Exhibit 2.2
AGREEMENT AND PLAN OF REORGANIZATION
BESTWAY TRUCKING, INC.
DATED: JULY 23, 1999
TABLE OF CONTENTS
1. DEFINITIONS............................................................1
2. PLAN OF REORGANIZATION.................................................3
2.1 THE MERGER.........................................................3
2.2 FRACTIONAL SHARES..................................................4
2.3 EFFECTS OF THE MERGER..............................................4
2.4 TAX-FREE REORGANIZATION............................................4
2.5 PURCHASE ACCOUNTING TREATMENT......................................5
2.6 WAIVER OF DISSENTERS RIGHTS........................................5
2.7 CLOSING............................................................5
2.8 CLOSING OBLIGATIONS................................................5
3. REPRESENTATIONS AND WARRANTIES OF SELLER...............................6
3.1 ORGANIZATION AND GOOD STANDING.....................................6
3.2 AUTHORITY; NO CONFLICT.............................................7
3.3 CAPITALIZATION.....................................................8
3.4 FINANCIAL STATEMENTS...............................................9
3.5 BOOKS AND RECORDS..................................................9
3.6 TITLE TO PROPERTIES; ENCUMBRANCES..................................9
3.7 CONDITION AND SUFFICIENCY OF ASSETS................................10
3.8 ACCOUNTS RECEIVABLE................................................10
3.9 NO UNDISCLOSED LIABILITIES.........................................10
3.10 TAXES..............................................................11
3.11 NO MATERIAL ADVERSE CHANGE.........................................11
3.12 EMPLOYEE BENEFITS..................................................12
3.13 COMPLIANCE.........................................................12
3.14 LITIGATION.........................................................12
3.15 ABSENCE OF CHANGES.................................................13
3.16 CONTRACTS; NO DEFAULTS.............................................14
3.17 INSURANCE..........................................................14
3.18 ENVIRONMENTAL MATTERS..............................................15
3.19 EMPLOYEES; INDEPENDENT CONTRACTORS.................................16
3.20 LABOR RELATIONS; COMPLIANCE........................................16
3.21 INTELLECTUAL PROPERTY..............................................17
3.22 RELATIONSHIPS WITH RELATED PERSONS.................................18
3.23 BROKERS OR FINDERS.................................................18
3.24 DISCLOSURE.........................................................18
3.25 INVESTMENT REPRESENTATION..........................................18
3.26 TAX REPRESENTATIONS................................................19
3.27 DISTRIBUTIONS......................................................19
3.28 RELATED TRANSACTIONS...............................................19
4. REPRESENTATIONS AND WARRANTIES OF TGI..................................19
4.1 ORGANIZATION AND GOOD STANDING.....................................19
4.2 AUTHORITY; NO CONFLICT.............................................19
4.3 CERTAIN PROCEEDINGS................................................20
4.4 SECURITIES COMPLIANCE..............................................20
4.5 TAX REPRESENTATIONS................................................20
5. COVENANTS..............................................................20
5.1 ACCESS AND INVESTIGATION...........................................20
5.2 OPERATION OF THE BUSINESSES OF THE COMPANY.........................20
5.3 NEGATIVE COVENANT..................................................21
5.4 NOTIFICATION.......................................................21
5.5 RELATED PARTY TRANSACTIONS.........................................21
5.6 NO NEGOTIATION.....................................................22
5.7 BEST EFFORTS.......................................................22
5.8 LEASE AGREEMENTS...................................................22
5.9 SATISFACTION OF PAYABLE OWED TO SELLER.............................22
5.10 ASSET PURCHASE.....................................................23
5.11 NAME CHANGE........................................................23
6. CONDITIONS PRECEDENT TO TGI'S OBLIGATION TO CLOSE......................23
6.1 ACCURACY OF REPRESENTATIONS........................................23
6.2 SELLER'S PERFORMANCE...............................................23
6.3 CONSENTS...........................................................23
6.4 ADDITIONAL DOCUMENTS...............................................23
6.5 NO PROCEEDINGS.....................................................24
6.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS................24
6.7 SATISFACTORY DUE DILIGENCE.........................................24
6.8 HSR WAITING PERIOD.................................................24
6.9 PURCHASE OF DLS LEASING, INC.......................................24
7. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE..................24
7.1 ACCURACY OF REPRESENTATIONS........................................24
7.2 TGI'S PERFORMANCE..................................................24
7.3 NO PROCEEDINGS.....................................................24
7.4 HSR WAITING PERIOD.................................................25
7.5 CONSENTS...........................................................25
7.6 PURCHASE OF DLS LEASING, INC.......................................25
7.7 RELEASE OF GUARANTEES..............................................25
8. TERMINATION............................................................25
8.1 TERMINATION EVENTS.................................................25
8.2 EFFECT OF TERMINATION..............................................26
9. INDEMNIFICATION; REMEDIES..............................................26
9.1 SURVIVAL...........................................................26
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER...................26
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY TGI......................27
9.4 ESCROW.............................................................28
9.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS..................28
9.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS........................29
9.7 TIME LIMITATIONS...................................................29
9.8 LIMITATION.........................................................29
10. GENERAL PROVISIONS.....................................................30
10.1 EXPENSES...........................................................30
10.2 PUBLIC ANNOUNCEMENTS...............................................30
10.3 NOTICES............................................................30
10.4 JURISDICTION; SERVICE OF PROCESS...................................31
10.5 FURTHER ASSURANCES.................................................31
10.6 WAIVER.............................................................31
10.7 ENTIRE AGREEMENT AND MODIFICATION..................................31
10.8 DISCLOSURE LETTER..................................................32
10.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.................32
10.10 SEVERABILITY.......................................................32
10.11 SECTION HEADINGS, CONSTRUCTION.....................................32
10.12 TIME OF ESSENCE....................................................32
10.13 GOVERNING LAW......................................................32
10.14 COUNTERPARTS.......................................................33
Exhibits and Schedules
Exhibit A -- Articles of Merger
Exhibit B1 and "B2" -- Employment Agreements
----
Exhibit C1 and "C2" -- Noncompetition Agreements
----
Exhibit "D1" and "D2" -- Protective Covenants Agreement
------------ ----
Exhibit E -- Escrow Agreement
Exhibit F -- Subscription Agreement
Exhibit "G1" and "G2" -- Lease Agreement
------------ ----
Schedule 5.5 Affiliate Indebtedness
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is made as of
July 23, 1999, by and between Transit Group, Inc., a Florida corporation
("TGI"), Bestway Trucking, Inc., a Kentucky corporation (the "Company"), and
Xxxxx X. Xxxxxxx, a resident of the State of Indiana ("Seller"). TGI, the
Company and the Seller are sometimes referred to herein individually as a
"Party," and collectively as the "Parties."
RECITALS
A. The Parties intend that, subject to the terms and conditions set
forth herein, a new corporation will be organized as a wholly owned subsidiary
of Transit Group, Inc. ("Newco") and will be merged with and into the Company in
a reverse triangular merger (the "Merger"), with the Company to be the surviving
corporation of the Merger, all pursuant to the terms and conditions of this
Agreement, the Articles of Merger substantially in the form of Exhibit "A"
hereto (the "Articles of Merger") and applicable law.
B. Upon the effectiveness of the Merger, all the outstanding capital
stock of the Company will be converted into cash and capital stock of TGI, in
the manner and on the basis determined herein and as provided in the Articles of
Merger.
C. The Merger is intended to be treated as a "purchase" for accounting
purposes and a tax-free reorganization pursuant to the provisions of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"), by
virtue of the provisions of Section 368(a)(2)(E) of the Code.
D. As of the Closing, Seller will be the sole shareholder of the
Company.
AGREEMENT
For and in consideration of the above premises and the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Agreement" --this Agreement and Plan of Reorganization together with
all Schedules and Exhibits hereto.
"Balance Sheet"--as defined in Section 3.4.
"Closing"--as defined in Section 2.7.
"Closing Date"--the date and time as of which the Closing actually
takes place.
"Company"--collectively the Company identified in the Recitals to this
Agreement together with each Subsidiary.
"Company's Disclosure Letter"--the disclosure letter delivered by
Seller to TGI concurrently with the execution and delivery of this Agreement.
"Computer Devices"--as defined in Section 3.21(c).
"Contemplated Transactions"--all of the transactions contemplated by
this Agreement, including:
(d) the Merger of Newco and the Company;
(e) the execution, delivery, and performance of the Employment
Agreements, the Noncompetition Agreements, the Protective
Covenants Agreements, the Subscription Agreements and the
Escrow Agreement; and
(f) the performance by TGI, the Company and Seller of their
respective covenants and obligations under this Agreement.
"Damages"--as defined in Section 9.2.
"Effective Time"--the effective time of the Merger as defined in
Section 2.1.
"Employment Agreements"--as defined in Section 2.8(a)(iii).
"Environmental Law"--any law or regulation that materially requires or
relates to:
(f) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or
other prohibitions and of the commencements of activities,
such as resource extraction or construction, that could have
significant impact on the environment;
(g) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the
environment;
(h) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or
other potentially harmful substances;
(i) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or
prevention; or
(j) making responsible parties pay private parties, or groups of
them, for damages done to their health or the environment, or
permitting self-appointed representatives of the public
interest to recover for injuries done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974, as
amended, and regulations and rules issued pursuant to that act.
"Escrow Agreement" --as defined in Section 2.8(a)(vi).
"Facility" -- as defined in Section 3.18.
"GAAP"--generally accepted United States accounting principles, applied
on a basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4 were prepared.
"Hazardous Materials"--any waste or other substance that, as of the
date of this Agreement, is listed, defined, designated, or classified as
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any applicable Environmental Law, including petroleum and all
derivatives thereof or synthetic substitutes therefor and asbestos or
asbestos-containing materials.
"HSR Act"-- the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder.
"Merger"--as defined in the Recitals hereto.
"Noncompetition Agreements"--as defined in Section 2.8(a)(iv).
"Occupational Safety and Health Law"--any law or regulation designed to
provide safe and healthy working conditions and to reduce occupational safety
and health hazards, and any program whose direct purpose is to provide safe and
healthful working conditions.
"Securities Act"--the Securities Act of 1933, as amended, and the
regulations and rules issued pursuant to that act, as in effect on the date
hereof.
"Seller"--as defined in the first paragraph of this Agreement.
"Subsidiary" or "Subsidiaries"--means any company, entity, partnership
or joint venture in which the Company owns an equity or other ownership
interest.
"TGI Disclosure Letter"--the disclosure letter delivered by TGI to
Seller concurrently with the execution and delivery of this Agreement.
"Year 2000 Problem"--as defined in Section 3.21(c).
2. PLAN OF REORGANIZATION.
2.1 THE MERGER.
Subject to the terms and conditions of this Agreement, prior to the
Closing Date, TGI will incorporate and organize Newco and will cause the Board
of Directors and shareholders of Newco to approve the Merger and perform all of
the duties of Newco set forth in this Agreement. Subject to the terms and
conditions of this Agreement, the Articles of Merger will be filed with the
Secretary of State of the State of Kentucky on the Closing Date. The date and
time that the Articles of Merger are filed with the Kentucky Secretary of State
and the Merger thereby becomes effective will be referred to in this Agreement
as the "Effective Time." Subject to the terms and conditions of this Agreement
and the Articles of Merger, Newco will be merged with and into the Company in a
statutory merger pursuant to the Articles of Merger and in accordance with
applicable provisions of Kentucky law as follows:
(a) Conversion of Company Common Stock. Each share of common stock of the
Company, no par value ------------------------------------- per share (the
"Company Common Stock"), that is issued and outstanding immediately prior to the
---------------------- Effective Time, will, by virtue of the Merger and at the
Effective Time and without further action on the part of any holder thereof, be
converted into the right to receive complete shares of fully paid and
nonassessable common stock of TGI, $.01 par value per share ("TGI Common
Stock"). The total number of ----------------- shares of TGI Common Stock into
which the Seller's shares of Company Common Stock will be converted is 1,542,501
shares, calculated by offsetting the amounts set forth on Schedule 5.5
($489,292) against the $8,250,000 aggregate stock value for a total of
$7,760,708 divided by the per share price on the date of the letter of intent
between the Parties of $5.03125.
(b) Conversion of Newco Shares. Each share of Newco Common Stock, par value
$0.01 ("Newco Common Stock"), that is issued and outstanding immediately prior
to the Effective Time, will, by virtue of the Merger and without further action
on the part of the sole shareholder of Newco, be converted into and become one
share of common stock of the Company as the surviving corporation, which shall
be the only shares of Company Common Stock issued and outstanding immediately
after the Effective Time.
2.2 FRACTIONAL SHARES.
De minimus rounding adjustments may be made to the relative amounts
of stock consideration to avoid the issuance of fractional shares of TGI Common
Stock.
2.3 EFFECTS OF THE MERGER.
At the Effective Time: (a) the separate existence of Newco will
cease, Newco will be merged with and into the Company, and the Company will be
the surviving corporation pursuant to the terms of the Articles of Merger; (b)
the Articles of Incorporation and Bylaws of Newco will be the Articles of
Incorporation and Bylaws of the surviving corporation; (c) the Articles of
Incorporation will be amended to reflect the name of the Company, as the
surviving corporation; (d) the directors of Newco in effect at the Effective
Time will be the directors of the Company as the surviving corporation, and the
officers of Newco will be the officers of the Company as the surviving
corporation; (e) each share of Company Common Stock outstanding immediately
prior to the Effective Time will be converted as provided in Section 2.1(a); (f)
each share of Newco Common Stock outstanding immediately prior to the Effective
Time will be converted as provided in Section 2.1(b) and (g) the Merger will, at
and after the Effective Time, have all of the effects provided by applicable
law.
2.4 TAX-FREE REORGANIZATION.
The Parties intend to adopt this Agreement as a tax-free plan of
reorganization and to consummate the Merger in accordance with the provisions of
Section 368(a)(1)(A) of the Code. The Parties believe that the value of the TGI
Common Stock to be received by the Seller in the Merger is equal to the value of
the Company Common Stock to be surrendered in exchange therefor. The TGI Common
Stock issued in the Merger will be issued solely in exchange for the Company
Common Stock, and no other transaction other than the Merger represents,
provides for or is intended to be an adjustment to, the consideration paid for
the Company Common Stock. Seller acknowledges that he has received his own
independent tax advice and counsel with respect to the Merger and the
transactions contemplated herein and is not relying on representations made by
TGI or its counsel, accountants or advisors with respect thereto.
2.5 PURCHASE ACCOUNTING TREATMENT.
The Parties intend that the Merger be treated as a "purchase" for
accounting purposes.
2.6 WAIVER OF DISSENTERS RIGHTS.
The Seller hereby waives any and all rights such shareholder has to
dissent from the Merger under Kentucky law.
2.7 CLOSING.
The consummation of the Merger provided for in this Agreement (the
"Closing") will take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx,
PLLC, Suite 3500, One Atlantic Center, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx 00000, at 10:00 a.m. (local time) on the later of (i) July 31, 1999, and
(ii) the fifth (5th) business day following the satisfaction of the conditions
set forth in Sections 6.3, 7.5 and 7.7, or (iii) at such time and place as the
Parties may agree.
2.8 CLOSING OBLIGATIONS.
At the Closing:
(a) Seller will deliver to TGI:
(i) certificates representing his shares of Company Common Stock,
duly endorsed for transfer (or accompanied by duly executed
stock powers), with signatures guaranteed by a commercial
bank;
(ii) releases and resignations from the officers and directors of the Company
and each Subsidiary duly executed by such parties; (iii) employment agreements
in the form of Exhibit "B1" and "B2", executed by each of the Seller and Xxxxx
Xxxxxxx, respectively, (the "Employment Agreement"); (iv) noncompetition
agreements in the form of Exhibit "C1" and "C2", executed by each of the Seller
and Xxxxx Xxxxxxx, respectively (the "Noncompetition Agreement"); (v) a
protective covenants agreement in the form of Exhibit "D1" and "D2", executed by
each of Xxxx Xxxxxxxxx and Xxxxxxx Xxxxxxxxxx, respectively (the "Protective
Covenants Agreement");
(vi) an escrow agreement in the form of Exhibit "E", executed by the Seller (the
"Escrow ------------ ------ Agreement"); ---------
(vii) a subscription agreement executed by the Seller for the shares of TGI
Common Stock to be received by the Seller in the Merger in the form attached
hereto as Exhibit "F"; and (viii) a certificate executed by Seller certifying to
TGI that the Seller's representations and warranties in this Agreement were
accurate in all respects as of the date of this Agreement and as of the Closing
Date. (b) TGI will deliver to Seller:
(i) share certificates representing the TGI Common Stock, issued
in the name of the Seller in the amount indicated in Section
2.1(a) to be delivered as promptly as practicable after the
Closing;
(ii) a certificate executed by TGI to the effect that TGI's representations and
warranties in this Agreement were accurate in all respects as of the date of
this Agreement and as of the Closing Date; (iii) Noncompetition Agreements
executed by TGI with each of the Seller and Xxxxx Xxxxxxx; (iv) an Escrow
Agreement executed by TGI. (c) The Company will deliver to Seller:
(i) Employment Agreements executed by the Company with each of the Seller and
Xxxxx Xxxxxxx;
(ii) Protective Covenants Agreements executed by TGI with each of Xxxx Xxxxxxxxx
and Xxxxxxx Xxxxxxxxxx; and
(iii) a Lease Agreement for the Company's Jeffersonville, Indiana, and
Nashville, Tennessee, facilities substantially in the form attached hereto as
Exhibit "G1" and "G2", respectively.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to TGI as follows:
3.1 ORGANIZATION AND GOOD STANDING.
(a) Part 3.1 of the Company's Disclosure Letter contains a statement of the
Company's and each Subsidiary's jurisdiction of incorporation, a list of all
other jurisdictions in which it is authorized to do business, and its
capitalization (including the identity of each stockholder and the number of
shares held by each). The Company and each Subsidiary is duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under its contracts.
The Company and each Subsidiary is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification, except for those jurisdictions where the failure to be so
qualified will not have a material adverse effect on the Company or require
material expense to qualify due to failure of the Company to previously do so.
(b) Seller has delivered to TGI copies of the Articles of Incorporation and
Bylaws of the Company and each Subsidiary, as currently in effect.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding obligation of
Seller and the Company enforceable against them in accordance with its terms.
Upon the execution and delivery by Seller of the Employment Agreement, the
Escrow Agreement, the Subscription Agreement, and the Noncompetition Agreement
(collectively, the "Seller's Closing Documents"), the Seller's Closing Documents
will constitute the ---------------------------- legal, valid, and binding
obligations of Seller, enforceable against him in accordance with their
respective terms. Each of the Seller and the Company has the absolute and
unrestricted right, power, authority and capacity to execute and deliver this
Agreement and the Seller's Closing Documents and to perform their respective
obligations under this Agreement and the Seller's Closing Documents, subject
only to payment in full of the Company's Promissory Notes to Xxxxxxx
Xxxxxxxxxxxx in the principal amount of $315,295.75 as of July 1, 1999 (the
"Xxxxxxxxxxxx Indebtedness") which the Company has the
-------------------------- absolute right to do prior to Closing.
(b) Except as set forth in Part 3.2 of the Company's Disclosure Letter, neither
the execution and delivery of this Agreement nor the consummation or performance
of any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time): (i) contravene, conflict with, or result in a
violation of (A) any provision of the Articles of Incorporation or Bylaws of the
Company or any Subsidiary; or (B) any resolution adopted by the board of
directors or the stockholders of the Company or any Subsidiary; or (C) any of
the terms or requirements of, or give any governmental body the right to revoke,
withdraw, suspend, cancel, terminate, or modify, any permit or authorization
that is held by the Company or any Subsidiary or that otherwise relates to the
business of, or any of the assets owned or used by, the Company or any
Subsidiary; or (D) any provision of, or give any person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify any contract to which the
Company or any Subsidiary is bound; or
(ii) result in the imposition or creation of any lien, claim or encumbrance upon
or with respect to any of the assets owned or used by the Company or any
Subsidiary.
(c) Except as set forth in Part 3.2 of the Company's Disclosure Letter, neither
Seller, the Company nor any Subsidiary is or will be required to give any notice
to or obtain any consent from any person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
3.3 CAPITALIZATION.
(a) The authorized equity securities of the Company consist of 1,500 shares of
common stock, no par value per share, of which 750 shares are issued and
outstanding (the "Shares"). The current stock ------ ownership of the Company is
set forth on Part 3.3 of the Company's Disclosure Letter. Seller is and will be
on the Closing Date the sole record and beneficial owner and holder of 750
shares of common stock of the Company, representing all of the issued and
outstanding shares on such date, free and clear of all liens, claims or
encumbrances, and the Shares were acquired by Seller free of any preemptive
rights or rights of first refusal. With the exception of the Shares (which are
owned by Seller), on the Closing Date there are and will be no other outstanding
equity securities or other securities of the Company. No legend or other
reference to any purported encumbrance appears upon any certificate representing
equity securities of the Company, including, without limitation, any options
warrants, convertible securities or other rights or agreements to acquire any
securities of the Company. All of the outstanding equity securities of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. As of the Closing Date, there will be no contracts relating to
the issuance, sale or transfer of any equity securities or other securities of
the Company, and any such agreements in effect on the date hereof are set forth
on Part 3.3 of the Company's Disclosure Letter. None of the outstanding equity
securities or other securities of the Company was issued in violation of the
Securities Act or any other law or regulation. Except as set forth in Part 3.3
of the Company's Disclosure Letter, the Company does not own, nor does it have
any contract to acquire, any equity securities or other securities of any person
(other than the Company) or any direct or indirect equity or ownership interest
in any other business.
(b) The authorized equity securities of each Subsidiary and the number of shares
of such Subsidiary that are outstanding are set forth on Part 3.3 of the
Company's Disclosure Letter. The Company is and will be on the Closing Date the
record and beneficial owner and holder of all of the issued and outstanding
stock of each Subsidiary, free and clear of all liens, claims or encumbrances.
With the exception of the shares owned by the Company, there are no other
outstanding equity securities or other securities of any Subsidiary. No legend
or other reference to any purported encumbrance appears upon any certificate
representing equity securities of a Subsidiary, including, without limitation,
any options, warrants, convertible securities or other rights or agreements to
acquire any securities of the Subsidiary. All of the outstanding equity
securities of each Subsidiary have been duly authorized and validly issued and
are fully paid and nonassessable. There are no contracts relating to the
issuance, sale, or transfer of any equity securities or other securities of any
Subsidiary. None of the outstanding equity securities or other securities of any
Subsidiary was issued in violation of the Securities Act or any other law or
regulation. No Subsidiary owns, nor does it have any contract to acquire, any
equity securities or other securities of any person or any direct or indirect
equity or ownership interest in any other business.
3.4 FINANCIAL STATEMENTS.
Seller has delivered to TGI: (a) audited balance sheets of the
Company and its Subsidiaries as at their fiscal year end for the year 1998, and
the related audited statements of income, changes in stockholders' equity, and
cash flow for the fiscal year then ended, and (b) unaudited balance sheets of
the Company and its Subsidiaries as at their fiscal year end for the years 1995,
1996 and 1997, and the related unaudited statements of income, changes in
stockholders' equity, and cash flow for the fiscal years then ended, and (c) the
unaudited balance sheet of the Company and its Subsidiaries as of June 30, 1999
(the "Balance Sheet") and income statements for the six (6) month period then
ended. Such financial statements and the notes thereto fairly present in all
material respects the financial condition and the results of operations, changes
in stockholders' equity and cash flow of the Company and its Subsidiaries as at
the respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP (except with respect to unaudited
statements as indicated in the notes thereto and as set forth on Part 3.4 of the
Company's Disclosure Letter), consistently applied throughout the periods 1992
through and including 1996, with changes in accounting methods for depreciation
in fiscal 1997 and salvage value in fiscal 1998 as indicated in the notes
thereto, and subject, in the case of the interim statements, to normal year-end
adjustments.
3.5 BOOKS AND RECORDS.
The books of account, minute books, stock record books and other
records of the Company and each Subsidiary, all of which have been made
available to TGI, are complete and correct and have been maintained in all
material respects in accordance with applicable law. The minute books of the
Company and each Subsidiary contain accurate and complete records of all
meetings of, and corporate actions taken by, the stockholders, the Boards of
Directors and committees of the Boards of Directors of the Company and each
Subsidiary, and no formal meeting of any such stockholders, Board of Directors
or committee has been held for which minutes have not been prepared and are not
contained in such minute books.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES.
Part 3.6 of the Company's Disclosure Letter contains a complete and
accurate list of any and all material items of personal property owned by the
Company and each Subsidiary. Except for liens set forth on Part 3.6, or as
otherwise reflected on the Balance Sheet, the Company and each Subsidiary owns
good and marketable title to the properties and assets located in the facilities
owned or operated by the Company or any Subsidiary or reflected as owned in the
books and records of the Company or any Subsidiary, including all of the
properties and assets reflected in the Balance Sheet, and all of the properties
and assets purchased or otherwise acquired by the Company or any Subsidiary
since the date of the Balance Sheet. All material properties and assets
reflected in the Balance Sheet are owned free and clear of all liens, claims or
encumbrances and are not, in the case of real property, subject to any use
restrictions, exceptions, variances, reservations, or limitations of any nature
except, with respect to all such properties and assets, (a) mortgages or
security interests shown on the Balance Sheet as securing specified liabilities
or obligations, with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, and (b) zoning laws
and other land use restrictions that do not impair the present or anticipated
use of the property subject thereto. To the best of Seller's knowledge, all
buildings, plants, and structures owned or leased by the Company or any
Subsidiary lie wholly within the boundaries of the real property owned by the
Company or any Subsidiary or its lessor, and do not encroach upon the property
of, or otherwise conflict with the property rights of, any other person.
3.7 CONDITION AND SUFFICIENCY OF ASSETS.
The buildings, plants, structures, and equipment owned or leased by
the Company and each Subsidiary are structurally sound, are in good operating
condition and repair (normal wear and tear excepted) and are adequate for the
uses to which they are being put, have been maintained in the ordinary course
and are not in need of extraordinary repairs. In Seller's judgment, the
building, plants, structures, and equipment owned or leased by the Company and
each Subsidiary are sufficient for the continued conduct of the Company's and
each Subsidiary's businesses after the Closing in substantially the same manner
as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE.
All accounts receivable of the Company and each Subsidiary as of the
Closing Date represent or will represent valid obligations arising from sales
actually made or services actually performed in the ordinary course of business.
Unless paid prior to the Closing Date, the accounts receivable are or will be as
of the Closing Date current and at least 95% collectible, however, no reserve
reflected on the Balance Sheet. To the best of the Company's knowledge, there is
no contest, claim, or right of set-off relating to the amount or validity of
such accounts receivable. The parties agree that in the event the Seller is
required to reimburse TGI or the Company for an uncollected receivable due to a
breach of this representation and warranty, the amount of such receivable paid
by the Seller will be assigned to the Seller for collection and receipt.
3.9 NO UNDISCLOSED LIABILITIES.
Except as set forth in Part 3.9 of the Company's Disclosure Letter,
neither the Company nor any Subsidiary has any liabilities or obligations of any
nature except for liabilities or obligations reflected or reserved against in
the Balance Sheet and nonmaterial current liabilities incurred in the ordinary
course of business since the date thereof.
3.10 TAXES.
(a) To the best of the Company's knowledge, the Company and each Subsidiary has
filed or caused to be filed on a timely basis all tax returns that are or were
required to be filed by or with respect to it. The Company and each Subsidiary
has paid, or made provision for the payment of, all taxes that have or may have
become due, as reflected on the returns filed by the Company and each
Subsidiary, for all periods prior to and through Closing. To the best of the
Company's knowledge, all tax returns filed by the Company and each Subsidiary
are true, correct and complete in all material respects. All references in this
Section 3.10 to "taxes" and "tax returns" shall include all federal, state,
local and foreign taxes required to be paid and tax returns, reports and
statements required to be filed by the Company or any Subsidiary.
(b) Except as disclosed on Part 3.10 of the Company Disclosure Letter, no United
States, federal or state income, sales, use, fuel or other tax returns of the
Company or any Subsidiary have been audited by the IRS or relevant state tax
authorities during the past seven years. Except as disclosed on Part 3.10 of the
Company's Disclosure Letter, neither Seller, the Company, nor any Subsidiary has
given or been requested to give waivers or extensions (or is or would be subject
to a waiver or extension given by any other person) of any statute of
limitations relating to the payment of taxes of the Company.
(c) The charges, accruals, and reserves with respect to taxes on the books of
the Company are adequate (determined in accordance with GAAP) and are at least
equal to the Company's liability for taxes (including any Subsidiary's
liability). The Company has not received notice of any proposed tax assessment
against the Company or any Subsidiary.
(d) Except as set forth on Part 3.10(a) of the Company's Disclosure Letter,
proper and accurate amounts have been withheld by Company and its Subsidiaries
from its employees for all periods through the Closing Date in compliance with
the tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings due and payable have
been timely paid to the respective governmental agencies. Except as disclosed in
Part 3.10 of the Company's Disclosure Letter, neither the Company nor any of its
Subsidiaries has executed or filed with the IRS or any other governmental
authority any agreement or other document extending, or having the effect of
extending the period for assessment or collection of any taxes.
3.11 NO MATERIAL ADVERSE CHANGE.
With the exception of matters disclosed in the Balance Sheet, since
December 31, 1998, there has not been any material adverse change in the
business, operations, properties, prospects, assets, or condition of the Company
or any Subsidiary, and, to the Company's knowledge, no event has occurred or
circumstance exists that could reasonably be expected to result in such a
material adverse change.
3.12 EMPLOYEE BENEFITS.
Part 3.12 of the Company's Disclosure Letter contains a list of all
pension, retirement, disability, medical, dental or other health plans, life
insurance or other death benefit plans, profit sharing, deferred compensation
agreements, stock, option, bonus or other incentive plans, vacation, sick,
holiday or other paid leave plans, severance plans or other similar employee
benefit plans maintained by the Company or any Subsidiary (the "Plans"),
including, without limitation, all "employee benefit plans" as defined in
Section 3(3) of ERISA. Except as otherwise disclosed on Part 3.12 of the
Company's Disclosure Letter, and except for 401-(k) contributions for the
current month that are paid monthly by the Company but are not accrued on the
Balance Sheet, all contributions due from the Company or any Subsidiary with
respect to any of the Plans have been made or accrued on the Balance Sheet, and
no further contributions will be due or will have accrued thereunder as of the
Closing. Each of the Plans, and its operation and administration, is, in all
material respects, in compliance with all applicable, federal, state, local and
other governmental laws and ordinances, orders, rules and regulations, including
the requirements of ERISA and the Internal Revenue Code. All such Plans that are
"employee pension benefit plans" (as defined in Section 3(2) of ERISA) which are
intended to qualify under I.R.C. Section 401(a)(8) have received favorable
determination letters that such plans satisfy all qualification requirements. In
addition, the Company has not been a participant in any "prohibited
transaction," within the meaning of Section 406 of ERISA, with respect to any
employee pension benefit plan (as defined in Section 3(2) of ERISA) which the
Company or any Subsidiary sponsors as employer or in which the Company or any
Subsidiary participates as an employer, which was not otherwise exempt pursuant
to Section 408 of ERISA (including any individual exemption granted under
Section 408(a) of ERISA), or which could reasonably be expected to result in an
excise tax.
3.13 COMPLIANCE.
(a) The Company and each Subsidiary is and has conducted its business and the
ownership and use of its assets in substantial compliance with all applicable
laws throughout the period of all applicable statutes of limitation.
(b) Part 3.13 of the Company's Disclosure Letter contains a complete and
accurate list of each permit or governmental consent or authorization that is
held by the Company and each Subsidiary or that otherwise relates to the
business of, or to any of the assets owned or used by, the Company or any
Subsidiary. Each such permit or governmental consent or authorization is valid
and in full force and effect and constitutes all of the governmental
authorizations necessary to permit the Company and each Subsidiary to lawfully
conduct and operate its business in the manner currently conducted.
3.14 LITIGATION.
(a) Except as set forth in Part 3.14 of the Company's Disclosure Letter, there
is no pending or to the knowledge of the Seller, threatened action, claim,
arbitration, audit, hearing, investigation, litigation or suit (whether civil,
criminal, administrative, investigative, or informal) by or against the Company
or any Subsidiary or that relates to or may materially affect the business of,
or any of the assets owned or used by, the Company or any Subsidiary; or that
challenges, or that may have the effect of preventing, delaying, making illegal
or enjoining, any of the Contemplated Transactions. The Company has not received
notice of any vehicle accident involving any employees, contractors or vehicles
of the Company or a Subsidiary which could reasonably be expected to result in a
claim or action against the Company or a Subsidiary and which is not set forth
on Part 3.14.
(b) Except as set forth on Part 3.14 of the Company's Disclosure Letter, there
is no order or court decision to which the Company, any Subsidiary, the Seller,
any director or officer of the Company, or any of the assets owned or used by
the Company, is subject.
3.15 ABSENCE OF CHANGES.
Except as set forth in Part 3.15 of the Company's Disclosure Letter,
since December 31, 1998 (except as disclosed in the Balance Sheet), the Company
and each Subsidiary has conducted its business only in the ordinary course and
there has not been any:
(a) change in its authorized or issued capital stock; grant of any stock option
or right to purchase shares of capital stock of the Company or any Subsidiary;
issuance of any security convertible into such capital stock; grant of any
purchase, redemption or stock retirement rights, or any acquisition by the
Company or any Subsidiary of any shares of its capital stock; or declaration or
payment of any dividend or other distribution or payment in respect of shares of
capital stock;
(b) amendment to the Articles of Incorporation or Bylaws of the Company or any
Subsidiary;
(c) payment or increase by the Company or any Subsidiary of any
bonuses, salaries or other compensation to any stockholder, director, officer or
employee (except normal raises in the ordinary course of business consistent
with past practices), or entry into any employment, severance, or similar
contract with any director, officer or employee; (d) adoption of, or increase in
the payments to or benefits under, any profit sharing, bonus, deferred
compensation, savings, insurance, pension, retirement or other employee benefit
plan for or with any employees of the Company or any Subsidiary; (e) material
damage to or destruction or loss of any material asset or property of the
Company or any Subsidiary, whether or not covered by insurance; (f) entry into,
termination of, or receipt of notice of termination of any material contract or
any contract or transaction involving a total remaining commitment by or to the
Company or any Subsidiary of at least $50,000; (g) sale, lease, or other
disposition of any material asset or property of the Company or any Subsidiary,
or mortgage, pledge, or imposition of any lien or other encumbrance on any
material asset or property of the Company or any Subsidiary; (h) material change
in the accounting methods used by the Company; or (i) agreement, whether oral or
written, by the Company or any Subsidiary to do any of the foregoing.
3.16 CONTRACTS; NO DEFAULTS.
(a) Part 3.16 of the Company's Disclosure Letter contains a complete and
accurate list, and Seller has delivered to TGI true and complete
copies, of:
(i) each contract that involves performance of services or
delivery of goods or materials by or to the Company or any
Subsidiary of an amount or value in excess of $25,000 in the
aggregate or which is not terminable by the Company or its
Subsidiaries without penalty or premium upon 60 days' or less
notice;
(ii) each lease, license, installment and conditional sales agreement, and other
contract affecting the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or personal property; (iii) each
agreement evidencing or relating to any indebtedness or capital lease of the
Company or its Subsidiaries; (iv) each joint venture, partnership, and other
contract involving a sharing of profits, losses, costs, or liabilities by the
Company or any Subsidiary with any other person; (v) each contract containing
covenants that purport to restrict the business activity of the Company or any
Subsidiary; (vi) each power of attorney that is currently effective and
outstanding; and (vii) each written warranty, guaranty, and or other similar
undertaking by the Company or any Subsidiary.
(b) Each contract identified or required to be identified in Part 3.16 of the
Company's Disclosure Letter is in full force and effect and is valid and
enforceable in accordance with its terms. The Company and each Subsidiary is,
and at all times has been, in compliance with all material terms and
requirements of each contract. Each third party to any contract with the Company
or any Subsidiary is, and at all times has been, in compliance with all material
terms and requirements of such contract. Neither the Company nor any Subsidiary
has given nor received notice from any other person regarding any actual,
alleged, possible, or potential violation or breach of, or default under, any
contract, and no default or event of default has occurred thereunder.
3.17 INSURANCE.
(a) Set forth on Part 3.17 of the Company's Disclosure Letter is a true and
complete list and description of all insurance policies to which the Company or
any Subsidiary is a party or under which the Company or any Subsidiary is or has
been covered at any time within the three (3) years preceding the date of this
Agreement, and all pending applications for policies of insurance, including the
premium paid, coverage amounts, deductible, and risks insured.
(b) All policies to which the Company or any Subsidiary is a party or that
provide coverage to either Seller, the Company, any Subsidiary or any director
or officer of the Company or any Subsidiary (i) are valid, outstanding, and
enforceable; (ii) are issued by an insurer that is financially sound and
reputable; (iii) in the Seller's judgment, provide adequate insurance coverage
for the assets and the operations of the Company and the Subsidiaries for all
risks normally insured against in the Company's industry; (iv) may be continued
in full force and effect following the consummation of the Contemplated
Transactions; and (v) except as set forth in Part 3.17(b) of the Company's
Disclosure Letter, do not provide for any retrospective premium adjustment or
other experienced-based liability on the part of the Company or any Subsidiary.
(c) Except as set forth on Part 3.17, neither Seller, the Company nor any
Subsidiary has received (i) any refusal of coverage or any notice that a defense
will be afforded with reservation of rights, or (ii) any notice of cancellation
or any other indication that any insurance policy is no longer in full force or
effect or will not be renewed or that the issuer of any policy is not willing or
able to perform its obligations thereunder. (d) The Company and each Subsidiary
has paid all premiums due, and has otherwise performed all of its obligations,
under each policy to which it is a party or that provides coverage to it. The
Company and each Subsidiary has given notice to the insurer of all known claims
that may be insured thereby.
13.18 ENVIRONMENTAL MATTERS.
(a) The Company and each Subsidiary is, and at all times has been, in material
compliance with, and has not been and is not currently in violation of or liable
under, any applicable Environmental Law. All real property owned, leased or
otherwise operated by the Company and its Subsidiaries (each, a "Facility") is
free of contamination from any Hazardous Material which may result in material
liability --------- under any Environmental Law. Seller has no reasonable basis
to expect, nor has Seller or the Company or any Subsidiary received, any actual
or threatened order, notice, or other communication from (i) any governmental
body or private citizen, or (ii) the current or prior owner or operator of any
facilities owned or leased by the Company or any Subsidiary, of any actual or
potential violation or failure to comply with any Environmental Law. To the best
of the Company's knowledge, neither Company nor any of its Subsidiaries has
caused or suffered to occur any release, spill, migration, leakage, discharge,
spillage, uncontrolled loss, seepage, or filtration of Hazard Material at or
from any Facility.
(b) All above or underground storage tanks, landfills, land deposits, or dumps
present on or at any Facility or, to the knowledge of the Seller, at any
adjoining property, or incorporated into any structure therein or thereon are
listed on the Phase I Environmental Audits referenced on Part 3.18 of the
Company's Disclosure Letter and are to the best of the Company's knowledge in
full compliance with all Environmental Laws. Neither the Company nor any
Subsidiary has transported Hazardous Materials except in the ordinary course of
its business in compliance with applicable law. (c) Seller has delivered to TGI
true and complete copies and results of any reports, studies, analyses, tests,
or monitoring possessed or initiated by Seller, the Company or any Subsidiary
pertaining to Hazardous Materials in, on, or under the facilities owned or
leased by the Company or any Subsidiary.
13.19 EMPLOYEES; INDEPENDENT CONTRACTORS.
(a) Part 3.19 of the Company's Disclosure Letter contains a complete and
accurate list of (i) each employee or director of the Company and each
Subsidiary, including each employee on leave of absence or layoff status, his or
her job title, and current compensation; and (ii) each independent contractor of
the Company and each Subsidiary, the type of services he or she provides and his
current compensation.
(b) To the Company's knowledge, no employee nor independent contractor of the
Company or any Subsidiary is a party to, or is otherwise bound by, any agreement
or arrangement, including any confidentiality, noncompetition or proprietary
rights agreement, between such employee and any other person that in any way
adversely affects or will affect (i) the performance of his duties to the
Company or any Subsidiary, or (ii) the ability of the Company or any Subsidiary
to conduct its business. (c) All persons rendering services to the Company or
any Subsidiary have been properly characterized and treated as either employees
or independent contractors, and neither the Company nor any Subsidiary has
received notice of, nor does Seller reasonably believe that, such treatment will
be challenged by the IRS or otherwise.
3.20 LABOR RELATIONS; COMPLIANCE.
(a) Neither the Company nor any Subsidiary has been nor is it now a party to any
collective bargaining or other labor contract. There is not presently pending or
existing, and to the Company's knowledge there is not threatened, (a) any
strike, slowdown, picketing, work stoppage, or employee grievance process, (b)
any proceeding against or affecting the Company or any Subsidiary relating to
the alleged violation of any applicable law pertaining to labor relations or
employment matters, including any charge or complaint filed by an employee or
union with the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable governmental body, organizational activity, or
other labor or employment dispute against or affecting the Company, or (c) any
application for certification of a collective bargaining agent. There is no
lockout of any employees by the Company or any Subsidiary, and no such action is
contemplated by the Company or any Subsidiary. Except as set forth on Part
3.20(a) of the Company's Disclosure Letter, the Company and each Subsidiary has
substantially complied in all respects with applicable legal requirements
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health, and plant
closing.
(b) The Company and each Subsidiary is, and at all times has been, in compliance
with, and has not been and is not in violation of or liable under, any
applicable Occupational Safety and Health Law. Seller has no basis to expect,
nor has Seller, the Company or any Subsidiary received, any actual or threatened
order, notice, or other communication from any person of any actual or potential
violation or failure to comply with any Occupational Safety and Health Law.
13.21 INTELLECTUAL PROPERTY.
(a) Intellectual Property Assets. The term "Intellectual
Property Assets" includes:
(i) the Company's and each Subsidiary's name, all fictional
business names, trade names, registered and unregistered
trademarks, service marks, and applications;
(ii) all patents, patent applications, inventions and discoveries that may be
patentable; (iii) all copyrights in both published works and unpublished works;
and (iv) all know-how, trade secrets, confidential information, customer lists,
software, technical information, data, process technology, plans, drawings and
blue prints owned, used, or licensed by the Company or any Subsidiary. (b) The
Intellectual Property Assets [other than items listed under subsection
3.21(a)(iv)] are listed on Part 3.21 of the Disclosure Letter. The Company
(directly or indirectly through its Subsidiaries) owns all right, title and
interest in and to each of the Intellectual Property Assets, free and clear of
all liens, security interests, charges, encumbrances, equities and other adverse
claims, and has the right to use without payment to a third party all of the
Intellectual Property Assets except as listed on Part 3.21.
(c) All of the computer software, computer hardware, other computer and
microprocessor-based equipment and all other equipment which performs or is or
may be required to perform functions involving dates or the computation of
dates, or containing date related data, owned, licensed, or used by the Company
or any Subsidiary which are material to the operations of the Company or would
require material expense to repair or replace (collectively the "Computer
Devices") will not suffer a Year 2000 Problem (as defined below). Except as set
forth on Part 3.12(c) of the Company's Disclosure Letter, the Company and each
Subsidiary has contacted and received written assurances from all material
suppliers of goods and services, including but not limited to suppliers of
Computer Devices, that all of the computer software, computer hardware, and
other computer and microprocessor-based equipment owned, licensed, or used by
such supplier will not have a Year 2000 Problem. For the purposes of this
Section 3.21(c), "Year 2000 Problem" shall mean any failure of a Computer Device
to: (a) store all date-related information and process all data interfaces
involving dates in a manner that unambiguously identifies the century, for all
date values before, during or after January 1, 2000; (b) calculate, sort, report
and otherwise materially operate correctly and in a consistent manner and
without interruption regardless whether the date on which the Computer Device is
operated or executed is before, during or after January 1, 2000; (c) report and
display all dates with a four-digit date so that the century is unambiguously
identified; and (d) handle all leap years, including but not limited to the year
2000 leap year, correctly.
3.22 RELATIONSHIPS WITH RELATED PERSONS.
Except as set forth on Part 3.22 of the Company's Disclosure Letter,
no Seller or any related person or affiliate of Seller or of the Company has, or
has had, any interest in any property used in the Company's or any Subsidiary's
business. Except as set forth on Part 3.22 of the Company's Disclosure Letter,
no Seller or any related person or affiliate of Seller or of the Company is, or
has owned, directly or indirectly, an equity interest or any other financial or
profit interest in, an entity that has (i) had business dealings or a material
financial interest in any transaction with the Company or any Subsidiary; or
(ii) engaged in competition with the Company or any Subsidiary with respect to
any line of the products or services of the Company or any Subsidiary. No Seller
or any related person or affiliate of Seller or of the Company is a party to any
contract with the Company or any Subsidiary. All transactions or agreements set
forth on Part 3.22 of the Company's Disclosure Letter are on arms length terms
no less favorable to the Company and its Subsidiaries than independently
obtained.
3.23 BROKERS OR FINDERS.
Except as set forth on Part 3.23 of the Company's Disclosure Letter,
neither the Company, Seller nor their respective agents have incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
3.24 DISCLOSURE.
No representation or warranty of Seller in this Agreement and no
statement in the Company's Disclosure Letter omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading. There is no fact known to
Seller that has specific application to any Seller, the Company or any
Subsidiary (other than general economic or industry conditions) and that
materially adversely affects or, as far as either Seller can reasonably foresee,
materially threatens, the assets, business, prospects, financial condition, or
results of operations of the Company or any Subsidiary that has not been set
forth in this Agreement or the Disclosure Letter.
3.25 INVESTMENT REPRESENTATION.
The Seller is acquiring the shares of the TGI Common Stock for their
own account and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act. Each Seller understands that such shares
are "restricted stock" and agrees not to sell, pledge, transfer, assign or
otherwise dispose of such shares except in accordance with the Securities Act.
3.26 TAX REPRESENTATIONS.
The liabilities of the Company were incurred by the Company in the
ordinary course of business. Through the Closing Date, the Company will not
discontinue any of its historic businesses nor has it discontinued any of its
historic businesses within the period beginning twelve months prior to the date
hereof. The Company and the Seller will each pay their own expenses in
connection with the Merger. Dividends the Company has paid (or may pay) in
anticipation of the Merger will be regular and normal distributions made in
accordance with the Company's past practices. At all times during the five year
period ending on the Closing Date, the fair market value of all of the Company's
real property interests has been less than fifty percent (50%) of the total fair
market value of all the assets used in the Company's trade or business,
including any real property owned by the Company which is not used in its trade
or business.
3.27 DISTRIBUTIONS.
The Company will continue to be solvent and able to pay its debts as
they become due immediately following the distributions and transactions
described in Section 5.9 hereof.
3.28 RELATED TRANSACTIONS.
The representations and warranties contained in a Stock Purchase
Agreement for the purchase of all of the stock of DLS Leasing, Inc. by and
between Seller and TGI (the "DLS Agreement"); a Membership Interest Purchase
Agreement pursuant to which TGI will purchase all of the Membership Interests of
Connection One Trucking, LLC (the "Connection One Agreement") and, an Agreement
for the Sale of Assets pursuant to which the Company will purchase certain of
the assets of DLS Leasing, Inc. (the "DLS Asset Agreement"), were true and
correct when made and at the Closing.
4. REPRESENTATIONS AND WARRANTIES OF TGI
TGI has delivered to Seller, simultaneously herewith, the TGI
Disclosure Letter. TGI represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING.
TGI is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida. Newco will be a corporation
duly organized, validly existing and in good standing under the laws of the
state of Kentucky.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid and binding obligation of
TGI, enforceable against TGI in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by TGI nor the
consummation or performance of any of the Contemplated Transactions by TGI and
Newco will give any person the right to prevent, delay or otherwise interfere
with any of the Contemplated Transactions pursuant to: (i) any provision of
TGI's or Newco's Articles of Incorporation or Bylaws;
(ii) any resolution adopted by the board of directors or the stockholders of TGI
or Newco; (iii) any legal requirement or order to which TGI or Newco may be
subject; or (iv) any contract to which TGI or Newco is a party or by which TGI
or Newco may be bound. (c) Neither TGI nor Newco will be required to obtain any
consent from any person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions, except as set forth on Schedule 4.2 hereto.
4.3 CERTAIN PROCEEDINGS.
There is no pending proceeding that has been commenced against TGI
that challenges, or may have the effect of preventing, delaying, making illegal,
or otherwise enjoining, any of the Contemplated Transactions.
4.4 SECURITIES COMPLIANCE.
TGI has made all securities filings required as a "reporting company"
under the Exchange Act of 1934, as amended. Upon completion of the Merger, the
TGI Common Stock to be issued to the Seller in connection with the Merger will
be fully paid and nonassessable.
4.5 TAX REPRESENTATIONS.
TGI represents now, and as of the Closing, that it presently intends
to continue the Company's historic business or use a significant portion of the
Company's business assets in a business. TGI has no present plan or intent to
reacquire any of the TGI Common Stock issued in the Merger.
5. COVENANTS
5.1 ACCESS AND INVESTIGATION.
Between the date of this Agreement and the Closing Date, Seller will,
and will cause the Company, its Subsidiaries and their representatives to, (a)
afford TGI and its representatives and prospective lenders and their
representatives (collectively, "TGI's Advisors") reasonable access during normal
business hours to the Company's and its Subsidiaries' personnel, properties,
contracts, books and records, and other documents and data, (b) furnish TGI and
TGI's Advisors with copies of all such contracts, books and records, and other
existing documents and data as TGI may reasonably request, and (c) furnish TGI
and TGI's Advisors with such additional financial, operating, and other data and
information as TGI may reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE COMPANY.
Between the date of this Agreement and the Closing Date, Seller will,
and will cause the Company and its Subsidiaries to: (a) conduct their businesses
only in the ordinary course; and (b) use its best efforts to preserve intact the
current business organization of the Company and its Subsidiaries, keep
available the services of their current officers, employees, and agents, and
maintain the relations and good will with their suppliers, customers, landlords,
creditors, employees, agents, and others having business relationships with the
Company or any Subsidiary.
5.3 NEGATIVE COVENANT.
Except as otherwise expressly permitted by this Agreement, between
the date of this Agreement and the Closing Date, Seller will not, and will cause
the Company and each Subsidiary not to, without the prior consent of TGI, take
any affirmative action, or fail to take any reasonable action within their or
its control, as a result of which any of the changes or events listed in Section
3.15 is likely to occur.
5.4 NOTIFICATION.
(a) Between the date of this Agreement and the Closing Date, Seller will
promptly notify TGI in writing if Seller or the Company becomes aware of any
fact or condition that causes or constitutes a breach of Seller's
representations and warranties as of the date of this Agreement, or if Seller or
the Company becomes aware of the occurrence after the date of this Agreement of
any fact or condition that would cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition.
(b) Between the date of this Agreement and the Closing Date, TGI will promptly
notify the Company in writing if TGI becomes aware of any fact or condition that
causes or constitutes a breach of any of TGI's representations and warranties as
of the date of this Agreement, or if TGI becomes aware of the occurrence after
the date of this Agreement of any fact or condition that would cause or
constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition.
5.5 RELATED PARTY TRANSACTIONS.
Except for the amounts set forth on Schedule 5.5 hereto (which
amounts have been offset against the purchase price as provided in Section
2.1(a) and will be forgiven as of the Closing Date), Seller will cause all
indebtedness owed to the Company by any Seller or any related person of any
Seller to be paid in full prior to Closing. The Seller agrees that except for
the Leases, the Company shall have no obligation to continue any arrangement
with any affiliate of Seller set forth on Part 3.22 of the Company's Disclosure
Letter or to continue to include any such parties as additional insureds on the
Company's insurance policies.
5.6 NO NEGOTIATION.
Until such time, if any, as this Agreement is terminated pursuant to
Section 8, Seller will not, and will cause the Company and each of its
Subsidiaries and representatives not to, directly or indirectly solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any person (other than TGI) relating to
any transaction involving the sale of the business or assets of the Company or
any Subsidiary, or any of the capital stock of the Company or any Subsidiary, or
any merger, consolidation, business combination, or similar transaction
involving the Company or any Subsidiary.
5.7 BEST EFFORTS.
Between the date of this Agreement and the Closing Date, Seller will
use his best efforts to cause the conditions in Section 6 to be satisfied, and
TGI will use its best efforts to cause the conditions in Section 7 to be
satisfied. TGI and Seller shall, as promptly as practicable following the
execution of this Agreement, in cooperation with each other, complete and file
with the appropriate authorities the pre-merger notification forms and any other
documents required under the HSR Act.
5.8 LEASE AGREEMENTS.
At Closing, the Company will enter into lease agreements
substantially in the form attached hereto as Exhibits "G-1" and "G-2" with
Seller and Silver Creek, LLC, for the facilities currently occupied by the
Company in Jeffersonville, Indiana, and Nashville, Tennessee, providing for a
total monthly rental of $35,000 and $5,000, respectively, for a five (5) year
period.
5.9 SATISFACTION OF PAYABLE OWED TO SELLER.
Prior to the Closing Date, the Seller shall cause the Company to pay
off in full satisfaction of a payable owed to Seller in the amount of
$328,653.68 for and in exchange for the distribution by the Company to the
Seller of the following items:
1. $130,153.68 in cash;
2. Six (6) vehicles, to wit: 1 Ford Expedition, 1
Custom Van, 1 Ford Taurus, 1 Ford Pick-Up Truck, 1 Jeep Cherokee and 1
Lincoln Navigator;
3. One back-hoe;
4. Two utility trailers; and
5. One Farm Tractor.
The Seller hereby represents that the fair market value of the vehicles
and equipment listed in items 2 through 5 above equals $198,500.00.
Seller shall also be entitled to purchase from the Company prior to
Closing, for a price of $24,660.28 (which Seller represents is equal to the net
book value, adjusted for tax depreciation), one dump truck owned by the Company.
All taxes due by the Company or otherwise as a result of the redemption,
distributions, and transactions set forth in this paragraph 5.9 shall be borne
by and shall be the exclusive responsibility of the Seller. In addition, any
indebtedness associated with any of the above-referenced items will be assumed
by the Seller, and the release of the Company will be obtained simultaneously
with such transfer.
5.10 ASSET PURCHASE.
Prior to the Closing, the Company shall purchase good and marketable
title, free and clear of all liens, approximately 129 trailers from DLS Leasing,
Inc. ("DLS") for an aggregate purchase price of $2,010,000, which the Seller
represents is the fair value therefor and which shall be on terms satisfactory
to TGI, with a Promissory Note bearing no interest which shall be distributed to
the Seller in his capacity as the sole shareholder of DLS prior to the Closing.
At the Closing Date, TGI shall pay in full the principal balance of such Note.
5.11 NAME CHANGE.
Immediately following the Closing, Seller agrees to change the name
of all entities owned by Seller which include the name "Bestway" and to cause
such entities to cease the use of such name and logo.
6. CONDITIONS PRECEDENT TO TGI'S OBLIGATION TO CLOSE
TGI's obligation to consummate the Merger and to take the other actions
required to be taken by TGI at the Closing is subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may be
waived by TGI, in whole or in part):
6.1 ACCURACY OF REPRESENTATIONS.
All of Seller's representations and warranties in this Agreement must
have been accurate in all material respects as of the date of this Agreement and
as of the Closing Date as if made on the Closing Date.
6.2 SELLER'S PERFORMANCE.
All of the covenants and obligations that the Company and the Seller
are required to perform or to comply with pursuant to this Agreement at or prior
to the Closing must have been duly performed and complied with in all respects.
6.3 CONSENTS.
Each of the consents identified in Part 3.2 of the Company's
Disclosure Letter hereto must have been obtained and must be in full force and
effect.
6.4 ADDITIONAL DOCUMENTS.
Each of the following documents must have been delivered to TGI:
(a) an opinion of counsel to the Company and the Seller, dated the Closing Date,
in form acceptable to TGI; and
(b) such other documents as TGI may reasonably request (i) evidencing the
accuracy of any of Seller's representations and warranties; (ii) evidencing the
performance by either Seller of, or the compliance by either Seller with, any
covenant or obligation required to be performed or complied with by such Seller;
(iii) evidencing the satisfaction of any condition referred to in this Section
6; or (iv) otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
6.5 NO PROCEEDINGS.
Since the date of this Agreement, there must not have been commenced
or threatened against TGI, Seller, the Company or any Subsidiary, or against any
person affiliated with TGI, Seller, the Company or any Subsidiary, any
proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that could
reasonably be expected to have the effect of preventing, delaying or making
illegal, any of the Contemplated Transactions.
6.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS.
There must not have been made or threatened by any person any claim
asserting that such person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity, or ownership interest in, the Company or any Subsidiary,
or (b) is entitled to all or any portion of the merger consideration. In
addition, Seller must have entered into an agreement with Xxxxxxx Xxxxxxxxxxxx
for the payment in full of the Xxxxxxxxxxxx Indebtedness for a complete release
of all claims in connection therewith and the release of all shares of Company
stock pledged as security therefor.
6.7 SATISFACTORY DUE DILIGENCE.
TGI shall have completed its investigation of the Company's assets,
business and financial condition and shall be satisfied with the results thereof
in its sole discretion.
6.8 HSR WAITING PERIOD.
All applicable waiting periods, as extended, under the HSR Act shall
have expired.
6.9 RELATED PURCHASES
Simultaneously herewith, TGI and the Seller have entered into the DLS
Agreement and the Connection One Agreement. All of the conditions precedent to
TGI's obligation to close such transactions shall have been satisfied as of the
Closing Date.
7. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The Company's obligation to consummate the Merger and to take the other
actions required to be taken by the Company or the Seller at the Closing is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by the Company, in whole or in
part):
7.1 ACCURACY OF REPRESENTATIONS.
All of TGI's representations and warranties in this Agreement must
have been accurate in all material respects as of the date of this Agreement and
must be accurate in all respects as of the Closing Date as if made on the
Closing Date.
7.2 TGI'S PERFORMANCE.
All of the covenants and obligations that TGI is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing must
have been performed and complied with in all respects.
7.3 NO PROCEEDINGS.
Since the date of this Agreement, there must not have been commenced
or threatened against TGI, Seller, the Company or any Subsidiary, or against any
person affiliated with TGI, Seller, the Company or any Subsidiary, any
proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, or making illegal, any of the Contemplated
Transactions.
7.4 HSR WAITING PERIOD.
All applicable waiting periods, as extended, under the HSR Act shall
have expired.
7.5 CONSENTS.
Each of the consents identified in Schedule 4.2 hereto must have
been obtained and be in full force ------------- and effect.
7.6 RELATED PURCHASES
Simultaneously herewith, TGI and the Seller have entered into the DLS
Agreement and the Connection One Agreement. All of the conditions precedent to
Seller's obligation to close such transactions shall have been satisfied as of
the Closing Date.
7.7 RELEASE OF GUARANTEES.
The personal guarantees provided by the Seller to a third party with
respect to any debt or obligation of the Company shall have been released prior
to Closing.
8. TERMINATION
8.1 TERMINATION EVENTS.
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by either TGI or the Company if a material breach of any provision of
this Agreement has been committed by the other party and such breach
has not been waived;
(b) by:
(i) TGI if any of the conditions in Section 6 has not been
satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the
failure of TGI to comply with its obligations under this
Agreement) and TGI has not waived such condition on or before
the Closing Date; or
(ii) Seller, if any of the conditions in Section 7 has not been satisfied of the
Closing Date or if satisfaction of such a condition is or becomes impossible
(other than through the failure of Seller to comply with their obligations under
this Agreement) and Seller have not waived such condition on or before the
Closing Date;
(c) by mutual consent of TGI and Seller; or
(d) by either TGI or Seller if the Closing has not occurred (other than through
the failure of any party seeking to terminate this Agreement to comply fully
with its obligations under this Agreement) on or before July 31, 1999, or such
later date as the Parties may agree upon.
8.2 EFFECT OF TERMINATION.
Each Party's right of termination under Section 8.1 is in addition to
any other rights it may have under this Agreement or otherwise. If this
Agreement is terminated pursuant to Section 8.1, all further obligations of the
Parties under this Agreement will terminate, except that the obligations in
Sections 10.1 and 10.2 will survive.
9. INDEMNIFICATION; REMEDIES
9.1 SURVIVAL.
All representations, warranties, covenants, and obligations in this
Agreement, the Company's Disclosure Letter, the certificates delivered pursuant
to Section 2.8(a)(viii), 2.8(b)(ii) and any other certificate or document
delivered pursuant to this Agreement will survive the Closing. The right to
indemnification, payment of Damages (as defined below) or other remedy based on
such representations, warranties, covenants, and obligations will not be
affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired), with respect to the accuracy or
inaccuracy of or compliance with, any such representation, warranty, covenant,
or obligation.
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER.
Seller will indemnify and hold harmless TGI, the Company, and their
respective representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons") for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage (including incidental
and consequential damages), expense (including costs of investigation and
defense and reasonable attorneys' fees) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Seller in this
Agreement, the Company's Disclosure Letter or any other certificate or
document delivered by Seller or the Company pursuant to this Agreement,
unless such breach is cured to TGI's satisfaction or waived in writing
by TGI prior to Closing;
(b) any breach by Seller or the Company of any covenant or obligation in this
Agreement, unless such breach is cured to TGI's satisfaction or waived in
writing by TGI, prior to Closing; (c) any product shipped or any services
provided by the Company or any Subsidiary prior to the Closing Date, less the
net amount of any insurance proceeds received by the Company in connection
therewith; (d) any claim or assessment for unpaid taxes or for failure to file
accurate or appropriate returns, in excess of the amounts accrued therefor on
the Balance Sheet, (in part relating to the pending IRS audit of the Company for
the tax year 1995 the outcome of which may affect open tax years 1995, 1997, and
1998) including without, United States, state and/or local income, profits,
franchise, sales, use, occupancy, property (real and personal), ad valorem,
excise, value added, withholding, payroll, transfer and other taxes (including
interest, penalties and any additions to tax) due from the Company or any
Subsidiary or claimed to be due from the Company or any Subsidiary by any taxing
authority for all periods through the Closing Date, including taxes which may
accrue for periods up to Closing Date but which have not become due and owing,
and including taxes which are attributable to the distribution described in
Section 5.9 hereof; (e) any use, release, threatened release, emission,
generation, storage, transportation, disposal, or arrangement for the disposal
of Hazardous Materials prior to the Closing Date by the Company or any
Subsidiary or the presence of any Hazardous Materials or circumstance or
condition at any Facility which would require remediation or other action under
any Environmental Laws, including, without limitation, the cost of any
environmental response action or liability under the Comprehensive Environmental
Response, Compensation and Liability Act whether such loss accrues, is required
or is necessary prior to the Closing Date, to the full extent that such loss is
attributable, in whole or in part, directly or indirectly, to the presence, use,
emission, generation, storage, transportation, release, threatened release,
disposal, or arrangements for disposal of Hazardous Materials at any Facility or
on any other properties to which the Company, its Subsidiaries or affiliates or
any other prior owner or operator of any Facility has sent or arranged for the
disposal of Hazardous Materials prior to the Closing Date. All terms used in
this paragraph and not otherwise defined herein shall be given the meaning
provided under the Environmental Laws; (f) the lawsuits and claims asserted in
the following actions: American Builders & Contractors Supply Co., Inc., et al.
v. Bestway Trucking Co., et al. and The Metropolitan Government of Nashville and
Davidson County, et al. v. Bestway Trucking et al.; and any matter disclosed in
Part 3.17(b) of the Company's Disclosure Letter; (g) any claim by any person for
brokerage or finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by any such person with
either Seller or the Company (or any person acting on their behalf) in
connection with any of the Contemplated Transactions, except the fees of
Scopelitis, Garvin, Light & Xxxxxx to the extent included in the amount paid by
the Company under Section 10.1 hereof; (h) any claim made by any creditor or
other third party with respect to the distributions and/or transactions set
forth in Section 5.9 hereof, related to the purchase of a portion of the assets
of DLS Leasing, Inc. as provided in Section 5.10; and (i) any claim by Xxxxxxx
Xxxxxxxxxxxx, his heirs, representatives, assigns or any other third party in
any way relating to the redemption by the Company of his ownership interest in
the Company, other than for payment of the Xxxxxxxxxxxx Indebtedness.
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY TGI.
TGI will indemnify and hold harmless Seller, and will pay to Seller
the amount of any Damages (as defined in 9.2 above) arising, directly or
indirectly, from or in connection with (a) any breach of any representation or
warranty made by TGI in this Agreement or in any certificate delivered by TGI
pursuant to this Agreement, unless such breach is cured to Seller's satisfaction
or waived in writing by the Seller prior to Closing (b) any breach by TGI of any
covenant or obligation of TGI in this Agreement, unless such breach is cured to
Seller's satisfaction or waived in writing by the Seller, in either case prior
to Closing, or (c) any claim by any person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such person with TGI (or any person acting on its
behalf) in connection with any of the Contemplated Transactions.
9.4 ESCROW.
At the Closing, the Seller will deposit 596,273 shares of TGI's
Common Stock that are issued to the Seller in the Merger (the "Escrow Shares")
with a bank or trust company located within the State of Georgia which will act
as an escrow agent (the "Escrow Agent"), who will hold the Escrow Shares in
escrow as collateral for the indemnification obligations of the Seller under
this Agreement, the DLS Agreement, the Connection One Agreement, and the DLS
Asset Agreement in accordance with the terms of the Escrow Agreement.
9.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person of notice of the
commencement of any proceeding against it, such Indemnified Person will, if a
claim is to be made against an indemnifying party hereunder, give notice to the
indemnifying party of the commencement of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any Indemnified Person, except to the extent that the
indemnifying party demonstrates that the defense of such action is prejudiced by
the Indemnified Person's failure to give such notice.
(b) If any proceeding is brought against an Indemnified Person and it gives
notice to the indemnifying party of the commencement of such proceeding, the
indemnifying party will be entitled to participate in such proceeding and, to
the extent that it wishes (unless (i) the indemnifying party is also a party to
such proceeding and the Indemnified Person determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the Indemnified Person of its financial capacity
to defend such proceeding and provide indemnification with respect to such
proceeding), to assume the defense of such proceeding with counsel satisfactory
to the Indemnified Person and, after notice from the indemnifying party to the
Indemnified Person of its election to assume the defense of such proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the Indemnified Person under this Section 9 for any fees of other
counsel or any other expenses with respect to the defense of such proceeding, in
each case subsequently incurred by the Indemnified Person in connection with the
defense of such proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the Indemnified Person's consent unless (A) there is no finding or
admission of any violation of applicable laws or any violation of the rights of
any person and no effect on any other claims that may be made against the
Indemnified Person, and (B) the sole relief provided is monetary damages that
are paid in full by the indemnifying party; and (iii) the Indemnified Person
will have no liability with respect to any compromise or settlement of such
claims effected without its consent. If notice is given to an indemnifying party
of the commencement of any proceeding and the indemnifying party does not,
within ten (10) days after such notice is given, give notice to the Indemnified
Person of its election to assume the defense of such proceeding, the
indemnifying party will be bound by any determination made in such proceeding or
any compromise or settlement effected by the Indemnified Person. Notwithstanding
the foregoing, the filing of an answer by the indemnifying party in order to
preserve the rights of the Indemnified Party due to a filing deadline shall not
in itself constitute its election to assume the defense of a claim hereunder.
(c) Notwithstanding the foregoing, if an Indemnified Person determines in good
faith that there is a reasonable probability that a proceeding may adversely
affect it or its affiliates other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the Indemnified
Person may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such proceeding, but the indemnifying party will
not be bound by any determination of a proceeding so defended or any compromise
or settlement effected without its consent (which may not be unreasonably
withheld). (d) Seller hereby consents to the non-exclusive jurisdiction of any
court in which a proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such proceeding or the matters alleged therein, and agrees that
process may be served on Seller with respect to such a claim anywhere in the
world.
9.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS.
A claim for indemnification for any matter not involving a
third-party claim may be asserted by notice to the party from whom
indemnification is sought.
9.7 If the Closing occurs, Seller will have no liability (for indemnification
or otherwise) with respect to any representation or warranty other than those in
Sections 3.3, 3.10, 3.12, 3.18 and 3.19, unless on or before the third (3rd)
anniversary of the Closing Date, TGI notifies Seller of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
TGI. A claim with respect to Section 3.3, or a claim for indemnification or
reimbursement based upon any covenant or obligation may be made at any time. A
claim with respect to Sections 3.10, 3.12, 3.18 or 3.19 may be made at any time
prior to the expiration of the applicable statute of limitations for the cause
of action giving rise to such Damages. If the Closing occurs, TGI will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, unless on or before the third (3rd) anniversary of the Closing Date
Seller notifies TGI of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Seller.
9.8 LIMITATION.
Notwithstanding the foregoing, neither Party shall make a claim for
indemnification under Section 9.2(a) or (b) or Section 9.3(a) or (b) unless and
until the amount of such claim, or the aggregate amount of all such claims, made
by such Party under this Agreement, and the DLS Asset Agreement, the Connection
One Agreement, and the DLS Agreement equals or exceeds Seventy-five Thousand
Dollars ($75,000).
10. GENERAL PROVISIONS
10.1 EXPENSES.
Each Party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants, provided that the Seller
shall be responsible for all such fees incurred by the Seller or the Company in
excess of $400,000 in the aggregate, owed by the Company.
10.2 PUBLIC ANNOUNCEMENTS.
Any public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued at such time and in
such manner as mutually agreed, except TGI may make such disclosures as it deems
necessary to comply with applicable securities laws. Unless consented to by TGI
in advance or required by applicable law, prior to the Closing Seller shall, and
shall cause the Company to, keep this Agreement strictly confidential and may
not make any disclosure of this Agreement to any person. Seller and TGI will
mutually agree upon the means by which the Company's employees, customers, and
suppliers and others having dealings with the Company will be informed of the
Contemplated Transactions, and TGI will have the right to be present for any
such communication.
10.3 NOTICES.
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Seller: Xxxxx X. Xxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxx 00000
with a copy to: Xxxxxx X. Xxxxxx, Esq.
Scopelitis, Garvin, Light & Xxxxxx
Suite 1500
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
TGI: Transit Group, Inc.
Overlook III, Suite 1740
0000 Xxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxx X. XxXxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
Suite 3500, One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
10.4 JURISDICTION; SERVICE OF PROCESS.
Any action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this Agreement may be brought by any Party
against any of the other Parties in the courts of the States of Georgia and
Indiana, or, if it has or can acquire jurisdiction, in the United States
District Court for the Northern District of Georgia and the Southern District of
Indiana. Each of the Parties consents to the jurisdiction of such courts (and of
the appropriate appellate courts) in any such action or proceeding and waives
any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world.
10.5 FURTHER ASSURANCES.
The Parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
10.6 WAIVER.
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any Party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one Party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other Parties; (b) no waiver that may be
given by a Party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one Party will be deemed to be a
waiver of any obligation of such Party or of the right of the Party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
10.7 ENTIRE AGREEMENT AND MODIFICATION.
This Agreement supersedes all prior agreements between the parties
with respect to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the Party
to be charged with the amendment.
10.8 DISCLOSURE LETTER.
The disclosures in the Company's Disclosure Letter, and those in any
supplement thereto, relate only to the representations and warranties in the
Section of the Agreement to which they expressly refer. In the event of any
inconsistency between the statements in the body of this Agreement and those in
the Company's Disclosure Letter (other than an exception expressly set forth as
such in the Company's Disclosure Letter with respect to a specifically
identified representation or warranty), the statements in the body of this
Agreement will control.
10.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
Neither the Seller nor the Company may assign any of their rights
under this Agreement without the prior consent of TGI. TGI and Newco may assign
this Agreement, the Seller's Closing Documents, or any one of them at any time
to any affiliated entity without obtaining the consent of or notifying any other
Party. This Agreement will apply to, be binding in all respects upon, and inure
to the benefit of the successors and permitted assigns of the Parties. Nothing
expressed or referred to in this Agreement will be construed to give any person
other than the Parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the Parties to this Agreement and their successors
and permitted assigns.
10.10 SEVERABILITY.
If any provision of this Agreement is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable. The remedies provided in
this Agreement will not be exclusive of or limit any other remedies that may be
available.
10.11 SECTION HEADINGS, CONSTRUCTION.
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
10.12 TIME OF ESSENCE.
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
10.13 GOVERNING LAW.
This Agreement will be governed by the laws of the State of Indiana
without regard to conflicts of laws principles, other than the merger provisions
contained in Article 2, which shall be governed by the laws of the State of
Kentucky.
10.14 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
"TGI":
TRANSIT GROUP, INC.
BY: /s/ Xxxxxx X. Xxxxxx
XXXXXX X. XXXXXX, President
THE "COMPANY":
BESTWAY TRUCKING, INC.
BY: /s/ Xxxxx X. Xxxxxxx
XXXXX X. XXXXXXX, President
SELLER:
/s/ Xxxxx X. Xxxxxxx
XXXXX X. XXXXXXX
SCHEDULE 4.2
TGI CONSENTS
1. AmSouth Bank, N.A.
2. GE Capital Equity Investments, Inc.
SCHEDULE 5.5
The following indebtedness owed to the Company by affiliates of the Seller will
be cancelled as of the Closing and satisfied by the reduction of the number of
shares of TGI Common Stock issued hereunder, which has been reflected in the
share calculations set forth in Section 2.1(a) hereof:
Debtor Dollar Amount
Cinci, LLC $126,781
Silver Creek, LLC $362,511
$489,292
