Exhibit 10.1
Confidential treatment has been requested for portions of the signature page
to this exhibit. The copy filed herewith omits the information subject to the
confidentiality requested. Omissions are designated with [***]. A complete
version of this exhibit has been filed separately with the United States
Securities and Exchange Commission.
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CON-WAY INC.
TRANSPORTATION RESOURCES, INC.
SEATTLE ACQUISITION CORPORATION
SHAREHOLDERS' AGENT
AND
THE PRINCIPAL SHAREHOLDERS
July 13, 2007
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms........................................... 1
ARTICLE II
THE MERGER
Section 2.1 The Merger.............................................. 12
Section 2.2 Closing................................................. 12
Section 2.3 Effective Time.......................................... 13
Section 2.4 Effect of the Merger.................................... 13
Section 2.5 Articles of Incorporation; Bylaws....................... 13
Section 2.6 Directors; Officers..................................... 13
Section 2.7 Consideration for the Merger............................ 14
Section 2.8 Closing Amount Adjustments.............................. 15
Section 2.9 Effect on Capital Stock................................. 17
Section 2.10 Escrow Amount and Shareholders' Escrow Amount.......... 18
Section 2.11 Surrender of Certificates.............................. 19
Section 2.12 No Further Ownership Rights in Company Capital Stock... 20
Section 2.13 Lost, Stolen or Destroyed Certificates................. 20
Section 2.14 Taking of Necessary Action; Further Action............. 21
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
Section 3.1 Organization, Standing and Power........................ 21
Section 3.2 Subsidiaries............................................ 22
Section 3.3 Capitalization; Title to the Shares..................... 22
Section 3.4 Authority............................................... 23
Section 3.5 Financial Statements.................................... 24
Section 3.6 Absence of Certain Changes.............................. 25
Section 3.7 Absence of Undisclosed Liabilities...................... 27
Section 3.8 Litigation.............................................. 28
Section 3.9 Restrictions on Business Activities..................... 28
Section 3.10 Governmental Authorization............................. 28
Section 3.11 [Reserved]............................................. 29
Section 3.12 Title to Property...................................... 29
Section 3.13 Intellectual Property.................................. 29
Section 3.14 Internal Controls...................................... 32
Section 3.15 Environmental Matters.................................. 32
Section 3.16 Taxes.................................................. 34
Section 3.17 Employee Benefit Plans................................. 37
Section 3.18 Employee Matters....................................... 40
Section 3.19 Interested Party Transactions.......................... 43
Section 3.20 Real Property.......................................... 43
Section 3.21 Insurance.............................................. 44
Section 3.22 Compliance With Laws................................... 45
Section 3.23 Minute Books........................................... 46
Section 3.24 Complete Copies of Materials........................... 46
Section 3.25 Brokers' and Finders' Fees............................. 46
Section 3.26 Board Approval......................................... 46
Section 3.27 Customers and Suppliers................................ 46
Section 3.28 Material Contracts..................................... 47
Section 3.29 No Breach of Material Contracts........................ 49
Section 3.30 Third Party Consents................................... 49
Section 3.31 Accounts Receivable and Payable........................ 49
Section 3.32 Export Licenses and Agreements......................... 50
Section 3.33 Customs Matters........................................ 50
Section 3.34 Propriety of Past Payments............................. 51
Section 3.35 Only Representations and Warranties.................... 51
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 4.1 Organization............................................ 52
Section 4.2 Power and Authority..................................... 52
Section 4.3 Board Approval.......................................... 53
Section 4.4 No Ownership of Company Capital Stock................... 53
Section 4.5 Availability of Funds................................... 53
Section 4.6 Brokers' and Finders' Fees.............................. 53
Section 4.7 Due Diligence by Parent and Merger Sub.................. 53
Section 4.8 Funding Commitment...................................... 54
ARTICLE V
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF PRINCIPAL SHAREHOLDERS
Section 5.1 Power and Authority..................................... 54
Section 5.2 Good Title to Shares.................................... 54
Section 5.3 No Conflicts............................................ 55
ARTICLE VI
CONDUCT PRIOR TO THE CLOSING DATE
Section 6.1 Conduct of Business of the Company...................... 55
Section 6.2 Restriction on Conduct of Business of the Company....... 55
Section 6.3 Shareholder Meeting; No Solicitation.................... 59
Section 6.4 Further Information..................................... 62
Section 6.5 Compliance with the WARN Act and Similar Laws........... 63
Section 6.6 Assistance with Financing............................... 63
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Public Disclosure....................................... 65
Section 7.2 Consents; Cooperation................................... 66
Section 7.3 Legal Requirements...................................... 66
Section 7.4 Commercially Reasonable Efforts and Further Assurances.. 66
Section 7.5 Termination of Plans.................................... 67
Section 7.6 Certain Tax Matters..................................... 67
Section 7.7 No Solicitation of Employees............................ 70
Section 7.8 Mexican Subsidiary Shareholders......................... 70
Section 7.9 Communication with Employees............................ 70
Section 7.10 Due Diligence Period................................... 70
Section 7.11 Directors and Officers................................. 72
Section 7.12 Retention of Reviewing Auditor......................... 73
ARTICLE VIII
CONDITIONS TO THE CLOSING
Section 8.1 Conditions to Obligations of Each Party to Effect the
Merger ................................................ 73
Section 8.2 Additional Conditions to Obligations of the Company..... 73
Section 8.3 Additional Conditions to the Obligations of Parent and
Merger Sub............................................. 74
Section 8.4 Frustration of Conditions............................... 75
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination............................................. 76
Section 9.2 Effect of Termination................................... 76
Section 9.3 Expenses................................................ 77
Section 9.4 Amendment............................................... 77
Section 9.5 Extension; Waiver....................................... 77
ARTICLE X
INDEMNIFICATION
Section 10.1 Indemnification........................................ 77
Section 10.2 [Reserved]............................................. 81
Section 10.3 Claims Pending at Expiration of Indemnification Period. 81
Section 10.4 Claims upon Escrow Account............................. 81
Section 10.5 Objections to Claims; Resolution of Conflicts.......... 82
Section 10.6 Shareholders' Agent.................................... 82
Section 10.7 Actions of the Shareholders' Agent..................... 83
Section 10.8 Third-Party Claims..................................... 83
Section 10.9 No Right of Contribution............................... 85
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Survival............................................... 85
Section 11.2 Notices................................................ 86
Section 11.3 Interpretation......................................... 86
Section 11.4 Counterparts........................................... 86
Section 11.5 Entire Agreement; Nonassignability; Parties in Interest 86
Section 11.6 Severability........................................... 87
Section 11.7 Governing Law.......................................... 87
Section 11.8 Rules of Construction.................................. 87
Section 11.9 Specific Performance................................... 87
Section 11.10 Descriptive Headings.................................. 88
Section 11.11 Force Majeure......................................... 88
Section 11.12 No Personal Liability................................. 88
Section 11.13 Merger Sub............................................ 88
EXHIBITS
Exhibit A Form of Articles of Incorporation of the Surviving
Corporation
Exhibit B Form of Bylaws of the Surviving Corporation
Exhibit C Reference Accounts Statement
Exhibit D Form of Escrow Agreement
Exhibit E Form of Non-Competition Agreement
Exhibit F Diligence Request List
SCHEDULES
Schedule 1.1
Schedule 5.2
Schedule 11.2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
July 13, 2007, by and among Con-way Inc., a Delaware corporation ("Parent"),
Seattle Acquisition Corporation, a Missouri corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), Transportation Resources, Inc., a
Missouri corporation (the "Company"), the Shareholders' Agent (as defined
herein) (the "Shareholders' Agent") and the Principal Shareholders (as
defined herein).
RECITALS
WHEREAS, the Board of Directors of each of Merger Sub and the
Company has adopted this Agreement in accordance with the General and
Business Corporation Law of Missouri, as amended (the "MGBCL"), and each
deems it advisable and in the best interests of its shareholders to
consummate the transactions contemplated hereby, including the merger (the
"Merger") of the Merger Sub with and into the Company, upon the terms and
subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has unanimously
determined that the consideration to be paid to the Company Shareholders is
fair to the Company Shareholders and has directed the submission of this
Agreement to a vote at a meeting of the Company Shareholders (the
"Shareholder Meeting") and recommended to the Company Shareholders the
approval of this Agreement and the Merger and the other transactions
contemplated hereby upon the terms and subject to the conditions set forth
herein; and
WHEREAS, concurrently with the execution of this Agreement, and as
a condition and inducement to Parent's willingness to enter into this
Agreement, certain of the Key Employees and certain of the Principal
Shareholders are entering into Employee Retention Agreements (collectively,
the "Retention Agreements"); and
WHEREAS, the Board of Directors of Merger Sub has directed the
submission of this Agreement to a vote at a meeting of the shareholders of
Merger Sub and, in turn, Parent, as the sole shareholder of Merger Sub, has
approved this Agreement and the Merger in accordance with the provisions of
the MGBCL.
NOW, THEREFORE, in consideration of the covenants and
representations set forth herein, and for other good and valuable
consideration, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms
As used herein, the terms below shall have the following meanings. Any
of such terms, unless the context otherwise requires, may be used in the
singular or plural, depending upon the reference.
"401(k) Plan" has the meaning set forth in Section 7.5.
"Acquisition Proposal" means any offer or proposal relating to any
Alternate Transaction.
"Antitrust Filings" has the meaning set forth in Section 7.3.
"Aggregate Consideration" has the meaning set forth in Section 2.7(a).
"Agreement" has the meaning set forth in the preamble.
"Alternate Transaction" means any transaction or series of related
transactions involving: (i) the sale, license, disposition or acquisition of
all or a material portion of the business or assets of the Company or any of
the Company Subsidiaries; (ii) the sale, issuance, grant, disposition or
acquisition of (A) any Company Capital Stock or other equity security of the
Company or any of the Company Subsidiaries, (B) any option, call, warrant or
right (whether or not immediately exercisable) to acquire any Company Capital
Stock or other equity security of the Company or any of the Company
Subsidiaries, or (C) any security, instrument or obligation that is or may
become convertible into or exchangeable for any Company Capital Stock or
other equity security of the Company or any of the Company Subsidiaries; or
(iii) any merger, consolidation, business combination, tender offer, share
exchange, reorganization or similar transaction involving the Company or any
of the Company Subsidiaries; provided, however, neither the Merger nor any
Company acquisition of Common Stock pursuant to the terms of the Stock
Incentive Plan will be deemed an Alternate Transaction in any case.
"Annual Financial Statements" means the audited consolidated balance
sheets of the Company and its Subsidiaries as of and for the fiscal years
ended December 31, 2004, 2005 and 2006, together with the related
consolidated statements of operation, shareholders' equity and cash flows for
the fiscal years ended December 31, 2004, 2005 and 2006, including the notes
thereto.
"Antitrust Filings" has the meaning set forth in Section 7.3.
"Articles of Merger" has the meaning set forth in Section 2.3.
"Asset Accounts" has the meaning set forth in Section 2.8(a).
"Assets" has the meaning set forth in Section 3.12(a).
"Audit" means any audit, assessment of Taxes, other examination by any
Tax Authority, or any administrative or judicial proceeding or appeal of such
proceeding relating to Taxes.
"Business Day" means any day that is not a Saturday, Sunday, or other
day on which banks are required or authorized by law to be closed in
Missouri.
"Change of Recommendation" has the meaning set forth in Section 6.3(f).
"Change of Recommendation Notice" has the meaning set forth in Section
6.3(f)(iii).
"Closing" has the meaning set forth in Section 2.2.
"Closing Amount" has the meaning set forth in Section 2.7(a)(i).
"Closing Amount Deficiency" has the meaning set forth in Section
2.8(d)(ii).
"Closing Amount Excess" has the meaning set forth in Section 2.8(d)(i).
"Closing Balance Sheet " means the unaudited balance sheet of the
Company as of the Closing Date, including any notes thereto and the
information set forth in Section 2.8(b).
"Closing Balance Sheet Objection" has the meaning set forth in Section
2.8(c)(i).
"Closing Date" has the meaning set forth in Section 2.2.
"Closing Reference Amount" has the meaning set forth in Section 2.8(b).
"COBRA" has the meaning set forth in Section 3.17(d).
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Commitment Letter" has the meaning set forth in Section 4.8.
"Common Stock" means all shares of common stock, par value $0.01 per
share, of the Company.
"Company" has the meaning set forth in the preamble.
"Company Articles" means the Articles of Incorporation of the Company as
in effect on the date hereof.
"Company Authorizations" has the meaning set forth in Section 3.10.
"Company Board" has the meaning set forth in Section 2.6(a).
"Company Bylaws" means the Bylaws of the Company as in effect on the
date hereof.
"Company Capital Stock" means all shares of Common Stock of the Company.
"Company Cash" means all cash of the Company on hand or held by any bank
or other third Person, less the amount of any Payment Obligation as such term
is defined in the Retention Agreements with the Company's Chief Executive
Officer and Chief Financial Officer to the extent not yet paid from an
account designated as "Cash" in the designation column of Exhibit C hereto,
less all overdrafts, and less amounts sufficient to satisfy all checks in
transit, in the accounts designated as "Cash" in the designation column of
Exhibit C hereto, as of the Closing Date.
"Company Certificate" means a certificate or certificates representing
shares of Company Capital Stock.
"Company Debt" means, with respect to the Company, (i) all obligations
set forth in accounts designated as "Debt" in the designation column of
Exhibit C hereto, (ii) all indebtedness for borrowed money or for the
deferred purchase price of property or services (other than current
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (iii) any other indebtedness that is
evidenced by a note, bond, debenture or similar instrument, (iv) any guaranty
including that certain Limited Guaranty by Contract Freighters, Inc. for the
benefit of U.S. Bank National Association, dated as of December 3, 2002 and
as amended by that certain First Amendment to Limited Guaranty dated December
2, 2005 and that certain Second Amendment to Limited Guaranty dated as of
December 21, 2006, for the principal amount of the balance of the note
described therein and (v) all obligations under financing leases or
capitalized leases, in each case (x) as of the Closing Date, (y) together
with interest thereon, related prepayment penalties actually incurred and
other amounts payable actually incurred in connection with the extinguishment
thereof, if any, and (z) determined in accordance with the Company's normal
accounting practices; provided, that in no event shall "Company Debt" include
(a) any operating lease, "keep well" or similar letter, or letter of credit
posted as collateral for self-insured retentions, to the extent not described
in clauses (i) or (v) hereof, (b) that certain Unlimited Guaranty (the
"Guaranty") by the Company for the benefit of U.S. Bank National Association
dated as of April 26, 2004, or (c) that certain Irrevocable Letter of Credit
No. 210-2706438 (the "Letter of Credit") dated March 13, 1990 for the benefit
of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇; provided that, no claim shall have
been made upon, nor any drawing made under, such Guaranty or Letter of
Credit, as the case may be.
"Company Disclosure Schedule" has the meaning set forth in ARTICLE III.
"Company Due Diligence Supervisor" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
"Company Employee Plans" has the meaning set forth in Section 3.17(a).
"Company Governing Documents" has the meaning set forth in Section 3.1.
"Company Shareholders" means the holders of Company Capital Stock,
including the Principal Shareholders.
"Company Subsidiary" or "Company Subsidiaries" has the meaning set forth
in Section 3.2(a).
"Confidentiality Agreement" means that certain Mutual Confidential
Nondisclosure Agreement dated as of February 19, 2007 by and between the
Company and Parent.
"Contract" means any written or oral agreement, contract, subcontract,
settlement agreement, lease, instrument, note, option, warranty, purchase
order, license, sublicense, insurance policy, benefit plan, commitment,
arrangement or undertaking of any nature that is legally binding as in effect
as of the date hereof or as may become enforceable against the Company or its
Subsidiaries on or before the Closing Date.
"Customs" has the meaning set forth in Section 3.33.
"Damages" has the meaning set forth in Section 10.1(a).
"Disclosure Schedule Delivery Date" has the meaning set forth in ARTICLE
III.
"Disputed Items" has the meaning set forth in Section 2.8(c)(ii).
"Dissenting Shareholder" has the meaning set forth in Section 2.9(c).
"Dissenting Shares" has the meaning set forth in Section 2.9(c).
"Dollars" or "$" means the lawful currency of the United States of
America.
"DOJ" has the meaning set forth in Section 3.4(b).
"Due Diligence Access" has the meaning set forth in Section 7.10(a).
"Due Diligence Period" has the meaning set forth in Section 7.10(a).
"Due Diligence Termination Fee" has the meaning set forth in Section
7.10(b).
"Due Diligence Termination Notice" has the meaning set forth in Section
7.10(a).
"Effective Time" has the meaning set forth in Section 2.3.
"Environmental Claim" has the meaning set forth in Section 3.15(f)(1).
"Environmental Damages" means any and all losses, damages, costs,
expenses, diminution in value, liabilities, obligations and claims of any
kind, whether known or unknown, asserted or unasserted or absolute or
contingent (including any action brought by any Governmental Entity or Person
and including reasonable costs of investigation and defense and reasonable
attorneys' fees and expenses) arising out of or relating to (i) the events,
circumstances, and conditions described in Section 3.15(d) of the Company
Disclosure Schedule; (ii) any pollution or threat to human health or the
environment that is related in any way to the management, use, control,
ownership or operation of the business of the Company or any Company
Subsidiary including, without limitation, all on-site and off-site activities
involving Materials of Environmental Concern, and that occurred, existed,
arises out of conditions or circumstances that occurred or existed, or was
caused, in whole or in part, on or before the Closing Date, whether or not
the pollution or threat to human health or the environment is described in
Section 3.15(d) of the Company Disclosure Schedule; or (iii) any
Environmental Claim against any Person or entity whose liability for such
Environmental Claim the Company or any Company Subsidiary has prior to the
Closing Date assumed or retained either contractually or by operation of law.
"Environmental Laws" has the meaning set forth in Section 3.15(f)(2).
"ERISA" has the meaning set forth in Section 3.17(a).
"ERISA Affiliate" has the meaning set forth in Section 3.17(a).
"Escrow Account" means the escrow account established pursuant to the
Escrow Agreement.
"Escrow Agent" means U.S. Bank National Association, acting as agent
under the Escrow Agreement or such other escrow agent selected by Parent and
reasonably satisfactory to the Company.
"Escrow Agreement" has the meaning set forth in Section 2.10.
"Escrow Amount" has the meaning set forth in Section 2.7(a)(ii).
"Export Approvals" has the meaning set forth in Section 3.32(a).
"Final Conversion Schedule" has the meaning set forth in Section
2.11(b).
"Final Date" has the meaning set forth in Section 9.1(b).
"Financial Statements" means the Annual Financial Statements, the
Interim Financial Statements and the Monthly Financial Statements delivered
to Parent on or before the date hereof.
"Financing" means the consummation of the financing that is the subject
of the Commitment Letter or such alternate financing as Parent shall deem
advisable.
"FMCSA" has the meaning set forth in Section 3.4(b).
"FTC" has the meaning set forth in Section 3.4(b).
"GAAP" means the United States generally accepted accounting principles.
"Governmental Entity" means any federal, state, local or foreign
government, including any municipality, any political subdivision thereof or
any court, administrative or regulatory agency, department, instrumentality,
body or commission or other governmental authority or agency.
"HSR Act" has the meaning set forth in Section 3.4(b).
"Indebtedness" means (i) all indebtedness for borrowed money or for the
deferred purchase price of property or services (other than current
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (ii) any other indebtedness that is
evidenced by a note, bond, debenture or similar instrument, (iii) all
obligations under financing leases or capitalized leases, (iv) all
obligations in respect of acceptances issued or created, (v) all liabilities
secured by any Lien on any property, other than Permitted Liens and (vi) all
guarantee, "keep well," "make well," comfort or similar obligations, in each
case together with interest thereon, related prepayment penalties actually
incurred and other amounts payable actually incurred in connection with the
extinguishment thereof, if any.
"Indemnification Period" has the meaning set forth in Section 10.2.
"Indemnified Person" or "Indemnified Persons" has the meaning set forth
in Section 10.1(a).
"Indemnity Deductible" has the meaning set forth in Section 10.1(c).
"Indemnity Threshold" has the meaning set forth in Section 10.1(c).
"Intellectual Property" means all intellectual property and industrial
property rights of any kind or nature, including all U.S. and foreign (i)
patents, patent applications, patent disclosures, and all related
continuations, continuations-in-part, divisionals, reissues, re-examinations,
substitutions, and extensions thereof ("Patents"), (ii) trademarks, service
marks, names, corporate names, trade names, domain names, logos, slogans,
trade dress, and other similar designations of source or origin, together
with the goodwill symbolized by any of the foregoing ("Trademarks"), (iii)
copyrights and copyrightable subject matter ("Copyrights"), (iv) rights of
publicity, (v) moral rights and rights of attribution and integrity, (v)
computer programs (whether in source code, object code, or other form),
algorithms, databases, compilations and data, technology supporting the
foregoing, and all documentation, including user manuals and training
materials, related to any of the foregoing ("Software"), (vi) trade secrets
and all other confidential information, know-how, inventions, proprietary
processes, formulae, models, and methodologies ("Trade Secrets"), (vii)
rights of privacy and rights to personal information, (viii) telephone
numbers and Internet protocol addresses, and (viii) all rights in the
foregoing and in other similar intangible assets, (ix) all applications and
registrations for the foregoing, and (x) all rights and remedies against
past, present, and future infringement, misappropriation, or other violation
thereof.
"Interim Balance Sheet" means the unaudited balance sheet of the Company
and its Subsidiaries on a consolidated basis as at March 31, 2007, including
any notes thereto.
"Interim Financial Statements" means the Interim Balance Sheet and the
related unaudited statements of operation and cash flows of the Company and
its Subsidiaries on a consolidated basis for the three (3) months ended March
31, 2007, including any notes thereto.
"International Employee Plan" has the meaning set forth in Section
3.17(k).
"Investigation" has the meaning set forth in Section 7.10.
"IP Contracts" has the meaning set forth in Section 3.13(b).
"IRS" means the Internal Revenue Service.
"Key Employee" means each employee of the Company set forth on Schedule
1.1(a) hereto.
"Knowledge" means (i) with respect to any natural Person, the actual
knowledge of such Person after reasonable inquiry, (ii) with respect to the
Company, the actual knowledge after reasonable inquiry of any of those
Persons set forth on Schedule 1.1(b) hereto or (iii) with respect to Parent
or Merger Sub, the actual knowledge after reasonable inquiry of any of those
Persons set forth on Schedule 1.1(c) hereto.
"Law" means any federal, state, foreign, local, municipal, provincial or
other statute, law, ordinance, regulation, rule, code, order or other
requirement or rule of law.
"Lease Agreements" has the meaning set forth in Section 3.20(b).
"Liability Accounts" has the meaning set forth in Section 2.8(a).
"Lien" means, with respect to any asset (including any security), any
mortgage, lien, pledge, charge, security interest, encumbrance or restriction
of any kind in respect of such asset.
"Material Adverse Effect" means, with respect to any entity or group of
entities, any event, change or effect that (x) is, or is reasonably expected
to be, materially adverse to the financial condition, properties, assets
(including intangible assets), liabilities, business, operations or results
of operations of such entity and its Subsidiaries, taken as a whole; or (y)
would prevent or materially alter or delay any of the transactions
contemplated by this Agreement; other than any event, change or effect
(either alone or in combination) relating to (a) conditions affecting the
industries in which such entity or group of entities operate generally or the
United States economy generally; (b) the taking of any action, or the
withholding of action, pursuant to the provisions of this Agreement; (c)
changes in Law or GAAP; (d) acts of war or acts of terrorism; or (e) the
announcement or consummation of this Agreement or any of the transactions
contemplated herein.
"Material Contracts" has the meaning set forth in Section 3.28.
"Materials of Environmental Concern" has the meaning set forth in
Section 3.15(f)(3).
"Merger" has the meaning set forth in the recitals.
"Merger Sub" has the meaning set forth in the preamble.
"Mexican Subsidiary Shareholders" means ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Consorcio de Servicios al Transporte, S.A. de
C.V. and Corporativo CST, S. de ▇.▇. de C.V., each of whom owns capital stock
of, or other equity or voting interests in, certain of the Mexican
Subsidiaries as of the date hereof, as more fully set forth on
Section 3.2(a)(ii) of the Company Disclosure Schedule.
"Mexican Subsidiaries" means CFI de Mexico, S.A. de C.V.; CFI Mex, S. de
▇.▇. de C.V.; CFI Logistica, S.A. de C.V.; Prontomex, S.A. de C.V.; Servicios
Administrativos CFI, S.A. de C.V.; and Soluciones Internacionales de
Transporte, S.A. de C.V.
"MGBCL" has the meaning set forth in the recitals.
"Monthly Financial Statements" means the unaudited balance sheets of the
Company and its Subsidiaries on a consolidated basis for each fiscal month
completed prior to the Closing Date, beginning with the month ended April 30,
2007 and the related statements of operation and cash flows for the monthly
periods then ended.
"Non-Environmental Damages" has the meaning set forth in
Section 10.1(a).
"Officer's Certificate" has the meaning set forth in Section 10.4.
"Outstanding Share Number" means the number of shares of Common Stock
outstanding immediately before the Effective Time.
"Owned Real Property" means any real property legally or beneficially
owned by the Company or any Company Subsidiary.
"Parent" has the meaning set forth in the preamble.
"Parent Due Diligence Supervisor" means ▇▇▇▇▇ ▇▇▇▇▇▇▇.
"Paying Agent" means U.S. Bank National Association, acting as agent
under the Paying Agent Agreement or such other paying agent selected by
Parent and reasonably satisfactory to the Company.
"Payment Fund" has the meaning set forth in Section 2.11(a).
"Permitted Liens" means (a) Liens for taxes not yet due and payable or
being contested in good faith; (b) statutory and contractual Liens of
landlords, (c) Liens of carriers, warehousemen, mechanics, materialmen,
repairmen and other similar Persons incurred in the ordinary course of
business; (d) zoning, building codes and other land use Laws regulating the
use or occupancy of any Owned Real Property; and (e) restrictions, variances,
covenants, rights of way, encumbrances, easements other similar matters of
record affecting title to any portion of the Owned Real Property and other
minor irregularities in title, none of which, individually or in the
aggregate, interfere in any material respect with the conduct of the
Company's business as conducted as of the date hereof.
"Person" shall mean any individual, corporation (including any non-
profit corporation), general partnership, limited partnership, limited
liability partnership, joint venture, estate, trust, company (including any
limited liability company or joint stock company), firm or other enterprise,
association, organization, entity or Governmental Entity.
"Post-Closing Taxable Period' means any taxable period beginning after
the Closing Date, or with respect to a Straddle Period, the portion of such
period beginning after the Closing Date.
"Pre-Closing Taxable Period" means any taxable period ending on or
before the Closing Date, or with respect to a Straddle Period, the portion of
such taxable period ending on and including the Closing Date.
"Pre-Qualified Company Shareholders" has the meaning set forth in
Section 2.11(b).
"Principal Shareholder Representatives" has the meaning set forth in
Section 7.1(b).
"Principal Shareholders" means each Person set forth on Schedule 1.1(d).
"Proportionate Share" means, with respect to a Company Shareholder, a
fraction, the numerator of which is the number of shares of Common Stock held
by such Company Shareholder immediately prior to the Effective Time and the
denominator of which is the Outstanding Share Number.
"Reference Accounts Statement" has the meaning set forth in Section
2.8(a).
"Reference Date" has the meaning set forth in Section 2.8(a).
"Reference Date Amount" has the meaning set forth in Section 2.8(a).
"Related Party Transaction" is a transaction between the Company or
Company Subsidiary and another Company Subsidiary, or another party defined
as a related party in Internal Revenue Code Section 482 and Regulations,
Canadian Transfer Pricing Code and Regulations, Mexican Transfer Pricing Code
and Regulations, or the Transfer Pricing Code and Regulations of any other
country in which a party to a transaction is located.
"Requisite Shareholder Approval" has the meaning set forth in Section
3.4(b).
"Retention Agreements" has the meaning set forth in the recitals.
"Reviewing Auditor" means the Kansas City, Missouri office of
PriceWaterhouseCoopers. In the event such firm is unable or unwilling to
serve as the Reviewing Auditor, then the Kansas City, Missouri office of
Ernst & Young LLP shall serve as the Reviewing Auditor. In the event both of
the Kansas City, Missouri office of PriceWaterhouseCoopers and the Kansas
City, Missouri office of Ernst & Young LLP are unable or unwilling to serve
as the Reviewing Auditor the parties hereto shall agree upon an office of an
accounting firm of national reputation to serve as the Reviewing Auditor;
provided that in no event shall such office of any such Person which has
provided services to Parent or any of its Subsidiaries, the Company or any of
its Subsidiaries or any Principal Shareholder in the five (5) year period
preceding the date hereof serve as Reviewing Auditor and provided, further
that it shall be a condition to any Person's appointment as the Reviewing
Auditor that the parties hereto agree not to retain the services of such
office of such Reviewing Auditor for a period of two (2) years following the
completion of such office's services as Reviewing Auditor.
"Secretary of State" has the meaning set forth in Section 2.3.
"Shareholder Meeting" has the meaning set forth in the recitals.
"Shareholders' Agent" means the Person set forth on Schedule 1.1(e).
"Shareholders' Escrow Account" means the escrow account established
pursuant to the Shareholders' Escrow Agreement.
"Shareholders' Escrow Agreement" means the escrow agreement to be
entered into prior to the Closing between the Shareholders' Agent and the
Shareholders' Escrow Agent.
"Shareholders' Escrow Amount" has the meaning set forth in Section
2.7(a)(iii).
"Shareholders' Escrow Agent" means U.S. Bank National Association,
acting as agent under the Shareholders' Agent Escrow Agreement or such other
escrow agent selected by the Shareholders' Agent in her sole discretion.
"Signing Date Employee" means any employee of the Company or any Company
Subsidiary as of the date hereof.
"Sitran" has the meaning set forth in Section 3.2(b).
"Stock Incentive Plan" has the meaning set forth in Section 3.3(a).
"Straddle Period" means a taxable period ending after the Closing Date
but beginning before the Closing Date.
"Subsidiary" means, as to any party, any corporation, association,
business entity, partnership, limited liability company or other Person of
which such party, either alone or together with one or more Subsidiaries or
by one or more Subsidiaries (i) directly or indirectly owns or controls
securities or other interests representing more than twenty-five percent
(25%) of the voting power of such Person or (ii) is entitled, by Contract or
otherwise, to elect, appoint or designate directors constituting a majority
of the members of such Person's board of directors or other governing body.
"Subsidiary Governing Documents" has the meaning set forth in Section
3.1.
"Superior Offer" means an unsolicited, bona fide written Acquisition
Proposal by a third party to acquire, directly or indirectly, pursuant to a
merger, consolidation or other business combination, all or substantially all
of the assets of the Company and its Subsidiaries or all of the outstanding
voting securities of the Company as a result of which the Company
Shareholders immediately preceding such transaction would hold less than
forty percent (40%) of the equity interests in the surviving or resulting
entity of such transaction and any direct or indirect parent or subsidiary
thereof, on terms that the Company Board has in good faith concluded, after
consultation with its financial advisor of nationally recognized reputation,
taking into account, among other things, (x) all legal, financial, regulatory
and other aspects of the offer (including any terms thereof relating to
break-up fees, expense reimbursement and conditions to consummation) and (y)
the Person making the offer, to be more favorable, from a financial point of
view, to the Company Shareholders (in their capacities as shareholders) than
the terms of the Merger (which shall require that such Acquisition Proposal
must provide to the Company Shareholders (in their capacities as
shareholders) consideration with a value per share of Company Capital Stock
that is greater than the per share consideration to be provided in the
Merger) and is capable of being consummated on the terms so proposed no later
than thirty (30) days following the Final Date and for which financing, to
the extent required, is then fully committed, subject to conditions no
greater than those set forth in the Commitment Letter.
"Surviving Corporation" has the meaning set forth in Section 2.1.
"Tax" or "Taxes" means all United States federal, state, local and
foreign taxes, and other assessments of a similar nature including, without
limitation: (i) taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, profits, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation or net worth; (ii) taxes or other charges in the
nature of excise, withholding, ad valorem, stamp, transfer, value added or
gains taxes; (iii) license, registration and documentation fees; and (iv)
customs duties, tariffs and similar charges, in each case, whether imposed
directly or through withholding, and including any interest, additions to
tax, or penalties applicable thereto and will include any liability pursuant
to a tax sharing, allocation, or indemnification agreement, any liability
determined by reference to, in respect of, or on behalf of the tax liability
of another Person, any liability under Treasury Regulation Section 1.1502-6
or any similar provision of state, local, or foreign Law.
"Tax Authority" means the IRS and any other national, regional, state,
municipal, foreign or other governmental or regulatory authority or
administrative body responsible for the administration of any Taxes.
"Tax Return" means all United States federal, state, local and foreign
tax returns, declarations, statements, reports, schedules, forms and
information returns or other documents and any amendments thereto required to
be filed with a Tax Authority.
"Third Party Claim" has the meaning set forth in Section 10.8.
"Termination Fee" has the meaning set forth in Section 9.3(b).
"Transaction Expenses" has the meaning set forth in Section 9.3.
"Transactions" means the Merger and the other transactions and
agreements contemplated by this Agreement.
"Treasury Regulations" has the meaning set forth in Section 3.17(b).
"Voting Debt" has the meaning set forth in Section 3.3(b).
"WARN Act" means the Worker Adjustment and Retraining Notification Act
of 1988, as amended.
ARTICLE II
THE MERGER
Section 2.1 The Merger
Upon the terms and subject to the conditions set forth in this
Agreement and the applicable provisions of the MGBCL, at the Effective Time,
Merger Sub shall be merged with and into the Company and the separate
corporate existence of Merger Sub shall thereupon cease with the Company
continuing as the surviving corporation and as a wholly-owned subsidiary of
Parent (sometimes hereinafter referred to as the "Surviving Corporation")
Section 2.2 Closing
The closing of the Merger (the "Closing") shall take place at 10:00
a.m. Central time, on a date to be specified by the parties, which shall be
no later than three (3) Business Days after satisfaction or waiver of all of
the conditions set forth in ARTICLE VIII of this Agreement (other than
conditions which can be satisfied only by the delivery of certificates or
other documents at the Closing) (the "Closing Date") at the offices of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, unless another time, date or place is
agreed to by the parties hereto. Each of the parties hereto acknowledges
that it is their intention that the Closing occur (subject to the terms and
conditions of this Agreement) as soon as practicable following the
satisfaction or waiver of the conditions set forth in ARTICLE VIII.
Section 2.3 Effective Time
Upon the terms and subject to the conditions set forth in this
Agreement, on the Closing Date, the Surviving Corporation shall file the
articles of merger in such form as is required by the MGBCL (the "Articles of
Merger") with the Secretary of State of the State of Missouri (the "Secretary
of State") in accordance with Section 351.430 of the MGBCL, whereupon, at
such time, or at such later time as shall be agreed upon by the parties and
specified in the Articles of Merger, Merger Sub shall be merged with and into
the Company, with the Company surviving the Merger, pursuant to the
provisions of the MGBCL (the "Effective Time"). The parties hereto shall
make all other filings, recordings or publications required by the MGBCL in
connection with the Merger.
Section 2.4 Effect of the Merger
From and after the Effective Time, the effect of the Merger shall
be as provided in this Agreement and the applicable provisions of the MGBCL.
Section 2.5 Articles of Incorporation; Bylaws
(a) Immediately after the Effective Time, the articles of
incorporation of the Surviving Corporation shall be the articles of
incorporation of Merger Sub as in effect immediately prior to the Effective
Time and as set forth in Exhibit A to this Agreement, except that such
articles of incorporation shall be amended to provide that the name of the
Surviving Corporation shall be "Transportation Resources, Inc.", and such
articles of incorporation shall be the articles of incorporation of the
Surviving Corporation until thereafter amended as provided by Law and such
articles of incorporation.
(b) Immediately after the Effective Time, the bylaws of the
Surviving Corporation shall be the bylaws of Merger Sub as in effect
immediately prior to the Effective Time and as set forth in Exhibit B to this
Agreement, except that such bylaws shall be amended to provide that the name
of the Surviving Corporation shall be "Transportation Resources, Inc.", and
such bylaws shall be the bylaws of the Surviving Corporation until thereafter
amended as provided by Law and such bylaws.
Section 2.6 Directors; Officers
(a) Immediately after the Effective Time, the directors of
Merger Sub at the Effective Time shall be the directors of the Surviving
Corporation until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed and qualified in
accordance with the Surviving Corporation's articles of incorporation and
bylaws. In furtherance thereof, the Company shall secure, effective at the
Effective Time, resignations of all of its incumbent directors (the "Company
Board"), and the Company shall take all actions available to the Company to
cause the directors of Merger Sub to be so elected or appointed and qualified
at the Effective Time.
(b) Immediately after the Effective Time, the officers of
Merger Sub at the Effective Time shall be the officers of the Surviving
Corporation until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed and qualified in
accordance with the Surviving Corporation's articles of incorporation and
bylaws. In furtherance thereof, the Company shall secure, effective at the
Effective Time, resignations of all of its officers, and the Company shall
take all actions available to the Company to cause the officers of Merger Sub
to be so elected or appointed and qualified at the Effective Time.
Section 2.7 Consideration for the Merger
(a) Parent shall pay or cause to be paid to, or on behalf
of, the Company Shareholders, an aggregate amount in the Merger equal to
Seven Hundred Fifty Million Dollars ($750,000,000) subject to the adjustments
set forth in this Section 2.7 and Section 2.8 below (as so adjusted, the
"Aggregate Consideration"), which shall consist of:
(i) an amount equal to Six Hundred Eighty-Two
Million Five Hundred Thousand Dollars ($682,500,000) (the "Closing
Amount"), which shall be paid to the Company Shareholders at Closing
in accordance with Section 2.11(a); and
(ii) an amount equal to Thirty-Seven Million Five
Hundred Thousand Dollars ($37,500,000) (the "Escrow Amount") less
the amount, if any, that is required to be paid to Indemnified
Persons to compensate such Indemnified Persons for Damages as
provided in ARTICLE X, which shall be paid into the Escrow Account
at Closing and disbursed in accordance with Section 2.10; and
(iii) an amount equal to Thirty Million Dollars
($30,000,000) (the "Shareholders' Escrow Amount") less the amount of
any Closing Amount Deficiency, if any, that is required to be paid
to Parent as provided in Section 2.8(d), which shall be paid into
the Shareholders' Escrow Account at Closing and disbursed in
accordance with the terms of the Shareholders' Escrow Agreement.
The Closing Amount and the Aggregate Consideration are subject to adjustment
in accordance with Section 2.8.
(b) Except as otherwise provided in Section 2.8, all
payments to be made as provided in this Section 2.7 shall be made without
interest or withholding.
(c) Notwithstanding anything in this Section 2.7 to the
contrary, any amounts required to be delivered into escrow pursuant to the
Retention Agreements, other than those Retention Agreements entered into by
the Chief Executive Officer and the Chief Financial Officer of the Company,
shall be paid by the Parent to the escrow agent under the Retention
Agreements and deducted from the amounts otherwise payable to the Principal
Shareholders pursuant to this Agreement.
Section 2.8 Closing Amount Adjustments
(a) Reference Accounts Statement. Attached hereto as
Exhibit C (the "Reference Accounts Statement") is a schedule setting forth
the balances of certain asset accounts designated "Asset" in the designations
column (the "Asset Accounts") and liability accounts designated "Liability"
in the designations column (the "Liability Accounts") of the Company as of
March 31, 2007 (the "Reference Date"). The amount by which the sum of the
Reference Date balances of the Asset Accounts exceeds the sum of the
Reference Date balances of the Liability Accounts is the "Reference Date
Amount." For the avoidance of doubt, (i) those accounts designated "N/A" in
the Reference Accounts Statement shall not be taken into account for purposes
of adjusting the Closing Amount and (ii) no accrued liability for Taxes for
which Parent has assumed responsibility for payment pursuant to Sections
7.6(a)(iv) shall be included in any Liability Account.
(b) Closing Balance Sheet. No later than sixty (60) days
after the Closing Date, Parent shall prepare and deliver to the Shareholders'
Agent the Closing Balance Sheet, which shall include the Closing Date
balances in each of the Asset Accounts and Liability Accounts, the amount by
which the sum of the balances of the Closing Date Asset Accounts exceeds the
sum of the balances of the Closing Date Liability Accounts (such number,
which may be a positive or negative number, the "Closing Reference Amount")
and the actual amounts of the Company Debt, Transaction Expenses incurred by
the Company or any Company Subsidiary and not paid or accrued and reflected
in the Closing Balance Sheet before the Closing Date and Company Cash. The
Company represents and warrants that the Reference Accounts Statement has
been prepared in accordance with, and Parent agrees that the Closing Balance
Sheet will be prepared in accordance with, the Company's normal accounting
practices, consistent with past practice in the ordinary course of business.
(c) Dispute Resolution
(i) The Company Shareholders shall be deemed to
have accepted the Closing Balance Sheet (A) if the Shareholders'
Agent provides written notice to Parent that it accepts the Closing
Balance Sheet as prepared by Parent or (B) unless the Shareholders'
Agent shall have delivered to Parent within sixty (60) days after
the date on which the Shareholders' Agent received the Closing
Balance Sheet a written notice of disagreement, such notice to
specify in reasonable detail the nature and extent of such
disagreement (a "Closing Balance Sheet Objection"). Parent and the
Shareholders' Agent shall attempt in good faith to reach agreement
resolving all disputes set forth in the Closing Balance Sheet
Objection within thirty (30) days after its delivery. If Parent and
the Shareholders' Agent are unable to resolve any or all such
disputes within such thirty-day period, Parent and the Shareholders'
Agent shall, promptly after the expiration of such period, submit
for resolution all unresolved disputes to the Reviewing Auditor as
an arbiter for resolution.
(ii) Promptly, but no later than thirty (30) days
after its acceptance of its appointment as Reviewing Auditor, the
Reviewing Auditor shall determine, based solely on presentation by
Parent and the Shareholders' Agent and not by independent review,
those items in dispute on the Closing Balance Sheet Objection (the
"Disputed Items") and shall render a written report to Parent and
the Shareholders' Agent as to the resolution of each dispute and the
resulting calculation of the Asset Accounts and Liability Accounts
as of the Closing Date, the Closing Reference Amount, Company Debt,
Transaction Expenses incurred by the Company or any Company
Subsidiary and not paid or accrued and reflected in the Closing
Balance Sheet before the Closing Date, Company Cash and any other
item on the Closing Balance Sheet. In resolving any Disputed Item,
the Reviewing Auditor (A) shall not assign a value to such Disputed
Item greater than the greatest value for such Disputed Item claimed
by either Parent or the Shareholders' Agent or less than the
smallest value for such Disputed Item claimed by either Parent or
the Shareholders' Agent; (B) shall rule only on the objections
raised by Shareholders' Agent, accepting all other aspects of the
Closing Balance Sheet; and (C) shall have no right, authority or
discretion to employ any accounting standard or principles except
for those provided for herein. The Reviewing Auditor will have
exclusive jurisdiction over, and shall be the sole recourse and
remedy of, the parties hereto against one another or any other
Person with respect to any disputes arising out of or relating to
Closing Balance Sheet. The Reviewing Auditor's determination, as
reflected in the report of the Reviewing Auditor, will be conclusive
and binding on the parties hereto, in the absence of manifest error,
and will be enforceable in a court of law. The Closing Balance
Sheet, as modified by the report of the Reviewing Auditor, shall
constitute the Closing Balance Sheet for all purposes hereunder.
(iii) Each party shall cooperate with and make
available to the other party and its representatives within three
(3) Business Days of its receipt of a written request all
information, records, data and working papers, and shall permit
access to facilities, personnel and representatives, as reasonably
required in connection with the preparation and analysis of the
Closing Balance Sheet, the Closing Balance Sheet Objection and the
resolution of any disputes with respect thereto.
(iv) Unless Parent and the Shareholders' Agent
otherwise mutually agree in writing, Parent and the Company
Shareholders shall share the fees and expenses of the Reviewing
Auditor as determined by such accounting firm based on the following
formulas: (A) the Company Shareholders shall pay a portion of such
fees and expenses equal to the total of such fees and expenses
multiplied by a fraction, the numerator of which is the dollar
amount of the Disputed Items resolved in favor of Parent and the
denominator of which is the total dollar amount of the Disputed
Items and (B) Parent shall pay a portion of fees and expenses equal
to the total of such fees and expenses multiplied by a fraction, the
numerator of which is the dollar amount of the Disputed Items
resolved in favor of the Company Shareholders and the denominator of
which is the total dollar amount of the Disputed Items.
(d) Calculation of Payments
(i) If (A) the Closing Reference Amount plus the
actual amount of Company Cash less the actual amount of Transaction
Expenses incurred by the Company or any Company Subsidiary and not
paid before the Closing Date or accrued on the Closing Balance Sheet
less the actual amount of Company Debt, in each case as reflected in
the Closing Balance Sheet, is greater than (B) the Reference Date
Amount (such difference, the "Closing Amount Excess"), Parent shall
pay to the Shareholders' Agent for the benefit of the Company
Shareholders the full amount of the Closing Amount Excess by wire
transfer of immediately available funds no later than five (5)
Business Days after the date on which the Closing Reference Amount
is finally determined to a bank account designated by the
Shareholders' Agent for the benefit of the Company Shareholders.
(ii) In the event that (A) the Closing Reference
Amount plus the actual amount of Company Cash less the actual amount
of Transaction Expenses incurred by the Company or any Company
Subsidiary and not paid before the Closing Date or accrued on the
Closing Balance Sheet less the actual amount of Company Debt, in
each case as reflected in the Closing Balance Sheet is less than (B)
the Reference Date Amount (the absolute value of such difference,
the "Closing Amount Deficiency"), the Shareholders' Agent shall pay
to Parent the full amount of the Closing Amount Deficiency out of
immediately available funds by wire transfer no later than five (5)
Business Days after the date on which Closing Reference Amount is
finally determined to a bank account designated by Parent.
(iii) Any amount paid in accordance with this
Section 2.8(d) shall bear interest from the Closing Date through but
excluding the date of payment, at the rate of the three-month
treasury rate as published in The Wall Street Journal from time to
time during such period. Such interest shall accrue daily on the
basis of a 365-day year.
Section 2.9 Effect on Capital Stock
(a) Conversion of Stock. Except as provided in Section
2.9(c) and Section 2.9(d) and subject to the terms and conditions of this
Agreement and the Certificate of Merger as of the Effective Time, by virtue
of the Merger and without any action on the part of any of the parties hereto
or any Company Shareholder, all shares of Company Capital Stock issued and
outstanding immediately prior to the Effective Time shall be converted into
the right to receive the Aggregate Consideration, to be allocated among the
Company Shareholders in accordance with the Final Conversion Schedule.
(b) Capital Stock of Merger Sub. As of the Effective Time,
by virtue of the Merger and without any action on the part of any of the
parties hereto or any holder of securities of Merger Sub, each share of
common stock, par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and exchanged
for one validly issued, fully paid and nonassessable share of common stock of
the Surviving Corporation. As of the Effective Time, each stock certificate
of Merger Sub evidencing ownership of any such shares of common stock shall
evidence ownership of such shares of capital stock of the Surviving
Corporation.
(c) Dissenters' Rights. Notwithstanding any provision of
this Agreement to the contrary and to the extent available under the MGBCL,
shares of Company Capital Stock that are issued and outstanding immediately
prior to the Effective Time and that are held by any Company Shareholder who
is entitled to exercise, and properly exercises, dissenter's rights with
respect to such Company Capital Stock (the "Dissenting Shares") pursuant to,
and who complies in all respects with, the provisions of Section 351.455 of
the MGBCL, shall not be converted into, exchangeable for or represent the
right to receive, such Company Shareholder's Proportionate Share of the
Aggregate Consideration. Any such Company Shareholder (each a "Dissenting
Shareholder") shall instead be entitled to receive payment of the fair value
of such Company Shareholder's Dissenting Shares from the Surviving
Corporation in accordance with the provisions of the MGBCL; provided,
however, that all Dissenting Shares held by any Company Shareholder who shall
have failed to perfect or who otherwise shall have withdrawn, in accordance
with the MGBCL, or lost such Company Shareholder's rights to demand an
appraisal and payment in respect of such Company Shares under the MGBCL,
shall thereupon be deemed to have been converted into, and to have become
exchangeable for, as of the Effective Time, the right to receive such Company
Shareholder's Proportionate Share of the Aggregate Consideration, without any
interest thereon, upon surrender or delivery, as applicable, of the ownership
evidence that formerly evidenced such Company Shares. The Company, Parent
and the Surviving Corporation shall give the Shareholders' Agent (i) prompt
notice of any demands received by such Person for payment for Dissenting
Shares, withdrawals of such demands and any other instruments, notices or
other documents served pursuant to the MGBCL with respect thereto, and (ii)
the opportunity, pursuant to Section 10.8 (treating such demands as Third
Party Claims), to control and direct all negotiations and proceedings with
respect to any such demands for payment under the MGBCL.
(d) Cancellation of Company Capital Stock Owned by Parent or
the Company. As of the Effective Time, by virtue of the Merger and without
any action on the part of any of the parties hereto or any Company
Shareholder, all shares of Company Capital Stock that are owned by the
Company as treasury stock and each share of Company Capital Stock owned by
Parent or any direct or indirect wholly owned Subsidiary of Parent or of the
Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
Section 2.10 Escrow Amount and Shareholders' Escrow Amount
(a) At the Closing, Parent shall pay by wire transfer of
immediately available funds into the Escrow Account the Escrow Amount to be
held in escrow and disbursed by the Escrow Agent pursuant to the escrow
agreement (the "Escrow Agreement") to be entered into prior to Closing in a
form reasonably satisfactory to Parent, the Company and the Escrow Agent.
The fees of the Escrow Agent shall be borne equally by Parent and the
Shareholders' Agent, on behalf of the Company Shareholders. The Company
Shareholders shall be entitled to receive the accretions and other earnings
in the Escrow Account. Any Taxes in respect of the accretions and other
earnings in the Escrow Account shall be borne by the Company Shareholders.
(b) At the Closing, Parent shall pay by wire transfer of
immediately available funds into the Shareholders' Escrow Account the
Shareholders' Escrow Amount to be held in escrow and disbursed pursuant to
the Shareholders' Escrow Agreement.
Section 2.11 Surrender of Certificates
(a) Exchange Procedures. At the Closing, each holder of
record of a Company Certificate may surrender or cause to be surrendered to
Parent the Company Certificate(s) held by such holder (including by
attestation in the case of book-entry shares), together with a duly completed
and validly executed letter of transmittal in such form as Parent reasonably
may request (which form shall bind each Company Shareholder to the terms of
this Agreement, including those set forth in ARTICLE X). In exchange
therefor, at the Closing, Parent shall (x) deliver to each Pre-Qualified
Company Shareholder whose aggregate portion of the Closing Amount is in
excess of or equal to One Million Dollars ($1,000,000), by wire transfer of
immediately available funds to the corresponding account designated in the
Final Conversion Schedule and (y) deliver at the location of the Closing for
the benefit of each Pre-Qualified Company Shareholder whose aggregate portion
of the Closing Amount is less than One Million Dollars ($1,000,000), a
cashier's check in the amount of the Closing Amount that such Pre-Qualified
Company Shareholder shall have the right to receive, as set forth in the
Final Conversion Schedule, and the Company Certificate so surrendered shall
forthwith be cancelled. With respect to each Company Shareholder who is not
a Pre-Qualified Company Shareholder and each Pre-Qualified Company
Shareholder who does not surrender or cause to be surrendered its Company
Certificate and letter of transmittal at the Closing, Parent shall pay at the
Closing by wire transfer of immediately available funds into an account
designated by the Paying Agent the Closing Amount less any amounts paid to
the Pre-Qualified Company Shareholders who surrendered their Company
Certificates and letter of transmittal at the Closing. Any cash deposited
with the Paying Agent shall hereinafter be referred to as the "Payment Fund".
The Paying Agent shall invest the cash included in the Payment Fund on a
daily basis as directed by Parent pending payment thereof by the Paying Agent
to the Company Shareholders who have not surrendered their certificates at
the Closing. Earnings from such investments shall become part of the Payment
Fund, and any amounts in excess of the amounts payable to the Company
Shareholders who have not previously surrendered their certificates and
received payment in exchange thereof pursuant to this ARTICLE II shall be
promptly paid to Parent. The Surviving Corporation shall cause the Paying
Agent to mail to any holder of record of a Company Certificate who has not
surrendered such holder's Company Certificate(s) at the Closing (i) a letter
of transmittal (which shall specify that delivery shall be effected and risk
of loss and title to the Company Certificates shall pass only upon receipt of
the Company Certificates by the Paying Agent and which shall be in such form
and have such other provisions as Parent may reasonably specify) and (ii)
instructions for effecting the surrender of the Company Certificates in
exchange for the amount of the Closing Amount that such holder has the right
to receive as set forth on the Final Conversion Schedule. Upon surrender of
a Company Certificate for cancellation to the Paying Agent, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holder of such Company Certificate shall
be entitled to receive in exchange therefor from the Payment Fund a cashier's
check or wire transfer in the amount of the Closing Amount that such holder
has the right to receive as set forth on the Final Conversion Schedule, and
the Company Certificate so surrendered shall forthwith be canceled. Until
surrendered in accordance with this Section 2.11(a), each outstanding Company
Certificate will be deemed from and after the Effective Time, for all
corporate purposes, to evidence only the right to receive such portion of the
Aggregate Consideration as set forth on the Final Conversion Schedule without
interest.
(b) Conversion Schedule. No later than five (5) Business
Days prior to the expected Closing Date, the Company shall deliver to Parent
a schedule showing, as of the Closing Date, (i) the number and class of
shares of Company Capital Stock held by each Company Shareholder; (ii) the
allocation of the Closing Amount among the Company Shareholders; (iii) the
Proportionate Share of each Company Shareholder and (iv) (y) a definitive
list of those Company Shareholders (the "Pre-Qualified Company Shareholders")
who, prior to delivery of such schedule, have tendered to counsel for the
Company with instructions to deliver to Parent at Closing a duly completed
and validly executed letter of transmittal (in such form as Parent shall
reasonably request) and the Company Certificates held by such Company
Shareholder (including by attestation in the case of book-entry shares), and
(z) account wiring instructions for Parent's payment of each such Pre-
Qualified Company Shareholder's Proportionate Share of the Closing Amount
(the "Final Conversion Schedule"). The parties hereto agree that each of the
Parent and the Paying Agent shall be entitled to rely upon the Final
Conversion Schedule without independent verification in connection with
payments to be made hereunder
(c) No Liability. Notwithstanding anything to the contrary
in this Section 2.11, neither the Surviving Corporation, the Paying Agent nor
any party hereto shall be liable to any Person for any amount properly paid
to a public official pursuant to any applicable abandoned property, escheat
or similar Law.
(d) Dissenting Shares. The provisions of this Section 2.11
shall also apply to Dissenting Shares that lose their status as such, except
that the obligations of Parent under this Section 2.11 shall commence on the
date of loss of such status and the holder of such shares shall be entitled
to receive in exchange for such shares the portion of the Aggregate
Consideration to which such holder is entitled pursuant to this ARTICLE II.
Section 2.12 No Further Ownership Rights in Company Capital Stock
No later than two (2) Business Days prior to the expected Closing
Date, the stock transfer books of the Company shall be closed and thereafter
there shall be no further registration of transfers of any shares of Common
Stock on the records of the Company. From and after the Effective Time, the
holders of Company Certificates evidencing ownership of shares of Company
Capital Stock outstanding immediately prior to the Effective Time shall cease
to have any rights with respect to such shares, except as otherwise provided
for herein or by applicable Law. If, after the Effective Time, Company
Certificates are presented to the Paying Agent, Parent or the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided
in this ARTICLE II.
Section 2.13 Lost, Stolen or Destroyed Certificates
In the event that any Company Certificates shall have been lost,
stolen or destroyed, the Parent shall cause the Paying Agent to pay in
exchange for such lost, stolen or destroyed Company Certificates, upon the
making of an affidavit of that fact by the holder thereof, such payment of
Aggregate Consideration as may be required pursuant to this ARTICLE II;
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed Company Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Paying Agent or the Surviving Corporation with respect to the
Company Certificates alleged to have been lost, stolen or destroyed.
Section 2.14 Taking of Necessary Action; Further Action
If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement and to
vest the Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of the Company,
the officers and directors of Parent, the Company and the Surviving
Corporation are fully authorized in the name of their respective corporations
to take, and may take, all such lawful and necessary action, so long as such
action is not prohibited by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
On or before August 3, 2007 (the "Disclosure Schedule Delivery
Date"), the Company shall deliver to Parent the Company disclosure schedule
(the "Company Disclosure Schedule"). Except as disclosed in that section of
the Company Disclosure Schedule corresponding to the Section of this
Agreement to which the following representations or warranties pertain, each
of the Company and each Principal Shareholder jointly and severally
represents and warrants to Parent as of the Disclosure Schedule Delivery Date
and as of the Closing Date as follows:
Section 3.1 Organization, Standing and Power
Each of the Company and its Subsidiaries is a corporation or other
organization duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation or organization and each has
the requisite power and authority to own, lease and operate its properties
and to carry on its business as currently conducted, except for such failures
as would not reasonably be expected to be material to any of the Company or
its Subsidiaries. Each of the Company and its Subsidiaries is duly qualified
to do business as a foreign corporation and is in good standing in every
jurisdiction where the properties, owned, leased or operated, or the business
conducted by it requires such qualification, except for such failures as
would not reasonably be expected to be material to any of the Company or its
Subsidiaries. The Company has made available to Parent (i) a true and
correct copy of the Company Articles and Company Bylaws, each as amended to
date (collectively, the "Company Governing Documents") and (ii) the charter
and by-laws, or like organizational documents (collectively, "Subsidiary
Governing Documents"), of each Company Subsidiary, and each such instrument
is in full force and effect. The Company is not in violation of any of the
provisions of the Company Governing Documents and each Company Subsidiary is
not in violation of its respective Subsidiary Governing Documents, except for
such violations as would not reasonably be expected to be material to the
Company or such Company Subsidiary, as the case may be.
Section 3.2 Subsidiaries
(a) Section 3.2(a)(i) of the Company Disclosure Schedule
sets forth the name of each Company Subsidiary (each a "Company Subsidiary"
and collectively, the "Company Subsidiaries"). The Company is the direct or
indirect owner of all of the outstanding shares of capital stock of, or other
equity or voting interests in, each Company Subsidiary and all such shares
have been duly authorized, validly issued and are fully paid and
nonassessable, free and clear of all Liens and restrictions imposed by
applicable securities laws. Notwithstanding (x) anything to the contrary
contained herein or in Section 3.2(a)(i) of the Company Disclosure Schedule
and (y) any Contract in respect of the Mexican Subsidiaries to which the
Company is party, except as set forth in Section 3.2(a)(ii) of the Company
Disclosure Schedule the Company is the beneficial owner of all of the
outstanding shares of capital stock of, or other equity or voting interests
in, the Mexican Subsidiaries and has the right to receive all profits and
distributions from the Mexican Subsidiaries. Other than the Company
Subsidiaries, neither the Company nor any Company Subsidiary owns any capital
stock of, or other equity or voting interests of any nature in, or any
interest convertible, exchangeable or exercisable for, capital stock of, or
other equity or voting interests of any nature in, any other Person.
(b) In addition to the Company Subsidiaries set forth in
Section 3.2(a) of the Company Disclosure Schedule, the Company is the direct
or indirect owner of 10,602,752 shares of the Series NN stock of Soluciones
Internacionales de Transporte, S.A. de C.V. ("Sitran"), and such shares have
been duly authorized, validly issued and are fully paid and nonassessable,
free and clear of all Liens and restrictions imposed by applicable securities
laws. The Company-held shares in Sitran represent forty-nine and nine-tenths
percent (49.9 %) of the outstanding capital stock of Sitran, and the
remaining fifty and one-tenth percent (50.1%) of the outstanding capital
stock is held by Mexican entities as set forth in Section 3.2(b)(i) of the
Company Disclosure Schedule. Except as set forth in Section 3.2(b)(ii) of
the Company Disclosure Schedule, Sitran (i) has obtained a permit to issue
and subscribe shares of "neutral capital" from the General Bureau of Foreign
Investment and (ii) has obtained a permit to render the Federal Service of
Freight Transportation (the Servicio de Autotransporte Federal de Carga).
Further, the holder of shares of the Series NN stock of Sitran is able to
transfer its Series NN shares without restriction after proper notice has
been given to the General Bureau of Foreign Investment in accordance with
Sitran's By-laws. The Company has made available to Parent a copy of
Sitran's By-laws, which have been approved by both the General Bureau of
Foreign Investment and by the General Direction of Federal Transportation
(Direccion General de Autotransporte Federal). Section 3.2(b)(ii) of the
Company Disclosure Schedule sets forth as complete list of the material
contracts to which Sitran is a party.
Section 3.3 Capitalization; Title to the Shares
(a) The authorized capital stock of the Company consists of
15,000,000 shares of Common Stock. As of the date hereof, (i) 6,007,212
shares of Common Stock are issued and outstanding; (ii) no shares of Common
Stock are reserved for issuance under the TRI 2004 Management Stock Incentive
Plan (the "Stock Incentive Plan") and (iii) 441,537 shares of Common Stock
are outstanding pursuant to stock grants under the Stock Incentive Plan.
42,196 shares of Company Capital Stock are issued and held in the treasury of
the Company. No shares of Company Capital Stock are owned or held by any
Company Subsidiary. As of the Closing, the issued and outstanding Company
Capital Stock shall be as set forth in the certificate to be delivered by the
Chief Executive Officer of the Company pursuant to Section 8.3(b). All of
the outstanding shares of Company Capital Stock are duly authorized, validly
issued, fully paid and non-assessable.
(b) Except as set forth in Section 3.3(a), (i) there are no
shares of capital stock or any other securities of the Company authorized,
issued or outstanding; (ii) there are no existing options, warrants, calls,
preemptive rights, Indebtedness having general voting rights or debt
convertible into securities having such rights ("Voting Debt") or
subscriptions or other rights, agreements, arrangements or commitments of any
character (including any shareholder rights plan or similar plan commonly
referred to as a "poison pill"), relating to the issued or unissued capital
stock of the Company obligating the Company to issue, transfer or sell or
cause to be issued, transferred or sold any shares of capital stock or Voting
Debt of, or other equity interest in, the Company or securities convertible
into or exchangeable for such shares or equity interests, or obligating the
Company to make any payment linked to the value of the Company Capital Stock
or the sale price of the Company, or obligating the Company to grant, extend
or enter into any such option, warrant, call, subscription or other right,
agreement, arrangement or commitment; and (iii) there are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire the Common Stock, or other capital stock of the Company or to provide
funds to make any investment (in the form of a loan, capital contribution or
otherwise) in any other entity.
(c) There are no voting trusts or other agreements or
understandings to which the Company is a party with respect to the voting of
the Company Capital Stock.
(d) As of the date hereof, Section 3.3(d) of the Company
Disclosure Schedule sets forth a true, complete and correct list of each
holder of record of Common Stock and the number of such securities owned by
each such holder.
Section 3.4 Authority
(a) The Company has the requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company.
This Agreement has been duly executed and delivered by the Company and
constitutes the valid and binding obligations of the Company enforceable
against the Company in accordance with its terms, except to the extent that
enforceability may be limited by the effect, if any, of any applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting
the enforcement of creditors' rights generally or any general principles of
equity, regardless of whether such enforceability is considered in a
proceeding at Law or in equity. Neither the execution and delivery by the
Company of this Agreement nor the consummation of the transactions
contemplated hereby will conflict with, or result in any breach or violation
of, or default under (with or without notice or lapse of time, or both), or
give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any benefit under (i) any provision of the Company
Governing Documents or any Subsidiary Governing Documents, (ii) any Contract
to which the Company or any Company Subsidiary is a party or to which any of
its properties or assets are bound or (iii) any permit, authorization,
concession, franchise, license, writ, judgment, order, decree, statute, Law,
ordinance, rule or regulation applicable to the Company or any Company
Subsidiary or any of their respective properties or assets, except, with
respect to clauses (ii) and (iii), for any such conflicts, breaches,
violations or defaults which, individually or in the aggregate, would not
reasonably be expected to be material to the Company and its Subsidiaries.
(b) No notice to, filing with, and no permit, authorization,
consent or approval of, any Governmental Entity, or any other Person is
necessary for the execution and delivery of this Agreement by the Company or
the consummation of the transactions contemplated by this Agreement, except
for (i) the filing and recordation of the Articles of Merger in accordance
with the requirements of the MGBCL, (ii) the filing of the Notification and
Report Forms with the United States Federal Trade Commission ("FTC") and the
Antitrust Division of the United States Department of Justice ("DOJ")
required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder ("HSR Act") and
the expiration or termination of the applicable waiting period under the HSR
Act and such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the foreign
merger control regulations identified in Section 3.4(b) of the Company
Disclosure Schedule, (iii) any applicable requirements of the Federal Motor
Carrier Safety Administration ("FMCSA") or of any state with respect to the
licensing or registration of motor carriers, which consents, approvals,
authorizations, permits, filings and notifications are set forth in Section
3.4(b) of the Company Disclosure Schedule, (iv) the affirmative vote of
Company Shareholders owning at least 66 2/3 % of the outstanding shares of
Company Capital Stock in favor of the Merger at a meeting of Company
Shareholders (the "Requisite Shareholder Approval") and (v) any such notice,
filing, permit, authorization, consent or approval, the absence of which
would, individually or in the aggregate, reasonably be expected to be
material to the Company and its Subsidiaries.
Section 3.5 Financial Statements
Attached hereto as Section 3.5 of the Company Disclosure Schedule
are true and correct copies of the Financial Statements. The Financial
Statements have been prepared in accordance with GAAP consistently applied
throughout the periods involved and present fairly, in all material respects,
the consolidated financial condition and the consolidated results of
operations and cash flows for such periods of the Company and its
Subsidiaries, in each case in accordance with GAAP, subject in the case of
the Interim Financial Statements to normal year-end adjustments. The Company
does not intend to correct or restate, and to the Company's Knowledge, there
is not any basis to correct or restate any of the Financial Statements. The
Company has not had any material dispute with any of its auditors regarding
accounting matters or policies during any of its past three (3) full fiscal
years or during the current fiscal year-to-date. The books and records of
the Company and each Company Subsidiary have been, and are being, maintained
in accordance with applicable legal and accounting requirements, and the
Financial Statements are consistent with such books and records. Neither the
Company nor any of the Company Subsidiaries is a party to, or has any
commitment to become a party to, any joint venture, off-balance sheet
partnership or any similar off-balance sheet Contract relating to any
transaction or relationship between or among the Company or any Company
Subsidiary, on the one hand, and any unconsolidated affiliate, including any
structured finance, special purpose or limited purpose Person, on the other
hand, or any "off-balance sheet arrangements" (as defined in Item 303(a) of
Regulation S-K promulgated by the United States Securities and Exchange
Commission). All transactions between the Company or any Company Subsidiary,
on the one hand, and any Company Subsidiary on the other hand, have been
properly disclosed on the Financial Statements and are segregated from trade
receivables due from, and payables owed to, unrelated parties.
Section 3.6 Absence of Certain Changes
Except as and to the extent set forth in the Financial Statements
made available to Parent on or before the Disclosure Schedule Delivery Date,
from the date of the Annual Financial Statement for the fiscal year ended
December 31, 2006 to the date of this Agreement, the Company has conducted,
and has caused each of its Subsidiaries to conduct, its business in the
ordinary course consistent with past practice, and has not, and has caused
each of its Subsidiaries to not have:
(a) suffered any Material Adverse Effect or suffered an event
or circumstance that is likely to result in a Material Adverse Effect;
(b) incurred any material liabilities or obligations
(absolute, accrued, contingent or otherwise), except for (i) liabilities or
obligations incurred in the ordinary course of business, consistent with past
practice or (ii) Transaction Expenses that have been paid by the Company or
will be deducted from the Closing Amount, or increased any bad debt,
contingency or other reserves;
(c) changed any assumptions underlying or methods of
calculating any bad debt, contingency or other reserves;
(d) paid, discharged or satisfied any material claims,
liabilities or obligations (absolute, accrued, contingent or otherwise) other
than the payment, discharge or satisfaction in the ordinary course of
business, consistent with past practice in respect of (i) claims, liabilities
and obligations reflected or reserved against in the Interim Balance Sheet or
any Monthly Financial Statement delivered on or before the Disclosure
Schedule Delivery Date and (ii) claims, liabilities and obligations between
(x) the last day of the period covered by the last Monthly Financial
Statement delivered on or before the Disclosure Schedule Delivery Date and
(y) the date hereof;
(e) permitted or allowed any of its properties or assets
(real, personal or mixed, tangible or intangible) to be subjected to any
Liens other than Permitted Liens;
(f) written down or written off as uncollectible any notes or
accounts receivable, except for write-downs and write-offs (x) in the
ordinary course of business, consistent with past practice and (y) not
exceeding One Hundred Thousand Dollars ($100,000) individually or Five
Hundred Thousand Dollars ($500,000) in the aggregate;
(g) cancelled any material debts or cancelled, compromised,
waived or released any material claims or rights, other than (x) in the
ordinary course of business, consistent with past practice and (y) not
exceeding One Hundred Thousand Dollars ($100,000) individually or Five
Hundred Thousand Dollars ($500,000) in the aggregate;
(h) sold, transferred, assigned or otherwise disposed of any
of its material properties or assets (real, personal or mixed, tangible or
intangible), except for the disposal of rolling stock assets in the ordinary
course of business, consistent with past practice;
(i) disposed of or permitted to lapse any rights to the use of
any Intellectual Property, or disposed of or disclosed to any Person other
than representatives of the Parent or pursuant to the terms of a
nondisclosure agreement any trade secret, formula, process or know-how or
other Intellectual Property not theretofore a matter of public knowledge;
(j) increased (x) in any manner the compensation or benefits
of any current or former director or officer of the Company or any Company
Subsidiary or (y) in any material manner the compensation or benefits of any
current or former employee or consultant of the Company or any Company
Subsidiary (including in the case of clauses (x) and (y) any such increase
pursuant to any bonus, pension, profit sharing, incentive compensation or
other plan, program, agreement or commitment) or increased in any manner the
compensation or benefits payable or to become payable to any current or
former director, officer, employee or consultant of the Company or any
Company Subsidiary, except, in the case of current employees other than
officers of the Company or any Company Subsidiary, as the case may be, for
such increases in compensation or benefits made in the ordinary course of
business, consistent with past practice;
(k) adopted, entered into or amended any bonus, pension,
profit sharing, incentive compensation, employment, consulting, severance,
termination, deferred compensation or other plan, program, agreement or
commitment, other than as required pursuant to applicable Law, or made any
change in any severance or termination plan, policy or practices;
(l) entered into any material operating lease or operating
license for property or assets;
(m) made capital expenditures or commitments or acquired any
property, plant and equipment that would be treated as a capital expenditure
in accordance with GAAP for a cost in excess of an aggregate amount of Five
Million Dollars ($5,000,000);
(n) declared, paid or set aside for payment any dividend or
other distribution in respect of its capital stock or redeemed, purchased or
otherwise acquired, directly or indirectly, any shares of capital stock or
other securities of the Company or any Company Subsidiary, other than in the
ordinary course of business consistent with past practice and which shall be
paid in full before the Closing Date;
(o) paid, loaned or advanced any material amount to, or sold,
transferred or leased any material properties or assets (real, personal or
mixed, tangible or intangible) to, or entered into any agreement or
arrangement with, any of its employees, officers, directors or shareholders
or any affiliate or associate of any of its employees, officers, directors or
shareholders (except for directors' fees and compensation to officers at
rates not inconsistent with the Company's past practice and reimbursements in
connection with business related travel) and advances to employees;
(p) introduced any change with respect to its operation or its
business which change could reasonably be expected to have a material
negative impact on its results of operations;
(q) amended, modified or terminated any Material Contract,
other than in the ordinary course of business, consistent with past practice;
(r) made any investment in or acquired the securities of any
other Person or acquired the assets of any other Person involving, in the
case of assets, an amount in excess of Two Hundred Fifty Thousand Dollars
($250,000) for any single transaction or One Million Dollars ($1,000,000) in
the aggregate;
(s) other than in the ordinary course of business consistent
with past practice (i) delayed or postponed the payment of accounts payable
or other liabilities, (ii) requested or sought acceleration of accounts
receivable, or (iii) changed its cash management practices;
(t) experienced any damage, destruction or loss (whether or
not covered by insurance) to or of any property or affecting any of its
assets, other than damage, destruction or loss to or of rolling stock in an
aggregate amount consistent with the aggregate amount of damage, destruction
or loss to or of rolling stock experienced over similar periods of time in
the ordinary course of business and consistent with past practice;
(u) made any offers, outside of the ordinary course of
business consistent with past practice, to customers to pay material
incentives, or actually paid material incentives, to such customers in order
to induce them to use any services;
(v) received resignations of, or terminated, any Key
Employee, officer or manager,
(w) reduced the number of drivers or seated trucks as at the
date of the Annual Financial Statement for the fiscal year ended December 31,
2006 by more than five percent (5%) in the case of drivers or five percent
(5%) in the case of seated trucks;
(x) entered into, or modified the terms of, any material
employment agreement or collective bargaining agreement or similar agreement;
or
(y) agreed, whether in writing or otherwise, to take any
action described in this Section 3.6.
Section 3.7 Absence of Undisclosed Liabilities
Except (i) as disclosed on the Interim Balance Sheet or Monthly
Financial Statements delivered on or before the Disclosure Schedule Delivery
Date, (ii) liabilities and obligations incurred since the date of the Interim
Balance Sheet in the ordinary course of business, consistent with past
practice that would not reasonably be expected to be material to the Company
and the Company Subsidiaries and (iii) Transaction Expenses that have been
paid by the Company or will be deducted from the Closing Amount, neither the
Company nor any Company Subsidiary has any liabilities. There are no off
balance sheet arrangements to which the Company or any Company Subsidiary is
a party or otherwise involving the Company or any Company Subsidiary.
Neither the Company nor any Company Subsidiary has any Indebtedness.
Section 3.8 Litigation
As of the Disclosure Schedule Delivery Date, there is no private or
governmental action, suit, proceeding, inquiry, claim, arbitration or
investigation pending before any agency, court, tribunal, or other
Governmental Entity, against the Company or any Company Subsidiary, any of
their respective properties or any of their respective officers or directors
(in their capacities as such). Since the Disclosure Schedule Delivery Date,
there is no private or governmental action, suit, proceeding, inquiry, claim,
arbitration or investigation pending before any agency, court, tribunal, or
other Government Entity, against the Company or any Company Subsidiary, any
of their respective officers or directors (in their capacities as such) that
(x) involves any allegation of criminal law, (y) if finally adversely
determined would reasonably be expected to be material to the Company and the
Company Subsidiaries, or (z) questions or challenges the validity of this
Agreement or any of the transactions contemplated hereby. To the Company's
Knowledge, there is no private or governmental action, suit, proceeding,
inquiry, claim, arbitration or investigation threatened against the Company
or any Company Subsidiary, or any of their respective officers or directors
(in their capacities as such) that (x) involves any allegations of criminal
law, (y) if finally adversely determined would reasonably be expected to be
material to the Company and the Company Subsidiaries, or (z) questions or
challenges the validity of this Agreement or any of the transactions
contemplated hereby. To the Company's Knowledge, there is no valid basis for
any such action, suit, proceeding, claim, arbitration or investigation which
questions or challenges the validity of this Agreement or any of the
transactions contemplated hereby. There is no judgment, decree or order
against the Company or any Company Subsidiary or any of their respective
directors or officers (in their capacities as such), that would reasonably be
expected to prevent, enjoin, or materially alter or delay any of the
transactions contemplated by this Agreement. Neither the Company nor any
Company Subsidiary has any litigation pending against any other party.
Section 3.9 Restrictions on Business Activities
There is no agreement, judgment, injunction, order or decree
binding upon the Company or any Company Subsidiary which has or would
reasonably be expected to have the effect of prohibiting or materially
impairing any acquisition of property by the Company or any Company
Subsidiary or the conduct of business by the Company or any Company
Subsidiary as currently conducted.
Section 3.10 Governmental Authorization
The Company and each Company Subsidiary has obtained each material
federal, state, county, local or foreign governmental consent, license,
permit, grant, or other authorization of a Governmental Entity (i) pursuant
to which the Company or such Company Subsidiary, as the case may be,
currently operates or holds any interest in any of its properties or (ii)
that is required for the operation of the business of the Company or such
Company Subsidiary, as the case may be, or the holding of any such interest
((i) and (ii) are herein collectively called "Company Authorizations"). The
Company and each Company Subsidiary has complied in all material respects
with all Company Authorizations, and all Company Authorizations are in full
force and effect.
Section 3.11 [Reserved]
Section 3.12 Title to Property
(a) The Company and each of its Subsidiaries has good and
marketable title to, or valid leasehold interests in, all of its material
properties, interests in properties and assets (the "Assets") that it
purports to own (real, personal or mixed, whether tangible or intangible and
wherever situated, including without limitation, all Owned Real Property and
all interests in real property held pursuant to any Lease Agreements),
including all the properties and assets reflected on the Interim Balance
Sheet or acquired after the date of the Interim Balance Sheet (except for
properties, interests in properties and assets having an aggregate book value
not in excess of One Hundred Thousand Dollars ($100,000) sold or otherwise
disposed of since the date of the Interim Balance Sheet in the ordinary
course of business, consistent with past practice), free and clear of all
Liens other than Permitted Liens.
(b) All tractors and trailers owned by the Company and its
Subsidiaries (i) when construed on the whole and not individually, are in
good operating condition and repair ordinary wear and tear excepted, (ii)
meet all operating and safety fitness requirements of the FMCSA, or the
corresponding requirements of the country where they operate, when construed
on the whole and not individually, (iii) have been maintained in material
compliance with all applicable manufacturers' warranty programs and
requirements, and (iv) have been inspected and maintained, on a routine
basis, in accordance with the Company's internal policies. Neither the
Company nor any Company Subsidiary has received an unsatisfactory or
conditional safety and fitness rating from the FMCSA or the corresponding
authority of the country where they operate. Section 3.12(b) of the Company
Disclosure Schedule sets forth a true and complete list of (x) each tractor
owned by the Company and its Subsidiaries and sets forth for each the
dispatched mileage as of the date indicated, vehicle identification number,
make, model and book value and (y) each trailer owned by the Company and its
Subsidiaries and sets forth for each the age, book value and date of service.
All other property and equipment of the Company and each of its Subsidiaries
used in the operations of the business of the Company and each of its
Subsidiaries when construed on the whole and not individually, are in good
operating condition and repair, subject to normal wear and tear, are adequate
for the uses to which they are being put and have been maintained and
serviced in accordance with prudent practice and in compliance with all
applicable laws. All material properties used in the operations of business
of the Company and each of its Subsidiaries are reflected in the Interim
Balance Sheet to the extent GAAP requires the same to be reflected.
Section 3.13 Intellectual Property
(a) Section 3.13(a) of the Company Disclosure Schedule sets
forth a true, correct, and complete list of all U.S. and foreign (i) issued
Patents and Patent applications, (ii) Trademark registrations and
applications, (iii) Copyright registrations and applications, and (iv)
material Software applications used or held for use in the business of the
Company and its Subsidiaries as currently conducted, in each case which is
owned or purported to be owned by the Company and its Subsidiaries. The
Company and/or its Subsidiaries is the sole and exclusive beneficial and
record owner of all of the Intellectual Property items set forth in Section
3.13(a)(i)-(iii) of the Company Disclosure Schedule, and the sole and
exclusive beneficial owner of all of the Intellectual Property items set
forth in Section 3.13(a)(iv), and, to the Knowledge of the Company, all such
Intellectual Property is subsisting, valid, and in full force and effect.
(b) Section 3.13(b) of the Company Disclosure Schedule sets
forth a true, correct, and complete list of all material written, or to the
Knowledge of the Company, oral, Contracts to which the Company or its
Subsidiaries is a party or otherwise bound (i) granting or obtaining any
right to use any material Intellectual Property used or held for use in the
business of the Company and the Company Subsidiaries as currently conducted
(other than Contracts granting rights to use readily available commercial
Software that is generally available on nondiscriminatory pricing terms and
having an acquisition price of less than One Hundred Thousand Dollars
($100,000) in the aggregate for all such related Contracts or agreements) or
(ii) restricting the Company's rights, or permitting other Persons, to use or
register any material Intellectual Property used or held for use in the
business of the Company and the Company Subsidiaries as currently conducted
(collectively, the "IP Contracts"). The Company and each Company Subsidiary
has performed its material obligations under and is entitled to all material
benefits under all IP Contracts to which it is a party, and to the Knowledge
of the Company, is not alleged to be in default in respect of any IP Contract
to which it is a party. Each of the IP Contracts is in full force and
effect, and there exists no material default or event of material default or
event, occurrence, condition or act, with respect to the Company or any
Company Subsidiary or, to the Knowledge of the Company, with respect to the
other contracting party, which, with the giving of notice, the lapse of time
or the happening of any other event or conditions, would reasonably be
expected to become a material default or event of material default under the
terms of any IP Contract.
(c) The Company and each of its Subsidiaries own, or has a
valid right to use, free and clear of all Liens, all Intellectual Property
used or held for use in, or necessary to conduct, the business of the Company
and its Subsidiaries as currently conducted.
(d) The conduct of the business of the Company and its
Subsidiaries (including the products and services of the Company and its
Subsidiaries) as currently conducted does not infringe, misappropriate, or
otherwise violate any Person's Intellectual Property rights, and there has
been no such claim asserted or threatened in the past three (3) years against
the Company or any Subsidiary.
(e) To the Knowledge of the Company, no Person is
infringing, misappropriating, or otherwise violating any Intellectual
Property owned, used, or held for use by the Company or any Subsidiary, and
no such claims have been asserted or threatened against any Person by the
Company or its Subsidiaries in the past three (3) years.
(f) The Company and each of its Subsidiaries take reasonable
measures to protect the confidentiality of Trade Secrets, a component of
which is its current policy to require written acknowledgement from its
employees of their confidentiality obligations and written confidentiality
agreements from its vendors.
(g) No affiliate or current or former partner, director,
shareholder, officer, or employee of the Company or any Subsidiary will, upon
giving effect to the transactions contemplated hereby, own or retain any
rights to use any of the Intellectual Property owned and used, or held for
use by the Company or any Subsidiary in the business of the Company and the
Company Subsidiaries as currently conducted other than pursuant to any
Contract with Parent or Merger Sub, or any Person affiliated with either of
the foregoing.
(h) The consummation of the transactions contemplated by
this Agreement will not result in the loss or impairment of or payment of any
additional amounts with respect to, nor require the consent of any other
Person in respect of, the Company's or its Subsidiaries' right to own, use,
or hold for use any of the material Intellectual Property as owned, used, or
held for use in the conduct of the business of the Company and its
Subsidiaries as currently conducted, except for such losses, impairments, or
payments which, individually or in the aggregate, would not reasonably be
expected to be material to the Company and its Subsidiaries.
(i) With respect to the use of the Software in the business
of the Company and its Subsidiaries as it is currently conducted, (i) no
capital expenditures are reasonably expected to be necessary with respect to
such use other than capital expenditures in the ordinary course of business
that are consistent with the past practice of the Company and its
Subsidiaries, (ii) the Company and its Subsidiaries has not experienced any
material defects in such Software, including any material error or omission
in the processing of any transactions other than defects which have been
corrected and (iii) to the Knowledge of the Company, no such Software
contains any device or feature designed to disrupt, disable, or otherwise
impair the functioning of any Software.
(j) To the Knowledge of the Company, there have been no
unauthorized intrusions or breaches of the security of the Company's
information technology systems. The Company and its Subsidiaries have
implemented commercially reasonable security patches or upgrades that are
generally available for the Company's information technology systems in
accordance with the Company's reasonable technical and business judgment.
(k) No claims have been asserted or threatened against the
Company or any Company Subsidiary alleging a violation of any Person's
privacy or personal information or data rights and the consummation of the
transactions contemplated hereby will not breach or otherwise cause any
violation of any Law, regulation or rule, contractual obligation, policy, or
procedure related to privacy, data protection, or the collection and use of
personal information collected, used, or held for use by the Company or its
Subsidiaries in the conduct of the business of the Company and its
Subsidiaries. The Company and each of its Subsidiaries takes reasonable
measures to ensure that such information is protected against unauthorized
access, use, modification, or other misuse.
Section 3.14 Internal Controls
The Company and each of its Subsidiaries has established and
maintains an adequate system of internal controls over financial reporting
and the preparation of its consolidated financial statements in accordance
with GAAP. Neither the Company nor any Company Subsidiary nor, to the
Company's Knowledge, the Company's independent auditors have identified or
been made aware of any fraud (or any claim or allegation of fraud), whether
or not material, that involves the Company's management or other employees
who have a role in the preparation of financial statements or the internal
controls utilized by the Company and its Subsidiaries.
Section 3.15 Environmental Matters
(a) The Company and each Company Subsidiary is in material
compliance with all Environmental Laws, which compliance includes, but is not
limited to, the possession by the Company and each Company Subsidiary of all
permits and other governmental authorizations required under all
Environmental Laws, and material compliance with the terms and conditions
thereof. Neither the Company nor any Company Subsidiary has received any
communication (written or oral), whether from a Governmental Entity, citizens
group, employee or otherwise, that alleges that the Company or such Company
Subsidiary, as the case may be, is not in such material compliance, and there
are no circumstances that may prevent or interfere with such material
compliance in the future. All permits and other governmental authorizations
currently held by the Company and each Company Subsidiary pursuant to all
Environmental Laws are identified in Section 3.15 of the Company Disclosure
Schedule.
(b) There is no Environmental Claim pending or, to the
Company's Knowledge, threatened against the Company, any Company Subsidiary
or, to the Company's Knowledge, against any Person or entity whose liability
for any Environmental Claim the Company or any Company Subsidiary has
retained or assumed either contractually or by operation of Law prior to the
Closing Date.
(c) To the Company's Knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Materials of Environmental Concern, that could reasonably be
expected to (i) form the basis of any Environmental Claim against the
Company, any Company Subsidiary or against any Person or entity whose
liability for any Environmental Claim the Company or any Company Subsidiary
has retained or assumed either contractually or by operation of Law, or (ii)
otherwise result in any fines or liabilities or material costs under
Environmental Law.
(d) Without in any way limiting the generality of the
foregoing, (i) all underground storage tanks, and the capacity and contents
of such tanks, presently located on any property owned, leased or operated at
any time by the Company or any Company Subsidiary are identified in Section
3.15(d)(i) of the Company Disclosure Schedule, (ii) except as disclosed on
Section 3.15(d)(i) of the Company Disclosure Schedule, to the Knowledge of
the Company, there have been no underground storage tanks located on any
property formerly owned, leased or operated by the Company or any Company
Subsidiary (iii) there is and, to the Knowledge of the Company, has been no
asbestos contained in or forming part of any building, building component,
structure or office space owned, leased or operated at any time by the
Company or any Company Subsidiary, and (iv) no polychlorinated biphenyls or
polychlorinated biphenyl-containing items are or, to the Knowledge of the
Company, have been used or stored at any property owned, leased or operated
at any time by the Company or any Company Subsidiary.
(e) The Company has provided to Parent all assessments,
reports, data, results of investigations or audits and similar information
that is in the possession of or reasonably available to the Company regarding
environmental matters pertaining to the environmental condition of the
business of the Company and each Company Subsidiary, or the compliance (or
noncompliance) by the Company and any Company Subsidiary with any
Environmental Laws.
(f) Neither the Company nor any Company Subsidiary is required
by virtue of the transactions set forth herein and contemplated hereby, or as
a condition to the effectiveness of any transactions contemplated hereby,
(i) to perform a site assessment for Materials of Environmental Concern,
(ii) to remove or remediate Materials of Environmental Concern, (iii) to give
notice to or receive approval from any Governmental Entity pursuant to any
Environmental Law, or (iv) to record or deliver to any Person or entity any
disclosure document or statement pertaining to environmental matters.
For purposes of this Agreement:
(1) "Environmental Claim" means any claim, action,
cause of action, suit, proceeding, investigation, order, demand or
notice (written or oral) by any Person or entity alleging potential
liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties)
arising out of, based on or resulting from (a) the presence, or release
into the environment, of or exposure to, any Material of Environmental
Concern at any location whether or not owned or operated by the Company
or any Company Subsidiary or (b) circumstances forming the basis of any
violation, or alleged violation by the Company or any Company Subsidiary
or any other Person or entity for whom either is legally, contractually
or otherwise responsible, of any Environmental Law.
(2) "Environmental Laws" means all federal, state,
local and foreign laws, regulations, ordinances, requirements of
governmental authorities, and common law relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata, and natural resources), including, without
limitation, laws and regulations relating to (i) emissions, discharges,
releases or threatened releases of, or exposure to, Materials of
Environmental Concern, (ii) the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern, (iii) recordkeeping, notification, disclosure and
reporting requirements regarding Materials of Environmental Concern, and
(iv) endangered or threatened species of fish, wildlife and plants and
the management or use of natural resources.
(3) "Materials of Environmental Concern" means
chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum and petroleum products, asbestos or asbestos-
containing materials or products, polychlorinated biphenyls, lead or
lead-based paints or materials, radon, fungus, mold, mycotoxins or
similar deleterious substances.
Section 3.16 Taxes
(a) Each of the Company and each Company Subsidiary has timely
filed all Tax Returns required to be filed by it, and all such Tax Returns
were true, complete and correct in all respects. All Taxes required to be
paid by the Company or any Company Subsidiary have been timely paid other
than those currently payable without penalty or interest. Where payment of
Taxes is not yet due, the Company or such Company Subsidiary has established
a reserve or accrued liability for Taxes (excluding any reserve for deferred
Taxes established to reflect a timing difference between book and tax income)
in accordance with GAAP that is adequate to cover such Taxes. Neither the
Company nor any Company Subsidiary has any liability for unpaid Taxes
accruing after the date of the Interim Balance Sheet other than unpaid Taxes
arising in the ordinary course of business. Except as otherwise disclosed on
Section 3.16(a) of the Company Disclosure Schedule, there are not now any
extensions of time with respect to the dates of which any Tax Returns of the
Company or any Company Subsidiary were or are due to be filed.
(b) There are no Liens for Taxes upon any property or assets
of the Company or any Company Subsidiary, except for Liens for Taxes not yet
due.
(c) Neither the Company nor any Company Subsidiary has made
any change in accounting methods, received a ruling from any Tax Authority or
signed an agreement with respect thereto or signed any closing agreement with
respect to any Tax year.
(d) The Company and each Company Subsidiary has complied in
all respects with all applicable laws, rules and regulations relating to the
payment and withholding of Taxes (including withholding of Taxes pursuant to
Sections 1441 and 1442 of the Code or similar provisions under any foreign
laws) and has, within the time and the manner prescribed by Law, withheld and
paid over to the proper Taxing Authorities all amounts required to be so
withheld and paid over under applicable Laws.
(e) Except as may result from the Transactions, neither the
Company nor any Company Subsidiary as of the Closing Date has agreed nor will
be required to include in income for any period after the Closing Date any
adjustment pursuant to Section 481(a) of the Code (or any corresponding
provision of state, local or foreign Law) by reason of any change in
accounting method or otherwise (nor has any Governmental Entity proposed in
writing any such adjustment or change of accounting method).
(f) No federal, state, local or foreign Audits, investigations
or other administrative proceedings or court proceedings are presently
pending with regard to any Taxes or Tax Returns of the Company or any Company
Subsidiary. A list of all Audits, examinations or investigations commenced
or completed with respect to the Company and each Company Subsidiary with
respect to taxable periods ending after December 31, 1999 is set forth in
Section 3.16(f) of the Company Disclosure Schedule. No written notification
has been received by the Company or any Company Subsidiary that such an Audit
or other proceeding is pending or threatened with respect to any Taxes due
from or with respect to or attributable to the Company or any Company
Subsidiary or any Tax Return filed by or with respect to the Company or any
Company Subsidiary, which such Audit or other proceeding has not been fully
resolved.
(g) All Tax deficiencies that have been claimed, proposed or
asserted against the Company or any Company Subsidiary have been fully paid
or finally settled, and no issue has been raised in any examination by any
Tax Authority that, by application of similar principles, could reasonably be
expected to result in the proposal or assertion of a Tax deficiency for
another year not so examined.
(h) There are no outstanding requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against the Company or any Company
Subsidiary.
(i) No power of attorney has been granted by or with respect
to the Company or any Company Subsidiary with respect to any matter relating
to Taxes.
(j) Neither the Company nor any Company Subsidiary is a party
to, is bound by or has any obligation under any Tax sharing agreement, Tax
indemnification agreement or similar Contract, and neither the Company nor
any Company Subsidiary has any potential liability or obligation to any
Person as a result of, or pursuant to, any such agreement or Contract.
(k) Neither the Company nor any Company Subsidiary is nor has
been a U.S. real property holding company (as defined in Section 897(c)(2) of
the Code) during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
(l) Other than any Tax Returns that have not yet been required
to be filed, the Company has made available to Parent true, correct and
complete copies of the United States federal income Tax Return and any state,
local or foreign Tax Return (or, in the case of monthly and quarterly Tax
Returns, an annual summary of such Tax Returns) for the Company and the
Company Subsidiaries for any jurisdiction for each of the taxable periods
ended December 31, 2002 through December 31, 2006. The Company has delivered
or made available to the Parent complete and accurate copies of (i) all Audit
reports, letter rulings, technical advice memoranda and similar documents
issued by a Governmental Entity relating to the United States federal, state,
local or foreign Taxes due from or with respect to the Company and (ii) all
closing agreements entered into by the Company with any Tax Authority, in
each case, existing on the date hereof.
(m) Section 3.16(m) of the Company Disclosure Schedule sets
forth all foreign, state and local jurisdictions in which the Company or any
Company Subsidiary is or has been subject to Tax and each type of Tax payable
in such jurisdiction during the taxable year ending December 31, 2006.
(n) Neither the Company nor any Company Subsidiary has any
liability with respect to income, franchise or similar Taxes relating to the
operation of the Company or such Company Subsidiary prior to the date of the
Interim Balance Sheet in excess of the amounts that are accrued with respect
thereto and are reflected in the Interim Financial Statements, and since the
date of the Interim Balance Sheet, neither the Company nor any Company
Subsidiary has incurred any liability for Taxes, except with respect to
operations in the ordinary course of business after the date of the Interim
Balance Sheet.
(o) Neither the Company nor any Company Subsidiary has
received written notice of any claim made by a Tax Authority in a
jurisdiction where the Company or such Company Subsidiary does not currently
file Tax Returns that the Company or any Company Subsidiary is or may be
subject to taxation by that jurisdiction.
(p) No Tax Authority is asserting or, to the Company's
Knowledge, threatening to assert a claim against the Company or any Company
Subsidiary under or as a result of Section 482 of the Code or any similar
provision of state, local or foreign Law.
(q) Neither the Company nor any Company Subsidiary has filed
or been included in a combined, consolidated, unitary, or similar group for
Tax purposes under applicable Law, nor has any liability for Taxes of any
Person (other than the Company or any Company Subsidiary) under Treasury
Regulation Section 1.1502-6 or any similar provision of applicable Law as a
transferee or successor, by Contract or otherwise.
(r) Neither the Company nor any Company Subsidiary has
distributed stock of another entity, nor has had its stock distributed by
another entity, in a transaction that was purported or intended to be
governed in whole or in part by Section 355 or Section 361 of the Code.
(s) Neither the Company nor any Company Subsidiary has engaged
in any reportable transactions that were required to be disclosed pursuant to
Section 1.6011-4 of the Code.
(t) Since their inceptions, the Company and each Company
Subsidiary has, for United States federal, state and all other income tax
purposes, (i) qualified for and validly elected to be an "S corporation" or a
"qualified subchapter S subsidiary" pursuant to Sections 1361 and 1362 of the
Code and such election has not been and will not be revoked or terminated
pursuant to Section 1362(d) (or comparable provisions of applicable Law) of
the Code prior to the Closing Date, and (ii) has been and will continue to be
classified as an S corporation or qualified subchapter S subsidiary, as
applicable, up to the Closing Date and has not taken and will not take any
action prior to the Closing Date contrary to its status as an S corporation
or qualified subchapter S subsidiary.
(u) Neither the Company nor any Company Subsidiary has
potential liability for any Tax under Section 1374 of the Code. Neither the
Company nor any Company Subsidiary has in the past 10 years (i) acquired
assets from another corporation in a transaction in which the Company's (or
any Company Subsidiary's) basis for the acquired assets was determined, in
whole or in part, by reference to the Tax basis of the acquired assets (or
any other property) in the hands of the transferor, or (ii) acquired the
stock of any corporation that is a qualified subchapter S subsidiary.
(v) Neither the Company nor any Company Subsidiary is a party
to any joint venture, partnership or other arrangement or Contract which
could be treated as a partnership for United States federal or Mexican income
tax purposes.
(w) Neither the Company nor any Company Subsidiary is a party
to any tax incentive, abatement, rebate, or reduction agreement.
(x) Each of the Company and each Company Subsidiary has
prepared and retained all transfer pricing documentation reports and
contemporaneous documentation required by any Tax Authority, and each Related
Party Transaction has been transacted at an arm's length price as determined
by the transfer pricing documentation reports and transfer pricing laws and
regulations of the respective country or countries.
(y) Each of the Company and each Company Subsidiary has set
forth on Section 3.16(y) of the Company Disclosure Schedule any foreign tax
credits from its non-United States Subsidiaries that may be available for the
benefit of the Parent.
Section 3.17 Employee Benefit Plans
(a) Section 3.17 of the Company Disclosure Schedule lists,
with respect to the Company and each Company Subsidiary and any trade or
business (whether or not incorporated) that is treated as a single employer
with the Company (an "ERISA Affiliate") within the meaning of Section 414(b),
(c), (m) or (o) of the Code, (i) all employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), (ii) each loan to any non-officer employee, loans to
officers and directors and any stock option, stock purchase, stock grant,
phantom stock, stock appreciation right, supplemental retirement, severance,
termination, change in control, sabbatical, medical, dental, vision care,
disability, employee relocation, cafeteria benefit (Code Section 125) or
dependent care (Code Section 129), life insurance or accident insurance
plans, programs, agreements or arrangements, (iii) all bonus, pension, profit
sharing, savings, deferred compensation or incentive plans, programs,
agreements or arrangements, (iv) other fringe, perquisites or employee
benefit plans, programs, agreements or arrangements, and (v) any current or
former employment or executive compensation or severance agreements, written
or otherwise, for the benefit of, or relating to, outstanding payments (or
potential payments) to any present or former employee, consultant or director
of the Company and each Company Subsidiary (together, the "Company Employee
Plans").
(b) The Company has made available to Parent a copy of each of
the Company Employee Plans and related material plan documents (including
trust documents, insurance policies or contracts, employee booklets and
handbooks, summary plan descriptions, summaries of material modifications,
material correspondence with any Governmental Entity or with Company Employee
Plan participants, other authorizing documents and, with respect to any
Company Employee Plan intended to be qualified under Section 401(a) of the
Code, the applicable nondiscrimination tests for the last three (3) plan
years) and has, with respect to each Company Employee Plan that is subject to
ERISA reporting requirements, made available copies of the Form 5500 reports
filed for the last three (3) plan years. Any Company Employee Plan intended
to be qualified under Section 401(a) of the Code has either obtained from the
IRS a favorable determination letter as to its qualified status under the
Code, or the expiration of the requisite period under applicable regulations
promulgated by the IRS under the Code ("Treasury Regulations") or IRS
pronouncements in which to apply for such determination letter and to make
any amendments necessary to obtain a favorable determination has not occurred
or has been established under a standardized prototype plan for which an IRS
opinion letter has been obtained by the plan sponsor and is valid as to the
adopting employer. The Company has also made available to Parent the most
recent IRS determination, notification, advisory, or opinion letter issued
with respect to each such Company Employee Plan, and, to the Company's
Knowledge, nothing has occurred since the issuance of each such letter which
could reasonably be expected to cause the loss of the tax-qualified status of
any Company Employee Plan subject to Code Section 401(a).
(c) None of the Company Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any Person, except as
required by applicable Law. There has been no material non-exempt
"prohibited transaction," as such term is defined in Section 406 of ERISA and
Section 4975 of the Code, with respect to any Company Employee Plan. Each
Company Employee Plan has been administered in accordance with its terms and
in compliance with the requirements prescribed by any and all applicable
statutes, rules and regulations (including ERISA and the Code). Each Company
Employee Plan has been administered in good faith compliance with Section
409A of the Code to the extent applicable. Neither the Company nor any of
its ERISA Affiliates is subject to any liability or penalty under Sections
4976 through 4980 of the Code (including Section 4980B of the Code) or Title
I of ERISA with respect to any of the Company Employee Plans. All
contributions required to be made by the Company or any of its ERISA
Affiliates to any Company Employee Plan have been made on or before their due
dates. With respect to each Company Employee Plan, no "reportable event"
within the meaning of Section 4043 of ERISA (excluding any such event for
which the thirty (30) day notice requirement has been waived under the
regulations to Section 4043 of ERISA) nor any event described in Section
4062, 4063 or 4041 of ERISA has occurred. Each Company Employee Plan can be
amended, terminated or otherwise discontinued after the Closing Date in
accordance with its terms, without liability to Parent (other than ordinary
administrative expenses typically incurred in a termination event). With
respect to each Company Employee Plan subject to ERISA as either an employee
pension benefit plan within the meaning of Section 3(2) of ERISA or an
employee welfare benefit plan within the meaning of Section 3(1) of ERISA,
the Company has prepared in good faith and timely filed all requisite
governmental reports (which, to the Company's Knowledge, were true and
correct as of the date filed). No suit, administrative proceeding, action or
other litigation has been brought, or, to the Knowledge of the Company, is
threatened, against or with respect to any such Company Employee Plan,
including any Audit or inquiry by the IRS or United States Department of
Labor other than requests for payments in the ordinary course or requests for
qualified domestic relations orders.
(d) With respect to each Company Employee Plan, the Company or
such Company Subsidiary, as the case may be, has complied with (i) the
applicable health care continuation and notice provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the regulations
thereunder, (ii) the applicable requirements of the Family and Medical Leave
Act of 1993 and the regulations thereunder and (iii) the applicable
requirements of the Health Insurance Portability and Accountability Act of
1996 and the regulations thereunder.
(e) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) entitle any
current or former employee, director or other service provider of the
Company, any Company Subsidiary or any ERISA Affiliates to severance benefits
or any other payment, except as expressly provided in this Agreement,
(ii) increase any benefits otherwise payable by the Company, any Company
Subsidiary or any ERISA Affiliates or (iii) accelerate the time of payment or
vesting of awards, including stock awards, under any Company Employee Plan or
any benefit, increase the amount of compensation due any such employee,
director or service provider or require the funding of any amount relating to
any Company Employee Plan.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company, any Company Subsidiary
or any ERISA Affiliates relating to, or change in participation or coverage
under, any Company Employee Plan that would increase the expense of
maintaining such Company Employee Plan above the level of expense incurred
with respect to that Company Employee Plan for the most recent fiscal year
included in the Financial Statements.
(g) Neither the Company nor any Company Subsidiary maintains,
sponsors, participates in or contributes to, or has ever maintained,
established, sponsored, participated in, or contributed to, any pension plan
(within the meaning of Section 3(2) of ERISA) that is subject to Section 302
of ERISA, Title IV of ERISA or Section 412 of the Code. No Company Employee
Plan is a "nonqualified deferred compensation plan" subject to Section 409A
of the Code.
(h) None of the Company, any Company Subsidiary or any of its
ERISA Affiliates is a party to, or has made any contribution to or otherwise
incurred any obligation to contribute to, any "multi-employer plan" as
defined in Section 3(37) of ERISA.
(i) None of the Company, any Company Subsidiary or any ERISA
Affiliate (i) is obligated to make any parachute payments as such term is
defined in Section 280G of the Code; (ii) is a party to any agreement that
under certain circumstances is reasonably likely to obligate it, or any
successor in interest, to make any parachute payments that will not be
deductible under Section 280G of the Code; or (iii) is obligated to make
reimbursement or gross-up payments to any Person in respect to excess
parachute payments.
(j) No amounts paid by the Company or any Company Subsidiary
by any Employee Benefit Plan would fail to be deductible under Sections 404
or 404A of the code.
(k) With respect to each employee benefit plan, program,
agreement or arrangement maintained by the Company, any Company Subsidiary or
any ERISA Affiliate of the Company for the benefit of, or relating to, any
present or former employee, consultant or director of the Company or any
Company Subsidiary who performs services outside of the United States (each,
an "International Employee Plan"): (i) each International Employee Plan is in
compliance with the applicable provisions of the laws and regulations
regarding employee benefits, mandatory contributions and retirement plans of
each jurisdiction in which each such International Employee Plan is
maintained, to the extent those laws are applicable to such International
Employee Plan; (ii) each International Employee Plan has been administered at
all times and in accordance with its terms; (iii) to the Knowledge of the
Company, there are no pending investigations by any Governmental Entity
involving any International Employee Plan, and no pending claims (except for
claims for benefits payable in the normal operation of the International
Employee Plans), suits or proceedings against any International Employee Plan
or asserting any rights or claims to benefits under any International
Employee Plan; and (iv) the transactions contemplated by this Agreement will
not, by themselves or in conjunction with any other agreements, events or
occurrences, create or otherwise result in any liability, accelerated payment
or any enhanced benefits with respect to any International Employee Plan.
The Mexican Subsidiaries do not have and do not offer to its employees,
except for those benefits referred to in Section 3.17(k) of the Company
Disclosure Schedule, any employee retirement plan or any other benefit plan
and do not give or offer any retirement benefits, other than those mandated
by applicable Mexican Law. Except for the statutory obligations of the
Mexican Subsidiaries for vacation, holiday pay, profit sharing and year-end
bonuses incurred in the ordinary course of business consistent with the past
practice, the Mexican Subsidiaries have no obligation to make, and no
liabilities with respect to, any bonuses, other deferred compensation or
other special payments.
Section 3.18 Employee Matters
(a) The Company, the Company Subsidiaries, and their
respective employees, agents or representatives have not committed any
material unfair labor practice as defined in the National Labor Relations Act
or other applicable law. The Company and the Company Subsidiaries are
neither party to, nor bound by (and none of their respective properties or
assets is bound by or subject to), any labor agreement, collective bargaining
agreement, work rules or practices, or any other labor-related agreements or
arrangements with any labor union, labor organization, trade union or works
council. There are no labor agreements, collective bargaining agreements, or
any other labor-related agreements or arrangements that pertain to any of the
employees of the Company or the Company Subsidiaries. No employees of the
Company or the Company Subsidiaries are represented by any labor union, labor
organization, trade union or works council with respect to their employment
with the Company or the Company Subsidiaries.
(b) No labor union, labor organization, trade union, works
council, or group of employees of the Company or the Company Subsidiaries has
made a pending demand for recognition or certification, and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened in writing to be
brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority. To the Knowledge of the Company, there are
no labor union organizing activities with respect to any employees of the
Company or the Company Subsidiaries. There are no actual or, to the
Knowledge of the Company, threatened material arbitrations, material
grievances, labor disputes, strikes, lockouts, slowdowns or work stoppages
against or affecting the Company or the Company Subsidiaries, nor has there
been any of the foregoing during the 3-year period before the date of this
Agreement.
(c) All personnel policies, rules and material procedures
applicable to employees of the Company or any of the Company Subsidiaries are
in writing. There are no written personnel manuals, handbooks, policies,
rules or procedures applicable to employees of the Company or any of the
Company Subsidiaries, other than those set forth in Section 3.18(c) of the
Company Disclosure Schedule, true and complete copies of which have
heretofore been made available to Parent.
(d) The Company and the Company Subsidiaries are and have been
in material compliance with all applicable laws respecting employment and
employment practices, including, without limitation, all laws respecting
terms and conditions of employment, health and safety, wages and hours, child
labor, immigration, employment discrimination, disability rights or benefits,
equal opportunity, plant closures and layoffs, affirmative action, workers'
compensation, labor relations, employee leave issues and unemployment
insurance. The Company and the Company Subsidiaries are not delinquent in
payments to any employees or former employees for any services or amounts
required to be reimbursed or otherwise paid. Neither the Company nor any of
the Company Subsidiaries is a party to, or otherwise bound by, any order of
any Governmental Entity relating to employees or employment practices.
(e) The Company and the Company Subsidiaries have not received
(i) notice of any unfair labor practice charge or complaint pending or
threatened before the National Labor Relations Board or any other
Governmental Entity against them, (ii) notice of any complaints, grievances
or arbitrations arising out of any collective bargaining agreement or any
other complaints, grievances or arbitration proceedings against them, (iii)
notice of any charge or complaint with respect to or relating to them pending
before the Equal Employment Opportunity Commission or any other Governmental
Entity responsible for the prevention of unlawful employment practices, (iv)
notice of the intent of any Governmental Entity responsible for the
enforcement of labor, employment, wages and hours of work, child labor,
immigration, or occupational safety and health laws to conduct an
investigation with respect to or relating to them or notice that such
investigation is in progress, or (v) notice of any complaint, lawsuit or
other proceeding pending or threatened in any forum by or on behalf of any
present or former employee of such entities, any applicant for employment or
classes of the foregoing alleging breach of any express or implied contract
of employment, any applicable law governing employment or the termination
thereof or other discriminatory, wrongful or tortious conduct in connection
with the employment relationship.
(f) The Company and the Company Subsidiaries are and have been
in compliance with all notice and other requirements under the WARN Act, and
any similar foreign, state or local law relating to plant closings and
layoffs. Neither the Company nor any of the Company Subsidiaries is
currently engaged in any layoffs or employment terminations sufficient in
number to trigger application of the WARN Act or any similar state, local or
foreign law. Section 3.18(f) of the Company Disclosure Schedule contains a
true and complete list of the names and the sites of employment or facilities
of those individuals who suffered an "employment loss" (as defined in the
WARN Act) at any site of employment or facility of the Company or any of the
Company Subsidiaries during the 90-day period prior to the date of this
Agreement. Section 3.18(f) of the Company Disclosure Schedule shall be
updated immediately prior to the Closing with respect to the 90-day period
prior to the Closing.
(g) To the Knowledge of the Company, no employee of the
Company or the Company Subsidiaries is in any material respect in violation
of any term of any employment-related agreement, nondisclosure agreement,
common law nondisclosure obligation, fiduciary duty, non-competition
agreement, restrictive covenant or other obligation to a former employer of
any such employee relating (i) to the right of any such employee to be
employed by the Company or the Company Subsidiaries or (ii) to the knowledge
or use of trade secrets or proprietary information.
(h) The Company has no Knowledge that any current officer or
Key Employee of the Company or the Company Subsidiaries intends to terminate
his or her employment, whether on account of the transactions contemplated by
this Agreement or for any other reason.
(i) The execution of this Agreement and the consummation of
the transactions contemplated by this Agreement will not result in any breach
or other violation of any collective bargaining agreement, employment
agreement, consulting agreement or any other labor-related agreement to which
the Company or any of the Company Subsidiaries is a party and/or is bound by
and/or that pertains to any of the employees of the Company or any of the
Company Subsidiaries.
(j) The Company and the Company Subsidiaries withheld all
amounts required by Law or by agreement to be withheld from the wages,
salaries, and other payments to employees or consultants, and are not liable
for any arrears of wages or any taxes or any penalty for failure to comply
with any of the foregoing. The Company and the Company Subsidiaries are not
liable for any payment to any trust or other fund or to any Governmental
Entity, with respect to unemployment compensation benefits, social security
or other benefits or obligations for employees (other than routine payments
to be made in the normal course of business, consistent with past practice).
There are no pending claims against the Company or any of the Company
Subsidiaries under any workers' compensation plan or policy or for long term
disability.
(k) Section 3.18(k) of the Company Disclosure Schedule sets
forth a substantially true and complete list of (i) the names and current
salaries or hourly wages of all employees, directors and elected and
appointed officers of the Company and the Company Subsidiaries, and the
family relationships, if any, among such Persons, on the one hand, and such
directors and officers, on the other hand, and (ii) all group insurance
programs in effect for employees of the Company and the Company Subsidiaries.
The Company is not in default with respect to any of its obligations referred
to in the preceding sentence.
(l) The Company and the Company Subsidiaries do not have any
(i) existing service or other agreements with any officers or employees of
the Company or the Company Subsidiaries which subject to legal requirements
cannot be fairly terminated by three (3) months' notice or less without
giving rise to a claim for damages or compensation; (ii) liability for
compensation to former employees; (iii) obligation to re-instate or re-employ
any former officer or former employee of the Company or the Company
Subsidiaries; (iv) Knowledge of grounds for dismissal of any employee of the
Company or the Company Subsidiaries; (v) policy, practice or obligation
regarding payments to employees in connection with termination of employment
which is more generous than required under any applicable Law or applicable
Company Employee Plan; or (vi) industrial agreement or enterprise agreement
(whether registered or not) or plans to introduce any such agreement, that
applies to any employee or officer of the Company.
(m) No Person has any agreement with the Company, any
Company Subsidiary or any Company Shareholder under which that Person (x) is
entitled to receive a bonus in connection with the consummation of the
transactions contemplated by this Agreement or (y) acts as an independent
contractor, consultant, or in a similar capacity for the Company or the
Company Subsidiaries whether on a full-time or a part-time or retainer basis
or otherwise.
Section 3.19 Interested Party Transactions
Neither the Company nor any Company Subsidiary is indebted to any
director, officer, employee, consultant or shareholder of the Company or any
Company Subsidiary (except for current amounts due as normal salaries and
bonuses and in reimbursement of ordinary expenses), and no such Person is
indebted to the Company or any Company Subsidiary. No Principal Shareholder,
officer or director of the Company or any Company Subsidiary owns or holds,
directly or indirectly, any interest in (excepting holdings solely for
passive investment purposes of securities of publicly held and traded
entities constituting less than five percent (5%) of the equity of any such
entity), or is an officer, director, employee or consultant of any Person
that is, a competitor, lessor, lessee, customer or supplier of the Company or
any Company Subsidiary or is engaged in the business of full truckload dry
van ground transportation of freight. No Principal Shareholder, and, to the
Knowledge of the Company, no officer or director of the Company or any
Company Subsidiary (a) has any claim, charge, action or cause of action
against the Company or any Company Subsidiary, as the case may be, except for
claims for reasonable unreimbursed travel or entertainment expenses, accrued
vacation pay or accrued benefits under any employee benefit plan existing on
the date hereof, (b) has made, on behalf of the Company or any Company
Subsidiary, any payment or commitment to pay any commission, fee or other
amount to, or to purchase or obtain or otherwise Contract to purchase or
obtain any goods or services from, any other Person of which any such
Principal Shareholder, officer or director (or, to the Knowledge of the
Company, a relative of any of the foregoing) is a partner or shareholder
(except holdings solely for passive investment purposes of securities of
publicly held and traded entities constituting less than five percent (5%) of
the equity of any such entity) or (c) has any material interest in any
property, real or personal, tangible or intangible, used in or pertaining to
the business of the Company and its Subsidiaries.
Section 3.20 Real Property
(a) Section 3.20(a) of the Company Disclosure Schedule sets
forth a complete list of all Owned Real Property. Each of the Company and
each Company Subsidiary, as the case may be, has valid and marketable fee
simple title to all Owned Real Property, free and clear of all Liens, other
than Permitted Liens. There are no outstanding options, rights of first
offer or rights of first refusal to purchase any Owned Real Property or any
portion thereof. Copies of (i) all title insurance policies currently
existing in favor of the Company or any Company Subsidiary, as the case may
be and (ii) all currently existing surveys, with respect to the Owned Real
Property have been made available to Parent. Neither the Company nor any
Company Subsidiary has leased, subleased, licensed or otherwise granted to
any Person the right to use or occupy all or any portion of the Owned Real
Property and other than the Company and the Company Subsidiaries, to the
Company's Knowledge, there are no parties in possession of any portion of the
Owned Real Property, whether as lessees, tenants at will, trespassers or
otherwise.
(b) Section 3.20(b) of the Company Disclosure Schedule sets
forth a complete list of the real property leased by the Company and each of
its Subsidiaries (the "Lease Agreements"). The Company or the applicable
Company Subsidiary, as the case may be, has a valid and binding leasehold
interest in, and enjoys peaceful possession of, the real property described
in the corresponding Lease Agreement and each Lease Agreement is valid,
binding and enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting creditors' rights
generally and general principles of equity (regardless of whether considered
in a proceeding at law or in equity). Copies of all such Lease Agreements
and any amendments thereto have been made available to Parent. Neither the
Company nor any Company Subsidiary leases any real property other than the
real property subject to the Lease Agreements. There are no material
disputes, oral agreements, or forbearance programs in effect as to the Lease
Agreements. There are no existing material defaults by the Company or any
Company Subsidiary under any Lease Agreement, and no event has occurred that
(with the giving of notice, lapse of time or both) would constitute a
material default by the Company or any Company Subsidiary under any Lease
Agreement. Neither the Company nor any Company Subsidiary has assigned,
transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest
in the leasehold or any of its rights under any Lease Agreement, and the
leasehold estate created by each such lease is free and clear of all Liens
other than Permitted Liens. Neither the Company nor any Company Subsidiary
is engaged in any negotiation for the reviewing of the rent payable under any
Lease Agreement.
(c) The Owned Real Property together with the real property
subject to Lease Agreements (i) constitutes all of the real property used by
the Company or any Company Subsidiary for the conduct of its business as
currently conducted and such real property is sufficient for such purposes,
(ii) is maintained in reasonable order and repair (ordinary wear and tear
excepted) and is free of any material damage or defect, and (iii) does not
violate any Law relating to zoning, building, land use, fire and noise
controls, except for such violations as would not reasonably be expected to
be material to the current use of such property by the Company or such
Company Subsidiary, as the case may be. The Company or any applicable
Company Subsidiary has obtained and maintains any and all licenses, permits
or approvals necessary for the use and operation of all such real property
for the conduct of its business as currently conducted thereon.
Section 3.21 Insurance
The Company and each Company Subsidiary has policies of insurance
and bonds of the type and in the amounts customarily carried by Persons
conducting businesses or owning assets similar to those of the Company or
such Company Subsidiary, as the case may be. Section 3.21(i) of the Company
Disclosure Schedule contains (x) a complete list of the current policies and
Contracts of insurance maintained by the Company and each Company Subsidiary
other than employee benefit plans listed on Section 3.17 of the Company
Disclosure Schedule and upon Closing, a complete historical listing of all
policies and Contracts of insurance in the Company's or its insurance
brokers' or agents' possession, (y) each individual claim under auto, workers
compensation, property damage and general liability policies, both open and
closed, for the period January 1, 2001 through December 31, 2006 and (z) the
total amounts paid, reserved and incurred from January 1, 1996 through
December 31, 2006 for auto, workers compensation and general liability
claims. All current insurance policies and bonds of the Company and the
Company Subsidiaries are in full force and effect, all premiums due and
payable to date under all such policies and bonds have been paid and the
Company or such Company Subsidiary, as the case may be, is otherwise in
material compliance with the terms of such policies and bonds. A true and
complete copy of each current insurance policy of the Company and the Company
Subsidiaries has been made available to Parent. In states where the Company
and any Company Subsidiary are qualified to be self-insured for workers'
compensation, all material requirements set forth by the state to maintain
status as a qualified self-insurer have been continually met since the
granting of such status and all fees, assessments and reporting requirements
are current. Neither the Company nor any Company Subsidiary has entered into
a collateral agreement with any insurance company, state regulator or other
government official to secure such self-insurance arrangements. No
underwriter of an insurance policy or bond of the Company or the Company
Subsidiaries has denied or disputed in writing a claim currently pending
under any such policy or bond. Neither the Company nor any Company
Subsidiary has received any written notice of cancellation or non-renewal of
any current insurance policy or bond from any of its insurance carriers, nor
to the Company's Knowledge, is the termination of any such current policy or
bond threatened. Neither the Company nor any Company Subsidiary has received
any written notice from any of its insurance carriers that any insurance
coverage presently provided will not be available to the Company or such
Company Subsidiary, as the case may be, in the future on substantially the
same terms as now in effect. No current insurance policy or bond of the
Company or any Company Subsidiary provides for any retrospective premium
adjustment, experience-based liability or loss sharing arrangement affecting
the Company or any Company Subsidiary. The Company and the Company
Subsidiaries do not now, nor have they within the five (5) year period
preceding the date of this Agreement, ceded any of their losses or assumed
any losses from third parties under any reinsurance or captive insurance
company arrangement, and have no outstanding loss reserves for captive
insurance company arrangements for this period; where "captive insurance
company" shall be deemed to include single-owner, group, association, agency,
rent-a-captive, protected cell company, virtual captive, captive pool, risk
retention group or similar entity or arrangement.
Section 3.22 Compliance With Laws
The Company and each Company Subsidiary is, and has been, since
June 30, 2004, in compliance with all applicable Laws that affect the
business, properties or assets of the Company and each of its Subsidiaries,
except for such instances of non-compliance that, individually or in the
aggregate, would not reasonably be expected to be material to the Company and
its Subsidiaries. Since June 30, 2004, neither the Company nor any Company
Subsidiary has received any written notice, charge, claim, action or
assertion that it has materially violated any applicable Law, and to the
Company's Knowledge, no such notice, charge, claim, action or assertion has
been filed, commenced or threatened against the Company or any Company
Subsidiary alleging such a violation. Since June 30, 2004, neither the
Company nor any Company Subsidiary has received any written notice or
direction from any Governmental Entity challenging or questioning (i) the
legal right of the Company or such Company Subsidiary, as the case may be, to
design, market, offer or sell any of its products or services or (ii) the use
of its assets in the present manner or style thereof.
Section 3.23 Minute Books
The minute books of the Company and each of its Subsidiaries, which
the Company has provided Parent with access to review during the Due
Diligence Period, contain a complete and accurate summary of all meetings of
directors and shareholders and all actions by written consent of the Company
or such Company Subsidiary, as the case may be, during the fifteen (15) year
period preceding the date of this Agreement, and reflect all transactions and
other corporate actions referred to in such minutes accurately in all
material respects.
Section 3.24 Complete Copies of Materials
During the Due Diligence Period the Company has provided Parent
with access to review complete copies of the stock transfer books of the
Company setting forth all transfers of any capital stock, as currently in
effect.
Section 3.25 Brokers' and Finders' Fees
The Company has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders' fees or agents'
commissions or investment bankers' fees or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
Section 3.26 Board Approval
The Company Board has unanimously adopted and approved this
Agreement and the Merger.
Section 3.27 Customers and Suppliers
Section 3.27 of the Company Disclosure Schedule sets forth (i) the
top twenty five (25) customers of the Company and the Company Subsidiaries
(on an aggregate basis) measured by gross revenues during the twelve (12)
month period preceding the date hereof, and (ii) the top ten (10) suppliers
of products and services the Company and the Company Subsidiaries measured by
the aggregate amount purchased by the Company and the Company Subsidiaries
during the twelve (12) month period preceding the date hereof. As of the
date of this Agreement, no such customer or supplier has canceled, terminated
or materially altered its business relationship with the Company and the
Company Subsidiaries, or communicated in writing any intent to do so. To the
Company's Knowledge, no such supplier or customer intends to cancel,
terminate or materially alter its business relationship with the Company.
Section 3.28 Material Contracts
Except for the Contracts described in Section 3.28 of the Company
Disclosure Schedule (the "Material Contracts"), neither the Company nor any
Company Subsidiary is a party to or bound by:
(a) any distributor, material sales, advertising or
manufacturer's representative Contract of the Company or any Company
Subsidiary which is not terminable without penalty on sixty (60) days or less
notice;
(b) any continuing Contract for the purchase of materials,
supplies, equipment or services involving (x) in respect of any such
Contracts in which the Company or any Company Subsidiary is the purchaser,
more than One Million Dollars ($1,000,000) in any twelve month period or more
than Five Million Dollars ($5,000,000) over the life of the Contract and (y)
in respect of all other such Contracts, more than Three Million Dollars
($3,000,000) in any twelve month period preceding the date hereof;
(c) any Contract relating to the acquisition by the Company or
any Company Subsidiary of any assets of a substantial nature, operating
business or capital stock of any other Person, the participation in a joint
venture or similar arrangement with any other Person or the making of any
other investment in any other Person;
(d) any Contract granting exclusive marketing or distribution
or other exclusive rights;
(e) any Contract, offer or proposal made by or binding upon
the Company or any Company Subsidiary to any customer or potential customer
having a value of more than Five Million Dollars ($5,000,000), other than
bids or proposals made in the ordinary course of business consistent with
past practice;
(f) any Contract involving the payment or receipt of more than
One Million Dollars ($1,000,000) over the twelve (12) month period preceding
the date of this Agreement that expires or may be renewed at the option of
any Person other than the Company or any Company Subsidiary so as to expire
more than one (1) year after the date of this Agreement or is not terminable
by the Company or any Company Subsidiary on sixty (60) days or less notice
without payment by or penalty or other adverse consequence other than
customer contracts containing conditional obligations based upon
availability;
(g) any Contract requiring the Company or any Company
Subsidiary to provide current or future products or services, or to provide
support for any current or future products or services, in each case, for any
period expiring more than twelve (12) months from the date hereof other than
customer contracts containing conditional obligations based upon
availability;
(h) any trust indenture, mortgage, promissory note, loan
agreement or other Contract or instrument for the borrowing of money, any
currency exchange, commodities or other hedging arrangement or any leasing
transaction of the type required to be capitalized in accordance with GAAP;
(i) any Contract for capital expenditures in excess of One
Million Dollars ($1,000,000) in the aggregate;
(j) any Contract or commitment limiting the freedom of the
Company or any Company Subsidiary to engage in any line of business or to
compete with any other Person;
(k) any Contract involving the payment or receipt of more than
One Million Dollars ($1,000,000) purporting to impose confidentiality or
nondisclosure obligations on the Company or any Company Subsidiary;
(l) any Contract involving the lease, purchase or sale of real
property;
(m) any Contract for the lease, purchase, sale or service of
any tangible personal property requiring payments in excess of One Million
Dollars ($1,000,000) in the aggregate;
(n) any employment-related agreement that contains any
severance or termination pay liabilities or obligations;
(o) any Contract with any shareholder, officer or director of
the Company or any Company Subsidiary, or any family member thereof;
(p) any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any similar Contract or commitment with
respect to, the obligations, liabilities (whether accrued, absolute,
contingent or otherwise) or indebtedness of any other Person;
(q) any Contract involving payments based on profits or
revenues of the Company or any Company Subsidiary;
(r) any Contract creating or incurring Indebtedness or
imposing a Lien (other than a Permitted Lien) on any assets of the Company or
any Company Subsidiary;
(s) any Contract creating any liability related to or
arising out of any prior acquisition or other business combination such as
any earn-out, performance, bonus or other contingent payment arrangement,
however such arrangement may be evidenced;
(t) any Contract creating any ongoing or contingent
liability related to or arising out of any disposition of securities or
assets of the Company or any Company Subsidiary, including under "earnout" or
contingent consideration provisions;
(u) any Contract providing for the payment by the Company of
or any Company Subsidiary of any material penalties or liquidated damages;
(v) any Contract involving an option to purchase, a right of
first refusal or other preferential right to acquire any assets or property
interest or any equity interest in any Person (including the Company);
(w) any Contract containing "most favored nation" provisions
or any similar provision requiring that a third party be offered terms or
concessions at least as favorable as those offered to one or more other
parties;
(x) any Contract that is a power of attorney or agency
agreement;
(y) any Contract to enter into any one of the foregoing.
Section 3.29 No Breach of Material Contracts
All Material Contracts are in written form. The Company and each
of its Subsidiaries has performed its material obligations under and is
entitled to all material benefits under all Material Contracts to which it is
a party, and to the Knowledge of the Company, is not alleged to be in default
in respect of any Material Contract to which it is a party. Each of the
Material Contracts is in full force and effect, and there exists no material
default or event of material default or event, occurrence, condition or act,
with respect to the Company or any Company Subsidiary or, to the Knowledge of
the Company, with respect to the other contracting party, which, with the
giving of notice, the lapse of time or the happening of any other event or
conditions, would reasonably be expected to become a material default or
event of material default under the terms of any Material Contract. True,
correct and complete copies of all Material Contracts have been delivered or
made available to Parent.
Section 3.30 Third Party Consents
Section 3.30 of the Company Disclosure Schedule lists all Contracts
involving the payment or receipt of more than Two Million Dollars
($2,000,000) during the twelve (12) month period preceding the date of this
Agreement to which the Company or any Company Subsidiary is a party or by
which its properties or assets are bound that require a novation, waiver,
consent or approval, as the case may be, in connection with the consummation
of the transactions contemplated by this Agreement.
Section 3.31 Accounts Receivable and Payable
Subject to any reserves set forth in the Interim Balance Sheet, all
accounts receivable of the Company and each of its Subsidiaries shown on the
Interim Balance Sheet and, as of the Closing Date, all accounts receivable of
the Company and each Company Subsidiary reflected on the books and records of
the Company and Company Subsidiaries, are valid receivables subject to no
setoffs or counterclaims, and represent and will represent bona fide claims
against debtors for sales and other charges, and are not subject to discount
except for normal cash and immaterial trade discounts and freight ▇▇▇▇
adjustments in the ordinary course of business consistent with past practice.
The amounts carried for doubtful accounts and allowances disclosed in the
Interim Balance Sheet are reasonably sufficient to provide for any losses
which may be sustained on realization of the receivables based on historical
averages for such losses or Knowledge of customer inability to pay. The
amounts carried as reserves for expenses, including, without limitation, all
expenses for services rendered and goods purchased, and revenue adjustments
on the Interim Balance Sheets are sufficient, in all material respects, for
the payment of (i) expenses incurred prior to the Closing Date, other than
Transaction Expenses incurred by the Company or any Company Subsidiary (ii)
current revenue adjustments and (iii) adjustments for billing corrections
which arise prior to twelve (12) months from the date of the Interim Balance
Sheet. There are no unpaid material invoices or bills representing amounts
alleged to be owed by the Company or any Company Subsidiary, or other alleged
obligations of the Company or any Company Subsidiary, which the Company or
such Company Subsidiary, as the case may be, has disputed or determined to
dispute or refuse to pay.
Section 3.32 Export Licenses and Agreements
(a) Section 3.32(a) of the Company Disclosure Schedule sets
forth a true, correct and complete list of: (i) each export license or other
form of export approval to which the Company or any Company Subsidiary is a
party or which apply to the Company or any Company Subsidiary or any of their
operations or assets (collectively, "Export Approvals") which is in effect as
of the date of this Agreement and (ii) each application for an Export
Approval for which the Company or any Company Subsidiary has requested an
Export Approval.
(b) (i) The Company and its Subsidiaries have complied with
each Export Approval as required; (ii) the Company and its Subsidiaries have
complied with the requirements of any applicable Law pertaining to any Export
Approval; (iii) as of the effective date of each Export Approval, all
representations and certifications made by the Company and its Subsidiaries
with respect to any Export Approval were accurate and the Company and its
Subsidiaries have fully complied with all such representations and
certifications; and (iv) based on its export activities, including those
involving foreign nationals in the United States and abroad, the Company and
its Subsidiaries have no Knowledge of any violation by them of the Arms
Export Control Act, the International Traffic In Arms Regulations, the Export
Administration Act, the Export Administration Regulations or any other export
regulation.
(c) (i) There are no pending audits or investigations of the
Company or its Subsidiaries or any of their respective officers, employees or
representatives and (ii) within the five (5) years prior to the date of this
Agreement, there has not been any audit or investigation with respect to any
Export Approval directed or requested by any Governmental Entity of the
Company or its Subsidiaries or any of their respective officers, employees or
representatives resulting in findings materially adverse to the Company.
During the five (5) years prior to the date of this Agreement, the Company
and its Subsidiaries have not made any voluntary disclosure to any
Governmental Entity with respect to any irregularity, misstatement or
omission arising under United States trade or transaction controls or
otherwise relating to the export activities of the Company and its
Subsidiaries.
Section 3.33 Customs Matters
Since January 1, 2003, neither the Company nor any of the
Subsidiaries has acted as an "importer of record," as that term is defined in
19 U.S.C. Section 1484 or any similar foreign Law, on import entry
documentation required by the U.S. Bureau of Customs and Border Protection or
any similar foreign Governmental Entity ("Customs"). The Company and each
Company Subsidiary possesses all licenses required to conduct their
respective businesses in accordance with the laws enforced by Customs,
including 19 U.S.C. Section 1623, 19 U.S.C. Section 1641 and 19 C.F.R.
Section 111 or any similar foreign Law. All such licenses are currently in
full force and effect and no misrepresentations were made by the Company or
any Company Subsidiary of any material fact in obtaining them. No
administrative or judicial proceedings have been instituted or, to the
Knowledge of the Company, threatened or are contemplated by Customs against
the Company or any Company Subsidiary seeking fines, forfeitures, liquidated
damages, or penalties or the modification, revocation, or suspension of any
license required to conduct their respective businesses in accordance with
the laws enforced by Customs. The Company and each Company Subsidiary is in
material compliance with all laws enforced by Customs.
Section 3.34 Propriety of Past Payments
Within the five (5) year period preceding the date of this
Agreement, (a) neither the Company nor any Company Subsidiary has established
any unrecorded fund or asset for any purpose, (b) neither the Company nor any
Company Subsidiary has accumulated or used its corporate funds without
accurately and fairly recording such accumulation or use in the books and
records of the Company or such Company Subsidiary, as the case may be,
(c) neither the Company nor any Company Subsidiary has made, offered or
promised any payment with the understanding that any part of such payment is
to be used for any purpose other than that described in the documents
supporting such payment and (d) neither of the Company, any Company
Subsidiary, any director or officer, or, to the Knowledge of the Company or
such Company Subsidiary, employee or agent of the Company or any Company
Subsidiary has, directly or indirectly, made any illegal contribution, gift,
bribe, rebate, payoff, influence payment, kickback or other payment to any
Person, private or public, regardless of form, whether in money, property,
services or anything of value, (i) to obtain favorable treatment for any
Company Shareholder, the Company or any Company Subsidiary in securing
business, (ii) to pay for favorable treatment for business (including any
financial or commercial advantage) secured for any Company Shareholder, the
Company or any Company Subsidiary, (iii) to obtain special concessions, or
for special concessions already obtained, for or in respect of any Company
Shareholder, the Company or any Company Subsidiary or (iv) otherwise for the
benefit of any Company Shareholder, the Company or any Company Subsidiary, in
each such case in violation of any Law. During the five (5) year period
preceding the date of this Agreement, none of the Company, any Company
Subsidiary or any current director or officer, or, to the Knowledge of the
Company, agent or employee has (y) used funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to political activity
or (z) accepted or received any unlawful contribution, payment, gift,
kickback, expenditure or other item of value. Neither the Company nor any of
its Subsidiaries has Knowledge of any violation by it of the Foreign Corrupt
Practices Act.
Section 3.35 Only Representations and Warranties
The only representations and warranties of the Company and the
Principal Shareholders are contained in this ARTICLE III, and, with respect
to the Principal Shareholders only, ARTICLE V. No due diligence materials or
other information or documents shall be deemed to constitute express or
implied representations or warranties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant
to the Company and the Principal Shareholders as of the date hereof and as of
the Closing Date as follows:
Section 4.1 Organization
Each of Parent and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
(for Parent) and the State of Missouri (for Merger Sub).
Section 4.2 Power and Authority
(a) Each of Parent and Merger Sub has the requisite
corporate power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Parent
and Merger Sub. This Agreement has been duly executed and delivered by
Parent and Merger Sub and constitutes the valid and binding obligations of
Parent and Merger Sub enforceable against Parent and Merger Sub in accordance
with its terms, except to the extent that enforceability may be limited by
the effect, if any, of any applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting the enforcement of creditors' rights
generally or any general principles of equity, regardless of whether such
enforceability is considered in a proceeding at Law or in equity. Neither
the execution and delivery by Parent or Merger Sub of this Agreement nor the
consummation of the transactions contemplated hereby will conflict with, or
result in any breach or violation of, or default under (with or without
notice or lapse of time, or both) or give rise to a right of termination,
cancellation or obligation or loss of any benefit under (i) any provision of
the Certificate of Incorporation or Bylaws, or other equivalent charter
documents, as applicable, of Parent or Merger Sub, (ii) any mortgage,
indenture, lease, Contract, agreement, instrument or understanding to which
Parent or Merger Sub is a party or to which any of its properties or assets
is bound or (iii) any permit, authorization, concession, franchise, license,
writ, judgment, order, decree, statute, Law, ordinance, rule or regulation
applicable to either Parent or Merger Sub or any of their respective
properties or assets, except, in the case of clauses (ii) and (iii) above,
any such conflicts, breaches, violations, defaults, rights or losses, which
would not, individually or in the aggregate, prevent or materially and
adversely delay the consummation by Parent or Merger Sub of the transactions
contemplated by this Agreement.
(b) No notice to, filing with, and no permit, authorization,
consent or approval of, any Governmental Entity, or any other Person is
necessary for the execution and delivery of this Agreement by Parent or
Merger Sub or the consummation of the transactions contemplated by this
Agreement, except for (i) the filing and recordation of the Articles of
Merger in accordance with the requirements of the MGBCL, (ii) the filing of
the Notification and Report Forms with the FTC and the DOJ required by the
HSR Act and the expiration or termination of the applicable waiting period
under the HSR Act and such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under the foreign merger control regulations identified in Section 3.4(b) of
the Company Disclosure Schedule and (iii) any applicable requirements of the
FMCSA or of any state with respect to the licensing or registration of motor
carriers. No approval by the shareholders of Parent is required for the
transactions contemplated by this Agreement.
Section 4.3 Board Approval
The Board of Directors of each of Parent and Merger Sub have
adopted and approved this Agreement and the transactions contemplated hereby.
Section 4.4 No Ownership of Company Capital Stock
As of the date hereof and without taking into account the
transactions contemplated hereby, neither Parent nor any of its Subsidiaries
beneficially owns any Company Capital Stock, and neither Parent nor any of
its Subsidiaries is, or has within the last five years been deemed to be, an
"interested shareholder" or an "affiliate or associate of an interested
shareholder" of the Company for purposes of Section 351.459 of the MGBCL.
Section 4.5 Availability of Funds
As of the Closing Date, Parent shall have sufficient and
immediately available funds in cash or cash equivalents to pay the Aggregate
Consideration and to pay any other amounts payable by Parent in connection
with this Agreement and the transactions contemplated hereby.
Section 4.6 Brokers' and Finders' Fees
Except for ▇▇▇▇▇▇▇, Sachs & Co., ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. and
any fees paid to any Person in connection with the Financing, in each case
which fees and expenses shall be borne solely by Parent, neither Parent nor
Merger Sub has incurred, or will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or investment
bankers' fees or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
Section 4.7 Due Diligence by Parent and Merger Sub
Parent and Merger Sub each acknowledges that, as of the Closing
Date, it will have conducted to its satisfaction an independent investigation
of the financial condition, results of operations, liabilities, assets,
properties and operations of the business of the Company and the Company
Subsidiaries and, in making its determination to proceed with transactions
contemplated by this Agreement, it has relied solely on the results of its
own independent investigation and the representations and warranties of the
Company and the Principal Shareholders set forth in ARTICLE III and ARTICLE
V, respectively. Such representations and warranties by the Company and the
Principal Shareholders constitute the sole and exclusive representations and
warranties of the Company and the Principal Shareholders in connection with
the transactions contemplated hereby, and each of Parent and Merger Sub
acknowledges and agrees that neither the Company, a Company Subsidiary nor
any Principal Shareholder is making any representation or warranty
whatsoever, express or implied, beyond those expressly given in this
Agreement, including any implied warranty as to the condition,
merchantability or suitability as to any of the assets of the Company or any
Company Subsidiary.
Section 4.8 Funding Commitment
Parent has received and has provided to the Company a true, correct
and complete copy of a commitment letter dated as of the date of this
Agreement from ▇▇▇▇▇▇▇ Sachs Credit Partners L.P. relating to its financing
commitment in the amount of Five Hundred Million Dollars ($500,000,000) (the
"Commitment Letter"). The Commitment Letter is in full force and effect, and
there is no default thereunder or any event that with the passage of time,
the giving of notice or both would constitute an event of default. All fees
associated with the Commitment Letter have been paid and Parent has no reason
to believe that any condition set forth therein will not be satisfied as of
the Closing Date, provided that Parent does not make this representation with
respect to the satisfaction of any condition relating to (x) the satisfaction
of the conditions set forth in Section 8.1 and Section 8.3 and (y) the
Company or any Company Subsidiary.
ARTICLE V
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF PRINCIPAL SHAREHOLDERS
In addition to the representations and warranties made by each of
the Principal Shareholders in ARTICLE III, each of the Principal Shareholders
severally and not jointly represents and warrants to Parent as of the date
hereof and as of the Closing Date as follows:
Section 5.1 Power and Authority
Such Principal Shareholder has all requisite power and authority,
and has full legal capacity and is competent, to execute, deliver and perform
this Agreement and to consummate the transactions contemplated hereby to be
performed by such Principal Shareholder. This Agreement has been duly and
validly executed and delivered by such Principal Shareholder and constitutes
a legal, valid and binding obligation of such Principal Shareholder,
enforceable against such Principal Shareholder in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally and by general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at Law).
Section 5.2 Good Title to Shares
Such Principal Shareholder is the owner of record and beneficially
of the shares of Company Capital Stock owned by such Principal Shareholder as
set forth on Schedule 5.2. Such Principal Shareholder has not received any
notice of adverse claim to the ownership of any such Company Capital Stock
and has no Knowledge of any such adverse claim. The delivery of stock
certificates representing such Principal Shareholder's Company Capital Stock
will transfer good, valid and marketable title to such Company Capital Stock,
free and clear of all Liens or other defects in title.
Section 5.3 No Conflicts
Neither the execution and delivery of this Agreement by such
Principal Shareholder nor the consummation of the transactions contemplated
hereby nor compliance by such Principal Shareholder with any of the
provisions hereof will (i) result in the creation or imposition of any Lien
on the Company Capital Stock owned by such Principal Shareholder, (ii) result
in an event which (with notice or lapse of time or both) would constitute a
breach of or default under (or give rise to any right or termination,
cancellation or acceleration) any of the terms, conditions or provisions of
any Contract to which such Principal Shareholder is bound or by which any of
its respective properties or assets is bound, or (iii) violate or conflict
with any order, writ, injunction, decree, statute, rule, Law or regulation of
any court, public body or authority or any other restriction of any kind
applicable to such Principal Shareholder or any of its properties or assets.
ARTICLE VI
CONDUCT PRIOR TO THE CLOSING DATE
For purposes of this ARTICLE VI, for each requirement that applies
to the Company in respect of its Subsidiaries in those instances where the
Company does not own the majority of the voting stock of a Company
Subsidiary, all obligations of the Company with respect to such Company
Subsidiary shall be deemed to be the obligation to use commercially
reasonable efforts to cause such Company Subsidiary to take or not take, as
the case may be, such actions.
Section 6.1 Conduct of Business of the Company
During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time,
except as set forth in Section 6.2 of the Company Disclosure Schedule or as
contemplated by this Agreement or with the prior written consent of Parent
which shall not be unreasonably withheld, delayed or conditioned, the Company
shall, and shall cause its Subsidiaries to: (i) carry on its business in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and (ii) use commercially reasonable efforts consistent
with past practice and policies to (x) preserve its present business
organizations, keep available the services of its present officers and
employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with
it, (y) preserve and protect its owned and leased properties and (z) conduct
its business in compliance with all applicable Law. The Company shall
promptly notify Parent of any event which could reasonably be expected to
have a Material Adverse Effect.
Section 6.2 Restriction on Conduct of Business of the Company
During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time,
except as set forth in Section 6.2 of the Company Disclosure Schedule or
except as expressly contemplated by this Agreement, the Company shall not,
and shall cause its Subsidiaries not to, do or cause any of the following
without the prior written consent of Parent which shall not be unreasonably
withheld, delayed or conditioned:
(a) Governing Documents. Cause any amendments to the
Company Governing Documents or any Subsidiary Governing Documents, as the
case may be, or organize any Subsidiary or acquire any capital stock or other
securities, or equity or ownership interest in the business, of any other
Person;
(b) Dividends; Changes in Capital Stock. Make any
distributions of stock or property (other than cash) in respect of any equity
security, or split, combine or reclassify any equity security or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of any equity security, or repurchase or otherwise
acquire, directly or indirectly, any shares of any equity security, except as
provided in the Stock Incentive Plan; provided that any payment or proposed
payment of any dividends shall be paid before the Closing Date;
(c) Issuance of Securities. Issue, deliver or sell
(including under phantom stock plans) or authorize or propose the issuance,
delivery or sale of, or purchase or propose the purchase of, any shares of
equity securities or securities convertible into, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible
securities;
(d) Stock Incentive Plan, Etc. Amend or change the period
of vesting of equity awards, other rights granted under or restrictions
applicable to the Stock Incentive Plan or authorize cash payments in exchange
for any equity awards or other rights granted under the Stock Incentive Plan;
(e) Indebtedness. Incur any material Indebtedness,
guarantee any such Indebtedness, issue or sell any debt securities or
guarantee any debt securities of others;
(f) Liens. Mortgage, pledge or encumber any assets other
than Permitted Liens granted in the ordinary course of the business,
consistent with past practice;
(g) Acquisitions. Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of,
or by any other manner, any Person, except, in each such case, which are
immaterial and are in the ordinary course of the business, consistent with
past practice;
(h) Dispositions. Sell, lease, license or otherwise dispose
of any of its properties or assets (including without limitation, any Owned
Real Property and any real property subject to Lease Agreements),
individually or in the aggregate, material to its business except, in each
case, in the ordinary course of business, consistent with past practice;
(i) Leases. Terminate, amend or enter into any material
lease with respect to real or personal property;
(j) Payment of Obligations. (i) Pay, discharge or satisfy
any claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise) arising other than in the ordinary
course of business other than the payment, discharge or satisfaction of
liabilities reflected or reserved against in the Interim Balance Sheet and
other than Transaction Expenses incurred by the Company or any Company
Subsidiary and (ii) (A) prepay any long-term Indebtedness, or pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued,
contingent or otherwise) other than in the ordinary course of business
consistent with past practice, (B) accelerate or delay the collection of
notes or accounts receivable in advance of or beyond their regular due dates
or the dates on which the same would have been collected in the ordinary
course of business consistent with past practice or (C) delay or accelerate
the payment of any account payable in advance of its due date or the date
such liability would have been paid in the ordinary course of business
consistent with past practice;
(k) Capital Expenditures. Make any capital expenditures,
capital additions or capital improvements in excess of One Hundred Thousand
Dollars ($100,000) individually or in excess of Five Hundred Thousand Dollars
($500,000) in the aggregate;
(l) Termination or Waiver. Terminate or waive any material
right, except for rights involving the payment by the Company or any Company
Subsidiary of less than One Hundred Thousand Dollars ($100,000) unless
payment is made in full before the Closing Date or is reflected in the
Liability Accounts; provided that no such termination or waiver shall include
(x) an admission of wrongdoing or (y) injunctive or other equitable relief;
(m) Employees; Employee Benefit Plans; New Hires; Pay
Increases. Adopt, amend, fund, or accelerate payment or grant an award or
modify any compensation under, any employee benefit, incentive compensation,
fringe benefit, retention, stock purchase, option, or other equity based
plan, program, agreement or arrangement, or hire any new employee, terminate
any Key Employee, pay any special bonus or special remuneration or
disbursement or make or forgive (in whole or in part) any loan or advance to
any current or former employee, consultant or director or increase the
salaries, wage rates or other benefits of any of its employees, or make any
severance commitments, in each case other than in the ordinary course of
business consistent with past practice in respect of individual employees
that are not officers or directors based on the individual merits of such
employee; provided that the Company shall not, and shall cause the Company
Subsidiaries to not make, any material personnel changes in respect of
officers, managers or other management-level personnel without notifying
Parent in writing not less than five (5) days prior to any such change.
(n) Severance Arrangements. Except as required by Law,
grant any severance, change in control or termination pay (i) to any current
or former director, consultant or officer or (ii) to any other current or
former employee;
(o) Contracts. Enter into any Contract with a value
exceeding Five Hundred Thousand Dollars ($500,000), or violate, amend or
otherwise modify or waive any of the terms of any of its Material Contracts,
other than in the ordinary course of business consistent with past practice;
(p) Intellectual Property. Transfer to any Person or entity
any rights to Intellectual Property owned, used or held for use by the
Company or any Company Subsidiary other than pursuant to non-exclusive
license arrangements in the ordinary course of business, consistent with past
practice, or abandon, permit to lapse or otherwise dispose of any
Intellectual Property owned, used or held for use by the Company or any
Company Subsidiary or make any material change in any Intellectual Property
owned, used or held for use by the Company or any Company Subsidiary;
(q) Litigation. Initiate or settle any litigation except
for (i) the commencement of legal action (A) in such cases where the Company
or such Company Subsidiary, as the case may be, in good faith determines that
failure to commence suit would result in the material impairment of a
valuable aspect of its business, provided that it notifies Parent prior to
the commencement of such a suit, or (B) for a breach of this Agreement; or
(ii) the settlement of legal action (A) in the ordinary course of business,
consistent with past practice; or (B) involving the payment by the Company or
any Company Subsidiary of less than One Hundred Thousand Dollars ($100,000)
unless payment is made in full before the Closing Date or is reflected in the
Liability Accounts; provided that no such settlement shall include (x) an
admission of wrongdoing or (y) injunctive or other equitable relief;
(r) Insurance. Fail to keep in full force and effect its
current insurance policies or other comparable insurance affecting its
business, or reduce the amount of any insurance coverage provided by existing
insurance policies;
(s) Taxes. Make or change any material election in respect
of Taxes, adopt or change any accounting method in respect of Taxes, file any
material Tax Return other than in the ordinary course of business consistent
with past practice and other than those for which extensions have been
received as set forth in the Company Disclosure Schedule or any amendment to
a material Tax Return, enter into any closing agreement, settle any claim or
assessment in respect of Taxes, or consent to any extension or waiver of the
statutory period of limitations applicable to any claim or assessment in
respect of Taxes;
(t) Accounting Policies and Procedures. Make any change to
its accounting methods, principles, policies, procedures or practices, except
as may be required by GAAP;
(u) Revaluation. Revalue any of its assets, including
writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business, consistent with
past practice;
(v) Agreements with Shareholders. Enter into any agreements
with the Company Shareholders;
(w) Collective Bargaining Agreements. Establish, adopt or
amend any collective bargaining agreement or any other labor-related
agreement or arrangement with any labor union, labor organization, trade
union or works council;
(x) Existence. Adopt a plan of partial or complete
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization or otherwise permit its corporate
existence to be suspended, lapsed or revoked;
(y) Other Acts. Do any other act (i) with the intention,
purpose or goal of causing any representation or warranty of the Company or
any Company Subsidiary in this Agreement to be or become untrue in any
material respect or (ii) with the intention, purpose or goal of causing any
of the conditions set forth in ARTICLE VIII not being satisfied;
(z) Other. Directly or indirectly take or agree to take any
of the foregoing actions described in this Section 6.2.
Section 6.3 Shareholder Meeting; No Solicitation
(a) Within one (1) day after the date hereof, the Company
will mail to each Company Shareholder a notice of the Shareholder Meeting and
shall take all action necessary in accordance with the MGBCL and the Company
Governing Documents to call, hold, convene and complete the Shareholder
Meeting as promptly as practicable, and in any event within 10 days after the
mailing of notice of such Shareholder Meeting to the Company's Shareholders,
provided, however, that the Shareholder Meeting may be postponed, continued
or adjourned before completion of the Shareholder Meeting, without a breach
of this Section 6.3, if the Company has received an unsolicited, bone fide
written Acquisition Proposal that the Company Board, after consultation with
outside legal counsel, in good faith determines could reasonably be expected
to lead to a Superior Offer, provided, further, that any such postponement,
continuation or adjournment shall be for the minimum period that the Company
Board reasonably determines to be necessary for the Company Board to
discharge its responsibilities to the Company Shareholders and to complete
any actions taken in accordance with Section 6.3(e) and Section 6.3(f), but
in no event for a period that exceeds twenty (20) days.
(b) Except to the extent expressly permitted by Section
6.3(f): (i) the Company Board shall unanimously recommend that the Company
Shareholders vote in favor of the adoption and approval of this Agreement and
approval of the Merger at the Shareholder Meeting and (ii) neither the
Company Board nor any committee thereof shall withdraw, amend or modify, or
propose or resolve to withdraw, amend or modify in a manner adverse to
Parent, the unanimous recommendation of the Company Board that the Company
Shareholders vote in favor of the adoption and approval of this Agreement and
the approval of the Merger.
(c) Subject to Sections 6.3(e) and 6.3(f), until the earlier
of the Effective Time or the termination of this Agreement, the Company and
its Subsidiaries and their respective officers, directors, employees or other
agents will not, directly or indirectly (i) initiate, solicit or encourage
(including, without limitation, by way of furnishing information), or take
any action to facilitate any inquiry or the making of, any offer or proposal
which constitutes or is reasonably likely to lead to any Alternate
Transaction, (ii) propose, enter into or participate in negotiations or
discussions with, or provide any information or data to, any Person (other
than Parent, Merger Sub or any of their respective affiliates or
representatives) relating to any Alternate Transaction, (iii) make or
authorize any statement, recommendation or solicitation in support of, or
approve, any Alternate Transaction or (iv) enter into any letter of intent or
similar document or any Contract, agreement or commitment contemplating or
otherwise relating to any Alternate Transaction or transaction contemplated
thereby. Upon execution of this Agreement, the Company will immediately
cease any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. After the date of
this Agreement, the Company will promptly notify Parent after receipt of any
proposal for an Alternate Transaction or any notice that any Person is
considering an Alternate Transaction or any request for information relating
to the Company or for access to the properties, books or records of the
Company by any Person that has advised the Company that it may be
considering, or has proposed, an Alternate Transaction and shall provide
Parent with a true and complete copy of such Alternate Transaction notice or
request or correspondence or communications related thereto, if it is in
writing, or a written summary thereof (which shall include the identity of
the Person considering or proposing such Alternate Transaction and the
material terms thereof), if it is not in writing.
(d) As promptly as practicable (and in any event no later
than 24 hours) after receipt of any (x) Acquisition Proposal, (y) request for
nonpublic information or (z) inquiry (A) that could reasonably be expected to
lead to an Acquisition Proposal or (B) from any Person seeking to have
discussions or negotiations with the Company relating to a possible
Acquisition Proposal, the Company shall provide Parent with notice of such
Acquisition Proposal, request or inquiry, including: (i) the material terms
and conditions of such Acquisition Proposal, request or inquiry; (ii) the
identity of the Person or group making any such Acquisition Proposal, request
or inquiry; and (iii) a copy of all written materials and a written summary
of all oral information provided by or on behalf of such Person or group in
connection with such Acquisition Proposal, request or inquiry. The Company
shall provide Parent with forty-eight (48) hours prior notice of any meeting
of the Company Board at which the Company Board could reasonably be expected
to consider any Acquisition Proposal or any such inquiry or to consider
providing nonpublic information to any Person. The Company shall notify
Parent, in writing, of any decision of the Company Board as to whether to
consider such Acquisition Proposal, request or inquiry or to enter into
discussions or negotiations concerning any Acquisition Proposal or to provide
nonpublic information or data to any Person, which notice shall be given as
promptly as practicable after such meeting (and in any event no later than 24
hours after such determination was reached and 24 hours prior to entering
into any discussions or negotiations or providing any nonpublic information
or data to any Person). The Company agrees that it shall promptly provide
Parent with oral and written notice setting forth all such information as is
reasonably necessary to keep Parent currently informed in all material
respects of the status and material terms of any such Acquisition Proposal,
request or inquiry (including any negotiations contemplated by Section
6.3(f)) and shall promptly provide Parent a copy of all written materials and
a written summary of all oral information subsequently provided to, by or on
behalf of such Person or group in connection with such Acquisition Proposal,
request or inquiry.
(e) Notwithstanding anything to the contrary contained in
Section 6.3(b), in the event that the Company receives prior to the approval
of the Merger by the Company Shareholders in accordance with applicable Law
an unsolicited, bona fide written Acquisition Proposal from a third party
that did not result from a breach of this Section 6.3 and that the Company
Board has in good faith concluded, after consultation with its outside legal
counsel and an independent financial advisor of nationally-recognized
standing, that such Acquisition Proposal is, or is reasonably likely to
result in, a Superior Offer, the Company may then (1) furnish nonpublic
information to the third party making such Acquisition Proposal and (2)
engage in negotiations with the third party with respect to such Acquisition
Proposal; provided that:
(i) the Company complies with all of the terms of
this Section 6.3;
(ii) prior to furnishing any nonpublic information
or entering into any negotiations or discussions with such third
party, (1) the Company receives from such third party an executed
confidentiality agreement containing customary limitations on the
use and disclosure of all nonpublic written and oral information
furnished to such third party on the Company's behalf in
substantially the form of the Confidentiality Agreement and, in any
event, no less restrictive to such third party than the
Confidentiality Agreement is with respect to Parent, and (2)
contemporaneously with furnishing any such nonpublic information to
such third party, the Company furnishes such nonpublic information
to Parent (to the extent such nonpublic information has not been
previously so furnished); and
(iii) the Company Board reasonably determines in
good faith, after consultation with outside legal counsel, that the
failure to provide such information or enter into such discussion or
negotiations would result in a breach of the Company Board's
fiduciary duties to the Company Shareholders under applicable Law.
(f) Notwithstanding anything to the contrary contained in
Section 6.3(b), in response to the receipt of a Superior Offer, (x) the
Company Board may withhold, withdraw, amend or modify its recommendation in
favor of the Merger (a "Change of Recommendation"), (y) the Company Board,
the Company or any Company Subsidiary (including each of their respective
directors, officers, employees, agents or other representatives) may approve,
endorse, or recommend a Superior Offer, and (z) the Company may, (A) after
payment of the Termination Fee pursuant to Section 9.3(b) and (B) upon
execution of definitive documentation with respect to such Superior Offer,
terminate this Agreement pursuant to Section 9.1(h); provided that the
Company or any of its Subsidiaries may execute or enter into a binding
definitive agreement with respect to a Superior Offer, if and only if, prior
to any such action described in clauses (x), (y) and (z) hereof, all of the
following conditions in clauses (i) through (vi) are met:
(i) the Company Board determines in good faith,
after consultation with an independent financial advisor of
nationally-recognized standing and outside legal counsel, that a
Superior Offer has been made and not withdrawn;
(ii) the Company Shareholders have not approved the
Merger in accordance with applicable Law;
(iii) the Company shall have delivered to Parent
written notice (a "Change of Recommendation Notice") at least five
(5) Business Days prior to effecting such Change of Recommendation
which shall state expressly (A) that the Company has received a
Superior Offer, (B) the final terms and conditions of the Superior
Offer and the identity of the Person or group making the Superior
Offer, (C) that the Company intends to effect a Change of
Recommendation and (D) if applicable, that the Company intends to
terminate this Agreement pursuant to Section 9.1(h);
(iv) after delivering the Change of Recommendation
Notice, the Company shall (A) provide Parent with a reasonable
opportunity to make such adjustments in the terms and conditions of
this Agreement during such five (5) Business Day period and (B)
negotiate in good faith with respect thereto during such ten (10)
Business Day period, in each case as would enable the Company to
proceed with its recommendation to stockholders in favor of adoption
of this Agreement without making a Change of Recommendation;
(v) the Company Board shall have determined (A)
after consultation with a financial advisor of nationally-recognized
standing, that the terms of the Superior Offer are more favorable to
the stockholders of the Company than the terms of the Merger (as
they may be adjusted pursuant to paragraph (iv) (A) above) and (B)
after consultation with outside legal counsel, the failure to effect
a Change of Recommendation would result in a breach of the Company
Board's fiduciary duties to the Company Shareholders under
applicable Law; and
(vi) the Company shall not have breached any of the
provisions set forth in this Section 6.3.
(g) The parties hereto agree that irreparable damage would
occur in the event that the provisions of this Section 6.3 were not performed
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed by the parties hereto that Parent shall be entitled to an
immediate injunction or injunctions, without the necessity of proving the
inadequacy of money damages as a remedy and without the necessity of posting
any bond or other security, to prevent breaches of the provisions of this
Section 6.3 and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, this being
in addition to any other remedy to which Parent may be entitled at law or in
equity. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth above by any officer, director, employee,
agent, representative or affiliate of the Company shall be deemed to be a
breach of this Agreement by the Company.
Section 6.4 Further Information
(a) [reserved]
(b) Subject to compliance with applicable Laws, from the date
of this Agreement until Closing or termination of this Agreement, Parent and
the Company shall confer on a regular basis with each other to discuss
operational matters of materiality and the general status of ongoing
operations of the Company and its Subsidiaries.
(c) No information obtained in any investigation pursuant to
this Section 6.4 shall affect or be deemed to modify any representation or
warranty contained in this Agreement or the conditions to the obligations of
the parties to consummate the transactions contemplated hereby.
(d) The Company shall give prompt notice to Parent upon
obtaining Knowledge of (i) any material failure of the Company to comply with
or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder or (ii) any representation or warranty of the
Company contained in this Agreement having become, or being when made, untrue
or inaccurate in any material respect or (iii) the occurrence or non-
occurrence of any event whose occurrence or non-occurrence, as the case may
be, would reasonably be likely to cause any condition set forth in ARTICLE
VIII to be unsatisfied at the Closing Date (except to the extent it refers to
a specific date); provided, however, that the delivery of any notice pursuant
to this Section 6.4(d) shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice or the
representations, warranties or covenants of the parties hereto or the
conditions to the obligations of the parties hereto.
(e) As soon as such information becomes available, and in any
event not later than thirty (30) days after the end of each fiscal month, the
Company shall provide to Parent the Monthly Financial Statements together
with a list of the ages and amounts of all accounts and notes due and
uncollected as of the end of such month. Notwithstanding the foregoing,
during such period the Company and each Company Subsidiary agrees to provide
to Parent and its accountants, counsel and other representatives copies of
the internal financial statements of the Company and any Company Subsidiary
promptly upon request.
Section 6.5 Compliance with the WARN Act and Similar Laws
The Company shall not, and shall cause each of the Company
Subsidiaries not to, at any time within the 90-day period before the
Effective Time, without complying fully with the notice and other
requirements of the WARN Act, effectuate (1) a "plant closing" (as defined in
the WARN Act) affecting any single site of employment or one or more
facilities or operating units within any single site of employment of the
Company or any of the Company Subsidiaries; or (2) a "mass layoff" (as
defined in the WARN Act) at any single site of employment or one or more
facilities or operating units within any single site of employment of the
Company or any of the Company Subsidiaries. Nor shall the Company or any of
the Company Subsidiaries otherwise terminate or lay off employees in such
numbers as to give rise to liability under any applicable laws respecting the
payment of severance pay, separation pay, termination pay, pay in lieu of
notice of termination, redundancy pay, or the payment of any other
compensation, premium or penalty upon termination of employment, reduction of
hours, or temporary or permanent layoffs. For purposes of the WARN Act and
this Agreement, the Effective Time is and shall be the same as the "effective
date" within the meaning of the WARN Act.
Section 6.6 Assistance with Financing
Subject to the limitations outlined and the obligations of Parent
set forth below, and subordinate to (1) the commitments set forth in Section
7.10 and (2) until the Disclosure Schedule Delivery Date, the efforts
required to complete the preparation of the Company Disclosure Schedule, the
Company shall, and shall cause its Subsidiaries and its and their
representatives to, reasonably cooperate in connection with the arrangement
of any Financing as may be reasonably requested by Parent. Such cooperation
by the Company shall include, at the request of Parent and if reasonably
necessary to obtain any such Financing, (i) agreeing to enter into such
agreements, and to use reasonable efforts to deliver such officer's
certificates and opinions, as are customary in financings of such type and as
are, in the good faith determination of the persons executing such officer's
certificates or opinions, accurate, and agreeing to pledge, grant security
interests in, and otherwise grant liens on, the Company's assets pursuant to
such agreements as may be reasonably requested (provided that no obligation
of the Company under any such agreement, pledge or grant shall be effective
until the Effective Time, and any fees, expenses, or other costs associated
with the preparation, execution, filing, and/or recording of such materials
will be borne by Parent), (ii) participating via telephone or in person in
Joplin, Missouri, in a limited number of meetings, drafting sessions, due
diligence sessions, management presentation sessions and sessions with rating
agencies, (iii) using commercially reasonable efforts to prepare or
participate in the preparation of business projections and financial
statements for inclusion in offering memoranda, private placement memoranda,
prospectuses and similar documents, (iv) instructing its independent
accountants to provide reasonable assistance to Parent (including to provide
consent to Parent to prepare and use their audit reports relating to the
Company and any necessary consent letters and "comfort letters" in connection
with such Financing), subject to Parent's payment of any associated fees,
expenses, or other costs, and (v) providing to the lenders in connection with
any such Financing financial and other information in the Company's
possession with respect to the Merger, making the Company's senior officers
available to assist such lenders and otherwise reasonably cooperating in
connection with the consummation of such Financing. All of the foregoing
agreements of the Company are subject to Parent's covenant and obligation to
(x) limit to the greatest degree reasonably practicable the disruptions to
and extra demands placed upon the employees responsible for conducting the
operations of the business of the Company and its Subsidiaries and (y) avoid
unreasonable interference with the necessary and proper performance by
employees of the Company and its Subsidiaries of their usual and customary
responsibilities occasioned by the additional activities enumerated in this
Section 6.6, including but not limited to providing as much advance notice as
is reasonably practicable of scheduling arrangements, availability
requirements, and required deliverables; scheduling meetings and requests
cooperatively with Company employees for mutual convenience; structuring
meeting agendas and discussions with third parties to most efficiently
utilize the time and obtain the required information of Company employees,
including limiting participation to the portions of telephone conferences and
in-person meetings at which the presence of Company personnel is required;
and coordinating due diligence and other information requests of Parent with
those of third parties to minimize duplicative and overlapping inquiries and
requests. Without limiting the effect of the foregoing provisions of this
Section 6.6, in no event shall any officer, director or other employee or
representative of the Company be required to be available for more than five
(5) hours on average each week to provide assistance with respect to the
Financing.
ARTICLE VII
ADDITIONAL AGREEMENTS
For purposes of this ARTICLE VII, for each requirement that applies
to the Company in respect of its Subsidiaries in those instances where the
Company does not own the majority of the voting stock of a Company
Subsidiary, all obligations of the Company with respect to such Company
Subsidiary shall be deemed to be the obligation to use commercially
reasonable efforts to cause such Company Subsidiary to take or not take, as
the case may be, such actions.
Section 7.1 Public Disclosure
(a) Parent and the Company have, prior to the date hereof,
agreed upon a joint press release regarding the existence or terms of this
Agreement and the transactions contemplated hereby, and, prior to the
Closing, neither the Company nor Parent shall (nor shall they permit any of
their Subsidiaries or any of their respective representatives or advisors to)
issue any other press release or make any other statement or disclosure
without the prior written approval of the other party, except as may be
required by applicable Law, in which case the disclosing party shall provide
the other party such advance notice as is reasonable under the circumstances
prior to the making of, and shall consult with the other party regarding the
form of, any such required disclosure.
(b) Each Principal Shareholder and the Shareholders' Agent
severally agrees that he or she shall not, prior to or following the Closing,
issue any press release, make any other public statement or make any other
disclosure to any third party (whether or not in response to an inquiry)
regarding the existence and terms of this Agreement and the transactions
contemplated hereby without the prior written approval of Parent.
Notwithstanding the foregoing, the Principal Shareholders may reveal the
existence and terms of this Agreement to their respective representatives and
advisors (a) who need to know the terms of this Agreement for the purpose of
evaluating the Merger, (b) who are informed of the confidential nature of the
Agreement and (c) who agree to act in accordance with the terms of this
Section 7.1 (such representatives and advisors, "Principal Shareholder
Representatives").
(c) From the date hereof until that date that is two (2)
years after the Closing Date, each Principal Shareholder and his or her
respective Principal Shareholder Representatives severally agrees that he or
she shall maintain in confidence and not use or disclose to any third party
(i) any confidential or proprietary information regarding the business
operations, product formulations, processes, technical know-how or data,
specifications, finances or other business matters of the Company and (ii)
the terms of this Agreement and the transactions contemplated hereby. Upon
discovery by any Principal Shareholder or any of their Principal Shareholder
Representatives that such Person is in possession of any such confidential or
proprietary information, such Person shall promptly destroy or return to
Parent such information without retaining any copies thereof except for
copies that such Person is required to retain by applicable Law or
professional obligation or to the extent such Person reasonably believes
necessary to preserve any legal right. The Principal Shareholders shall be
responsible for ensuring the compliance of their respective Principal
Shareholder Representatives with the obligations in this Section 7.1(c)
applicable to them. To the extent that any former Principal Shareholder
Representative is subject to a confidentiality agreement with a Principal
Shareholder with respect to confidential information subject to this Section
7.1(c), such Principal Shareholder shall undertake reasonable measures to
enforce such confidentiality obligations, shall not waive such rights, or
release such former Principal Shareholder Representative from its obligations
with respect thereto, and, to the extent reasonably practicable, allow Parent
to seek to enforce such rights directly. If any Principal Shareholder or any
of their respective Principal Shareholder Representatives receives a request
or is required (by oral questions, interrogatories, request for information
or documents, subpoena, civil investigative demand or similar legal process
or by regulatory agency or stock exchange or other applicable rules) to
disclose all or any part of such confidential or proprietary information,
each Principal Shareholder severally agrees that he or she shall, and shall
undertake reasonable measures to ensure that his or her respective Principal
Shareholder Representatives shall, promptly notify Parent of each such
request or determination, to the extent practicable and not limited by Law or
legal or regulatory process, so that Parent may seek a protective order or
other appropriate remedy.
Section 7.2 Consents; Cooperation
The Company shall be responsible for promptly applying for or
otherwise seeking, and using its commercially reasonable efforts to obtain,
all consents, waivers and approvals required to be obtained by it or any
Company Subsidiary for the consummation of the transactions contemplated
hereby.
Section 7.3 Legal Requirements
Subject to the terms and conditions herein provided, each of
Parent, Merger Sub and the Company will, and the Company will cause its
Subsidiaries to, take all actions necessary to comply in all material
respects promptly with all legal requirements which may be imposed on it with
respect to the consummation of the transactions contemplated by this
Agreement and will take all reasonable actions necessary to obtain (and will
cooperate with the other parties hereto in obtaining) any consent, approval,
order or authorization of, or any registration, declaration or filing with,
any Governmental Entity or other Person, required to be obtained or made by
it in connection with the taking of any action contemplated by this
Agreement. In furtherance and not in limitation of the foregoing, each of
Parent and the Company agrees (a) to make an appropriate filing under the HSR
Act as soon as practicable, but in no event more than ten (10) Business Days
of the date of this Agreement (the "Antitrust Filings") and (b) to supply
promptly any additional information and documentary material that may be
requested in connection with the Antitrust Filings. Parent shall pay all
filing fees arising in connection with the Antitrust Filings.
Section 7.4 Commercially Reasonable Efforts and Further Assurances
Prior to the Closing, upon the terms and subject to the conditions
of this Agreement, (x) each of Parent and Merger Sub shall use its
commercially reasonable efforts to consummate and make effective the
Transactions as promptly as practicable and (y) the Company shall use its
commercially reasonable efforts to, or cause the Company Subsidiaries to,
consummate and make effective the Transactions as promptly as practicable.
Notwithstanding the foregoing, in no event shall this Section 7.4 require
Parent to take any action that is reasonably likely to adversely affect
Parent or its affiliates (other than Merger Sub) following the consummation
of the Transactions in any material respect. Prior to closing, Parent agrees
that it shall not engage in any transaction that would reasonably be expected
to compromise its ability to consummate the transactions contemplated by this
Agreement. Without limiting its obligations in this Section 7.4, the Company
and the Company Board shall, if any takeover statute or similar Law is or
becomes applicable to the Transactions, this Agreement or any of the
transactions contemplated by this Agreement, use commercially reasonable
efforts to consummate the Transactions as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize the effect of
such Law on the Transactions, this Agreement and the transactions
contemplated hereby. Subject to applicable Law, the Company shall, and shall
cause its Subsidiaries and its and their representatives to, reasonably
cooperate in connection with the development of plans, systems and procedures
in respect of the anticipated operation of the Surviving Corporation
following the Effective Time (provided that such requested cooperation does
not unreasonably interfere with the ongoing operations of the Company and its
Subsidiaries). Notwithstanding the foregoing, in no event shall this
Section 7.4 require the Company, or any of its Subsidiaries, prior to the
Closing, to (i) sell, divest, hold separate, or otherwise dispose of any of
their respective businesses, product lines or assets; (ii) conduct their
respective businesses in a specified manner; (iii) agree to take any of the
actions set forth in clause (i) or (ii), other than agreements that would
require such actions only on or after the Closing; or (iv) agree to take any
other action or agree to any restriction, limitation or condition that would
or would reasonably be expected to have a Material Adverse Effect on the
Company and its Subsidiaries, other than agreements that would require such
actions or would impose such restrictions, limitations or conditions only on
or after the Closing.
Section 7.5 Termination of Plans
Prior to the Effective Time, if requested by Parent no later than
three Business Days prior to the Closing Date the Company shall, or shall
take all actions necessary or appropriate so that the Contract Freighters,
Inc. Employees' Retirement Plan (the "401(k) Plan") shall be terminated as of
no later than the day immediately preceding the Closing Date, but contingent
on the Closing, including adopting such resolutions prior to the Effective
Time as are necessary or appropriate to implement the foregoing. Prior to
the Effective Time, the Company shall provide to Parent evidence that the
Company Board has adopted resolutions to terminate the 401(k) Plan (the form
and substance of which resolutions shall be subject to prior review and
approval of Parent, which approval will not be unreasonably withheld or
delayed).
Section 7.6 Certain Tax Matters
(a) Tax Returns and Cooperation.
(i) The Principal Shareholders shall cause the
Company to prepare and timely file, in a manner consistent with past
practice and subject to the review and reasonable approval of
Parent, which approval shall not be unreasonably withheld, delayed
or conditioned, all United States federal, state, local, and foreign
Tax Returns and amendments thereto required to be filed by or for
the Company and each Company Subsidiary for all taxable periods
ending on or before the Closing Date. The Principal Shareholders
shall provide Parent with a draft of such Tax Returns at least
fourteen (14) days prior to the due date (including applicable
extensions) of each such Tax Return. Parent will be given a copy of
Tax Returns filed after the date hereof.
(ii) The Company Shareholders shall be liable for
all Taxes of the Company and each Company Subsidiary for the Pre-
Closing Taxable Period (other than to the extent that the liability
for those Taxes is taken into account as an accrued Tax liability in
the Liability Accounts that are a part of the Closing Balance Sheet
or for which Parent has assumed responsibility for payment of the
Tax pursuant to Section 7.6(a)(iv)) and all Taxes of the Company
Shareholders for any taxable year or taxable period. Each of the
Company Shareholders and Parent hereby agree that the Tax year of
the Company for Federal income tax purposes will end on the Closing
Date and the Company's S Corporation status will terminate for
Federal income tax purposes as of the Closing Date. Notwithstanding
the foregoing, in the case of any Straddle Period, the portion of
the Taxes of the Company and each Company Subsidiary for such
Straddle Period attributable to the period prior to close of the
Closing Date shall be treated as Taxes of a Pre-Closing Taxable
Period for purposes of this Section 7.6(a)(ii). The amount of
Straddle Period Taxes of the Company and each Company Subsidiary
that are treated as Taxes of a Pre-Closing Taxable Period shall be
computed (x) in the case of income, franchise, sales, or similar
taxes, pursuant to an interim closing of the books method by
assuming that the Company and each Company Subsidiary had a taxable
year or period which ended on the Closing Date, except that
exemptions, allowances or deductions that are calculated on an
annual basis, such as the deduction for depreciation, shall be
apportioned on a per-diem basis and (y) in the case of real property
Taxes, personal property taxes and similar ad valorem obligations by
prorating such Taxes owed for the Straddle Period on a per-diem
basis.
(iii) Except as provided above with respect to
Straddle Periods, Parent shall be liable for any and all Taxes
imposed on the Company relating to or apportioned to any Post-
Closing Taxable Period.
(iv) No new elections with respect to Taxes, any
changes in current elections with respect to Taxes of the Company
and/or any Company Subsidiary or any amendments to any Tax Returns
of the Company or any Company Subsidiary in each case, which may
have an effect on the Company and/or any Company Subsidiary for
periods ending after the Closing Date shall be made after the date
of this Agreement without the prior written consent of Parent, which
consent shall not be unreasonably withheld, delayed or conditioned.
No new elections with respect to Taxes, or any change in current
elections with respect to Taxes of the Company which may have an
adverse effect on the liability of Company Shareholders for Taxes
shall be made after the Closing Date by Parent, the Company, the
Surviving Corporation or any Company Subsidiary (i) without the
prior written consent of the Shareholders' Agent, which consent
shall not be unreasonably withheld, delayed or conditioned, or (ii)
unless Parent agrees to (x) be responsible for any incremental Taxes
of the Company and the Company Subsidiaries and (y) reimburse the
Company Shareholders for any incremental Taxes of the Company
Shareholders (including, on an iterative basis, any Taxes on such
reimbursement payments), in each case as a result of making any such
election. In the event of a dispute regarding the amount of
reimbursement payable to Company Shareholders pursuant to clause
(ii)(y) of the preceding sentence, (A) the dispute shall be
submitted to the Reviewing Auditor or another accounting firm
mutually agreeable to the Shareholders' Agent and the Parent, whose
decision regarding the required amount of reimbursement shall be
binding on Parent and the Company Shareholders, (B) all fees and
costs of the Reviewing Auditor or other accounting firm selected
pursuant to clause (A) above shall be borne by the Parent, and (C)
the Parent and the Company Shareholders seeking reimbursement under
clause (ii)(y) of the preceding sentence shall provide to the
Reviewing Auditor or other accounting firm selected pursuant to
clause (A) above all information reasonably requested by such Person
to enable it to make a determination regarding the required
reimbursement amount.
(v) Parent, the Company and the Principal
Shareholders shall each cooperate fully, as and to the extent
reasonably requested by any other party, in connection with the
filing of Returns pursuant to this Section 7.6(a) and any audit,
litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon any other party's
request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any
material provided hereunder. The Company (before the Closing) and
Parent (after the Closing) shall each cause the Company and each
Company Subsidiary (A) to retain all books and records with respect
to Tax matters pertinent to the Company and each Company Subsidiary
relating to any taxable period beginning before the Closing Date
until the expiration of the statutory period of limitations of the
respective taxable periods, and to abide by all record retention
agreements entered into with any Taxing Authority, and (B) to give
the other party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if the
other party so requests, the Principal Shareholders or Parent as the
case may be, shall allow the other party to take possession of such
books and records.
(vi) Notwithstanding anything contrary herein,
Parent and the Company further agree, upon request of the other
party or the Shareholders' Agent, to use good faith commercially
reasonable efforts to obtain any certificate or other documents from
any Governmental Entity or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the Transactions
contemplated hereby); provided that such certificate or other
document does not increase the Tax of Parent, or the Company, or any
Company Shareholder.
(b) Other Tax Matters
(i) The Company Shareholders shall be responsible
for all transfer, sales and other similar taxes as a result of the
Transactions.
(ii) Parent shall not bear any Taxes resulting from
the Company's failure to qualify as an S corporation. For the
avoidance of doubt, Parent shall not be responsible for any Taxes of
the Company Shareholders, including Taxes, if any, paid by the
Company on a composite or other similar basis.
(iii) Neither the Company nor any Company
Shareholder shall revoke, prior to the Closing, the Company's or any
Company Subsidiary's election to be taxed as an S corporation or as
a qualified subchapter S subsidiary. Neither the Company nor any
Company Shareholder shall take any action prior to the Closing that
could reasonably be expected to result in the termination of the
Company's or a Company Subsidiary's status as a validly elected S
corporation or a qualified subchapter S subsidiary.
Section 7.7 No Solicitation of Employees
For a period of three (3) years commencing on the Closing Date,
each Principal Shareholder severally agrees that he or she shall not solicit
or attempt to solicit any Signing Date Employee to leave the employ of the
Company or any Company Subsidiary, as the case may be.
Section 7.8 Mexican Subsidiary Shareholders
The Company shall cooperate with Parent in respect of the status of
the interests of the Mexican Subsidiaries held by the Mexican Subsidiary
Shareholders, including undertaking good faith efforts to assist Parent in
its efforts to cause such Mexican Subsidiary Shareholders to transfer any
stock of a Mexican Subsidiary held by such Mexican Subsidiary Shareholder to
other Persons as directed by Parent in Parent's sole discretion.
Section 7.9 Communication with Employees
The Company shall not (nor permit any Company Subsidiary or any of
their respective subsidiaries, representatives or advisors to) engage in
discussions with, or issue any communications (written or oral) or make any
other statement or disclosure to, the Company's or the Company Subsidiaries'
employees concerning the Merger or any effect or change to any terms of
employment without (x) substantially adhering to the terms of a script as to
the form and substance of any such communication provided by Parent to the
Company prior to the date hereof or (y) the prior written approval of Parent;
provided, that this Section 7.9 shall not apply to communications with the
Company Shareholders necessary or advisable in connection with the
Shareholders Meeting.
Section 7.10 Due Diligence Period
(a) The Parties acknowledge and agree that Parent shall
continue to conduct its due diligence and transition planning with respect to
the Company and the Company Subsidiaries during the period commencing on the
date of this Agreement and terminating at 7:00 p.m. Central time on
August 21, 2007 (the "Due Diligence Period"). During the Due Diligence
Period and thereafter prior to the Closing the Company shall afford, and
shall cause each Company Subsidiary to afford, Parent and its accountants,
counsel and other representatives reasonable access and under reasonable
circumstances to (i) all of the properties, books, Contracts, commitments and
records, patent application files, advisors and personnel of the Company and
the Company Subsidiaries and (ii) all other information concerning the
business of the Company and the Company Subsidiaries, their respective
properties, advisors and personnel as Parent may reasonably request
(collectively, "Due Diligence Access"). On or before August 3, 2007, the
Company shall fully respond to each of the requests set forth in that certain
diligence request list attached hereto as Exhibit F. After August 3, 2007,
the Company shall use commercially reasonable efforts to respond to all other
due diligence requests promptly, and in any event not more than seventy-two
(72) hours after any request is made; provided, that nothing in this Section
7.10 shall be construed to require action by the Company or any Company
Subsidiary that is not practicable despite the exertion of commercially
reasonable efforts and provided, further that, except as specifically
provided in this Agreement, neither the Company nor any Company Subsidiary
shall be required to create information, documents or other materials not
derivable from the books and records of the Company or such Company
Subsidiary through the exercise of commercially reasonable efforts or in
forms or formats that cannot be derived from the forms in which the Company's
or such Company Subsidiary's information, documents, or other materials are
created, maintained or held through the exercise of commercially reasonable
efforts. The Company Due Diligence Supervisor and the Parent Due Diligence
Supervisor shall be responsible for coordinating, organizing and facilitating
Due Diligence Access. Each instance of Due Diligence Access is subject to
the prior approval of the Company Due Diligence Supervisor, which approval
shall not be unreasonably withheld, conditioned or delayed. Notwithstanding
anything contained in this Agreement, (x) Parent shall take reasonable
actions to reduce interference with or disruption of the operation of the
business of the Company and any Company Subsidiary, (y) Company shall have
the right to have the Company Due Diligence Supervisor or his designee
present during any entry by Parent, its accountants, counsel and other
representatives upon the properties of the Company or any Company Subsidiary
and (z) neither the Company nor any Company Subsidiary nor any of their
respective officers, directors, representatives, auditors and agents shall
have any obligation to disclose any information to Parent if such disclosure
would reasonably be expected to violate any applicable Law or Contract
entered into prior to the date hereof, provided that if such disclosure would
reasonably be expected to result in a violation of a non-disclosure
obligation under any such Contract, the Company shall, and shall cause each
Company Subsidiary to, provide Parent with the material terms of such
Contract without violating such non-disclosure obligation by providing Parent
a redacted copy of the Contract, a summary of the material terms of the
Contract or other means of conveying such information to Parent. Subject to
the foregoing, up to and including the Closing Date, Parent or its employees,
representatives, engineers, consultants or agents may enter into and upon all
or any portion of the Company's or any Company Subsidiary's properties in
order to investigate and assess, as Parent deems necessary or appropriate in
its sole and absolute discretion, the environmental condition of such
properties or the business of the Company or any Company Subsidiary (the
"Investigation"). The Investigation may include, but need not be limited to,
the performance of soil and surface or ground water sampling, monitoring,
borings, or testing, and any other tests, investigations, audits,
assessments, studies, inspections or other procedures relating to
environmental conditions or Materials of Environmental Concern relating to
the Company's or any Company Subsidiary's properties or the business of the
Company or any Company Subsidiary. The Company shall cooperate, and shall
cause each Company Subsidiary to cooperate, with Parent in conducting any
such Investigation, shall allow Parent full access to the Company's or such
Company's Subsidiary's properties or the business of the Company or such
Company Subsidiary, together with full permission to conduct any such
Investigation, and shall provide, and shall cause such Company Subsidiary to
provide, to Parent all plans, soil or surface or ground water tests or
reports, any environmental investigation results, reports or assessments
previously or contemporaneously conducted or prepared by or on behalf of the
Company or such Company Subsidiary or its predecessors, and all information
relating to environmental matters regarding the Company's or such Company
Subsidiary's properties or the business of the Company or such Company
Subsidiary that is in the Company's or any Company Subsidiary's possession or
control, or is reasonably available to the Company, any Company Subsidiary or
any of their respective employees, representatives, engineers, consultants or
agents. This grant of access shall not constitute a possessory right,
easement, or other property interest, but constitutes a temporary,
nonexclusive license to enter the properties to conduct the Investigation.
If drilling or subsurface testing is required for the Investigation, Parent
shall provide the Company Due Diligence Supervisor copies of a scope of work
or work plan no less than two (2) business days in advance of any proposed
drilling or subsurface testing. Parent shall provide the Company a copy of
any (x) soil or surface or ground water tests or reports, (y) any
environmental investigation results, reports or (z) assessments prepared, or
data produced or created, by any third party conducting the Investigation in
conjunction with any Investigation. At the conclusion of the Investigation
if Parent has terminated this Agreement pursuant to Section 7.10(b), Parent
shall restore any physical disturbance to the properties caused by their
entry thereon so as to return the properties to their immediate prior
condition, including without limitation the abandonment of any groundwater
monitoring ▇▇▇▇▇ installed by Parent in accordance with applicable Laws.
Parent shall indemnify, defend, and hold the Company harmless against any
actual and direct physical damage to property, any liens or any personal
injury claim directly caused by and solely the result of Parent's
Investigation. This obligation to indemnify the Company shall survive until
the date that is two (2) years from the earlier of (x) the date of
termination of this Agreement or (y) the Closing Date.
(b) Prior to 7:00 p.m. Central time on the first day
following the expiration of the Due Diligence Period, Parent shall have the
right to terminate this Agreement by notice to the Company (the "Due
Diligence Termination Notice") if (i) (x) it shall not have completed its due
diligence investigation of the Company and its Subsidiaries or (y) Parent
shall not be satisfied by the results of such investigations, in each case as
determined by Parent in Parent's sole discretion and (ii) it pays the Company
Five Hundred Thousand Dollars ($500,000) (the "Due Diligence Termination
Fee") by wire transfer of immediately available funds to an account to be
designated in writing by the Company. Parent shall be deemed to have elected
to proceed with the transactions contemplated by this Agreement and to have
waived its right to terminate the Agreement in accordance with this Section
7.10(b) unless, prior to 7:00 p.m. Central time on the first day following
the expiration of the Due Diligence Period, the Company shall have received
from Parent (x) written notice indicating that Parent is exercising its right
to terminate the Agreement in accordance with this Section 7.10(b) and (y)
the Due Diligence Termination Fee.
Section 7.11 Directors and Officers.
From and after the Closing, Parent shall cause the articles of
incorporation and bylaws of the Surviving Corporation and any of its
Subsidiaries that were formerly Company Subsidiaries to contain provisions no
less favorable with respect to limitation of liability and indemnification
than are set forth in the articles of incorporation and bylaws of the Company
and the respective former Company Subsidiary as of the date of this
Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six (6) years after the Closing in any manner that
would materially and adversely affect the rights thereunder of any
individuals who at or prior to the Closing were directors, officer, agents or
employees of the Company or any former Company Subsidiary or who were
otherwise entitled to indemnification pursuant to the articles of
incorporation and bylaws of the Company or any former Company Subsidiary.
Section 7.12 Retention of Reviewing Auditor
In the event that the Reviewing Auditor is called upon to provide
the services set forth in this Agreement, each Principal Shareholder agrees
that it shall not and Parent agrees that it shall not, and shall cause its
Subsidiaries not to, retain the services of the Reviewing Auditor (i.e., the
specific office of the auditing firm) for a period of two (2) years following
the completion of such services; provided that any such agreement shall be
limited to the retention of the specific office that serves as the Reviewing
Auditor.
ARTICLE VIII
CONDITIONS TO THE CLOSING
Section 8.1 Conditions to Obligations of Each Party to Effect the
Merger
The respective obligations of each party to this Agreement to
consummate and effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, by agreement of Parent and the Company:
(a) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued
by any Governmental Entity or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger shall be in effect, nor
shall any proceeding brought, seeking any of the foregoing be pending; nor
shall there be any action taken, or any statute, rule, regulation or order
enacted, entered or enforced, which makes the consummation of the Merger
illegal. In the event an injunction or other order shall have been issued,
each party agrees to use its reasonable efforts to have such injunction or
other order lifted.
(b) Governmental Approval. Parent, the Company and their
respective Subsidiaries shall have timely obtained from each Governmental
Entity all approvals, waivers and consents, if any, necessary for
consummation of, or in connection with, the several transactions contemplated
hereby, in each case without any conditions or restrictions attached thereto
which would reasonably be expected to have a Material Adverse Effect.
(c) Shareholder Approval. The Requisite Shareholder
Approval shall have been obtained.
Section 8.2 Additional Conditions to Obligations of the Company
The obligations of the Company to consummate and effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of
each of the following conditions, any of which may be waived, in writing, by
the Company:
(a) Representations, Warranties and Covenants. The
representations and warranties of Parent and Merger Sub in this Agreement
shall be true and correct (without giving effect to any materiality or
Material Adverse Effect qualification) on and as of the Closing Date as
though such representations and warranties were made on and as of such date
(except for such representations and warranties which speak as of a
particular time which representations and warranties need be true and correct
only as of such time) except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each of Parent and
the Merger Sub shall have performed and complied in all material respects
with the covenants and agreements of this Agreement required to be performed
and complied with by it as of the Effective Time.
(b) Certificate of Parent. The Company shall have received
from Parent an officer's certificate certifying to the fulfillment of the
conditions specified in Section 8.2(a).
(c) Escrow Agreement. The Escrow Agent and Parent shall
have executed and delivered to the Company the Escrow Agreement effective
upon the Closing Date in the form of Exhibit D attached to this Agreement.
(d) Paying Agent Agreement. The Paying Agent and Parent
shall have executed and delivered to the Company the Paying Agent Agreement
effective upon the Closing Date in form and substance reasonably satisfactory
to Parent and to the Shareholders' Agent.
Section 8.3 Additional Conditions to the Obligations of Parent and
Merger Sub
The obligations of Parent and Merger Sub to consummate and effect
the Merger shall be subject to the satisfaction at or prior to the Effective
Time of each of the following conditions, any of which may be waived, in
writing, by Parent:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Company in this Agreement shall be true
and correct (without giving effect to any materiality or Material Adverse
Effect qualification) on and as of the Closing Date as though such
representations and warranties were made on and as of such date (except for
such representations and warranties which speak as of a particular time which
representations and warranties need be true and correct only as of such time)
except as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. The Company shall have performed and
complied in all material respects with the covenants and agreements of this
Agreement required to be performed and complied with by it as of the
Effective Time.
(b) Certificate of the Company. Parent shall have received
a certificate of the Company executed by an officer certifying fulfillment of
the conditions specified in Section 8.3(a).
(c) No Material Adverse Effect. There shall not have
occurred any Material Adverse Effect.
(d) Dissenting Shares. Holders of Common Stock
representing ninety-two percent (92%) of the aggregate number of shares of
Common Stock outstanding shall have waived their appraisal rights under the
MGBCL.
(e) Termination of 401(k) Plan. If Parent shall have
previously delivered to the Company written notice of its election for the
Company to terminate the 401(k) Plan, the 401(k) Plan shall have been
terminated.
(f) Non-Competition Agreements. Each of the Key Employees
shall have delivered to Parent an executed Non-Competition Agreement
effective upon the Closing Date in the form of Exhibit E attached to this
Agreement.
(g) Final Conversion Schedule. The Company shall have
delivered the Final Conversion Schedule to Parent and the Paying Agent.
(h) Transaction Expenses. The Company shall have provided
Parent with evidence reasonably satisfactory to Parent that the Company has
paid in full all Transaction Expenses incurred by the Company or any Company
Subsidiary or provided for the payment thereof from the Closing Amount.
(i) Due Diligence. The deadline set forth in Section
7.10(b) shall have expired and Parent shall not have (x) delivered a Due
Diligence Termination Notice and (y) paid the Due Diligence Termination Fee
on or before such deadline.
(j) Escrow Agreement. The Escrow Agent and the
Shareholders' Agent shall have executed and delivered to Parent the Escrow
Agreement effective upon the Closing Date in the form of Exhibit D attached
to this Agreement.
(k) Regulatory Matters. No temporary restraining order,
preliminary or permanent injunction or other order issued by any Governmental
Entity or other legal or regulatory restraint or prohibition (i) requiring
any party to sell, divest, hold separate, or otherwise dispose of any of
their respective businesses, product lines or assets; (ii) requiring any
party to conduct their respective businesses in a specified manner; (iii)
requiring any party to agree to take any of the actions set forth in clause
(i) or (ii); or (iv) requiring any party to agree to take any other action or
agree to any restriction, limitation or condition that would or would
reasonably be expected to have (x) a Material Adverse Effect on the Company
or (y) a material adverse effect on the benefits, taken as a whole, Parent
otherwise would have derived from the Merger, nor shall any proceeding
brought, seeking any of the foregoing be pending.
(l) Paying Agent Agreement. The Paying Agent and the
Company shall have executed and delivered to Parent the Paying Agent
Agreement effective upon the Closing Date in form and substance reasonably
satisfactory to Parent and to the Shareholders' Agent.
Section 8.4 Frustration of Conditions
Neither Parent nor the Company may rely on the failure of any
condition set forth in this ARTICLE VIII to be satisfied if such failure was
caused by such party's failure to comply with or perform any of its covenants
or obligations set forth in this Agreement.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination
At any time prior to the Effective Time, this Agreement may be
terminated by written notice in one of the following circumstances:
(a) by mutual consent of Parent and the Company;
(b) by either Parent or the Company, if the Closing shall
not have occurred on or before sixty (60) days after the date of this
Agreement (the "Final Date"); provided that the right to terminate this
Agreement under this Section 9.1(b) shall not be available to any party whose
action or failure to act has been the cause of or resulted in the failure of
the Merger to occur on or before such date and such action or failure to act
constitutes a material breach of this Agreement; provided further that the
Final Date shall be extended by one day for each day that the Shareholder
Meeting is postponed, continued or adjourned in accordance with Section
6.3(a);
(c) by Parent, if the Company shall breach any
representation, warranty, obligation or agreement hereunder such that the
conditions set forth in Section 8.3 would be incapable of being satisfied by
the Final Date;
(d) by the Company, if Parent or Merger Sub shall breach any
representation, warranty, obligation or agreement hereunder, such that the
conditions set forth in Section 8.2(a) would be incapable of being satisfied
by the Final Date;
(e) by Parent if there shall have occurred any Material
Adverse Effect;
(f) by Parent, Merger Sub or the Company if any permanent
injunction or other order of a court or other competent authority preventing
the consummation of the Merger shall have become final and nonappealable;
(g) by the Company, if the Company (A) shall have entered
into a definitive binding agreement with respect to a Superior Offer pursuant
to and in compliance with Section 6.3(d) and (B) shall have paid Parent the
Termination Fee described in Section 9.3(b); and
(h) by Parent as provided in Section 7.10(b).
Section 9.2 Effect of Termination
In the event of termination of this Agreement as provided in
Section 9.1, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent, Merger Sub, any Principal
Shareholder or the Company except (a) as provided in Section 9.3 and (b) to
the extent that such termination results from the breach of any
representation, warranty, obligation or agreement hereunder. Notwithstanding
the foregoing, the provisions of Section 7.1 (Public Disclosure), this
Section 9.2, Section 9.3 (Expenses) and ARTICLE X (Indemnification) shall
remain in full force and effect and survive any termination of this
Agreement.
Section 9.3 Expenses
(a) Except as set forth in Section 9.3(b), whether or not
the Merger is consummated, all costs and expenses arising out of, relating to
or incidental to the discussion, evaluation, negotiation and documentation of
this Agreement and the transactions contemplated hereby and thereby
(including, without limitation, fees and expenses of legal counsel and
financial advisors and accountants, if any) (in the aggregate, "Transaction
Expenses"), shall, except as set forth in Section 7.3, be paid by the party
incurring such expense; it being understood that all such costs and expenses
incurred by the Company shall be paid by the Company in cash prior to the
Closing, and shall in no event be borne by Parent, the Surviving Corporation
or Merger Sub. To the extent that any such costs or expenses of the Company
are not so paid, they shall be deducted from the Closing Amount.
(b) The Company shall, before termination of this Agreement
pursuant to Sections 6.3(f) and 9.1(g), pay Parent a fee equal to Thirty Two
Million Dollars ($32,000,000) in immediately available funds (the
"Termination Fee").
Section 9.4 Amendment
The parties hereto may cause this Agreement to be amended at any
time by execution of an instrument in writing signed on behalf of each of the
parties hereto, except as otherwise required by Law.
Section 9.5 Extension; Waiver
Any party hereto may, subject to Section 9.4 and to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions for the benefit of such
party contained herein. Any such extension or waiver by any party hereto
shall not operate or be construed as a further or continuing extension or
waiver. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE X
INDEMNIFICATION
Section 10.1 Indemnification
(a) Subject to the limitations set forth in this ARTICLE X
and in Section 11.1, the Company Shareholders (other than Dissenting
Shareholders) will indemnify and hold harmless Parent and its affiliates
(including the Surviving Corporation) and their respective officers,
directors, agents and employees (hereinafter referred to individually as an
"Indemnified Person" and collectively as "Indemnified Persons"), from and
against (without duplication) (i) any and all losses, damages, costs,
expenses, diminution in value, liabilities, obligations and claims of any
kind, whether known or unknown, asserted or unasserted or absolute or
contingent (including any action brought by any Governmental Entity or Person
and including reasonable costs of investigation and defense and reasonable
attorneys' fees and expenses) (collectively, "Non-Environmental Damages")
arising out of or relating to (A) any inaccuracy or omission in any of the
representations and warranties made by the Company in this Agreement, as
qualified by the Company Disclosure Schedule, or in any exhibit or schedule
to, or certificate delivered in connection with, this Agreement, (B) any
inaccuracy or omission in any of the representations and warranties made by
any Principal Shareholder in this Agreement, (C) any breach of any of the
covenants and agreements of the Company or any Principal Shareholder in this
Agreement, (D) any Taxes of the Company and any Company Subsidiary for any
Pre-Closing Taxable Period, (except to the extent that the liability for such
Taxes is reflected as an accrued Tax liability in the Liability Accounts that
are part of the Closing Balance Sheet or Taxes for which Parent has assumed
responsibility for payment pursuant to Section 7.6(a)(iv)), (E) any
inaccuracy contained in the Reference Accounts Statement, (F) fraud, (G) any
liability of the Parent or the Company for failure to withhold on amounts
payable to Company Shareholders pursuant to Section 2.7, or (H) any Taxes
resulting from the Company's failure to qualify as an S corporation, (ii) any
and all Environmental Damages and (iii) any and all amounts paid to any
Company Shareholder in accordance with Section 2.9(c) in excess of such
Company Shareholder's Proportionate Share of the Aggregate Consideration
(together with the Non-Environmental Damages and Environmental Damages, the
"Damages").
(b) The right to indemnification, payment of Damages or
other remedy will not be affected by any investigation conducted with respect
to, or any Knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of or compliance
with, any representation, warranty, covenant or agreement made by the Company
or any other matter. The waiver of any condition based on the accuracy of
any such representation or warranty, or on the performance of or compliance
with any such covenant or agreement, will not affect the right to
indemnification, payment of Damages, or any other remedy based on any such
representation, warranty, covenant or agreement.
(c) From and after the Closing Date, except as expressly set
forth in Sections 10.1(d), (e), (f), (g) and (h), (i) the Indemnified Persons
shall not be entitled to indemnification for Damages, and a claim for Damages
may not be made, unless and until the aggregate amount of Damages exceeds Two
Million Dollars ($2,000,000) (the "Indemnity Threshold"), whereupon the
Indemnified Persons shall be entitled to recover such Damages in excess of
One Million Dollars ($1,000,000) (the "Indemnity Deductible); (ii) the
Indemnified Persons shall not be entitled to indemnification for Damages to
the extent such indemnification liability would exceed the amount remaining
in the Escrow Account from time to time; (iii) all claims under this ARTICLE
X shall be asserted solely against the Escrow Account and the Indemnified
Persons shall have no right to make claims against any other assets of the
Company Shareholders; and (iv) subject to Section 10.3, the period during
which an Indemnified Person may make a claim under this ARTICLE X (the
"Indemnification Period" shall terminate at 11:59 pm Central time on the date
that is twelve (12) months following the Closing Date.
(d) Notwithstanding Section 10.1(c), with respect to any
claim for indemnification for Damages under (x) Section 10.1(a)(i)(A) for any
inaccuracy or omission in any representation and warranty in Section 3.1
(Organization, Standing and Power), Section 3.2 (Subsidiaries), Section 3.3
(Capitalization; Title to Shares), Section 3.4 (Authority), Section 3.19
(Interested Party Transactions) (only as it relates to any Principal
Shareholder) and Section 3.26 (Board Approval) or (y) Section 10.1(a)(i)(B),
(i) such claim shall not be subject to the Indemnity Threshold or the
Indemnity Deductible, (ii) the indemnification liability for such claim may
exceed the amount in the Escrow Account from time to time, (iii) such claim
need not be asserted solely against the Escrow Account and the Indemnified
Persons may make claims against any other assets of the Company Shareholders,
and (iv) the Indemnification Period for such claim shall not terminate at
11:59 pm Central time on the date that is twelve (12) months following the
Closing Date, but shall continue indefinitely.
(e) Notwithstanding Section 10.1(c), with respect to any
claim for indemnification for Damages under (v) Section 10.1(a)(i)(D) for
Taxes of the Company and any Company Subsidiary for any Pre-Closing Taxable
Period, (w) Section 10.1(a)(i)(G) for any liability of the Parent or the
Company for failure to withhold on amounts payable to Company Shareholders
pursuant to Section 2.7, (x) Section 10.1(a)(1)(H) for any Taxes resulting
from the Company's failure to qualify as an S corporation, (y) Section
10.1(a)(i)(A) for any inaccuracy or omission in any representation and
warranty in Section 3.16 (Taxes) and (z) Section 10.1(a)(i)(C) for any breach
of any covenants or agreements of the Company or any Principal Shareholders
contained in Section 7.6 (Certain Tax Matters) (i) such claim shall not be
subject to the Indemnity Threshold or the Indemnity Deductible, (ii) the
indemnification liability for such claim may exceed the amount in the Escrow
Account from time to time, (iii) such claim need not be asserted solely
against the Escrow Account and the Indemnified Persons may make claims
against any other assets of the Company Shareholders, and (iv) the
Indemnification Period for such claim shall not terminate at 11:59 pm Central
time on the date that is twelve (12) months following the Closing Date, but
shall continue until sixty (60) days after the expiry of the applicable
statute of limitations.
(f) Notwithstanding Section 10.1(c), with respect to any
claim for indemnification for Damages (x) under Section 10.1(a)(i)(F) for
fraud, including fraud with respect to any representation, warranty or
covenant for which indemnification is provided or is barred by any other
provision of this ARTICLE X and (y) under Section 10.1(a)(iii) for any
amounts paid to any Company Shareholder in accordance with Section 2.9(c) in
excess of such Company Shareholder's Proportionate Share of the Aggregate
Consideration (i) such claim shall not be subject to the Indemnity Threshold
or the Indemnity Deductible, (ii) the indemnification liability for such
claim may exceed the amount in the Escrow Account from time to time,
(iii) such claim need not be asserted solely against the Escrow Account and
the Indemnified Persons may make claims against any other assets of the
Company Shareholders, and (iv) the Indemnification Period for such claim
shall not terminate at 11:59 pm Central time on the date that is twelve (12)
months following the Closing Date, but shall continue indefinitely.
(g) Notwithstanding Section 10.1(c), with respect to any
claim for indemnification for Damages under Section 10.1(a)(i)(C) for any
breach of any covenants or agreements of the Company or any Principal
Shareholder contained in Section 7.1(b) and (c) (Public Disclosure) and
Section 7.7 (No Solicitation of Employees) (i) such claim shall not be
subject to the Indemnity Threshold or the Indemnity Deductible, (ii) the
indemnification liability for such claim may exceed the amount in the Escrow
Account from time to time, (iii) such claim need not be asserted solely
against the Escrow Account and the Indemnified Persons may make claims
against any other assets of the Company Shareholders, and (iv) the
Indemnification Period for such claim shall not terminate at 11:59 pm Central
time on the date that is twelve (12) months following the Closing Date, but
shall continue for the applicable time periods set forth in Section 7.1(b)
and (c) and Section 7.7, or if no such time period is applicable,
indefinitely.
(h) Notwithstanding Section 10.1(c), with respect to any
claim for indemnification for Damages under (y) Section 10.1(a)(i)(A) for any
inaccuracy or omission in any representation and warranty in Section 3.15
(Environmental Matters) and (z) Section 10.1(a)(ii) for Environmental
Damages, (i) such claim shall not be subject to the Indemnity Threshold or
the Indemnity Deductible, (ii) (A) during the twelve (12) month period
following the Closing Date the indemnification liability for such claim may
not exceed the amount in the Escrow Account from time to time during such
period plus Twenty Million Dollars ($20,000,000) and (B) during the period of
time that is more than twelve (12) months but less than twenty-four months
following the Closing Date the indemnification liability for such claim may
not exceed Twenty Million Dollars ($20,000,000), (iii) such claim need not be
asserted solely against the Escrow Account and the Indemnified Persons may
make claims against any other assets of the Company Shareholders, and (iv)
the Indemnification Period for such claim shall not terminate at 11:59 pm
Central time on the date that is twelve (12) months following the Closing
Date, but shall continue until 11:59 pm Central time on the date that is
twenty-four (24) months following the Closing Date.
(i) In determining the amount of any Damage, any materiality
or Material Adverse Effect qualifier contained in a representation, warranty
or covenant of the Company shall be disregarded. If the aggregate amount of
Damages for which indemnification is required under this ARTICLE X (such
requirement taking into account the limitations on indemnification contained
herein) exceeds the amount remaining in the Escrow Account, then the Company
Shareholders shall be responsible for providing indemnification under this
ARTICLE X to the extent of such excess severally, and not jointly, in
proportion to their Proportionate Share, provided that an Indemnified Person
shall be entitled to seek the full benefit of the indemnification to which
such Person is entitled hereunder from the Principal Shareholders, and not
the other Company Shareholders, severally, and not jointly, in the same
proportion as the number of Company Shares owned by such Principal
Shareholders immediately before the Merger bears to the number of Company
Shares owned by all Principal Shareholders. Notwithstanding any other
provision contained in this ARTICLE X, in no event shall the liability of any
Company Shareholder under this ARTICLE X exceed an amount equal to the
aggregate amount paid or to be paid to such Company Shareholder under this
Agreement.
(j) Any indemnification payment paid pursuant to this
ARTICLE X shall be treated as an adjustment to the purchase price. In
calculating the amount payable to any Indemnified Party, the amount of any
Damages (i) shall not be duplicative of any (A) other Damages for which an
indemnification claim has been made or (B) any item to the extent taken into
account in accordance with Section 2.8 and Section 9.3, (ii) (A) shall be
computed net of any third-party insurance proceeds which have been recovered
by the Indemnified Person in connection with the facts giving rise to the
right of indemnification (net of expenses incurred in obtaining such recovery
and net of any increase in insurance premiums resulting from such facts or
such recovery) and (B) if the Indemnifying Person makes any payment on any
Third Party Claim, the indemnifying Person shall be subrogated, to the extent
of such payment, to all rights and remedies of the Indemnified Person to any
insurance benefits or other claims of the Indemnified Person with respect to
such Third Party Claim, (iii) shall be reduced to take account of any net Tax
benefit realized but only if, and to the extent actually realized in the form
of an actual reduction in cash that would otherwise have been payable by such
Indemnified Party but for the indemnity claim in the Tax year in which such
claim is finally resolved (for the avoidance of doubt, any Tax attributes of
Parent, the Company, or their Subsidiaries shall be taken into account first
prior to any deductions or other Tax attributes resulting from such claim)
and (iv) shall be reduced by any reversal of such Damages in a subsequent
period occurring less than two (2) years after the related indemnification
payment has been made hereunder, provided, that in such instance Parent shall
promptly pay to the Shareholders' Agent the full amount of any such reversal;
provided further, if at the end of such two (2) years there shall be any suit
or other proceeding pending which may result in a reversal of Damages, such
two (2) year period shall be extended until final resolution of such action
or other proceeding. Each Indemnified Party shall be obligated to use its
commercially reasonable efforts to mitigate the amount of any Damages for
which it is entitled to seek indemnification hereunder, including using
commercially reasonable efforts to obtain recovery under existing insurance
policies. The existence or potential availability of insurance or any
potential recovery from any third party shall not delay the Indemnifying
Person's obligation to indemnify the Indemnified Person as set forth herein.
(k) From and after the Closing, the sole and exclusive
remedy of the Indemnified Persons with respect to any and all claims relating
to the subject matter of this Agreement and the transactions contemplated
hereby shall be pursuant to the indemnification provisions set forth in this
ARTICLE X. In furtherance of the foregoing, Parent, on its own behalf and on
behalf of each Indemnified Person, hereby waives, to the fullest extent
permitted by Law, and agrees not to assert in any action or proceeding of any
kind, any and all rights, claims and causes of action it may now or hereafter
have under any Law, other than claims for indemnification asserted as
permitted by and in accordance with the provisions set forth in this ARTICLE
X.
Section 10.2 [Reserved]
Section 10.3 Claims Pending at Expiration of Indemnification Period
In the event that Parent has delivered an Officer's Certificate in
accordance with Section 10.4 and the claim for Damages represented thereby
has not been resolved prior to the expiration of the Indemnification Period,
the claimed amount of such Damages shall be retained in the Escrow Account
pending resolution of such claim, in accordance with the provisions of the
Escrow Agreement.
Section 10.4 Claims upon Escrow Account
In the event that an Indemnified Person seeks to exercise its
rights to obtain indemnification for Damages pursuant to the terms of Section
10.1(a) hereto, Parent shall deliver to the Shareholders' Agent and the
Escrow Agent on or before the last day of the Indemnification Period a
certificate signed by any officer of Parent (an "Officer's Certificate")
specifying in reasonable detail the nature of the claim for which
indemnification is being sought and the amount of Damages.
Section 10.5 Objections to Claims; Resolution of Conflicts
(a) The Shareholders' Agent shall have the right to object
to one or more of the claims set forth in any Officer's Certificate delivered
by Parent to the Shareholders' Agent by serving written notice thereof to
Parent and the Escrow Agent within thirty (30) Business Days following the
delivery of such Officer's Certificate, which notice shall specify in
reasonable detail the basis for such objection. In the event that the
Shareholders' Agent does not object to a claim in accordance with the
preceding sentence by the close of business on the thirtieth (30th) Business
Day following receipt by the Shareholders' Agent of the Officer's
Certificate, the Shareholders' Agent shall be deemed to have accepted and
agreed to the claim set forth in such Officer's Certificate on behalf of the
Company Shareholders, and shall be precluded from raising any objection
thereto following such date. In the event that the Shareholders' Agent
accepts and agrees to a claim set forth in an Officer's Certificate, or is
deemed to accept and agree in accordance with the immediately preceding
sentence, the Shareholders' Agent and Parent shall instruct the Escrow Agent
by jointly executed written notice to disburse the claimed amount to Parent.
(b) In case the Shareholders' Agent shall so object in
writing to any claim or claims by Parent made in any Officer's Certificate,
Parent shall have thirty (30) days after receipt of an objection by the
Shareholders' Agent to respond thereto in a written statement to
Shareholders' Agent and the Escrow Agent. If after such thirty (30) day
period there remains a dispute as to any claims, the Shareholders' Agent and
Parent shall attempt in good faith for sixty (60) days to agree upon the
rights of the respective parties with respect to each of such claims. If the
Shareholders' Agent and Parent should so agree, the claims set forth in such
Officer's Certificate shall be modified as necessary to reflect such
agreement, and the Shareholders' Agent and Parent shall instruct the Escrow
Agent by jointly executed written notice to disburse the agreed amount to
Parent.
(c) If no such agreement can be reached after good faith
negotiation during such sixty (60) day period, either Parent or the
Shareholders' Agent may pursue any and all legal remedies available to such
party.
Section 10.6 Shareholders' Agent
(a) The Shareholders' Agent shall be constituted and
appointed as the Shareholders' Agent for and on behalf of the Company
Shareholders to give and receive notices and communications, to authorize
disbursement by the Escrow Agent from the Escrow Account, in satisfaction of
claims by an Indemnified Person, to object to such deliveries, to agree to,
negotiate, enter into settlements and compromises of, and demand arbitration
and comply with orders of courts and awards of arbitrators with respect to
such claims, to agree to, negotiate, enter into and provide amendments and
supplements to and waivers in respect of this Agreement, and to take all
actions necessary or appropriate in the judgment of the Shareholders' Agent
for the accomplishment of any or all of the foregoing. No bond shall be
required of the Shareholders' Agent, and the Shareholders' Agent shall
receive no compensation for her services. Notices or communications to or
from the Shareholders' Agent shall constitute notice to or from each of the
Company Shareholders.
(b) The Shareholders' Agent shall not be liable for any act
done or omitted hereunder as Shareholders' Agent while acting in good faith
and in the exercise of reasonable judgment, and any act done or omitted
pursuant to the advice of counsel shall be conclusive evidence of such good
faith. The Company Shareholders shall severally indemnify the Shareholders'
Agent on the basis of their respective Proportionate Shares and hold her
harmless against any loss, liability or expense incurred without gross
negligence or bad faith on the part of the Shareholders' Agent and arising
out of or in connection with the acceptance or administration of her duties
hereunder. Nothing in this Section 10.6 shall limit the Shareholders'
Agent's obligations to any Indemnified Person pursuant to the terms of this
ARTICLE X.
Section 10.7 Actions of the Shareholders' Agent
A decision, act, consent or instruction of the Shareholders' Agent
shall constitute a decision of all of the Company Shareholders and shall be
final, binding and conclusive upon each and every Company Shareholder, and
Parent, Merger Sub, the Company and the Surviving Corporation may rely upon
any decision, act, consent or instruction of the Shareholders' Agent as being
the decision, act, consent or instruction of each and every Company
Shareholder. Each of Parent, Merger Sub, the Company and the Surviving
Corporation is hereby relieved from any liability to any Person for any acts
done by them in accordance with such decision, act, consent or instruction of
the Shareholders' Agent.
Section 10.8 Third-Party Claims
(a) In the event that Parent becomes aware of a third-party
claim (including any demand received by the Surviving Corporation for payment
for Dissenting Shares) which Parent believes give rise to indemnification
under this ARTICLE X (a "Third Party Claim"), Parent shall promptly notify
the Shareholders' Agent of such Third Party Claim; provided, however, that so
long as the notice is delivered within the Indemnification Period the failure
to give prompt notice shall not affect the indemnification provided hereunder
except to the extent the Shareholders' Agent, on behalf of the Company
Shareholders, has been actually prejudiced as a result of such failure. The
notice of Third Party Claim shall include, based on the information then
available to Parent, a summary in reasonable detail of the basis for the
claim and a reasonable estimate of the Damages. The Shareholders' Agent, on
behalf of the Company Shareholders, shall be entitled, upon written notice
delivered to Parent within forty five (45) days of its receipt of Parent's
notice of a Third Party Claim to assume the defense of such Third Party
Claim, including the employment of counsel reasonably satisfactory to Parent
and the payment of the fees and disbursements of such counsel from the Escrow
Account (for so long as funds are available in the Escrow Account, and with
respect to claims described in Section 10.1(d), (e), (f) and (g) for which
funds are no longer available, from the Company Shareholders, and with
respect to claims described in Section 10.1(h) for which funds are longer
available, from the Company Shareholders, but only to the extent of the
limitations set forth in Section 10.1(h)(ii)). In the event that the
Shareholders' Agent declines or fails to assume the defense of the Third
Party Claim within such forty five (45) day period, then the Shareholders'
Agent shall pay the reasonable fees and disbursements of counsel for Parent
as incurred from the Escrow Account (for so long as funds are available in
the Escrow Account, and with respect to claims described in Section 10.1(d),
(e), (f) and (g) for which funds are no longer available, from the Company
Shareholders, and with respect to claims described in Section 10.1(h) for
which funds are longer available, from the Company Shareholders, but only to
the extent of the limitations set forth in Section 10.1(h)(ii)); provided,
however, that the Shareholders' Agent shall not be required to pay the fees
and disbursements of more than one counsel for all Indemnified Persons, and
additional local counsel, if necessary, for any single Third Party Claim.
With respect to any Third Party Claim for which indemnification is sought
hereunder, Parent or the Shareholders' Agent, whichever is not assuming the
defense of such Third Party Claim, shall have the right to participate in
such matter and to retain its own counsel at such party's own expense. The
party controlling the defense of such Third Party Claim shall at all times
use reasonable efforts to keep the other party reasonably apprised of the
status of the defense of such Third Party Claim and the Parties shall
cooperate in good faith with each other with respect to the defense of any
such matter. Notwithstanding anything contained in this Section 10.8(a),
Shareholders' Agent shall not be entitled to assume the defense of any Third
Party Action (and shall be liable for the reasonable fees and disbursements
of counsel of Parent in connection with defending such Third Party Claim, to
be paid from the Escrow Account (for so long as funds are available in the
Escrow Account, and with respect to claims described in Section 10.1(d), (e),
(f) and (g) for which funds are no longer available, from the Company
Shareholders, and with respect to claims described in Section 10.1(h) for
which funds are longer available, from the Company Shareholders, but only to
the extent of the limitations set forth in Section 10.1(h)(ii)) if the Third
Party Claim (i) involves a matter where a single counsel selected by
Shareholders' Agent may not represent Shareholders' Agent and Parent under
applicable ethical rules involving conflicts of interest or (ii) seeks an
order, injunction or other equitable relief or relief other than money
damages against the Indemnified Person that the Indemnified Person reasonably
determines cannot be separated from any related claim for money damages or
(iii) is in respect of Taxes that could adversely impact any Post-Closing
Taxable Period of the Parent, Company or any Company Subsidiary. With
respect to any Third Party Claim in respect of Taxes related to any Pre-
Closing Taxable Period for which Parent has assumed responsibility pursuant
to Section 7.6(a)(iv), (y) Shareholders' Agent shall not be entitled to
assume the defense of such Third Party Claim and (z) no Indemnified Person
shall be entitled to seek reimbursement hereunder for fees and disbursements
of counsel in connection therewith.
(b) Subject to Section 10.8(c), neither Parent nor any other
Indemnified Person may settle or compromise any Third Party Claim or consent
to the entry of any judgment in connection therewith without the prior
written consent of the Shareholders' Agent unless (i) Shareholders' Agent
fails timely to assume the defense of such Third Party Claim in accordance
with Section 10.8(a) hereof, or (ii) such settlement, compromise or consent
includes an unconditional release of Shareholders' Agent, the Company
Shareholders and any Person serving as an officer, director employee or agent
of the Company or any of its Subsidiaries prior to the Closing from all
liability arising from such Third Party Claim. Shareholders' Agent may not
settle or compromise any Third Party Claim or consent to the entry of any
judgment in connection therewith without the prior written consent of Parent
unless such settlement, compromise or consent (except in respect of a Tax
matter that could adversely impact any Post-Closing Taxable Period of Parent,
the Company or any Company Subsidiary, or in respect of Taxes related to any
Pre-Closing Taxable Period for which Parent has assumed responsibility
hereunder, which in all cases shall require prior written consent of Parent,
not to be unreasonably withheld, conditioned or delayed), (x) includes an
unconditional release of the Indemnified Persons from all liability arising
from such Third Party Claim, (y) does not contain any admission or statement
suggesting any wrongdoing or liability on behalf of any Indemnified Person
and (z) does not contain any equitable order, judgment or term that in any
manner affects, restrains or interferes with the business of any Indemnified
Person.
(c) None of Parent, the Surviving Corporation, the Company
or any Company Subsidiary may settle or compromise any claim with respect to
Taxes for which the Company Shareholders would be responsible hereunder (i)
without the prior written consent of the Shareholders' Agent, which consent
shall not be unreasonably withheld, conditioned or delayed or (ii) unless
Parent agrees to reimburse the Company Shareholders for any incremental Taxes
of the Company Shareholders (including, on an iterative basis, any Taxes on
such reimbursement payments), resulting from the settlement or compromise of
such Tax claim. In the event of a dispute regarding the amount of
reimbursement payable to Company Shareholders pursuant to clause (ii) of the
preceding sentence, (x) the dispute shall be submitted to the Reviewing
Auditor or another accounting firm mutually agreeable to the Shareholders'
Agent and the Parent, whose decision regarding the required amount of
reimbursement shall be binding on Parent and the Company Shareholders, (y)
all fees and costs of the Reviewing Auditor or other accounting firm selected
pursuant to the preceding clause (x) shall be borne by the Parent, and (z)
the Parent and the Company Shareholders seeking reimbursement under clause
(ii) of the preceding sentence shall provide to the Reviewing Auditor or
other accounting firm selected pursuant to the preceding clause (x) all
information reasonably requested by such Person to enable it to make a
determination regarding the required reimbursement amount.
Section 10.9 No Right of Contribution
Neither the Shareholders' Agent nor any Company Shareholder,
including, without limitation, the Principal Shareholders, shall make any
claim for contribution from the Company or the Surviving Corporation with
respect to any indemnity claims arising under or in connection with this
Agreement to the extent that the Company, the Surviving Corporation or any
Indemnified Person is entitled to indemnification hereunder for such claim,
and the Shareholders' Agent, on its own behalf and on behalf of all Company
Shareholders, hereby waives any such right of contribution from the Company
or the Surviving Corporation it has or may have in the future.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Survival
The representations, warranties, covenants and agreements of the
Company contained in this Agreement as qualified by the Company Disclosure
Schedule or any exhibit or schedule or certificate delivered pursuant to this
Agreement shall survive until the first anniversary of the Closing Date,
except (x) with respect to the matters set forth in (i) Section 3.15
(Environmental Matters), which shall survive until two (2) years from the
date of the Effective Time, (ii) Section 3.16 (Taxes), which shall survive
until sixty (60) days past the expiry of the applicable statute of
limitations, and (iii) Sections 3.1 (Organization, Standing and Power), 3.2
(Subsidiaries), 3.3 (Capitalization; Title to Shares), 3.4 (Authority), 3.19
(Interested Party Transactions) (only as it relates to the Principal
Shareholders) and 3.26 (Board Approval), which shall survive indefinitely,
and (y) for those certain covenants and agreements (such as those relating to
the right to indemnification) that call for action after the Effective Time,
which survive for the periods set forth therein or, if no period is
specified, indefinitely. In no case shall the termination of the
representations, warranties, covenants and agreements affect any claim for
misrepresentation or breach thereof or default thereunder if written notice
of such misrepresentation, breach or default is given to the Shareholders'
Agent (including under Section 10.3 or Section 10.8) prior to such
termination.
Section 11.2 Notices
All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally or by commercial delivery
service, or mailed by registered or certified mail (return receipt
requested), or sent by facsimile (which is confirmed), to the parties at the
address or facsimile numbers set forth on Schedule 11.2 hereto (or at such
other address or facsimile number for a party as shall be specified by like
notice).
Section 11.3 Interpretation
When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without
limitation." The phrase "made available" in this Agreement shall be deemed
to mean that the information referred to has been posted in an on-line data
room, access to which has been given to Parent. The phrases "the date of
this Agreement", "the date hereof", and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to July 13, 2007. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement.
Section 11.4 Counterparts
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the
parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart. Delivery of an executed
signature page of this Agreement by facsimile or electronic transmission
shall be effective as delivery of a manually executed counterpart hereof.
Section 11.5 Entire Agreement; Nonassignability; Parties in Interest
This Agreement and the certificates, documents and instruments and
other agreements specifically referred to herein or delivered pursuant
hereto, including the Exhibits, the Schedules, including the Company
Disclosure Schedule (a) constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to
the subject matter hereof, (b) except by operation of the Merger, shall not
be assigned by operation of Law or otherwise except as otherwise specifically
provided, and (c) shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement shall create or be deemed to create any third party
beneficiary rights in any person or entity not a party to this Agreement,
except for Section 7.11 which is intended to be for the benefit of the
Persons described therein and may be enforced by any such Person.
Section 11.6 Severability
In the event that any provision of this Agreement, or the
application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other Persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with
a valid and enforceable provision that will achieve, to the extent possible,
the economic, business and other purposes of such void or unenforceable
provision.
Section 11.7 Governing Law
This Agreement shall be governed by and construed in accordance
with the laws of the State of Missouri without reference to such state's
principles of conflicts of Law. Each party hereto: (a) irrevocably and
unconditionally consents and submits to the jurisdiction of the Circuit Court
sitting in Kansas City, Missouri and the United States District Court for the
Western District of Missouri for purposes of any action, suit or proceeding
arising out of or relating to this Agreement; (b) agrees that service of any
process, summons, notice or document by U.S. mail addressed to such party in
accordance with the notice provisions hereof shall be deemed to constitute
effective service thereof for purposes of any action, suit or proceeding
arising out of or relating to this Agreement; (c) irrevocably and
unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of or relating to this letter agreement in
Circuit Court sitting in Kansas City, Missouri or the United States District
Court for the Western District of Missouri; and (d) irrevocably and
unconditionally waives the right to plead or claim, and irrevocably and
unconditionally agrees not to plead or claim, that any action, suit or
proceeding arising out of or relating to this Agreement that is brought in
Circuit Court sitting in Kansas City, Missouri or the United States District
Court for the Western District of Missouri has been brought in an
inconvenient forum.
Section 11.8 Rules of Construction
The parties hereto agree that they have been represented by counsel
during the negotiation, preparation and execution of this Agreement and,
therefore, waive the application of any Law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document
will be construed against the party drafting such agreement or document.
Section 11.9 Specific Performance
The parties hereto agree that if any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached, irreparable damage would occur, no adequate remedy at Law
would exist and damages would be difficult to determine, and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at Law or equity.
Section 11.10 Descriptive Headings
The descriptive headings herein are inserted for convenience only
and are not intended to be part of or to affect the meaning or interpretation
of this Agreement.
Section 11.11 Force Majeure
No party shall be deemed to fail to perform its obligations or
respond to any notice on a timely basis if its failure results solely from
the following causes beyond its reasonable control, specifically: war,
terrorism, strikes, natural disaster or acts of God. Any delay resulting
directly from any of said causes shall extend accordingly the time to perform
or respond by the length of the delay. For avoidance of doubt, the foregoing
shall in no event relieve any party of its obligations hereunder or permit a
party to fail to respond to notice beyond the extension described in the
preceding sentence.
Section 11.12 No Personal Liability
Parent and the Merger Sub acknowledge that the Company, the Company
Subsidiaries and their shareholders, officers, employees, agents and
representatives, including the Shareholders' Agent, have performed or may
perform acts in connection with this Agreement on behalf of the Company, the
Company Subsidiaries, or on behalf of Parent or Merger Sub, to facilitate the
transactions contemplated by this Agreement. Notwithstanding anything to the
contrary, after the Closing Date no such shareholder, officer, employee,
agent or representative shall have, as a result of serving in such capacity,
and Parent, Merger Sub, the Company and the Company Subsidiaries hereby
absolve all such Persons from, any personal liability or obligation for any
matter relating to or arising out of this Agreement and any of the
transactions contemplated hereby, other than each such Person's
indemnification and other obligations as set forth herein or in any other
agreement to which Person is a party.
Section 11.13 Merger Sub
Parent shall have the right to substitute any of its wholly-owned
Subsidiaries for Merger Sub under this Agreement by notice to the Company,
which notice shall be signed by both Parent and such Subsidiary, shall
contain such Subsidiary's agreement to be bound by this Agreement and shall
contain a confirmation by such Subsidiary of the accuracy with respect to it
of the representations set forth in ARTICLE IV. Upon delivery of such
notice, wherever the words "Merger Sub" are used in this Agreement (other
than in this Section 11.13), such words shall be deemed to refer to such
Subsidiary in lieu of Merger Sub.
[Signature page follows]
Confidential treatment has been requested for portions of the signature page
to this exhibit. The copy filed herewith omits the information subject to the
confidentiality requested. Omissions are designated with [***]. A complete
version of this exhibit has been filed separately with the United States
Securities and Exchange Commission.
IN WITNESS WHEREOF, the Company, Parent, Merger Sub, the
Shareholders' Agent and the Principal Shareholders have executed and
delivered this Agreement or have caused this Agreement to be executed and
delivered by their respective officers thereunto duly authorized, all as of
the date first written above.
CON-WAY INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name:▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:Chief Financial Officer
SEATTLE ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name:▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:Secretary
TRANSPORTATION RESOURCES, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name:▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:President
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