Transaction
Documents to which Purchaser is a party have each been duly executed and
delivered by Purchaser and constitute the legal, valid and binding obligations
of Purchaser, enforceable against it in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
1.4. Restricte. Purchaser understands that the Convertible Preferred Stock as
well as the shares of Common Stock issuable upon conversion thereof are
restricted securities under the federal securities laws inasmuch as they are
being acquired in a transaction not involving a public offering and may be
resold only in certain limited circumstances.
1.5. Brokers . Purchaser has no contract, arrangement or understanding with any
broker, finder or similar agent with respect to the transactions contemplated
by this Agreement.
COMPANY'S REPRESENTATIONS AND WARRANTIES
Company makes the following representations and warranties to
each Purchaser, each and all of which shall survive the execution and delivery
of this Agreement and the Closing hereunder, subject to the provisions of
Section 8.1 hereof:
. After giving effect to the Closing, the authorized capital
stock of Company consists of 100,000,000 shares of Common Stock, $.01 par value
per share, of which 26,046,701 shares are issued and outstanding, and
20,000,000 shares of preferred stock, no par value per share, of which
5,000,000 shares of Convertible Preferred Stock will be issued and outstanding.
All of such issued and outstanding shares, including, without limitation
(subject to the filings referred to in Section 4.6(vii)(A)), the Convertible
Preferred Stock, are validly issued, fully paid and non-assessable, after
payment in full of the purchase price referred to in Section 2.2. Except as set
forth on Schedule 4.1, (i) there is no existing option, warrant, call,
commitment or other agreement to which Company is a party requiring, and there
are no convertible securities of Company outstanding which upon conversion
would require, the issuance of any additional shares of Stock of Company or
other securities convertible into shares of equity securities of Company, other
than the Convertible Preferred Stock, and (ii) there are no agreements to which
Company is a party or, to the knowledge of Company, to which any stockholder or
warrant holder of Company is a party, with respect to the voting or transfer of
the Stock of Company, other than the Stockholders Agreement. Except as set
forth on Schedule 4.1, there are no stockholders' preemptive rights or rights
of first refusal or other similar rights with respect to the issuance of Stock
by Company, other than pursuant to the Transaction Documents. True and correct
copies of the articles of incorporation and by-laws of Company have been
delivered to Purchaser.
1.6. . The issuance of the Convertible Preferred Stock has been duly authorized
by all necessary corporate action on the part of Company and, upon delivery to
Purchaser of certificates therefor against payment in accordance with the terms
hereof, the Convertible Preferred Stock will have been validly issued and fully
paid and non-assessable, free and clear of all pledges, liens, encumbrances and
preemptive rights. The issuance of shares of Common Stock upon conversion of
the Convertible Preferred Stock has been duly authorized by all necessary
corporate action on the part of Company and, when issued upon conversion of the
Convertible Preferred Stock, such Common Stock will have been validly issued
and fully paid and non-assessable. Company has duly reserved 5,000,000 shares
of Common Stock for issuance pursuant to the terms of the Convertible Preferred
Stock.
1.7. Securitie. In reliance on the investment representations contained in
Sections 3.1 and 3.2, the offer, issuance, sale and delivery of the Convertible
Preferred Stock, as provided in this Agreement, are exempt from the
registration requirements of the Securities Act and all applicable state
securities laws, and are otherwise in compliance with such laws. Neither
Company nor any Person acting on its behalf has taken or will take any action
(including, without limitation, any offering of any securities of Company under
circumstances which would require the integration of such offering with the
offering of the Convertible Preferred Stock under the Securities Act and the
rules and regulations of the SEC thereunder) which might subject the offering,
issuance or sale of the Convertible Preferred Stock to the registration
requirements of Section 5 of the Securities Act.
1.8. Corporate. Company and each of its Subsidiaries, if any, (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Florida in the case of Company and as set forth on
Schedule 4.5 in the case of its Subsidiaries; (ii) is duly qualified as a
foreign corporation and in good standing under the laws of each jurisdiction
where its ownership or lease of property or the conduct of its business
requires such qualification (except for jurisdictions in which such failure to
so qualify or to be in good standing would not have a Material Adverse Effect);
(iii) has the requisite corporate power and authority and the legal right to
own, pledge, mortgage or otherwise encumber and operate its properties, to
lease the property it operates under lease, and to conduct its business as now
being conducted; (iv) has, or has applied for, all material licenses, permits,
certificates, consents or approvals from or by, and has made all material
filings with, and has given all material notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct including, but not limited to, those required by the
Department of Transportation or any other Governmental Authority having
jurisdiction over interstate, intrastate or international transportation of
goods by trucks; (v) is in compliance with its certificate or articles of
incorporation and by-laws; and (vi) is in compliance with all applicable
provisions of law, including, but not limited to, regulations promulgated by
the Department of Transportation and analogous state and provincial
requirements, except for such non-compliance which would not have a Material
Adverse Effect.
1.9. Subsidiar. There currently exist no Subsidiaries of Company other than as
set forth on Schedule 4.5 hereto, which sets forth such Subsidiaries, together
with their respective jurisdictions of organization, and the authorized and
outstanding capital Stock of each such Subsidiary, by class and number and
percentage of each class owned by Company or a Subsidiary of Company or any
other Person. There are no options, warrants, rights to purchase or similar
rights covering capital Stock for any such Subsidiary.
1.10. Corporate. The execution, delivery and performance by Company of this
Agreement, the other Transaction Documents to which it is a party and all
instruments and documents to be delivered by Company, the issuance and sale of
the Convertible Preferred Stock and the consummation of the other transactions
contemplated by any of the foregoing: (i) are within Company's corporate power
and authority; (ii) have been duly authorized by all necessary or proper
corporate action; (iii) are not in contravention of any provision of Company's
articles of incorporation or by-laws; (iv) will not violate any law or
regulation, or any order or decree known to Company of any court or
governmental instrumentality; (v) will not conflict with or result in the
breach or termination of, constitute a default under or accelerate any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which Company or any of its Subsidiaries is a
party or by which Company, any of its Subsidiaries or any of their property is
bound; (vi) will not result in the creation or imposition of any Lien upon any
of the property of Company or any of its Subsidiaries; and (vii) do not require
the consent or approval of, or any filing with, any Governmental Authority or
any other Person (except (A) for the filing of an amendment to Company's
articles of incorporation to authorize additional shares of Common Stock,
preferred stock, and the Convertible Preferred Stock, substantially in the form
of the Certificate of Designation, (B) for those filings required by the
Registration Rights Agreement, (C) compliance with the applicable requirements
of the HSR Act, (D) the approval by the holders of the Common Stock of Company
of such amendment to Company's articles of incorporation, (E) to the extent
previously obtained or made and (F) as set forth in Schedule 4.6 hereto). At or
prior to the Closing Date, each of this Agreement and the other Transaction
Documents shall have been duly executed and delivered by Company and each shall
then constitute a legal, valid and binding obligation of Company, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity), and an amendment to
Company's articles of incorporation containing the provisions of the
Certificate of Designation shall have been duly filed with the Secretary of
State of the State of Florida.
. 1.11. The audited consolidated balance sheet of Company as
at December 31, 1998, and the related consolidated statements of operations,
changes in Total Nonredeemable Preferred Stock, Common Stock and Stockholders'
Equity and cash flows for the year then ended, with the opinion thereon of
PricewaterhouseCoopers LLP, and the unaudited consolidated balance sheet of
Company as at March 31, 1999 (the "Balance Sheet") and the related unaudited
consolidated statements of operations, changes in Total Nonredeemable Preferred
Stock, Common Stock and Stockholders' Equity and cash flows for the three
months then ended, copies of which have previously been delivered to Purchaser,
have been prepared in conformity with GAAP consistently applied throughout the
periods involved and present fairly in all material respects the consolidated
financial position of Company as at the dates thereof, and the consolidated
results of its operations and cash flows for the periods then ended, subject,
in the case of the interim financial statements, to normal year-end audit
adjustments.
(a) Except as set forth on Schedule 4.7, neither Company nor any of its
Subsidiaries has any material obligations, contingent or otherwise, including,
without limitation, liabilities for Charges, long-term leases or unusual
forward or long-term commitments which are not reflected in the Balance Sheet,
other than those which are not required by GAAP to be so reflected and those
incurred since March 31, 1999, in the ordinary course of business.
(b) Except as set forth on Schedule 4.7, no dividends or other distributions
have been declared, paid or made upon any shares of capital Stock of Company,
nor have any shares of capital Stock of Company been redeemed, retired,
purchased or otherwise acquired for value by Company in either case since March
31, 1999. 1.12. . (a) Except as set forth on Schedule 4.8, neither Company nor
any of its Subsidiaries owns any real estate. Each of Company and its
Subsidiaries has good and marketable and insurable fee simple title to its
owned real property, free and clear of all Liens, except those of an immaterial
customary nature and encumbrances of record which do not impair Company's use
thereof. Each of Company and its Subsidiaries has valid and marketable
leasehold interests in the leases described in Schedule 4.8 hereto, and, except
as set forth on Schedule 4.8, good and marketable title to, or valid leasehold
interests in, all of its other properties and assets free and clear of all
Liens.
(b) All real property leased by Company and its Subsidiaries is set forth on
Schedule 4.8. Each of such leases is valid and enforceable in accordance with
its terms (subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity)) and is in full force and effect. Company has delivered to Purchaser
true and complete copies of each of such leases set forth on Schedule 4.8(b)
and all documents affecting the rights or obligations of Company or any of its
Subsidiaries, including, without limitation, any non-disturbance and
recognition agreements, subordination agreements, attornment agreements and
agreements regarding the term or rental of any of the leases. Except as set
forth on Schedule 4.8, none of Company, any of its Subsidiaries nor, to its
knowledge, any other party to any such lease is in default of its obligations
thereunder or has delivered or received any notice of default under any such
lease, nor has any event occurred which, with the giving of notice, the passage
of time or both, would constitute a default under any such lease.
(c) Except as disclosed on Schedule 4.8, neither Company nor any of its
Subsidiaries is obligated under or a party to, any option, right of first
refusal or any other contractual right to purchase, acquire, sell, assign or
dispose of any real property owned or leased by Company or such Subsidiary.
1.13. . Schedule 4.9 contains a true, correct and complete list and description
of all Material Contracts. Each Material Contract is a valid and binding
agreement of Company or its Subsidiaries (as the case may be) enforceable
against Company or such Subsidiary in accordance with its terms (subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity)), and neither Company nor any of its Subsidiaries has any knowledge
that any Material Contract is not a valid and binding agreement against the
other parties thereto. Company and each of its Subsidiaries has fulfilled all
material obligations required pursuant to the Material Contracts to have been
performed by Company or such Subsidiary on its part. Except as set forth in
Schedule 4.9, neither Company nor any of its Subsidiaries is in material
default or breach, nor to Company's or such Subsidiary's knowledge is any third
party in default or breach, under or with respect to any Material Contract.
1.14. Environme. (a) Except as set forth on Schedule 4.10, to Company's and its
Subsidiaries' knowledge, all real property owned, leased or otherwise operated
by Company and its Subsidiaries (each, a "Facility") is free of contamination
from any substance, waste or material (i) currently identified to be toxic or
hazardous pursuant to, or which may result in liability under, any
Environmental Law or (ii) within the definition of a substance which is toxic
or hazardous under any Environmental Law, including, without limitation, any
asbestos, pcb, radioactive substance, methane, volatile hydrocarbons,
industrial solvents, oil or petroleum or chemical liquids or solids, liquid or
gaseous products, or any other material or substance which has in the past or
could at any time in the future cause or constitute a health, safety, or
environmental hazard to any Person or property or result in any Environmental
Liabilities and Costs ("Hazardous Substance") of more than $100,000 or which,
in either case, could have a Material Adverse Effect. Except as set forth on
Schedule 4.10, to Company's knowledge, 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 Substances at or from any Facility (a "Spill") which could result in
Environmental Liabilities and Costs in excess of $100,000.
(b) Company and each Subsidiary has generated, treated, stored and disposed of
any Hazardous Substances in full compliance with applicable Environmental Laws,
except for such non-compliances which would not have a Material Adverse Effect.
(c) Company and each Subsidiary has obtained, or has applied for, and is in
full compliance with and in good standing under all permits required under
Environmental Laws (except for such failures which would not have a Material
Adverse Effect) and neither Company nor any of its Subsidiaries has any
knowledge of any proceedings to substantially modify or to revoke any such
permit. (d) Except as set forth on Schedule 4.10, there are no investigations,
proceedings or litigation pending or, to Company's or its Subsidiaries'
knowledge, threatened affecting or against Company, any of its Subsidiaries or
the Facilities relating to Environmental Laws or Hazardous Substances. (e)
Except for communications in connection with the matters listed on Schedule
4.10, neither Company nor any of its Subsidiaries has received any
communication or notice (including, without limitation, requests for
information) indicating the potential of Environmental Liabilities and Costs
against Company or its Subsidiaries. (f) Company has provided to Purchaser
copies of all environmental and safety investigations, audits, assessments,
sampling results and other reports relating to Company or any current or former
facilities that are in the possession, custody or control of Company. 1.15. .
(a) There are no strikes or other labor disputes against Company or any of its
Subsidiaries pending or, to Company's or its Subsidiaries' knowledge,
threatened. Hours worked by and payment made to employees of Company and its
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable law dealing with such matters. All payments due from Company
and each of its Subsidiaries on account of employee health and welfare
insurance have been paid or accrued as a liability on the books of Company or
such Subsidiary. There is no organizing activity involving Company or any of
its Subsidiaries pending or, to Company's or its Subsidiaries' knowledge,
threatened by any labor union or group of employees. There are no
representation proceedings pending or, to Company's or its Subsidiaries'
knowledge, threatened with the National Labor Relations Board, and no labor
organization or group of employees of Company or its Subsidiaries has made a
pending demand for recognition. There are no complaints or charges against
Company or any of its Subsidiaries pending or, to Company's or its
Subsidiaries' knowledge, threatened to be filed with any federal, state, local
or foreign court, governmental agency or arbitrator based on, arising out of,
in connection with, or otherwise relating to the employment or termination of
employment by Company or any of its Subsidiaries of any individual.
(b) Neither Company nor any of its Subsidiaries is, or during the five years
preceding the date hereof was, a party to any labor or collective bargaining
agreement and there are no labor or collective bargaining agreements which
pertain to employees of Company or its Subsidiaries.
1.16. . Except as set forth on Schedule 4.12, neither Company nor any of its
Subsidiaries is engaged in any joint venture or partnership with any other
Person.
1.17. Taxes . Except as set forth on Schedule 4.13, all federal, state, local
and foreign tax returns, reports and statements required to be filed by Company
and its Subsidiaries have been timely filed with the appropriate Governmental
Authority and all such returns, reports and statements are true, correct and
complete in all material respects. All material Charges and other impositions
due and payable for the periods covered by such returns, reports and statements
have been paid prior to the date on which any fine, penalty, interest or late
charge may be added thereto for nonpayment thereof, or any such fine, penalty,
interest, late charge or loss has been paid. 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. Except as set forth in Schedule 4.13, neither
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
Charges. No tax audits or other administrative or judicial proceedings are
pending or to Company's knowledge threatened with regard to any Charges for
which Company or any Subsidiary may be liable and Company has not received
notice that any assessment of Charges is proposed against the Company or any
Subsidiary. Neither Company nor any of its Subsidiaries has filed a consent
pursuant to IRC Section 341(f) or agreed to have IRC Section 341(f)(2) apply to
any dispositions of subsection (f) assets (as such term is defined in IRC
Section 341(f)(4)). None of the property owned by Company or any of its
Subsidiaries is property which such company is required to treat as being owned
by any other Person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, and in effect immediately prior to
the enactment of the Tax Reform Act of 1986 or is "tax-exempt use property"
within the meaning of IRC Section 168(h). Neither Company nor any of its
Subsidiaries has agreed or has been requested to make any adjustment under IRC
Section 481(a) by reason of a change in accounting method or otherwise. Neither
Company nor any of its Subsidiaries has any obligation under any written tax
sharing agreement, except for reimbursement of taxes to AmSouth Bank pursuant
to certain Company tax indemnity agreements. 1.18. No Litiga. Except as
disclosed on Schedule 4.14, no action, claim or proceeding is now pending or,
to the knowledge of Company or its Subsidiaries, threatened against Company or
any of its Subsidiaries, at law, in equity or otherwise, before any court,
board, commission, agency or instrumentality of any federal, state, or local
government or of any agency or subdivision thereof, or before any arbitrator or
panel of arbitrators, which if determined adversely to Company or its
Subsidiaries would be reasonably likely to result in a Material Adverse Effect.
1.19. Brokers . Except as set forth on Schedule 4.15, no broker or finder
acting on behalf of Company or any of its Subsidiaries brought about the
consummation of the transactions contemplated pursuant to this Agreement and
neither Company nor any of its Subsidiaries has any obligation to any Person in
respect of any finder's or brokerage fees (or any similar obligation) in
connection with the transactions contemplated by this Agreement. Company is
solely responsible for the payment of all such finder's or brokerage fees.
1.20. Employmen. Except as set forth on Schedule 4.16, there are no
employment, consulting or management agreements covering officers of Company or
any of its Subsidiaries.
1.21. Patents, . Company and each of its Subsidiaries owns all licenses,
patents, patent applications, copyrights, service marks, trademarks and
registrations and applications for registration thereof, and trade names
necessary to continue to conduct its business as heretofore conducted by it and
now being conducted by it, each of which is listed, together with Patent and
Trademark Office or Copyright Office application or registration numbers, where
applicable, on Schedule 4.17 hereto. To Company's knowledge, Company and each
of its Subsidiaries conducts its businesses without infringement or claim of
infringement of any license, patent, copyright, service xxxx, trademark, trade
name, trade secret or other intellectual property right of others, except as
set forth on Schedule 4.17 hereto. To Company's knowledge, there is no
infringement by others of any license, patent, copyright, service xxxx,
trademark, trade name, trade secret or other intellectual property right of
Company or any of its Subsidiaries, except as set forth on Schedule 4.17
hereto.
1.22. No Materi. No event has occurred since December 31, 1998 which has had or
could be reasonably expected to have a Material Adverse Effect.
1.23. ERISA . (a) Schedule 4.19 sets forth: (i) all "employee benefit plans",
as defined in Section 3(3) of ERISA, and any other employee benefit
arrangements or payroll practices, including, without limitation, severance
pay, sick leave, vacation pay, salary continuation for disability, consulting
or other compensation agreements, retirement, deferred compensation, bonus,
stock purchase, hospitalization, medical insurance, life insurance and
scholarship programs (the "Plans") maintained by Company and any of its
Subsidiaries or to which Company or and of its Subsidiaries contributed or is
obligated to contribute thereunder, and (ii) all "employee pension plans", as
defined in Section 3(2) of ERISA (the "Pension Plans"), maintained by Company,
any of its Subsidiaries or any of its ERISA Affiliates to which Company, any of
its Subsidiaries or any of its ERISA Affiliates contributed or is obligated to
contribute thereunder. None of the Pension Plans is a "defined benefit pension
plan" subject to Title IV of ERISA or a Multiemployer Plan.
(b) The Pension Plans intended to be qualified under Section 401 of the IRC are
so qualified and the trusts maintained pursuant thereto are exempt from federal
income taxation under Section 501 of the IRC, and nothing has occurred with
respect to the operation of the Pension Plans which could cause the loss of
such qualification or exemption or the imposition of any liability, penalty, or
tax under ERISA or the IRC.
(c) All contributions required by law or pursuant to the terms of the Plans
(without regard to any waivers granted under Section 412 of the IRC) to any
funds or trusts established thereunder or in connection therewith have been
made by the due date thereof (including any valid extension). (d) There is no
material violation of ERISA with respect to the filing of applicable reports,
documents, and notices regarding the Plans with the Secretary of Labor and the
Secretary of the Treasury or the furnishing of such documents to the
participants or beneficiaries of the Plans. (e) True, correct and complete
copies of the following documents, with respect to each of the Plans, have been
made available or delivered to Purchaser by Company: (A) any plans and related
trust documents, and amendments thereto, (B) the most recent Forms 5500
(including any schedules thereto), (C) the last IRS determination letter, (D)
summary plan descriptions, (E) written communications to employees relating to
the Plans and (F) written descriptions of all non-written agreements relating
to the Plans. (f) There are no pending actions, claims or lawsuits which have
been asserted or instituted against the Plans, the assets of any of the trusts
under such Plans or the Plan sponsor or the Plan administrator, or against any
fiduciary of the Plans with respect to the operation of such Plans (other than
routine benefit claims), nor does Company or any of its Subsidiaries have
knowledge of facts which could form the basis for any such claim or lawsuit.
(g) All amendments and actions required to bring the Plans into conformity in
all material respects with all of the applicable provisions of ERISA and other
applicable laws have been made or taken except to the extent that such
amendments or actions are not required by law to be made or taken until a date
after the Closing Date. (h) The Plans have been maintained, in all material
respects, in accordance with their terms and with all provisions of ERISA
(including rules and regulations thereunder) and other applicable Federal and
state law, and neither Company nor any of its Subsidiaries or "party in
interest" or "disqualified person" with respect to the Plans has engaged in a
"prohibited transaction" within the meaning of Section 4975 of the IRC or
Section 406 of ERISA. (i) None of Company, any of its Subsidiaries or any ERISA
Affiliate maintains retired life and retired health insurance plans which are
Welfare Plans and which provide for continuing benefits or coverage for any
participant or any beneficiary of a participant except as may be required under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA") and at the expense of the participant or the participant's
beneficiary. Company, all of its Subsidiaries and all ERISA Affiliates which
maintains a Welfare Plan has materially complied with the notice and
continuation requirements of COBRA and the regulations thereunder. 1.24. .
Except as set forth in Schedule 4.20 hereto and as provided in the Registration
Rights Agreement, neither Company nor any of its Subsidiaries is under any
contractual obligation to register, under the Securities Act, any of its
presently outstanding securities or any securities which may hereafter be
issued.
1.25. SEC Docum. Company has made available to Purchaser a true and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by Company with the SEC since January 1, 1998 and prior to the
date of this Agreement (the "Company SEC Documents"), which are all the
documents (other than preliminary material) that Company was required to file
with the SEC since such date. As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Company SEC Documents, and
none of the Company SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
1.26. Ordinary . Except as set forth on Schedule 4.7 or in response to the
events described therein, since December 31, 1998, Company and each of its
Subsidiaries has conducted its operations only in the ordinary course of
business consistent with past practice.
1.27. Insurance. Schedule 4.23 hereto contains a complete and correct list of
all policies of insurance of any kind or nature covering Company and its
Subsidiaries, including, without limitation, policies of life, fire, theft,
employee fidelity and other casualty and liability insurance, indicating the
type of coverage, name of insured, the insurer, the premium, the expiration
date of each policy and the amount of coverage, and such policies are in full
force and effect. Complete and correct copies of each such policy have been
furnished or made available to Purchaser. Such policies are, in Company's
judgment, in amounts customary for the industry in which Company or such
Subsidiary operates.
1.28. Minute Bo. The minute books of Company, as previously made available to
Purchaser accurately reflect all formal corporate action of the stockholders
and Board of Directors of Company.
1.29. Year 2000. (a) Each system comprised of software, hardware, databases or
embedded control systems (microprocessor controlled or controlled by any
robotic or other device) the operational failure of which would be reasonably
likely to result in a Material Adverse Effect (collectively, a "System") will
not be materially adversely affected by the advent of the year 2000, the advent
of the twenty-first century or the transition from the twentieth century
through the year 2000 and into the twenty-first century and each System of
Company and its Subsidiaries will be able to accurately process date data,
including, but not limited to, calculating, comparing and sequencing from, into
and between the twentieth century (through year 1999), the year 2000 and the
twenty-first century, including leap year calculations ("Year 2000 Compliant").
Company has no reason to believe that it or any of its Subsidiaries may incur
material expenses arising from or relating to the failure of any of their
Systems as a result of the advent of the year 2000, the advent of the
twenty-first century or the transition from the twentieth century through the
year 2000 and into the twenty-first century.
(b) All vendors of products or services to Company or any of its Subsidiaries,
the operational failure of which would be reasonably likely to result in a
Material Adverse Effect, and such respective products, services and operations,
are (or prior to December 31, 1999, will be), to the knowledge of Company, Year
2000 Compliant. To the knowledge of Company after a reasonably diligent
investigation, each such vendor will continue to furnish its products or
services to Company or its Subsidiaries, as applicable, without interruption or
material delay, on and after January 1, 2000.
1.30. . No information contained in this Agreement or the schedules hereto, any
other Transaction Document or the Financial Statements contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements contained herein or therein not misleading in light of the
circumstances under which made.
COVENANTS
1.31. . Company covenants and agrees that from and after the date hereof
(except as otherwise provided herein, or unless the Required Holders have given
their prior written consent) so long as at least 30% of the shares of
Convertible Preferred Stock issued on the Closing Date are outstanding and so
long as Purchaser and its Affiliates constitute the Required Holders:
(a) . Company shall, and shall cause its Subsidiaries to, keep adequate records
and books of account with respect to their business activities, in which proper
entries, reflecting all of their financial transactions, are made in accordance
with GAAP.
(b) .inancial and Business Information
(i) . Commencing with the month ending May 31, 1999, Company will deliver to
Purchaser as soon as practicable after the end of each month, but in any event
within 30 days thereafter, the information specified on Schedule 5.1(b) hereto.
(ii) Quarterly Informat. Company will deliver to Purchaser as soon as
practicable after the end of each of the first three quarterly fiscal periods
in each fiscal year of Company, but in any event within 45 days thereafter, (A)
an unaudited consolidated balance sheet of Company and its Subsidiaries, if
any, as at the end of such quarter, and (B) unaudited consolidated statements
of income, retained earnings and cash flows of Company and its Subsidiaries, if
any, for such quarter and (in the case of the second and third quarters) for
the portion of the fiscal year ending with such quarter, setting forth in
comparative form in each case the projected consolidated figures for such
period and the actual consolidated figures for the comparable period of the
prior fiscal year. Such statements shall be (1) prepared in accordance with
GAAP consistently applied, (2) in reasonable detail and (3) certified by the
principal financial or accounting officer of Company.
. Company will deliver to Purchaser as soon as
practicable after the end of each fiscal year of Company, but in any event
within 90 days thereafter, (A) an audited consolidated balance sheet of Company
and its Subsidiaries, if any, as at the end of such year, and (B) audited
consolidated statements of income, retained earnings and cash flows of Company
and its Subsidiaries, if any, for such year; setting forth in comparative form
in each case the projected consolidated figures for such year and the actual
consolidated figures for the previous year. Such statements shall be (1)
prepared in accordance with GAAP consistently applied, (2) in reasonable detail
and (3) certified by PricewaterhouseCoopers LLP or such other firm of
independent certified public accountants of recognized national standing
selected by Company and reasonably acceptable to the Required Holders.
. Company will deliver to Purchaser, promptly upon
their becoming available, one copy of each report, notice or proxy statement
sent by Company to its stockholders generally, and of each regular or periodic
report (pursuant to the Exchange Act) and any registration statement,
prospectus or other writing (other than transmittal letters) (including,
without limitation, by electronic means) pursuant to the Securities Act filed
by Company with (i) the SEC or (ii) any securities exchange on which shares of
capital Stock of Company are listed.
. Company will deliver to Purchaser within 30 days
prior to the beginning of each Fiscal Year, a final form of which shall be
delivered within 30 days after the beginning of each Fiscal Year:
(A) draft projected consolidated balance sheets of Company and its
Subsidiaries, if any, for such Fiscal Year, on a monthly basis;
(B) draft projected consolidated cash flow statements of Company and its
Subsidiaries, if any, including summary details of cash disbursements
(including for Capital Expenditures), for such Fiscal Year, on a monthly basis;
and (C) draft projected consolidated income statements of Company and its
Subsidiaries, if any, for such Fiscal Year, on a monthly basis; in each case,
approved by the Board of Directors of Company, together with appropriate
supporting details.
. If requested by Purchaser, Company will deliver
to Purchaser such other information respecting Company's or any of its
Subsidiaries' business, financial condition or prospects as Purchaser may, from
time to time, reasonably request.
. Subject to the first sentence of Section 5.1
hereof, information provided under this Section 5.1(b) which is not otherwise
publicly available shall be available only to Purchaser and Purchaser's
Affiliates (other than Affiliates who are direct competitors of Company) who
are transferees of Convertible Preferred Stock.
(c) . Company authorizes Purchaser to communicate directly with its independent
certified public accountants and tax advisors and authorizes those accountants
to disclose to Purchaser any and all financial statements and other supporting
financial documents and schedules including copies of any management letter
with respect to the business, financial condition and other affairs of Company
and any of its Subsidiaries; provided that Purchaser shall provide Company with
at least two Business Days prior written notice of its intention to communicate
directly with such accountants and shall permit Company to participate in any
such communication with such accountants. Any information obtained from such
accountants shall be available only to Purchaser and Purchaser's Affiliates
(other than Affiliates who are direct competitors of Company) who are
transferees of Convertible Preferred Stock. At or before the Closing Date,
Company shall deliver a letter addressed to such accountants and tax advisors
instructing them to comply with the provisions of this Section 5.1(c).
(d) . Company shall pay all transfer, excise or similar taxes (not including
income or franchise taxes) in connection with the issuance, sale, delivery or
transfer by Company to Purchaser of the Convertible Preferred Stock and the
Common Stock issuable upon conversion thereof, and shall indemnify and save
Purchaser harmless without limitation as to time against any and all
liabilities with respect to such taxes. Company shall not be responsible for
any taxes in connection with the transfer of the Convertible Preferred Stock or
such Common Stock by the holder thereof. The obligations of Company under this
Section 5.1(d) shall survive the payment, prepayment or redemption of the
Convertible Preferred Stock and the termination of this Agreement.
(e) Insurance. Company shall and shall cause each Subsidiary of Company to
maintain insurance covering, without limitation, fire, theft, burglary, public
liability, property damage, product liability, workers' compensation,
directors' and officers' insurance and insurance on all property and assets
material to the operation of the business, all in amounts customary for the
industry, including at least $30,000,000 in excess umbrella liability
insurance. Company shall, and shall cause each of its Subsidiaries to, pay all
insurance premiums payable by them. Company shall maintain key-man life
insurance for Xxxxxx X. Xxxxxx in an amount equal to at least $6,000,000.
(f) Employee . (i) With respect to other than a Multiemployer Plan, for each
Plan and Pension Plan intended to be qualified under Section 401(a) of the IRC
hereafter adopted or maintained by Company, any of its Subsidiaries or any
ERISA Affiliate, Company shall (A) seek, or cause its Subsidiaries or ERISA
Affiliates to seek, and receive determination letters from the IRS to the
effect that such Plan or Pension Plan is qualified within the meaning of
Section 401(a) of the IRC; and (B) from and after the adoption of any such Plan
or Pension Plan, cause such plan to be qualified within the meaning of Section
401(a) of the IRC and to be administered in all material respects in accordance
with the requirements of ERISA and Section 401(a) of the IRC.
(ii) With respect to each Welfare Plan hereafter adopted or maintained by
Company, any of its Subsidiaries or any ERISA Affiliate, to the extent
applicable, Company shall comply, or cause its Subsidiaries or ERISA Affiliates
to comply, with the notice and continuation coverage requirements of Section
4980B of the IRC and the regulations thereunder.
(iii) Company shall not, directly or indirectly, and shall not permit its
Subsidiaries or any ERISA Affiliate to directly or indirectly by reason of an
amendment or amendments to, or the adoption of, one or more Pension Plans,
permit the present value of all benefit liabilities, as defined in Title IV of
ERISA, (using the actuarial assumptions utilized by the PBGC upon termination
of a plan) to exceed the fair market value of assets allocable to such benefits
by more than $250,000, or to increase to the extent security must be provided
to any Pension Plan under Section 401(a)(29) of the IRC. Neither Company nor
any of its Subsidiaries shall establish or become obligated to any new Retiree
Welfare Plan, which would result in the present value of future liabilities
under any such plans to exceed $250,000. Neither Company nor any of its
Subsidiaries or ERISA Affiliates shall establish or become obligated to any new
unfunded Pension Plan, which would result in the present value of future
liabilities under any such plans to exceed $250,000. Company shall not directly
or indirectly, and shall not permit its Subsidiaries or any ERISA Affiliate to
(a) satisfy any liability under any Pension Plan by purchasing annuities from
an insurance company or (b) invest the assets of any Pension Plan with an
insurance company, unless, in each case, such insurance company is rated AA by
Standard & Poor's Corporation and the equivalent by each other nationally
recognized rating agency at the time of the investment. (iv) Company, any of
its Subsidiaries and any ERISA Affiliate shall not contribute or become
obligated to contribute to any Multiemployer Plan. (g) . Company shall, and
shall cause each of its Subsidiaries to, comply with all laws, including
Environmental Laws, applicable to it, except where the failure to comply would
not be reasonably likely to result in a Material Adverse Effect.
(h) Maintenan. Company shall, and shall cause each of its Subsidiaries to: (i)
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, and its rights and franchises; (ii) at all
times maintain, preserve and protect all of its patents, trademarks and trade
names, and preserve all the remainder of its material assets, in use or useful
in the conduct of its business and keep the same in good repair, working order
and condition (taking into consideration ordinary wear and tear) and from time
to time make, or cause to be made, all needful and proper repairs, renewals and
replacements, betterments and improvements thereto consistent with industry
practices; provided, however, that Company shall not be required to register
trademarks or pursue litigation if it reasonably determines that the cost
thereof would outweigh the benefits; and (iii) continue to conduct only a
trucking business and businesses related to the business that Company and its
subsidiaries are engaged in on the date hereof.
(i) . Company shall permit representatives of Purchaser, at Purchaser's
expense, to visit and inspect any of the properties of Company and its
Subsidiaries, to examine the corporate books and make copies or extracts
therefrom and to discuss the affairs, finances and accounts of Company and its
Subsidiaries with the principal officers of Company, all at such reasonable
times, upon reasonable notice and as often as Purchaser may reasonably request.
(j) Exchange . Company will, at its expense, promptly upon surrender of any
certificates representing shares of Convertible Preferred Stock at the office
of Company referred to in, or designated pursuant to, Section 10.1 hereof,
execute and deliver to Purchaser so surrendering such certificates a new
certificate or certificates in denominations specified by Purchaser for an
aggregate number of shares of Convertible Preferred Stock equal to the number
of shares of such stock represented by the certificates surrendered.
(k) Lost, Sto. Upon receipt of evidence reasonably satisfactory to Company of
the loss, theft, destruction or mutilation of any certificate for shares of
Convertible Preferred Stock and, in the case of loss, theft or destruction,
upon delivery of an indemnity reasonably satisfactory to Company (which may be
an undertaking by Purchaser to so indemnify Company), or, in the case of
mutilation, upon surrender and cancellation thereof, Company will issue a new
certificate of like tenor for a number of shares of Convertible Preferred Stock
equal to the number of shares of such stock represented by the certificate
lost, stolen, destroyed or mutilated.
1.32. . Company covenants and agrees that from and after the date hereof
(except as otherwise provided herein, or unless the Required Holders have given
their prior written consent) so long as at least 30% of the shares of
Convertible Preferred Stock issued on the Closing Date are outstanding and so
long as Purchaser and its Affiliates constitute the Required Holders:
(a) . Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly in any transaction or related series of transactions,
acquire (including pursuant to a Capital Lease or operating lease) or invest
in, whether for cash, debt, Stock, or other property or assets or by guaranty
of any obligation, any assets or business of any Person other than (i)
acquisitions of assets, other than rolling stock, in the ordinary course of
business of Company with an aggregate purchase price of not more than
$5,000,000 in any Fiscal Year, (ii) acquisitions by Company or wholly-owned
Subsidiaries of Company from Company or any such wholly-owned Subsidiary or
investments therein, (iii) acquisitions of all or substantially all of the
Stock, assets or business of any Person, or a division thereof, involving an
aggregate purchase price of not more than (A) $10,000,000 in any single
transaction, or (B) $5,000,000 in cash, purchase money debt of Company or one
of its' Subsidiaries (other than the Person being acquired) or loans in any
single transaction, (iv) acquisitions of rolling stock in the ordinary course
of business and (v) investments in Cash Equivalents. Purchaser shall have ten
Business Days from the date of confirmed receipt of written notice by
Purchaser's Observer (as defined in the Stockholders Agreement) on the board of
directors (or, if there is no Observer or the Observer is otherwise not
available, of receipt of written notice in accordance with Section 10.1 hereof)
of Company's request to conduct an acquisition (other than the transactions
described in clauses (i)-(v) hereof) to consent or decline to consent to such
acquisition. If Purchaser fails to respond to such request within such time
period, it shall be deemed to have consented to such request. For purposes
hereof, the purchase price of leased property shall be its GAAP value in the
case of a Capital Lease, and its Fair Market Value, as determined by Company's
Board of Directors, in the case of an operating lease. Company shall not, and
shall not permit any of its Subsidiaries to, invest in any Person if, after
giving effect thereto, such Person would be an Affiliate, but not a Subsidiary,
of Company.
(b) Sales of . Company shall not, and shall not permit any Subsidiary of
Company to, (i) sell, transfer, convey or otherwise dispose of any assets or
properties or (ii) liquidate, dissolve or wind up Company, or any of its
Subsidiaries, except for transfers to Company, whether voluntary or
involuntary; provided, however, that the foregoing shall not prohibit (1) the
sale of inventory or rolling stock or sale-leaseback transactions in the
ordinary course of business, (2) the sale of surplus or obsolete equipment and
fixtures, (3) transfers resulting from any casualty or condemnation of assets
or properties, or (4) sales involving an aggregate sale price of not more than
$1,000,000 in any single transaction.
(c) . Company shall not and shall not permit any Subsidiary of Company to take
or omit to take any action, which act or omission would constitute a default or
an event of default under any agreement, document or instrument to which it is
a party, after giving effect to any applicable cure period (a "Cross Default"),
(A) involving the failure to make any payment (whether of principal, interest
or otherwise) due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) in respect of any Indebtedness of the type
described in clauses (i), (ii) or (iii) of the definition of "Indebtedness" of
Company, which Indebtedness is in an aggregate amount exceeding $1,000,000, or
(B) causing (or permitting any holder of such Indebtedness or a trustee to
cause) such Indebtedness or a portion thereof in an aggregate amount exceeding
$1,000,000, to become due prior to its stated maturity or prior to its
regularly scheduled dates of payment.
(d) . Company shall not and shall not permit any Subsidiary of Company to make
or accrue any loans or other advances of money to any employee of Company or
such Subsidiary, other than (i) loans in an aggregate amount outstanding not to
exceed $1,000,000 at any one time, (ii) loans outstanding on the date hereof as
set forth in Schedule 5.2(d) and (iii) loans made in connection with
acquisitions permitted under Section 5.2(a) hereof.
(e) Capital S. Company shall not issue or agree to issue any additional shares
of Convertible Preferred Stock, nor any Stock senior to or pari passu with the
Convertible Preferred Stock nor any securities exchangeable for or convertible
into such Stock.
(f) Transacti. Company shall not and shall not permit any Subsidiary of Company
to enter into or be a party to any transaction with any Affiliate of Company or
such Subsidiary, except (i) transactions in existence on the date hereof as set
forth on Schedule 5.2(f) or expressly permitted hereby, (ii) transactions in
the ordinary course of and pursuant to the reasonable requirements of Company's
or such Subsidiary's business and upon fair and reasonable terms that are fully
disclosed to Purchaser and are no less favorable to Company or such Subsidiary
than would be obtained in a comparable arm's-length transaction with a Person
not an Affiliate of Company or such Subsidiary, (iii) transactions between
Company and its wholly-owned Subsidiaries or between such Subsidiaries and (iv)
payment of compensation to employees and directors' fees.
(g) Indebtedn. Company shall not and shall not permit any Subsidiary of Company
to incur or suffer to exist any Indebtedness except: (i) Indebtedness existing
on the date hereof and listed on Schedule 4.9; (ii) Permitted Indebtedness;
(iii) Indebtedness, inclusive of Indebtedness referred to in clause (i) above;
provided that at no time shall the ratio of Company's Indebtedness plus the
Liquidation Preference (as such term is defined in Company's articles of
incorporation) of the shares of outstanding Convertible Preferred Stock, plus
all declared or accrued and unpaid dividends thereon, to EBITDA be greater than
4.00:1.00, determined as of the last day of the second fiscal quarter and
Fiscal Year for each Fiscal Year for the twelve-month period ending on such
date; or (iv) Indebtedness owing by Company to any of its wholly-owned
Subsidiaries or by any of Company's wholly-owned Subsidiaries to any other
wholly-owned Subsidiaries or Company. Company shall not incur or issue any
Indebtedness which is convertible into or exchangeable for Stock nor issued
together with Stock or warrants to acquire Stock. For purposes of this Section
5.2(g), "EBITDA" shall mean the consolidated operating income (before
extraordinary items, interest, taxes, depreciation and amortization) of Company
and its Subsidiaries, giving pro forma effect to the EBITDA of any Persons
acquired by Company during the period for which the ratio is calculated, as if
the acquisition was consummated on the first day of each twelve month period,
determined in accordance with GAAP.
(h) Restricte. Company shall not, and shall not agree to, and shall not permit
any Subsidiary of Company to make, or agree to make, any Restricted Payments
nor shall Company permit any Subsidiary to make or agree to make such payments
with respect to Company's Stock; provided, however, that Company may (i)
declare and pay cash dividends on the Convertible Preferred Stock and (ii)
redeem the Convertible Preferred Stock in accordance with its terms.
(i) Mergers a. Neither Company nor any Subsidiaries of Company shall directly
or indirectly, by operation of law or otherwise, merge with, consolidate with,
or otherwise combine with any Person, nor shall Company create any Subsidiary,
other than (i) the creation of wholly-owned Subsidiaries, (ii) mergers of
wholly-owned Subsidiaries of Company into Company or any other of its
wholly-owned Subsidiaries or (iii) in connection with Permitted Acquisitions;
provided that at all times Company shall be the surviving entity of any such
combination; provided, however, that clauses (i) and (ii) of this Section
5.2(i) shall not apply to any Canadian Subsidiary of Company so long as Company
holds at least 80% of the voting and equity Stock of such Canadian Subsidiary.
(j) Amendment. Company shall not authorize, adopt or approve an amendment to
the articles of incorporation of Company or the by-laws of Company, except to
increase the number of authorized shares of Common Stock and as contemplated by
Section 4.6(vii) hereof.
1.33. . Upon the occurrence and during the continuance of an Event of Default
by Company (subject to notice and opportunity to cure as set forth in the
definition of Event of Default), in addition to any other remedies available at
law or in equity, the holders of the Convertible Preferred Stock shall be
entitled to elect two members of the Board of Directors of Company in
accordance with the provisions of the Certificate of Designation.
1.34. Certain T. (a) In the event (i) of a Final Determination (as defined
below) that, due to any reason (including by reason of any of the terms of
Convertible Preferred Stock) other than an act or failure to act of Purchaser
(including by reason of the application of IRC Section 246(c) or IRC Section
246A) or Purchaser being other than a corporation, dividends paid or accrued or
deemed paid or accrued on the Convertible Preferred Stock are not eligible for
the dividends received deduction provided under the Dividends Deduction Laws
(as defined in Section 5.5 below) (the "Dividends-Received Deduction"), (ii)
any Dividends Deduction Law or any similar or corresponding state or local law
is amended to reduce or eliminate or otherwise limit the Dividends-Received
Deduction available to Purchaser or (iii) any dividend with respect to the
Convertible Preferred Stock does not constitute, in whole or in part, a
dividend for federal income tax purposes or such dividend is subject to Section
1059 of the IRC (in either case, an "Excess Distribution"), Company shall pay
to Purchaser with respect to each such dividend payment, no later than the
Payment Date (as defined below), an additional payment (the "Gross-Up Payment")
such that the net amount of Gross-Up Payment received and retained by Purchaser
after payment by Purchaser of any federal, state and local income tax payable
with respect to such Gross-Up Payment shall equal, in the case of (i) or (ii)
above, the difference between (x) the federal, state and local income tax
payable by Purchaser with respect to such dividend in its taxable year in which
the dividend was paid or deemed paid and (y) the federal, state and local
income tax which would have been payable by Purchaser in its taxable year in
which the dividend was paid or deemed paid if the events described in (i) or
(ii) had not occurred and in the case of (iii) above, an amount which, when
taken together with the aggregate distributions (whether treated as dividends
or Excess Distributions for federal income tax purposes) paid or deemed paid to
Purchaser during any taxable year, would cause Purchaser's net yield in dollars
(after taking into effect the federal income tax consequences of treating the
Excess Distributions received by Purchaser as capital gain received upon the
taxable sale or exchange of Convertible Preferred Stock) to be equal to the net
yield in dollars which would have been received by Purchaser had none of the
distributions paid or deemed paid to Purchaser during such taxable year
constituted Excess Distributions, in all cases together with any interest or
penalties actually payable by Purchaser to the IRS or any other applicable
taxing authority by reason of such events.
(b) A "Final Determination" shall mean (i) a decision, judgment, decree or
other order by any court of competent jurisdiction, which decision, judgment,
decree or other order has become final or (ii) a closing agreement entered into
under Section 7121 (or any successor to such Section) of the IRC or any
corresponding provision of state or local law, or any other settlement
agreement entered into in connection with an administrative or judicial
proceeding and consented to by Purchaser or any member of its consolidated
group. The "Payment Date" shall mean the date that is 90 days after the end of
the relevant taxable year.
(c) If Purchaser is notified formally or informally of any audit, examination
or proceeding by the IRS or any other taxing authority with respect to the
availability of the Dividends-Received Deduction, Purchaser shall promptly
notify Company of such audit, examination or proceeding; provided, however,
that Purchaser's failure to give such notice or to keep Company fully informed
concerning a Contest (as defined below) shall not affect Company's obligation
to make Gross-Up Payments in accordance with this Section. Purchaser shall have
exclusive control and responsibility to conduct any audit, examination,
proceeding or litigation (a "Contest") with respect to such issue. (d) All
subsequent holders of the Convertible Preferred Stock shall be entitled to all
of the benefits of this Section; provided that any such subsequent holder
qualifies for the Dividends-Received Deduction under the then current Dividend
Deductions Laws at the time of its acquisition of the Convertible Preferred
Stock. 1.35. . Company will not (i) in any income tax return or claim for
refund of income tax or other submission to the IRS or other taxing authority
claim a deduction in respect of amounts paid or payable under the Convertible
Preferred Stock, whether as interest or pursuant to any other statutory
provisions or regulation now in effect or hereafter enacted or adopted, except
to the extent that any such deduction shall not, in the opinion of counsel
satisfactory to the Required Holders, operate to jeopardize the availability to
Purchaser of the dividends received deduction provided by Section 243(a)(1) of
the IRC, or any successor provision or any similar or corresponding provision
under state or local law (collectively, the "Dividends Deduction Laws"), (ii)
in any report to stockholders, or to any governmental body having jurisdiction
over Company or otherwise treat the Convertible Preferred Stock other than as
equity capital or the dividends paid thereon other than as dividends paid on
equity capital unless required to do so by a governmental body having
jurisdiction over the accounts of Company or by a change in GAAP required as a
result of action by an authoritative accounting standards-setting body, and
(iii) except to the extent permitted in clause (i) above and other than as
expressly permitted by this Agreement or Company's articles of incorporation
take any action which would result in the dividends paid by Company on the
Convertible Preferred Stock out of Company's current or accumulated earnings
and profits being ineligible for the dividends received deduction provided by
any Dividends Deduction Laws.
CONDITIONS PRECEDENT
1.36. . The obligation of Purchaser to purchase the Convertible Preferred Stock
pursuant to Section 2.2 hereof, is subject to the condition that Purchaser
shall have received, on the Closing Date, the following, each dated the Closing
Date unless otherwise indicated, in form and substance satisfactory to the
Required Holders:
(a) Favorable opinions of Womble, Carlyle, Xxxxxxxxx & Xxxx, counsel to
Company, substantially in the form attached hereto as Exhibit D, it being
understood that to the extent that such opinion of counsel to Company shall
rely upon any other opinion of counsel, each such other opinion shall be in
form and substance reasonably satisfactory to the Required Holders and shall
provide that Purchaser may rely thereon.
(b) Resolutions of the board of directors of Company, certified by the
Secretary or Assistant Secretary of Company, as of the Closing Date, to be duly
adopted and in full force and effect on such date, authorizing (i) the
consummation of each of the transactions contemplated by this Agreement and
(ii) specific officers to execute and deliver this Agreement and each other
Transaction Document to which it is a party. (c) Governmental certificates,
dated the most recent practicable date prior to the Closing Date, with telegram
updates where available, showing that Company is organized and in good standing
in the jurisdiction of its organization and is qualified as a foreign
corporation and in good standing in all other jurisdictions in which it is
qualified to transact business. (d) True and correct copies, certified by the
Secretary or Assistant Secretary of Company, of the document evidencing the
terms of the Convertible Preferred Stock, which shall contain the terms set
forth in Exhibit A attached hereto and evidence of the filing of an amendment
to the articles of incorporation reflecting the provisions of the Certificate
of Designation with the Secretary of State of the State of Florida. (e) A copy
of the organizational charter and all amendments thereto of Company, including
the amendment contemplated by Section 4.6(vii) hereof, certified as of a recent
date by the Secretary of State of the State of Florida, and copies of Company's
by-laws, certified by the Secretary or Assistant Secretary of Company as true
and correct as of the Closing Date. (f) The letter from Company to its
accountants referred to in Section 5.1(c). (g) The Registration Rights
Agreement and the Stockholders Agreement duly executed by the parties thereto.
(h) Certificates of the Secretary or an Assistant Secretary of Company, dated
the Closing Date, as to the incumbency and signatures of the officers of
Company executing this Agreement, the Convertible Preferred Stock, each other
Transaction Document to which it is a party and any other certificate or other
document to be delivered pursuant hereto or thereto, together with evidence of
the incumbency of such Secretary or Assistant Secretary. (i) Certificate of the
President of Company, dated the Closing Date, stating that all of the
representations and warranties of Company contained herein or in the other
Transaction Documents are true and correct on and as of the Closing Date as if
made on such date and that no breach of any covenant contained in Article V has
occurred or would result from the Closing hereunder. 1.37. . The obligation of
each Purchaser to purchase the Convertible Preferred Stock pursuant to Section
2.2 is subject to the additional conditions precedent that:
(a) Such Purchaser shall have received evidence that the insurance policies
provided for in Section 4.23 are in full force and effect, certified by the
insurer thereof.
(b) Company shall have paid all reasonable fees and expenses of (i) GE
Capital's outside counsel, Weil, Gotshal & Xxxxxx LLP, and (ii) all special
local counsel retained in connection with this Agreement and the transactions
contemplated thereby. (c) There shall not have occurred any event or condition
since December 31, 1998 which could have a Material Adverse Effect. (d) All of
the representations and warranties of Company contained herein or in the other
Transaction Documents shall be true and correct on and as of the Closing Date
as if made on such date and no breach of any covenant contained in Article V
shall have occurred or would result from the Closing hereunder. (e) All
applicable waiting periods under the HSR Act shall have expired. (f) The
Closing shall have occurred no later than May 31, 1999. 1.38. . The obligation
of Company to sell the Convertible Preferred Stock pursuant to Section 2.2 is
subject to the conditions precedent that:
(a) All of the representations and warranties of Purchaser contained herein or
in the other Transaction Documents shall be true and correct on and as of the
Closing Date as if made on such date.
(b) All applicable waiting periods under the HSR Act shall have expired.
(c) Stockholders of Company shall have approved the amendment to the articles
of incorporation to increase the number of shares of Common Stock and preferred
stock in connection with the issuance of Convertible Preferred Stock to
Purchaser. (d) The Closing shall have occurred no later than May 31, 1999.
SECURITIES LAW MATTERS
1.39. . Each certificate representing the Convertible Preferred
Stock shall bear a legend substantially in the following form:
"THE SERIES A CONVERTIBLE PREFERRED STOCK REPRESENTED BY THIS
CERTIFICATE HAS BEEN ACQUIRED BY THE HOLDER FOR ITS OWN
ACCOUNT, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO THE
DISTRIBUTION OF SUCH CONVERTIBLE PREFERRED STOCK. THE SHARES
OF SERIES A CONVERTIBLE PREFERRED STOCK HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION THEREFROM."
SURVIVAL; INDEMNIFICATION
1.40. . All of the representations and warranties made by any party in this
Agreement or pursuant hereto shall survive the Closing until the second
anniversary of the Closing Date; provided, however, that (i) the
representations and warranties of Company under Section 4.10 shall survive
until the fourth anniversary of the Closing Date and (ii) the representations
and warranties of Company under Sections 4.13 and 4.19 shall survive for their
respective statutes of limitations.
1.41. Indemnifi. Company agrees to indemnify and hold harmless Purchaser and
its Affiliates and their respective officers, directors and employees
(collectively, the "Indemnified Parties") from and against any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, attorneys' fees, expenses and disbursements of any kind, other than any
special or consequential damages ("Losses"), which may be imposed upon,
incurred by or asserted against such Purchaser or such other indemnified
Persons in any manner relating to or arising out of any untrue representation,
breach of warranty or failure to perform any covenants or agreement by Company
contained herein or in any certificate or document delivered pursuant hereto or
arising out of any Environmental Law applicable to Company or its Subsidiaries
or in connection with any third-party claim otherwise relating to or arising
out of the transactions contemplated hereby; provided that Company shall have
no obligation to an Indemnified Party hereunder with respect to liabilities
arising from the gross negligence or willful misconduct of that Indemnified
Party as determined by a court of competent jurisdiction. Each Indemnified
Party shall, as soon as practicable after receipt of notice of a claim or
action against such Indemnified Party in respect of which indemnity may be
sought hereunder, notify Company in writing of the claim or action (stating in
reasonable detail the facts giving rise to such action); provided that the
failure to notify Company shall not relieve Company from any liability which it
may have to an Indemnified Party except to the extent that Company was
prejudiced by such failure, and in no event shall such failure relieve Company
from any other liability which it may have to such Indemnified Party. If any
such claim or action shall be brought against an Indemnified Party, and it
shall have notified Company, Company shall be entitled to participate therein,
and, to the extent that it wishes, to assume the defense therein, with counsel
reasonably satisfactory to the Indemnified Party. After notice to the
Indemnified Party from Company of its election to assume the defense of any
claim or action, Company shall not be liable to the Indemnified Party for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof. Company may not without the prior written
consent of the Indemnified Party, not to be unreasonably withheld, agree to (i)
any settlement of any claim or action indemnifiable hereunder, other than a
settlement solely for monetary damages for which Company shall be responsible
hereunder or (ii) any remedy or relief which will be applied against the
Indemnified Party. In any action hereunder as to which Company has assumed the
defense thereof with counsel reasonably satisfactory to the Indemnified Party,
the Indemnified Party shall continue to be entitled to participate in the
defense thereof, with counsel of its own choice, but Company shall not be
obligated hereunder to reimburse the Indemnified Party for the costs thereof.
Company shall only be liable to the Indemnified Parties for any Losses
resulting from a breach of representation or warranty (i) if the claim therefor
is asserted in writing prior to the end of the applicable survival period as
set forth in Section 8.1 hereof; (ii) which exceed an aggregate amount equal to
$500,000 and only for such Losses in excess thereof, and (iii) up to an
aggregate amount of $15,000,000.
EXPENSES
Company shall pay all reasonable out-of-pocket expenses of
(i) GE Capital in connection with the preparation of the Transaction Documents
and the transactions contemplated thereby including all legal expenses, other
than the filing fee paid by GE Capital in connection with filings under the HSR
Act, and (ii) the Required Holders in connection with (A) any amendment,
modification or waiver, or consent with respect to, any of the Transaction
Documents, and (B) any attempt to enforce any rights of Purchaser against
Company, any Subsidiary of Company or any other Person, that may be obligated
to Purchaser by virtue of any of the Transaction Documents (including the
reasonable fees and expenses of all of its counsel and consultants retained in
connection with the Transaction Documents and the transactions contemplated
thereby).
MISCELLANEOUS
1.42. . Whenever it is provided herein that any notice, demand, request,
consent, approval, declaration or other communication shall or may be given to
or served upon any of the parties by another, or whenever any of the parties
desires to give or serve upon another any such communication with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and either shall be
delivered in person with receipt acknowledged or by registered or certified
mail, return receipt requested, postage prepaid, or by telecopy and confirmed
by telecopy answerback addressed as follows:
If to Company:
Transit Group, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: President
Telecopy Number: (000) 000-0000
with a copy to:
Womble, Carlyle, Xxxxxxxxx & Xxxx, PLLC
Suite 3500
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. XxXxxxxx, Esq.
Telecopy Number: (000) 000-0000
If to Purchaser:
GE Capital:
GE Capital Equity Investments, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: GE Equity Group-Transit
Telecopy Number: (000) 000-0000
with copies to:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: GE Equity Group Legal Counsel
Telecopy Number: (000) 000-0000
and
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx X. Xxxxxxx, Esq.
Telecopy Number: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback, or
three (3) Business Days after the same shall have been deposited with the
United States mail.
1.43. . Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and permitted assigns. Nothing in this Agreement, express
or implied, is intended or shall be construed to give any person other than the
parties to this Agreement or their respective successors or assigns any legal
or equitable right, remedy or claim under or in respect of any agreement or any
provision contained herein.
1.44. Amendment. No amendment or waiver of any provision of this Agreement or
any other Transaction Document nor consent to any departure by Company
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Company and the Required Holders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action, of compliance with any
representations, warranties, covenants or agreements contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any preceding or succeeding breach
and no failure by either party to exercise any right or privilege hereunder
shall be deemed a waiver of such party's rights or privileges hereunder or
shall be deemed a waiver of such party's rights to exercise the same at any
subsequent time or times hereunder.
1.45. Successor. Neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof shall be assignable by Company
without the prior written consent of the Required Holders. Any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by Purchaser only in connection with the transfer of shares of
Convertible Preferred Stock without the prior written consent of Company,
except the obligation of Purchaser to purchase the Convertible Preferred Stock
at Closing. Subject to Section 5.1(b)(vii), all covenants contained herein
shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns.
1.46. Remedies . Purchaser, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at
law would be adequate. In any action or proceeding brought to enforce any
provision of this Agreement or where any provision hereof is validly asserted
as a defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
1.47. Section a. The section and other headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Agreement.
1.48. Severabil. In the event that any one or more of the provisions contained
in this Agreement shall be determined to be invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and enforceability of any
such provision or provisions in every other respect and the remaining
provisions of this Agreement shall not be in any way impaired.
1.49. Counterpa. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument.
1.50. Publicity. Neither Purchaser nor Company shall issue any press release or
make any public disclosure regarding the transactions contemplated hereby
unless such press release or public disclosure is approved by the other party
in advance. Notwithstanding the foregoing, each of the parties hereto may, in
documents required to be filed by it with the SEC or other regulatory bodies,
make such statements with respect to the transactions contemplated hereby as
each may be advised by counsel is legally necessary or advisable, and may make
such disclosure as it is advised by its counsel is required by law.
1.51. Entire Ag. This Agreement, the exhibits and schedules hereto and the
Confidentiality Agreement, dated April 5, 1999 (the "Confidentiality
Agreement"), between Company and General Electric Capital Corporation (which
shall be deemed to apply to Purchaser), represent the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties, except
that, the Confidentiality Agreement shall remain in full force and effect.
1.52. Governing. This Agreement shall be governed by, construed and enforced in
accordance with, the laws of the State of New York without regard to the
principles thereof relating to conflict of laws. Each of the parties hereby
submits to personal jurisdiction and waives any objection as to venue in the
federal or state courts located in the County of New York, State of New York.
Service of process on the parties in any action arising out of or relating to
this Agreement shall be effective if mailed to the parties in accordance with
Section 10.1 hereof. The parties hereto waive all right to trial by jury in any
action or proceeding to enforce or defend any rights under this Agreement.
IN WITNESS WHEREOF, Company and Purchaser have executed this
Agreement as of the day and year first above written.
TRANSIT GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: President and CEO
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Xxxxxxx Xxxxxxx
Name:Xxxxxxx Xxxxxxx
Title:
