[DESCRIPTION] ASSET PURCHASE AGREEMENT
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
By and Between
LANDSTAR XXXXX, INC.
as the Seller,
and
LANDSTAR SYSTEM, INC.
as the Guarantor,
and
XXXXXXXXX NATIONAL, INC.
as the Purchaser
Dated as of July 15, 1998
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
Section 1.1 Certain Definitions 1
Section 1.2 Other Defined Terms 5
ARTICLE II PURCHASE AND SALE OF CERTAIN ASSETSAND ASSUMPTION OF CERTAIN LIABILITIES 7
Section 2.1 Assets to be Purchased and Sold 7
Section 2.2 Acquisition and Transfer of Certain Assets 7
Section 2.2A Non-Transferrable Assets 10
Section 2.3 Excluded Assets 10
ARTICLE III PURCHASE PRICE, PAYMENT AND ALLOCATION 12
Section 3.1 Purchase Price and Allocation 12
Section 3.2 Payment 13
Section 3.3 Calculation and Payment of Purchase Price Adjustment 14
Section 3.4 Collection and Guaranty of Receivables 17
Section 3.5 Assumption of Certain Liabilities 17
ARTICLE IV CLOSING; TERMINATION 19
Section 4.1 Closing Date 19
Section 4.2 Proceedings at Closing 19
Section 4.3 Confidentiality Agreement 19
Section 4.4 Termination 19
Section 4.5 Effect of Termination 20
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SELLER 20
Section 5.1 Corporate Existence and Organization 20
Section 5.2 Corporate Power; Authorization; Enforceable Obligations 21
Section 5.3 Safety Rating 21
Section 5.4 No Interest in Other Entities 21
Section 5.5 Validity of Contemplated Transactions, Etc. 21
Section 5.6 No Third Party Options 22
Section 5.7 Vehicle Supplies and Inventories, Etc. 22
Section 5.8 Vehicles 22
Section 5.9 Authorizations 22
Section 5.9A Computer Generated Balance Sheets 22
Section 5.10 Ownership of the Assets Other than Leased Assets 22
Section 5.11 Real Property 23
Section 5.12 Absence of Certain Developments 24
Section 5.13 Intellectual Property 25
Section 5.14 Tax and Other Returns and Reports 25
Section 5.15 Existing Condition 26
Section 5.16 Labor Matters 26
Section 5.17 Insurance 27
Section 5.18 Employee Benefit Plan and Arrangements 27
Section 5.19 Contracts and Commitments 27
Section 5.20 Additional Information 29
Section 5.21 Customers 29
Section 5.22 Necessary Assets 29
Section 5.23 Immigration Matters 29
Section 5.24 Adequacy of Representations and Warranties 30
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER 30
Section 6.1 Corporate Existence 30
Section 6.2 Corporate Power and Authorization 30
Section 6.3 Validity of Contemplated Transactions, Etc. 30
ARTICLE VII SURVIVAL OF REPRESENTATIONS AND WARRANTIES 31
Section 7.1 Survival of the Seller's Representations and Warranties 31
Section 7.2 Survival of the Purchaser's Representations and Warranties 31
ARTICLE VIII AGREEMENTS OF THE SELLER PENDING CLOSING 31
Section 8.1 Conduct of Business 31
Section 8.2 Maintenance of Physical Assets 32
Section 8.3 Employees and Business Relations 32
Section 8.4 Updated Schedules 32
Section 8.5 HSR Act Notice and Filing 32
Section 8.6 Cooperative Efforts 32
Section 8.7 Access 33
Section 8.8 Press Releases 33
Section 8.9 Notification of Certain Events 33
Section 8.10 No Negotiations 33
Section 8.11 I/C Contracts 34
Section 8.12 Transfer of Base Plates 34
Section 8.13 Compliance with Laws, Etc 34
ARTICLE IX AGREEMENTS OF THE PURCHASER PENDING THE
CLOSING 35
Section 9.1 Actions of Purchaser 35
Section 9.2 Press Releases 35
Section 9.3 WARN Notice 35
ARTICLE X CONDITIONS PRECEDENT TO THE CLOSING;THE PURCHASER'S OBLIGATION 35
Section 10.1 The Seller's Representations and Warranties True as of
the Closing Date 35
Section 10.2 Compliance with this Agreement 36
Section 10.3 Closing Certificate 36
Section 10.4 Opinions of Counsel for the Seller 36
Section 10.5 No Threatened or Pending Litigation 36
Section 10.6 HSR Approval Prior to Closing 36
Section 10.7 Employee Drivers 36
Section 10.8 The Sellers' Deliveries 36
Section 10.9 Vehicle Adjustment Amount 37
Section 10.10 Environment Report 37
Section 10.11 Certain Revenues 37
ARTICLE XI CONDITIONS PRECEDENT TO THE CLOSING;THE SELLER'S OBLIGATION 37
Section 11.1 The Purchaser's Representations and Warranties True as of
the Closing Date 37
Section 11.2 Compliance with this Agreement 37
Section 11.3 Closing Certificate 38
Section 11.4 No Threatened or Pending Litigation 38
Section 11.5 HSR Approval Prior to Closing 38
Section 11.6 Escrow Agreement 38
Section 11.7 Vehicle Adjustment Amount 38
ARTICLE XII INDEMNIFICATION 38
Section 12.1 General Indemnification Obligation of the Seller 38
Section 12.2 General Indemnification Obligation of the Purchaser 39
Section 12.3 Defense of Claims 40
Section 12.4 Compliance with Bulk Sales Laws 40
Section 12.5 Other Rights and Remedies Not Affected 40
ARTICLE XIII POST-CLOSING MATTERS 41
Section 13.1 Employee Benefits 41
Section 13.2 Employees 41
Section 13.3 Third Party 42
Section 13.4 Maintenance of Books and Records 42
Section 13.5 Payments Received 42
Section 13.6 Use of Name 43
Section 13.7 UCC Matters 43
Section 13.8 Further Assurances 43
Section 13.9 Cooperation for Certain Tax Related Matters 44
Section 13.10 Transfer Taxes 44
Section 13.11 Power of Attorney 44
Section 13.12 Covenants Not to Employ or Solicit 45
Section 13.13 Federal Highway Use Tax 45
Section 13.14 Removal of Fuel Tank 46
ARTICLE XIV MISCELLANEOUS 46
Section 14.1 Brokers' and Finders' Fees 46
Section 14.2 Expenses 46
Section 14.3 Entire Agreement 47
Section 14.4 Assignment and Binding Effect 47
Section 14.5 Notices 47
Section 14.6 Governing Law 47
Section 14.7 No Benefit to Others 47
Section 14.8 Headings, Gender and "Person" 48
Section 14.9 Schedules and Exhibits 48
Section 14.10 Severability 48
Section 14.11 Guarantee 48
Section 14.12 Jurisdiction 49
Section 14.13 Counterparts 49
Section 14.14 Table of Contents 49
Section 14.15 Amendments and Waivers 49
SCHEDULES
Schedule 2.2(a)
Vehicles by unit number, year, name, VIN number, and current book value
Schedule 2.2(b)
Vehicle Supplies and Inventories and book values
Schedule 2.2(c)
Trade Receivables With Aging
Schedule 2.2(d)
Other Receivables With Aging
Schedule 2.2(e)
Tangible Property and Book Values, including Service Vehicles by year, make and VIN number
Schedule 2.2(g)
Real Property
Schedule 2.2(h)
Intellectual Property
Schedule 2.2(p)
Material Written Licenses
Schedule 2.3(j)
Landstar Contracts and Agency Contracts
Schedule 2.3(n)
Owned and Leased Automobiles
Schedules 8.11(a) and (b)
I/C Contracts
Schedule 13.12
Certain Agents
Schedule 5
Disclosure Schedule List
The schedules and exhibits listed above are not filed herewith. Copies of the
omitted schedules and exhibits will be filed with the Commission upon request.
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made this 15th day of July,
1998, by and among Xxxxxxxxx National, Inc., a Wisconsin corporation
(hereinafter referred to as the "Purchaser"), Landstar Xxxxx, Inc., an Alabama
corporation (hereinafter referred to as "Xxxxx" or the "Seller") and Landstar
System, Inc., a Delaware corporation (hereinafter referred to as "Landstar" or
the "Guarantor").
BACKGROUND
A. Landstar and its indirect wholly-owned subsidiary Xxxxx are engaged in
the business of providing transportation services in a number of reportable
business segments, including, among others, a company-owned tractor segment
consisting of Xxxxx.
X. Xxxxx provides truckload transportation services over short and medium
length regional traffic lanes, primarily utilizing tractors owned by Xxxxx in
contrast to those other reportable business segments of Landstar which are
principally engaged in motor carrier transportation primarily utilizing
tractors owned by independent contractors/owner operators.
C. Landstar and Xxxxx are interested in divesting themselves of their
company-owned tractor segment operations via the sale of certain operating
assets of Xxxxx.
D. The Purchaser, through its wholly owned subsidiaries, is engaged in the
business of providing motor carrier transportation services primarily utilizing
company-owned tractors, and is interested in acquiring, either directly or
through its designees, certain operating assets of Xxxxx and assuming all
ongoing liabilities relating to the ownership or operation of those assets.
NOW THEREFORE, in consideration of the mutual promises hereinafter set forth,
the parties agree as follows:
ARTICLE I DEFINITIONS
Section 1.1 Certain Definitions. As used in this Agreement, the following
terms have the following meanings (which shall apply equally to both the
singular and plural forms of the terms defined).
"Adjusted Value" means, with respect to any Vehicle shown on Schedule 2.2(a)
hereto, the product of the book value for such Vehicle, as shown on Schedule
2.2(a) hereto, times a fraction, the numerator of which is $29,000,000 and the
denominator of which is $34,052,748 (i.e., the aggregate book value of such
Vehicles as of 6/27/98).
"Affiliate" means, with respect to a specified Person, a Person that, directly
or indirectly, through one or more intermediaries, controls, or is controlled
by or is under common control with, the Person specified. As used herein, the
term "control" (including the terms "controlling," "controlled by," and "under
common control with") means the possession, direct or indirect, of the power to
direct or to cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Authorizations" shall mean all Operating Authorities, franchises, licenses,
permits, easements, rights, applications, filings, registrations and other
authorizations which are in any manner necessary for the Seller to conduct
the Business or for the ownership and use of the assets owned or used by the
Seller in the conduct of the Business.
"Business" means the truckload transportation services of a short and medium
length traffic, primarily utilizing over-the-road tractors and trailers owned
by the Seller, as the same is currently conducted by the Seller.
"Business Day" means any weekday on which nationally chartered banks in the
City of New York are open for business.
"Closing" means the consummation of the transactions contemplated by this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any contract, agreement, indenture, note, bond, loan,
instrument, lease for any leased real property, equipment lease, mortgage,
license, franchise, obligation, commitment or other arrangement or agreement,
oral or written, to which either the Seller is a party, obligor or beneficiary
or by which any of the Assets is bound, excluding agreements with respect to
Intellectual Property and Employees.
"Damages" means all claims, actions, losses, damages, deficiencies, costs
(including, without limitation, costs of investigation), expenses and
liabilities (including reasonable attorneys' fees incident to the foregoing),
whether or not arising out of Third Party claims.
"Employees" means all persons employed by the Seller in the Business on the
day immediately prior to the Closing Date, including without limitation, any
person on disability (other than Persons receiving benefits under the Seller's
Long Term Disability Plan), sick leave or leave of absence from the Seller.
"Encumbrance" means any encumbrance, security interest, mortgage, deed of
trust, lien, charge, pledge, option, Third Party right, right of first refusal,
easement, restrictive covenant, adverse claim or restriction of any kind,
including, but not limited to, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership (other
than a restriction on transfer arising under federal or state securities laws).
"Environmental Law" means any applicable Law pertaining to the protection of
human health or the environment as in effect on the date of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"GAAP" means generally accepted accounting principles in the United States.
"Governmental Body" means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal, state, territorial
local or foreign, or any agency, department or instrumentality thereof, or any
public or private court.
"Hazardous Material" means any substance, material or waste which is regulated
by any applicable Governmental Body pursuant to any applicable Environmental
Law, including, without limitation, any material or substance which is defined
as a "hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste," "contaminant," "toxic waste" or
"toxic substance" under any provision of an Environmental Law applicable to the
operations of the Business.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder.
"Intellectual Property" means patents, trademarks, service marks, trade names
(including all goodwill associated therewith), copyrights and applications,
registrations, and renewals thereof, software and similar intangible rights.
"Landstar Contracts" means any contract with Landstar System, Inc. or its
Affiliates (other than Seller) from which the Seller benefits that is not
being transferred to the Purchaser. Schedule 2.3(j) lists all Landstar
Contracts.
"Liability" or "Liabilities" shall include, without limitation, any direct
or indirect indebtedness, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, fixed or unfixed,
known or unknown, asserted or unasserted, presently existing or arising
hereafter, liquidated or unliquidated, secured or unsecured, matured or
unmatured, absolute or contingent of whatever nature.
"Material Adverse Effect" means a material adverse effect on the Assets or
Business of the Seller.
"Operating Authorities" means such Certificates of Public Convenience and
Necessity, Contract Carrier Permits as issued by the Interstate Commerce
Commission, Surface Transportation Board and various State and Canadian
Provincial and Territorial governmental agencies.
"Order" means any order, injunction, judgment, decree, ruling, writ, assessment
or arbitration award by a Governmental Body of competent jurisdiction.
"Permit" means any written approval, consent, exemption, franchise, license,
permit, waiver, certificate or other authorization required to carry on the
Business as currently conducted under applicable Law.
"Permitted Liens" means
(a) Liens for taxes not yet delinquent or the nonpayment of which in the
aggregate would not reasonably be expected to have a Material Adverse Effect,
or which are being contested in good faith by appropriate proceedings
diligently conducted;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 60 days or which are being contested in good
faith by appropriate proceedings diligently conducted; and
(c) zoning restrictions, easements, rights-of-way, restrictions on the use of
property, other similar encumbrances incurred in the ordinary course of
business and minor irregularities of title and other Liens, which do not
materially interfere with the ordinary conduct of the business of the Seller.
"Person" means any natural person, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization
or Governmental Body or any other entity.
"Schedules" mean all schedules prepared as part of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Third Party" means any Person other than the Seller, the Purchaser or any of
their respective Affiliates.
"Vehicle Adjustment Amount" means the sum of the Adjusted Values of each
Vehicle as to which the aggregate cost to repair any body damage (normal wear
and tear excepted) and any other failure to comply with the standards set forth
in Section 5.8 hereof exceeds $5,000.00. The Vehicle Adjustment Amount shall
be established by the parties pursuant to Section 3.1(b) hereof.
Section 1.2 Other Defined Terms. Each of the following terms shall have the
meaning ascribed such term in the respective section opposite it below:
Term Section
Assets 2.2
Assigned Contracts 2.2(i)
Assumed Liabilities 3.5(a)
Books and Records 2.2(k)
Closing Date 4.1
Confidentiality Agreement 4.3
Department of Transportation 5.3
Disclosure Schedule Article 5
Employee Benefit Plan 5.18
Excluded Assets 2.3
Goods Contracts 5.19
I/C Contracts 2.2(a)
IRCA 5.23
Leasehold Interest 2.2(f)
Xxxx 13.6
Marked Vehicles 13.6
Purchase Price 3.1(a)
Purchase Price Adjustment 3.3 (b)(i)
Purchaser Party 12.1
Real Property 2.2(g)
Seller Intellectual Property 2.2(h)
Seller's Documents 5.2
Service Vehicles 2.2(e)
Service Contracts 5.19
Tax or Taxes 5.14
Tax Returns 5.14
Tangible Property 2.2(e)
Tractor Transitional Period 13.6
Trade Receivables 2.2(c)
Trailer Transitional Period 13.6
Transfer Taxes 13.10
Transitional Period 13.6
Unassumed Liabilities 3.4(b)
Vehicle Supplies and Inventories 2.2(b)
Vehicles 2.2(a)
WARN Act 9.3,13.1
WARN Notice 9.3
Warranty Rights 2.2(j)
ARTICLE II
PURCHASE AND SALE OF CERTAIN ASSETS
AND
ASSUMPTION OF CERTAIN LIABILITIES
Section 2.1 Assets to be Purchased and Sold. At the Closing (i) the
Seller shall unconditionally transfer, sell, convey, assign and deliver to the
Purchaser, and the Purchaser shall purchase from the Seller, the Assets (as
defined in Section 2.2 hereof), and (ii) the Seller shall unconditionally
transfer and assign to the Purchaser, and the Purchaser shall assume from the
Seller, the Assumed Liabilities (as defined in Section 3.5(a) hereof).
Section 2.2 Acquisition and Transfer of Certain Assets. Upon the terms and
subject to the conditions hereinafter set forth, the Seller, and with respect
to clause (r) below, the Guarantor, agrees to sell, assign, transfer, convey
and deliver to the Purchaser, and the Purchaser agrees to purchase, acquire and
accept from the Seller or the Guarantor, as the case may be, all of the
Seller's or the Guarantor's, as the case may be, rights, title and interests in
and to all of the following assets, properties, rights, and contracts employed
in the Business as the same shall exist as of the date of Closing (such rights,
title and interests in and to all such assets, properties, rights, and
contracts being collectively referred to as the "Assets"):
(a) All tractors and trailers (collectively the "Vehicles") owned by the
Seller or leased by the Seller (other than vehicles leased to the Seller
pursuant to 49 CFR 1057 ("I/C Contracts") and Service Vehicles). Schedule 2.2
(a) lists, as of June 27, 1998, all such Vehicles (other than such Service
Vehicles) by unit number, year, make, VIN number, and the then current book
value thereof;
(b) All spare parts, vehicle supplies, oil and fuel inventories
(collectively, "Vehicle Supplies and Inventories"). Schedule 2.2(b) lists, as
of June 27, 1998, all of the Vehicle Supplies and Inventories and book values
thereof;
(c) All trade accounts receivables arising from the Business or the Assets,
including unpaid receivables arising in connection with the Assigned Contracts
(the "Trade Receivables"). Schedule 2.2(c) lists, as of June 27, 1998, all of
the Trade Receivables and the book values thereof;
(d) All other accounts and notes receivables, and other rights to receive
payment arising from the Business or the Assets, other than any receivables due
from any owner operator who does not execute an I/C Contract or like agreement
with the Purchaser in the manner contemplated by Section 8.11 hereof (the
"Other Accounts Receivables"). Schedule 2.2(d) lists, as of June 27, 1998, all
of the Other Receivables and the book values thereof;
(e) All furnishings, furniture, fixtures, office supplies, computers, and
other tangible personal property owned by the Seller and utilized in the
operation of the Business ("Tangible Property"), including all pickup trucks,
yard vehicles, fork lifts and like vehicles ("Service Vehicles"). Schedule
2.2(e) lists, as of June 27, 1998, all such Tangible Property (including all
such Service Vehicles), and the then current book values thereof, and, in the
case of such Service Vehicles, the year, make and VIN number thereof;
(f) To the extent transferrable, all of the Seller's right, title and
interest in the leases of such tangible personal property, agreements or
arrangements to provide products or services utilized in the operation of the
Business and/or provision of services utilized in the operation of the
Business, and the rights to xxx for, and remedies against, the lessor's of such
property or provider of such goods or services to the extent such rights and
remedies relate to events occurring after the Closing Date ("Leasehold
Interests");
(g) The Real Property owned by the Seller and set forth on Schedule 2.2(g)
(the "Real Property");
(h) All Intellectual Property owned by the Seller and used primarily in the
Business, including the trade names, trademarks and registered copyrights
shown on Schedule 2.2 (h), and the rights to xxx for, and remedies against,
past, present and future infringements thereof to the extent the same relate
to events occurring after the Closing Date ("Seller Intellectual Property");
(i) All rights of the Seller in and to (i) all Contracts, agreements and
purchase orders for the sale or purchase of goods or services, or both,
relating to the Assets or the Business, other than the Landstar Contracts and
Agency Contracts, and (ii) all other Contracts and agreements of whatever
nature which pertain to the Assets or Business (other than those agreements
referred to in Section 2.2(p) with respect to Intellectual Property),
including, but not limited to, those contracts, agreements , purchase orders,
leases and other contracts set forth on Schedule 5.19 to this Agreement (all
of the items referred to in this subparagraph (i) are, collectively, the
"Assigned Contracts");
(j) To the extent transferrable, all of the Seller's right under or pursuant
to all warranties, representations and guarantees made by suppliers,
manufacturers and contractors in connection with the operation of the Business
after the Closing or affecting the Assets after the Closing ("the Warranty
Rights");
(k) All customer and supplier lists, engineering, maintenance and operating
records, advertising materials, customer lists, cost and pricing information,
business plans, quality control records and manuals, personnel records and
credit records of customers (other than any such items which relate to the
Excluded Assets) ("Books and Records");
(l) The name "Xxxxx Truck Line" including derivations thereof; provided,
however, that the Purchaser acquires no rights to use the name, xxxx or logo
"Landstar" or any derivations thereof, whether in combination with the name
"Xxxxx" or not ("Name Use") and shall at all times comply with the provisions
of Section 13.6 of this Agreement in this regard;
(m) All rights under any contracts, agreements, or claims for refunds,
repayments and other recoupments, to the extent the same relate to events
occurring after the Closing Date;
(n) Any claims or causes of action relating to the foregoing Assets and any
and all claims for indemnity and contribution, refund, counterclaims, setoffs
or defenses the Seller may have with respect to the Assets, to the extent the
same relate to events occurring after the Closing Date;
(o) All prepaid items and prepaid expenses relating to miscellaneous
supplies;
(p) All material written licenses to which the Seller is a party with respect
to Intellectual Property, as listed on Schedule 2.2(p), provided that Schedule
2.2(p) need not list licenses for off-the-shelf computer software;
(q) To the extent transferrable and to the extent the Purchaser exercises its
option to have the Seller enter into an equipment lease with respect to the
Vehicles pursuant to Section 8.12 hereof, all prepaid base plates with respect
to the Vehicles;
(r) The Equipment Sales, Software License, and Services Agreement, dated
December 19, 1994, between Information Solutions, Inc. and the Guarantor
(the "1mage Agreement");
(s) All QUALCOM Units of the Seller; and
(t) All VORAD Units of the Seller.
Section 2.2A Non-Transferrable Assets. To the extent that the sale,
conveyance, transfer or assignment of any service vehicle, Leasehold Interest,
Assigned Contract, license referred to in Section 2.2(p) or base plates
referred to in Section 2.2(q) requires the consent of any person or entity
other than the Purchaser or the Seller, this Agreement shall not constitute
an agreement to effect such sale, conveyance, transfer or assignment if such
action would constitute a breach thereof. If the Purchaser and/or the Seller
is unable to obtain the consent to the assignment of any such Asset, the
Closing shall nevertheless take place and the Seller will thereafter take all
reasonable action requested by the Purchaser to secure such consents after
the Closing or otherwise to transfer to the Purchaser the benefits of such
Asset, provided that the Seller shall not be required to expend more than
$25,000 in satisfaction of its obligations under this Section 2.2A, plus, in
the case of the Agreement identified as Items 1-5 on Schedule 2.2(p) hereto and
the agreement identified in Item 4 under "Landstar Contracts" on Schedule 2.3
(j) hereto, 50% of all costs in excess thereof which are attributable solely to
obtaining the applicable consent and not to any portion of any such consent fee
which is attributable to the Purchaser's proposed use of the applicable license
in a manner which differs from the Seller's historic use of such license, and
provided further, that with respect to all such base plates, the Seller shall
comply with the applicable provisions of Section 8.12 hereof.
Section 2.3 Excluded Assets. Notwithstanding the foregoing, the Seller
and the Purchaser, expressly understand and agree that the Seller is not
selling, assigning, transferring, conveying, or delivering to the Purchaser,
any assets, properties, rights, contracts and claims not referred to in
Section 2.2, including, without limitation, the following (collectively,
the "Excluded Assets"):
(a) Cash;
(b) Any books, records or other data relating to the ownership of the Seller
or the Business by the Guarantor;
(c) The capital stock, corporate minute books, seal, stock record books
and stock transfer records, stock certificates, treasury stock, certificate
of incorporation and By-Laws of the Seller, or other records having to do
solely with the corporate organization of the Seller;
(d) Accounts receivable related to transactions with the Guarantor or any
other intercompany receivable;
(e) All rights under the Seller's insurance policies relating to the Assets
or the Business;
(f) The rights which accrue or will accrue to the Seller under this
Agreement;
(g) All of the Seller's rights under its I/C Contracts and all reserves and
escrows related thereto;
(h) All Authorizations;
(i) All bad debt reserves related to Trade Receivables and Other Receivables;
(j) Any of the Contracts listed on Schedule 2.3(j) hereto, which lists the
Landstar Contracts and the Agency Contracts;
(k) All rights under any contracts, agreements, or claims for refunds,
repayments and other recoupments to the extent the same relates to events
occurring prior to the Closing Date;
(l) Any claims or causes of action relating to the foregoing Assets and any
and all claims for indemnity and contribution, refund, counterclaims, setoffs
or defenses the Seller may have with respect to the Assets to the extent the
same relates to events occurring prior the Closing Date;
(m) Any and all assets and rights with respect to employee benefit plans,
programs or arrangements maintained by the Seller;
(n) All automobiles owned or leased by the Seller (other than service
vehicles), all of which are listed on Schedule 2.3(n) hereto;
(o) The Real Property owned by the Seller located in Spartanburg, South
Carolina and all of Seller's interests in the escrow agreement (and related
escrow account) established in connection with the Seller's prior sale of
certain real property located in Nashville, Tennessee;
(p) All prepaid items and prepaid expenses relating to the Assets or the
Business, other than prepaids for the base plates for the Vehicles and such
other items and expenses which relate to miscellaneous supplies;
(q) All rights to the name, xxxx or logo "Landstar" and any derivations
thereof;
(r) All Vehicles as to which a Vehicle Adjustment Amount is definitively
established pursuant to Section 3.1(b) hereof; and
(s) All Contracts with any customer or other account of the Seller which
is derived from, or attributable to, any of the Seller's agents listed on
Attachment G to Schedule 5.19(a)(iv) hereto.
ARTICLE III
PURCHASE PRICE, PAYMENT AND ALLOCATION
Section 3.1 Purchase Price and Allocation. (a) The initial Purchase
Price (as it may be adjusted pursuant to Section 3.1(b) below, "the Initial
Purchase Price") shall be $41,592,000 and shall be allocated among the
Assets as set forth below. The Initial Purchase Price shall be subject to
adjustment after the Closing in the manner described in Sections 3.3 and 3.4
hereof (as so adjusted in accordance with such sections, the "Purchase Price".)
The Seller and the Purchaser shall, and shall cause each of their respective
affiliates, to (i) prepare and file all statements or other information
required to be furnished to any tax authority pursuant to section 1060 of
the Code and Treasury regulations or other applicable tax law in a manner
consistent with such allocations and (ii) prepare all tax returns required to
be filed by them in a manner consistent with such allocations, and shall not
take any position contrary to such allocations.
(b) No later than 3 business days before the then scheduled Closing Date,
the Purchaser shall deliver to the Seller its estimate of the Vehicle
Adjustment Amount, together with reasonable supporting documentation
identifying the specific Vehicles and the specific alleged body or other
deficiencies in question. From and after the date hereof and prior to its
delivery of such estimate of the Vehicle Adjustment Amount, if any, to the
Seller, the Purchaser shall promptly notify the Seller in writing of any
Vehicles which it intends to include in its estimate of the Vehicle Adjustment
Amount, and the alleged body of other deficiencies with respect to such
Vehicle. The Purchaser's estimate of the Vehicle Adjustment Amount shall be
reasonably acceptable to the Seller and, if it is not, the Purchaser and the
Seller shall negotiate in good faith for a period of at least 5 business days
to definitively establish the Vehicle Adjustment Amount. If the Purchaser and
the Seller are unable to so agree on any Vehicle Adjustment Amount during such
period, their dispute with respect thereto shall be submitted to binding
arbitration with a single arbitrator, to be mutually selected by the parties,
under the rules of the American Arbitration Association (or such other rules as
the parties may agree to establish), and the decision of such arbitrator shall
be final, binding and conclusive upon the Purchaser and the Seller with respect
to the Vehicle Adjustment Amount.
Allocation of Purchase Price
Assets Purchase Price
Vehicles $29,000,000
Trade Receivables 8,466,000
Other Receivables 481,000
86 QUALCOM Units 131,000
536 VORAD Units 632,000
Real Property 947,000
Prepaid Base Plates 250,000
Prepaid Supplies 20,000
Vehicle Supplies and Inventory 694,000
Tangible Property 721,000
All Remaining Assets and
Covenant Not To Solicit 250,000
Total $41,592,000 (less the vehicle Adjustment
Amount if any)
Section 3.2 Payment. The Purchase Price shall be paid as follows:
(a) On the Closing Date, the Purchaser shall wire transfer to the Seller the
excess of (x) $40,842,000 over (y) the Vehicle Adjustment Amount, if any;
(b) On the Closing Date, the Purchaser shall wire transfer $750,000 (the
"Escrow Amount") to Bank One Green Bay, as Escrow Agent (the "Escrow Agent"),
to be held by the Escrow Agent for the benefit of the Seller, the Guarantor
and the Purchaser until the date the Purchase Price Adjustment is definitively
established pursuant to Section 3.3 hereof. The Escrow Amount shall secure a
portion of the potential obligations of the parties under this Agreement to
adjust the Initial Purchase Price and shall be governed by the terms and
conditions of the Escrow Agreement (the "Escrow Agreement") to be negotiated
by the parties prior to the Closing.
(c) Effective as of the Closing, the Purchaser shall assume and perform the
Assumed Liabilities in accordance with Section 3.5 below;
(d) Upon determination of the Purchase Price Adjustment pursuant to Section
3.3 below, the Purchaser shall pay to the Seller or the Seller shall pay to the
Purchaser, as the case may be, the amount of the Purchase Price Adjustment.
Such payment shall be made in accordance with Section 3.3(b) hereof; and
(e) Upon the Purchaser's election to require the Seller to repurchase any
unpaid Trade Receivable pursuant to Section 3.4 hereof, the Seller shall pay
to the Purchaser the amount specified in such Section at the time required by
such Section.
Section 3.3 Calculation and Payment of Purchase Price Adjustment.
(a) No later than thirty (30) days after the Closing, the Purchaser shall
prepare and deliver to the Seller a written schedule of the Closing Date
Asset Values (such schedule, as it may be revised pursuant to Section 3.3(b)
(ii) hereof, the "Schedule of Closing Date Asset Values"); it being understood
and agreed that all Closing Date Asset Values, except as specifically stated
below, shall be calculated in the same manner in which such asset values
would be calculated in connection with the preparation of a balance sheet
for the Seller prepared as of the close of business on the Closing Date in
accordance with GAAP and otherwise in accordance with the historical
accounting policies, practices, procedures and elections of the Seller,
as reflected in the financial statements of the Seller previously made
available to the Purchaser. For purposes of this Agreement, the Closing Date
Asset Values shall mean the following:
(i) The book value of the Trade Receivables of the Seller as of the Closing;
(ii) The book value of the Other Receivables of the Seller as of the
Closing;
(iii) The book value of all Vehicles owned by the Seller as of the Closing
(which value, for all purposes of this Section 3.3, shall be $29,000,000,
less the aggregate of the Adjusted Values for all of the Vehicles shown on
Schedule 2.2(a) hereto which are sold, disposed of or abandoned prior to
Closing, or which are no longer in existence as of the Closing);
(iv) The book value of the Real Property as of the Closing (which value, for
all purposes of this Section 3.3, shall be $947,000 plus the book value of
any additions or improvements made to the Real Property during the period after
June 27, 1998 and prior to the Closing);
(v) The book value of the Tangible Property of the Seller as of the Closing;
(vi) The book value of the Vehicle Supplies and Inventory of the Seller as
of the Closing plus $50,000 (representing the $50,000 fuel allowance);
(vii) $270,000 (representing the agreed upon residual value for the Business
plus the agreed upon value for prepaid miscellaneous supplies);
(viii) $250,000 (representing the agreed upon value of prepaid base plates),
provided that such amount shall be reduced to zero if the Purchaser does not
exercise its equipment lease option pursuant to Section 8.12 hereof;
(ix) The book value of all of the VORAD units of the Seller as of the
Closing;
(x) The book value of all of the QUALCOM units of the Seller as of the
Closing; and
(xi) A negative amount equal to the book value of the Seller's reserve
for accrued vacation time for all Employees who accept the Purchaser's offer
of employment pursuant to Section 13.2 hereof.
(b) Payment of Purchase Price Adjustment.
(i) If the Closing Date Asset Values, as set forth on the Schedule of
Closing Date Asset Values, exceed $41,592,000 (less the Vehicle Adjustment
Amount, if any), the Purchaser shall pay such excess to the Seller in
immediately available funds within fifteen (15) days after its delivery of the
Schedule of Closing Date Asset Values to the Seller, unless the Seller has
notified the Purchaser within such fifteen (15) day period that the Seller
disagrees with any such Closing Date Asset Values. If the Closing Date Asset
Values, as set forth on the Schedule of Closing Date Asset Values, are less
than $41,592,000 (less the Vehicle Adjustment Amount, if any), the Seller
shall pay such deficit to the Purchaser in immediately available funds within
fifteen (15) days after the delivery of the Schedule of Closing Date Asset
Values to the Seller, unless the Seller has notified the Purchaser within such
fifteen (15) day period that the Seller disagrees with such Closing Date Asset
Values. The excess amount owing by the Purchaser to the Seller or the deficit
amount owing by the Seller to the Purchaser, as the case may be, is referred to
herein as the "Purchase Price Adjustment";
(ii) If within fifteen (15) days after delivery of the Schedule of Closing
Date Asset Values to the Seller by the Purchaser, the Seller notifies the
Purchaser that the Seller disagrees with any of such Closing Date Asset Values
reflected thereon, then for a period of fifteen (15) days thereafter, the
Purchaser and the Seller shall attempt in good faith to resolve their dispute
regarding the Closing Date Asset Values. In connection with its review of the
Purchaser's calculation of the Closing Date Asset Values, the Seller and its
authorized representatives, including K.P.M.G. Peat Marwick LLP ("KPMG"), will
have the right to review the information used in the preparation of the
Schedule of Closing Date Asset Values provided by the Purchaser and its
representatives, including, but not limited to, all existing work papers
relating to such values and to discuss such information used in the preparation
of such values with the personnel of the Purchaser and its representatives
responsible therefor. If during such second fifteen (15) day period the
Purchaser and the Seller resolve their dispute, the Purchase Price Adjustment
shall be made in immediately available funds within ten (10) business days
after their dispute is resolved. If the disagreement remains unresolved
after such fifteen (15) day period, the Purchaser and the Seller shall engage
Price Waterhouse Coopers, LLP ("PW") within seven (7) days after the end of the
fifteen (15) day period, who shall resolve the dispute between the parties
within thirty (30) days after its selection, which resolution shall be final
and binding upon all parties, and within ten (10) business days after such
resolution, the appropriate Purchase Price Adjustment shall be made. All
charges of PW incurred in resolving the dispute shall be shared equally by the
Purchaser and the Seller;
(iii) Any portion of the Purchase Price Adjustment not paid in full when due
shall bear interest from the date due until paid in full at the rate of seven
percent (7%) per annum; and
(iv) On the date that the Purchase Price Adjustment is definitively
established pursuant to the provisions of Section 3.3(b)(i) or 3.3(b)(ii)
hereof, as the case may be, the Seller and the Purchaser shall (x) jointly
certify to the Escrow Agent the amount of such Purchase Price Adjustment,
together with the amount of the interest accrued on the Purchase Price
Adjustment from the Closing Date to the date of such payment under Section 3.3
(b)(iii) hereof, (y) if the Purchase Price Adjustment is to be made in favor of
the Purchaser, direct the Escrow Agent to pay such amounts (to the extent
available in the Escrow Account) to the Purchaser and to pay any portion of the
Escrow Account not utilized for such purpose to the Seller and (z) if there is
no Purchase Price Adjustment or if the Purchase Price Adjustment is to be made
in favor of the Seller, direct the Escrow Agent to pay the entire Escrow Amount
to the Seller. In the event the sum of the Purchase Price Adjustment to be
paid to the Seller or the Purchaser, as the case may be, plus the applicable
interest thereon under Section 3.3(b)(iii) hereof, exceeds the Escrow Amount,
the Seller or the Purchaser, as the case may be, shall be obligated to
immediately pay such excess to the other.
Section 3.4 Collection and Guaranty of Receivables. From and after the
Closing, the Purchaser shall undertake the collection of each of the Trade
Receivables reflected on the Schedule of Closing Date Asset Values with the
same diligence as is customarily employed by the Purchaser and its operating
subsidiaries in connection with the collection of accounts receivable. All
amounts collected by the Purchaser from customers that have outstanding Trade
Receivables reflected on the Schedules of Closing Date Asset Values shall be
applied against the oldest accounts of such customer first unless such customer
shall specifically designate that such payment shall be applied in a different
manner. The Purchaser will provide the Seller on a monthly basis with access
to a reconciled schedule of cash receipts listing all cash receipts from
customers with Trade Receivables included in the Schedule of Closing Date Asset
Values and a listing of all Trade Receivables on the Schedule which remain
Outstanding as of the date such listing is prepared. At any time subsequent to
the 90th day, and prior to the 120th day, after the Closing, the Purchaser may
give written notice to the Seller that it is requiring the Seller to purchase
from the Purchaser any of the Trade Receivables reflected on the Schedule of
Closing Date Asset Values which remain unpaid as of such date in consideration
for the payment to the Purchaser of the book value of such Trade Receivable, as
set forth on the Schedule of Closing Date Asset Values. The Seller shall
purchase (or cause to be purchased) any such transferred Trade Receivable
within 15 days after receiving the applicable notice from the Purchaser.
Upon its purchase of any such Trade Receivable, the Seller shall thereafter
have the exclusive right to collect such Trade Receivable from the applicable
payor.
Section 3.5 Assumption of Certain Liabilities. (a) Assumed Liabilities.
In addition to the Purchase Price, upon the Closing Date, the Purchaser shall
assume and agree to pay, discharge or perform the following obligations
(collectively, the "Assumed Liabilities"): (i) all obligations and other
Liabilities arising from and after the Closing under each of the Contracts
(except to the extent the same is an Excluded Asset) and Intellectual Property
Agreements that are set forth on Schedules 2.2(p) and 5.19 hereto, the 1mage
Agreement and the lease agreement with respect to the Brunswick Georgia
facility listed on Schedule 5.11 hereto, provided the Purchaser does not
assume, and the Seller shall be obligated to complete, all obligations referred
to on Schedule 5.19(a)(vii) associated with the removal of the underground
storage tank described thereon, (ii) the liabilities with respect to Employees
specifically referred to in Section 13.1 hereof and (iii) all Liabilities and
obligations arising out of the Purchaser's ownership of the Assets or the
operation of the Business from and after the Closing Date, including, without
limitation, any Liabilities associated or relating in any way to the "Year
2000" issues associated with the Intellectual Property. The Purchaser shall
not assume or be responsible for any other Liability of the Seller, whether
accrued before or after the Closing Date, other than the Assumed Liabilities.
(b) Unassumed Liabilities. Without limiting the breadth and generality
of the exclusion in Section 3.5(a), the Purchaser shall not assume or incur any
Liability in respect of any of the following:
(i) Liabilities to any of the Seller's secured creditors which are incurred
or accrued prior to the Closing due to, or in connection with, the Seller's
creation of any security interest on any Asset;
(ii) Any product liability, cargo liability, vehicle accident, premises
liability, or similar claim for injury to person or property, regardless of
when made or asserted, which arises out of or is based upon any express or
implied representation, warranty, action, inaction, tort, agreement or
guarantee made by the Seller, or alleged to have been made by the Seller, or
which is imposed or asserted to be imposed by operation of law, and any claim
seeking recovery for consequential damage, lost revenue or income, in all cases
to the extent the same relates to the ownership or operation of the Business or
the Assets prior to the Closing Date;
(iii) Except as provided in Section 13.13 hereof, any foreign, federal,
state or local Tax (as defined in Section 5.14): (i) payable with respect to
the business, assets, properties or operations of the Seller, the Guarantor or
any member of any affiliated group of which either is a member, or (ii)
incident to or arising as a consequence of the negotiation or consummation by
the Seller, the Guarantor or any member of any affiliated group of which either
is a member, of this Agreement and the transactions contemplated hereby;
(iv) Any Liability under or in connection with the Excluded Assets;
(v) Any Liability not specifically referred to in Section 13.1 hereof
arising prior to or as a result of the Closing to any employees, agents or
independent contractors of the Seller, whether or not employed by the Purchaser
after the Closing, or under any benefit arrangement with respect thereto; and
(vi) Any Liability of the Seller arising or incurred in connection with
the negotiation, preparation and execution of this Agreement and the
transactions contemplated hereby including, but not limited to fees and
expenses of counsel, accountants and other experts, fees and costs relating
to the Seller's termination of any leases regarding the Vehicles.
ARTICLE IV
CLOSING; TERMINATION
Section 4.1 Closing Date. The Closing of this transaction shall take
place at the offices of Debevoise & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, at 10:00 a.m. (local time) on the fourth business day after the
conditions set forth in Sections 10.6 and 11.5 hereof have been satisfied
or waived by the party entitled to do so; or at such other place, time and
date as may be mutually agreed upon by the Purchaser and the Seller.
The date on which the Closing occurs is referred to in this Agreement as the
"Closing" or the "Closing Date".
Section 4.2 Proceedings at Closing. All proceedings to be taken and all
documents to be executed and delivered by the Seller in connection with the
consummation of the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to the Purchaser and its counsel.
All proceedings to be taken and all documents to be executed and delivered by
the Purchaser in connection with the consummation of the transactions
contemplated hereby shall be reasonably satisfactory in form and substance
to the Seller and their counsel. All proceedings to be taken and all
documents to be executed and delivered by all parties at the Closing shall
be deemed to have been taken, executed and delivered simultaneously, and no
proceedings shall be deemed taken nor any documents executed or delivered until
all have been taken, executed and delivered.
Section 4.3 Confidentiality Agreement. In addition to all other provisions
contained herein, effective as of the Closing Date, that certain
Confidentiality Agreement by and between the parties ("Confidentiality
Agreement"), dated as of August 20, 1997, shall be terminated and shall be
null and void and of no further force and effect, except to the extent any
Information (as defined therein) pertains to the Guarantor or any other
Affiliate of the Seller, as to which Information such Confidentiality Agreement
shall remain in full force and effect.
Section 4.4 Termination. This Agreement may be terminated prior to the
Closing as follows:
(a) By the written agreement of the Purchaser and the Seller;
(b) By either the Purchaser or the Seller if there shall be in effect a final
nonappealable Order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;
(c) By either the Purchaser or the Seller (provided that the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material breach
of any of the representations or warranties set forth in this Agreement on the
part of the other party, which breach is not cured within thirty (30) days
following written notice to the party committing such breach or which breach,
by its nature, cannot be cured prior to the Closing, and which breach,
individually or together with all other such breaches, would have a Material
Adverse Effect, in the case of breaches by the Seller, or a material adverse
effect on the Purchaser's ability to consummate the transactions contemplated
hereby, in the case of breaches by the Purchaser; and
(d) By either the Purchaser or the Seller if either shall have reasonably
determined that one or more conditions set forth in Articles X or XI cannot
be fulfilled or satisfied within a reasonable period of time and, in any
event, if such Closing has not occurred on or before September 30, 1998.
Section 4.5 Effect of Termination. If this Agreement is terminated in
accordance with Section 4.4 hereof and the transactions contemplated hereby
are not consummated, this Agreement shall become null and void and of no
further force and effect, except (i) for this Section 4.5, and (ii) that the
termination of this Agreement for any cause shall not relieve any party hereto
from any liability which at the time of termination had already accrued to any
other party hereto or which thereafter may accrue in respect of any act or
omission of such party prior to such termination, including breaches of
covenants hereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser that, except as
otherwise set forth on Schedule 5 (the "Disclosure Schedule"), which
Disclosure Schedule shall specifically identify the relevant subsection
hereof to which it relates, the following:
Section 5.1 Corporate Existence and Organization. The Guarantor and the
Seller are each corporations duly organized, validly existing and in good
standing under the laws of the jurisdiction of their respective incorporation;
and the Seller is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the conduct of the Business by
it requires it to be so qualified, except where the failure to be so qualified
would not have a Material Adverse Effect. The Guarantor is the beneficial
owner (within the meaning of Section 13d-3 of the Securities and Exchange Act
of 1934, as amended) of all issued and outstanding stock of the Seller.
There are no proxies, voting trust agreements, pledges or other restrictions
affecting such stock.
Section 5.2 Corporate Power; Authorization; Enforceable Obligations.
The Seller has the corporate power and authority to execute, deliver and
perform this Agreement. The execution, delivery and performance of this
Agreement by the Seller has been duly authorized by all necessary corporate
and shareholder action on the part of the Seller. This Agreement has been, and
the other agreements, documents and instruments required to be delivered by the
Seller
in accordance with the provisions hereof (the "Seller's Documents") will be
duly executed and delivered on behalf of the Seller by duly authorized
officers of the Seller; and this Agreement constitutes, and the Seller's
Documents when executed and delivered will constitute, the legal, valid and
binding obligations of the Seller, enforceable against the Seller in accordance
with their respective terms.
Section 5.3 Safety Rating. The Seller has now and, for the five years
preceding the date of this Agreement, maintained a "Satisfactory" safety
rating as promulgated by the Department of Transportation ("DOT") and is not
aware of any issues, deficiencies or violations which would
change such rating. The Seller is not aware of any notice of any intended,
pending, or proposed audit of its operations by the DOT or any other
governmental entity having jurisdiction over the Seller's operations.
Section 5.4 No Interest in Other Entities. No shares of any corporation
or any ownership or other investment interest, either of record, beneficially
or equitably, in any association, partnership, joint venture or other legal
entity are included in the Assets, other than shares of capital stock
representing immaterial, non-controlling interests in publicly-traded companies
obtained by the Seller in the ordinary course of the Business.
Section 5.5 Validity of Contemplated Transactions, Etc. The execution,
delivery and performance of this Agreement by the Seller does not and will
not violate, conflict with or result in the breach of any term, condition or
provision of, or require the consent of any other person under (a) any existing
law, ordinance, or governmental rule or regulation to which the Seller is
subject, (b) any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
which is applicable to the Seller, (c) the charter documents of the Seller,
or (d) any mortgage, indenture, agreement, contract, commitment, lease,
license, or other instrument, document or legally enforceable understanding,
oral or written, to which the Seller is a party, by which the Seller may have
rights or by which any of the Assets may be bound or affected, or give any
party with rights thereunder the right to terminate, modify, accelerate or
otherwise change the existing rights or obligations of the Seller thereunder,
except for any such violations or conflicts which would not have a Material
Adverse Effect. Except as aforesaid or provided in the HSR Act, no
authorization, approval or consent of, and no registration or filing with, any
governmental or regulatory official, body or authority is required in
connection with the execution, delivery or performance of this Agreement by the
Seller, except for any such approvals, consents, registrations or filings, the
failure of which to obtain or make would not have a Material Adverse Effect; it
being understood that the Seller makes no representation or warranty as to its
ability to transfer any of the Operating Authorities or base plates to the
Purchaser.
Section 5.6 No Third Party Options. There are no existing agreements,
options, commitments or rights with, conferring on any Third Party the right
to acquire any of the Assets.
Section 5.7 Vehicle Supplies and Inventories, Etc. All vehicle supplies and
inventories, furnishings, furniture, fixtures, office supplies, computers, and
other tangible personal property included in the Assets, are of good and
merchantable quality in all material respects; and are usable in the ordinary
course of the Business in compliance in all material respects with all
applicable regulations and quality standards of any Governmental Authority.
Section 5.8 Vehicles. All Vehicles included in the Assets have the proper
Vehicle Identification Number (VIN) shown on Schedule 2.2(a), have less than
$3,000,000 in the aggregate of body damage (normal wear and tear excepted),
have engines that start and run with no major leaks or excessive smoke and are
capable of transporting freight of such weight and dimensions as allowable
under Department of Transportation requirements, except for any such failures
which would not have a material adverse effect on the Purchaser.
Section 5.9 Authorizations. As of the date hereof and the Closing Date
(without giving effect to the consummation of this transaction), all Operating
Authorities are in good standing and there are no actions pending concerning
such operating authorities.
Section 5.9A Computer Generated Balance Sheets. Seller has delivered to
Purchaser copies of the computer generated balance sheets for the Seller as
of June 28, 1997, December 27, 1997 and June 27, 1998. Such balance sheets
fairly present in all material respects the assets of Seller as of the dates
indicated, excluding any appropriate write-downs thereto as a result of or
relating to the consummation of the transactions provided for hereunder.
Section 5.10 Ownership of the Assets Other than Leased Assets. Except with
respect to assets listed on Schedules 2.2(g) and (p), the Seller has (or will
as of the Closing have) good and valid title to all of the Assets, free and
clear of all Encumbrances, except for any such Encumbrances which would not
have a Material Adverse Effect. At the Closing, the Purchaser will acquire
such good and valid title, except as a result of any actions as may be taken
by the Purchaser. With respect to any leases listed on Schedule 5.11, as of the
Closing Date, the Seller shall not be in material default of any such leases or
service arrangements, and shall be current in all material respects with
respect to any liabilities arising thereunder prior to the Closing Date. No
affiliate of the Seller owns any of the Assets. This Section 5.10 does not
relate to the Seller Intellectual Property, which is instead covered by Section
5.13.
Section 5.11 Real Property. With respect to the Real Property:
(a) Real Property. All real property (including, without limitation, all
interests in and rights to real property) and improvements located thereon
which are owned by the Seller and used in connection with the Business or
included in the Assets, are listed on the Disclosure Schedule in response to
this Section.
(b) Title to Owned Real Property. With respect to the Real Property, title
to such Real Property is, and at Closing shall be, good and marketable, fee
simple absolute, free and clear of all Encumbrances other than Permitted Liens.
At Closing, title to the Real Property owned by the Seller shall be insurable
by any title insurance company selected by the Purchaser, at such company's
regular rates (as paid for by the Purchaser) pursuant to an ALTA 1987 owner's
form of policy, to the extent available, free of all exceptions except
Permitted Liens.
(c) Pollution and Hazardous Substances. Except as would not reasonably be
expected to result in a Material Adverse Effect: the Seller has not used,
discharged, released, disposed on, under or about any of its Assets, including
the Real Property, any Hazardous Material in violation of any applicable
Environmental Laws, except for goods and materials transported as cargo in
the ordinary course of the Seller's Business and in substantial compliance
with all applicable Environmental Laws. The Seller has kept and maintained
its assets, including the Real Property, and, to the best of its knowledge,
the waters or any waste on, under or discharged from its assets, including
the Real Property, in compliance with, and has not caused or permitted its
assets, including the Real Property, to be in violation of any applicable
Environmental Law now or previously in effect related to environmental
conditions, air, water and land pollution or the storage or disposal of
Hazardous Materials on, under or about its assets, including the Real Property
(d) Eminent Domain. The Seller has received no notices, oral or written,
and has no knowledge that any governmental body having the power of eminent
domain over the Real Property has commenced or intends to exercise the power
of eminent domain or a similar power with respect to all or any part of the
Real Property.
(e) No Violations. Except as would not be reasonably expected to have
a Material Adverse Effect, the Real Property and its present uses comply
with all applicable Regulations of all governmental bodies having jurisdiction
over the Real Property. The Seller has received no notices, oral or written,
from any governmental body, and has no knowledge that the Real Property or
any improvements erected or situate thereon, or the uses conducted thereon
or therein, violate in any material respect any applicable Regulations of
any governmental body having jurisdiction over the Real Property.
(f) Improvements. The material improvements located on the Real Property
are in good condition and are structurally sound in all material respects,
and all material mechanical and other material systems located therein are
in good operating condition, subject to normal wear, and no condition exists
requiring material repairs, alterations or corrections.
(g) Access. The buildings and structures constituting part of the Real
Property currently have access to public roads or valid easements over private
streets or private property for such ingress to and egress from such property.
(h) Compliance with Construction Regulations. To the Seller's knowledge, the
installation and construction of the buildings and structures located on the
Real Property have been completed in material compliance with all laws, rules,
regulations, judgments, orders, permits, licenses and other requirements of and
agreements with all Governmental Bodies applicable to such properties; and all
building permits, certificates of occupancy, licenses and other authorizations
required for current uses of such properties have been obtained, other than
those the failure of which to obtain would not materially adversely affect
the continued use of the relevant property as now used.
Section 5.12 Absence of Certain Developments. Since June 27, 1998, the
Business has been conducted in the ordinary course consistent with past
practices and, except in the ordinary course of business consistent with past
practices, there has not been any (i) increase in the rate of compensation
payable by the Seller to any of its Employees who are compensated on an hourly
basis or any increase in the amounts paid or payable to such Employees under
any bonus, incentive, pension, profit sharing or other benefit plan, or any
arrangement therefore made for or with any such Employee; or (ii) any sale
or other disposition of any asset other than in the ordinary course of
business.
Section 5.13 Intellectual Property. (a) Schedule 2.2(h) lists all material
Seller Intellectual Property. Except as set forth on Schedule 2.2(p), the
Seller owns all Intellectual Property necessary for the conduct of the
Business as currently conducted.
(b) Neither the Seller nor, to the Seller's knowledge, any other party
thereto, is in default under any license set forth on Schedule 2.2(p), and,
except as set forth on Schedule 2.2(p), each such license is in full force
and effect as to the Seller and, to the Seller's knowledge, as to each other
party thereto, except for such defaults and failures to be so in full force
and effect as, individually and in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. To the Seller's knowledge,
none of the Seller Intellectual Property is subject to any outstanding
injunction, judgment, order, decree or ruling.
(c) Except as set forth in Schedule 5.13(c), the Seller has not received any
notice or claim stating (or otherwise to the effect) that the conduct of the
Business infringes the asserted Intellectual Property rights of any person and
the Seller has no knowledge of any infringement by any person of the Seller
Intellectual Property.
Section 5.14 Tax and Other Returns and Reports. All federal, state, local
and foreign tax returns, reports, statements and other similar filings
required to be filed by or on account of the Seller (the "Tax Returns") with
respect to any federal, state, local or foreign taxes, assessments, interest,
penalties, deficiencies, fees and other governmental charges or impositions,
(including, without limitation, all income tax, unemployment compensation,
social security, payroll, sales and use, excise, privilege, property, ad
valorem, franchise, license, school, fuel, fuel use, highway use, and any
other tax or similar governmental charge or imposition under laws of the United
States or any state or municipal or political subdivision thereof or any
foreign country or political subdivision thereof) (the "Taxes") have been filed
with the appropriate governmental agencies in all jurisdictions in which such
Tax Returns are required to be filed, and all such Tax Returns properly reflect
the liabilities of the Seller for Taxes for the periods, property or events
covered thereby, except in all cases for any failures which would not have a
material adverse effect on the Purchaser. All Taxes, including without
limitation those which are called for by the Tax Returns, or heretofore or
hereafter claimed to be due by any taxing authority from the Seller, have been
properly accrued or paid, except in all cases for any failures which would not
have a material adverse effect on the Purchaser. The accruals for Taxes
contained in the Seller's financial statements are adequate to cover the tax
liabilities of the Seller with respect to the Business as of that date and
include adequate provision for all deferred taxes, and nothing has occurred
subsequent to that date to make any of such accruals inadequate, except in all
cases for any failures which would not have a material adverse effect on the
Purchaser. The Seller has not received any notice of assessment or proposed
assessment in connection with any Tax Returns respecting the Seller and there
are not pending tax examinations or audits of or tax claims asserted against
the Seller or any of its assets or properties, except in all cases for any
failures which would not have a material adverse effect on the Purchaser. The
Seller has not extended, or waived the application of, any statute of
limitations of any jurisdiction regarding the assessment or collection of any
Taxes with respect to the Seller. The Seller has made all deposits required by
law to be made with respect to the Seller's Employees' withholding and other
employment taxes, including, without limitation, the portion of such deposits
relating to taxes imposed upon the Seller with respect to the Seller, except
for any failure to make such deposits or pay such taxes which would not have a
material adverse effect on the Purchaser. The Seller shall timely file
all tax returns and pay all taxes related to operation of the Business prior
to the Closing Date, except in all cases for any failures which would not
have a material adverse effect on the Purchaser.
Section 5.15 Existing Condition. Except in the ordinary course of business
consistent with past practices, since June 27, 1998, the Seller has not:
(a) Sold, encumbered, assigned or transferred any assets or properties
included in the Assets, except for the sale, use or consumption of inventory
in the ordinary course of business consistent with past practice;
(b) Mortgaged, pledged or subjected any of the Assets to any mortgage,
lien, pledge, security interest, conditional sales contract or other
encumbrance of any nature whatsoever, except as otherwise permitted or for
Encumbrances which will be discharged prior to the Closing;
(c) Made or suffered any amendment or termination of any Assigned Contract;
(d) Made commitments or agreements for capital expenditures or capital
additions or betterments exceeding in the aggregate $25,000, except such as
may be involved in ordinary repair, maintenance or replacement of its assets;
(e) Increased the salaries or other compensation of, or made any advance
(excluding advances for ordinary and necessary business expenses) or loan to,
any of its employees or made any increase in, or any addition to, other
benefits to which any of its employees may be entitled;
(f) Entered into any transaction other than in the ordinary course of
business consistent with past practice.
Section 5.16 Labor Matters. The Seller is not a party to any collective
bargaining agreement, no such agreement determines the terms and conditions of
employment of any employee of the Seller, no collective bargaining agent has
been certified as a representative of any of the employees of the Seller, and
no representation campaign or election is now in progress with respect to any
of the employees of the Seller, nor to the best of the Seller's information
and belief there have not been any attempts to organize the employees or
independent contractors/owner operators of the Seller within the preceding
12-month period. The Seller is in compliance in all material respects with
all applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours. There is no labor strike,
dispute, slow-down or work stoppage actually pending or, to the knowledge of
the Seller, threatened with respect to the Seller's employees. Since December
27, 1997, the Seller has not made or agreed to any increase in the amount,
rate, terms or method of calculation of compensation to any existing
or former employee of the Seller. The Seller's Business is not subject to
Executive Order 11246.
Section 5.17 Insurance. The Assets and the Business of the Seller are
insured under various policies of general liability and other forms of
insurance, all of which are described in all material respects in the
Disclosure Schedule.
Section 5.18 Employee Benefit Plan and Arrangements. The Disclosure
Schedule contains a complete list of all written material employee benefit
plans, whether covering one person or more than one person, sponsored or
maintained by the Seller. For the purposes hereof, the term "employee benefit
plan" includes all plans, funds, programs, policies, arrangements and
practices (including vacation policies) providing benefits of economic value to
any of the Seller's Employees, former Employees, or present or former
beneficiary or dependent of any such employee or former employee other than
regular salary, wages or commissions paid substantially concurrently with the
performance of the services for which paid. Without limitation, the term
"employee benefit plan" includes all employee welfare benefit plans within the
meaning of section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), all employee pension benefit plans within the meaning of
section 3(2) of ERISA.
Section 5.19 Contracts and Commitments. (a) The Seller is not a party to
any of the following Contracts other than those terminable at the Seller's
will without penalty, payment or impairment:
(i) Any contract with any present or former employee or consultant or for
the employment of any person, including any consultant, who is engaged in the
conduct of the Business;
(ii) Any contract for the future purchase of, or payment for, supplies or
products, or for the performance of services by a third party which supplies,
products or services are used in the conduct of the Business involving in any
one case $25,000 or more;
(iii) Any contract to sell or supply products ("Goods Contracts") or to
perform services other than customer transportation agreements ("Services
Contract") in connection with the Business involving, in any one case,
$100,000.00 or more;
(iv) Any distribution, dealer, representative or sales agency Contract,
relating to the Business;
(v) Any lease under which the Seller is either lessor or lessee relating
to the Assets or any property at which the Assets are located;
(vi) Any Contract for any charitable or political contribution relating
to the Business;
(vii) Any Contract for any capital expenditure or leasehold improvement
in excess of $25,000;
(viii) Any Contract limiting or restraining the Seller, the Business or any
successor thereto from engaging or competing in any manner or in any business,
nor, to the Seller's knowledge, is any employee of the Seller engaged in the
conduct of the Business subject to any such agreement, contract or commitment;
(ix) Any franchise or distributorship agreement; or
(x) Any Contract relating to the Business not otherwise listed on the
Disclosure Schedule and continuing over a period of more than six months from
the date hereof, or exceeding $100,000.00 in value.
(xi) Any Service Contract other than in the form attached to the Disclosure
Schedule with only such changes as are necessary to reflect applicable fees,
time periods, and other changes therein as do not naturally affect the rights
or obligations of the Seller thereunder.
(b) The Seller has made available to the Purchaser complete and correct
copies of all written contracts listed on Schedule 5.19, and a complete
and correct description in all material respects of all of the material terms
of all oral contracts listed on Schedule 5.19, in each case together with a
complete and correct copy or description in all material respects, as the case
may be, of all amendments thereto.
(c) Each of the Contracts listed in the Disclosure Schedule in response
to this Section, or not required to be listed therein because of the amount
thereof, and to which the Purchaser is to acquire rights or obligations
hereunder, is, to the Seller's knowledge, valid and enforceable in accordance
with its terms. The Seller is, and to the Seller's knowledge all other
parties thereto are, in compliance with the provisions thereof; the Seller is
not, and to the Seller's knowledge, no other party thereto is, in default in
the performance, observance or fulfillment of any material obligation,
covenant or condition contained therein; and, to the Seller's knowledge no
event has occurred which with or without the giving of notice or lapse of
time, or both, would constitute a default thereunder. This Section 5.19 does
not relate to agreements with respect to Intellectual Property, which are
instead covered by Section 5.13.
Section 5.20 Additional Information. The Disclosure Schedule contains
accurate lists and summary descriptions of the following:
(a) The names and titles of and current annual base salary or hourly rates
for all employees of the Seller engaged in the conduct of the Business,
together with a statement of the full amount and nature of any other
remuneration, whether in cash or kind, paid to each such person during the
past or current fiscal year or payable to each such person in the future and
the bonuses accrued for, the vacation and severance benefits to which, each
such person is entitled; and
(b) All names under which the Seller has conducted any business or which it
has otherwise used during the last five years.
Section 5.21 Customers. As of the date hereof, the Seller has not received
any notice from any customer under an Assigned Contract listed on Schedule
5.19 stating (or otherwise to the effect) that it has (i) ceased or is planning
to cease using the Seller's services or (ii) within the past 30 days,
substantially reduced, or will substantially reduce, the amount of the Seller's
services to be purchased in the future.
Section 5.22 Necessary Assets. The Assets constitute all of the assets
utilized in the conduct of the Seller's Business as it is presently conducted,
other than the Excluded Assets and for immaterial exceptions.
Section 5.23 Immigration Matters. To its knowledge, the Seller has complied
with the Immigration Reform and Control Act of 1986, as amended, and all
regulations promulgated thereunder ("IRCA") as to all Employees (as defined
in section 274al(g) of Title 8, Code of Federal Regulations) with respect to
the completion, maintenance and other documentary requirements of Forms I-9
(Employment Verification Forms) for all such current
and former Employees and the reverification of the employment status of any and
all such Employees whose employment authorization documents indicated a limited
period of employment authorization. To its knowledge, the Seller has only
employed individuals authorized to work in the United States. To its knowledge,
the Seller has not received any written notice of any inspection or
investigation relating to its alleged noncompliance with or violation of
IRCA, nor have either of them been warned, fined or otherwise penalized by
reason of any failure to comply with IRCA.
Section 5.24 Adequacy of Representations and Warranties. No representation
or warranty made by the Seller in this Agreement or any certificate or
schedule delivered by the Seller pursuant hereto contains, or will contain
on the Closing Date, any material misstatement of fact or omits, or will omit
on the Closing Date, to state a material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller:
Section 6.1 Corporate Existence. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Wisconsin.
Section 6.2 Corporate Power and Authorization. The Purchaser has the
corporate power, authority and legal right to execute, deliver and perform
this Agreement. The execution, delivery and performance of this Agreement by
the Purchaser have been duly authorized by all necessary corporate action.
This Agreement has been, and the other agreements, documents and instruments
required to be delivered by the Purchaser in accordance with the provisions
hereof (the "Purchaser's Documents"), will be, duly executed and delivered by
duly authorized officers of the Purchaser and this Agreement constitutes, and
the other Purchaser's Documents when executed and delivered, will constitute,
the legal, valid and binding obligation of the Purchaser enforceable against
the Purchaser in accordance with its terms.
Section 6.3 Validity of Contemplated Transactions, Etc. The execution,
delivery and performance of this Agreement by the Purchaser does not and will
not violate, conflict with or result in the breach of any term, condition or
provision of, or require the consent of any other person under (a) any existing
law, ordinance, or governmental rule or regulation to which the Purchaser is
subject, (b) any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
which is applicable to the Purchaser, (c) the charter documents of the
Purchaser or any securities issued by the Purchaser, or (d) any mortgage,
indenture, agreement, contract, commitment, license, lease, plan,
authorization, or other instrument, document or understanding, oral or written,
to which the Purchaser is a party or by which the Purchaser may have rights or
give any party with right thereunder the right to terminate, modify, accelerate
or otherwise change the existing rights or obligations of the Purchaser
thereunder. Except as aforesaid or provided in the HSR Act, no authorization,
approval or consent of, and no registration or filing with, any governmental
or regulatory official, body or authority is required in connection with the
execution, delivery or performance of this Agreement by the Purchaser. The
Purchaser has sufficient funds available to permit it to pay the Initial
Purchase Price at Closing.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 7.1 Survival of the Seller's Representations and Warranties.
All representations and warranties made in this Agreement by the Seller, or
in any certificate, schedule, or instrument furnished hereunder shall terminate
as of the Closing, except that (i) the representations and warranties made in
Section 5.5 shall terminate at the end of the six month period immediately
following the Closing, (ii) the representations and warranties made in Sections
5.10, 5.11(a), 5.11(b) and 5.11(c) hereof shall terminate on the one year
anniversary of the Closing and (iii) the representations and warranties made
in Sections 5.1 and 5.2 hereof shall survive indefinitely.
Section 7.2 Survival of the Purchaser's Representations and Warranties.
All representations and warranties made in this Agreement by the Purchaser
shall survive Closing indefinitely, except that the representations and
warranties of the Purchaser made in Section 5.3 hereof shall terminate at
the end of the six month period following the Closing.
ARTICLE VIII
AGREEMENTS OF THE SELLER PENDING CLOSING
Agreements of the Seller Pending the Closing. The Seller covenants and agrees
that, pending the Closing, and except as otherwise agreed to in writing by the
Purchaser:
Section 8.1 Conduct of Business. The Business shall be conducted
in the ordinary course consistent with past practice. The Seller shall not take
any action that would cause the representations and warranties of the Seller
contained in this Agreement to be untrue in the manner required under Section
10.1.
Section 8.2 Maintenance of Physical Assets. The Seller shall continue
to maintain and service the physical assets used in the conduct of the
Business in the same manner as has been its consistent past practice.
Section 8.3 Employees and Business Relations. The Seller shall use its
reasonable commercial efforts to keep available the services of the present
employees and agents of the Business and to maintain the relations and
goodwill with the suppliers, customers, distributors and any others having
business relations with the Business. The Seller shall not change the amount
or method of compensation for any of its employees or independent
contractor/owner operators other than increases in the ordinary course of
business consistent with past practices.
Section 8.4 Updated Schedules. The Seller shall promptly disclose to
the Purchaser any information contained in its representations and warranties
or the Schedules which, because of an event occurring or becoming known to
the Seller after the date hereof, is incomplete or is no longer correct as of
all times after the date hereof until the Closing Date; provided, however,
that none of such disclosures shall be deemed to modify, amend or supplement
the representations and warranties of the Seller, or the schedules hereto for
the purposes of Article X hereof, unless the Purchaser shall have consented
thereto in writing, provided further, however, that, in the event the Closing
occurs such disclosures will modify and supplement the representations and
warranties of the Seller (and the related schedules) for all purposes of
Article XII hereof.
Section 8.5 HSR Act Notice and Filing. As soon as practicable (but no
later than 15 business days) after the execution of this Agreement, each of the
Seller and the Purchaser will file, or cause to be filed with the Federal Trade
Commission and the Antitrust Division of the United States Department of
Justice pursuant to the "HSR Act", and any and all state, federal or foreign
regulatory bodies or agencies, the notification and documentary material
required in connection with this transaction. Thereafter, each of the Seller
and the Purchaser shall promptly file any additional information requested as
soon as practicable after receipt of a request for additional information under
the HSR Act or any other regulatory filing. Each of the Seller and the
Purchaser shall use reasonable efforts to obtain early termination of the
applicable waiting period under the HSR Act. The Seller and the Purchaser shall
each pay one-half (1/2) of the filing fees (not to include any legal fees
incurred in the preparation or filing of the materials) required under the HSR
Act or in connection with any other state, federal or foreign regulatory
filing.
Section 8.6 Cooperative Efforts. The Seller shall cooperate with the
Purchaser, execute all instruments and documents, pay the filing, assignment
and transfer fees and other charges and use its reasonable best efforts to
cause all of the conditions to the obligations of the Purchaser and the Seller
under this Agreement to be satisfied on or prior to the Closing Date.
Section 8.7 Access. The Seller shall give to the Purchaser's officers,
employees, counsel, accountants and other representatives free and full access
to and the right to inspect, during normal business hours, all of the premises,
properties, assets, records, contracts and other documents relating to the
Assets and shall permit them to consult with the officers, employees,
accountants, counsel and agents of Seller for the purpose of making such
investigation of the Assets, including without limitation the Seller's
financial statements, as the Purchaser shall desire to make, provided that such
investigation shall not unreasonably interfere with the Seller's business
operations. Furthermore, the Seller shall make available to the Purchaser all
such documents and copies of documents and records and information with respect
to the affairs of the Business and copies of any working papers relating
thereto as the Purchaser shall from time to time reasonably request and shall
permit the Purchaser and its agents to make such physical inventories and
inspections of the Assets as the Purchaser may reasonably request from time to
time.
Section 8.8 Press Releases. Except as required by applicable law, the
Seller shall not give notice to third parties or otherwise make any public
statement or releases concerning this Agreement or the transactions
contemplated hereby except for such written information as shall have been
approved as to form and content by the Purchaser, which approval shall not be
unreasonably withheld.
Section 8.9 Notification of Certain Events. The Seller shall give prompt
notice to the Purchaser as soon as it becomes aware of (i) the occurrence or
nonoccurrence of any event that would be likely to cause either (a) any
representation or warranty of the Seller contained in this Agreement, or in
connection with the transactions contemplated hereunder, to be untrue or
inaccurate in the manner required under Section 10.1 hereof, or (b) directly or
indirectly, have any Material Adverse Effect on the Seller; or (ii) a material
failure of the Seller to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder. Notwithstanding the
foregoing, the delivery of any notice pursuant to this Section shall not limit
or otherwise affect the remedies available hereunder to the party receiving
such notice.
Section 8.10 No Negotiations. The Seller and its officers, directors and
anyone acting on behalf of the Seller or such person shall not, directly or
indirectly, affirmatively solicit any person, firm or other entity or group
(other than the Purchaser or its representatives), engage in unsolicited
discussions, engage in any negotiations with, or provide any information
concerning any merger or sale of all or substantially all of its assets or the
Business or the sale of capital stock of the Seller.
Section 8.11 I/C Contracts. Schedule 8.11 (a) sets forth a list of all
of the Seller's I/C Contracts as of June 27, 1998. Schedule 8.11(b) sets
forth, with respect to all such I/C Contracts, information concerning (i) the
number and type of tractors owned and operated by each owner operator who is a
party to each such I/C Contract, (ii) the terms and conditions of the Seller's
standard form of agreement for its I/C Contracts (together with a standard
compensation schedule) and (iii) all reserves and escrows posted by such owner
operators with respect to such I/C Contracts. Prior to the Closing, the
Seller, upon the Purchaser's request, will use its reasonable efforts to
persuade all owner operators who are a party to any such I/C Contracts to
execute similar contracts with the Purchaser, effective as of the Closing Date,
and to either authorize the Seller to transfer to the Purchaser all reserves
and escrows held by the Seller with respect to the I/C Contract of such owner
operator or to authorize the Seller to release all such reserves and escrows.
In addition, the Seller agrees to negotiate in good faith with the Purchaser
towards the Purchaser's purchase of any note receivables (and any related
collateral) of any such transferring owner operator held by any of the Seller's
Affiliates which arise out of any financing arrangements made available to such
owner operator to purchase tractors, trailers and related transportation
equipment.
Section 8.12 Transfer of Base Plates. The Seller agrees to use its
reasonable efforts to cooperate with the Purchaser in connection with the
Purchaser's efforts to utilize the base plates for the Vehicles for the
period from the Closing to March 31, 1999. In this regard, the Seller
acknowledges that such cooperation may include, upon the request of the
Purchaser prior to the Closing, the Seller's negotiation, execution and
delivery of equipment leases with respect to all of the Vehicles (other than
any Vehicles as to which a Vehicle Adjustment Amount is established pursuant to
Section 3.1(b) hereof) on such terms and conditions as are agreed to by the
parties; it being understood and agreed that all such leases will contain
provisions (i) imposing all post-Closing Liabilities of every kind and
description with respect to such Vehicles on the Purchaser, (ii) requiring the
Purchaser to name the Seller as an additional insured on all insurance policies
maintained by the Purchaser with respect to such Vehicles, (iii) ensuring that
the Seller will not create any Encumbrances on its title to such Vehicles
during the pendency of any such leases, (iv) requiring the Purchaser to
purchase (and the Seller to deliver titles, free and clear of all Encumbrances,
to) such Vehicles by no later than April 15, 1999 and (v) imposing all costs of
implementing such arrangements on the Purchaser.
Section 8.13 Compliance with Laws, Etc. The Seller shall comply in all
material respects with all laws, rules and regulations applicable to the
Business or Assets, the noncompliance with which would reasonably be expected
to have a material adverse effect on the Purchaser.
ARTICLE IX
AGREEMENTS OF THE PURCHASER PENDING THE CLOSING
The Purchaser covenants and agrees that, pending the Closing and except as
otherwise agreed to in writing by the Seller:
Section 9.1 Actions of Purchaser. The Purchaser will not take any action
which would result in a breach of any of its representations and warranties
hereunder. Furthermore, the Purchaser shall cooperate with the Seller and use
its reasonable best efforts to cause all of the conditions to the obligations
of the Purchaser and the Seller under this Agreement to be satisfied on or prior
to the Closing Date.
Section 9.2 Press Releases. Except as required by applicable law, the
Purchaser will not give notice to third parties or otherwise make any public
statement or releases concerning this Agreement or the transactions
contemplated hereby except for such written information as shall have been
approved in writing as to form and content by the Seller, which approval shall
not be unreasonably withheld.
Section 9.3 WARN Notice. The Purchaser and, to the extent applicable, the
Seller, will comply with all notice requirements under 29 U.S.C. 2101 - 2109
(the "WARN Act") and all applicable state law counterparts.
ARTICLE X
CONDITIONS PRECEDENT TO THE CLOSING;
THE PURCHASER'S OBLIGATION
All obligations of the Purchaser under this Agreement are subject to the
fulfillment or satisfaction, at the times indicated herein, of each of the
following conditions precedent, unless, at the Purchaser's discretion, such
condition precedent is waived:
Section 10.1 The Seller's Representations and Warranties True as
of the Closing Date. The representations and warranties of the Seller
contained in this Agreement or in any schedule, certificate, exhibit or
document delivered by the Seller to the Purchaser pursuant to the provisions
hereof shall have been true in all material respects on the date hereof and
shall be true in all material respects on the Closing Date with the same
effect as though such representations and warranties were made as of such date.
Section 10.2 Compliance with this Agreement. The Seller shall have
performed and complied in all material respects with all agreements,
conditions and covenants required by this Agreement to be performed or complied
with by it prior to or at the Closing.
Section 10.3 Closing Certificate. The Purchaser shall have received a
certificate from the Seller dated the Closing Date, certifying that the
conditions specified in Article X hereof have been fulfilled.
Section 10.4 Opinions of Counsel for the Seller. Debevoise & Xxxxxxxx and
Xxxxxxx X. Xxxxxx, Esq., outside and internal counsel for the Seller,
respectively, shall have delivered to the Purchaser written opinions, dated
the Closing Date, in form and substance reasonably satisfactory to the
Purchaser and its counsel.
Section 10.5 No Threatened or Pending Litigation. On the Closing Date, no
material suit, action or other proceeding, or injunction or final judgment
relating thereto, shall be threatened or be pending before any court or
governmental or regulatory official, body or authority in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that is likely to result in any such material suit, action or
proceeding shall be pending or threatened.
Section 10.6 HSR Approval Prior to Closing. Prior to Closing, the waiting
period shall have expired (whether pursuant to early termination or passage of
time) following the filing of forms under the HSR Act.
Section 10.7 Employee Drivers. The Seller shall have at least 450 active
Employee drivers as of immediately prior to the Closing, all of whom shall be
employed in accordance with the Seller's current practices and standards.
Section 10.8 The Sellers' Deliveries. The Seller shall have delivered to the
Purchaser at or prior to the Closing the following, all of which shall be in
a form reasonably satisfactory to the Purchaser and its counsel:
(a) Such bills of sale, deeds and assignments, endorsements, and other
good and sufficient instruments and documents of conveyance and transfer,
in form reasonably satisfactory to Purchaser and its counsel, as shall be
necessary and effective to transfer and assign to, and vest the Assets in the
Purchaser in the manner provided for in this Agreement.
(b) All such documents as may be required to change the Seller's name to
another name not including "Xxxxx" or "Xxxxx Truck Line", including but not
limited to a name change amendment with the Secretary of State of Alabama.
(c) The Seller shall have executed a limited warranty deed, which passes fee
simple title to the Real Property, in proper form for recording in the
jurisdiction in which the Real Property is located.
(d) The Escrow Agreement shall have been executed and delivered by the
Seller, the Guarantor and the Escrow Agent.
Section 10.9 Vehicle Adjustment Amount. The Vehicle Adjustment Amount, if
any, shall have been definitively established in accordance with Section 3.1
(b) hereof.
Section 10.10 Environment Report. The Purchaser shall have received a
"Phase 1" environmental report with respect to each parcel of Real Property.
Section 10.11 Certain Revenues. The Seller shall certify to the Purchaser
that the customers and accounts referred to in Section 2.3(s) hereof did not
constitute more than 30% of the Seller's total revenues for the period from
January 1, 1998 through the end of the calendar month most recently completed
as of the Closing Date, and such certificate shall be reasonably acceptable in
form and substance to the Purchaser.
ARTICLE XI
CONDITIONS PRECEDENT TO THE CLOSING;
THE SELLER'S OBLIGATION
All obligations of the Seller under this Agreement are subject to the
fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent:
Section 11.1 The Purchaser's Representations and Warranties True
as of the Closing Date. The representations and warranties of the Purchaser
contained in this Agreement or in any list, certificate or document delivered
by the Purchaser to the Seller pursuant to the provisions hereof shall be true
in all material respects on the date hereof and shall be true on the Closing
Date in all material respects with the same effect as though such
representations and warranties were made as of such date.
Section 11.2 Compliance with this Agreement. The Purchaser shall have
performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with prior to
or at the Closing.
Section 11.3 Closing Certificate. The Seller shall have received a
certificate from the Purchaser dated the Closing Date, certifying in such
detail as the Seller may reasonably request that the conditions specified in
Sections 11.1 and 11.2 hereof have been fulfilled.
Section 11.4 No Threatened or Pending Litigation. On the Closing Date, no
material suit, action, or other proceeding, or injunction or final judgment
relating thereto, shall be threatened or be pending before any court or
governmental or regulatory official, body or authority in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that is likely to result in any such material suit, action or
proceeding shall be pending or threatened.
Section 11.5 HSR Approval Prior to Closing. Prior to Closing, the waiting
period shall have expired (whether pursuant to early termination or passage of
time) following the filing of forms under the HSR Act.
Section 11.6 Escrow Agreement. The Escrow Agreement shall have been
executed and delivered by the Purchaser and the Escrow Agent.
Section 11.7 Vehicle Adjustment Amount. The Vehicle Adjustment Amount,
if any, shall have been definitively established in accordance with Section
3.1(b) hereof.
ARTICLE XII
INDEMNIFICATION
Section 12.1 General Indemnification Obligation of the Seller. With
respect to claims brought from and after the Closing, the Seller hereby agrees
to defend, indemnify and hold harmless the Purchaser and its successors and
assigns (a "Purchaser Party") against and in respect of:
(a) any and all Damages incurred or suffered by any Purchaser Party that
result from, relate to or arise out of:
(xii) any and all Liabilities and obligations of the Seller of any nature
whatsoever, except for those Liabilities and obligations of the Seller which
the Purchaser specifically assumes pursuant to Section 3.5(a) of this Agreement
or which arise out of or relate to the Purchaser's ownership of the Assets or
operation of the Business from and after the Closing
(xiii) any breach of warranty or nonfulfillment of any agreement or covenant
on the part of the Seller under this Agreement, or in any certificate or
schedule furnished to the Purchaser pursuant hereto, provided that the Seller
shall not be required to indemnify the Purchaser with respect to any
representations and warranties that terminate as of the Closing or with
respect to any claims made with respect to any other representation or warranty
after the date such representation or warranty terminates in accordance with
Article VII hereof and provided, further, that the Seller shall not be required
to indemnify the Purchaser for claims made under clause (ii) above in an
aggregate amount that exceeds the Purchase Price; and
(b) any and all actions, suits, claims, proceedings, investigations, demands,
assessments, audits, fines, judgments, costs and other expenses (including,
without limitation, reasonable legal fees and expenses) incident to any of the
foregoing or to the enforcement of this Section 12.1
Section 12.2 General Indemnification Obligation of the Purchaser. With
respect to claims arising from and after the Closing, the Purchaser hereby
agrees to defend, indemnify and hold harmless the Seller, the Guarantor and
their respective successor and assigns (a "Seller Party") against and in
respect of:
(a) any and all Damages incurred or suffered by any Seller Party that result
from, relate to or arise out of:
(xiv) any liabilities from any misrepresentation or breach of any warranty,
covenant or agreement of the Purchaser contained in or made pursuant to this
Agreement or in any schedule or certificate delivered by the Purchaser pursuant
to this Agreement provided that the Purchaser shall not be required to
indemnify the Seller with respect to any representations and warranties that
terminate as of the Closing or with respect to any claims made with respect to
any other representation or warranty after the date such representation or
warranty terminates in accordance with Article VII hereof and provided,
further, that the Purchaser shall not be required to indemnify the Seller for
claims made under this clause (i) in an aggregate amount that exceeds the
Purchase Price;
(xv) any Assumed Liability; or
(xvi) other than any Unassumed Liability, the ownership of the Assets or the
operation of the Business from and after the Closing; and
(b) any and all actions, suits, claims, proceedings, investigations, demands,
assessments, audits, fines, judgments, costs and other expenses (including,
without limitation, reasonable legal fees and expenses) incident to any of the
foregoing or to the enforcement of this Section 12.1
Section 12.3 Defense of Claims. If any Purchaser Party or Seller Party
seeks indemnity pursuant to this Article XII, it shall give notice to the other
parties briefly describing the claim and providing a good faith estimate of the
amount of the claim if it is successful. Within 10 days of the date notice is
given, the potential indemnifying party shall notify the potential indemnified
party in writing that the potential indemnifying party either (a) acknowledges
its liability for defense and indemnity; (b) denies all liability for either
indemnity or defense; or (c)
denies liability for indemnity but is willing to provide a defense to the
potential indemnified party. If the potential indemnifying party fails to so
notify the potential indemnified party within such ten (10) day period, the
potential indemnifying party shall have been deemed to accept liability for
defense and indemnity for the claim. Defense of the claim shall be provided
by counsel selected by the potential indemnified party, in the reasonable
exercise of its discretion, unless the potential indemnifying party
acknowledges full liability for indemnity and defense, in which case it shall
select counsel in the reasonable exercise of its discretion.
Section 12.4 Compliance with Bulk Sales Laws. The Purchaser and the Seller
acknowledge that the Seller's principal business is not the sale of inventory
from stock, and hereby waive compliance with the bulk sales law and any other
similar laws in any applicable jurisdiction in respect of the transactions
contemplated by this Agreement. The Seller hereby defends, indemnifies and
holds the Purchaser harmless from and against, any claims, liabilities,
damages, costs and expenses resulting from or arising out of (i) the parties'
failure to comply with any of such laws in respect of the transactions
contemplated by this Agreement, or (ii) any action brought or levy made as a
result thereof, other than those liabilities which have been expressly assumed
by the Purchaser pursuant to Section 3.5(a) of this Agreement.
Section 12.5 Other Rights and Remedies Not Affected. The indemnification
rights of the Purchaser under this Article XII and the other indemnification
provisions hereunder are the exclusive remedies of the parties with respect to
any and all matters arising out of or relating to this Agreement and the
transactions provided for hereunder, except with respect to the matters set
forth in Section 13.12 hereof.
ARTICLE XIII
POST-CLOSING MATTERS
Section 13.1 Employee Benefits. Except as expressly provided for herein,
the Seller shall provide for payment to each employee of the Seller concerning
all benefits (including the arrangements, plans and programs set forth in
Section 5.18) which have been accrued on behalf of that employee (or is
attributable to expenses properly incurred by that employee) as of the Closing
Date, and the Purchaser shall assume no liability therefor. Except for the
Purchase price adjustment set forth in Section 3.3(a) (viii) hereof, no portion
of the assets of, or reserves in respect of, any plan, fund, program or
arrangement, written or unwritten, heretofore sponsored or maintained by the
Seller (and no amount attributed to any such plan, fund, program or
arrangement) shall be transferred to the Purchaser; and the Purchaser shall not
be required to continue any such plan, fund, program or arrangement after the
Closing Date. The amounts payable on account of all benefit arrangements shall
be determined with reference to the date of the event by reason of which such
amounts become payable, without regard to conditions subsequent, and the
Purchaser shall not be liable for any claim for insurance, reimbursement or
other benefits payable by reason of any event which occurs
prior to the Closing Date. Notwithstanding the foregoing, the Purchaser shall
be liable for all accrued but unpaid vacation days reserved for on the Schedule
of Closing Date Asset Values and any liability arising from (x) any severance
benefits payable to any Employee by reason of the failure of the Purchaser to
offer employment to a sufficient number of Employees pursuant to the provisions
of Section 13.2 hereof to avoid any obligations under the WARN Act or (y) any
action taken or omitted by the Purchaser on or after the Closing Date,
including without limitation, any failure of the Purchaser to comply with the
provisions of the WARN Act.
Section 13.2 Employees. The Purchaser shall offer employment to a
sufficient number of Employers to avoid any obligations under the WARN
Act and to all of the Seller's Employee drivers. All such offers of
employment shall be at a rate of compensation which is substantially equivalent
to the compensation paid by the Seller to such Employee immediately
prior to the Closing Date and, in the case of the Seller's Employee drivers, at
a rate of compensation which is at least equal to the compensation paid by the
Seller to such drivers immediately prior to the Closing Date. In addition, the
Purchaser shall provide any such Employee driver who accepts its offer of
employment (an "Accepting Employee") employee benefits which are at least
substantially equivalent to the benefits that the Seller provides such drivers
as of immediately prior to the Closing Date. Seller agrees to use its
reasonable commercial efforts to encourage the Employees to accept employment
with the Purchaser. Subject to compliance with applicable law, the Seller
shall provide the Purchaser with such information as the Purchaser shall
reasonably request with respect to any Accepting Employee, including, without
limitation, copies of personnel files and other records. In addition, prior to
the Closing, the Seller shall provide the Purchaser with the Driver
Qualification files of all of its employee drivers as of the most recent
practicable date.
Section 13.3 Third Party. No part of this Agreement shall create any
Third Party beneficiary rights in any Employee (including any beneficiary
or dependent thereof) in respect of continued employment (or resumed
employment) for any specified period of any nature or kind whatsoever, and no
provision of this Agreement shall create such Third Party beneficiary rights
in any such persons in respect of any benefits that may be provided, directly
or indirectly, under any employee benefit plan or arrangement.
Section 13.4 Maintenance of Books and Records. (a) The Seller shall
preserve all records possessed by it relating to any of the Assets, Liabilities
or the Business, until the earlier of (i) the tenth anniversary of the Closing
Date or (ii) 90 days after notice to the Purchaser that the Seller intends to
destroy the records, in which case the Purchaser shall have 30 days to elect to
receive the records and the Seller will deliver the records as requested by or
at the expense of the Purchaser. Each of the Seller and the Purchaser will
provide the other (the "Other Party") with access, upon prior reasonable
written request specifying the need therefor (which must also be reasonable and
not expose either party to undue competitive risk), during regular business
hours, to (i) its officers and employees and (ii) its books of account and
records and the Other Party and its representatives shall have the right to
make copies of such books and records; provided, however, that the foregoing
right of access shall not be exercisable in such a manner as to interfere
unreasonably with the normal operations and business of the Seller or the
Purchaser, as the case may be; and further, provided, that, as to any such
information that constitutes trade secrets or confidential business information
(and not part of the Assets), the Other Party and its officers, directors and
representatives shall be subject to the terms of a confidentiality agreement
in form and substance reasonably satisfactory to the Purchaser. Without
limiting the generality of the foregoing, until the 60th day after the Closing
Date, the Purchaser shall make available to the Seller and its representatives,
at no charge, all such personnel and other employees as is reasonably necessary
to enable the Seller to close its accounting books and prepare any tax returns
relating to its ownership and operation of the Assets and the Business. In
addition, for the 60-day period following the Closing Date, the Seller will
make available to the Purchaser (at no cost) the services of Mr. Xxxxx Xxxxxx
for any reasonable request made by the Purchaser relating to transitional
issues associated with its ownership and operation of the Assets.
Section 13.5 Payments Received. The Seller and the Purchaser each
agree that after the Closing they will hold and will promptly transfer and
deliver to the other, from time to time as and when received by them, any cash,
checks with appropriate endorsements (using their best efforts not to convert
such checks into cash), or other property that they may receive on or after the
Closing which properly belongs to the other party, including without limitation
any insurance proceeds, and will account to the other for all such receipts.
From and after the Closing, the Purchaser shall have the right and authority to
endorse, without recourse, the name of the Seller on any check or any other
evidences of indebtedness received by the Purchaser on account the Assets
transferred to the Purchaser hereunder.
Section 13.6 Use of Name. To the extent that the name, xxxx or logo
"Landstar" (the "Xxxx") appears on any of the Vehicles (the "Marked Vehicles")
as of the Closing Date, the Purchaser may continue to use such Marked Vehicles
for a period not to exceed 2 years after the Closing Date, in the case of all
vehicles constituting trailers (the "Trailer Transitional Period"), and not to
exceed March 31, 1999, in the case of all Vehicles constituting tractors (the
"Tractor Transitional Period"; and, together with the Trailer Transitional
Period, the "Transitional Periods"); provided, however, that (a) the Purchaser
shall either remove such Xxxx at the Purchaser's cost from such Marked Vehicles
prior to the end of the Transitional Period applicable to such Vehicle or cease
to use such Marked Vehicle prior to the end of such Transitional Period, (b)
the Purchaser shall not place such Xxxx on any Vehicles after the Closing Date,
and (c) the Purchaser shall not use such Xxxx, or any name, xxxx or logo
similar thereto or any variant thereof, in any manner after the Closing Date,
other than as specifically permitted herein. The Purchaser shall indemnify the
Seller and the Guarantor and hold the Seller and the Guarantor harmless from
and against any liabilities, obligations, losses or damages arising from the
use of such Marked Vehicles or any unauthorized use of the Xxxx after the
Closing Date and shall provide the Seller with periodic reports on a reasonable
basis as to its compliance with the provisions of this Section 13.6.
Section 13.7 UCC Matters. From and after the Closing Date, the Seller
will promptly refer all inquiries with respect to ownership of the Assets to
the Purchaser. In addition, the Seller will execute such documents and
financing statements as the Purchaser may request from time to time to evidence
transfer of the Assets to the Purchaser, including any necessary assignments of
financing statements.
Section 13.8 Further Assurances. The Seller from time to time after the
Closing, at the Purchaser's request, will execute, acknowledge and deliver to
the Purchaser such other instruments and will take such other actions and
execute and deliver such other documents, certifications and further assurances
as the Purchaser may reasonably require to vest more effectively in the
Purchaser, or to put the Purchaser more fully in possession of, any of the
Assets, or any of the liabilities or obligations assumed by the Purchaser.
Each of the parties hereto will cooperate with the other and execute and
deliver to the other parties hereto such other instruments and documents and
take such other actions as may be reasonably requested from time to time by
any other party hereto as necessary to carry out, evidence and confirm the
intended purposes of this Agreement.
Section 13.9 Cooperation for Certain Tax Related Matters. The Purchaser
and the Seller shall, and shall cause their respective Affiliates to, provide
any requesting party that is a party to this Agreement with such assistance and
documents, without charge, as may be reasonably requested by such party in
connection with (i) the preparation of any Tax Return of or relating to the
Seller, (ii) the conduct of any audit or other proceeding relating to liability
for or refunds or adjustments with respect to Taxes, and (iii) any other Tax
related matter that is a subject of this Agreement. Such cooperation and
assistance shall be provided to the requesting party promptly upon its request.
Section 13.10 Transfer Taxes. Notwithstanding any other provision of
this Agreement to the contrary, the Seller shall be liable for 100% of all
transfer (including real property transfer and documentary), sales, use, gains,
(including state and local transfer gains taxes), excise and other transfer or
similar Taxes incurred in connection with the transfer of the Business or the
Assets to the Purchaser other than any Taxes based upon or measured by net
income (collectively, "Transfer Taxes"). The Purchaser and the Seller shall
mutually cooperate in perfecting any exemption from Transfer Taxes available in
connection with the transactions contemplated by this Agreement and in timely
preparing and filing any Tax Returns required in connection with Transfer
Taxes, provided, however, that in the case of any Tax Return required to be
filed by only one party, such party shall not file such Tax Return without the
written consent of the other party, which consent shall not unreasonably be
withheld.
Section 13.11 Power of Attorney. Effective on the Closing Date, the
Seller hereby constitutes and appoints the Purchaser the true and lawful
attorney of such Seller, with power of substitution, in the name of such
Seller or the Purchaser, but on behalf of and for the benefit of the Purchaser:
to demand and receive from time to time any and all of the Assets and to make
endorsements and give receipts and releases for and in respect of the same and
any part thereof, to institute, prosecute, compromise and settle any and all
actions or proceedings against Third Parties that the Purchaser may deem proper
in order to collect, assert or enforce any claim, right or title of any kind in
or to the Assets; to defend or compromise any and all actions or proceedings
against Third Parties in respect of the Assets; and to do all such acts and
things necessary to fulfill the transactions contemplated under this Agreement.
The Seller acknowledges that the appointment hereby made and the powers hereby
granted are coupled with an interest and are not and shall not be revocable by
it in any manner or for any reason. The Purchaser shall indemnify and hold
harmless each Seller from any and all losses caused by or arising out of any
breach of Law by The Purchaser in its exercise of such power of attorney.
Section 13.12 Covenants Not to Employ or Solicit. (a) Each of the Seller
and the Guarantor agrees that it shall not, directly or indirectly, at any time
within the one-year period immediately following the Closing employ, or solicit
or offer to employ, any Employee of the Business to whom the Purchaser offers
employment, except that such covenant shall not in any way apply to Mr. Xxx
Xxxxxx. In addition, each of the Seller and the Guarantor agrees that it shall
not, and shall not permit its wholly-owned subsidiaries to, directly or
indirectly, at any time within the 90-day period immediately following the
Closing, continue, or enter into an owner-operator or like agreement, or
solicit the same, with respect to any owner operator listed on Schedule
8.11 hereto. The Purchaser agrees that it shall not at any time within the
one-year period immediately following the Closing, enter into any agency or
like agreement, or solicit the agency or like services, of any agent listed on
Schedule 13.12 hereto; it being understood and agreed that this covenant shall
not in any way apply to any of the customers and accounts referred to in
Section 2.3(s) hereof.
(b) For a period of 120 days immediately subsequent to the Closing Date,
the Guarantor shall use its reasonable efforts to cause any loads or other
freight traffic generated by any of the agents listed on Schedule 13.12 hereto
in respect of any customer who produced any receivables for the Seller within
the six month period prior to the Closing Date to be offered to the Purchaser
pursuant to a standard brokerage carrier's agreement, between the applicable
Landstar carrier and the Purchaser, in which 93% of the payments received
from the applicable customer will be for the benefit of the Purchaser and
the remaining 7% will be for the benefit of the applicable Landstar carrier.
Upon the receipt of any such offer, the Purchaser shall either accept or
decline such offer in a timely fashion, in light of all the applicable facts
and circumstances.
(c) Each of the Seller, the Guarantor and the Purchaser acknowledge that the
covenants contained in this Section 13.12 were a material and necessary
inducement for the parties to agree to the transactions contemplated hereby,
and that each of the Seller and the Guarantor, on the one hand, and the
Purchaser, on the other, realized significant monetary benefit from these
transactions, that violation of any of the covenants contained in this Section
13.12 will cause irreparable and continuing damage to the party for whom such
covenant is made and that such party for whom such covenant is made shall be
entitled to injunctive or other equitable relief from any court of competent
jurisdiction restraining any further violation of such covenants and that
such injunctive relief shall be cumulative and in addition to any other rights
or remedies to which such party may be entitled.
Section 13.13 Federal Highway Use Tax. Each of the Seller and the
Purchaser acknowledge that all Vehicles constituting tractors are subject to a
Federal Highway Use Tax for the 12 month period commencing July 1, 1998, that
the parties intend for such tax to be paid when due and payable, and that the
parties will be responsible for all such taxes on a pro rata basis based on the
portions of such 12 month period elapsing before and after the Closing Date.
Accordingly, each of the Seller and the Purchaser agree that such Federal
Highway Use Tax shall be paid by the Seller, in the event such tax is due and
payable before the Closing Date, and
by the Purchaser, in the event such tax is due and payable on or after the
Closing Date, and that in either case, the non-paying party shall promptly pay
the paying party an amount equal to the amount of such tax times a fraction,
the numerator of which, in the case such non-paying party is the Seller, is
the number of days elapsed from July 1, 1998 to and through the day before the
Closing Date and, in the case such non-paying party is the Purchaser, the
number of days from and after the Closing Date through and including June 30,
1999, and the denominator of which, in both cases, is 365.
Section 13.14 Removal of Fuel Tank. Prior to or promptly subsequent to
the Closing, the Seller shall cause the work associated with the removal of
the underground storage tank described in Schedule 5.19(a)(vii) hereto to be
completed.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Brokers' and Finders' Fees. (a) For the Seller. The Seller
represents and warrants to the Purchaser that all negotiations relative to this
Agreement have been carried on by it directly without the intervention of any
person, who may be entitled to any brokerage or finder's fee or other
commission in respect of this Agreement or the consummation of the transactions
contemplated hereby, and the Seller agrees to indemnify and hold harmless the
Purchaser against any and all claims, losses, liabilities and expenses which
may be asserted against or incurred by it as a result of the Seller's dealings,
arrangements or agreements with any such person.
(b) For the Purchaser. The Purchaser represents and warrants that all
negotiations relative to this Agreement have been carried on by it directly
without the intervention of any person who may be entitled to any brokerage or
finder's fee or other commission in respect of this Agreement or the
consummation of the transactions contemplated hereby, and the Purchaser agrees
to indemnify and hold harmless the Seller against any and all claims, losses,
liabilities and expenses which may be asserted against or incurred by it as a
result of the Purchaser's dealings, arrangements or agreements with or any such
person
Section 14.2 Expenses. Except as otherwise provided in this Agreement and
hereunder, each party hereto shall pay its own expenses incidental to the
preparation of this Agreement, the carrying out of the provisions of this
Agreement and the consummation of the transactions contemplated hereby.
Section 14.3 Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto with respect to the transactions
contemplated hereby. It shall not be amended or modified except by written
instrument duly executed by each of the parties hereto. Any and all previous
agreements and understandings between or among the parties regarding the
subject matter hereof, whether written or oral, are superseded by this
Agreement.
Section 14.4 Assignment and Binding Effect. This Agreement may not be
assigned prior to the Closing by any party hereto without the prior written
consent of the other parties, except that at any time, the Purchaser may
assign and delegate its rights and obligations hereunder to one of its
wholly-owned direct or indirect subsidiaries, but no such assignment shall
relieve the Purchaser of any of its obligations hereunder. Subject to the
foregoing, all of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the successors and
assigns of the Seller and the Purchaser. Prior to execution by all parties,
this Agreement shall not be binding upon or enforceable by or against any
party, by estoppel or otherwise.
Section 14.5 Notices. Any notice or communication under this Agreement
shall be in writing and delivered (by hand, telecopy, telegraph, telex or
courier) or deposited in the United States mail (first class, registered or
certified), postage fully prepaid and addressed as stated below. Notice by
United States mail shall be deemed given on the third day after its deposit.
Notice by telecopy, telegraph or telex shall be deemed given on the day sent.
Notice by hand delivery or courier shall be deemed given on the first business
day when such delivery is first attempted. Either party may, from time to time,
specify as its address for purposes of this Agreement any other address upon
the giving of 10 days notice thereof to the other party in the manner required
by this paragraph. This paragraph shall not prevent the giving of written
notice in any other manner, but such notice shall be deemed effective only when
and as of its actual receipt at the proper address and by the proper addressee.
Section 14.6 Governing Law. This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of Wisconsin.
Section 14.7 No Benefit to Others. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit
of the parties hereto and, in the case of Article XII hereof, the other parties
certified to indemnity or defense, and their heirs, executors, administrators,
legal representatives, successors and assigns, and they shall not be construed
as conferring any rights on any other persons.
Section 14.8 Headings, Gender and Person. All section headings contained
in this Agreement are for convenience of reference only, do not form a part of
this Agreement and shall not affect in any way the meaning or interpretation of
this Agreement. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine, or neuter, as
the context requires. Any reference to a "person" herein shall include an
individual, firm, corporation, partnership, trust, governmental authority or
body, association, unincorporated organization or any other entity.
Section 14.9 Schedules and Exhibits. All Exhibits and Schedules referred
to herein are intended to be and hereby are specifically made a part of this
Agreement.
Section 14.10 Severability. Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If, however, any
condition precedent described in Article X is invalid or unenforceable, the
Purchaser shall nevertheless have the option of terminating this Agreement
under Article IV herein.
Section 14.11 Guarantee. The Seller and the Guarantor, jointly and
severally, each hereby unconditionally guarantees to the Purchaser and its
subsidiaries and other affiliates, successors and assigns, the full and timely
performance of all of the obligations, liabilities and agreements of the Seller
under this Agreement or any exhibit or Schedule made hereunder; it being
understood and agreed that such Guarantee is being furnished for good and
valuable consideration and will survive the Closing. The foregoing guarantee
shall include the guarantee of the payment of all damages, costs and expenses
which might become recoverable as a result of the nonperformance of any of the
obligations, representations or agreements so guaranteed or as a result of the
nonperformance of this guarantee. Any guaranteed person may, at its option,
proceed against the Guarantor or the Seller for the performance of any such
obligation or agreement, or for damages for default in the performance thereof,
without first proceeding against any other party or against any of its
properties. The Seller and the Guarantor further agree that their guarantee
shall be an irrevocable guarantee and shall continue in effect notwithstanding
any extension or modification of any guaranteed obligation, any assumption of
any such guaranteed obligation by any other party, or any other act or thing
which might otherwise operate as a legal or equitable discharge of a guarantor
and the Seller hereby waives all special suretyship defenses and notice
requirements.
Section 14.12 Jurisdiction. The Seller, the Guarantor and the Purchaser
consent to the jurisdiction and venue of the state and federal courts located
in Xxxxx County, Wisconsin and/or the Eastern District of Wisconsin with
respect to any legal action, in tort or contract, arising directly or
indirectly from this Agreement or the relationship created hereby. This
provision shall not bar enforcement of a provisional, extraordinary, in-rem or
post-judgment remedy in any court whose original jurisdiction is essential or
exclusive as to that remedy, despite the above consent to jurisdiction.
Section 14.13 Counterparts. This Agreement may be executed in any number
of counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
Section 14.14 Table of Contents. The table of contents and article and
section headings of this Agreement are for reference purposes only and are to
be given no effect in the construction or interpretation of this Agreement.
Section 14.15 Amendments and Waivers. This Agreement can be amended,
supplemented or modified, and any provision hereof may be waived, only by a
written instrument making a specific reference to this Agreement signed by each
of the parties hereto. No action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance
with any representation, warranty, covenant or agreement contained herein.
The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a further or continuing waiver of such
breach or as a waiver of any other or subsequent breach. Except as otherwise
expressly provided herein, no failure on the part of any party to exercise, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power
or remedy by such party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by Law.
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