EXHIBIT 10.13
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
AMONG
PACER INTEGRATED LOGISTICS
INTRACO, INC.,
PMT HOLDINGS, INC.
AND
THE SHAREHOLDER OF INTRACO, INC.
DATED AS OF APRIL 3, 1998
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TABLE OF CONTENTS
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PAGE
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ARTICLE I MERGER; EFFECT ON CONSTITUENT CORPORATIONS...................1
1.1 The Merger......................................................1
1.2 Effective Time of the Merger....................................2
1.3 Effect of the Merger............................................2
1.4 Charter and By-laws of Surviving Corporation....................2
1.5 Authorization of the Merger, this Agreement, the Delaware
Certificate and the Missouri Certificate........................2
1.6 Effect on Securities............................................3
1.7 Delivery of Funds; Surrender of Certificates....................3
1.8 After the Effective Time........................................4
1.9 Further Assurances..............................................4
1.10 Contingent Shares; Earn-out.....................................4
ARTICLE II THE CLOSING.................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING THE SHAREHOLDER
AND THE MERGER SHARES..................................................6
3.1 Title to the Merger Shares......................................6
3.2 Authority; Noncontravention; Consents...........................7
3.3 Investment Representations......................................7
3.4 Affiliate Assets................................................8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER REGARDING
THE COMPANY............................................................8
4.1 Organization, Power, Authority and Good Standing................8
4.2 Authorization, Execution and Enforceability.....................9
4.3 Consents........................................................9
4.4 Capitalization.................................................10
4.5 Subsidiaries; Investments......................................10
4.6 Financial Information..........................................10
4.7 Absence of Undisclosed Liabilities.............................11
4.8 Absence of Changes.............................................11
4.9 Tax Matters; Certain Definitions...............................12
4.10 Title to Assets, Properties and Rights and Related Matters.....14
4.11 Real Property-owned or Leased..................................14
4.12 [Omitted.].....................................................15
4.13 Agreements, No Defaults, Etc...................................15
4.14 Litigation, Etc................................................17
4.15 Compliance with Laws...........................................17
4.16 Insurance......................................................18
4.17 Labor Relations; Employees.....................................18
4.18 Erisa Compliance...............................................19
4.19 Environmental Matters..........................................21
4.20 Brokers........................................................22
4.21 Related Party Transactions.....................................22
4.22 Accounts and Notes Receivable..................................23
4.23 Bank Accounts; Powers Of Attorney..............................23
4.24 Customers......................................................23
4.25 Conflicts of Interest..........................................23
4.26 Disclosure.....................................................24
PAGE
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND
HOLDINGS...............................................................24
5.1 Organization; Corporate Authority..............................24
5.2 Corporate Action; Authority; No Conflict.......................24
5.3 Brokers........................................................25
5.4 Consents.......................................................25
5.5 Organization; Corporate Authority..............................25
5.6 Corporate Action; Authority; No Conflict.......................25
5.7 Capitalization.................................................26
5.8 Duly Authorized, Validly Issued Holdings Shares................26
5.9 Financial Information..........................................27
ARTICLE VI COVENANTS AND AGREEMENTS....................................27
6.1 [Omitted.].....................................................27
6.2 Confidential Information.......................................27
6.3 Public Announcements...........................................27
6.4 Cooperation Regarding Tax Filings..............................28
6.5 Non-Compete; Non-Solicitation..................................28
ARTICLE VII DELIVERIES AT CLOSING......................................29
7.1 Deliveries By The Shareholder..................................29
7.2 Deliveries By The Purchaser....................................31
ARTICLE VIII INDEMNIFICATION...........................................31
8.1 Indemnification Generally; Etc.................................31
8.2 Assertion of Claims............................................32
8.3 Notice and Defense of Third Party Claims.......................32
8.4 Survival of Representations and Warranties.....................33
8.5 Limitations on Indemnification.................................34
8.6 Satisfaction of Shareholder's Indemnification Obligations......35
8.7 Cooperation Regarding Tax Proceedings..........................35
8.8 Dispute Resolution.............................................36
ARTICLE IX [OMITTED.]..................................................36
ARTICLE X MISCELLANEOUS PROVISIONS.....................................36
10.1 Amendment......................................................36
10.2 Entire Agreement...............................................37
10.3 Severability...................................................37
10.4 Benefits of Agreement..........................................37
10.5 Expenses.......................................................38
10.6 Notices........................................................38
10.7 Counterparts...................................................39
10.8 Governing Law..................................................39
10.9 Independence of Covenants and Representations and Warranties...40
10.10 Interpretation; Construction...................................40
10.11 Remedies.......................................................41
10.12 Waiver of Jury Trial...........................................41
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER dated as of April 3, 1998 (the "AGREEMENT"),
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by and among PACER INTEGRATED LOGISTICS, INC., a Delaware corporation (the
"PURCHASER"), INTRACO, INC., a Missouri corporation (the "COMPANY"), XXXX XXXXX
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XXXX, the sole shareholder of the Company (the "SHAREHOLDER"), and PMT HOLDINGS,
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INC., a Delaware corporation and the sole stockholder of the Purchaser
("HOLDINGS").
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PREAMBLE
The Company is engaged in the business of providing trucking, freight
consolidation, traffic management, third party logistics and railroad signal
reclamation and salvage services (the "BUSINESS"). The Shareholder is the sole
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shareholder of the Company, owning 500 shares of the Company's common stock, par
value $1.00 per share (the "COMPANY COMMON STOCK").
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The respective Boards of Directors of each of the Purchaser, the Company,
and Holdings have duly approved and adopted this Agreement and the proposed
Merger of the Company with and into the Purchaser, which shall be the surviving
corporation of the Merger, in accordance with, and subject to, the terms and
conditions of this Agreement, the Delaware General Corporation Law (the
"DELAWARE ACT") and the Missouri General and Business Corporation Law (the
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"MISSOURI ACT"). Certain capitalized terms used herein are defined on ANNEX I
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hereto.
NOW, THEREFORE, in consideration of the premises and the mutual
representations hereinafter set forth, the parties hereto hereby agree as
follows:
ARTICLE I
MERGER; EFFECT ON CONSTITUENT CORPORATIONS
1.1 THE MERGER.
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In accordance with, and subject to, the provisions of this Agreement, the
Delaware Act and the Missouri Act, the Company shall be merged with and into the
Purchaser which, at and after the Effective Time, shall be and is hereinafter
sometimes referred to as the "SURVIVING CORPORATION." The Company and the
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Purchaser are hereinafter sometimes collectively referred to as the "CONSTITUENT
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CORPORATIONS."
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1.2 EFFECTIVE TIME OF THE MERGER.
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The Merger shall become effective upon the filing of a certificate of
merger in the form required under the Delaware Act (the "DELAWARE CERTIFICATE")
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with the Secretary of State of the State of Delaware and the filing of articles
of merger in the form required under the Missouri Act (the "MISSOURI
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CERTIFICATE") with the Secretary of State of the State of Missouri. The
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Delaware Certificate shall be executed and delivered in the manner provided
under the Delaware Act and the Missouri Certificate shall be executed and
delivered in the manner provided under the Missouri Act. The date and time when
the Merger shall become effective is referred to herein as the "EFFECTIVE TIME."
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1.3 EFFECT OF THE MERGER.
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Except as specifically set forth herein or in the Delaware Certificate , at
the Effective Time, the identity, existence, corporate organization, purposes,
powers, objects, franchises, privileges, rights, immunities, restrictions,
debts, liabilities and duties (collectively, the "CORPORATE RIGHTS") of the
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Purchaser shall continue in effect and be unimpaired by the Merger, and, subject
to the provisions hereof, the Corporate Rights of the Company shall be merged
with and into the Purchaser, which shall, as the Surviving Corporation, be fully
vested therewith. At the Effective Time, the separate existence and corporate
organization of the Company shall cease, and the Company shall be merged with
and into the Surviving Corporation.
1.4 CHARTER AND BY-LAWS OF SURVIVING CORPORATION.
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From and after the Effective Time, (a) the Certificate of Incorporation of
the Purchaser shall be the Certificate of Incorporation of the Surviving
Corporation until altered, amended or repealed as provided in the Delaware Act,
(b) the By-laws of the Purchaser shall become the By-laws of the Surviving
Corporation, unless and until altered, amended or repealed as provided in the
Delaware Act, the Surviving Corporation's Certificate of Incorporation or such
By-laws, and (c) the officers and directors of the Purchaser shall,
respectively, become the officers and directors of the Surviving Corporation
unless and until removed or until their respective terms of office shall have
expired in accordance with the Delaware Act or the Surviving Corporation's
Formation Documents, as applicable.
1.5 AUTHORIZATION OF THE MERGER, THIS AGREEMENT, THE DELAWARE CERTIFICATE AND
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THE MISSOURI CERTIFICATE.
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(a) Simultaneously with or prior to the execution and delivery of this
Agreement, the Shareholder, being the holder of all of the issued and
outstanding shares of Company Common Stock, shall execute a written consent in
lieu of a meeting, and Holdings, being the sole shareholder of the Purchaser,
shall execute a written consent in lieu of a meeting, each of which written
consents shall include resolutions approving and adopting the Merger, this
Agreement, the Delaware Certificate, the Missouri Certificate
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and the consummation of the transactions contemplated hereby and thereby, in
each case in accordance with the provisions of the Delaware Act and the Missouri
Act.
(b) The Shareholder shall take, as promptly as practicable, all such
other actions as may be necessary or advisable under the Delaware Act, the
Missouri Act and any other applicable law or regulation in connection with this
Agreement, the Merger, the Delaware Certificate or the Missouri Certificate. The
Shareholder shall cause to be prepared and distributed any written notice or
other materials relating to the shareholder action contemplated by SECTION
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1.5(A) required to be delivered pursuant to the Company's Formation Documents,
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the Delaware Act, the Missouri Act or any other federal or state law applicable
to this Agreement, the Merger, the Delaware Certificate, the Missouri
Certificate or such shareholder action (collectively, the "SHAREHOLDER
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MATERIALS"); provided, however, that the Purchaser and its counsel shall have a
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reasonable opportunity to review all Shareholder Materials and all Shareholder
Materials shall be reasonably satisfactory in form and substance to the
Purchaser and its counsel.
1.6 EFFECT ON SECURITIES.
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Anything contained in this Agreement, the Delaware Certificate or the
Missouri Certificate to the contrary notwithstanding, the entire consideration
payable in the Merger with respect to all shares of capital stock of the Company
shall not exceed the Aggregate Merger Consideration. The manner and basis of
converting, exchanging or canceling the shares of capital stock of each of the
Constituent Corporations into cash and the Holdings Shares shall be as follows:
(a) each Merger Share shall, by virtue of the Merger and without any
action on the part of the Shareholder or the Company, cease to be outstanding
and be converted into the right to receive at and after the Effective Time in
accordance herewith the Per Share Merger Consideration;
(b) each authorized but unissued or treasury share of Company Common
Stock immediately prior to the Effective Time shall be canceled for no
consideration; and
(c) each share of the common stock, par value $.01 per share, of the
Purchaser issued and outstanding prior to the Effective Time shall be unaffected
by the Merger and shall remain outstanding.
1.7 DELIVERY OF FUNDS; SURRENDER OF CERTIFICATES.
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At the Effective Time, upon the surrender to the Surviving Corporation of
the certificate or certificates which, immediately prior to the Effective Time,
represented the Merger Shares, the Shareholder shall, from and after the
Effective Time, in accordance with the provisions hereof, be entitled to receive
in exchange for the Merger Shares so surrendered (i) an amount in cash equal to
the Merger Cash Consideration and (ii) a certificate representing the Holdings
Shares (of which the Contingent Shares shall be subject to forfeiture as
provided in SECTION 1.10 below).
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1.8 AFTER THE EFFECTIVE TIME.
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The Aggregate Merger Consideration paid in respect of the surrender of
certificates representing the Merger Shares in accordance with the provisions of
this Agreement, the Delaware Certificate and the Missouri Certificate shall be
deemed to have been paid in full satisfaction of all rights pertaining to the
Merger Shares. At and after the Effective Time, the stock transfer books of the
Surviving Corporation shall be closed with respect to the capital stock of the
Company, and thereafter there shall be no further registration of transfers of
the capital stock of the Company on the records of the Surviving Corporation.
1.9 FURTHER ASSURANCES.
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The Shareholder shall, at any time after the Closing, upon the request of
the Purchaser and at the Purchaser's expense, do, execute, acknowledge and
deliver, and cause to be done, executed, acknowledged and delivered, all such
further acts, deeds, assignments, transfers, conveyances, powers of attorney or
assurances as may be reasonably required to effect the Merger.
1.10 CONTINGENT SHARES; EARN-OUT.
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(a) Within thirty (30) days after the end of each fiscal quarter of
the Surviving Corporation, commencing with the fiscal quarter ended December 31,
1998, the Surviving Corporation shall deliver to the Shareholder an income
statement prepared in accordance with GAAP (subject to the absence of footnotes
and year-end adjustments) showing the Surviving Corporation's revenues for the
fiscal quarter then ended. In the event that the revenues reflected on such
income statement are equal to or greater than the revenues set forth in the
schedule below for the corresponding fiscal quarter, the Contingent Shares set
forth opposite such corresponding fiscal quarter shall be deemed earned as of
the first day of the next fiscal quarter thereafter and shall no longer be
Contingent Shares subject to forfeiture pursuant to this section, but shall be
Earned Shares for all purposes of this Agreement. In the event that the
revenues reflected on such income statement are less than the revenues set forth
in the schedule below for the corresponding fiscal quarter, the Contingent
Shares set forth opposite such corresponding fiscal quarter, as well as all
Contingent Shares for each subsequent fiscal quarter thereafter, shall
automatically, without any action on the part of any of the parties hereto or
any other Person, be forfeited by the Shareholder to Holdings for no
consideration and deemed to be cancelled and to cease to be outstanding for all
purposes. The schedule referred to above is as follows:
FISCAL
QUARTER ENDED REVENUES CONTINGENT SHARES
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12/31/98 $500,000 5,476
3/31/99 $500,000 1,905
6/30/99 $500,000 1,905
9/31/99 $500,000 1,905
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12/31/99 $500,000 1,905
3/31/99 $500,000 237
provided, however, that in the event Holdings consummates an Initial Public
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Offering (as defined in the Holdings Stockholder Agreement) prior to December
31, 1998, then (i) 3,571 of the 5,476 Contingent Shares set forth opposite
December 31, 1998, in the above schedule shall be deemed earned as of the
effective date of the registration statement for such Initial Public Offering
and shall no longer be Contingent Shares subject to forfeiture pursuant to this
section, but shall be Earned Shares for all purposes of this Agreement, and (ii)
if such effective date occurs prior to September 30, 1998, then each "Fiscal
Quarter Ended" date in the above schedule shall be accelerated and changed to be
the last day of the previous fiscal quarter (e.g. the fiscal quarter ended
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December 31, 1998, will be changed to be the fiscal quarter ended September 30,
1998, and so on, with the final "Fiscal Quarter Ended" date in the above
schedule being changed to December 31, 1999).
(b) In the event that Holdings, Pacific Motor or the Surviving
Corporation consummates a Corporate Transaction (as defined below), then all
Contingent Shares on the date of such transaction shall immediately be deemed
Earned Shares as of such date. As used herein, "CORPORATE TRANSACTION" shall
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mean, with respect to Holdings, Pacific Motor or the Surviving Corporation, (i)
a sale by such entity to one entity or group of entities (who are not Affiliated
with Holdings, Pacific Motor or the Surviving Corporation as of the date
hereof), whether in a single transaction or a series of related transactions, of
assets having an aggregate fair market value greater than 50% of the aggregate
fair market value of all of the assets of such entity and its subsidiaries on a
consolidated basis or (ii) the transfer by such entity or its stockholders
existing as of the date of this Agreement to one entity or group of entities
(who are not Affiliated with Holdings, Pacific Motor or the Surviving
Corporation as of the date hereof) in a single transaction or series of related
transactions (including a merger or similar consolidation) of capital stock
possessing the right to elect a majority of the members of its board of
directors.
(c) Upon any forfeiture of Contingent Shares pursuant TO SECTION
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1.10(A), the Shareholder shall promptly deliver to Holdings the certificate or
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certificates representing such Contingent Shares so forfeited, duly endorsed or
accompanied by duly executed stock powers for transfer to Holdings (or, in the
event the loss or theft of such certificate(s), an affidavit of loss and
indemnity reasonably acceptable to Holdings), but the Shareholder's failure to
do so shall not affect in any way such forfeiture. In addition to the
restrictions and limitations placed on the Contingent Shares pursuant to the
Stockholders Agreement, the Shareholder may not Transfer (as defined in the
Stockholders Agreement) any Contingent Shares without the prior written consent
of Holdings in its sole discretion, and any such Transfer attempted without
Holdings' consent shall be void ab initio. All certificates representing
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Contingent Shares shall bear such legends and notices as may be reasonably
required by Holdings to effectuate and evidence the provisions of this SECTION
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1.10. In the event of a Material Adverse Change affecting the Surviving
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Corporation as a result of a loss of, or a material reduction in the
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business conducted with, a significant customer of the business due to
circumstances beyond the control of the Shareholder, the Surviving Corporation
agrees that it shall, at the Shareholder's request (provided that the
Shareholder is employed by the Surviving Corporation or any of its Affiliates at
the time of such request), in good faith negotiate reasonable and appropriate
adjustments to the quarterly revenue targets contained in the foregoing schedule
to account for such loss or reduction. The Shareholder acknowledges that the
President of the Surviving Corporation, who shall be Xxxxx Xxxxxx, or in his
absence, Xxx X. Xxxxx or Xxxxxxx X. Xxxx, or such other person who shall be
reasonably acceptable to the Shareholder for so long as the Shareholder is
employed by the Surviving Corporation or any of its Affiliates, shall have sole
discretion, in consultation with the Shareholder for so long as the Shareholder
is employed by the Surviving Corporation or any of its Affiliates, with respect
to the business and affairs, including strategic matters, of the Surviving
Corporation.
ARTICLE II
THE CLOSING
The Closing (the "CLOSING") of the transactions contemplated by this
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Agreement shall take place at the offices of X'Xxxxxxxx Graev & Karabell, LLP,
00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, simultaneously with the
execution and delivery of this Agreement on April 3, 1998, or such other date as
shall be mutually agreeable to the parties hereto (the "CLOSING DATE").
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ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING
THE SHAREHOLDER AND THE MERGER SHARES
The Shareholder represents and warrants as of the date hereof and as of the
Closing Date as follows:
3.1 TITLE TO THE MERGER SHARES.
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The Shareholder is the lawful owner, of record and beneficially, of all of
the Merger Shares and has good and marketable title to the Merger Shares, free
and clear of any and all Encumbrances whatsoever and with no restriction on the
voting rights and other incidents of record and beneficial ownership pertaining
thereto. The Shareholder is not the subject of any bankruptcy, reorganization
or similar proceeding. Except for this Agreement and except as set forth on
SCHEDULE 3.1, there are no agreements or understandings between the Shareholder
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and any other Person with respect to the acquisition, disposition, transfer,
registration or voting of, or otherwise relating to, any of the capital stock of
the Company.
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3.2 AUTHORITY; NONCONTRAVENTION; CONSENTS.
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(a) The Shareholder has the full and absolute legal right, capacity,
power and authority to enter into this Agreement and each Related Document to
which the Shareholder is or will be a party, and this Agreement and each Related
Document to which the Shareholder is or will be a party has been, or upon the
Shareholder's execution and delivery thereof will be, duly and validly executed
and delivered by the Shareholder. This Agreement and each Related Document to
which the Shareholder is a party is, or upon the Shareholder's execution and
delivery thereof will be, the valid and binding obligation of the Shareholder,
enforceable against the Shareholder in accordance with its respective terms.
(b) Neither the execution, delivery and/or performance by the
Shareholder of this Agreement or any Related Document to which the Shareholder
is or will be a party, nor the consummation of the transactions contemplated
hereby or thereby, nor compliance by the Shareholder with any of the provisions
hereof or thereof will (i) result in any violation of, or cause a default (with
or without notice or lapse of time, or both) under, or give rise to any right of
termination, amendment, cancellation or acceleration of any obligations
contained in, any term, condition or provision of any Contract to which the
Shareholder is a party, or by which the Shareholder or his assets may be bound
or (ii) violate any Law applicable to the Shareholder.
(c) Except as contemplated by this Agreement, no Permit,
authorization, consent or approval of or by, or any notification of or filing
with, any Person (governmental or private) is required in connection with the
execution, delivery and performance by the Shareholder of this Agreement or any
Related Document to which the Shareholder is a party or the consummation by the
Shareholder of the transactions contemplated hereby or thereby.
3.3 INVESTMENT REPRESENTATIONS.
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(a) The Shareholder is acquiring the Holdings Shares for his own
account, for investment and not with a view to the distribution thereof in
violation of the Securities Act or applicable state securities law.
(b) The Shareholder understands that (i) the Holdings Shares have not
been registered under the Securities Act or applicable state securities laws by
reason of their issuance in a transaction exempt from the registration
requirements of the Securities Act and applicable state securities laws and (ii)
the Holdings Shares must be held by the Shareholder indefinitely unless a
subsequent disposition thereof is registered or qualified, as the case may be,
under the Securities Act and applicable state securities laws or is exempt from
registration or qualification, as the case may be.
(c) The Shareholder acknowledges that there is no public market for
the Holdings Common Stock and that an investment in the Holdings Shares is
speculative
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and that no assurance has been or can be given as to the prospects of Holdings
and its subsidiaries or as to the likelihood or probability that such a public
market will develop.
(d) The Shareholder is an "accredited investor" (as defined in Rule
501(a) of Regulation D promulgated under the Securities Act). The Shareholder
and his attorneys and other representatives have had free and full access to all
agreements, documents, records and books of Holdings and its subsidiaries that
the Shareholder has requested in connection with his acquisition of the Holdings
Shares. The Shareholder has had an opportunity to ask questions of, and receive
answers from, persons acting on behalf of Holdings and its subsidiaries
concerning Holdings and its subsidiaries and the terms and conditions of the
Shareholder's acquisition of the Holdings Shares hereunder, and answers have
been provided to all of such questions to the full satisfaction of the
Shareholder. The Shareholder (together with his adviser representative, if any)
has such knowledge and experience in financial and business matters that he is
capable of evaluating the risks and merits of his acquisition of the Holdings
Shares hereunder.
(e) The Shareholder is not a person who is, or would cause the
Purchaser to be, disqualified pursuant to Rule 262 promulgated under the
Securities Act.
3.4 AFFILIATE ASSETS.
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The Affiliate Assets listed on SCHEDULE 3.4 hereto constitute all of the
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assets, properties and rights owned by the Shareholder or any of his Affiliates
(other than the Company) that are used in or necessary for the conduct of the
Business as currently conducted.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDER REGARDING THE COMPANY/1/
The Shareholder represents and warrants as of the date hereof and as of the
Closing Date as follows:
4.1 ORGANIZATION, POWER, AUTHORITY AND GOOD STANDING.
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The Company is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite power and authority (corporate and otherwise) to own, lease and
operate its assets and properties and to carry on its business as presently
conducted and as presently proposed to be conducted. The Company is duly
qualified and in good standing to transact business as a foreign Person in those
jurisdictions set forth on SCHEDULE 4.1, which constitute all the
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______________________
/1/ Additional Representations and Warranties, if any, to come upon completion
of due diligence.
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jurisdictions in which the character of the property owned, leased or operated
by the Companyor the nature of the business or activities conducted by the
Company makes such qualification necessary. The Purchaser has been furnished
with true, correct and complete copies of the articles of incorporation of the
Company (the "COMPANY'S CHARTER") and the by-laws of the Company (the "COMPANY'S
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BY-LAWS"), in each case as amended and in effect on the date hereof. Except as
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set forth on SCHEDULE 4.1, the Company has (i) never engaged in any business
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other than the Business and (ii) not used within the last five years any other
trade name or assumed names.
4.2 AUTHORIZATION, EXECUTION AND ENFORCEABILITY.
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The Company has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement and each Related Document to which
it is or will be a party and to consummate the transactions contemplated hereby
and thereby. The Company's execution and delivery of this Agreement and each
Related Document to which it is or will be a party and the performance by the
Company of its obligations hereunder and thereunder have been duly and validly
authorized by all requisite action on the part of the Company and its
shareholders, and this Agreement and each Related Document to which the Company
is or will be a party has been, or upon the Company's execution and delivery
thereof will be, duly and validly executed and delivered by the Company and
constitutes, or upon its execution and delivery will constitute, a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms. Neither the Company's execution and delivery of, and/or
performance of its obligations under, this Agreement and each Related Document
to which it is or will be a party, nor the consummation of the transactions
contemplated hereby or thereby, shall (a) violate, or result in the creation of
an Encumbrance upon any of the Company's assets as a result of, any Laws
applicable to the Company or any of its properties or assets or (b) result in
any violation or breach of, any of the terms, conditions or provisions of, or
constitute (with due notice or lapse of time, or both) a default or give rise to
any right of contingent payment, termination, cancellation or acceleration, or
result in the creation of any Encumbrance upon any of the properties or assets
of the Company, under, any provision of the Company's Charter or the Company's
By-laws or any Contract listed on SCHEDULE 4.13 (or incorporated onto such
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Schedule by reference).
4.3 CONSENTS.
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Except as set forth on SCHEDULE 4.3, no Permit, authorization, consent or
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approval of or by, or notification of or filing with, any Person (governmental
or otherwise) is required in connection with the execution, delivery and
performance by the Company of this Agreement or any Related Document to which it
is or will be a party or the consummation of the transactions contemplated
hereby or thereby.
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4.4 CAPITALIZATION.
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(a) The authorized capital stock of the Company consists of 30,000
duly authorized shares of Company Common Stock, of which 500 shares of Company
Common Stock are duly and validly issued and outstanding, fully paid and
nonassessable, with no personal Liability attached to the ownership thereof, and
all of which are held of record and beneficially by the Shareholder.
(b) There are no securities presently outstanding which are
convertible into, exchangeable for, or carry the right to acquire, equity
securities of the Company, and there are no subscriptions, warrants, options,
calls, puts, convertible securities, registration or other rights, arrangements
or commitments obligating the Company to issue, sell, register, purchase or
redeem any of its equity securities or any ownership interest or rights therein.
There are no voting trusts or other agreements or understandings to which the
Company is bound with respect to the voting of the Company's capital stock.
There are no stock appreciation rights, phantom stock rights or similar rights
or arrangements outstanding. Except as set forth on SCHEDULE 4.4, there are no
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Contracts to which the Company, the Shareholder or any other Person is a party
relating in any way to any shares of capital stock or other securities of the
Company.
(c) All securities issued by the Company have been issued in
transactions exempt from registration under the Securities Act and the rules and
regulations promulgated thereunder and all applicable state securities or "blue
sky" laws, and the Company has not violated the Securities Act or any applicable
state securities or "blue sky" laws in connection with the issuance of any such
securities.
4.5 SUBSIDIARIES; INVESTMENTS.
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Except as set forth on SCHEDULE 4.5, the Company does not own or hold,
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directly or indirectly, any equity interest in any Person.
4.6 FINANCIAL INFORMATION.
---------------------
(a) SCHEDULE 4.6 attached hereto contains true, correct and complete
------------
copies of (i) the unaudited balance sheet of the Company as of December 31,
1997 (the "LATEST BALANCE SHEET"; and such date being the "LATEST BALANCE SHEET
-------------------- --------------------
DATE"), and the related unaudited statement of income of the Company for the
----
twelve-month period then ended, including any footnotes thereto, (ii) the
unaudited balance sheet of the Company as of January 31, 1998, and the related
unaudited statement of income of the Company for the month then ended and (iii)
the unaudited balance sheet of the Company as of February 28, 1998, and the
related unaudited statement of income of the Company for the month then ended
(all of the foregoing, including the Latest Balance Sheet, being collectively
referred to as the "UNAUDITED FINANCIAL STATEMENTS").
------------------------------
(b) The Unaudited Financial Statements (i) are true, complete and
correct in all material respects to the Actual Knowledge of the Shareholder, and
(ii) have been
-10-
prepared in accordance with the books and records of the Company which have been
maintained in a manner consistent with historical practice.
(c) The Purchaser acknowledges that the Unaudited Financial Statements
have not been prepared in accordance with GAAP and shall have no claim against
the Shareholder or the Company based on an alleged breach of this SECTION 4.6
-----------
arising from any failure of the Unaudited Financial Statements to be in
accordance with GAAP.
4.7 ABSENCE OF UNDISCLOSED LIABILITIES.
----------------------------------
To the Actual Knowledge of the Shareholder, except as set forth on SCHEDULE
--------
4.7, (a) the Company has no Liabilities except (i) to the extent expressly
---
reflected or reserved against on the Latest Balance Sheet, (ii) Liabilities
under Contracts (except arising from any breach thereof) and (iii) Liabilities
incurred in the ordinary course of business since the date of the Latest Balance
Sheet (other than any such Liability arising from or under any breach of
contract, breach of warranty, tort, infringement, Environmental, Health and
Safety Law or any other Law or any Proceeding) and (b) there are no loss
contingencies (as such term is used in Statement of Financial Accounting
Standards No. 5 issued by the Financial Accounting Standards Board in March
1975). To the Actual Knowledge of the Shareholder, except as may be disclosed
on SCHEDULE 4.19(A) or SCHEDULE 4.19(B), the Company has not, either expressly
---------------- ----------------
or by operation of Law, assumed or undertaken any Liability of any other Person,
including any obligation for corrective or remedial action relating to
Environmental, Health and Safety Laws.
4.8 ABSENCE OF CHANGES.
------------------
Since the Latest Balance Sheet Date, except as set forth on SCHEDULE 4.8,
------------
the Company has been operated in the ordinary course of the Business, consistent
with past practice, and there has not been:
(a) to the Actual Knowledge of the Shareholder, any material adverse
change in the business, operations, assets, condition (financial or otherwise),
operating results, liabilities, relations with employees, customers or
suppliers, or prospects of the Company or any material casualty loss or damage
to the assets of the Company, whether or not covered by insurance (a "MATERIAL
--------
ADVERSE CHANGE");
--------------
(b) any declaration, setting aside or payment of any distribution with
respect to any shares of capital stock of the Company, or any direct or indirect
redemption, purchase or other acquisition of any thereof, or any other payments
of any nature to any Affiliate of the Company, whether or not on or with respect
to any shares of capital stock of the Company owned by such Affiliate (other
than (i) salaries and benefits paid in the ordinary course of the Business as
previously disclosed to the Purchaser, (ii) dividends of not more than $325,391
and (iii) the transfer of a certificate of deposit from the Company to the
Shareholder in the face amount of $8,500 issued by Mercantile Bank);
-11-
(c) any general uniform increase in the compensation of employees
(including any increase pursuant to any bonus, pension, profit-sharing or other
plan or commitment) of the Company, or any increase in any such compensation
payable to any officer, director, manager or key employee, except as may be
contained in the Employment Agreement and as previously disclosed to the
Purchaser;
(d) any change in the tax or other accounting methods or practices
followed by the Company, any change in depreciation or amortization policies or
rates previously adopted or any write-up of inventory or other assets;
(e) any material change in the manner in which (i) products or
services of the Company are marketed (including any change in prices), (ii) the
Company extends discounts or credit to customers or (iii) the Company collects
accounts receivable or otherwise deals with customers;
(f) any failure by the Company to pay trade accounts payable or any
other Liability of the Company when due; or
(g) any agreement, whether in writing or otherwise, to take any of the
actions specified in the foregoing CLAUSES (A) through (F).
----------- ---
4.9 TAX MATTERS; CERTAIN DEFINITIONS.
--------------------------------
(a) Except as set forth on SCHEDULE 4.9(A), the Company and each other
---------------
Person included in any consolidated or combined Tax Return and part of an
affiliated group, within the meaning of Section 1504 of the Internal Revenue
Code of 1986, as amended (the "CODE"), of which the Company is or has been a
----
member, (i) has timely paid or caused to be paid all Taxes required to be paid
by it through the date hereof and as of the Closing Date (including any Taxes
shown due on any Tax Return), (ii) has filed or caused to be filed in a timely
and proper manner (within any applicable extension periods) all Tax Returns
required to be filed by it with the appropriate Governmental Entities in all
jurisdictions in which such Tax returns are required to be filed and (iii) has
not requested or caused to be requested any extension of time within which to
file any Tax Return, which Tax Return has not since been filed.
(b) Except as set forth on SCHEDULE 4.9(B):
---------------
(i) the Company has not been notified by the Internal Revenue
Service or any other taxing authority that any issues have been raised (and
no such issues are currently pending) by the Internal Revenue Service or
any other taxing authority in connection with any Tax Return of the
Company, there are no pending Tax audits and no waivers of statutes of
limitations have been given or requested with respect to the Company;
-12-
(ii) the Company has not incurred any Tax Liability from and
after the Latest Balance Sheet Date other than Taxes incurred in the
ordinary course of business;
(iii) the Company is not and has not (A) made an election to be
treated as a "consenting corporation" under Section 341(f) of the Code or
(B) been a "personal holding company" within the meaning of Section 542 of
the Code;
(iv) the Company has made an election under the provisions of
Section 1362 (a) of the Code to be taxed as an S Corporation and the
Company has been since __________, and continues to be, taxed as an S
Corporation for federal income tax purposes for each of such taxable
periods and has made a corresponding election under the tax laws of each of
the states in which it does business for each of such taxable years, and
such elections have been accepted and, to the Actual Knowledge of the
Shareholder, have never been challenged by the Internal Revenue Service or
any other taxing authority;
(v) the Company has complied in all respects with all
applicable Laws relating to the collection or withholding of Taxes (such as
sales Taxes or withholding of Taxes from the wages of employees);
(vi) the Company is not and has not ever been a party to any
Tax sharing agreement with any Person except as may be implied under
Section 1362(a) of the Code for shareholders who have made an election to
be treated under Subchapter S of the Code;
(vii) the Company has not agreed to and is not required to make
any adjustments or changes either on, before or after the Closing Date to
its accounting methods pursuant to Section 481 of the Code, and the
Internal Revenue Service has not proposed any such adjustments or changes
in the accounting methods of the Company;
(viii) no claim has ever been made by any taxing authority in a
jurisdiction in which the Company does not file Tax Returns that the
Company is or may be subject to taxation by that jurisdiction;
(ix) the Company will not be liable for any Taxes under Section
1374 of the Code in connection with the transactions contemplated hereby,
and the Company has not, within the past ten years, (A) acquired assets
from another corporation in a transaction in which the Company's Tax basis
is determined by reference to the Tax basis of the acquired assets (or any
other property) in the hands of the transferor or (B) acquired the stock of
any corporation which is a qualified subchapter S subsidiary; and
-13-
(x) the Company is not a foreign Person within the meaning of
(S)(S)1.1445-2(b) of the rules and regulations promulgated under Section
1445 of the Code, and the Purchaser has been furnished with a true and
accurate certificate of the Company so stating which complies in all
respects with (S)(S)1.1445-2(b)(1) of such rules and regulations.
4.10 TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS.
----------------------------------------------------------
(a) The Company has good and marketable title to (or a valid leasehold
interest in) all of the assets, properties and interests in properties, real,
personal or mixed, reflected on the Latest Balance Sheet or acquired after the
Latest Balance Sheet Date (except inventory or other property sold or otherwise
disposed of since the Latest Balance Sheet Date in the ordinary course of
business and accounts receivable and notes receivable paid in full subsequent to
the Latest Balance Sheet Date), free and clear of all Encumbrances, of any kind
or character, except for those Encumbrances set forth on SCHEDULE 4.10(A) and
----------------
Permitted Encumbrances. Such assets comprise substantially all of the assets
used in or required for the conduct of the Business as currently conducted.
Such assets are generally in good operating condition and repair (normal wear
and tear excepted), are suitable for the uses for which they are used in the
Business. To the Actual Knowledge of the Shareholder, with respect to any
Leased Property, such assets are in such condition as to permit the surrender
thereof by the Company to the lessors thereunder on the date hereof without any
cost or expense for repair or restoration as if the related leases were
terminated on the date hereof in the ordinary course of business. Except for
inventory, supplies, trucks and trailers in transit in the ordinary course of
the Business, all material tangible personal property is located on the premises
of the Company.
(b) SCHEDULE 4.10(B) contains a true, correct and complete list of all
----------------
property, plant and equipment owned by the Company as of the Closing Date.
4.11 REAL PROPERTY-OWNED OR LEASED.
-----------------------------
(a) The Company does not own any real property. SCHEDULE 4.11(A)
----------------
contains a list and brief description of all of the real property leased by the
Company subject to one or more leases (the "LEASED PROPERTY"). True, correct and
---------------
complete copies of such leases covering the Leased Property have been delivered
to the Purchaser prior to the date hereof. The Leased Property constitutes all
real property used or occupied by the Company in connection with the Business.
(b) With respect to the Leased Property, except as set forth on
SCHEDULE 4.11(B):
----------------
(i) to the Actual Knowledge of the Shareholder, no portion
thereof is subject to any pending condemnation Proceeding or Proceeding by
any public
-14-
or quasi-public authority and there is no threatened condemnation or
Proceeding with respect thereto;
(ii) the physical condition of the Leased Property is sufficient
to permit the continued conduct of the Business as presently conducted
subject to the provision of usual and customary maintenance and repair
performed in the ordinary course with respect to similar properties of like
age and construction;
(iii) subject to the terms of the leases (and any subleases)
covering the Leased Property, the Company is the holder of all the
leasehold estates purported to be granted by such leases;
(iv) there are no Contracts, written or oral, to which the
Company or any Affiliate thereof is a party, granting to any party or
parties the right of use or occupancy of any portion of the parcels of the
Leased Property;
(v) there are no parties (other than the Company or its lessees
disclosed pursuant to CLAUSE (IV) above) in possession of the Leased
------ ----
Property; and
(vi) to the Actual Knowledge of the Shareholder, no notice of
any increase in the assessed valuation of the Leased Property, no notice of
any contemplated special assessment has been received by the Company, and
there is no threatened increase in assessed valuation or threatened special
assessment pertaining to any of the Leased Property.
4.12 [OMITTED.]
-------
4.13 AGREEMENTS, NO DEFAULTS, ETC.
----------------------------
(a) SCHEDULE 4.13 contains a true and complete list and brief
-------------
description of all written or oral Contracts to which the Company is a party and
(x) which were entered into or made outside the ordinary course of business or
(y) which were entered into or made in the ordinary course of business and are
described in CLAUSES (I) through (XII) of this SECTION 4.13(A). Except as set
----------- ----- ---------------
forth on SCHEDULE 4.13, the Company is not a party to any of the following,
-------------
whether written or oral:
(i) distributorship, dealer, sales, advertising, agency,
manufacturer's representative or other Contract relating to the payment of
a commission;
(ii) Contract for the employment of any officer, employee or
consultant or any other type of Contract or understanding with any officer,
employee or consultant, including any agreement or understanding relating
to severance payments;
-15-
(iii) indenture, mortgage, promissory note, loan agreement,
pledge agreement, conditional sale, guarantee or other Contract for the
borrowing of money, for a line of credit or for a Capital Lease;
(iv) Contract for charitable contributions in excess of $5,000
individually or $10,000 in the aggregate;
(v) Contract for capital expenditures in excess of $5,000
individually or $10,000 in the aggregate;
(vi) agreement or arrangement for the sale of any assets,
properties or rights other than the sale of services or products in the
ordinary course of business;
(vii) lease or other agreement pursuant to which it is a lessee
of or holds or operates any machinery, equipment, motor vehicles, office
furniture, fixtures, products, merchandise or other personal property owned
by any other Person in excess of $5,000 individually or $10,000 in the
aggregate;
(viii) Contract with respect to the lending or investing of
funds;
(ix) Contract which restricts the Company from engaging in any
aspect of the Business or any other business anywhere in the world;
(x) Contract or group of related Contracts with the same
Person or group of Affiliated Persons (excluding purchase orders entered
into in the ordinary course of business) for the purchase or sale of
products or services under which the undelivered balance thereof (including
the aggregate undelivered balance under any such Contracts between the same
Person and the Company) has a selling price in excess of $25,000;
(xi) agreement for the acquisition or disposition of a Person
or a division of a Person made within the preceding five years (whether or
not such acquisition or disposition was consummated); and
(xii) other Contract material to the Business or with any
Affiliate of the Shareholder or any "associate" of the Shareholder (as
defined in the rules promulgated under the Securities Exchange Act of 1934,
as amended).
The Contracts disclosed on SCHEDULE 4.4, the leases described on SCHEDULE
------------ --------
4.11(A), the insurance policies on SCHEDULE 4.16, the Company Employee Plans and
------- -------------
the Contracts on SCHEDULE 4.21, are incorporated by reference onto SCHEDULE
------------- --------
4.13.
----
(b) All items listed on SCHEDULE 4.13 (or incorporated thereon by
-------------
reference) are in full force and effect, constitute legal, valid and binding
obligations of the Company, and are enforceable in accordance with their
respective terms. To the
-16-
Actual Knowledge of the Shareholder, the Company has in all material respects
performed all of the obligations required to be performed by it to date, and
there exists no material default, or any event which upon the giving of notice
or the passage of time, or both, would give rise to a claim of a material
default in the performance by the Company or any other party to any of the
foregoing of their respective obligations thereunder. The Purchaser has been
furnished with true, complete and correct copies of all written items listed on
SCHEDULE 4.13 and SCHEDULE 4.13 contains accurate descriptions of all oral items
------------- -------------
listed on SCHEDULE 4.13 (and items incorporated thereon by reference).
-------------
(c) SCHEDULE 4.13 contains a true and complete list of all Funded
-------------
Indebtedness of the Company, in each case showing the aggregate principal amount
thereof (and the aggregate amount of any undrawn commitments with respect
thereto), the name of the lender and the name of the respective borrower and any
other Person which directly or indirectly guaranteed such debt. As of the
Closing, the aggregate principal amount of outstanding Funded Indebtedness of
the Company is not greater than $190,000.
4.14 LITIGATION, ETC.
---------------
Except as set forth on SCHEDULE 4.14, and except for workers' compensation
-------------
claims made in the ordinary course of business and consistent (in frequency and
cost) with past practices, there are no (i) proceedings pending or, to the
Actual Knowledge of the Shareholder, threatened against the Company, whether at
law or in equity and whether civil or criminal in nature or before or by any
Governmental Entity or arbitrator, nor to the Actual Knowledge of the
Shareholder does there exist any basis therefor, or (ii) Orders of any
Governmental Entity or arbitrator naming the Company. The Company has delivered
to the Purchaser all material documents and correspondence in its or the
Shareholder's possession relating to such matters referred to on SCHEDULE 4.14.
-------------
4.15 COMPLIANCE WITH LAWS.
--------------------
To the Actual Knowledge of the Shareholder, (a) the Company has complied in
all material respects with, and is in compliance in all material respects with,
all Laws, Orders and Permits applicable to it and the Business, (b) the Company
has all Permits used or necessary in the conduct of the Business and (c) such
Permits listed on SCHEDULE 4.15 are in full force and effect, and no material
-------------
violations with respect to any thereof have occurred or are or have been
recorded, and no proceeding is pending or, to the Actual Knowledge of the
Shareholder, threatened, to revoke or limit any thereof. No investigation or
review by any Governmental Entity with respect to the Company is pending or, to
the Actual Knowledge of the Shareholder, threatened, nor has any Governmental
Entity notified the Company of its intention to conduct the same.
-17-
4.16 INSURANCE.
---------
(a) SCHEDULE 4.16(A) contains a true and complete list of all
----------------
policies of liability, theft, fidelity, life, fire, product liability, cargo,
workers' compensation, health and other forms of insurance held by the Company
and/or the Shareholder for the benefit of the Company (specifying the insurer,
amount and basis (i.e., claims made or occurrence based) of coverage, type of
insurance and policy number). The Company and/or the Shareholder have maintained
such insurance coverage at all times during the course of the operation of the
Business.
(b) Except as set forth on SCHEDULE 4.16(B), with respect to each
----------------
policy of insurance listed on SCHEDULE 4.16(A):
----------------
(i) all premiums with respect thereto are currently paid or
prepaid and are not subject to adjustment, and neither the Shareholder nor
the Company is in material default in any respect with respect to its
obligations under such policy, and, to the Actual Knowledge of the
Shareholder, no basis exists that would give any insurer under any such
policy the right to cancel or unilaterally reduce or limit the stated
coverages contained in such policy;
(ii) there are no outstanding claims currently pending under
such policy; and
(iii) the Company has not received any notice that such policy
has been or will be canceled or terminated or will not be renewed on
substantially the same terms as are now in effect or that the premium on
such policy will be materially increased upon the renewal thereof.
4.17 LABOR RELATIONS; EMPLOYEES.
--------------------------
(a) SCHEDULE 4.17 sets forth a list of all directors, officers and
-------------
employees of the Company as of the date hereof, together with their respective
titles (if any), their current compensation (including salary, wages, bonuses
and commissions) and the respective dates on which they commenced employment.
To the extent any such employee is on a leave of absence, SCHEDULE 4.17
-------------
indicates the nature of such leave of absence and such employee's anticipated
date of return to active employment. To the Actual Knowledge of the
Shareholder, none of the key employees listed on SCHEDULE 4.17 has any plans or
-------------
intends to terminate his or their employment or engagement with the Company and
no former key employee has left the service of the Company within the last 6
months.
(b) To the Actual Knowledge of the Shareholder, except as set forth on
SCHEDULE 4.17:
-------------
-18-
(i) the Company generally enjoys good relations with all of its
employees, and there is no labor strike, dispute or grievance, slowdown or
stoppage actually pending or threatened against or involving the Company;
and
(ii) the Company is not a party to or bound by any collective
bargaining agreement, union contract or similar agreement, no such
agreement is currently being negotiated by the Company, no labor union has
taken any action with respect to organizing employees of the Company and no
representation question exists with respect to any such employees.
4.18 ERISA COMPLIANCE.
----------------
(a) SCHEDULE 4.18(A) contains a true, complete and correct list of all
----------------
Employee Benefit Plans (collectively, the "COMPANY EMPLOYEE PLANS"):
----------------------
(i) that cover any employees, contract employees or former employees
of the Company or any spouses, family members or beneficiaries thereof (A)
that are maintained, sponsored or contributed to by the Company or (B) with
respect to which the Company is obligated to contribute or has any actual
or potential Liability or obligation on account of the maintenance or
sponsorship thereof or contribution thereto by any present or former ERISA
Affiliate of the Company; or
(ii) with respect to which the Company has any actual or potential
liability or obligation on account of the maintenance or sponsorship
thereof or contribution thereto by any present or former ERISA Affiliate of
the Company.
(b) To the Actual Knowledge of the Shareholder, except as set forth on
SCHEDULE 4.18(B), with respect to each Company Employee Plan:
----------------
(i) such Company Employee Plan has been established, maintained, and
administered in accordance with its terms and in compliance in all material
respects with ERISA, the Code, and other applicable Laws (including with
respect to reporting and disclosure);
(ii) all required, declared or discretionary (in accordance with
historical practices) payments, premiums, contributions, reimbursements or
accruals for all periods ending prior to or as of the date hereof have been
made or properly accrued on the Latest Balance Sheet, or with respect to
accruals properly made after the Latest Balance Sheet Date, on the books
and records of the Company and all amounts withheld from employees have
been timely deposited into the appropriate trust or account;
(iii) there is no unfunded actual or potential Liability relating to
such Company Employee Plan which is not reflected on the Latest Balance
Sheet, or
-19-
with respect to accruals properly made after the Latest Balance Sheet Date,
on the books and records of the Company;
(iv) neither the Company nor any of its ERISA Affiliates, nor
any other "disqualified person" or "party in interest" (as such terms are
defined in Section 4975 of the Code and Section 3(14) of ERISA,
respectively) with respect to such Company Employee Plan, has breached the
fiduciary rules of ERISA or engaged in a prohibited transaction that could
subject any of the foregoing Persons to any tax or penalty imposed under
Section 4975 of the Code of Section 502(I), (j) or (1) of ERISA;
(v) no Proceedings (other than routine claims for benefits)
are pending or threatened against or relating to any Company Employee Plan
or any fiduciary thereof, and there is no basis for any such Proceeding
against any Company Employee Plan;
(vi) such Company Employee Plan, if intended to be "qualified",
within the meaning of Section 401(a) of the Code, has been determined by
the Internal Revenue Service to be so qualified and the related trusts are
exempt from Tax under Section 501(a) of the Code, and nothing has occurred
that has or could reasonably be expected to adversely affect such
qualification or exemption;
(vii) except as may be required under Laws of general
application, such Company Employee Plan does not obligate the Company to
provide any employee or former employee, or their spouses, family members
or beneficiaries, any post-employment or post-retirement health or life
insurance, accident or other "welfare-type" benefits;
(viii) if such Company Employee Plan is a "group health plan"
within the meaning of Section 5000 of the Code, such Company Employee Plan
has been maintained in compliance with Section 4980B of the Code and Title
I, Subtitle B, Part 6 of ERISA and no tax payable on account of Section
4980 B of the Code has been or is expected to be incurred;
(ix) neither the Company nor any ERISA Affiliate thereof is or
has ever maintained or been obligated to contribute to a Multiemployer Plan
(as defined Section 3(37) of ERISA), a Multiple Employer Plan (as defined
in Section 413 of the Code) or a Defined Benefit Pension Plan (as defined
in Section 3(35) of ERISA); and
(x) all bonding and reporting and disclosure obligations
imposed under ERISA and the Code have been satisfied with respect to each
Company Employee Plan.
(c) The Purchaser has been provided with true and complete copies, to
the extent applicable, of all documents pursuant to which such Company Employee
Plan is
-20-
maintained and administered, the two most recent annual reports (Form 5500 and
attachments) and financial statements therefor, all governmental rulings,
determinations, and opinions (and pending requests therefor), and, if such
Company Employee Plan provides post-employment or post-retirement health and
life insurance, accident or other "welfare-type" benefits, the most recent
valuation of the present and future obligations under such Company Employee
Plan; and the foregoing documents accurately reflect all of the terms of such
Company Employee Plan (including, without limitation, any agreement or provision
which would limit the ability of the Company to make any prospective amendments
or terminate such Company Employee Plan).
4.19 ENVIRONMENTAL MATTERS.
---------------------
(a) Except as set forth on SCHEDULE 4.19(A), to the Actual Knowledge
----------------
of the Shareholder, neither the Company nor any of its Affiliates, nor any of
their respective predecessors, has received any written or oral notice, report
or other information (i) regarding any actual or alleged violation of any
Environmental, Health and Safety Laws, or any Liabilities or potential
Liabilities, including any investigatory, remedial or corrective obligations,
relating to the Company, the Business or any of the Company's current or former
owned or leased properties or operations or (ii) that the Company is potentially
responsible under any Environmental, Health and Safety Laws for response costs,
corrective action or natural resource damages, as those terms are defined under
the Environmental, Health and Safety Laws, at any location.
(b) SCHEDULE 4.19(B) sets forth a complete and accurate list of all
----------------
properties and facilities previously owned, leased or operated by the Company or
any predecessor of the Company (together with the Leased Properties, the
"COVERED PROPERTIES"). Except as set forth on SCHEDULE 4.19(B), to the Actual
------------------ ----------------
Knowledge of the Shareholder, there has been no release, discharge, spill, or
disposal of any substance at any of the Covered Properties so as to give rise to
Liability of the Company under any Environmental, Health and Safety Laws. To
the Actual Knowledge of the Shareholder, except as set forth on SCHEDULE
--------
4.19(B), neither is there now, nor has there ever been, any asbestos-containing
-------
material in any form or condition, underground storage tanks, above-ground
storage tanks, landfill, waste pile, surface impoundment, or article or
equipment containing polychemical biphenyls on or at any of the Leased
Properties.
(c) To the Actual Knowledge of the Shareholder, except as set forth
on SCHEDULE 4.19(B), neither the Company nor any of its Affiliates, nor any of
----------------
their respective predecessors has treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled or released any substance, or
owned or operated any property (and no such property is contaminated by any such
substance) in a manner that has given or would give rise to Liabilities pursuant
to any Environmental, Health and Safety Laws, including any Liability for
response costs, corrective action costs, personal injury, property damage,
natural resources damage or attorney fees, or any investigative, corrective or
remedial obligations pursuant to any Environmental, Health and Safety Laws.
-21-
(d) To the Actual Knowledge of the Shareholder, no facts, events or
conditions relating to the past or present operations of the Company or any of
its Affiliates, nor any of their respective predecessors or any of the Covered
Properties will prevent continued compliance by the Company and the Business
with any Environmental, Health and Safety Laws, or give rise to any
investigatory, remedial or corrective obligations pursuant to any Environmental,
Health and Safety Laws, or give rise to any other Liabilities pursuant to
Environmental, Health and Safety Laws, including, without limitation, any
relating to on-site or off-site releases or threatened releases of materials,
substances or wastes, personal injury, property damage or natural resources
damage.
(e) To the Actual Knowledge of the Shareholder, neither this
Agreement nor the consummation of the transactions contemplated by this
Agreement or any of the Related Documents will result in any obligations for
site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called "transaction-
triggered" or "responsible property transfer" Environmental, Health and Safety
Laws.
(f) The Company has provided the Purchaser with correct and complete
copies of all reports and studies within the possession or control of the
Company or the Shareholder with respect to past or present environmental
conditions or events at any of the Covered Properties and, to the Actual
Knowledge of the Shareholder, there are no other environmental reports or
studies with respect thereto.
4.20 BROKERS.
-------
Neither the Shareholder nor the Company has employed any broker or finder
or incurred any Liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated hereby.
4.21 RELATED PARTY TRANSACTIONS.
--------------------------
Except as set forth on SCHEDULE 4.21, no current or former Affiliate of the
-------------
Company or any "associate" (as defined in the rules promulgated under the
Securities Exchange Act of 1934, as amended) thereof, is now, or has been during
the last five fiscal years, the direct or indirect owner of an interest in any
Person which is a present or potential competitor, supplier or customer of the
Company (other than non-affiliated holdings in publicly held companies). Except
as set forth on SCHEDULE 4.21, the Company is not a guarantor or otherwise
-------------
liable for any actual or potential Liability of its Affiliates and their
associates. Except as set forth on SCHEDULE 4.21, the Company does not (x) own
-------------
or operate any vehicles, boats, aircraft, apartments or other residential or
recreational properties or facilities for executive, administrative or sales
purposes or (y) own or pay for any social club memberships, whether or not for
the benefit of the Company and/or its executives.
-22-
4.22 ACCOUNTS AND NOTES RECEIVABLE.
-----------------------------
Except as set forth on SCHEDULE 4.22, all the accounts receivable and notes
-------------
receivable owing to the Company or its subsidiaries as of the date hereof
constitute valid and enforceable claims, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity), arising from bona fide transactions in the
ordinary course of business, and to the Best Knowledge of the Shareholder, there
are no known or asserted claims, refusals to pay or other rights of set-off
against any thereof. Except as set forth on SCHEDULE 4.22, there is (i) no
-------------
account that is delinquent by more than 90 days or subject to an actual or, to
the Best Knowledge of the Shareholder, threatened refusal to pay for any reason,
or a claim of set-off or similar claim.
4.23 BANK ACCOUNTS; POWERS OF ATTORNEY.
---------------------------------
SCHEDULE 4.23 sets forth a true and complete list of (i) all bank accounts
-------------
and safe deposit boxes of the Company and all persons who are signatories
thereunder or who have access thereto and (ii) the names of all persons, firms,
associations, corporations or business organizations holding general or special
powers of attorney from the Company and a summary of the terms thereof
(excluding ministerial powers of attorney granted to representatives of the
Company which are terminable at will).
4.24 CUSTOMERS.
---------
The Company's sole customer is Union Pacific Railroad, which has not
notified the Company that it intends, nor, to the Best Knowledge of the
Shareholder, has it threatened, to terminate, curtail or otherwise alter its
relationship or dealings (including with respect to pricing, scope or volume of
services) with the Company in a manner that has had or would reasonably be
likely to have a Material Adverse Change.
4.25 CONFLICTS OF INTEREST.
---------------------
Neither the Shareholder, the Company nor any officer, employee, agent or
other Person acting on behalf of the Shareholder or the Company has, directly or
indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any Governmental Entity or other Person who was, is, or may be in
a position to help or hinder the business of the Company (or assist in
connection with any actual or proposed transaction) that (i) might subject the
Company to any damage or penalty in any Proceeding, (ii) if not given in the
past, would have resulted in a Material Adverse Change to the Company or (iii)
if not continued in the future, could reasonably be expected to result in a
Material Adverse Change. There is not now, and there has never
-23-
been, any employment by the Company of, or beneficial ownership in the Company
by, any governmental or political official in any jurisdiction in which the
Company has conducted or proposes to conduct business.
4.26 DISCLOSURE.
----------
Neither this Agreement, including the schedules, attachments or exhibits
hereto, nor any other written material delivered by or on behalf of the Company
or the Shareholder to the Purchaser or any of its representatives contains any
untrue statement of a material fact or omits a material fact necessary to make
the statements contained herein or therein, taken as a whole, in light of the
circumstances in which they were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND HOLDINGS
The Purchaser and Holdings represent and warrant as of the Closing Date as
follows:
5.1 ORGANIZATION; CORPORATE AUTHORITY.
---------------------------------
The Purchaser is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has all
requisite power and authority (corporate or otherwise) to own, lease and operate
its assets and properties and to carry on its business as presently conducted
and as presently proposed to be conducted. The Purchaser is duly qualified and
in good standing to transact business as a foreign Person in those jurisdictions
set forth on SCHEDULE 5.1, which constitute all the jurisdictions in which the
------------
character of the property owned, leased or operated by the Purchaser or the
nature of the business or activities conducted by the Purchaser makes such
qualification necessary. The Shareholder has been furnished with true, correct
and complete copies of the certificate of incorporation (the "PURCHASER'S
-----------
CHARTER") and by-laws (the "PURCHASER'S BY-LAWS") of Purchaser, in each case as
------- -------------------
amended and in effect on the date hereof.
5.2 CORPORATE ACTION; AUTHORITY; NO CONFLICT.
----------------------------------------
The Purchaser has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement and each Related Document to which
it is or will be a party and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by Purchaser of this
Agreement and each Related Document to which it is or will be a party, and
performance of its obligations hereunder and thereunder have been duly and
validly authorized by all necessary corporate action on the part of Purchaser
and its shareholders. This Agreement and each
-24-
Related Document to which it is or will be a party has been or upon the
Purchaser's execution and delivery thereof will be, duly and validly executed
and delivered by Purchaser, and constitutes, or upon its execution and delivery
will constitute, a valid and binding obligation of Purchaser, enforceable
against it in accordance with its terms. Neither Purchaser's execution and
delivery of, and/or performance of its obligations under, this Agreement and
each Related Document to which it is or will be a party, nor the consummation of
the transactions contemplated hereby and thereby shall (i) conflict with or
result in any violation or breach of, any of the terms, conditions or provisions
of, or constitute (with due notice or lapse of time, or both) a default under,
or give rise to any right of termination, cancellation or acceleration or result
in the creation of any Encumbrance upon any of the assets or properties of
Purchaser under provision of Purchaser's Charter or Purchaser's By-laws or any
Contract to which Purchaser is a party or by which it or any of its assets or
properties is or may be bound, or (ii) violate, or result in the creation of an
Encumbrance upon any of Purchaser's assets as a result of, any Laws applicable
to Purchaser or any of its properties or assets.
5.3 BROKERS.
-------
Except as set forth on SCHEDULE 5.3, Purchaser has not employed any broker
------------
or finder or incurred any Liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby.
5.4 CONSENTS.
--------
No Permit, authorization, consent or approval of or by, or notification of
or filing with, any Person (governmental or otherwise) is required in connection
with the execution, delivery and performance by Purchaser of this Agreement or
the Related Documents to which Purchaser is or will be a party or the
consummation of the transactions contemplated hereby or thereby.
5.5 ORGANIZATION; CORPORATE AUTHORITY.
---------------------------------
Holdings is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has all
requisite power and authority (corporate or otherwise) to own, lease and operate
its assets and properties and to carry on its business as presently conducted
and as presently proposed to be conducted. The Shareholder has been furnished
with true, correct and complete copies of the certificate of incorporation (the
"HOLDINGS CHARTER") and by-laws (the "HOLDINGS BY-LAWS") of Holdings, in each
---------------- ----------------
case as amended and in effect on the date hereof.
5.6 CORPORATE ACTION; AUTHORITY; NO CONFLICT.
----------------------------------------
Holdings has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement and each Related Document to which
it is or will be a party and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by Holdings of this
Agreement and each Related
-25-
Document to which it is or will be a party, and performance of its obligations
hereunder and thereunder, have been duly and validly authorized by all necessary
corporate action on the part of Holdings and its shareholders. This Agreement
and each Related Document to which it is or will be a party has been or upon
Holdings' execution and delivery thereof will be, duly and validly executed and
delivered by Holdings' and constitutes, or upon its execution and delivery will
constitute, a valid and binding obligation of Holdings, enforceable against it
in accordance with its terms. Neither Holdings' execution and delivery of,
and/or performance of its obligations under, this Agreement and each Related
Document to which it is or will be a party, nor the consummation of the
transactions contemplated hereby and thereby shall result in any violation or
breach of, any of the terms, conditions or provisions of, or constitute (with
due notice or lapse of time, or both) a default under, or give rise to any right
of termination, cancellation or acceleration under any provision of the Holdings
Charter or the Holdings By-laws or any material Contract to which Holdings is a
party or by which it or any of its assets or properties is or may be bound.
5.7 CAPITALIZATION.
--------------
(a) The authorized capital stock of Holdings is as set forth on
SCHEDULE 5.7, which schedule also sets forth the total number of outstanding
------------
shares of Holdings. All such outstanding shares disclosed on SCHEDULE 5.7 are
------------
duly and validly issued and outstanding, fully paid and nonassessable, with no
personal liability attached to the ownership thereof, and are held of record by
the Persons and in the amounts set forth on SCHEDULE 5.7.
------------
(b) Except as set forth on SCHEDULE 5.7, there are no securities presently
------------
outstanding, and on the Closing Date there will not be any outstanding
securities, which are convertible into, exchangeable for, or carrying the right
to acquire, equity securities of Holdings, or subscriptions, warrants, options,
calls, puts, convertible securities, registration or other rights, arrangements
or commitments obligating Holdings or any of its subsidiaries to issue, sell,
register, purchase or redeem any of its equity securities or any ownership
interest or rights therein. Except as set forth on SCHEDULE 5.7, there are no
------------
Contracts to which Holdings or any of its subsidiaries is a party with respect
to the voting of such Person's capital stock.
5.8 DULY AUTHORIZED, VALIDLY ISSUED HOLDINGS SHARES.
-----------------------------------------------
The Holdings Shares have been duly authorized and, when issued and
delivered to the Shareholder against payment therefor in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and, based on
the truthfulness and accuracy of the Shareholder's representations in SECTION
-------
3.3, exempt from registration under the Securities Act and the rules and
---
regulations promulgated thereunder.
-26-
5.9 FINANCIAL INFORMATION.
---------------------
(a) SCHEDULE 5.9 attached hereto contains copies of the following:
------------
(i) unaudited (internally prepared) preliminary consolidated
balance sheet of Holdings and its subsidiaries as of December 31, 1997;
(ii) the unaudited (internally prepared) consolidated statements of
operations of Holdings and its subsidiaries for the nine-month period ended
September 30, 1997; and (iii) the unaudited (internally prepared)
preliminary consolidated statements of income of Holdings and its
subsidiaries for the one-month periods ended January 31, 1998, and February
28, 1998 (collectively, the "HOLDINGS UNAUDITED FINANCIAL STATEMENTS").
---------------------------------------
(b) Except as set forth on SCHEDULE 5.9, the Holdings Unaudited
------------
Financial Statements (i) are true, complete and correct in all material
respects, and (ii) have been prepared in accordance with the books and records
of Holdings and its subsidiaries which have been maintained in a manner
consistent with historical practice. The Shareholder acknowledges that the
Holdings Unaudited Financial Statements have not been prepared in accordance
with GAAP in all respects.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 [OMITTED.]
----------
6.2 CONFIDENTIAL INFORMATION.
------------------------
The Shareholder agrees that all confidential or proprietary information
relating to the Business which is known to the Shareholder as of the Closing
Date will be the sole property of the Company. The Shareholder agrees that it
will not use or disclose such information except for the benefit of the Company
and the Shareholder will take reasonable steps to protect such information from
misuse, loss, theft or accidental disclosure.
6.3 PUBLIC ANNOUNCEMENTS.
--------------------
Each party agrees that, except (i) as otherwise required by Law and (ii)
for disclosure to its respective directors, officers, employees, financial
advisors, potential financing sources, legal counsel, independent certified
public accountants or other agents, advisors or representatives on a need-to-
know basis and with whom such party has a confidential relationship, it will not
issue any reports, statements or releases, in each case pertaining to this
Agreement or any Related Document to which it is a party or the
-27-
transactions contemplated hereby or thereby, without the prior consent of the
Company and the Purchaser, which consent shall not unreasonably be withheld or
delayed.
6.4 COOPERATION REGARDING TAX FILINGS.
---------------------------------
After the Closing, the Purchaser, the Company and the Shareholder shall act
in good faith and cooperate with one another for the purpose of filing all Tax
Returns and reports required to be filed by any of them.
6.5 NON-COMPETE; NON-SOLICITATION.
-----------------------------
(a) The Shareholder acknowledges and agrees that as a mutual
condition to the respective obligations of the parties at the Closing, as a
material inducement to the Purchaser and Holdings to enter into and perform
their obligations hereunder, and in consideration of the payments to be received
by the Shareholder under this Agreement, the Shareholder shall not, without the
prior written consent of Holdings, at any time during the period beginning on
the Closing Date and ending on the fifth anniversary thereof, (i) directly or
indirectly engage in, represent in any way, or be connected with, any Competing
Business (as defined below), whether such engagement shall be as an officer,
director, owner, employee, partner, affiliate or other participant in any
Competing Business, (ii) assist others in engaging in any Competing Business in
the manner described in CLAUSE (I) above, (iii) induce other employees of the
----------
Company (other than the Shareholder's spouse) or any of its subsidiaries or
Affiliates to terminate their employment with the Company or any of its
subsidiaries or Affiliates or to engage in any Competing Business or (iv) induce
any customer, vendor, agent, owner/operator, fleet owner or any other person or
entity with which the Company or any of its subsidiaries or Affiliates has a
business relationship, contractual or otherwise, to terminate or alter such
business relationship. This covenant is considered an integral part of this
Agreement. The foregoing restriction shall not apply to the Shareholder's
ownership of securities of any publicly traded securities which represent not
more than 5% of the ownership interests of the issuer.
(b) The Shareholder understands that the foregoing restrictions may
limit his ability to earn a livelihood in a business similar to the business of
the Company or any subsidiary or Affiliate thereof, but the Shareholder
nevertheless believes that he has received and will receive sufficient
consideration and other benefits under this Agreement and the Related Documents
to which he is or will be a party to justify clearly such restrictions which, in
any event (given the Shareholder's education, skills and ability), the
Shareholder does not believe would prevent him from earning a living.
(c) As used herein, the term "COMPETING BUSINESS" shall mean any
------------------
business conducted in any city or county in any state of the United States which
is engaged in providing any of the following services: freight consolidation and
deconsolidation; traffic management; railroad signal project management,
consolidation
-28-
and/or deconsolidation or reclamation and salvage; intermodal marketing; or
flatbed specialized hauling using owner-operators or agents; provided, however,
-------- -------
that:
(i) any entity which has separate divisions or business units,
one or more of which are engaged in a business described above, will not be
deemed a Competing Business with respect to those portions of such entity
which are not engaged in a business described above so long as the
Shareholder's association with any such separate division or business unit
(fully taking into account his functions and the nature of his work at such
division or business unit) does not relate in any material respect to such
portion of such business which would be a Competing Business hereunder; and
(ii) the provision of freight consolidation consulting services
to a direct shipper who is not a customer of the Company or any of its
affiliates or any railroad at the time of the termination of the
Shareholder's employment with the Company, or a former customer of the
Company or any of its affiliates or any railroad at any time during the 12
months preceding such termination, shall not be deemed to be "engaging in a
Competing Business" for purposes of this SECTION 6.5.
-----------
ARTICLE VII
DELIVERIES AT CLOSING
7.1 DELIVERIES BY THE SHAREHOLDER.
-----------------------------
At the Closing, the Shareholder shall deliver or cause to be delivered to
the Purchaser the following items:
(A) DELIVERY OF ALL MERGER SHARES. The certificate or certificates
-----------------------------
representing all of the Merger Shares, duly endorsed for transfer and free and
clear of all Encumbrances.
(B) CONSENTS AND APPROVALS. Duly executed copies of all consents and
----------------------
approvals required for or in connection with the execution and delivery by the
Company and the Shareholder of this Agreement and each of the Related Documents
to which any of them may be parties, the consummation of the transactions
contemplated hereby and thereby, and the continued conduct of the Business as
previously conducted (including any and all material consents identified on
SCHEDULE 4.3), in form and substance reasonably satisfactory to the Purchaser
------------
and its counsel.
(C) RELATED DOCUMENTS. Each of the following documents (each, a
-----------------
"RELATED DOCUMENT," and collectively, the "RELATED DOCUMENTS") executed and
----------------- -----------------
delivered by the parties thereto (the transactions contemplated thereby to be
completed at
-29-
or prior to the Closing substantially consummated or effected, as the case may
be, in accordance with the terms thereof):
(i) Delaware Certificate.
(ii) Missouri Certificate.
(iii) EMPLOYMENT AGREEMENT. The Employment Agreement between the
--------------------
Shareholder and Pacific Motor, substantially in the form of EXHIBIT A
---------
attached hereto;
(iv) HOLDINGS STOCKHOLDERS AGREEMENT. A joinder agreement
-------------------------------
substantially in the form of EXHIBIT B attached hereto (the "JOINDER
--------- -------
AGREEMENT") duly executed and delivered by the Shareholder, pursuant to
---------
which the Shareholder will become a party to, and be bound by and obligated
to comply with the terms and provisions of, the Holdings Stockholders
Agreement;
(v) SIDE LETTER AGREEMENT. The side letter agreement (the
--------------------- ----
"SIDE LETTER AGREEMENT") relating to the Holdings Stockholders Agreement,
---------------------
substantially the form of EXHIBIT C attached hereto, executed and delivered
---------
by each of the parties thereto.
(d) CLOSING CERTIFICATES. Each of the following certificates executed
--------------------
and/or delivered, as the case may be, by the Person who or which is the subject
thereof:
(i) a certificate of the secretary of the Company, dated as of
the Closing Date, certifying (i) that true and complete copies of the
Company's Charter and the Company's By-laws as in effect on the date of the
adoption of the resolutions referred to below and on the Closing Date are
attached thereto, (ii) as to the incumbency and genuineness of the
signatures of each officer of such Person executing this Agreement and the
Related Documents on behalf of such Person, and (iii) the genuineness of
the resolutions (attached thereto) of the board of directors or similar
governing body of the Company authorizing the execution, delivery and
performance of this Agreement and the Related Documents to which the
Company is a party and the consummation of the transactions contemplated
hereby and thereby; and
(ii) certificates dated within five days of the Closing Date of
the secretaries of state of the states in which the Company is organized
and qualified to do business as of the Closing Date, certifying as to the
good standing and nondelinquent tax status of the Company.
(e) PAY-OFF LETTERS; TERMINATION AGREEMENTS. Pay-off and/or
---------------------------------------
termination agreements relating to the payment of Funded Indebtedness, duly
executed and delivered by the holders thereof, all on terms and in substance
reasonably satisfactory to the Purchaser.
-30-
7.2 DELIVERIES BY THE PURCHASER.
---------------------------
At the Closing the Purchaser shall deliver or cause to be delivered to the
Shareholder the following items:
(a) CLOSING CERTIFICATES. Each of the following certificates executed
--------------------
and/or delivered, as the case may be, by the Person who or which is the subject
thereof:
(i) a certificate of the secretary of Purchaser, dated as of the
Closing Date, certifying (i) that true and complete copies of Purchaser's
Charter and Purchaser's By-laws as in effect on the date of the adoption of
the resolutions referred to below and on the Closing Date are attached
thereto, (ii) as to the incumbency and genuineness of the signatures of
each officer of such Person executing this Agreement and the Related
Documents on behalf of Purchaser, and (iii) the genuineness of the
resolutions (attached thereto) of the board of directors or similar
governing body of Purchaser authorizing the execution, delivery and
performance of this Agreement and the Related Documents to which Purchaser
is a party and the consummation of the transactions contemplated hereby and
thereby; and
(ii) certificates dated within five days of the Closing Date of
the secretaries of state of the states in which Purchaser is organized or
qualified to do business as of the Closing Date, certifying as to the good
standing and nondelinquent tax status of Purchaser.
(b) HOLDINGS SHARES CERTIFICATE. A certificate representing 22,857
---------------------------
Holdings Shares duly issued in the name of the Shareholder, containing all
legends required by the Holdings Stockholders Agreement and the Employment
Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION GENERALLY; ETC.
-------------------------------
(a) Subject to the further provisions of this ARTICLE VIII, the
------------
Shareholder shall indemnify the Purchaser Indemnified Persons for, and hold each
of them harmless from and against, any and all Purchaser Losses arising from or
in connection with any of the following:
(i) the untruth, inaccuracy or breach of any representation or
warranty of the Shareholder contained herein or in any certificate
delivered by the Shareholder or the Company in connection herewith at the
Closing (or any facts or circumstances constituting any such untruth,
inaccuracy or breach);
-31-
(ii) the breach of any agreement or covenant of the Shareholder
contained in this Agreement; and
(iii) liabilities for Taxes payable by the Shareholder or the
Company for or with respect to periods ending on or prior to the Closing
Date.
(b) Subject to the further terms of this ARTICLE VIII, the Purchaser
------------
shall indemnify the Shareholder Indemnified Persons for, and hold each of them
harmless from and against, any and all Shareholder Losses arising from or in
connection with any of the following:
(i) the untruth, inaccuracy or breach of any representation or
warranty of the Purchaser contained herein or in any certificate delivered
by the Purchaser in connection herewith at the Closing (or any facts or
circumstances constituting any such untruth, inaccuracy or breach); and
(ii) the breach of any agreement or covenant of the Purchaser
contained in this Agreement.
8.2 ASSERTION OF CLAIMS.
-------------------
No claim shall be brought for a breach of a representation or warranty
under SECTION 8.1 hereof unless the Indemnified Persons, or any of them, at any
-----------
time prior to the applicable Survival Date (as defined below), give the
Indemnifying Persons (a) written notice of the existence of any such claim,
specifying the nature and basis of such claim and the amount thereof, to the
extent known, or (b) written notice pursuant to SECTION 8.3 of any Third Party
-----------
Claim, the existence of which might give rise to such a claim. Upon the giving
of such written notice as aforesaid, the Indemnified Persons, or any of them,
shall have the right to commence legal proceedings subsequent to the Survival
Date for the enforcement of their rights under SECTION 8.1, provided that they
-----------
use their commercially reasonable efforts to diligently pursue the same.
8.3 NOTICE AND DEFENSE OF THIRD PARTY CLAIMS.
----------------------------------------
The obligations and liabilities of an Indemnifying Person with respect to
Losses resulting from the assertion of liability by third parties (each, a
"THIRD PARTY CLAIM"), other than Tax Claims (which are dealt with in SECTION 8.7
----------------- -----------
below), shall be subject to the following terms and conditions:
(a) The Indemnified Persons shall promptly give written notice to the
Indemnifying Persons of any Third Party Claim which might give rise to any Loss
by the Indemnified Persons, stating the nature and basis of such Third Party
Claim, and the amount thereof to the extent known; provided, however, that no
-------- -------
delay on the part of the Indemnified Persons in notifying any Indemnifying
Persons shall relieve the Indemnifying Persons from any liability or obligation
hereunder unless (and then solely to the extent) the Indemnifying Person thereby
is materially prejudiced by such delay.
-32-
Such notice shall be accompanied by copies of all relevant documentation with
respect to such Third Party Claim to the extent available to the Indemnified
Persons, including any summons, complaint or other pleading which may have been
served, any written demand or any other document or instrument.
(b) If the Indemnifying Persons shall acknowledge in a writing
delivered to the Indemnified Persons that such Third Party Claim is properly
subject to their indemnification obligations hereunder, then the Indemnifying
Persons shall have the right to assume the defense of any Third Party Claim at
their own expense and by their own counsel which counsel shall be reasonably
satisfactory to the Indemnified Persons; provided, however, that the
-------- -------
Indemnifying Persons shall not have the right to assume the defense of any Third
Party Claim, notwithstanding the giving of such written acknowledgment, if (i)
the Indemnified Persons shall have been advised by counsel that there are one or
more legal or equitable defenses available to them which are different from or
in addition to those available to the Indemnifying Persons, or if an actual
conflict of interest exists between the Indemnified Persons and the Indemnifying
Persons, (ii) such action or proceeding involves, or could have a material
effect on, any material matter beyond the scope of the indemnification
obligation of the Indemnifying Persons or (iii) the Indemnifying Persons shall
not have assumed the defense of the Third Party Claim in a timely fashion, but
in no event later than 60 days of receipt of written notice thereof.
(c) If the Indemnifying Persons shall assume the defense of a Third
Party Claim (under circumstances in which the proviso to the first sentence of
SECTION 8.3(B) is not applicable), the Indemnifying Persons shall not be
--------------
responsible for any legal or other defense costs subsequently incurred by the
Indemnified Persons in connection with the defense thereof. If the Indemnifying
Persons do not exercise their right to assume the defense of a Third Party Claim
by giving the written acknowledgment referred to in SECTION 8.3(B), or are
--------------
otherwise restricted from so assuming such defense by the proviso to the first
sentence of SECTION 8.3(B), the Indemnifying Persons shall nevertheless be
--------------
entitled to participate in such defense with their own counsel and at their own
expense.
(d) If the Indemnifying Persons exercise their right to assume the
defense of a Third Party Claim pursuant to SECTION 8.3(B), (i) the Indemnified
--------------
Persons shall be entitled to participate in such defense with their own counsel
at their own expense and (ii) the Indemnifying Persons shall not make any
settlement of any claims without the written consent of the Indemnified Persons,
which consent shall not be unreasonably withheld, delayed or conditioned.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
------------------------------------------
Subject to the further provisions of this SECTION 8.4, the
-----------
representations and warranties contained in this Agreement or in any certificate
or other writing delivered in connection with this Agreement shall survive the
Closing until October 3, 1999; provided, however, that (i) except as provided in
-------- -------
clause (ii) of this proviso, the
-33-
representations and warranties contained in SECTIONS 3.1, 3.2, 3.3, 4.1, 4.2,
--------------------------------
4.3, 4.4, 4.20 AND 4.21 shall survive the Closing indefinitely and the
-----------------------
representations and warranties contained in SECTION 4.9 shall survive the
-----------
Closing Date until 90 days after the expiration of the applicable statutes of
limitations for Third Party Claims applicable to the matters covered thereby.
For convenience of reference, the date upon which any representation or warranty
contained herein shall terminate, if any, is referred to herein as the "SURVIVAL
--------
DATE." The covenants and other agreements of the parties contained in this
----
Agreement shall survive the Closing Date until they are otherwise terminated by
their terms. From and after the Closing, the Shareholder shall not have any
recourse against the Company for any breach of any representation, warranty,
covenant or agreement of the Company or the Shareholder set forth in this
Agreement or in any certificate or other writing delivered in connection with
this Agreement.
8.5 LIMITATIONS ON INDEMNIFICATION.
------------------------------
(a) The Purchaser Indemnified Persons shall not have the right to be
indemnified for breaches of representations and warranties pursuant to CLAUSE
------
(I) of the first sentence of SECTION 8.1(A) unless and until the Purchaser
--- --------------
Indemnified Persons shall have incurred on a cumulative basis aggregate Losses
in an amount exceeding $25,000, in which case the Purchaser Indemnified Persons
shall be entitled to indemnification for all Losses incurred by the Purchaser
Indemnified Persons; provided, however, that (i) except as provided in CLAUSE
-------- ------- ------
(II) of this proviso, the sum of all Losses pursuant to which indemnification is
----
payable by the Shareholder Indemnifying Persons pursuant to CLAUSE (I) of the
----------
first sentence of SECTION 8.1(A) shall not exceed $750,000 and (ii) the sum of
---------------
all Losses pursuant to which indemnification is payable by the Shareholder
Indemnifying Persons pursuant to CLAUSE (I) of the first sentence of SECTION
---------- -------
8.1(A) with respect to the representations and warranties set forth in SECTIONS
------ --------
3.1 and 4.4 shall not exceed the Aggregate Merger Consideration.
--- ---
Notwithstanding anything to the contrary stated above, any payment by the
Shareholder Indemnifying Persons pursuant to SECTION 8.1(A)(I) hereof shall
-----------------
reduce, dollar for dollar, the maximum dollar amount required to be paid by the
Shareholder Indemnifying Persons under CLAUSES (I) and (II) of the immediately
----------- ----
preceding sentence.
(b) The Shareholder Indemnified Persons shall not have the right to be
indemnified for breaches of representations and warranties pursuant to CLAUSE
------
(I) of SECTION 8.1(B) unless and until the Shareholder Indemnified Persons have
--- --------------
incurred on a cumulative basis aggregate Losses in an amount exceeding $25,000,
in which case the Shareholder Indemnified Persons shall be entitled to
indemnification for all Losses incurred by the Shareholder Indemnified Persons;
provided, however, that (i) except as provided in CLAUSE (II) of this proviso
-------- ------- -----------
the sum of all Losses pursuant to which indemnification is payable by the
Purchaser Indemnifying Persons pursuant to CLAUSE (I) of SECTION 8.1(B) shall
---------- --------------
not exceed $750,000 and (ii) the sum of all Losses pursuant to which
indemnification is payable by the Purchaser Indemnifying Persons pursuant to
SECTION 8.1(C)(I) with respect to the representations and warranties contained
-----------------
in SECTIONS 5.7 and 5.8 shall not exceed $1,599,990. Notwithstanding anything
------------ ---
to the contrary stated
-34-
above, any payment by the Purchaser Indemnifying Persons pursuant to any
provision of SECTION 8.1(B)(I) shall reduce, dollar for dollar, the maximum
-----------------
dollar amount required to be paid by the Purchaser Indemnifying Persons under
the CLAUSES (I) and (II) of the immediately preceding sentence.
----------- ----
8.6 SATISFACTION OF SHAREHOLDER'S INDEMNIFICATION OBLIGATIONS.
---------------------------------------------------------
The obligations of the Shareholder pursuant to SECTION 8.1(A) to indemnify
--------------
the Purchaser Indemnified Persons for Purchaser Losses arising from or in
connection with the matters described in CLAUSE (I) of such SECTION 8.1(A) shall
---------- --------------
be satisfied in cash by the Shareholder to the Purchaser Indemnified Persons by
wire transfer of immediately available funds to an account specified by the
Purchaser. In the event that the Shareholder shall not have made any such
payment within 120 days after receipt of a written final nonappealable order of
a court of competent jurisdiction or written notice of a binding arbitral award
providing that the Shareholder is obligated under SECTION 8.1 to make such
-----------
payment, the Purchaser Indemnified Persons shall have the option of causing such
obligation to be satisfied in whole or in part by the surrender to Holdings for
no consideration of up to that number of Holdings Shares having an aggregate
value equal to the amount of such payment obligation (unless all of the Holdings
Shares have been previously surrendered). Solely for purposes of the
immediately preceding sentence, then (i) the per share value of the Holdings
Shares shall be the Market Price (as defined in the Holdings Stockholders
Agreement) at the time of such surrender or (ii) if the Holdings Common Stock is
not listed on any United States securities exchange or quoted in The NASDAQ
Stock Market or the United States over-the-counter market, the per share value
of the Holdings Shares shall be $70 (subject to proportionate adjustment in the
event of any stock dividends, stock splits, stock combinations or other similar
pro rata recapitalization events affecting the Holdings Common Stock after the
--- ----
date hereof).
8.7 COOPERATION REGARDING TAX PROCEEDINGS.
-------------------------------------
(a) Each of the Purchaser, on the one hand, and the Shareholder, on
the other hand, shall promptly notify the other party upon becoming aware of the
assertion of any claim (a "TAX CLAIM") with respect to Taxes paid or payable by
---------
the Company or the Shareholder for which the Purchaser Indemnified Persons may
seek indemnity hereunder; provided, however, that no delay on the part of either
-------- -------
party in so notifying the other party shall relieve the other party from any
liability or obligation hereunder unless (and then solely to the extent) that
the other party is materially prejudiced by such delay. Such notice shall be
accompanied by copies of all relevant documentation with respect to such Tax
Claim to the extent available to such party.
(b) For purposes of this SECTION 8.7 and to the extent permitted by
-----------
law, a Purchaser Indemnified Person may contest a Tax Claim either by contesting
the imposition of such Tax prior to payment or by paying the Tax and pursuing
appropriate procedures for obtaining a refund. If the Purchaser Indemnified
Person elects the latter course and the Purchaser Indemnified Persons are
entitled to indemnification therefor
-35-
under SECTION 8.1(A), the Shareholder shall indemnify the Purchaser Indemnified
--------------
Persons (but only to the extent they are required to do so under the applicable
provisions of this ARTICLE VIII) promptly after the Purchaser Indemnified
------------
Person's payment of the Tax, and if a refund subsequently is obtained, the
Purchaser Indemnified Person shall turn over to the Shareholder the amount of
Tax (but not interest) refunded, up to the amount of the indemnification payment
actually made by the Shareholder to the Purchaser Indemnified Persons, together
with interest on such refund of Tax from the date the Shareholder made such
indemnification payment, at the rates in effect from time to time under Section
6621(a)(1) of the Code.
(c) During the course of any Proceeding regarding any Tax Claim, the
Purchaser Indemnified Persons and the Shareholder will cooperate and consult
with each other from time to time in good faith regarding the defense of such
Tax Claim. Each of the Purchaser Indemnified Persons, on the one hand, and the
Shareholder, on the other hand, will afford the other and its attorneys and
other advisors reasonable access to all documents and other materials pertaining
to such Tax Claim and the defense thereof.
8.8 DISPUTE RESOLUTION.
------------------
The parties acknowledge and agree that they shall cooperate in good faith
to resolve promptly any disputes arising under this Agreement. In the event the
parties are unable to resolve any such dispute on an amicable basis, the parties
agree that arbitration will afford them a quick, effective and relatively
inexpensive method of dispute resolution. Therefore, the parties agree that any
and all disputes arising under this Agreement that remain unresolved for more
than 30 days after notice by any party to submit the same to arbitration
hereunder will be adjudicated exclusively through use of the arbitration
services provided by the American Arbitration Association ("AAA"), using the
---
AAA's Commercial Rules. Any such arbitration shall take place in New York, New
York. The parties agree that any attempt by the arbitrator to exercise power
other than as provided for herein, or to issue an award that violates any
express provision of this Agreement shall be null, void and unenforceable in any
form.
ARTICLE IX
[OMITTED.]
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 AMENDMENT.
---------
This Agreement shall not be altered or otherwise amended except pursuant to
an instrument in writing signed by each party, except that any party may waive
any
-36-
obligation owed to it by another party under this Agreement. No waiver by any
party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
10.2 ENTIRE AGREEMENT.
----------------
This Agreement and the other agreements and documents referenced herein
(including the schedules and the exhibits (in their executed form) attached
hereto) and any other document or agreement contemporaneously entered into with
this Agreement contain all of the agreements among the parties hereto with
respect to the transactions contemplated hereby and supersede all prior
agreements or understandings among the parties with respect thereto. Other than
this Agreement and the other agreements referred to herein and to be executed
and delivered in connection herewith, there are no other agreements continuing
in effect relating to the subject matter hereof.
10.3 SEVERABILITY.
------------
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the Law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
10.4 BENEFITS OF AGREEMENT.
---------------------
All the terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Except as expressly provided herein, this Agreement shall
not confer any rights or remedies upon any Person other than the foregoing;
provided, however, that the Purchaser may, without the consent of any other
-------- -------
party hereto, assign any or all of its rights and interests under this Agreement
and any other agreements or documents executed and delivered in connection
herewith as collateral for the benefit of the agent and lenders under the Credit
Agreement, which agent and lenders shall be permitted to exercise any and all of
such rights, or transfer and assign all such rights to any purchaser upon the
foreclosure or other exercise of remedies as to such collateral.
-37-
10.5 EXPENSES.
--------
Except as otherwise provided in this Agreement, the Purchaser on the one
hand and the Shareholder on the other hand shall each bear their own expenses
(with the Shareholder bearing the expenses of the Company incurred in connection
with the transactions contemplated by this Agreement) incurred in connection
with this Agreement and the Related Documents. All sales taxes and all
registration, recording or transfer or stamp taxes which may be payable in
connection with the transactions contemplated by this Agreement and the Related
Documents shall be borne 50% by the Shareholder and 50% by the Purchaser.
10.6 NOTICES.
-------
All notices or other communications pursuant to this Agreement shall be in
writing and shall be deemed to be sufficient if (A) delivered personally, (B)
telecopied, (C) sent by nationally-recognized, overnight courier, or (D) mailed
by registered or certified mail (return receipt requested), postage prepaid, to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to the Company, to:
Intraco, Inc.
00 Xxxxxxx Xxxx
Xxxxxx Xxxx, Xxxxxx 00000
Attention: Xxxx Xxxxx Xxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and, if prior to the Closing, with a copy to:
Xxxxxxxx & Xxxxxx, LLP
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) if to the Shareholder to the most recent address of the
Shareholder on the books of the Company, with a copy to Xxxxxxxx & Xxxxxx LLP,
at its address set forth above;
-38-
(c) if to the Purchaser, to:
Pacer Integrated Logistics, Inc.
c/o Pacific Motor Transport Company
Pacer Division
0000 Xxxx Xxxxxxxx Xxx Xxxx
XxXxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: President
with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
All such notices and other communications shall be deemed to have been given and
received (A) in the case of personal delivery, on the date of such delivery, (B)
in the case of delivery by telecopy, on the date of such delivery, (C) in the
case of delivery by nationally-recognized, overnight courier, on the Business
Day following dispatch, and (D) in the case of mailing, on the third Business
Day following such mailing.
10.7 COUNTERPARTS.
------------
This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
10.8 GOVERNING LAW.
-------------
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK, OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL
LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF
THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT OF
LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY
APPLY.
-39-
10.9 INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES.
------------------------------------------------------------
All covenants hereunder shall be given independent effect so that if a
certain action or condition constitutes a default under a certain covenant, the
fact that such action or condition is permitted by another covenant shall not
affect the occurrence of such default, unless expressly permitted under an
exception to such initial covenant. In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached shall not affect the incorrectness of or a breach
of a representation and warranty hereunder.
10.10 INTERPRETATION; CONSTRUCTION.
----------------------------
The term "AGREEMENT" means this agreement together with all annexes,
---------
schedules and exhibits hereto, as the same may from time to time be amended,
modified, supplemented or restated in accordance with the terms hereof. In this
Agreement, the term "ACTUAL KNOWLEDGE" of any Person means the actual knowledge
----------------
of such Person without being deemed to have undertaken any inquiry as to the
matter in question, and the term "BEST KNOWLEDGE" of any Person means (i) the
--------------
Actual Knowledge of such Person and (ii) that knowledge which such Person would
have obtained from exercising such due care and attention to the management of
his business affairs as a prudent businessperson would have made or exercised in
the management of his business affairs. The use in this Agreement of the term
"INCLUDING" means "INCLUDING, WITHOUT LIMITATION." The words "HEREIN",
---------- ----------------------------- ------
"HEREOF", "HEREUNDER", "HEREBY", "HERETO", "HEREINAFTER", and other words of
------ --------- ------ ------ -----------
similar import refer to this Agreement as a whole, including the annexes,
schedules and exhibits, as the same may from time to time be amended, modified,
supplemented or restated, and not to any particular article, section,
subsection, paragraph, subparagraph or clause contained in this Agreement. All
references to articles, sections, subsections, clauses, paragraphs, annexes,
schedules and exhibits mean such provisions of this Agreement and the annexes,
schedules and exhibits attached to this Agreement, except where otherwise
stated. The title of and the article, section and paragraph headings in this
Agreement are for convenience of reference only and shall not govern or affect
the interpretation of any of the terms or provisions of this Agreement. The use
herein of the masculine, feminine or neuter forms shall also denote the other
forms, as in each case the context may require. Where specific language is used
to clarify by example a general statement contained herein, such specific
language shall not be deemed to modify, limit or restrict in any manner the
construction of the general statement to which it relates. The language used in
this Agreement has been chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.
Accounting terms used but not otherwise defined herein shall have the meanings
given to them under GAAP. Unless expressly provided otherwise, the measure of a
period of one month or year for purposes of this Agreement shall be that date of
the following month or year corresponding to the starting date, provided that,
if no corresponding date exists, the measure shall be that date of the following
month or
-40-
year corresponding to the next day following the starting date. For example, one
month following February 18 is March 18, and one month following March 31 is May
1.
10.11 REMEDIES.
--------
Subject to the exclusive application of SECTION 8.8 with respect to
-----------
claims by any party for money damages, the parties shall each have and retain
all rights and remedies existing in their favor under this Agreement, at law or
equity, including rights to bring actions for specific performance and
injunctive and other equitable relief (including, without limitation, the remedy
of rescission) to enforce or prevent a breach or any violation of this
Agreement. All such rights and remedies shall, to the extent permitted by
applicable Law, be cumulative.
10.12 WAIVER OF JURY TRIAL.
--------------------
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY RELATED DOCUMENT.
* * *
-41-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Merger as of the date first written above.
THE PURCHASER:
-------------
PACER INTEGRATED LOGISTICS, INC.
By: ________________________________
Xxxxx Xxxxxx
President
THE COMPANY:
-----------
INTRACO, INC.
By: _______________________________
Xxxx Xxxxx Xxxx
President
THE SHAREHOLDER:
----------------
____________________________________
Xxxx Xxxxx Xxxx
HOLDINGS:
--------
PMT HOLDINGS, INC.
By:_________________________________
Xxxxx Xxxxxx
Vice President
ANNEX I
DEFINITIONS
-----------
"AFFILIATE" means, with respect to any Person, (i) a director, officer or
---------
shareholder of such Person, (ii) a spouse, parent, sibling or descendant of such
Person (or spouse, parent, sibling or descendant of any director or executive
officer of such Person), and (iii) any other Person that, directly or indirectly
through one or more intermediaries, Controls, or is Controlled by, or is under
common Control with, such Person.
"AFFILIATED PERSONS" means any group of two or more affiliates.
------------------
"AGGREGATE MERGER CONSIDERATION" means (i) the Merger Cash Consideration
------------------------------
and (ii) the Holdings Shares.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or a day on
------------
which banking institutions in New York, New York, are not required to be open.
"CAPITAL LEASE" means any obligation to pay rent or other amounts under any
-------------
lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person
as of such date computed in accordance with GAAP.
"COMPANY" shall have the meaning ascribed thereto in the Caption and, with
-------
respect to the period from and after the Effective Time, shall include the
Purchaser as successor by merger to Intraco, Inc.
"CONTINGENT SHARES" means those shares of Holdings Common Stock that, at
-----------------
any time in question, are subject to forfeiture to Holdings pursuant to SECTION
-------
1.10 based on the Surviving Corporation's failure to meet the earn-out targets
----
as provided therein.
"CONTRACT" means any loan or credit agreement, note, bond, mortgage,
--------
indenture, lease, sublease, purchase order or other agreement, commitment,
instrument, permit, concession, franchise or license.
"CONTROL" means, with respect to any Person, the possession, directly or
-------
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"CREDIT AGREEMENT" means that certain Amended and Restated Credit Agreement
----------------
dated as of December 16, 1997, among Holdings, Pacific Motor, Interstate
Consolidation, Inc., Interstate Consolidation Service, Inc., Intermodal
Container Service, Inc., ICI Acquisition Company, American International Rail
Services LLC, American International Mechanical Services LLC, the Lenders from
time to time named therein and The First National Bank of Chicago, as agent.
"EARNED SHARES" means those shares of Holdings Common Stock that, at any
-------------
time in question, are earned and not subject to forfeiture pursuant to SECTION
-------
1.10.
----
"EMPLOYEE BENEFIT PLAN" means (i) any qualified or non-qualified Employee
---------------------
Pension Benefit Plan (as defined in Section 3(2) of ERISA), including any
Multiemployer Plan or Multiple Employer Plan, (ii) any Employee Welfare Benefit
Plan (as defined in Section 3(1) of ERISA), or (iii) any employee benefit,
fringe benefit, compensation, severance, incentive, bonus, profit-sharing, stock
option, stock purchase or other plan, program or arrangement, whether or not
subject to ERISA and whether or not funded.
"EMPLOYMENT AGREEMENT" means the Employment Agreement dated as of the date
--------------------
hereof between the Shareholder and Pacific Motor, pursuant to which the
Shareholder shall be employed as the Vice President of Business Development for
the Pacer Division of Pacific Motor, subject to and on the terms and conditions
set forth therein.
"ENCUMBRANCES" shall mean and include security interests, mortgages, liens,
------------
pledges, charges, easements, reservations, restrictions, rights of way,
servitudes, options, rights of first refusal, community property interests,
equitable interests, restrictions of any kind and all other encumbrances,
whether or not relating to the extension of credit or the borrowing of money.
"ENVIRONMENTAL, HEALTH AND SAFETY LAWS" means all Laws, Permits, Orders and
-------------------------------------
Contracts and all common law relating to or addressing pollution or protection
of the environment, public health and safety, or employee health and safety,
including, but not limited to, all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect.
"ERISA AFFILIATE" means, with respect to any Person, any other Person that
---------------
is a member of a "controlled group of corporations" with, or is under "common
control" with, or is a member of the same "affiliated service group" with such
Person as defined in Section 414(b), 414(c), or 414(m) or 414(o) of the Code.
"FORMATION DOCUMENTS" means the documents which shall govern a corporation,
-------------------
including the Certificate or Articles of Incorporation and the By-Laws of such
corporation.
"FUNDED INDEBTEDNESS" means, without duplication, the aggregate amount
-------------------
(including the current portions thereof) of all (i) indebtedness for money
borrowed from others (including any prepayment and similar penalties) and
purchase money indebtedness (other than accounts payable in the ordinary
course); (ii) indebtedness of the
type described in clause (i) above guaranteed, directly or indirectly, in any
manner by the Company or in effect guaranteed, directly or indirectly, in any
manner by the Company through an agreement, contingent or otherwise, to supply
funds to, or in any other manner invest in, the debtor, or to purchase
indebtedness, or to purchase and pay for property if not delivered or pay for
services if not performed, primarily for the purpose of enabling the debtor to
make payment of the indebtedness or to assure the owners of the indebtedness
against loss (any such arrangement being hereinafter referred to as a
"GUARANTY") (but the term "Guaranty" shall exclude endorsements of checks and
--------
other instruments in the ordinary course); (iii) all indebtedness of the type
described in clause (i) above secured by any Encumbrance upon property owned by
the Company even though the Company has not in any manner become liable for the
payment of such indebtedness; (iv) Capital Leases; and (v) all interest expense
and other charges accrued but unpaid, and all prepayment premiums, on or
relating to any of such indebtedness.
"GAAP" means Generally Accepted Accounting Principles.
----
"GOVERNMENTAL ENTITY" means any governmental authority or instrumentality,
-------------------
whether Federal, state, local or foreign and whether legislative, executive,
judicial or otherwise.
"GUARANTY" has the meaning set forth in the definition of "Funded
--------
Indebtedness".
"HOLDINGS COMMON STOCK" means the common stock, $.01 par value, of
---------------------
Holdings.
"HOLDINGS SHARES" means, collectively, 22,857 shares of Holdings Common
---------------
Stock, of which an aggregate of 13,333 shares constitute Contingent Shares as of
the Effective Time and an aggregate of 9,524 shares constitute Earned Shares as
of the Effective Time.
"HOLDINGS STOCKHOLDERS AGREEMENT" means that certain Amended and Restated
-------------------------------
Shareholders Agreement dated as of December 16, 1997, among Holdings and the
Shareholders from time to time listed therein.
"INDEMNIFIED PERSONS" means and includes the Shareholder Indemnified
-------------------
Persons and/or the Purchaser Indemnified Persons, as the case may be.
"INDEMNIFYING PERSONS" means and includes the Shareholder Indemnifying
--------------------
Persons and/or the Purchaser Indemnifying Persons, as the case may be.
"INTELLECTUAL PROPERTY RIGHTS" means all intellectual property rights,
----------------------------
including, without limitation, patents, patent applications, trademarks,
trademark applications, tradenames, servicemarks, servicemark applications,
trade dress, logos and designs and the goodwill connected with the foregoing,
copyrights and copyright applications, know-how, trade secrets, proprietary
processes and formulae, confidential information, franchises, licenses,
inventions, instructions, marketing materials and all documentation
and media constituting, describing or relating to the foregoing, including,
without limitation, manuals, memoranda and records.
"LAW" means any applicable federal, state or local law, statute, treaty,
---
rule, directive, regulation, ordinances and similar provisions having the force
or effect of law or an Order of any Governmental Entity (including all
Environmental, Health and Safety Laws).
"LIABILITY" means any liability or obligation, whether known or unknown,
---------
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated and whether due or to become due, regardless of when asserted.
"LITIGATION EXPENSE" means any reasonable out-of-pocket expenses incurred
------------------
in connection with investigating, defending or asserting any claim, legal or
administrative action, suit or Proceeding incident to any matter indemnified
against hereunder, including, without limitation, court filing fees, court
costs, arbitration fees or costs, witness fees and fees and disbursements of
outside legal counsel, investigators, expert witnesses, accountants and other
professionals.
"LOSSES" means any and all losses, claims, shortages, damages, expenses
------
(including reasonable attorneys' and accountants' and other professionals' fees
and Litigation Expenses), assessments, Taxes (including interest or penalties
thereon) and insurance premium increases arising from or in connection with any
such matter that is the subject of indemnification under ARTICLE VIII, as
------------
reduced by (i) the amount actually recovered under insurance policies (net of
-------
deductibles and incidental expenses resulting therefrom) and (ii) tax benefits
actually realized under Tax Laws in respect of such Losses, in each case net of
all costs and expenses of recovering any such amount. For purposes of
determining tax benefits actually realized, there shall be included tax benefits
actually realized before the taxable year in which a payment for a Loss is
received and tax benefits reasonably expected to be realized in the taxable year
in which a payment for a Loss is received.
"MERGER" means the merger of the Company with and into the Purchaser such
------
that the Company shall cease to exist and become part of the Surviving
Corporation, in accordance with this Agreement, the Delaware Act and the
Missouri Act.
"MERGER CASH CONSIDERATION" means $400,000.
-------------------------
"MERGER SHARES" means, collectively, the shares of Company Common Stock
-------------
outstanding immediately prior to the Effective Time.
"ORDERS" means judgments, writs, decrees, compliance agreements,
------
injunctions or judicial or administrative orders and determinations of any
Governmental Entity or arbitrator.
"PACIFIC MOTOR" means Pacific Motor Transport Company, a California
-------------
corporation and a direct, wholly owned subsidiary of Holdings.
"PERMITS" means all permits, licenses, authorizations, registrations,
-------
franchises, approvals, consents, certificates, variances and similar rights
obtained, or required to be obtained, from Governmental Entities.
"PERMITTED ENCUMBRANCES" means (i) Encumbrances for Taxes not yet due and
----------------------
payable or being contested in good faith by appropriate proceedings and for
which there are adequate reserves on the books, (ii) workers or unemployment
compensation liens arising in the ordinary course of business, and (iii)
mechanic's, materialman's, supplier's, vendor's or similar liens arising in the
ordinary course of business securing amounts that are not delinquent.
"PER SHARE MERGER CASH CONSIDERATION" means the Merger Cash Consideration
-----------------------------------
divided by the number of Merger Shares.
"PER SHARE MERGER CONSIDERATION " means (i) the Per Share Merger Cash
-------------------------------
Consideration and (ii) the Per Share Merger Stock Consideration.
"PER SHARE MERGER STOCK CONSIDERATION" means the number of Holdings Shares
------------------------------------
divided by the number of Merger Shares.
"PERSON" shall be construed broadly and shall include an individual, a
------
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization or a
governmental entity (or any department, agency or political subdivision
thereof).
"PROCEEDING" means any action, suit, investigation or proceeding before any
----------
Governmental Entity or arbitrator.
"PURCHASER INDEMNIFIED PERSONS" means and includes the Purchaser and its
-----------------------------
subsidiaries (including, following the Closing, the Company), their respective
successors and assigns, and the respective officers, directors and controlling
parties of each of the foregoing; provided, however, that any such Person who
-------- -------
was, prior to the Closing Date, an officer, director, employee, Affiliate,
successor or assign of the Company shall not in such capacity be a Purchaser
Indemnified Person with respect to a breach of this Agreement or any Related
Document based on facts or circumstances occurring, or actions taken by such
Person, at or prior to the Closing.
"PURCHASER INDEMNIFYING PERSONS" means the Purchaser and its successors.
------------------------------
"PURCHASER LOSSES" means any and all Losses sustained, suffered or incurred
----------------
by any Purchaser Indemnified Person arising from or in connection with any such
matter which is the subject of indemnification under ARTICLE VIII.
------------
"SECURITIES" means "SECURITIES" as defined in SECTION 2(1) of the
---------- ---------- ------------
Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
--------------
"SHAREHOLDER INDEMNIFIED PERSONS" means and includes the Shareholder and
-------------------------------
his personal representatives, estates and heirs.
"SHAREHOLDER INDEMNIFYING PERSONS" means and includes the Shareholder and
--------------------------------
his personal representatives, estates and heirs.
"SHAREHOLDER LOSSES" shall mean any and all Losses sustained, suffered or
------------------
incurred by any Shareholder Indemnified Person arising from or in connection
with any matter which is the subject of indemnification under ARTICLE VIII.
------------
"TAX LIABILITY" means the amount of Taxes owed.
-------------
"TAX LOSSES" means (i) all Taxes payable by the Company with respect to all
----------
periods through the Closing Date and (ii) any and all Losses sustained, suffered
or incurred by any Purchaser Indemnified Person arising from or in connection
with the untruth, inaccuracy or breach of the representations and warranties of
the Company and the Shareholder contained in SECTION 4.9.
-----------
"TAX RETURN" means any return, declaration, report, claim for refund, or
----------
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TAXES" means, with respect to any Person, (i) all income taxes (including
-----
any tax on or based upon net income, gross income, income as specially defined,
earnings, profits or selected items of income, earnings or profits) and all
gross receipts, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property or windfall profits taxes, alternative or add-on minimum taxes, customs
duties and other taxes, fees, assessments or charges of any kind whatsoever,
together with all interest and penalties, additions to tax and other additional
amounts imposed by any taxing authority (domestic or foreign) on such Person (if
any) and (ii) any liability for the payment of any amount of the type described
in CLAUSE (I) above as a result of (A) being a "transferee" (within the meaning
---------- ----------
of Section 6901 of the Code or any other applicable Law) of another Person, (B)
being a member of an affiliated, combined or consolidated group or (C) a
contractual arrangement or otherwise.
SCHEDULES AND EXHIBITS
----------------------
ANNEXES
-------
Annex I - Definitions
SCHEDULES
---------
Schedule 3.1 - Title to the Shares
Schedule 3.4 - Affiliate Assets
Schedule 4.1 - Jurisdictions
Schedule 4.3 - Consents
Schedule 4.4 - Capitalization
Schedule 4.5 - Subsidiaries; Investments
Schedule 4.6 - Financial Information
Schedule 4.7 - Absence of Undisclosed Liabilities
Schedule 4.8 - Absence of Changes
Schedule 4.9(a) - Tax Matters
Schedule 4.9(b) - Taxing Authority Notifications
Schedule 4.10(a) - Encumbrances
Schedule 4.10(b) - Property, Plant and Equipment
Schedule 4.11(a) - Leased Property
Schedule 4.11(b) - Leased Property Notices
Schedule 4.13 - Contracts
Schedule 4.14 - Litigation
Schedule 4.15 - Compliance with Laws
Schedule 4.16(a) - Insurance Policies
Schedule 4.16(b) - Insurance Claims, Etc.
Schedule 4.17 - Employees
Schedule 4.18(a) - Employee Benefit Plans
Schedule 4.18(b) - ERISA Compliance
Schedule 4.19(a) - Environmental Laws - Violations
Schedule 4.19(b) - Previous Facilities - Environmental Compliance
Schedule 4.21 - Related Party Transactions
Schedule 4.22 - Accounts and Notes Receivables
Schedule 4.23 - Bank Accounts; Powers of Attorney
Schedule 5.1 - Jurisdictions
Schedule 5.3 - Brokers of Purchaser
Schedule 5.7 - Capitalization
Schedule 5.9 - Financial Information
EXHIBITS
--------
Exhibit A - Form of Xxxx Employment Agreement
Exhibit B - Form of Joinder Agreement to Stockholders Agreement
Exhibit C - Form of Side Letter Agreement
INDEX OF DEFINED TERMS
----------------------
The following capitalized terms, which may be used in more than one
Section or other location of this Agreement, are defined in the following
Sections or other locations:
Term Location
---- --------
AAA........................................................Section 8.8
Actual Knowledge.........................................Section 10.10
Affiliate......................................................Annex I
Affiliated Persons.............................................Annex I
Aggregate Merger Consideration.................................Annex I
Agreement......................................................Caption
Best Knowledge...........................................Section 10.10
Business......................................................Preamble
Business Day...................................................Annex I
Capital Lease..................................................Annex I
Closing.....................................................Article II
Closing Date................................................Article II
Code....................................................Section 4.9(a)
Company........................................................Annex I
Company Common Stock..........................................Preamble
Company Employee Plans.................................Section 4.18(a)
Company's By-laws..........................................Section 4.1
Company's Charter..........................................Section 4.1
Competing Business......................................Section 6.5(c)
Constituent Corporations...................................Section 1.1
Contingent Shares..............................................Annex I
Contract.......................................................Annex I
Control........................................................Annex I
Corporate Rights...........................................Section 1.3
Corporate Transactions.................................Section 1.10(b)
Covered Properties.....................................Section 4.19(b)
Credit Agreement...............................................Annex I
Delaware Act..................................................Preamble
Delaware Certificate ......................................Section 1.2
Earned Shares..................................................Annex I
Effective Time.............................................Section 1.2
Employee Benefit Plan..........................................Annex I
Employment Agreement...........................................Annex I
Encumbrances...................................................Annex I
Environmental, Health and Safety Laws..........................Annex I
ERISA Affiliate................................................Annex I
Formation Documents............................................Annex I
Funded Indebtedness............................................Annex I
GAAP...........................................................Annex I
Governmental Entity............................................Annex I
Guaranty.......................................................Annex I
Holdings.......................................................Caption
Holdings By-Laws...........................................Section 5.5
Holdings Charter...........................................Section 5.5
Holdings Common Stock..........................................Annex I
Holdings Shares................................................Annex I
Holdings Stockholders Agreement................................Annex I
Holdings Unaudited Financial Statements.................Section 5.9(a)
Indemnified Persons............................................Annex I
Indemnifying Persons...........................................Annex I
Intellectual Property Rights...................................Annex I
Joinder Agreement...................................Section 7.1(c)(iv)
Latest Balance Sheet....................................Section 4.6(a)
Latest Balance Sheet Date...............................Section 4.6(a)
Law............................................................Annex I
Leased Property........................................Section 4.11(a)
Liability......................................................Annex I
Litigation Expense.............................................Annex I
Losses.........................................................Annex I
Material Adverse Change.................................Section 4.8(a)
Merger.........................................................Annex I
Merger Cash Consideration......................................Annex I
Merger Shares..................................................Annex I
Missouri Act..................................................Preamble
Missouri Certificate ......................................Section 1.2
Orders.........................................................Annex I
Pacific Motor..................................................Annex I
Permits........................................................Annex I
Permitted Encumbrances.........................................Annex I
Per Share Merger Cash Consideration............................Annex I
Per Share Merger Consideration.................................Annex I
Per Share Merger Stock Consideration...........................Annex I
Person.........................................................Annex I
Proceeding.....................................................Annex I
Purchaser......................................................Caption
Purchaser Indemnified Persons..................................Annex I
Purchaser Indemnifying Persons.................................Annex I
Purchaser Losses...............................................Annex I
Purchaser's By-Laws........................................Section 5.1
Purchaser's Charter........................................Section 5.1
Related Document(s).....................................Section 7.1(c)
Securities.....................................................Annex I
Securities Act.................................................Annex I
Shareholder ...................................................Caption
Shareholder Indemnified Persons................................Annex I
Shareholder Indemnifying Persons...............................Annex I
Shareholder Losses.............................................Annex I
Shareholder Materials...................................Section 1.5(b)
Side Letter Agreement................................Section 7.1(c)(v)
Survival Date..............................................Section 8.4
Surviving Corporation......................................Section 1.1
Tax Claim..................................................Section 8.7
Tax Liability..................................................Annex I
Tax Losses.....................................................Annex I
Tax Return.....................................................Annex I
Tax(es)........................................................Annex I
Third Party Claim..........................................Section 8.3
Unaudited Financial Statements..........................Section 4.6(a)
